Fantasyland - flickr creative commons - PincessAshley

I like to see and read the entries from Resilient Communities and Democracy at Work and other similar sites.  Both offer some good information.

And Richard Wolff is spot on in his evaluation of how we got to where we are in most respects.

I feel however that nearly all these ideas leave out one one basic calculation and that is the ever increasing population.  The continued strain we are putting on the resources that we have, which are finite. Worse yet climate change is even now diminishing our available resources with longer and more sever droughts and interrupted growing seasons.

When this country or continent was being settled it was a capitalist’s and serf’s wet dream come true. Land as far as the eye see. There was some place one could grown just about anything or raise cattle or what not. At the beginning of the industrial revolution, resources were there pretty much for the taking. Rivers could be dammed for energy and coal – and later oil – were abundant. Iron and copper and zinc and on and on.

Fresh clean water and air and what not.  But in a little over 200 years this has ceased to be the case. Our oil fields have gone dry. Coal is now too dirty to use in any scale and it’s mining pollutes the rivers and streams.  Any river that could be dammed for energy has already  been.   Any land that is good growing is spoken for. That which is left is rocky or desert or both.

But even this presentation tends to be a bit on the optimistic side as it does not truly take into account the effect of population growth and climate change.   Nor does it take into account the fact humans rarely behave in a reasonable and rational manner when faced with their backs increasingly against the wall.

Ives Smith at Naked Capitalism  shows how the increasing student debt is even now dragging on the economy as new graduates are finding it more and more difficult – if not impossible – find employment.

And yet most – if not nearly everyone – seems to think we can some how avoid the inevitable or make it somehow less painful.   I see this as highly unlikely as long was we insist on growth in any area. And stopping growth in population seems to be the one area nobody wants to deal with. Yet it is the one area that needs to be dealt with the most.  As long as humans insist on creating more humans, it simply is not possible to have a sustainable future that is not some dystopic hell.

Creature From The Back Lagoon - flickr Boogeyman13

So why is it that tiny little Cyprus and the their banks are causing such consternation and high blood pressure over in Europe and why should we care ? Richard Wolff gives a good explanation with this audio clip from an interview on KPFA that I grabbed and uploaded to my web site. You can hear the whole program here if you like.

Here is the long and the short of it. The Eurozone was the outgrowth of The Common Market or EEC – European Economic Community.

The European Economic Community (EEC) was an international organisation created by the Treaty of Rome of 1957.^[1] aIts aim was to bring about economic integration, including a common market, among its six founding members: Belgium, France, Italy, Luxembourg, the Netherlands and West Germany. The EEC was also known as the Common Market in the English-speaking world and sometimes referred to as the European Community even before it was officially renamed as such in 1993.

It gained a common set of institutions along with the European Coal and Steel Community (ECSC) and the European Atomic Energy Community (EURATOM) as one of the European Communities under the 1965 Merger Treaty (Treaty of Brussels).

Upon the entry into force of the Maastricht Treaty in 1993, the EEC was renamed the European Community (EC) to reflect that it covered a wider range of policy. This was also when the three European Communities, including the EC, were collectively made to constitute the first of the three pillars of the European Union (EU), which the treaty also founded. The EC existed in this form until it was abolished by the 2009 Treaty of Lisbon, which merged the EU’s former pillars and provided that the EU would “replace and succeed the European Community.”

Whew. That’s is essentially how it began. To allow trade between the various countries that made it up to proceed with few hindrances and eventually to have a common currency. Sounds good in theory but it has a number of flaws. For one there is a central bank but no central government behind it. It has no real power except to print money. It cannot set policy of the member states.  Nor can it set the policies of theses states banks. The states themselves remain autonomous.  When the single currency was brought forth, it was – more or less – to replace each states currency on a one for one basis, even if the exchange rate at the times was wildly different.

All of this was in and of itself a prescription for disaster.  As we all know the exuberance and risk taking by the banks both here and in Europe built up mounds of debt. Debt that eventually came due and the debtors could not pay.

So why all this fuss over Cyprus banks ? They could not be THAT big…or could they.  Well as a matter of fact and as Richard Wolff explains in the interview they are. Far bigger that this tiny country with only tourism and some maritime shipping would ever generate on it’s own.

