Youtube video on Aus, China and USA

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This is the fifth video from an inter­view by Benny Sut­ton:

It’s less ana­lytic than my usual effort–I don’t have the data to be an “expert” on China, and I doubt that I’d trust the data all that much even if I did have it. But I reflect on what could hap­pen to Aus­tralia if China’s cur­rent boom proves to be dri­ven by poorly directed credit, and dis­cuss China’s very delib­er­ate and suc­cess­ful pro­gram of indus­tri­al­iza­tion in the last 3 decades, where pre­dom­i­nantly US cor­po­ra­tions were encour­aged to relo­cate tech­nol­ogy and pro­duc­tion to China. The Chi­nese ensured that there was the devel­op­ment of a viable cap­i­tal­ist class, as well as a growth in employment–unlike many other devel­op­ing nations fol­low­ing export-ori­ented indus­tri­al­iza­tion strategies–by requir­ing for­eign ven­tures to have a local part­ner, and trans­fer­ring a large slab of the own­er­ship to that part­ner over time.

About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.
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  • Robert K

    Dear pro­fes­sor Keen: Your loyal read­ers would very much like to hear a brief sum­mary of the events and talks you expe­ri­enced and par­tic­i­pated in dur­ing
    your recent trip to Spain, Great Britain and France. Would you con­sider oblig­ing?
    Did you get to see Hugh Hendry? Best regards

  • Steve, I couldn’t have said it bet­ter myself. The US is still run­ning a large trade deficit, largely financed by its own gov­ern­ment. A coun­try can only import more than they export if their econ­omy is largely credit dri­ven. The trade deficit in the US took off when Greenspan took action to keep the stock bub­ble going in the late 1990’s dur­ing the Asian debt cri­sis. Then, once that bub­ble broke, FNMA and other mort­gage oper­a­tions took over. In fact, from what I read in Doug Noland’s column’s over the past decade, the mort­gage bub­ble actu­ally started with the stock bub­ble, mort­gage lend­ing pro­vid­ing the col­lat­eral for cash to fuel the stock bub­ble. From my under­stand­ing, your com­ments are very accu­rate.

  • There are also some extremely inter­est­ing and rel­a­tive posts from Mish today:

    http://globaleconomicanalysis.blogspot.com/

    On China refi­nanc­ing the World of losers and rebuild­ing failed Nations:

    http://globaleconomicanalysis.blogspot.com/2011/06/china-rebuilds-san-francisco-oakland.html

    I have to admit that I was wrong as I pre­dicted back in 2006 that it would be a reborn USA that would become the Engi­neer­ing and man­u­fac­turer of the World: obvi­ously it appears that China is and will take on this role.

    But I was cor­rect in the pre­dic­tion of the UT +8 time line from Perth to Vladi­vos­tok where Perth sup­plies the raw mate­ri­als (dirt) and Asia the engi­neer­ing exper­tise, com­pe­tence, and abil­i­ties and tech­nolo­gies. This includes the main cities of Sin­ga­pore, KL, Djakarta, Hong Kong, Taipei, Shang­hai, Seoul, Tokyo, Bei­jing, Vladi­vos­tok and rep­re­sents the wealth dis­tri­b­u­tion cen­tres for the next 100 years or so.

    Sin­ga­pore has already become a major expat cen­tre; a hive a activ­ity — again.

    The rest wal­low in the warm dream time of repeated vision-less fail­ure.

    Soon China will move onto the High Speed rail to Sin­ga­pore and then the rail sys­tem that con­nects the World and across the Bering Straits to the Amer­i­cas,
    through India and the Mid­dle East to Paris and back through Rus­sia to Vladi­vos­tok. And along with this will come the Cop­per and Fibre.

    And the Aus­tralian “lead­er­ship” keep their heads stuck firmly in the ground as the National hole gets deeper as they stick it to the Dig­gers.

    We need to pray to the Gods for some real lead­er­ship before it is too late.

  • @Steve

    I am not con­cerned, now, at all about China as it is pro­ject­ing itself through­out the World at an amaz­ing pace and replac­ing the failed West with cap­i­tal, engi­neer­ing, cheap man­u­fac­tured goods, inno­v­a­tive eco­nom­ics, pro­tec­tion which in essence, is broad­en­ing its base of influ­ence.

    I see the World get­ting very tired and so revulsed by US aggres­sion, bomb­ings, lies, threat, intim­i­da­tion and bull­shit and although, to the man in the street every­where, the US is / was most favourable, the image has worn thin; the USA is dying.

