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Report 40 - Collapse of the World Financial System

Collapse of the World Financial System

Why – How – When


By Juan Chamero, aunmas.com Chief Editor, August 5th 2002


Sources: NYT, New York Times,  Progressive.org,;  FAS, Federation of American Scientists; The Education Guardian, from London; AP, El País, BBC from London, Global Policy, Los Angeles Times, Clarín, Carnegie Endowmentfor International Peace, The Miami Herald, Global Policy


Recommended Thread: ¿Se cae el Sistema? (Is the System Collapsing?, Metamorfosis de Estados Unidos (USA Metamorphosis), Unilateralidad y Desestabilización (Unilateralism and Destabilization), El Modelo Político Empresarial – Serie Globalidad - IX (The Corporate Political Model – Global World Series IX)



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We continue with parts emphasizing facts and intentions that perhaps seem collateral but they were always present even hidden by the clamor of the war actions. Now that we are in an impasse, waiting for the next war scenario, we could see those facts and intentions better, without distortion. If we compare the world ex antes September 11th with the World of today it happened like something at planetary scale took place. Every place of our world has been disturbed for bad, every nation, every interest, and every class. In the chaos theory it is accepted that even the light fly of a butterfly could be the cause of a huge meteoric phenomenon but that really accounts because the system perturbed by the butterfly was in an unstable equilibrium. The world changes experimented in so short period is a signal that something crucial and global was unstable, perhaps close to collapsing.


Perhaps we are going to see soon how Iraq will be invaded by USA. That will deepen the potential differences and forces that were dormant. By sure the unilateralism is an intrinsic unstable model and perhaps the voice volume of unheard people got its critical mass, something that we mentioned in the beginning of this series, like the dawn of a new but worldwide French Revolution. Our thesis is that the unilateralism was the nurturing soup for the anomalous explosive growth of a perverse corporate model that if lasting it will transform the human being in a miserable creature. 




Symptoms of decadence

What is our Opinion?, A Degenerative cause-effect circuit

Hope for our Countries, Something more about the External Debt






Symptoms of decadence


We live forced to react faster and faster and accordingly, to think faster and faster, something equivalent to think weaker and weaker. At the edge of its Golden Age the Greeks had time enough to think and so they developed the basis of what is known as the Western style of thinking with its core around Logic, Philosophy and History. Now we are in the edge of some cultural phenomenon, at the end of an uncertain Golden Age of a Technology and Money Realm, but too much urged and pressed, particularly by the mass media, to think well. 


Through those media and from our direct experience we are flooded by oceans of information about social, economic and political facts end events that feeds our anxiety: we intuit that something globally serious is happening, that we are immerse in it but enable to identify it. However, from the Greek Aristotle we inherit the concept of “primal motor”, the first cause, and from Decartes, Rene Cartesius, we inherit the art of think properly in order to discover the primal causes of everything. The Cartesian method invites us to list all the possible symptoms and that is what we are going to make below for illustration purposes. This list is by no means exhaustive.


·         An obstinate Unilateralism: In this case, the customary Foreign Policy of United States of America, now radicalized by the George W. Bush Government;


·         The Terrorism of State policy: The National States, without exceptions all over the world, are each time weaker, trying to counterbalance their weakness strengthening their Police Power over their own people.


·         The Vicious Ambitions: People behave socially more or less uniform concerning ambition. We couldn’t sustain scientifically that for instance the European are more ambitious than Latin Americans. Governments, on the contrary, could be titled as ambitious in some extent and in some opportunities. Sometimes this ambitious is vicious, leading nations to senseless and even inhuman adventures. From time to time appear these types of governments putting in risk the human being if they eventually lead an empire.


·         A World Corporate Model upraises weakening the Nations’ Governments: we’ve being mentioned that we are facing the confrontation between a perverse CPM, Corporate Political Model and the Nations of the world. The dominant “motto” of this model is to produce as much money from money as possible, no matter how. In the past the motto was usually restricted to specific lines of products, like for instance, cars, oil, food, and even to brands but now becomes a dangerous impersonal form of capitalism only tied to money, no matter how is it generated, and the leaders of this model are a-moral persons specially trained to make money from money and even to make money from virtual and inexistent money.


·         The irrational consumption of non-renewable resources: That’s a fact along the human history. The man as an out-of-scale depredator, thinking selfishly and short ranged, for him, not for the generations to come. Add this characteristic to the occurrence of any of the symptoms listed stir it well and wait.


·         The irrational industrial pollution: Closely related to the Corporate Political Model strategy. Don’t forget that pollution was always one of the biggest massive exterminator. The CPM model, as an anonym institution till now, ignores these restrictions to its commitments but negotiates clean and dirty regions with the nations where operates. However pollution is not manageable and could revert its killing direction and actions at any moment.