Read the rest of this entry →

Hunger March - flickr/wikimedia commons

My old education institution in Florida – The Univ. Of Central Florida that was originally called Florida Technological Univ. – has had it’s own brush with a plot for mass violence.  The person who was plotting this however committed suicide before carrying it out.   Thought he did have the required implements of destruction.

UCF police said they received a fire alarm call around 12:20 a.m. As they responded to that call, police then received a 911 call reporting a man with a gun.

When police arrived, they found a student with what appeared to be a self-inflicted gunshot wound. They also found a bag of improvised explosive devices, along with a handgun and an assault weapon. - Central Florida News 13

We may never really know the motivations behind this individual or his actions and proposed actions but it’s safe bet is was some personal problem or agenda that drove him to it.

There a those who like to see such situations as some idealistic political and/or religious or some other kind of plot. In most cases those who are involved are just people  who feel they have been pushed too far and are generally just really pissed off and desperate.  Desperation can drive people to do things and behave in a manner they would not under other circumstances.

If one looks at the history to most political and/or economic upheavals, they were generally started by people who had “Had enough” and were desperate. Even the Russian revolution caught Lenin by surprise when it began even though he and others had plotted the over throw of the Tzar, it was a spontaneous event  by desperate people that initiated it.  The same for the French revolution and nearly all other such situations.

And now with the current situation in Europe and the EU ministers decision on the Cyprus bank bail outs, they are sowing and fertilizing the seeds of another upheaval.

There’s been a great deal of discussion of how the deal came about, with a particularly detailed account at the Wall Street Journal. The new stance at the creditor nations and the ECB is that there will be “private sector participation” which is bureaucrat-speak for haircuts to the people who funded the banks. And in the fracas over renegotiating the pact so as to make it less unpalatable to the locals, the Eurozone officials have made clear they don’t care how Anastasiades skins this particular cat as long as he comes up with €5.8 billion from local deposits. Banks were due to be closed Monday on Cyprus for a holiday; officials are now considering imposing a bank holiday on Tuesday. Funds have been frozen in the meantime, producing what is likely to be the emblematic photo of this crisis, of a man trying to break into his bank branch:

. . . . .

Now the EU officials could easily calm nervous depositors by announcing an ECB-backstopped deposit guarantee, instead of the current national system which depends on not-exactly-credible central banks. Germany and its fellow surplus countries have hesitated about proceeding with the necessary steps to further economic integration (notice how the plan to implement eurozone wide bank supervision, which Germany insisted was a precondition to Eurozone-level deposit guarantees, has languished?). Germany is trying to maintain policies that are contradictory: it wants to continue to have large trade surpluses, yet not fund its trade partners; its wants debtors to meet their obligations, yet refuses to allow either enough in the way of fiscal deficits or monetary easing to keep debtor countries from falling into deflationary spirals, which assure default. Germany’s failure to relent on any of these conditions means that what breaks will be the financial system. – Naked Capitalism

It took FDR meeting with the heads of the unions and communists and socialist parties to convince him that this country was very close to another revolution in the 1930s.  It was this sort of situation that brought Hitler to power and also brought down a number of leaders in other countries. People are not stupid and when they see that they are being sacrificed for the good of those in the upper crust..when they feel they have no say or recourse…when they feel desperate, they will eventually take matters into their own hands.

The PTB need to realize and be aware that it’s groups of highly desperate and pissed of people that will force a change in the current situation for good or bad. Not some high minded organized plot by some subversive element. Though these elements will often take credit for it, they generally are not the instigators.

Euro - flickr creative commons

The on going and deepening economic crisis in Europe once again has come to the for front in at least a few media outlets.  Now before I go any further let me point out what has been going on in reality – at least according to Richard Wolff.  He has given a good synopsis of the situation in a number of his presentations on the economy.

The European Central bank – funded primarily by Germany, France and Belgium – has been “bailing out” various peripheral countries.  Mainly Greece, Spain, Portugal and Italy. But where is the money going ? Well back to the big banks in Germany, France, Belgium and Switzerland.   That’s where. In other words it has been and continues to be a stealth bailout of these big banks, mostly by Germany.