    And, China is chang­ing mate­ri­ally, polit­i­cally (slightly), emo­tion­ally, socio-eco­nom­i­cally and eco­nom­i­cally; it is get­ting more sophis­ti­cated, more tech­no­log­i­cally upgraded, bet­ter equipped, more worldly and more wiser. I see that China appears to have got its lead­er­ship mind wrapped around the Big Pic­ture as to where the World now parses.

    We may have some ups and down but, for West­ern Aus­tralia, the future is bright but unfor­tu­nately, we have lit­tle oppor­tu­nity to do any­thing here except dig­ging holes and buy­ing over priced houses. 

    Maybe with the US mil­i­tary mov­ing ahead with its Occu­pa­tion, there will be some jobs clean­ing their floors and pol­ish­ing their cars. off/sarc

    In March 09 2006 I wrote on my Blog, Ver­be­warp, “A Warn­ing to the East”:

    West­ern Civ­i­liza­tion is in a rapid State of Decline
    and there­fore Imi­tate them at your Own Peril”

    It is so True.

    The West and Aus­tralia des­per­ately needs new Lead­er­ship — a new vision, intel­lect, and Erfahrung — and finally bring release by declar­ing an inde­pen­dent Repub­lic of Aus­tralia and bring the Jour­ney of the Hero to all our Youth.

    And:

    Let the dead bury the dead.

  • The Aussie real estate bub­ble depends on China, and China is in the midst a hous­ing bub­ble big­ger than any in the globe, except from Aus­tralia!! By any mea­sure The Aussie bubble’s on a far larger scale and less sus­tain­able that Chi­nese bub­ble. Just like Oz, China’s invest­ing in point­less excess infra­struc­ture nobody needs includ­ing huge over-sup­ply of homes. Sure, Aus­tralia might have had strong pop­u­la­tion growth in the past to fill those houses, but the lat­est ABS data shows immi­gra­tion in freefall.

    For Aus­tralia, the party’s over and every­one knows it. Ven­dors are now tak­ing their over­priced homes off the mar­ket and putting them up for rent because they can’t sell! It was obvi­ous asset prices couldn’t keep ris­ing for­ever!

    Aus­tralia has a seri­ous debt prob­lem that needs to be addressed. But at the moment it’s not even being acknowl­edged. Why not? Could it be that if we acknowl­edge the debt and the need to deal with it, we have to acknowl­edge its cause? And could it be that the cause is too unpalat­able to reveal? Could it be that suc­ces­sive Aus­tralian gov­ern­ments, along with busi­ness, have been run­ning a Ponzi scheme with our assets, our resources and our future? It’s unsus­tain­able. Auc­tion results have totally col­lapsed. No gov­ern­ment wants house price growth to slow but it’s unavoid­able now.

    Slow growth under­mines the short-term share price of big busi­ness (and CEO remu­ner­a­tion), as well as the elec­toral per­for­mance of the gov­ern­ment. So to facil­i­tate growth, the Gov­ern­ment turns a blind eye to the fact that a sig­nif­i­cant pro­por­tion of demand fuelling “growth” is debt dri­ven; debt-financed demand has con­sti­tuted around 20% of total demand in the Aus­tralian econ­omy. The best way to keep growth on the up and up is to keep every­one spend­ing and money cheap. Con­sumers are told that spend­ing is the right thing to do by busi­nesses that profit from con­sumer expen­di­ture and by gov­ern­ments who bask in the glory of boom­ing growth fig­ures.

    The avail­abil­ity of cheap credit and con­sumer binges dri­ves up prices, so more debt is needed to keep the spend­ing going. Peo­ple feel wealth­ier as their house prices have gone up and they have more stuff, but they don’t realise that neg­a­tive gear­ing and sim­i­lar tax rorts just makes things worse. Peo­ple their house will fund their retire­ment, so they are happy to spend more and save less. Every­one is happy – par­tic­u­larly busi­ness and gov­ern­ment — so long as the spend­ing binge con­tin­ues – and money can be found to keep ser­vic­ing the moun­tains of debt being accu­mu­lated. And therein lies the rub. How is all this debt to be financed?

    Rob Fisher
    Aus­tralian Prop­erty Price Crash Forum

  • sir­ius

    I love the pat­terns (lifted from another blog)…

    …The Fall of Rome

    …In the fifty years after Dio­clet­ian the Roman tax bur­den roughly dou­bled, mak­ing it impos­si­ble for small farm­ers to live on their pro­duc­tion (Bernardi 1970: 55). [14] This is what led to the final break­down of the econ­omy (Jones 1959). As Lac­tan­tius (1984: 13) put it:

    The num­ber of recip­i­ents began to exceed the num­ber of con­trib­u­tors by so much that, with farm­ers’ resources exhausted by the enor­mous size of the req­ui­si­tions, fields became deserted and cul­ti­vated land was turned into for­est.

