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What Went Wrong In 2015

Politics / Social Issues Dec 29, 2014 - 03:22 PM GMT

By: Andrew_McKillop


What Went Wrong in '14?
In some ways this could as easily be 1914 as 2014  War-fascination and phobia was so high in 2014 that in several countries, in Europe and also the USA, Canada, Australia and others the production of books, films, TV documentaries and panel discussions, leading press articles and political speeches relating to the 1914-1918 war were everywhere. But just as the Clash of Empires theme was found diificult or wanting to explain the war, even if the vidgame version of empires clashing is a moneyspinner. the economic causes of WWar I were also found wanting, despite all the effort trying to cobble them together and prove them. By the 1920s and above all the 1930s, J. M. Keynes had made the economic causes and consequences of the war one of his major writing projects. And in 2014 it was possible to find at least a few major similarities between the causes of the 1929 crash and its follow-on Great Depression, and the flyblown world since 2008.

One of the easier comparisons is that the 1920s was a classic boom-bust sequence and process of "speculative froth" on the back of a fast-growing economy recovering from the massive destruction of the first world war. The 1929 crash was exactly the same as the 2008-2009 crash due to "financial overreach and hubris+, financial criminals exploiting unrealistic visions of continued fast economic growth in a financialized economy – the 1920s Prosperity Bubble obligatorily included frenetic speculation on equity share prices and housing and real estate, with less and less regard or interest in the underlying asset value of the assets used to lever the financial bubble.All of today's so-called "troubled Club Med countries" of the Eurozone, for example, and the UK, turned the house price lottery into an article of faith and "pillar of economic growth"

It was hard to be more fatuous than that.

Not at all stealthily but by rabid contagion this financialization process for pumping up asset values or numbers, was a main cause in the oil crisis we have since about November  2014. Unrealistic values have to be shaken down, uneconomic assets have to be eliminated in a classic financial panic nvironment. The oil sector shakedown merely being an additional one, similar but larger to the shakeout of the overblown renewable energy and electric power sector bubble that in many countries started to seriously wind down by around 2011.

To the slender extent that energy interests or assets can be presented as "very important' in the Ukraine crisis, in what in fact is simply Cold War 2.0, Ukraine's ramshackle "gas transport prosperity bubble" which started in the 1980s,  and its present collapse could be added as putative raisons de guerre. No normally constituted sane person can believe this absurd tale, but myth and fantasy are critical for starting wars and financial crashes!

The Importance of Not Knowing
What we can call late stage financialized roll-a-dice capitalism critically depends on doubt and uncertainty – an environment in which liars and braggarts have a field day. You may until recently, for example, have thought that oil could only come out of the ground if a barrel costs at least $100 and that massive windfarms, whether they work or not, are an obligatory "insurance policy against climate change", saving polar bears everytime the rotors turn! How much you would pay for that would be a lot, of course, but the actual price, the bankers and brokers told us, was unimportant and a matter for daily trading by experts. It was important for us not to know.

Likewise if your daily office sandwich in its "recycable" packaging, recycled like any trash by landfill dumping in most cases, costs $2 or $4 and then $8 this would be attributable to "value discovery" in the value chain ending up at the supermarket shelf and then the landfill dump. This is more simply a war between producers and consumers with the producers backed by the financial system, trying to screw more cash out of all things and all people. Not knowing how this process operates and how it can be contained, neutralized and then eradicated is as simple as (for example) knowing why the Punk Psychopaths of the Islamic State cannot be deprived of their financial support, then contained and then totally eradicated. As we know from relatively credible reports and studies, ISIS tends to sell its stolen oil at around $33 a barrel, which makes the $1 office sandwich a reasonable prospect!

J. M. Keynes, himself and in person, was worried about deflation, taking it as a key symptom that econmic growth was declining and could certainly count on bankers and brokers to always be ready for the game of driving prices down t nothing, before exploding them upwards in a shower of "value discovery". Likewise for periods of fast inflation in western economies like the 1970s, when the Surprise discovery" was made that inflation also causes, or is linked with declining rates of economic growth. Therefore the discovery that "just a bit" of inflation is very nice, but deflation is always bad. This is rocket science!

Therefore economic planning is necessary and it wasn't me who said so. One very surprising exponent and champion of that is UK prime minister Cameron, but his meanings of "economic planning" are rather special. For example and to be sure, the financial system nust be a little better policed or "reformed" but should at all times be allowed to firstly create doubt on the asset value of anything, then play around with that "discovery", strictly for the profit of the financial system, but claimed as "beneficial to all".

The "We Didn't Know" Cult
As already noted abve it is very important not to know in the late stage financialized capitalist economy. The permaneent fog is excellent for deceit, fraud, childlike hope and the siphoning of further wealth by those who are already wealthy. Also as anybody will tell you, nobody knows how the 1914-18 war started. The massive numbers of new books, articles and studies on the subject attest to this doubt, Weak attempts have been made trying to say the same about WWar II and plenty of other wars – for example the American-led Afghan war of about 2001-14 and Iraq war of about 2003-08 (because both wars are in fact continuing).

While an "economic handle" for the Afghan war is impossible to find, despite occasional attempts at doing so, the Iraq war at least has the oil handle. The sequels of the Afghan and Iraq wars, when combined with the Syrian civil war, produce what we have today. One totally unexpected and illogical seqel is further downward pressure on the oil price! If the Libyan civil war succceeds in denying all exports of oil from Libya, that might slightly reduce the downward pressure, but not by much!

"We didn't know!" is the swansong cop-out for the globalized consumer horde, some of them calling themselves "middle class" because they happen to suck a little more wealth out of the economy than other global consumers. The only difference. Even the technology and methods used for global mass communication help in this task of produced a Dumbed Down mass, a critical deadweight social mass of stupidity, made up of people who in many cases still think they must vote and their vote might count. In the UK for example, they might vote for David Campbell and his Tories to carry on their sstrange "economic plan". Or they might not, but the sequels will be the same.

Albert Einstein once said that if people cannot understand the technologies and methods used for communication in society "we will alll become idiots".

Show the dumbed down masses and especially their "intelligent middle classes" any disaster ranging from freak floods and airplanes disappearing, to ISIS psychopaths cutting heads off with a rusty penknife, and they will instantly gurgle "We didn't know!".They are not responsible and very, very happy to be in that free-floating state of irresponsibility. They can go on consuming, which in fact is the only thing they do. They therefore have the economic system ("system" being an exaggerated term) they have, and have no excuse at all for the consequences. Why should 2015 be any different?

By Andrew McKillop


Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

© 2014 Copyright Andrew McKillop - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisor.

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