And Germany is keeping this part quiet since Merkel and all know damn well that the German people would not put up with this if they knew this was what was really going on.  I suspect they do however and this is why this item from Ives Smith over at Nakedcapitalism is not and should not come as a big surprise.  She gives a good rundown on the situation – as linked to by Faster – and what it may mean.  Beginning with this revelation.

Data point one. One of my colleagues studied in Germany, has extensive, high level political and economic contacts there, and reads the press daily. He also describes his sang froid as “somewhere between that of a Chinese sage and a dead animal.”

Needless to say, he not prone to overstatement or overreaction and also has a propensity to makes Delphic remarks.

He said the Eurozone is over. In pretty much those words, a simple sentence, no caveats or conditionals. I nearly fell out of my chair. This apparently reflects the German recognition as a result of the Italian elections that they will not be able to surmount domestic opposition in Italy and potentially other periphery countries and would rather pull the plug than continue funding their trade partners. He said there was a fair bit of discussion of Germany leaving the Eurozone after the election. I quizzed him on how they thought they could do that, since the new DM would presumably trade at a big premium to the Euro. We discussed that the likely outcome would be further labor “reforms”. Maybe I am naive, but I don’t see how this would not undercut an critical German strength, that of the good, if also sometimes combative, relationship between German workers and management. My source finally said widespread recognition of the existential impasse at most a couple of months away. He’s never this definitive.

Germany throwing in the towel ? If Merkel’s Christian Democrats do as badly in the upcoming elections as it has been doing in the local elections recently, this is a good bet.  Since they have been footing the bill for most of this themselves. Not something that has proven popular with the German people one bit.

And with Italy in a dead lock politically,  the ministers of Portugal fearing for their safety and the police and firefighters refusing to enforce evictions in Spain – the likelihood of the enforced austerity programs IE bank bailouts  continuing apace grows dimmer and dimmer.

Greece is on the verge of exploding and imploding all at once. And other countries are taking notice. As Ives says.

Thus Greece for the Germans served pour decourager les autres, to show what would happen if you let your debt levels and finances get as badly out of whack as Greece has. But that might have backfired. Citizens in periphery countries now suffering high unemployment might decide they’d rather take more pain now and gain control over their destiny rather than face being broken later on the Trokia’s rack.

As I said, I don’t have an answer here. I’ve long thought the technocrats underestimated the risk of democratic revolt. Those tail risks are bigger than you think! The European elites beat back that threat in Greece, but Italy may (stress may) prove to be different.

Not to mention Spain and Portugal…among others.  It has been said in the past by other economists that the Euro was a bad idea poorly implemented and not really thought through . I tend to agree. I also think that Merkel’s loyally to the banks and her conservative ideology has been laid bare to the German people through all of this. Not good for her or her party and I see no way she can come out looking good.

So what does this mean for us ? Well according Ives sources in hedge funds circles, happy days are here again. But we have seen this kind of denial and naive exuberance before from Wall Street and even the FED and Treasury under Bush.  Even in the late 1920s just before the market crashed. And we actually had a manufacturing base back then.

I could be wrong but I suspect an unraveling of the Eurozone would lay bare a lot of uncomfortable realities concerning these masters of finance both in Europe and here.

US vs THEM

That is how it was put by Romney and his group in the last election, as Richard Wolff reminds us in his presentations. Such as this one.  An economic Us vs Them but not entirely.   This country is and has been unique in that it is one of the few countries that is not  made up of a majority of people from the same racial, ethnic and religious backgrounds.  So there has been at least an undercurrent of racial/ethnic/religious animosity from the get go.

Add to that the economic and social differences, it’s actually pretty amazing we have not been at each others throats all along.  There was great debate as to whether voting should be limited to only those who owned land or were bankers and merchants and yeoman farmers and on and on.

For a while Us was was limited to white anglo saxon men. And then divided up to men either those with money and prestige or those without IE workers and farmers etc. Depending on which group one belonged to. But it did not include and minorities or homosexuals. It included women but only as second class members with – for a while – no voting rights.