    …The wealthy effec­tively were able to evade tax­a­tion through legal and ille­gal mea­sures, such as bribery. By con­trast, the ordi­nary cit­i­zen was help­less against the demands of the increas­ingly bru­tal tax col­lec­tors…

    …In the end, there was no money left to pay the army, build forts or ships, or pro­tect the fron­tier. The bar­bar­ian inva­sions, which were the final blow to the Roman state in the fifth cen­tury, were sim­ply the cul­mi­na­tion of three cen­turies of dete­ri­o­ra­tion in the fis­cal capac­ity of the state to defend itself. Indeed, many Romans wel­comed the bar­bar­ians as sav­iors from the oner­ous tax burden.[15]…

    In con­clu­sion, the fall of Rome was fun­da­men­tally due to eco­nomic dete­ri­o­ra­tion result­ing from exces­sive tax­a­tion, infla­tion, and over-reg­u­la­tion. Higher and higher taxes failed to raise addi­tional rev­enues because wealth­ier tax­pay­ers could evade such taxes while the mid­dle class–and its tax­pay­ing capacity–were exter­mi­nated. Although the final demise of the Roman Empire in the West (its East­ern half con­tin­ued on as the Byzan­tine Empire) was an event of great his­tor­i­cal impor­tance, for most Romans it was a relief.…

    http://www.cato.org/pubs/journal/cjv14n2-7.html

    I will add this on to the one by Mar­tin Arm­strong who seems to have stud­ied Roman coinage at length.

  • alain­ton

    @sirius

    The fall of the Roman Empire is a case which has got increas­ing atten­tion in recent years because many of the fusty anti­quar­ian pre­con­cep­tions — that Rome was a ‘con­sump­tion city’, that its cul­ture was anti-trade etc. have one by one shown to be false –just so — sto­ries — indeed from the late repub­li­can era onwards Rome seems to have been Cap­i­tal­is­tic in all impor­tant aspects but one — that a large por­tion of its work­force (espe­cially in rural areas) was slave. 

    How­ever it is by no means clear why slav­ery should dis­qual­ify it from being con­sid­ered cap­i­tal­ist. It cer­tainly slows the rate of indus­tri­al­i­sa­tion from ‘prim­i­tive accu­mu­la­tion’, but cer­tainly didn’t stop it, many cap­i­tal­ist agri­cul­tural enter­prises have relied on slave labour, even to this day, and in the mid-repub­lic much slav­ery orig­i­nated from peo­ple escap­ing debt bondage through ‘vol­un­tary’ slav­ery. Over­all the marx­ian con­cept of an onward and upward one way march through ‘modes of pro­duc­tion’ seems unhelp­ful, and trapped in Hegelian and Vic­to­rian ideas of progress. Ways of pro­duc­ing have failed, and empires with them. Indeed Rome may be regarded as a cap­i­tal­ist empire which has failed, pro­duc­ing a dark age last­ing 800 years, until cap­i­tal­ism re-emerged from the never lost seeds in Con­stan­tino­ple via the cru­sades. It is cer­tainly a warn­ing to us today.

    Sir­ius I cant swal­low though the Cato Insti­tute view of imag­ing the Roman Empire to be like their con­cept of social­ism, or Roman Emper­ors to be Oba­mas in togas. The num­ber of Roman state offi­cials was tiny and taxes were low (but rigid and tax farm­ing often exploita­tive).

    The bound­aries of the Roman empire, and the mar­gin of cul­ti­va­tion, did retreat, and this I think is the key to under­stand­ing the col­lapse, as it reduced the total amount or rent down­wards, but it retreated for sev­eral com­plex inter­con­nected rea­sons, that can only be under­stood through a sys­tems per­spec­tive: the costs of main­tain­ing legions at an extended fron­tier, leav­ing some areas unde­fended with a retreat to defended home­steads at the fron­tier (the ori­gins of feu­dal­ism) the expan­sion of the mar­gins of cul­ti­va­tion to mar­ginal lands caus­ing eco­log­i­cal degra­da­tion, the fact that eco­nomic growth was dri­ven by ‘free land’ which had run out, the lack of free land to give to legionar­ies less­en­ing their incen­tive to fight and requir­ing a rise in mil­i­tary quasi-mer­ce­nary costs, and with ris­ing mil­i­tary costs, and with the rise of Chris­tian­ity the unavail­abil­ity of pri­vate credit, the debase­ment of the cur­rency. Despite the shift for­ward 1,700 years many of these prob­lems of expan­sion hit­ting lim­its, and these lim­its con­cern­ing food sup­ply, apply today.

