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Globalization and Financialization Are Dead, and so Is Everything That Depended on Them

Globalization and Financialization Are Dead, and so Is Everything That Depended on Them

Financialization was never sustainable, and neither was the destructive globalization it enabled.

All the happy-story analogies to past pandemics being mere bumps in the road miss the mark. A popular claim is that the 1918-1919 flu pandemic killed millions but no biggie, the Roaring 20s started the following year. It’s onward and upward, baby, once we toss the masks.

Wrong. Completely, totally, dead wrong. The drivers of the past 75 years of growth– globalization and financialization–are dead, and so is everything that depended on them for “growth”. (Growth is in quotes because once external costs and currency arbitrage are factored in, most of what’s been glorified as “growth” is nothing but losses covered by accounting trickery.)

Here’s what’s poorly understood: globalization and financialization die when they stop expanding. Just as a shark dies if it stops swimming forward, globalization and financialization die once they stop expanding, because their viability depends on expansion.

Globalization and financialization have been losing momentum for years. Under the guise of “opening markets,” globalization has stripmined every economy that can’t print a reserve currency and hollowed out economies globally as only globally competitive sectors survive globalization. The net result is that once vibrant, diversified economies have been reduced to fragile monocultures completely dependent on global flows of capital and spending for their survival.

Tourism is a prime example: every region that has seen its local economy crushed by global arbitrage and corporate hegemonies, leaving global tourism as its sole surviving sector, has been devastated by the drop in tourism, which was always contingent on disposable income and credit expanding forever.

…click on the above link to read the rest of the article…

Coronavirus Shutdown: The End of Globalization and Planned Obsolescence – Enter Multipolarity

Coronavirus Shutdown: The End of Globalization and Planned Obsolescence – Enter Multipolarity

The coronavirus pandemic has shown that the twin processes of globalization and planned obsolescence are deficient and moribund. Globalization was predicated on a number of assumptions including the perpetuity of consumerism, and the withering away of national boundaries as transnational corporations so required.

What we see instead is not a globalization process, but instead a process of rising multipolarity and a rethinking of consumerism itself.

Normally a total market crash and unemployment crisis would usher in a period of militant labor activity, strikes, walk-outs and community-labor campaigns. We’ve seen some of this already. But the ‘medical state of emergency’ we are in, has effectively worked like a ‘lock-out’. The elites have effectively flipped-the-script. Instead of workers now demanding a restoration of wages, hours, and work-place rights, they are clamoring for any chance to work at all, under any conditions handed down. Elites can ‘afford’ to do this because they’ve been given trillions of dollars to do so. See how that works?

All our lives we’ve been misinformed over what a growing economy means, what it looks like, how we identify it. All our lives we’ve been lied to about what technical improvement literally means.

A growing economy in fact means that all goods and services become less expensive. That cuts against inflation. Rather all prices should be deflating – less money ought to buy the same (or the same money ought to buy more). Technical innovation means that goods should last longer, not be planned for obsolescence with shorter lifespans.

Unemployment is good if it parallels price deflation. If both reached a zero-point, the problems we believe we have would be solved.

…click on the above link to read the rest of the article…

COVID-19, Brought to You by Globalization

COVID-19, Brought to You by Globalization

How the virus exploits traits of our economy extolled as modern triumphs.

Viking_Sky_colorful.jpg
A Viking cruise ship docked in France in 2017. Viking and Princess Lines have halted operations. Cruise ships combine urban-like crowding with world-wide mobility. Photo: Wikimedia

This pandemic, with an estimated mortality rate of one to two per cent, is not a world ender or something to be truly feared.

But it deserves our respect and it certainly has our attention.

Pandemics, which go off like improvised bombs, don’t have to be formidable killers to be bad. Even modest biological detonations can upend your day and alter your world. 

As SARS-CoV-2 — the respiratory virus that causes the disease COVID-19 — begins its explosive global journey, it has proven its ability to clog hospitals and freeze economies. 

