The Tragedy Of Common Collapse
To survive this crisis a company has to increase revenue and decrease spending. It’s pretty simple on a microeconomic level, but when you have a bunch of firms doing the same thing you get one hell of a macroeconomic tsunami. One company can fire people without affecting consumer spending overall. However, when many companies downsize there’s a huge effect on consumer spending, and confidence. Companies and people take actions in their own economic self-interest, but the result is pretty similar to the bank runs that led to the Great Depression. Firms are panicking. It’s like the tragedy of the commons, except with zombie sheep fucking each other and eating each other’s brains. More accurately, it’s like everyone rips up their piece of the common green and takes it home, leaving us with a big hole in the ground.
National Collapse
Which is to say, it’s going to get worse before it gets better. What makes it worse is that this is perhaps the first truly global recession. In the past you could have the Dark Ages in Europe and China getting along fine. However, with people and systems so connected, a shock in one part of the world immediately cascades across the globe. Sri Lankans – being in the shitter to start with – are, I think, somewhat laissez faire about this. I’m not sure we understand the gravity of the situation. As Marc Ambinder reports, the Americans do, in particular the Obama admin.
Where the discussion isn’t going, at least in public, (or the PR level), is the possibility that the first foreign policy crisis the administration will face will be the complete economic collapse of a large, unstable nation. To be sure, Pakistan is nearly broke, and U.S. policy makers seem to be aware of that; but a worldwide demand crisis could lead to social unrest in countries like Indonesia and Malaysia, Singapore, the Ukraine, Japan, Turkey or Egypt (which is facing an internal political crisis of epic proportions already). The U.S. won’t have the resources to, say, engineer the rescue of the peso again, or intervene in Asia as in 1997.
The fate of nations is on the line. This is not just about companies failing. A rational firm has no choice but to increase revenue and decrease spending. But when everyone decreases spending how does anyone increase revenue? It’s effectively a panic, a run on the banks. The inevitable response is for the government to nationalize industries (like the banks) to stop the panic. Because the government can simply order everyone to chill the fuck out until things settle. However, this means that the governments also undertake the risk. And the debt is still there. So if the underlying assets are bad (which they are, they’re fucking turds) then it’s not firms that collapse, it’s governments. And nations. Nations will collapse, like Iceland. People in Iceland are pretty chill, but I’m buying some leather clothes in case some Mad Max shit goes down here.
Right now there is a bunch of bad debt careening around the system like a pinball. It has to go somewhere. You can shake and kick the machine all you want, but eventually it’s going to go TILT. And we’re kinda going to have to start over.
Sri Lanka
In local news, Sri Lanka has a $1.6 billion stimulus package in the form of the war. Which is great, cause a nationalized firm that kills many of its employees seems like a good idea. However, we also have a President spending millions on airplanes from foreign countries (for the failed Mihin) while people are literally going hungry. We have a Supreme Court Justice whose whimsical decision to override a legal contract because it was stupid threatens to topple the stock market and make it impossible for the nation to get credit. And the Central Bank Governor isn’t an economist at all. I don’t know if our particular fuckedupedness somehow insulates us from the global tsunami, or if it makes things worse. I suspect the latter.
Oil
One particular worry is that global oil prices are totally tanking. I’ve never seen a graph like this. It is literally straight down. Low oil prices would seem good for the economy, but in this case it seems to signal a pretty dramatic drop in global demand for any sort of economic activity. That is, to repeat, firms and individuals are reducing spending on a micro level, resulting in a global clusterfuck on the macro. Which is to say, the actions we take to protect ourselves may endanger us all. Looking at what’s out there I don’t see how this ends without the entire global economy, down to even monetary structure, being rebuilt. And I mean rebuilt as in ‘destroy and rebuild it’. Which will be, needless to say, painful. Read the Oil Drum thing. It’s scary.
This is highly dubious. Miss Travel is a travel/social networking site that connects ‘Generous’ and ‘Attractive’ travelers. To, like, travel together, I guess. It all seems a bit like arranged prostitution and trafficking. This is part of a broader online trend to connect rich men to younger, attractive women. Sites like 
Sri Lankan domestics never say anything, they just stop coming. My maid just stopped coming and when I finally pressed her she said I needed to get a washing machine. I was hoping to ride this one out, but I’ve run out of underwear and I have no choice. I finally caved and bought a washing machine, from 
There’s nothing wrong with pornography, but there’s a lot wrong with porn. Nothing wrong with watching people have sex, but too often that sex is brutal, senseless and coerced. I mean how many couples are coming on each others faces every day? Hence, philosopher king Alain de Botton – after calling for a 
Sri Lanka is going to start offer 
The knock-on effects of a number of banks having closed down will affect the local banks and firms here in the next year. Already, The Finance Company (part of Ceylinco) has increased the number of days notice for withdrawal of money from a fixed deposit from 7 days to 1 month! Cheques written by Ceylinco Insurance are bouncing. With the government taking money from the government banks and EPF funds, it gets all fucked up as neither the private nor the public banks are safe! :O
If any of you have any huge deposits anywhere, withdraw them as soon as you can, or else we may be weeping like how people did when Sakvithi swindled us all, only that these banks collapsed not because of a fraud, but because of a global meltdown!
Hey Indi, I’m surprised that you did not mention the last crisis on a similar scale: the Great Depression. It was also a worldwide depression.
Ben Bernanke is a student of the subject, which is why the US response has been more aggressive than the EU.
He has published a book of essays on the subject:
http://press.princeton.edu/titles/6817.html
This is also the incident that lead Keynes to the General Theory.