    The rise of clio­dy­nam­ics, the recov­ered under­stand­ing that value the­ory derives from food and land, and the recog­ni­tion that power and mate­ri­al­ism drive each other, not uni-causally, is finally giv­ing us sophis­ti­cated tools to model this, more var­ied than the lim­ited but use­ful Marx­ian tools, and over­comes the rea­son that insti­tu­tional eco­nom­ics lost out to neo­clas­si­cism, its lack of a mod­elled expla­na­tion for eco­nomic col­lapse.

    I’m get­ting through these his­tor­i­cal issues in, im sorry, painstak­ing detail in my blog, and will get to the detailed Roman econ­omy analy­sis, and a cri­tique of that Cato paper, in a cou­ple of weeks time. (sorry the posts appear in reverse order)

    https://andrewlainton.wordpress.com/category/political-economy/capitalisms-last-frontier/

  • alain­ton

    Arti­cle in LA times based on new chi­nese audit

    Munic­i­pal loans need­ing refi­nanc­ing equiv­a­lent to 27% of gdp!

    http://latimesblogs.latimes.com/money_co/2011/06/chinas-national-audit-office-said-monday-that-local-governments-had-amassed-165-trillion-of-debt-by-the-end-of-last-year.html

    Chi­nese toxic debts look of a mag­ni­tude to take up most of its $2.4bn for­eign cur­rency reserves, cant see how it can afford to bail out and take over the devel­oped world.

  • Scott M

    Thanks for the video Steve, I love all your video’s and always look for­ward to the next one. We’ve been here before with the Japan­ese mir­a­cle. Every­thing goes up up up and doesn’t come down, then defla­tion hap­pened and where were we? Sim­ple logic to some, though to oth­ers grav­ity does have an effect. I’ve been read­ing a bit and thought of shar­ing. There are some good arti­cles cov­er­ing these issues. A very good arti­cle to start that breaks down China’s debt is on the wall street Jour­nal “China Puts a Num­ber on Local Debt” that has a break­down of debt (82% of gdp accord­ing to Drag­o­nom­ics): http://online.wsj.com/article/SB10001424052702304447804576411013575221104.html?mod=googlenews_wsj, There is another arti­cle “China Risks Being Next Prop­erty-Bub­ble Blow Up.” http://online.wsj.com/article/SB10001424052702304569504576403793565756986.html?mod=WSJ_article_MoreIn_Asia. Then there is the issue of ghost cities: http://www.businessinsider.com/chinese-ghost-cities-2011–5.
    Then there is an arti­cle on Bloomberg about China head­ing for a hard land­ing: http://www.bloomberg.com/news/2011–06-27/why-china-s-heading-for-a-hard-landing-part-1-a-gary-shilling.html.
    In money morn­ing there is also an arti­cle on “Why China risks repeat­ing an Amer­i­can Dis­as­ter”: http://www.moneymorning.com.au/20110627/why-china-risks-repeating-an-american-disaster.html.
    Though oth­ers point out the increase in GDP that off­sets that prob­lem: http://www.financialfeed.net/despite-slow-growth-chinese-economy-seen-to-recoil/853503/

  • @ Alain­ton June 28, 2011 at 9:19 am | #

    Chi­nese toxic debts look of a mag­ni­tude to take up most of its $2.4bn for­eign cur­rency reserves, cant see how it can afford to bail out and take over the devel­oped world.”

    You have to take into your con­sid­er­a­tions that China has enor­mous pos­i­tive cash inflows, whereas the US has huge cash-burn. China also has glob­ally wide and a grow­ing trade spread which has much depth. Also the atti­tudes and loy­al­ties of the major­ity of its peo­ple is strong.

    China’s major­ity of cash burn is sup­port­ive of their long term vision­ary focus where the West is focussed on sta­tism and the com­fort of the day; sta­tus quo. The US vision, the PNAC (cough, cough) is entrenched in a destruc­tive belief for God and Dom­i­nance and as such will never hold the cen­tre.

    Roman Empire: The Roman Emper­ors were also great experts at coinage clip­ping, just as they are today. Noth­ing much has changed in socio-eco­nom­ics over the past ~3000 years — and that’s the prob­lem.

  • An inter­est­ing obser­va­tion:

    A group of vul­tures is called a com­mit­tee, venue and or wake.