It is worth remembering that SARS-CoV-2, unlike influenza, is a novel cold-like virus that Homo sapiens have never experienced before. We have no immunity and must acquire it either through exposure to the virus or a vaccine that most likely won’t be ready till the pandemic is over.  

SARS-CoV-2 will play with different populations differently, making use of the demographic material at hand along with human follies such as the criminal dearth of testing in the United States for the last month. 

And it won’t be the last. This particular biological invader springs from an ancient, large and diverse family of viruses hosted by a variety of wild animals including bats and birds. 

These species are particularly hard pressed by global economic forces now ruinously reducing biological diversity everywhere. As biological biodiversity declines, viruses will seek reliable hosts and jump from animals into people at any given opportunity. Peter Daszak, a pioneering disease ecologist, says we now live in Age of Pandemics. 

…click on the above link to read the rest of the article…

We Can Only Choose One: Our National Economy or Globalization

We Can Only Choose One: Our National Economy or Globalization

The servitude of society to a globalized economy is generating extremes of insecurity, powerlessness and inequality. 

Does our economy serve our society, or does our society serve our economy, and by extension, those few who extract most of the economic benefits? It’s a question worth asking, as beneath the political churn around the globe, the issues raised by this question are driving the frustration and anger that’s manifesting in social and political disorder.

A recent essay examines these issues in light of Brexit, which the author sees as a manifestation of dramatic but poorly understood changes in Britain’s economy over the past 60 years:

How Britain was sold: Why we need to rethink the case for a national capitalism in the age of uncertainty.

“One of the reasons Brexit has become unstuck is that the changing nature of the British economy since the 1970s and 1980s has made it hard to identify what the economic interests of the nation really are.

If nothing else, Brexit has been a long overdue education in the realities of Britain’s economy.

While both liberals and Marxists argue that the nationality of capitalism does not matter, there is a need to rethink the case for a national capitalism in this age of economic inequality, political fracture and geopolitical uncertainty. If nothing else, by embedding the economy more deeply into the nation and the daily lives of its citizens, and by directing itself towards national purposes and having a greater stake in developing national skills and innovations, a national capitalism would underline and reinforce that lost idea of the common good.”

It’s shocking to recall that Britain had a large and vibrant domestically owned auto industry in the 1960s, and remained a major industrial power / exporter.

…click on the above link to read the rest of the article…

The Third Wave Of Globalization Has Ended

The Third Wave Of Globalization Has Ended

The global economy is certainly at crossroads. Protectionism and nationalism, a well-matched marriage of global chaos at the moment, has threatened to end the third wave of globalization that began in the late 1980s. 

Capital Economics has published a compelling research note, titled “The end of globalization,” specifying how 150 years of globalization could’ve put in a significant peak in the last several years, all thanks to President Trump’s trade war with China. 

The third wave of globalization began in the late 1980s, mostly driven by technological advancements and shifting labor and capital around the world to the most cost-effective regions. 

While the Western hemisphere consumed for three decades, the Eastern hemisphere manufactured the goods (which produced rising inequality in the West and thus how protectionism and nationalism were sparked), but the status quo of how supply chains are organized around the world could be changing as world trade volumes have hit a significant wall. 

U.S. Economy Grew at 1.9% Pace in Third-Quarter

In terms of the Elliott wave principle, a third wave eventually gives out to a corrective fourth wave. Capital Economics believes the world is headed towards a period of de-globalization, or as history will call it a fourth corrective wave.  

“It is possible that this is just a temporary hiatus and that an unforeseen technological breakthrough will trigger a new wave of globalisation. But such waves are rare. In fact, there are several reasons – even before we consider the trade war – why globalisation has peaked. First, all the major steps to integrate the global system have been taken. Second, advanced manufacturing techniques mean that the location of manufacturing no longer hinges on where labour costs are cheapest. Third, complex supply chains have reached their limit. Fourth, China is unlikely to open up its capital markets significantly.

 …click on the above link to read the rest of the article…

The Importance Of A Resilient Life

The Importance Of A Resilient Life

In the end, it will mean all the difference

My business partner Adam and I recently met with a successful business owner whose career began on Wall Street. The kind of guy who should be rooting for the system, because it has treated him well.

