Your Sunday read

I just finished reading the most depressing paper I’ve read in years. Via ZeroHedge I discovered “Trade-Off”: A Study In Global Systemic Collapse (pdf) by David Korowicz.

In the paper Korowicz develops an argument that the increasing complexity and interdependence of the global economy has made it more vulnerable to shocks to the system. A crisis anywhere within the system will be felt across the whole system. Moreover, the complexity and high efficiency of our modern day economy (think ‘just in time’ management of factory stocks) is such, that even a minor (financial) crisis can cause a global systemic collapse, hitting a nations health care, energy supply and ultimately food supply. And given the present circumstances in the economy, with too much debt, shrinking earnings and a European currency that is tearing the continent apart, a collapse of the system may just be inevitable. Or, as Korowicz says it:

Collectively, it is like we are passengers travelling in an unimaginably complex plane locked onto a perilous course. Our understanding of the engine and guidance system is partial, nor do we know many of the connections between them. We may want to change course by retooling the guidance system, but there’s a meaningful risk it will stall the engine, and we’ll plummet to the ground. Good risk management might argue that before repairs are done, we ensure the passengers have parachutes, but time is running out, maybe it already has.

At 78 pages it is a hefty read. But it is well written and, in a morbid fascination kind of way, riveting. If you have some time to kill, this is a paper you ought to read. In fact, it is a paper all those in leadership positions should read. Which they won’t, of course.

All in all, the paper argues compellingly that the days of us being able to shop for an almost endless variety of products at low prices are coming to an end. Enjoy it while it lasts.

Have a good Sunday.

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6 Responses to Your Sunday read

  1. DP111 says:

    Scientists, with the aid global instruments and satellites, are discovering the intricate and highly connected nature of the planetary system. Even minor increases in the CO2 output, from the Netherlands for instance, can cause global warming or cooling.

    Collectively, it is like we are passengers travelling in an unimaginably complex spherical object locked onto a perilous course. Our understanding of the engine and guidance system is partial, nor do we know many of the connections between them, or where we are headed. Etc etc..


    I’m sick and tired of doom mongers. The world is indeed financially interconnected. But what this also gives it resilience. That is, a shock at one point does not mean the energy is dissipated at that point only, but transfers itself along to the whole. The impact energy is thus spread, and the consequences much less. In addition, a complex financial system, has inbuilt inertia of the system itself. In addition, there is human inertia, as well as human intervention. Unlike the planet on its unknown trajectory, the financial system is of our design, and can be controlled. Finally, we can switch OFF the damned satellite comm systems on which much of the communications depend, or a couple main frames.

    It is this type of analysis that gives governments the reason and justification, to increase even further the control of the financial system, and thus all our lives. Who is going to control AGW, why the UN? Who is going to control the trajectory of the financial system? The UN.

    Why is that the elite, academics of all hues, are intent on control of the global type? They love a global government, in which, they presume, that as “experts”, they would be asked to advice and administer- Power at last.

    • Klein Verzet says:

      This is a ‘on the one hand, on the other hand’ type situation. I don’t necessarily buy into the peak oil narrative. But you have to admit that the description of the worlds financial state is rather accurate, and depressingly so. At least, the parts about that rung true to me.

      You argue that this paper legitimises more government control. I read it completely different. Much of the misery we’re experiencing is caused by government interfering in matters they cannot control. And by interfering they’ve created circumstances that are very, very detrimental to us, mere mortals.

      The papers argument is that governments can take measures to mitigate the immediate aftermath of a systemic collapse. That is what any just and prudent government should do, don’t you agree?

  2. Alan R says:

    I’d be slightly wary of anything produced by Feasta. They are an Irish lefty peak oily doom and gloom organization who spent their entire time in a state of panic about various potential calamities. Yes the financial system is knackered, but how much of that is due to big socialist projects like the EU? There are lots of reasons to be cheerful including the discovery of shale gas, and the puncturing of the global warming scare. Be happy 🙂

    • Klein Verzet says:

      Thanks for the heads up. I’d never heard of Feasta, so I just judged the paper on its merit (as far as I am able to anyway). The bits about peak oil and climate change struck me as a bit out of the blue. But I figured it was in there to make the pint palatable to an audience as broad as possible. I thought they were put in there out of PC necessity.

      I agree with you 100%. Yes, this crisis is the direct result of socialist type interventions in a system. that (theoretically at least) functions extremely efficient on its own. And shale gas is very good news, indeed (if ‘they’ let us make use of it).

      I’ll be happy once the EUnion is relegated to the dustbin of history and we can finally deal with our problems in a sane, practical manner. But you’re right, it’s not all misery and mayhem.

  3. DP111 says:

    Yes, this crisis is the direct result of socialist type interventions in a system.

    I agree with you. From the Systems PoV, a random system will average out any major impact, thus lessening its global effect.

    Legislation, particularly of the socialist type, is specifically designed to bring the system down, not at once but by stages. Thus articles such as these, provide legitimacy to EU, the UN and other global political systems, for increasing their control of the financial system.

  4. DP111 says:

    Hollande About to Wreck France With Economically Insane Proposal: “Make Layoffs So Expensive For Companies That It’s Not Worth It”

    Now this is the kind of thing that really creates havoc in the system. It is not a point impact but an impact that legislation makes over a whole country.

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