Chase-ing Rainbows

When I first started this blog, I was a little worried about finding things to write about. I guess if I was writing on advances in humanist philosophy, the pickings might be a little dry, but when you're writing about the slow-motion collapse of modern industrial civilization, you have the opposite problem -- trying to cover all the little mini-fires and negative trends.

Today's news really isn't a surprise, but another banking scandal just erupted with the announcement of Chase blowing $2 billion in trading losses. Of course, heads are already rolling because of this, but let's break the situation down a little. Ina Drew, the scapegoat for this brewing scandal is being out of managing a division which apparently worked with around $360 billion dollars in assets. Pulling out the calculator shows that this was a loss of 0.55 % of these assets. That's a little over one-half of one percent. Statistically speaking, this is nothing.

So why the head-rolling? Reading on, we see that Jamie Dimon apparently had "encouraged" her to take these risks. What does "encouraged" mean in the context of a CEO speaking? Especially at one of the world's leading banks? I wasn't a fly on the wall, but I'd guess it's something along the lines of "make something happen or make way for someone else." Of course, the D-word pops up in this narrative, too -- derivatives. The real story here, I think, is the fact that a bank CEO is pushing for taking more risks in the first place. The recession has not ended, the world is still reeling globally from a long series of screwed-up moves by banks, and no one knows where the path out of the mess is.

At the same time as this news, is the announcment that California's new budget shortfall is $16 billion, up from $9 billion. That would be pretty sobering news in good economic times, but in the continuing New Great Depression, how do you begin to make that up? There are only two real alternatives -- cut spending or raise taxes. Cutting spending is going to reduce the amount of money available for education, law enforcement, infrastructure, etc. In other words, all the things that make a region attractive to people and businesses in the first place. The other option is to raise taxes some more, and see another "Atlas Shrugged" moment like are becoming popular in places like France, where rich people leave so they can try to remain rich for a while longer.

Sadly for Jerry Brown, California can't print it's own money, like Congress can. Like most states and cities, people were content to live it up and enjoy the excesses of prosperity, without realizing that prosperity can eventually fall on hard times and incoming tax revenues will sooner or later be "disappointing."

Last, Greece is back in the news again. The funny thing is that if Europe itself was healthy, it would've tossed the sick man of the EU overboard long ago. Unfortunately for proponents of European unity, this would just make everyone in Berlin (perhaps the only really healthy Eurozone country left) ask tough questions like "Hey, if we got rid of Greece, why is Spain in our little club?" I guess enough people in Europe still see enough of value in the EU to determine that the modern-day version of the Hanseatic League needs to limp along until the fiction that it was ever a workable idea can be done away with.

The common thread in all these stories is still the denial of reality and living in the mindset of the past. A bank CEO decides that risky behavior is just fine, even after too much risk almost torpedoed the world economic system. A state governer admits that the state has been leaving in a budgetary dream world. And an economic union pretends that booting one bad apple will get rids of the worms in the rest of the system. It's all about living in a dream world.

We still have enough "slack" to make some intelligent decisions about our future -- downscaling, modifying, adapting -- to where the loss of cheap energy and abundant resources can be offset by good planning. The problem is that we cannot let go of the past, of the notion that we can have "forever growth" and endless bounty. Reality has already begun to catch up to people -- those who have seen their unemployment run out, those who were conned into mortgaging their future for the promise of a good job, and those who have worked hard their entire lives to enjoy the fruits of their labor, only to find those fruits have rotted. At some point, it's going to catch up to everyone all around the world, then we're going to see the new Dark Age show itself in full glory.