Racial bigotry wasn’t limited to blacks. There was Native Americans, Italians, Irish, Jews, Japanese, Chinese and even Germans.  Some of it outrageous and some of subtle. Stereotypes and caricatures  galore.

Social too. The Hillbilly and Farmers and Southerners and rednecks and city slickers etc.  In movies and comic books and on TV and radio…….

And all was fine as long as They kept their place and kept quiet.   The war or animosity between the business owners and the workers is nearly as long and in a way rather ironic and most of those who became business owners originally here, came from the working classes over there.   Both groups convinced that They are the ones who do the work and They are the ones who make the country great and They are the ones  who deserve respect. And that the Others should be grateful and are lazy and uncouth etc.

After WWII and the availability of higher education came another group of educated professionals that did not exist in such great numbers who also spit but this time along more ideological lines of US vs Them.   Neither one fully or actually identifying with either of the previous groups.  Since they were not part of the rich elites or the working classes.  A new bourgeoisie as it were or elites wannabee.   Wishing they were rich and quite often trying to live like such.

But then another group emerged. One I first had contact with in the late 1970s. Baby-boomers who rejected the college educated crowd and intellectuals. Who felt that they had been  somehow betrayed by them. Angry, disenchanted people who wanted to relate to the proletarians or working stiffs but were quite often well educated.   Distrustful of the educated liberals who they thought had betrayed their ideals but not really from the working classes either.    An Us vs Them that is not nearly as well defined.

So maybe when Richard Wolff and others ask how come We and not rising up against Them in outrage, it’s because We are not all that sure who We are.  Not nearly as clear now as it was in the past.

This is quite a good explanation of our current economic situation that Professor Wolfe gave a few years  ago at MIT. Going along with his appearance on Bill Moyers just this last week.

I know that there were a few people that were not entirely happy with his appearance on the Moyers program and thought that he had at leas pull some punches in his answers and explanations.  One has to bare in mind the audience he was trying to reach, however. Just as here.

All of whom have been indoctrinated from the very first on the superiority of the American capitalistic system. And all of whom would have turned a deaf ear at the very least or chased him off the stage if he had not chosen his words carefully.   Much the same as if one were to try to convince a group of Islamists or communist party members in the old Soviet Union of the faults of their system of beliefs.

He gives a very good history of how we got here.

Of how up until the 1970s we had a history of increasing worker income in terms of real buying power.

The failure of Hoover and Roosevelt both to stem the depression of the 1930s and that WWII was how we got out of it.

That with the rest of the world in shambles after WWII, business here had it made. But Europe and Japan got rebuilt, American business threw in the towel since they could no compete.

How computers diminished the need for workers and increased immigration and women and minorities in the work force helped for stagnate wages.

How this stagnation in wages couple with increase worker productivity increased profits and how these profits were used to lend money to workers to offset the real wages lost.

This leading to bubbles and collapses and workers become more stressed and household debt has gone through the roof.

And that this current situation will not end of get any better and that re-regulation will not work.  As there will always be a motivation to remove it

And that a fundamental change in the system is necessary, not just here but in the world wide economy and that it’s happening now. Though most are unaware.

The whole presentation is quite good and worth the 60 min it takes to watch.

http://vimeo.com/39903036

Banksy Foreclosed Dreams - flickr/Finger food

One of the main topics these days has been about how to “save the system”. Meaning our current political and economic system here and maybe elsewhere. Or the eventual collapse of same regardless of what anyone does or attempts to do.

And one of the main aspects of this is then context in which this is being done. As if the time after WWII and the depression of the 1930s is the way things have always been and the attitudes there in were the way people always were. The problem here is that anyone who has read any history should know – this is false. But most of us still alive think this way. Those of us born after WWII. The so called Baby Boomers and their off spring.

Before WWII unless you were born into a “Middle Class” family – and I am using the wikipedia definition here, the college educated professional class – your life would be pretty rough. Either working a farm or on one or working in some factory in some metro area for horrible pay and lousy working conditions and lousy housing. And that is if you were white. If you were a minority, it was even rougher.

