Total System Failure Will Give Rise To New Economy

| Educate!

Above photo: High-speed electric train. Wikipedia.

Covid-19 driven collapse of global supply chains, demand and mobility will painfully spawn next great tech-led economic models.

Nobody, anywhere, could have predicted what we are now witnessing: in a matter of only a few weeks the accumulated collapse of global supply chains, aggregate demand, consumption, investment, exports, mobility.

Nobody is betting on an L-shaped recovery anymore – not to mention a V-shaped one. Any projection of global gross domestic product (GDP) in 2020 gets into falling-off-a-cliff territory.

In industrialized economies, where roughly 70% of the workforce is in services, countless businesses in myriad industries will fail in a rolling financial collapse that will eclipse the Great Depression.

That spans the whole spectrum of possibly 47 million US workers soon to be laid off – with the unemployment rate skyrocketing to 32% – all the way to Oxfam’s warning that by the time the pandemic is over half of the world’s population of 7.8 billion people could be living in poverty.

According to the World Trade Organization’s (WTO) most optimistic 2020 scenario – certainly to become outdated before the end of Spring – global trade would shrink by 13%. A more realistic and gloomier WTO scenario sees global trade plunging by 32%.

What we are witnessing is not only a massive globalization short circuit: it’s a cerebral shock extended to three billion hyperconnected, simultaneously confined people. Their bodies may be blocked, but they are electromagnetic beings and their brains keep working – with possible, unforeseen political and other consequences.

Soon we will be facing three major, interlocking debates: the management (in many cases appalling) of the crisis; the search for future models; and the reconfiguration of the world-system.

This is just a first approach in what should be seen as a do-or-die cognitive competition.

Particle accelerator

Sound analyses of what could be the next economic model are already popping up. As background, a really serious debunking of all (dying) neoliberalism development myths can be seen here.

Yes, a new economic model should be revolving around these axes: AI computing; automated manufacturing; solar and wind energy; high-speed 5G-driven data transfer; and nanotechnology.

China, Japan, South Korea and Taiwan are very well positioned for what’s ahead, as well as selected European latitudes.

Plamen Tonchev, head of the Asia unit at the Institute of International Economic Relations in Athens, Greece, points to the possible reorganization – short term – of Belt and Road Initiative projects, privileging investment in energy, export of solar panels, 5G networks and the Health Silk Road.

Covid-19 is like a particle accelerator, consolidating tendencies that were already developing. China had already demonstrated for the whole planet to see that economic development under a control system has nothing to do with Western liberal democracy.

On the pandemic, China demonstrated – also for the whole planet to see – that containment of Covid-19 can be accomplished by imposing controls the West derided as “draconian” and “authoritarian,” coupled with a strategic scientific approach characerized by a profusion of test kits, protection equipment, ventilators and experimental treatments.

This is already translating into incalculable soft power which will be exercised along the Health Silk Road. Trends seem to point to China as strategically reinforced all along the spectrum, especially in the Global South. China is playing go, weiqi. Stones will be taken from the geopolitical board.

System failure welcomed?

In contrast, Western banking and finance scenarios could not be gloomier. As a Britain-centric analysis argues, “It is not just Europe. Banks may not be strong enough to fulfill their new role as saviors in any part of the world, including the US, China and Japan. None of the major lending systems were ever stress-tested for an economic deep freeze lasting months.”

So “the global financial system will crack under the strain,” with a by now quite possible “pandemic shutdown lasting more than three months” capable of causing  “economic and financial ‘system failure.’”

As system failures go, nothing remotely approaches the possibility of a quadrillion dollar derivative implosion, a real nuclear issue.

Capital One is number 11 on the list of the largest banks in the US by assets. They are already in deep trouble on their derivative exposures. New York sources say Capital One made a terrible trade, betting via derivatives that oil would not plunge to where it is now at 17-year lows.

Mega-pressure is on all those Wall Street outfits that gave oil companies the equivalent of puts on all their oil production at prices above $50 a barrel. These puts have now come due – and the strain on the Wall Street houses and US banks will become unbearable.

The anticipated Friday oil deal won’t alter anything: oil will stay around $20 per barrel, $25 max.

This is just the beginning and is bound to get much worse. Imagine most of US industry being shut down. Corporations – like Boeing, for instance – are going to go bankrupt. Bank loans to those corporations will be wiped out. As those loans are wiped out, the banks are going to get into major trouble.

Derivative to the max

Wall Street, totally linked to the derivative markets, will feel the pressure of the collapsing American economy. The Fed bailout of Wall Street will start coming apart. Talk about a nuclear chain reaction.

In a nutshell: The Fed has lost control of the money supply in the US. Banks can now create unlimited credit from their base and that sets up the US for potential hyperinflation if the money supply grows non-stop and production collapses, as it is collapsing right now because the economy is in shutdown mode.

