Updated Primer on Ongoing Financial Crisis
The Automatic Earth is a unique, one-stop website which presents the world’s best current writing on the ongoing financial and economic crises. The following Primer lists key articles and analyses written by the Automatic Earth team.
Nicole Foss (aka Stoneleigh) writes:
It is time to undertake the yearly review and update of our primer guide, with a view to making it easier for our readers to see the entirety of our TAE worldview in one place. Primers are continuously added in order to flesh out the biggest possible big picture. This will continue as we move over to our new site later this year. These essays are not tied to the events of a specific day, week or month, but are the ones that take a step back and look at the world through a wide angle lens.
We have covered a wide variety of topics in the three and a half years of our existence. The point is to tackle complexity and make it comprehensible, rather than assuming away the context as most analyses do. All the strands of our century of challenges are interwoven, with each affecting the others. It is vital to understand those interactions, as well as to understand each separate topic and their relative timelines. Different factors will act as primary drivers at different times.
We retain our primary focus on Ponzi finance and the nature of markets, since the consequences of a major bubble implosion will have the greatest impact in the shortest time. Exploring those consequences, both within and beyond the financial realm is of immediate importance, given the scale of the impacts and how quickly they can manifest as a contraction picks up momentum to the downside.
As always, we cover energy as the master resource, and this year the major focus of new energy primers has been the catastrophe at Fukushima. We have also begun to cover the natural gas situation in North America in some detail, returning to the familiar theme of Ponzi dynamics.
The Resurgence of Risk, which appeared at The Oil Drum Canada in August 2007 provides the background to how we came to be in our present predicament. It is by far the longest of the primers, and its purpose is to explain in some depth the nature of our credit bubble, the role of ‘financial innovation’, the distinction between currency inflation and credit hyper-expansion and the mechanism by which value disappears as a bubble deflates.
For further explanation of the ponzi nature of bubbles, the spectrum of ponzi dynamics underlying many economic phenomena and the implications of this for where we are headed, see From the Top of the Great Pyramid.
This ties in with an earlier piece from The Oil Drum Canada, Entropy and Empire, detailing the progression of hegemonic power from empire to empire, as each rises, over-reaches, falls and passes the mantle on to its successor.
The picture in terms of real politik (ie the way the world really works behind the scenes) is further developed in
- Economics and the Nature of Political Crisis,
- Corruption, Culpability and Short-Termism,
- Hornswoggled Absquatulation,
- A Future Discounted,
- The Worth of the Earth,
- Beyond the Trust Horizon,
- The Lord of More,
- Trickles, Floods and the Escalating Consequences of Debt,
- The View From the Bottom of the Pyramid and
- The Last of the Affluent, the Carefree and the Innocent.
A more specific look at Europe can be found in The Imperial Eurozone (With all That Implies).
When bubbles reach their maximum extent, they invariably deflate. Our explanation as to why this is inevitable can be found in Inflation Deflated, followed by, The Unbearable Mightiness of Deflation, a rebuttal to inflationist Gary North, and Debunking Gonzalo Lira and Hyperinflation.
The Nature of Markets:
We dispute classical economic theory and the received wisdom as to the nature of markets. Markets are not objective, mechanical and rational as the Efficient Market Hypothesis would have you believe. Our explanation of markets as human phenomena grounded in destabilizing positive feedback can be found in Markets and the Lemming Factor, A Glimpse Into the Stubborn Psychology of Fish and The Future Belongs to the Adaptable (with kudos to Robert Prechter, who has been developing the hugely important theory of socionomics for many years). Historical perspective with regard to bubbles and financial crisis is provided in The Infinite Elasticity of Credit, and a view of finance and ecology as analogous systems structure can be found in Fractal Adaptive Cycles in Natural and Human Systems.
We have a number of articles on specific aspects of our current crisis. Our view of real estate can be found in Welcome to the Gingerbread Hotel and Bubble Case Studies: Ireland and Canada. Employment is covered in War in the Labour Markets and An Unstable Tower of Breaking Promises.
Oil and Gas:
Our view of the intersection between peak oil and finance can be found in Energy, Finance and Hegemonic Power and Oil, Credit and the Velocity of Money Revisited. The notion of shale gas as a game-changer and a clean source of energy is challenged in Get Ready for the North American Gas Shock and Fracking Our Future. Ponzi dynamics feature once again.
Renewables and Electricity:
Nuclear power, in the aftermath of the Fukushima catastrophe, is covered in a series of articles written in the two months following the earthquake: How Black is the Japanese Nuclear Swan?, The Fukushima Fallout Files, Fukushima: Review of an INES class 7 Accident, Fukushima: Fallacies, Fallout, Fundamentals and Fear and Welcome to the Atomic Village.
Departing from finance and energy, our contribution to the health debate, which is relevant to future food supply and storage, can be found in Our Daily Bread, or Not, As the Case May Be.
Summary and Lifeboat Prescriptione:
This is our attempt to convey what we as individuals can hope to do about it for ourselves, our families and friends. We cannot avoid living through a Greater Depression, but we can take action, and, being forewarned, we can hopefully avoid many pitfalls. We can attempt to avoid becoming part of the herd that is determined to throw itself off a cliff.
The big picture is of crucial importance as we have reached, and passed, the pinnacle of a golden age. We are moving into an era of uncertainty and upheaval such as none of us have hitherto experienced but all of us must try to navigate successfully. We at The Automatic Earth will continue to provide what assistance we can with that process. The TAE world tour continues, recently in the US, currently in Europe and in Australia after Christmas.