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This week the world inched fatefully closer to economic apocalypse. All week, the world’s markets have been jumping up and down like a pile driver operated by a speed freak. Of course there’s no way of telling if or when a total cataclysmic crash might take place, but it’s clear that we can no longer discount the possibility. When markets crashed in 2008, much of the world was caught off guard as almost nobody (in the mainstream) dared predict it. If another crash comes now, it may well be (in part) because everyone is expecting it. Doom and gloom prophecies which were once limited to the “fringes” of anarchists, conspiracy theorists and peak-oilers, are now front and centre in much of the business press.

Many people are very angry, especially at Standard & Poor’s for sparking the sell-off by downgrading America’s credit rating. There’s even talk of official inquiries. And while I have no love for S&P, I have to say I’m not convinced. Obama may insist that America is “really” worthy of a AAA rating, but is it? The financial leaders of the US are now learning what it’s like for the rest of us. Credit ratings are set in arbitrary ways by unaccountable institutions, and aren’t always fair. They can destroy your ability to get out of a bad spot, and there’s rarely much you can do about it. Why is a downgrade such a frightening notion? Because for a few decades now, America has run a hefty trade deficit with the rest of the world, and their main export has been money. Their size, might and various post-war treaties granted their dollars special status as a de-facto global currency. If the value of US dollars or bonds comes into question, so does the global economy.

This notion has come up a few times in the last decade, with the most common “solution” involving replacing it with the Euro. This is no longer an option – America may have a bit of a debt crisis on its hands, but the EU now has half a dozen. Nor would Chinese money be a solution, given their current inflation crisis. The ugly truth is that we are now all too integrated for a purely regional crisis.

The other convenient demon for the recent sell-off would be the debt ceiling debate amongst America’s Government. There’s no doubting that this spectacle was shameful, childish and unbelievably irresponsible. Spending two weeks threatening a nation and the globe that you’ll default on your debts over petty policy disputes virtually guarantees that somebody’s going to declare you a “credit risk”. Some have gone so far as to call it a “the Tea Party Downgrade”, though there’s more than enough blame to go around. What the Tea Party did was prove their unparalleled ability as a vocal minority to push this brinksmanship even further to suit their own twisted beliefs. If the recent Wisconsin protests were a demonstration of how little popular support they actually have, the debt ceiling row was a show of how much influence they hold among policymakers.

With the G7 pledging to preserve ‘liquidity’ and the Fed promising not to raise ultra-low interest rates for at least another two years, there’s little doubt that bailouts are still on the agenda. Have we learned nothing from the last three years? Using public money to prop up private failures has only made the situation far worse, engendering “austerity” measures we clearly can’t afford, and generating no end of civil strife.

It’s time to be honest – there is no easy answer here. Speculators, hedge fund traders or irresponsible bankers might not have helped, but this crisis runs much deeper. The fact that the Tea Party or Greek Parliament can bring us this close to a meltdown only goes to show how much pressure is building.

What will come of all this? Consistent market failures demand a system change or face collapse. People have been predicting the collapse of capitalism since at least the time of Marx, and we haven’t seen it yet. Markets have imploded many times, but in the end there’s still governments to bail them out. After the last time, the word “socialism” was thrown around often, but no real spreading of wealth or sharing of resources took place. The largest corporations are now more profitable and consolidated than ever. What’s evolving in America is much like China – a wholesale breakdown of the (thin) boundaries between businesses and government – threatening rise of a more blatant type of technocratic rule. How far would those with power go to keep it? As far as they feel they need to.

If we can’t start talking seriously about alternatives now, then when?

Despite overwhelming odds, Greek Prime Minister Papandreou has managed to win his confidence vote, the EU and IMF have a bailout offer and all that’s needed is to pass the “austerity” measures, which seem to be on track to parliamentary approval, though only by one vote. The final obstacle between Greece and a financial rescue for the Eurozone? The Greeks. Today unions begin the first 48-hour General Strike in decades, and battles have already raged with tear-gas and rocks as protesters converge on Syntagma Square and surround the parliament buildings.

The austerity measures being debated right now in Greek parliament would involve a massive (~$40 billion) sell-off of state assets (like the electrical company), large cuts to wages and workers rights and tax increases. Facing at least 70-80% public opposition, the Greek government is stuck between a rock and a hard place. A default could have nightmarish consequences for the European Union’s entire financial system, but many feel it’s probably unavoidable in the long term.

Protesters have occupied central squares for the last month in many cities including Athens, holding assemblies and speaking out against the government’s cuts. Add to that the last few years of riotous unrest, and the backing of large unions, and these protesters become a force to be reckoned with. Feeling that the debt crisis is a product of the bailouts, which mostly went towards bankers and other powerful interests at public expense, they’re not willing to give up their wages and rights to pay the bill with interest.

This reflects a growing unease, both politically and economically, across the region. With “contagion” fears that lending between European banks would cause other economies in similar situations (like Spain and Portugal) to crash and default as well. Whether you’re an enraged citizen of one of these nations or a financial analyst, it isn’t hard to see the obvious looming problem here: taking loans to bail out debtors who can’t pay their loans only makes the underlying problem worse. So far the world’s economic “recovery” has been very shaky and we can’t just keep bailing out failing economies without putting the entire system at risk. These measures will buy time, but little else.

All eyes will be on Athens for the next few days, and many will be holding their breath. The growing global wave of strikes and protests is no longer simply a curiosity for the world media – it’s now a powerful and prominent player in world affairs.

America faced the loss of over one million homes in 2010, not from an earthquake, flood or tsunami, but from it’s own banking system. Foreclosure filings reached nearly three million, continuing their rise, and are expected to do so through 2011. In Nevada, one in eleven housing units faced a notice.

