"Trade-Off": A Study In Global Systemic Collapse

[ThePythonicCow]

ZeroHedge posted (here) an important paper a year ago that I just noticed now, thanks to a recent update here mentioning it.

The main and important paper, from June of 2012, is here: Trade Off: Financial system supply-chain cross contagion – a study in global systemic collapse, by David Korowicz.

The main point of the paper is to analyze the global interdependencies of our world-wide socio-economic-financial system, and to observe that both

1. the current escalating world-wide debt situation is becoming increasingly unstainable, and
2. the complexity of inter-dependencies exceeds our human ability to manage in the event of a large failure.

This makes a catastrophic system failure increasingly difficult to avoid. With a substantial portion of the world's population depending on electrical, water, transportation, energy, parts, supplies, food and financial services that are all entwined with with this global socio-economic system, this will likely be a major setback for human civilization.

The paper's overview says it in a more accurate, but less dramatic fashion:

=================

Overview

This study considers the relationship between a global systemic banking, monetary and solvency crisis and its implications for the real-time flow of goods and services in the globalised economy. It outlines how contagion in the financial system could set off semi-autonomous contagion in supply-chains globally, even where buyers and sellers are linked by solvency, sound money and bank intermediation. The cross-contagion between the financial system and trade/production networks is mutually reinforcing.

It is argued that in order to understand systemic risk in the globalised economy, account must be taken of how growing complexity (interconnectedness, interdependence and the speed of processes), the de-localisation of production and concentration within key pillars of the globalised economy have magnified global vulnerability and opened up the possibility of a rapid and large-scale collapse. ‘Collapse’ in this sense means the irreversible loss of socio-economic complexity which fundamentally transforms the nature of the economy. These crucial issues have not been recognised by policy-makers nor are they reflected in economic thinking or modelling.

As the globalised economy has become more complex and ever faster (for example, Just-in-Time logistics), the ability of the real economy to pick up and globally transmit supply-chain failure, and then contagion, has become greater and potentially more devastating in its impacts. In a more complex and interdependent economy, fewer failures are required to transmit cascading failure through socio-economic systems. In addition, we have normalised massive increases in the complex conditionality that underpins modern societies and our welfare. Thus we have problems seeing, never mind planning for such eventualities, while the risk of them occurring has increased significantly. The most powerful primary cause of such an event would be a large-scale financial shock initially centring on some of the most complex and trade central parts of the globalised economy.

The argument that a large-scale and globalised financial-banking-monetary crisis is likely arises from two sources. Firstly, from the outcome and management of credit over-expansion and global imbalances and the growing stresses in the Eurozone and global banking system. Secondly, from the manifest risk that we are at a peak in global oil production, and that affordable, real-time production will begin to decline in the next few years. In the latter case, the credit backing of fractional reserve banks, monetary systems and financial assets are fundamentally incompatible with energy constraints. It is argued that in the coming years there are multiple routes to a large-scale breakdown in the global financial system, comprising systemic banking collapses, monetary system failure, credit and financial asset vaporization. This breakdown, however and whenever it comes, is likely to be fast and disorderly and could overwhelm society’s ability to respond.

We consider one scenario to give a practical dimension to understanding supply-chain contagion- a break-up of the Euro and an intertwined systemic banking crisis. Simple argument and modelling will point to the likelihood of a food security crisis within days in the directly affected countries and an initially exponential spread of production failures across the world beginning within a week. This will reinforce and spread financial system contagion. It is also argued that the longer the crisis goes on, the greater the likelihood of its irreversibility. This could be in as little as three weeks.

This study draws upon simple ideas drawn from ecology, systems dynamics, and the study of complex networks to frame the discussion of the globalised economy. Real-life events such as United Kingdom fuel blockades (2000) and the Japanese Tsunami (2011) are used to shed light on modern trade vulnerability.

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In my view, this is the greatest risk we face. The only exit strategy available to Western banks (Europe, US, Japan and close trading partners) is to continue increasing and centralizing debt, assets and risk. This will not end well, and when it does end, it will be serious.

[GlassSteagallfan]

But here in the US, if we were to change to the Glass-Steagall banking system, we could control the collapse and less people would die. Without GS, the system will continue to be controlled by the weaker minds.