Instead, he was quite nervous about the sustainability of the status quo. “Starting in August,” he said, “Maybe it was the Amazon catching fire, maybe it was the negative interest rates – I don’t know for certain what the trigger was – but something has snapped.”

I agree. Because I feel it, too.

As do so many others. And not just those who regularly read PeakProsperity.com. Increasingly, even ‘mainstream’ voices are stating to report a profound sense that something really isn’t right. That — from the economy to geopolitics to the natural world — things are swiftly worsening.

Public perception is beginning to shift from complacency to fear. Countries are fast rejecting globalization in favor of nationalization. The holes in our ecosystem — vanishing birds, insects, amphibians and fish stocks — are becoming frighteningly obvious. The threats to life as we’re accustomed to it are becoming more visible while accelerating in both magnitude and frequency.

I expounded on the danger of this in my recent report It’s the Pace of Change That Kills You. Negative developments can spark their own vicious cycle. The more components of a system that fail, the more at risk the remaining components become.

That report was published just two weeks ago. Since then the world’s largest oil refinery was attacked by hostile forces and knocked out of commission, throwing the future integrity of the global oil market into question. Scientists just announced that North America has lost 29% of its total bird population (a drop of -3 billion) in the past half century.

 …click on the above link to read the rest of the article…

Globalization Just Peaked

Globalization Just Peaked

Joan Miro The farmer’s wife 1923

In Jackson Hole on Friday, Bank of England’s outgoing governor Mark Carney talked about a Synthetic Hegemonic Currency (SHC) that the world ‘must’ create, and I thought: that sounds as creepy as anything Halloween. Now, Carney is a central banker as well as a former Giant Squid partner, hence a certified cultist, but still.

He even mentioned Facebook’s Libra ‘currency’ as some sort of example for something that should replace the US dollar internationally. And that replacement is allegedly needed because countries are hoarding dollars. And/or “protecting themselves by racking up enormous piles of dollar-denominated debt.” Whichever comes first, I guess?!

I’ve read quite a few comments on Carney’s speech, but far as I’ve seen they all ignore one aspect of it: the current shape and form of globalization. See, Carney can see only one thing: more centralization, more things moving more in the same direction. Remember, he’s the man who with Michael Bloomberg in 2016 wrote “How To Make A Profit From Defeating Climate Change”. Aka things are worth doing only if they make you richer.

It’s a state of mind that works fine when you’re inside a system and an echo chamber, when you’re a central banker or a corporate banker. But there’s nothing that indicates it’s a useful state of mind when the system you’re serving must undergo change. What is as true when it comes to climate change as it is for changing the entire global economy. Carney’s got blinders on.

World Needs To End Risky Reliance On US Dollar: BoE’s Carney 

Carney [..] said the problems in the financial system were encouraging protectionist and populist policies. [..] Carney warned that very low equilibrium interest rates had in the past coincided with wars, financial crises and abrupt changes in the banking system.

 …click on the above link to read the rest of the article…

From Dollar Hegemony to Global Warming: Globalization, Glyphosate and Doctrines of Consent

From Dollar Hegemony to Global Warming: Globalization, Glyphosate and Doctrines of Consent

There has been an on-going tectonic shift in the West since the abandonment of the Bretton Woods agreement in 1971. This accelerated when the USSR ended and has resulted in the ‘neoliberal globalization’ we see today.

At the same time, there has been an unprecedented campaign to re-engineer social consensus in the West. Part of this strategy, involves getting populations in Western countries to fixate on ‘global warming’, ‘gender equity’ and ‘anti-racism’: by focusing on identity politics and climate change, the devastating effects and injustices brought about by globalized capitalism and associated militarism largely remain unchallenged by the masses and stay firmly in the background.

This is the argument presented by Denis Rancourt, researcher at Ontario Civil Liberties Association, in a new report. Rancourt is a former full professor of physics at the University of Ottawa in Canada and author of ‘Geo-economics andgeo-politics drive successive eras of predatory globalization and socialengineering: Historical emergence of climate change, gender equity, andanti-racism as state doctrines’ (April 2019).