If derivatives start to implode, the only solution for all major banks in the world will be immediate nationalization, much to the ire of the Goddess of the Market. Deutsche Bank, also in major trouble, has a 7 trillion euro derivatives exposure, twice the annual GDP of Germany.

No wonder New York business circles are absolutely terrified. They insist that if the US does not immediately go back to work, and if these possibly quadrillions of dollars of derivatives start to rapidly implode, the economic crises that will unfold will create a collapse of the magnitude of which has not been witnessed in history, with incalculable consequences.

Or perhaps this will be just the larger-than-life spark to start a new economy.

Pepe Escobar is correspondent-at-large at Asia Times. His latest book is 2030. Follow him on Facebook.

  • voza0db

    Seems CLEAR that the Secular Ruling Families & Billionaires & Jesters FOUND the perfect way to tackle “MAN MADE CLIMATE CHANGE”.

    Put at least half the Global Herd in poverty or absolute misery, if they complain… just kill.

    The reduction on the SIZE of the Herd will result in a BETTER Planet for them to live on, less stress caused by such a huge Herd, and their Life can resume for another couple of centuries without the 7.8 billion THREAT.

    FUNNY PART, they are using a weak flu virus to PERFORM THE TASK!

  • kjf4

    My wife was reading a story today on a german news site. It talked about the new coming order. The information was coming from the”main shark tank” guy. He talked about climate change and how this “virus” will positively impact the world… everything will be “local” and less out

  • voza0db

    Does that think I, and others, are just spreading conspiracy theories are the same ones that believe that a weak flu virus is going to KILL US ALL!

    I’ve been attentive to most of the events and meetings and tech developments/test/implementation for around 15 to 20 years… And it seems that today tech is ripe to implement most of the Great Ideas the SRF&B&J have to launch their dream: The Global Digital Herd Control.

    And they will succeed, because my fellow slaves – Herd members – are really Ignorant and Irresponsible.

  • rgaura

    Mr Escobar is usually insightful. His connection of 5G and the Health Silk Road is really incomprehensible. Wifi is known to have serious and cumulative health effects. 5G, especially 60ghz is a biological nightmare. The areas hit hardest by the pandemic have been areas with 5g rollouts. The internet of things is not biologically friendly. I would much rather a cabled internet of living systems. See Devra Davis tonight on Zen Honeycutt´s site, Moms Across America. It will be a zoom presentation 8pm EST.

  • Nylene13

    We need to change the way we live. Local, small worker owned, food co/ops, farmers markets and backyard gardens.

    And stop killing animals to eat. “Wet Markets” –
    Slaughterhouses are what started this epidemic.

  • mwildfire

    I agree. Whether 5G has anything to do with COVID19 or not, it’s both a health risk to the entire planet, and a platform for surveillance and war–we have more than enough of that already. We DON’T NEED IT. Nanotechnology is also a matter of monkeying around with poorly understood things, driven by an obsessive profit motive. What we really need is a termination of finance capital as the master of our economy, more nationalization. more localization, essentially a Green New Deal. Key is a serious program to transition our agricultural sector to , polycultural, regenerative farms

  • rgaura

    Yes! I’m planting fruit trees this month!

  • chetdude

    A 22% global death outcome (so far) from Covid-19 hardly meets any reasonable definition as a “weak flu virus”…

    We’re going to end up back in the Great Depression — where those Communities who did the best were the ones that were most localized and prepared to sustain themselves…

  • voza0db

    Do you really want to waste time with that moronic number 22%?!

    We are not going to end up back in the Great Depression because of COVID-19.

  • Thom Rip

    You’ve definitely touched on part of the agenda here..(.personal note),…read that Kevin Zeese?

  • Jon

    Thank you for this one major deficiency in an otherwise fine article. I just got a router guard Faraday cage that just fits,and reduces radiation about 90%. A splendid book on this entire domain is “The non-Tinfoil Guide to EMFs.” Just finished reading it! 5G is a terrorist delight!

  • Jon

    mwildfire, See my comment above to rgaura.

  • Jon

    Ever the cynic, but clearly knowledgeable.

  • voza0db

    C’mon Jon! We are living in Cynic and Hypocritical Times… I need to use the language code that reflects it, or else I’m being just as cynic as the rest.

  • voza0db

    The Plan that is being implement (with the help of China) goes way beyond the reduction of the Herd Size, and the allegedly new virus, is not the agent for that reduction…

    As for Kevin, he only agrees with stuff written by licensed dudes and gals!

  • mwildfire

    Good. It’s important to think of the longer term as well as short term. I hope you’ve taken time to do it right, figure out what will thrive in your locale, chosen mutually pollinating varieties, put them on decent soil ideally with lower ground for cold air this time of year to flow down into, appropriate distance apart. But I find the most RELIABLE fruit is strawberries, which have only one year’s lead time to establish. I have strawberries, raspberries (both in my garden) blackberries, apples, pears, peaches, one little fig, a pair of goumi bushes, one sour cherry, blueberries, many wild persimmons- some grafted to a nearly seedless bigger-fruited variety…

  • Jon

    ” I need to use the language code that reflects it,” No, actually you don’t. You consistently throw a wet blanket over attempts to generate and give encouragement to resistance. Why is that?

