[permaculture] The Five Stages of Financial Collapse

Harmon Seaver hseaver at gmail.com
Sun Mar 2 11:30:06 EST 2008

Toby Hemenway wrote:
> Harmon Seaver wrote:
>> http://cluborlov.blogspot.com/2008/02/five-stages-of-collapse.html
> 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."

   Right, the US probably will stop at stage 2, although stage 3 is
entirely possible.

> 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. 

   You need to read his more comprehensive work on the USSR's collapse
and conditions in Russia.

> 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.

  See the above. It wasn't that centralized control stopped the
collapse, but that life in Russia was very different, obviously, from
life in the US. When things got bad, nobody got evicted from their
apartments or homes because they couldn't pay the rent. People didn't
get fired or laid-off from their jobs, they just didn't get paid, or got
paid very irregularly. Very few had cars, public transportation was good
and kept running. These were very powerful mitigating factors -- and the
US situation is almost exactly opposite.
  So everybody had a place to live, families were close together and
nearby and helped one another. Everybody knew their neighbors very well.
People were still able to go to their jobs and make use of the
facilities to earn money on the blackmarket. Say you worked in a machine
shop, for example, even though you weren't getting paid, you could go
their and make things on the machinery that you could sell. Or what
eventually happened was that a lot of the workplaces were gutted by the
workers who sold the furniture, equipment, even stripping the wiring and
plumbing to sell for scrap.
   That all made a great difference. Compare that to the US -- here, if
you can't pay the rent or house payment, you are out on the street very
quickly. Laid off from the job -- you certainly aren't allowed back on
site. Extended families are far apart, and very few people even know
their neighbors, let alone have close, working relationships with them.

> 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.
    And that could very easily happen here. Or worse. We just watched
"City of God" the other night, about life in the slums of Brazil. Watch
the documentary on the DVD as well. Recent news stories tell of gangs in
Brazil not just resisting police, but actually attacking and overrunning
police stations. Then take a close look at what is happening in the
inner cities in the US.

> 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.

   I don't think he gets it wrong. We already have close to a million
empty homes, and the subprime mess is just getting started.

> 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.

   Then why are they the ones who worked the hardest to stop the recent
bill in Congress to try to alleviate the problem? Not that I think that
bill made any sense -- the gov't can't come in and modify private
contracts, that would cause total chaos and flood the courts with lawsuits.

Harmon Seaver

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