There were no suburbs or interstate highways or big box discount stores. Health care was minimal, if at all. And the depression made this all much worse. For farmers thing were already getting rough with droughts that precede the dust bowl and the depression. Not to mention that just prior to this in the late 1800s, grain prices had gone down a black hole do to over production caused by the mechanization of farming.

And unless you were born into a very well off family, higher education was pretty much out of the question. There were few state universities and the private ones were beyond all but the very fortunate.

Babe boomers however had it much much better. Our parents got to go to college thanks to Uncle Sam if they were in the service. State Universities were being built along with community colleges. The war and what followed created a huge demand for workers not know before hand. There was a major building boom do to the lack of housing and suburbs popped up like weeds. Unemployment was low and wages were going up. If you were white, during this period, you future was a hell of lot more rosy than you parents was. And most kids then were expected to go to college if they had anything on the ball at all. A major change from previous generations.

Now here is the problem. We were all told – on the radio, television, by our parents and in school – this is the way things are and the ways things will always be. Maybe not on those words, but that was the message. We were not told that this was primarily because the US was the only show in town. That the rest of the world was in the stone age or had been bombed into the stone age. That a very large number of the jobs out there had to do with make weapons to fight those horrible communists. That the cheap gas and oil etc. were provided by US companies that used slave labor to steal it from other less developed nations.

And to tell you the truth few if any of us cared. We were too busy with rock and roll and the beat generation. Hot Rods and girls. The space race. A few of us became aware of racial bigotry and civil rights and began to come a bit more involved with this. Joining marches and protests and singing songs. But with the intention of returning to our nice comfortable lives.

The Vietnam war geared up and more of us get involved with protesting that – primarily to keep our heads from being blown off. And with the intention of returning to our nice comfortable lives. But along the way a lot of us became very disenchanted with our government and political system. We grew up idealistic and getting pretty much what we wanted. We expected to be treated well and listened to and when we were not… When we were treated like some kind of inconvenient pest, a large number developed a deep seated resentment. And far too often this was passed on to their children as well.

We were going to change the world…the system and when we could not, felt betrayed by the whole establishment. Government, education, corporate…you name it. But our expectations were unreal. We were unaware or refused to accept that the times and our it’s prosperity were one huge propaganda event. To show the world that our system was so much better that the “other” system. And as soon as this was no longer necessary, tossed aside like a used newspaper.

Because far too many of us – of my generation, the boomers – would not completely see that because we were white that others were not, was a big reason why our lives had been so comfortable. And that as soon as that was no longer necessary, we would become unnecessary as well.

We had the privilege to live a fantasy. A Disney kind of life for a while. But the fantasy is over. Time to get real.

The consumer confidence has dropped again for the second straight month according to AFP. As if this was some sort of anomaly. And at World Economic Forum in Davos the movers and shakers are try to figure out what to do next with the current economic down turn, as if they had any clue. They don’t but that’s OK, they’ll still party like there is no tomorrow. There just might not be.

The problem is that everyone thinks we are experiencing some odd deviation from the norm. That there is some problem with the world economy that needs to be fixed and if only the correct solution could be found, everything would right itself and start humming along. Nothing could be further from the truth.

Economic downturns and financial crisis are all part of capitalism. They are in fact capitalism itself. Marx was quite clear on this.

Capitalism is an economic system that is inherently crisis-prone. It is driven by forces which cause it to be unstable, anarchic and self-destructive. This is as true today as it was over 150 years ago, when Karl Marx and his collaborator Frederick Engels described capitalism in the Communist Manifesto as “a society that has conjured up such gigantic means of production and of exchange, [that it] is like the sorcerer, who is no longer able to control the powers of the nether world whom he has called up by his spells.”1

Indeed, today’s world of wild stock market booms and slumps, recurring layoffs and long-term unemployment, corporate scandals and power blackouts, seems to fit their description better than ever before. The present economic downturn is no exception. The United States is currently in the middle of the longest period of job losses since the Great Depression of the 1930s. In fact, the U.S. economy today has 2.6 million fewer jobs that it did two years ago. Meanwhile, over two million people have lost health insurance coverage and personal bankruptcies hit a record of over 1.5 million households in 2002.2 In short, economic crises–recessions and depressions–were a part of capitalism at its birth and, despite promises to the contrary, continue to plague the system to this day.

