There is no shortage of collapse prognosticators that never tire of prognosticating that a financial calamity is right around the corner. I am not one of them; what I try to do is not prognosticate but explain. I take collapse to be something real—something that my readers can observe for themselves, if they care to look—and what interests me is its inner workings.
That said, when three famous figures simultaneously announce that financial collapse is around the corner, I suppose we should start paying attention. To me, it doesn’t even matter if their opinions are right or wrong, … What’s relevant is that if enough high-visibility individuals say that financial collapse is around the corner, then, given the reach and the force of their utterances, they no longer function as mere expressions of opinion but as speech acts that transform the state of the world—of the various mechanisms of international finance, in this case, from humming right along to getting ready to seize up.
First, let’s listen to Paul Krugman, an economics professor and the winner of a (fake) Nobel prize in economics (unrelated to Nobel but in fact handed out by some Swedish bank). ….
Our next Blind Man is George Soros. He is a nasty piece of work who has impoverished people around the world with his financial machinations and has worked hard to disrupt and destroy local cultures and societies using his Open Society initiatives. ….
Our final Blind Man is a woman: IMF chief Christine Lagarde, behind whose oompa-loompa complexion I have been able to discern a keen intellect. Speaking at the St. Petersburg economic forum, Lagarde spoke of the three clouds that are darkening the economic horizon.
The first dark cloud is the simply gargantuan sovereign debt of $162 trillion, or 225% of global GDP—an all-time record. … Lagarde’s second dark cloud is financial fragility; if the US tightens up the dollar supply by raising rates, capital will be drained out of the developing economies. In fact, the Federal Reserve is doing just that and has raised the federal funds rate again just last week; expect a July snowshower.
Lagard’s third, “biggest and darkest cloud” is the erosion of confidence “by attempts to challenge the way in which trade has been conducted, in which relationships have been handled, and the way in which multilateral organizations have been operating.” This is, of course, again all Trump’s fault. Whatever the problem, be it tariffs, Brexit, migrants, austerity, or a dangerous lack of confidence, all three great minds agree that Trump is to blame.
And in Imperial Collapse Markers
When the Soviet collapse occurred, the universal reaction was “Who could have known?” Well, I knew. I distinctly remember a conversation I had with a surgeon in the summer of 1990, right as I was going under the knife to get my appendix excised, waiting for the anesthesia to kick in. He asked me about what was going to happen to the Soviet republics, Armenia in particular. I told him that they would be independent in less than a year. He looked positively shocked. I was off by a couple of months. I hope to be able to call the American collapse with the same degree of precision.
This hindsight makes it possible for us to spot certain markers that showed up then and are showing up now. The four that I want to discuss now are the following:
1. Allies are being alienated
2. Enmities dissipate
3. Ideology becomes irrelevant
4. Military posture turns flaccid
All of these are plain to see already in the American collapse. As with the Soviet collapse, there is a certain incubation period for each of these trends, lasting perhaps a year or two, during which not much seems to be happening, but when it is over everything comes unstuck all at once.