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2020-

2020-08-10 c
House of Cards - Sinking Ship - Circling the Drain

The Economy Is Mortally Wounded

A fully financialized, totally debt and speculation-dependent economy is terminal once leverage and debt stop expanding exponentially.

We all know the movie scene in which the character is wounded but dismisses it as no big deal, and then lurches into the closing sequence where we discover the wound was not inconsequential, it was mortal, and the character expires.

That's a fair depiction of the economy--both the U.S. and the global economy. The rapt audience is assured it's just a flesh wound and the character will soldier on, teeth nobly gritted, and that sets up our surprise when he/she tragically expires in the climatic scene.

Financial-political authorities and their paid cheerleaders are sparing no expense in assuring us the pandemic-triggered Greater Depression is a mere bump in the road and the recovery will be record-breaking, and they lavish excessive optimism on the triggers of this astounding recovery that's just waiting in the wings: a covid-19 vaccine, a covid-19 treatment, herd immunity, etc.

What the cheerleaders and authorities cannot dare acknowledge is the extreme fragility and vulnerability of the pre-pandemic economy: the unprecedentedly excessive leverage, debt, speculation, wealth and income inequality, asset bubbles, etc. that had all started to roll over as gravity finally took hold in Q4 of 2019.

Also missing from the astounding recovery that's just waiting in the wings narrative is the recognition of second-order effects as the dominoes of fragility and vulnerability continue toppling.

Even super-duper covid-curing space rays beamed at our planet by helpful Martians couldn't stop the financial conflagration that is now raging, a conflagration that was inevitable given the monetary deadwood that was piled ever higher for 12 long years, a mountain of dry tinder awaiting a random lightning strike or careless match. (read more)

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