In the report, Rancourt references Michael Hudson’s 1972 book ‘Super Imperialism: The Economic Strategy of American Empire’ to help explain the key role of maintaining dollar hegemony and the importance of the petrodollar to US global dominance. Aside from the significance of oil, Rancourt argues that the US has an existential interest to ensure that opioid drugs are traded in US dollars, another major global commodity. This explains the US occupation of Afghanistan. He also pinpoints the importance of US agribusiness and the arms industry in helping to secure US geostrategic goals.

 …click on the above link to read the rest of the article…

The Ugly End of Globalization

The Ugly End of Globalization

Sometime in the fall of 2018 a lowly gofer at the New York Stock Exchange was sweating  bullets.  He’d made an honest mistake.  One that could forever tag him a buffoon.

After trading sideways for most of the spring, the Dow Jones Industrial Average was on the move.  When it closed at 26,828 on October 3, it appeared the Dow was but one trading day away from eclipsing 27,000.  Everyone, including Jim Cramer, just knew it was about to happen.

And this was precisely what the NYSE gofer feared most.  For he’d failed to procure Dow 27,000 hats.  What a shame it would be for Wall Street’s most revered index to notch this historic milestone with no commemorative hats for floor traders to put on while they go bananas.

But then a miracle happen.  The Dow didn’t go up; rather, it went down.  A week later, to the gofers relief, the Dow 27,000 hats arrived…in advance of Dow 27,000.

And now, nearly eight months later, Dow 27,000 remains elusive.  After pulling back in October of last year, the Dow made another run at it last month.  But, again, fell short.  Hence, the hats remain stowed away in a box in the back of a broom closet.

By our estimation, that’s where the Dow 27,000 hats will stay until about 2050 – or even later.  Moreover, when it’s finally time to pull them out, we suspect Wall Street cheerleading will have long since gone out of style.  What a waste of perfectly good hats.

But fear not.  All’s not lost…

Another Day in Paradise

By all commonly accepted weights and measures we’re living in paradise.  Our federal government’s broke.  Our state and local governments are crazy as ever.  Yet things still work wonderfully well.

 …click on the above link to read the rest of the article…

American Soil Is Being Globalized: Nearly 30 Million Acres Of U.S. Farmland Is Now Owned By Foreigners

American Soil Is Being Globalized: Nearly 30 Million Acres Of U.S. Farmland Is Now Owned By Foreigners

All across America, U.S. farmland is being gobbled up by foreign interests.  So when we refer to “the heartland of America”, the truth is that vast stretches of that “heartland” is now owned by foreigners, and most Americans have no idea that this is happening.  These days, a lot of people are warning about the “globalization” of the world economy, but in reality our own soil is rapidly being “globalized”.  When farms are locally owned, the revenue that those farms take in tends to stay in local communities.  But with foreign-owned farms there is no guarantee that will happen.  And while there is plenty of food to go around this is not a major concern, but what happens when a food crisis erupts and these foreign-owned farms just keep sending their produce out of the country?  There are some very serious national security concerns here, and they really aren’t being addressed.  Instead, the amount of farmland owned by foreigners just continues to increase with each passing year.

Prior to seeing the headline to this article, how much U.S. farmland would you have guessed that foreigners now own?

Personally, I had no idea that foreigners now own nearly 30 million acres.  The following comes from NPR

American soil.

Those are two words that are commonly used to stir up patriotic feelings. They are also words that can’t be be taken for granted, because today nearly 30 million acres of U.S. farmland are held by foreign investors. That number has doubled in the past two decades, which is raising alarm bells in farming communities.

How did we allow this to happen?

