Wednesday, March 25, 2009
"The real systemic risk we face isn't from a financial seizure. That risk is mild in comparison to the risk of a widespread collapse in legitimacy."
The Collapse of Legitimacy
John Robb makes the following point at Global Guerrillas.
Wednesday, 25 March 2009
JOURNAL: More on Banksters
I mentioned at the time I wrote this brief, that viral violence targeting the barons of global finance was likely incoming (but that it wasn't here yet). Here's a small addition to that trend line (that builds on the thousands of death threats that have been received). In the UK, vandals hit the home of the former CEO of the Royal Bank of Scotland, 'Sir' Fred Goodwin (he and his family have already fled the country). Windows on the ground floor of the home and his Mercedes S600 were smashed. E-mails from a group claiming the attacks said,
We are angry that rich people, like him, are paying themselves a huge amount of money, and living in luxury, while ordinary people are made unemployed, destitute and homeless. This is a crime. Bank bosses should be jailed. This is just the beginning.
The Real Systemic Risk
This leads me to a broader topic. The real systemic risk we face isn't from a financial seizure. That risk is mild in comparison to the risk of a widespread collapse in legitimacy. Due to excesses (too many to name), legitimacy is rapidly draining from the global financial system and the networked groups that give it their primary loyalty (like Fred above). In recognition of this, nation-states should hold this system at arms length to limit damage to their own legitimacy.
Given the constraints on resources faced by nation-states, a plan that would bulk up legitimacy would focus on reorganizing financial institutions (not bailing them out) and repairing the balance sheets of individual citizens (the only group in the chart to the left that is still loyal to nation-states). That isn't happening and the damage incurred from this mistake will be significant.
NOTE: The other thing that the inset chart tells us is that this crisis is due to debt, overreach, and insolvency. Until the US collectively writes/pays off $20 trillion plus in excess debt, not much will change. Transferring debt from financial firms to the government (as in the Paulson/Geithner plan), only accelerates the decline of nation-states relative to an already dominant global financial/economic system.
Posted by John Robb on Wednesday, 25 March 2009 at 10:44 AM | Permalink | Comments (7) | TrackBack (0)