·         The intolerance: This is a human trait that was the primal motor of many disasters. Segregation and racism are some of its outbreaks. Intolerance is also exacerbated by intrusions. Secure and healthy countries are scarce. Technology generates massive unemployment and massive unemployment in its turn generates emigration to somewhere and that to immigration, unexpected and illegal. It exacerbates the intolerance in the highly developed countries, and in great extent in the United States of America. Competition exacerbates also intolerance: If “they” are different but they are not competing with us they are considered interesting people but if “they” compete with us they become competitors, then unfair competitors and lastly enemies.


·         The technology: The impressive advance of the technology washing away still useful and necessary productive facilities. Oh the man, always making tools to compete and destruction!. Who is fueling so frenetically this process?. Men or money?. The adequate cultural assimilation of a new technology takes its time and this time is measured in cultural times, in generational units of time. The assimilation time of a given technology is not only the time spent to master it by pioneer’s groups. It must cover the whole assimilation by the society as a whole including the alleviation of its negative effects, like for instance unemployment.


·         The generalized corruption: Cause and effect at the same time. Saint Sor Inés de la Cruz, used to say the following metaphor: “Who sin more?. The one who sins for the payment or the one who pays to sin?. I’m prone to opt by the second, the one that have the means to make others sin. One misconception was that corruption had to do with poverty and dependence, that is, the poor people and the slaves tend to be more corrupt than the rich and free. Wrong!. Corruption is a bad human trait exacerbated when human values and principles weaken, being either king or slave.


·         The collapse of the Education System: As a consequence of the irrational intrusion, of the technology and of market principles, in our lives, education standards are each day lower. The education level in our Latin American countries is far from ideal but the education in the “First World” is also far from ideal and I dare to say that from a humanistic point of view is inferior. Children in the State of Florida, USA, have serious problem to read (in English). The professional market is overflowing with undergraduate and graduated that obtained their titles and certifications by answering QUESTs. The bookshops sold more How-to-get-high in QUESTs guides than books written to learn seriously about the subjects dealt in those QUEST’s. The universities, even the most prestigious, have a suspicious high level of graduated people, for instance higher than 95%. It seems that the system is well suited to train people fast to cope with a predetermined business model. Universities are no more academic institutions but Corporations.


·         The impossible to cancel External Debt: we have discussed this crucial subject many times in these pages. We invite you to see External Debt Guide.  What are the creditors going to do with the debtors is the big question. Have them the power to seizure their national assets, even their sacred ones that conform their sovereignty?. This problem will be elucidated soon, perhaps before the end of this year comes.


·         The Unemployment Plague: No doubt, a social and economic consequence in itself and the main cause of the misery of the nations. Technology, when forced by the economic dominant forces, is the main cause of unemployment. Efficiency problems of working technologies could always be easily solved with an appropriate education, so if industrial sectors collapse massively you must look for the technology as its main cause.



And many other factors that are more or less dependent of some of those listed.





What is our Opinion?

A Degenerative cause-effect circuit



In our point of view, the primal motor of the actual global crisis is the Corporate Political Model. The CPM uses the technology as the battering ram to destroy its enemies. An enemy is someone that somehow makes difficult the easy make money running of the model.


è The technology generates the massive unemployment.

è The massive unemployment makes impossible to cancel debts at domestic and international level.

è In order to survive, the model needs a Police Power to threat and to enforce debtors but as it doesn’t have YET its own Police Power it makes use of the existent Police Power managed by the nations.

è They first stimulated corruption all over the world to sell money, yes, to sell credits to our countries, no matter what for except to make rich some local negotiators.

è When the debt was impressive and at the same time the technology contributed to squeeze the debtors economies, destroying their rather old industrial infrastructures and causing massive unemployment they entered in a second strategic step to survive: to convince the most powerful nations that they must help them in a “salvific” world wide project


Corollary: They succeed but only in the first round of the battle. They convince the USA government to use its out-of-scale Police Power to enforce rebel debtors and to make them work straight right. But we live in a marvelous casuistic universe of actions and reactions:


è the debtor’s crisis drives a generalized low consumption and

è low consumption in economies that live based almost exclusively on it like USA start to feel the effects. Today, on Sunday August 3 year 2002, newspapers announced the economy is freezing.

è These effects exacerbates the intolerance, forcing immigrants to go back to their countries, empowering more both ends of drama:

è worsening the economy of the receptor country that surely is a poor country or in a state of poverty and at the same time shrinking more the economy of the host country: less consumers and absence of manpower in the lower level labor tasks.