And actually laws regarding land ownership vary greatly from state to state.  Some states have placed strict restrictions on foreign land ownership, while in other states it is “a free-for-all”

 …click on the above link to read the rest of the article…

The Next Economic Crisis and the Looming Post-Multipolar System

 The Next Economic Crisis and the Looming Post-Multipolar System

The Impending Crisis

At one time, specifically during the post-World War 2 Bretton Woods era, it looked like as if the capitalist model could be indefinitely sustainable and avoid plunging the world into major world conflicts. That era began to come to an end during the stagflation crisis of the 1970s, and came to a complete end at the end of the Cold War which ushered in the era of the so-called “globalization” which took form of unbridled competition for markets and resources. At first this competition did not show many signs of trouble. There were many “emerging markets” created as a result of the collapse of the Soviet bloc into which Western corporations could expand. However, the law of diminishing returns being what it is, the initial rapid economic growth rates could not be sustained and attempts to goose it using extremely liberal central bank policies, to the point of zero and even negative interest rates, succeeded in inflating—and bursting—several financial “bubbles”. Even today’s US economy bears many hallmarks of such a bubble, and it is only one of many. Sooner or later the proverbial “black swan” event will unleash a veritable domino effect of popping bubbles and plunge the global economy into a crisis of a magnitude it has not seen since the 1930s. A crisis against which the leading world powers have few weapons to deploy, since they have expended their monetary and fiscal “firepower” on the 2008 crisis, to little avail. The low interest rates and high levels of national debt mean that the next big crisis will not be simply “more of the same.” It will fundamentally rearrange the global economy.

 …click on the above link to read the rest of the article…

Bruno Latour on Politics in the New Climatic Regime

Bruno Latour on Politics in the New Climatic Regime

Why are so many zones of the world descending into chaos and confusion? There is no single reason, of course, but the French scholar of modernity, Bruno Latour, has a compelling overarching theory. In his new book, Down to Earth: Politics in the New Climatic Regime (Polity), Latour argues that climate change, by calling into question the once-universal dream of “development” and globalization, is leaving a huge void in our consciousness. 

This has resulted in an “epistemological delirium.” As the ordering principle of “the modern” dissolves into thin air, we don’t know which way is up or how to proceed. Hence the title of the original French version of the book, Où atterir? Comment s’orienter en politique – “Where to land? How to orient yourself in politics?” 

Humanity no longer has a shared framework of “becoming modern,” says Latour. It is hard for everyone to believe that globalized markets, “development,” and consumerism will yield a steady march toward civilization and progress. Corporations have proven themselves to be consummate externalizers of cost and risk. And climate change among other eco-crises suggests that relentless economic growth is simply preposterous — and grossly mal-distributed in any case. 

Hence our profound disorientation. It’s hard to deal with the slow-motion collapse of a once-universal story of human aspiration. 

The rich nations, or at least the US, remain mostly in denial about climate change, if only because acknowledging the truth would upend so much. The remaining nation-states of the world, meanwhile, have no clear path in a fractured, divided world for constructing a shared vision. 

Without the unifying normative framework of “development” and its claims of infinite growth and progress, how can we figure out a new consensus narrative for humanity, one that acknowledges the existential reality that we live on the same, finite planet? How can we find a way to share and co-manage our only habitable space?

 …click on the above link to read the rest of the article…

The founder of the World Economic Forum shares what he sees as the biggest threat to the global economy

The founder of the World Economic Forum shares what he sees as the biggest threat to the global economy

  • Economist Klaus Schwab is the founder and executive chairman of the World Economic Forum which will be holding it’s Annual Meeting in Davos, Switzerland January 22-25, 2019.
  • Schwab explains the theme of this year’s meeting, “Globalization 4.0: Shaping a New Architecture in the Age of the Fourth Industrial Revolution.”
  • When asked if we were currently in a trend of deglobalization he said no, “we have to make a differentiation between globalization, which is a fact, and globalism.”
  • He says the biggest threat to economic stability is the imbalances in the world.
  • Schwab says he believes trade imbalances are a problem. He is not an unconditional advocate for free trade, which he says is great but only if there is equality.

Sara Silverstein: This year’s theme for 2019 for the meeting is Globalization 4.0 and shaping the architecture of the Next Wave of Globalization which is the industrial revolution, the fourth industrial revolution, which you’ve literally wrote a book on. Can you tell me what makes up the fourth industrial revolution?

