[permaculture] The Five Stages of Financial Collapse
toby at patternliteracy.com
Sat Mar 1 15:57:45 EST 2008
Harmon Seaver wrote:
Interesting speculations on the nature of collapse, and I think Orlov is
right in that collapse is not a straight drop to the sub-basement of
total chaos, but a progression that can stop at any one of his 5 steps.
That's why I'm not a doomer--there are too many other stable states for
collapse to rest at besides "we're all gonna die."
Orlov describes his work as "conjecture" and it certainly is. It's about
as data-free an essay as I've seen in a long time. He gives no support
for his ideas, no examples except the USSR's collapse, and only
speculation there about the causes. I disagree with him: he says the
command-and-control structure of the USSR allowed it to survive better
than the market economy of the US will. But centralized control
structures are notoriously poor at dealing with rapid change (e.g. FEMA
and Katrina), and I think the USSR merely shows how difficult it is for
an industrial state to collapse fully.
A far better system to deal with rapid change than a centralized one is
a highly distributed network of independent agents, like our economy.
Look at ecosystems; they deal with energy descent all the time. Western
economies are like ecosystems and thus more resilient to chaos than
centralized ones. Look what Russia ended up with when the gov't
collapsed: independent mafia warlords who stabilized it at a high
(though unpleasant) level until the gov't could function again.
I don't think the gubment will bail us out; I think local action and
shifting networks of responsive people will.
Orlov also gets the housing bubble wrong, saying that we're going to
have immense numbers of empty homes. Banks are already letting people
miss long strings of payments on sub-prime mortgages without
foreclosure, since they know getting some eventual mortgage payment is
better than millions of empty houses causing further drop in home prices
as well as a surge in homelessness. In fact, it's homeowners who are now
walking away from their houses into cheaper ones (Thursday's Wall St
Journal, page 1), leaving the banks unhappily stuck with houses worth
less than what is owed. Banks know that in wholesale foreclosure, they
are the big losers.
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