  • Thom Rip

    I gotcha about the virus not being the agent, but currently I’d describe it as a vehicle,or toool.
    I’m curious…licensed dudes and gals by what or who?

  • voza0db

    It’s a very bad tool… Only kills people with already weak immune systems or other chronic diseases. Until today I’ve read zero evidence that it can kill an HEALTHY subject.

    Kevin has a real problem with my comments, and since he believes that a license is required to talk about Health, Immune System, Virus, Statistics, Data and all the rest of it… if you aren’t a debt licensed dude or gal and if your comment goes against Kevin’s ideas and/or illusions he just ignores it and tries to downgrade you.

  • chetdude

    Apparently, we are just about there…

  • voza0db

    Yes… but that is not because of SARS-Cov-2!

  • voza0db

    What resistance are you referring to?

  • chetdude

    Not entirely — the house of cards was crumbling anyway — propped up only by immense quantities of debt, mostly personal debt — and Covid-19 gave it a big shove….

  • voza0db

    Not even 0,00001%…

    Crumbling indeed that’s why a GOOD FEAR & PANIC EVENT is needed to entertain the Herd while TRILLIONS flow to the same old good folks!

    Personal debt is a drop of water in an OCEAN OF CORPORATE & FINANCIAL MARKETS & GOVERNMENT debt.

  • Thom Rip

    Thanks muchly for your clarification. That was the impression I got from Kevins replies..and him (rather surprisingly) not agreeing with anything. It’s a relief of sorts to hear your words of affirmation.
    I was taken by your comments as they much more align with mine. There’s many facets of control and subjugation with this “plan-demic” assault and I’m hoping for more non-cooperation,

  • Jon

    The plethora of organizations which, no matter how ineffective and silo-centered they may be, are attempting to sound the alarm and confront the Empire, various whistle-blowers who courageously come forth, and assorted writers who expose the criminality of the ruling class. Your persistent disdain is counter-productive in that regard. Efforts to strengthen the effort will be appreciated.

  • voza0db

    You never saw me putting down whistle-blowers, in FACT those for me are the model for other modern dumb slaves. I support their actions ALWAYS.

    As for the organizations… I already had this discussion with another fellow slave!

    So I’ll write less, because I know I’m writing to the recycling bin… That plethora of organizations can, in very few and specific cases be successful, but this is not enough to CAUSE CHANGE to the SUB-SYSTEMS much less to the MAIN SYSTEM.
    So, it’s a positive action to remind them they their blindness to see that their work and actions are achieving anything, besides offering them a job/occupation and some felling of auto induced self-esteem. In many cases they are just pretending that they want REAL CHANGE but when confronted with the hard questions of what that means, they run away and reject to answer them, a clear sign of what they really are.

  • voza0db

    The problem is, once again, quantity! It’s billions against millions…

    When a Herd of Billions starts to Run in Panic Mode, just step aside, watch the show and try to do what you can to avoid the most negative consequences that the Herd is causing.

  • Thom Rip

    It’s not actually numbers that have to be overcome…often it can happen from the awakened “few”.Perhaps you’re also familiar with the 100th monkey philosophy. As soon as a certain number reach awareness, the rest catch on from the “field” like magic. But yes, avoiding the collateral damage of this, as best I can..tough.

  • voza0db

    That sounds like the theory of the butterfly wing effect!

    Can you stop a TSUNAMI with a bucket of water?!

    Umans only reach a sort of awareness when something directly causes harm or loss to each one of them in a individual level.

    This is why we NEVER cared about the 7,000,000 premature annual deaths due to AIR POLLUTION. Just a small factual example. Yet millions if not billions of umans are aware of Air Pollution!

  • Thom Rip

    Accurate perception for sure. Folks haven’t done much about killer air pollution and yes they don’t change unless affected personally.I do think we’re enduring a thing right now where many are affected personally…and hoards are being “pushed”. Many will comply and I’m hoping “enough” (for my theory) will not.

  • voza0db

    I’m not so sure… The “many” want to return to the previous situation and if for that the Jesters tell them that they need to do A, B and C, they will comply! After all the many have complied with ALL the moronic stuff being ordered since the start of this flu season…

  • Thom Rip

    Yea…we all want that return to “normal” and it’s such a carrot. BUT that surely ain’t happening. The plan will likely be a gentle ease in to a very different reality but with total monitoring and control measures with only a resemblance of freedom remaining…but survival may be possible. The rest, if not dead, will be on the fringe finding sanctuary somewhere. My feeling remains tho, the delusion will be exposed (Thanks Edmund-so true)