Klaus Schwab: We are living in a time of multiple technological innovations. I just mentioned artificial intelligence, blockchain, you could add and add, and all those technologies together will fundamentally transform the world, not just business models but economies, society, politics and so on. So when we speak about globalization 4.0, we want to address the global architecture which is needed in this new context of the fourth industrial revolution.

Silverstein: And what was the issue with the last wave of globalization?

Schwab: We see it already now so so many issues like inequality, trade wars, and I could go on and on. The danger is that we deal with those issues, we address those issues with patchwork policies.

 …click on the above link to read the rest of the article…

Steen Jakobsen: The Four Horsemen Portend A Painful Reckoning

Steen Jakobsen: The Four Horsemen Portend A Painful Reckoning

Even the US is now ‘swimming naked’

Steen Jacobsen, Chief Economist and Chief Investment Officer of Saxo Bank sees economic slowdown ahead.

Specifically, his “Four Horseman” indicators: the drivers of economic growth, are all flashing red.

Jacobsen believes that the central banks will continue their liquidity tightening efforts for as long as they can get away with (i.e., until the financial markets start toppling over). In his opinion, they eased way too much for way too long; and the malinvestment and zombification that resulted needs to clear the system — and it will likely do so more violently and painful than the central banks will like:

I like to make things simple. Right now we have the Four Horsemen: the four drivers of the global economy. They are the quantity of money, which is falling; the price of money, which is rising; the price of energy,which is a tax on consumers and is rising; and globalization/productivity, which is falling.

So, if you look at the economy as a black box, I really don’t know what happens inside of it. But I can observe what goes into the black box: it’s these four things.

Globalization / productivity, we know that’s all about Trump, trade war and the likes. It’s not exactly improving; it’s actually worsening.

As for the quantity of money, a lot of people argue with me that the Central Banks are still expanding their balance sheets, but the fact of the matter is that the QT in terms of the U.S has been reducing the Federal Reserve balance sheet. And we have a stealth reduction of the balance sheet in terms of the Bank of Japan. The EBC would love to cut and is publicly committed to doing so. The Bank of England is doing its first hike. So the quantity of money is falling.

…click on the above link to read the rest of the article…

Three Reasons to Fear Another ‘Great War’ Today

Three Reasons to Fear Another ‘Great War’ Today

Still think globalization will bring peace? They thought that in 1914, too. 

Things exploded quickly.     Photographer: J. J. Marshall/Hulton Archive via Getty Images

Last month, I traveled to Vienna, the former seat of the Austro-Hungarian Empire and a fitting place to contemplate the approaching 100th anniversary of the conclusion of World War I.

That conflict began with Austria-Hungary’s declaration of war against Serbia in July 1914, following the assassination of Austro-Hungarian archduke Franz Ferdinand. It ultimately led to more than 15 million deaths, the collapse of four empires, the rise of communism and fascism in some of Europe’s leading states, the emergence and subsequent retreat of America as a global power, and other developments that profoundly altered the course of the 20th century.

World War I was “the deluge … a convulsion of nature,” remarked Britain’s Minister of Munitions David Lloyd George, “an earthquake which is upheaving the very rocks of European life.” Although that conflict ended a century ago, it still offers three crucial lessons that are relevant to our increasingly disordered world today.

First, peace is always more fragile than it seems. In 1914, Europe had not experienced an all-out, continental conflict since the end of the Napoleonic wars a century earlier. Some observers believed that a return to such catastrophic bloodletting had become almost impossible. The British author Norman Angell would immortalize himself by suggesting, just a few years before World War I, that what we would now call globalization had rendered great-power conflict obsolete. War, he argued, had become futile because peace and the growing economic and financial linkages between the major European states were producing so much prosperity.

Angell had good company in the multitude of thinkers who believed that improved communications were knitting humanity ever more tightly together, that international arbitration was making war unnecessary, and that nationalism was being suppressed by newer, more enlightened ideologies and improved forms of international cooperation.

…click on the above link to read the rest of the article…

Olduvai IV: Courage
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Olduvai II: Exodus
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