The causes of the “mortgage meltdown” are common knowledge at this point – careless lending, securitization and a fundamentally unhealthy economy. None of these choices were made by working-class America, nearly all by bankers, investors and government officials. And while those officials were able to “bail out” many failing banks and corporations with public money, very little went to simply stop people from losing their homes.

This is far from surprising for America. These economic shockwaves are hitting an already traumatized population. Though America is the world’s richest nation overall, it also has some of the worst poverty in the industrialized world. These folks are already dealing with one of the sparsest social safety nets in the industrialized world (the only one without public Health Care etc), waves of crippling globalization-related shutdowns (the Rust Belt), the Wal-Mart and suburbanization of their cities and economies and a mind-blowing military budget. Foreclosures are the last thing the American Populace needs.

Any day now, Julian Assange is threatening that the next big Wikileaks release will be from inside a “major American bank”, and claims to evidence of an “ecosystem of corruption”. For those who’ve lost homes since the “meltdown”, these revelations will probably not be taken well.

It’s only a matter of time before North America begins to see the kind of “austerity” – related riots and rebellions which have rocked Europe for the past few months. The blatant greed and corruption shown by governments, banks and corporations can no longer be hidden behind a compliant press – we are far too connected these days. And if this makes life uncomfortable for those who’ve embezzled billions from the public, then they have only themselves to blame.

I, like many activists, am fairly critical of the notion that new technologies are about to arrive which will diffuse the ticking time bombs that are peak oil and climate change. But there’s a much bigger mythical solution which needs even more scorn and contempt: government. Too many activists, academics and pundits have become addicted to seeing government policy as a magic wand which can be used to solve any and all problems. It won’t, and it can’t. A much better analogy would be a magic ring, like something Tolkein would write, which has an evil and devious mind of it’s own.

It’s 2010. Bush is gone. The science on climate change is stronger than ever and runaway oil prices already have wrecked the world economy. Everyone from Al Gore to Alan Greenspan is admitting that we have a very serious problem. And yet the “solutions” we are being offered have not changed. Bigger highways, fossil fuels and a strong auto industry. These policies overshadow in every way any “progress” made in North America towards sustainable government policies.

I’ve already written recently several times about Obama’s bailout extravaganza for the auto industry. But the situation is becoming pretty clear at all levels. Deutsche Bank recently snubbed the US over its failure to pass effective climate change legislation and pledged to focus its $6-7 billion climate investing portfolio on Western Europe and China instead. And locally, though he did pledge billions in his most recent tax break for big corportions to build new rail lines, it was not only overshadowed by a much larger increase in highways, but also isn’t going to come close to meeting the growing maintenance backlog for America’s transit system – now $77.7 billion. This case is especially telling, since people are actually flocking to public transit in droves, passenger miles went from 39.8 billion in 1995 to 55.2 billion in 2008. Unfortunately, without extra funding, this success is putting a huge added strain on transit networks.

Locally, politicians continue to drag their feet. In the name of “giving more stalls to local farmers”, the newly redeveloped Hamilton Farmers Market will have 26 less stalls than it did before. The stadium debate still rages around the merits of a highway-side location, and now threatens to tear up the Aberdeen rail yard on the recommendation of city staff. Now that’s planning for a low-oil future.

The $100 million budget for the Pan-Am games would be really handy at dealing with these problems. It’s a damn shame we’ll never be able to direct that money as it should be spent. But what’s even more unfortunate is that this money is only a drop in the bucket of the billions we hand over annually to deal with these issues, for which we get less and less (school, health care etc) back. The very nature of governments prohibits them from solving these problems because it places them in bed with the corporations which cause it. Canadians can understand this – the entire history of our colonization is one where big, resource-hungry corporations like the Hudson Bay Company ran the land.

The first step in taking effective action is to realise that the government is not going to do it for us.

Chris Wilson at Slate Magazine has put together a beautiful animated map which depicts the economic crisis. Where jobs are gained, he puts a blue dot, and a red one where they’re lost. The bigger the dot, the bigger the loss. The animation runs month-by month, and by the end of the three years (the present), it looks like America has been bombed from space.

How many of these job losses hit people with dependants? How many cut off benefits to a family? And how many of these people will ever be able to get jobs like these again. This isn’t just about boom-and-bust economic cycles, the fabric of our Continent’s economy is changing before our eyes. Manufacturing is disappearing, big industries are consolidating and major resources like oil and fish are vanishing.

What this most recent global meltdown shows is a “perfect storm” where all the factors lined up. It wasn’t just mischievous bankers. It was a world system which has been stretched to the breaking point. And it isn’t over. We may have put seven trillion dollars worth of duct tape on it. Not only did this piss away any savings we might have had, but it only made the basic problem – trillions in bad loans – worse. And it isn’t just money – in real economic situations – production, fishing or farming, one can often pull a lot of money out in the short term by making awful decisions in the long run (like not spending money repairing them), and live-or-die recession situations bring that out. Notice how quickly renewables spending started to dry up when auto companies needed bailing out?

Ten years from now there will be far less oil left. There will be less farmland, less trees, less fish, less ores and coal veins, much less fresh water and far more people. National debts, bolstered by the bailout, will be far more taxing on every dollar we spend. Whether the next “bubble” will “burst” because of high fuel costs, risky investing or the high cost of responding to natural and industrial disasters, it cannot be far off. If there’s one thing that went through my head while visiting New Orleans after Hurricane Katrina, it’s that there’s no way even America’s economy could take that kind of damage more than a handful of times. It isn’t just the cost of responding, or even the repair bill. It’s the fact that the economic systems which support such things have been levelled. To quote one guy on the Greyhound Bus going through Biloxi, “I haven’t seen anything like this since Vietnam”.

Like Katrina, and like the last recession, the worst of this will fall on ordinary people.

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