è Some clever people reacts within those privileged countries, like USA and some European countries, discussing and presenting to the public opinion elementary contradictions that put in evidence the bubble of the big Corporations and Financial Organizations using the power of the State in their own benefit against the interests of the nations involved.

è That reaction produce the cascade of Corporate scandals that reach the Official spheres.


Now we are seeing in scene the first frictions among the “Sheriff”, the owners of the Saloon, the major local landowners, and the Commission of Honorable Citizens,  a classic in many Far West pictures. The Sheriff was pushed to exterminate the bad guys but now the Commission of Honorable Citizens has some doubts about everything. Let’ see then what happen in the third chapter.




Hope for our Countries

Something more about the External Debt



Really the External Debt “bubble” is a global menace. Let’s how this incredible paradox works today. In recent declarations, the controverter USA Secretary of Treasure Mr. Paul O’Neill has issued hasty declarations about the politician corruption in our debtor countries adding that the USA people (via taxes) is not going to nurture our corruption anymore, getting fat Suisse accounts allegedly pertaining to our corrupt political class. Even some of our politicians agree with that comment. Perhaps many people believe that the “survival” funds delivered by the International Monetary Fund, colloquially known in our countries as FMI (efeemei) go to those accounts. Perhaps only a small bit of it, never more than 1 to 3 percent if bribery existed. Those amounts, like the 15,000 millions and 14,000 millions that Brazil and Argentina are eagerly expecting respectively to “keep-save-for-a-while” their economies, are never going to enter in those countries, not even a single dollar.


Those terrific amounts are going to maintain alive-for-a-while the big financial institutions of the world, national, supranational or private. This financial bubble process resembling the well known “dollar’s chains” are destined to collapse at any moment. They fatally collapse at the moment someone says “no”. At one end of the chain are the financial institutions that now are well aware of what is going to happen sooner or later (less than on year from now) and when faced to one of the two possible alternatives: the belligerent, like the one driven by USA through its Secretary of Treasure, and the permissive, stated as giving more credit limited only to cancel their services (financial services). They opt by the second in the hope to last a little while more!. Waiting for what?, nobody knows but it is a breathing space at least!. (Notwithstanding they are also humans).


Both strategies will lead to the same point: the inevitable collapse of the World Financial System so big is the bubble!. Its volume is nearly 1,500,000,000,000 dollars, even a giant amount for USA, the greatest economy of the world.


When a system is near collapse it delivers a myriad of alerts and warning and is always preceded by a progressive cascade of symptoms, namely.


è USA is now aware its economy is in crisis. It was announced few days ago;

è The Argentine “corralito” syndrome is spreading to neighbors;

è The European Union, that was euphoric just a few days ago, with the worth value of its “euro” beating the dollar value, starts now to think how the bubble collapse will affect them;

è The world belligerence is significantly increasing all over the world. USA and UK, are setting traps to take control over the main strategic commodities of the world, particularly oil;

è The rest of the world is going to do pretty much the same joining forces in a “Second World Option”;



Corollary: In the interim, wise countries, wise people must keep the calm, making a serious balance of their real assets, and try to make them “physically” productive, not virtually, because the time of bubbling virtually economy will come to an end sooner or later. The only real things are, now and forever:


·                People, particularly people skills

·                Technology

·                Land and its commodities, being the space in itself a highly valuable strategic commodity. Water, particularly drinking water is becoming a very valuable commodity


For instance, Argentina and Brazil will have no problem in any conceivable future scenario because they have skilled people, a reasonable “second level” technology supported by a reasonable infrastructure and they are endowed by plenty of land and essential commodities. What else!.


Note 1: The first level technology will enter into crisis as long as the financial collapse starts because its strong dependence of financing.


Note 2 : This system is having signs of instability in all fronts of the economic activity. We were talking about the effects in our countries but within the privileged societies that allegedly benefit from the model begun to appear serious problems, specially when related to the great monetary domestic circuits, namely: insurance and health industries. In the USA both services are extremely expensive, so much that they are paralyzing the economy. USA people have access to the best medicines and to the best health technology. However the average attention is considered from medium to bad. A Doctor consult could cost you from a minimum of 100$ to 5,000$ but the Doctor’s insurance cover wrong praxis cases costs from a minimum of 20,000$ to 500,000$ per month!. For that reason you may find Doctors that refuse to attend some cases like a suspected difficult baby’s delivery.


Note 3: In the last two years we saw what happened in the Internet realm where for instance a startup of 30,000$, get inflated by the system attracting investor for 2,000 million dollar worth and now, the figures goes as down as zero dollar, talking of the same project that had a 30,000$ startup two years ago!. Take a look to this anomaly: from 30,000 to 2,000,000,000 and then go back to 0. All these examples form part of the mentioned bubble of the perverse CPM






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