Yes, we must continue increasing and centralizing debt, assets and risk (kicking the can down the road), but we are running out of road.

A good interview by Alex Jones with Peter Schiff:

Source: https://youtube.com/watch?v=ohGSos0OG1o

[ThePythonicCow]

Posted by GlassSteagallfan (here)
But here in the US, if we were to change to the Glass-Steagall banking system, we could control the collapse and less people would die. Without GS, the system will continue to be controlled by the weaker minds.

Too late for that, in my view. Glass-Steagall, had it been kept and enforced, could have kept us from this. But I see no way to disassemble this house of cards, now that it has been built so high, short of it collapsing. A Minsky Moment of monumental proportions seems inevitable (to me.)

[ThePythonicCow]

Posted by GlassSteagallfan (here)
A good interview by Alex Jones with Peter Schiff

Yup - good.

I think that there is a reason that Peter Schiff (of the Schiff family) and others are being allowed to speak of the pending collapse. The most powerful know that a catastrophic socio-economic-financial collapse is coming. They are doing their best to warn us so that we might be better prepared, without panic'ing us. There is real risk, as noted in the paper I posted at the top of this thread, is that the world economy cannot be restarted afterward.

Imagine being one of the captains of these ships (a central bank head), circling a giant whirlpool:

Imagine moreover, that the faster you sail, the more this powers the whirlpool. Imagine also that the ships are roped together.

You can be first in, or slightly behind. You can go in quicker, by sailing straight for the whirlpool. You can make a small mistake, and go in sooner than you planned. But you are going in, and not all that far into the future.

There are lifeboats, which might work. But if your crew abandons ship for the lifeboats too soon, you lose that way too.

And these are the biggest ships ever built in (publicly) recorded human history, with behaviors when taken to extremes that are untested.

A complicated and risky business .

This catastrophic socio-economic-financial collapse is, in my estimation, the Great Catastrophy for which we are being prepared, mostly with rumors of a wide variety of other less plausible catastrophies.

The bastards in power do intend to reconstitute a new financial order, another of many, more securely ensuring their power. But they don't want to rule over a civilization that has been set back a couple of centuries, or worse.

[Lifebringer]

Arrest the politicians who took the bribes to put the end protections of the citizen's finances, and there you go.

They knew what they were doing in the dead of night behind closed doors.

Book of Micah Chapt2.vs 1 tells of this time, I read it yesterday for the 1st time, since they took it out.

ch2.1 "Woe to those who plan iniquity, to those who plot evil on their beds!
2.2They covet the fields and seize them and houses and take them
They defraud a man of his home, and fellowman of his inheritance
2.3 Therefore the Lord says: "I am[/COLOR] planning disaster against "this" people, from which you cannot save yourselves.
You will no longer walk proudly, for it will be a time of calamity.
2.4 In that day, men will ridicule you. They will taunt you with this mournful song: "WE are utterly ruined, my people's possessions divided up.
He takes it from me! He assigns our fields to traitors!
2.5 Therefore you will have no one in the assembly of the Lord, to divide by lot.

"TV preachers"
2.11 "If a liar and a deceiver comes and says: I will prophesy for you plenty of wine and beer, he would be the just prophet for this people.

"Governing bodies"
3.9"Hear this rulers and leaders who dispise justice and distort all that is right, change your ways or be plowed like a field, becoming a heap of rubble, your temples overgrown with thickets.4.3 He will judge between many peoples and settle disputes for srtong nations far and wide. They will beat their swords into plowshares and their spears into pruning hooks. Nation will NOT take up swords against nation, nor will they train for war anymore.

[mgray]

Posted by Paul (here)

Posted by GlassSteagallfan (here)
A good interview by Alex Jones with Peter Schiff

Yup - good.

I think that there is a reason that Peter Schiff (of the Schiff family)

I know Peter Schiff and he is not of the Jekyll Island, banking Schiff family. Both families have a Jacob Schiff, but it is not the same person.

[ghostrider]

To bring in a new system of global control , they must first collapse the old one and get the public in the mindset that they need government to do everything for them ...