Tag Archives: Unintended consequences

Funny Things Happen on the Way to “Restoring Financial Stability”, by Charles Hugh Smith

This is not funny “ha-ha.” From Charles Hugh Smith at oftwominds.com:

We can also predict that the next round of instability will be more severe than the previous bout of instability.

Everyone is in favor of “doing whatever it takes” to “restore financial stability” when the house of cards starts swaying, but funny things happen on the way to “Restoring Financial Stability.” Whatever “emergency measures” are rushed into service to “stabilize” an inherently unstable system resolve the immediate problem but opens unseen doors to new sources of instability that eventually trigger another round of systemic instability that must be addressed with more “emergency measures.”

These unintended consequences proliferate as policy extremes are pushed to new extremes, and “emergency measures” become permanent sources of the very instability they were supposed to eliminate.

As @concodanomics recently observed on Twitter: “A major flaw of finance is that it nearly always mutates the very instruments meant to protect investors into crisis-inducing time bombs.”

Another major flaw in finance is the self-serving pressure applied by politically influential players to “enable innovation,” a.k.a. new opportunities for skims and scams. The usual covers for these “innovations” are 1) deregulation (“growth” will result if we let “markets” self-regulate) and 2) technology (generating guaranteed profits by front-running the herd is now technically possible, so let’s make it legal).

Broadening the pool of punters who can be skimmed and scammed is also a favored form of financial “growth” and “innovation.” “Democratizing markets” was the warm and fuzzy cover story for enabling everyone with a mobile phone to dabble in risk-on gambles with margin accounts (cash borrowed against a portfolio of stocks).

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An Analysis of the Covid-19 Response: Weighing up the Threat From the Virus, and the Threat From the Reaction, by Rob Slane

The “cures” to the coronavirus are going to be far worse than the disease. From Rob Slane at ronpaulinstitute.org:

Would you consider the shutting down of an entire national economy for a disease such as the Black Death, which between 1347-1351 killed an estimated 60 percent of the population in the areas where it spread, to be a proportionate response? What about for a virus which carries — at the very most (see below) — a mortality rate of 1.4 percent for those who contract it?Such decisions should be weighed in the balances. In the left-hand side, there is the number of people who could die from the illness, the burden this will place on the health care system and other vital services, and the consequent misery and devastation this will cause to individuals, to families, to businesses, and to society at large. In the right-hand side, there is the possibility of economic collapse, with the mass job losses, destruction of businesses, and extreme poverty this would bring for many.

For something like the Black Death, it is something of a no-brainer. If you don’t shut down everything very quickly, not only will people start dropping dead like flies, but the economy you are attempting to save will soon have nobody to work in it. If you were foolish enough to try to keep your economy running during such a situation, you’d end up with the worst of both worlds: almost no people and almost no economy.

But what about the virus with a 1.4 percent (maximum) mortality rate for those who get it? How do the scales balance out there?

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Italy, the EU, and the Fall of the Roman Empire, by Alastair Crooke

The EU is trying to stop rising nationalism across Europe, but in so doing may accelerate it instead. From Alastair Crooke at strategic-culture.org:

The EU leadership is trying to contain a crisis that is emerging at increasing speed: this challenge comprises the rise of contumacious states (i.e. the UK, Poland, Hungary and Italy), or of defiant, historic ‘cultural blocs’ (i.e. Catalonia) – all of whom are explicitly disenchanted with the notion of some coerced convergence towards a uniform EU-administered ‘order’, with its austere monetary ‘disciplines’. They even dismiss the EU’s claim to be, somehow, a part of a greater civilizational order of moral values.

If, in the post-war era, the EU represented an attempt to escape the Anglo-American hegemony, these new defiant blocks of ‘cultural resurgence’ which seek to situate themselves as interdependent, sovereign ‘spaces’ are, in their turn, an attempt to escape another type of hegemony: that of an EU administrative ‘uniformity’.

To exit this particular European order (which it originally was hoped, would differ from the Anglo-Americanimperii), the EU nevertheless was forced to lean on the latter’s archetypal construct of ‘liberty’ as empire’s justification (now metamorphosed into the EU’s ‘four freedoms’) on which the EU strict ‘uniformities’ (the ‘level-playing-field’, regulation in all aspects of life, tax and economic harmonization) have been hung. The European ‘project’ has become seen, as it were, as something that hollows out distinct and ancient ‘ways-of-being’.

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