Cascading failure was a real possibility in 2007/2008. It is less likely now.
I do not doubt that a contingency plan exists, never admitted and never discussed, for the maintenance of civil order and a nationalised payments-and-savings system administered by the staff of former banks.
I have no idea how such a regime would deal with institutional creditors and large-scale bondholders: in many ways, a 'year zero' nationalisation without compensation would be better than taking on a liability to this class of investors which exceeds the national income by orders of magnitude.
The question ought to be: "Where do we draw the line?" and a brutal cost-benefit analysis.
In reality - or realpolitik - it is necessary to *say* that we, as a nation, will always support our banks, always honour our debts, and always remain a member of 'the club' - and if that requires us to sell off every nut and bolt and brick and every acre of our country, and to sacrifice half our citizens for the sale of their internal organs, and to consign the remainder to a lingering death by starvation and disease, then "So be it".
I worry that some politicians - and most one-percenters - actually believe this fiscally-necessary fiction, or are prepared to go a very long way towards implementing it; presumably, they expect to escape the consequences by flying out to Switzerland in their private jets with their money.
The reality is that there is no 'Switzerland' if a G7 economy falls into an irrecoverable cascade of failing banks; and a successor state will impose a year-zero national-banking regime on a cascading collapse... Sometime after the hospitals run out of hard cash for pharmaceuticals - as they have in Greece - and petrol rationing is introduced, and well before the point at which we start questioning the army's willingness to take the necessary measures to restore civil order.
If Barclays (and their fellow-fraudsters) had failed in their fictions and precipitated a cascading collapse, we might well be in that very situation now. I don't believe that any of our elected leaders would've had the nerve to nationalise immediately and impose order on the retail banking system, while letting the bondholders - and, eventually, our creditors for the national debt - take the necessary 'haircut'.
As it is, the halfway-house of bleeding out the real economy to keep the banks 'afloat' may well fail, and slowly slide us into something that resembles a disorderly collapse - or the sado-monetarist dystopia, organ donors and all. It *probably* won't fail: but Barclays' are finished and I'd rather see them seized by the state, keeping the assets in use in the domestic economy, than swallowed up in litigation in America.
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branchandroot
no subject
Date: 2012-06-28 07:34 pm (UTC)I do not doubt that a contingency plan exists, never admitted and never discussed, for the maintenance of civil order and a nationalised payments-and-savings system administered by the staff of former banks.
I have no idea how such a regime would deal with institutional creditors and large-scale bondholders: in many ways, a 'year zero' nationalisation without compensation would be better than taking on a liability to this class of investors which exceeds the national income by orders of magnitude.
The question ought to be: "Where do we draw the line?" and a brutal cost-benefit analysis.
In reality - or realpolitik - it is necessary to *say* that we, as a nation, will always support our banks, always honour our debts, and always remain a member of 'the club' - and if that requires us to sell off every nut and bolt and brick and every acre of our country, and to sacrifice half our citizens for the sale of their internal organs, and to consign the remainder to a lingering death by starvation and disease, then "So be it".
I worry that some politicians - and most one-percenters - actually believe this fiscally-necessary fiction, or are prepared to go a very long way towards implementing it; presumably, they expect to escape the consequences by flying out to Switzerland in their private jets with their money.
The reality is that there is no 'Switzerland' if a G7 economy falls into an irrecoverable cascade of failing banks; and a successor state will impose a year-zero national-banking regime on a cascading collapse... Sometime after the hospitals run out of hard cash for pharmaceuticals - as they have in Greece - and petrol rationing is introduced, and well before the point at which we start questioning the army's willingness to take the necessary measures to restore civil order.
If Barclays (and their fellow-fraudsters) had failed in their fictions and precipitated a cascading collapse, we might well be in that very situation now. I don't believe that any of our elected leaders would've had the nerve to nationalise immediately and impose order on the retail banking system, while letting the bondholders - and, eventually, our creditors for the national debt - take the necessary 'haircut'.
As it is, the halfway-house of bleeding out the real economy to keep the banks 'afloat' may well fail, and slowly slide us into something that resembles a disorderly collapse - or the sado-monetarist dystopia, organ donors and all. It *probably* won't fail: but Barclays' are finished and I'd rather see them seized by the state, keeping the assets in use in the domestic economy, than swallowed up in litigation in America.