Comments | rocketgeek: Global financial crisis

rocketgeek

Global financial crisis

Oct 10, 2008 09:18

First, it should be clear that the $700bn bailout plan is already a failure. That's because it contains no provisions to actually fix what's wrong. The problem is not a crisis of liquidity, for which a great wad of government cash is a reasonable fix, but a crisis of confidence. Major US banks have been running at reserve ratios of 3%-5% and they ( Read more... )

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rocketgeek October 10 2008, 20:17:37 UTC

A political collapse of mainland China has no visible upside. It would destabilize two already marginally stable nuclear powers (China and N. Korea), and I doubt whatever comes after will look much better. There's a deep well of nationalist grievances going back at least two centuries there. AFAICT, there is a deep sense among many in China that China ought to be king shit of the whole wide world (again). The chances of a Chinese civil war triggering a wider war in Asia is high. Pick your combatants for WWIII, betting line forms on the left. Chinese combatants may be chosen by province.

Russia would take it on the chin from a major shift away from petroleum... and they are another country with some very old grievances and inferiority complexes. The excesses of Peter the Great and Stalin were part and parcel of the same sense of inferiority to the rest of Europe.

And on the oil front, how are the nations of the Middle East going to take the West stomping their golden goose to death?

Another analysis, part I following_bliss October 12 2008, 11:22:09 UTC

This is a really good analysis, although my own conclusions are quite different. In the scenarios that I've developed, I generally expect the US to fare very badly as a result of the financial crisis; the Europeans to do slightly better; and the Chinese to do rather well. The key factor, I find, is not actually the relative strengths of the underlying socio-political-economic structures, but, rather, the quality of the specific decision-making processes in each society. The outcomes of the present situation are *extremely* path-dependent, much more so than is typical. One or two really bad decisions in China could indeed cause it to fragment -- and the same goes for the US, I might add. On the other hand, a handful of really good decisions could transform an impending Great Depression into merely a bad recession ( ... )

Re: Another analysis, part I rocketgeek October 13 2008, 16:54:31 UTC

It seems that the UK is leading the way to at least partial nationalization of banks, and everyone else in the US and Europe is following along because they don't have a better plan. I think that's a good sign, because it's the first thing that the powers that be in the west have done that really addresses the issues of trust that are currently freezing up the inter-bank credit market.

Another analysis, part II following_bliss October 12 2008, 11:25:07 UTC

The other things to keep in mind is that Chinese nationalistic sentiment is higher than ever, and it is almost impossible to overestimate the depth of this sentiment. Whatever economic turmoil China faces, it won't be as bad as during the Great Leap Forward or Cultural Revolutions. If the Uighers and Tibetans couldn't break free then -- before the influx of Han, when they were actual majorities in their own lands -- then there's no chance in hell that they'll break free now. China will remain intact ( ... )