Indeed. On need only to review the history of capitalism and the lists of financial crisis to see it is just one crisis and downturn after another with brief periods of stability followed by some economic bubble or boom followed by another crisis. Beginning ironically enough with tulips.

17th century

Tulip mania (1637)

18th century

South Sea Bubble (1720)
Crisis of 1772
Panic of 1792
Panic of 1796-1797

19th century

Post-Napoleonic depression
Danish state bankruptcy of 1813

Panic of 1819, a U.S. recession with bank failures; culmination of U.S.’s first boom-to-bust economic cycle
Panic of 1825, a pervasive British recession in which many banks failed, nearly including the Bank of England
Panic of 1837, a U.S. recession with bank failures, followed by a 5-year depression
Panic of 1847
Panic of 1857, a U.S. recession with bank failures
Panic of 1866

Long Depression (1873–1896)
Panic of 1873, a US recession with bank failures, followed by a four-year depression
Panic of 1884
Panic of 1890
Panic of 1893, a US recession with bank failures
Australian banking crisis of 1893

20th century

Panic of 1907, a U.S. economic recession with bank failures

Wall Street Crash of 1929 and Great Depression (1929–1939) the worst depression of modern history

OPEC oil price shock
Secondary banking crisis of 1973–1975 in the UK

Japanese asset price bubble (1986–2003)

Bank stock crisis (Israel 1983)
Black Monday (1987)

Savings and loan crisis of the 1980s and 1990s in the U.S.
1991 India economic crisis
Finnish banking crisis (1990s)
Swedish banking crisis (1990s)
1994 economic crisis in Mexico

1997 Asian financial crisis
1998 Russian financial crisis
Argentine economic crisis (1999–2002)

Quite a list. And these are just the biggies. There is a separate list of banking crisis that is nearly as long. We love to blame each of these on who ever is the leader at the time as if he or she was responsible for it, when financial crisis and downturns are part of the capitalistic system. There is also some belief that eliminating empires would fix it it as well, when empire is part of capitalism. In fact it’s a requirement since capitalism requires continued growth to exist and continued growth requires empire.

As you can see the mean time between failure is horrible and an engineer worth his or her salt would get rid of the system. And it can no more be regulated that an avalanche.

This is normal. The lousy jobs and lousy education and lousy outlook. Until the next bubble or final crash or until we replace it.

Black Friday - flickr

“History is a set of lies that people have agreed upon,” Napoleon said. “Even when I am gone, I shall remain in people’s minds the star of their rights, my name will be the war cry of their efforts, the motto of their hopes.”

It has always been thus, that people will glorify and embellish the past to suit their own egos. Especially when it comes to wars and the victors but even the losers as well. With stories and monuments and what not. Hollywood has made a fortune on this. Books by the millions have been written glorifying the past one way or another.

And as Chris Hedges point out, to inflate peoples egos and diminish others.

The split between those in Memphis who hold up authentic heroes—those who fought to protect, defend and preserve life, such as [Ida B.]Wells and Burkle—and those who memorialize slave traders and bigots such as Forrest points up a disturbing rise of a neo-Confederate ideology in the South. Honoring figures like [Nathan Bedford] Forrest in Memphis while ignoring Wells would be like erecting a statue to the Nazi death camp commander Amon Goeth in the Czech Republic town of Svitavy, the birthplace of Oskar Schindler, who rescued 1,200 Jews.

The rewriting of history in the South is a retreat by beleaguered whites into a mythical self-glorification. I witnessed a similar retreat during the war in Yugoslavia in the 1990s. As Yugoslavia’s economy deteriorated, ethnic groups built fantasies of a glorious past that became a substitute for history. They sought to remove, through exclusion and finally violence, competing ethnicities to restore this mythological past. The embrace by nationalist groups of a nonreality-based belief system made communication with other ethnic groups impossible. They no longer spoke the same cultural language. There was no common historical narrative built around verifiable truth. A similar disconnect was illustrated last week in Memphis when the chairman of the city’s parks committee, William Boyd, informed the council that Forrest “promoted progress for black people in this country after the war.” Boyd argued that the KKK was “more of a social club” at its inception and didn’t begin carrying out “bad and horrific things” until it reconstituted itself with the rise of the modern civil rights movement.

This is not limited to political history but to economic history as well. Idolizing the events and leaders of a past that was not nearly as glorious and successful as even those of us who lived it would like to imagine. The post WWII era and FDR’s New Deal. Which either helped tremendously or hindered horribly our economic endeavors. Depending on which revisionist history one adheres to. It generally was not quite that clear cut.

The Depression of the late 1920s and 1930s and (supposed) prosperity following WWII seems to be the current interest of both the right and the left. All conveniently forgetting that this was simply one of many economic downturns and may not even have been the worst. The depression of the late 1800s was by some accounts far worse and even lasted far longer.

But the economic fundamentals were shaky. Wheat exporters from Russia and Central Europe faced a new international competitor who drastically undersold them. The 19th-century version of containers manufactured in China and bound for Wal-Mart consisted of produce from farmers in the American Midwest. They used grain elevators, conveyer belts, and massive steam ships to export trainloads of wheat to abroad. Britain, the biggest importer of wheat, shifted to the cheap stuff quite suddenly around 1871. By 1872 kerosene and manufactured food were rocketing out of America’s heartland, undermining rapeseed, flour, and beef prices. The crash came in Central Europe in May 1873, as it became clear that the region’s assumptions about continual economic growth were too optimistic. Europeans faced what they came to call the American Commercial Invasion. A new industrial superpower had arrived, one whose low costs threatened European trade and a European way of life.

As continental banks tumbled, British banks held back their capital, unsure of which institutions were most involved in the mortgage crisis. The cost to borrow money from another bank — the interbank lending rate — reached impossibly high rates. This banking crisis hit the United States in the fall of 1873. Railroad companies tumbled first. They had crafted complex financial instruments that promised a fixed return, though few understood the underlying object that was guaranteed to investors in case of default. (Answer: nothing). The bonds had sold well at first, but they had tumbled after 1871 as investors began to doubt their value, prices weakened, and many railroads took on short-term bank loans to continue laying track. Then, as short-term lending rates skyrocketed across the Atlantic in 1873, the railroads were in trouble. When the railroad financier Jay Cooke proved unable to pay off his debts, the stock market crashed in September, closing hundreds of banks over the next three years. The panic continued for more than four years in the United States and for nearly six years in Europe.
The long-term effects of the Panic of 1873 were perverse. For the largest manufacturing companies in the United States — those with guaranteed contracts and the ability to make rebate deals with the railroads — the Panic years were golden. Andrew Carnegie, Cyrus McCormick, and John D. Rockefeller had enough capital reserves to finance their own continuing growth. For smaller industrial firms that relied on seasonal demand and outside capital, the situation was dire. As capital reserves dried up, so did their industries. Carnegie and Rockefeller bought out their competitors at fire-sale prices. The Gilded Age in the United States, as far as industrial concentration was concerned, had begun.

As the panic deepened, ordinary Americans suffered terribly. A cigar maker named Samuel Gompers who was young in 1873 later recalled that with the panic, “economic organization crumbled with some primeval upheaval.” Between 1873 and 1877, as many smaller factories and workshops shuttered their doors, tens of thousands of workers — many former Civil War soldiers — became transients. The terms “tramp” and “bum,” both indirect references to former soldiers, became commonplace American terms. Relief rolls exploded in major cities, with 25-percent unemployment (100,000 workers) in New York City alone. Unemployed workers demonstrated in Boston, Chicago, and New York in the winter of 1873-74 demanding public work. In New York’s Tompkins Square in 1874, police entered the crowd with clubs and beat up thousands of men and women. The most violent strikes in American history followed the panic, including by the secret labor group known as the Molly Maguires in Pennsylvania’s coal fields in 1875, when masked workmen exchanged gunfire with the “Coal and Iron Police,” a private force commissioned by the state. A nationwide railroad strike followed in 1877, in which mobs destroyed railway hubs in Pittsburgh, Chicago, and Cumberland, Md. The Real Great Depression – Scott Reynolds Nelson

But both sides of the debate really do not like talking about this part of history since upon close examination it revels how shaky the argument for capitalism really is. For this is the era that Marx was writing in and about. This crisis of capitalism that so parallels our own current situation. But that was the late 1800s and the capitalists were still able to grow and invent their way out of this mess. At least temporarily.

Inventions and growth though have built in limitations as well. This is one crisis that will not be grown out of or invented out of or even be solved by imperialistic wars, such as those used by Germany in the 1930s.

And like all eras of history, it has been glossed over by those who would like to think the years prior to WWI were so peaceful and nostalgic. Conveniently forgetting how horrific they actually were so as to vindicate their own agendas.

Cell Phones -Scallop Holden/flickr

I just finished doing an electronic restoration on an old Hallicrafters S40 communications receiver circa 1947. Replaced all the old paper capacitors and the electrolytic capacitors and a few resisters. I also replaced the audio output tube and its associated components with an audio amplifier module I had since that particular vacuum tube was pretty pricey and the transformer as well.

Where I currently live I am not to far from the transmitter sites of some local radio stations but this did not seem to bother this radio when I was tuning around, I was able to listen to a station in Toronto Ontario quite well. This was not the case with a much newer Radio Shack DX302 that I had which was overloaded by these close and powerful signals to the point of making it nearly useless trying to receive anything on the AM broadcast band.

With my hearing the way it is, I find the sound from the old Hallicrafters much more pleasing to listen to than my newer high priced receivers for AM and shortwave. But to be fair the old Hallicrafters was not as sensitive on the upper shortwave bands as any of the newer ones I have, including the RS DX302.

This not a diary to bash current technology. After all I have been mucking about in it since I was 10 years old and I am now in my 60s. Also, I enjoy working on and building and modifying radios and such, and have done so for nearly that long. I am concerned, though, about a few aspects of it.

I had a talk the other day with a gentleman who was here to do maintenance on my furnace. He came into my radio room and was fairly impressed – I guess – with my equipment and such. We got to talking about the current electronics and such, and how people just pitch them out when they break rather than getting the items repaired. I said that was the main reason I left the field of repair and went into computers. The occupation just went away. In fact component level repair is just not practical on today’s electronics. The parts are way too small and require specialized tools to replace them — assuming one can even get the replacement parts. In the case of microprocessors and specialized chips, this is quite often very difficult or impossible.

Which brings up another aspect of our current technology. The old vacuum tube equipment, though some it was pretty cheaply made, it was still quite robust. It was not as affected by voltage spikes or lightning or heat and humidity as current equipment is. It was much more repairable and less complex, to the point that you did not need much training or specialized tools to maintain it. Also we were not nearly so dependent on it in our lives.

Like the old cars with carburetors and distributors and such, that if they died on the road you could do some kind of quick fix to get you to a gas station to do a more complete repair. Nowadays that simply is not possible. Nearly every part is controlled by a computer.

Speaking of computers, I helped a friend last night with her’s because it had some unwanted software on it and getting rid of it was a considerable task. Computers are beyond most people to maintain, even the software can become unusable pretty quickly. With our dependence on them, this is becoming a major hassle.

Not simply computers but nearly everything we do now requires some sort of high tech to accomplish. There are processors in nearly everything now  and the infrastructure as well. And little of it is protected from anything. From simple communications to every financial transaction and even many medical tasks. And all this data runs on fiber optic cable that has little protection from the the environment or from sabotage. Our electric infrastructure is right out in the open  and as we have seen a number of times, can be brought to halt rather quickly.

We know how much pandemonium is caused if we lose electricity for a week. Imagine what it would be like if we lost it for a month or more. Or if we lost our data communications for a month or more, which can happen. It is nearly impossible to protect as it is so vast. But the loss of a few key sites could bring the whole thing down.

The fact that this has not occurred yet does not mean if would not or could not happen. And it’s a hell of a lot easier and cheaper to disable than flying planes into buildings. Weapons have already been developed to disable the electrical grid or parts of it.

One of the main reasons for this is the centralized control that is maintained by private monopolies, making our infrastructure very vulnerable. So while we sit back at our computers…sipping on our electrically brewed coffee…remember this the next time you use your cell phone.