    Remind me that the Irish Pound is termed a Punt

    😉

  • MMitchell

    Based on the (I admit lim­ited) evi­dence I have seen I tend to agree with Alain­ton that the Roman decline was pri­mar­ily due to their unsus­tain­able envi­ron­men­tal prac­tices (i.e extract­ing more than the land could sup­port) which turned much of North Africa into desert. Appar­ently, the Roman empire was estab­lished due to the supe­rior agri­cul­ture and health of its cit­i­zens, but as Romans gave up farm­ing and left it to their slaves and hired help (as absen­tee land­lords) these prac­tices qucikly devolved. In the end they found that they had con­sumed and degraded most avail­able agri­cul­tural land. 

    For some ref­er­ences see:

    http://soilquality.org/history/history_civilizations.html

    An early ver­sion of Top­soil and civ­i­liza­tion. by Ver­non Gill Carter and Tom Dale is avail­able from the Soil and Health library.

    Note, this still does not let us off the hook, it just empha­sises that our own envi­ron­men­tally unsta­ble prac­tices are likely to com­pound our eco­nom­i­cally unsta­ble ones.

  • @ MMitchell June 28, 2011 at 3:03 pm | #

    Based on the (I admit lim­ited) evi­dence I have seen I tend to agree with Alain­ton that the Roman decline was pri­mar­ily due to their unsus­tain­able envi­ron­men­tal prac­tices (i.e extract­ing more than the land could sup­port) which turned much of North Africa into desert. ”

    I find that which you state above rather hard to accept: there is cer­tainly evi­dence that indi­cates that much of North­ern Africa was semi-desert at least 1500 years before the Roman Empire. Cer­tainly they destroyed Carthage brick by brick but this had noth­ing to do with soil prac­tises.

    Could you pro­vide some spe­cific ref­er­ences to sup­port this state­ment please?

    I believe that the Roman Empire broke down because the socio-eco­nomic moral and eth­i­cal fab­ric of the lead­er­ship descended into the abyss. In other words, lead­er­ship lost the long term intel­lec­tual focus and wal­lowed pref­er­en­tially in sta­tism, value depre­ci­a­tion and cur­rency debase­ment — as the West does today.

  • Lyon­wiss

    Peter­jbolton June 28, 2011 at 4:47 pm

    An ear­lier post of yours about the poor treat­ment of retired dig­gers sug­gests that if Aus­tralia were an empire, like that of ancient Rome, it would be start­ing its decline. Accord­ing to one the­ory:

    Roman his­tory is par­tic­u­larly impor­tant to us because the fall of the Roman Empire was 

    caused by a pen­sion cri­sis. No more, no less. Its fall was not caused by deca­dence, rev­o­lu­tion, ris­ing power of mighty ene­mies, but by pen­sion schemes. The lack of land to be given to vet­er­ans as retire­ment income caused the col­lapse not only of an econ­omy and a very effec­tive state, but also a cul­ture that we are still try­ing to catch up with. Our law sys­tems do not just have a Roman ori­gin, they are Roman and all efforts to improve the design have utterly failed.”

    The full arti­cle (speech) is here:

    http://www.rotman.utoronto.ca/userfiles/departments/icpm/File/Jan%20van%20de%20Poel_Dinner%20Speech_%20Que%20Sera%20Sera_October%202007.pdf

    I would be inter­ested in a more schol­arly treat­ment of this idea, if any­one has other ref­er­ences on this sub­ject.

  • @ Lyon­wiss
    June 28, 2011 at 6:47 pm | #
    Peter­jbolton June 28, 2011 at 4:47 pm

    An ear­lier post of yours about the poor treat­ment of retired dig­gers sug­gests that if Aus­tralia were an empire, like that of ancient Rome, it would be start­ing its decline. Accord­ing to one the­ory:
    “Roman his­tory is par­tic­u­larly impor­tant to us because the fall of the Roman Empire was caused by a pen­sion cri­sis.”

    Yes, I have read var­i­ous opin­ions along these lines, how­ever, to pin­point a sin­gu­lar cause for the down­fall of Empire is mere poorly paced opin­ion and lacks sound knowl­edge of the com­plex­i­ties of human behav­iours and their inter-depen­dant entan­gle­ments.

    On my Blog Ver­be­warp, in July and August 2006 under the prime titles of Global Eco­nomic Col­lapse you will find numer­ous rea­sons listed in the two arti­cles as to some of the Causes behind the col­lapse of Empire. I do not sug­gest that these lists are com­plete, au con­traire, but I have posted them as exam­ples lead­ing to, col­lec­tively, the demise of State.

    But say­ing that, there are many other con­sid­er­a­tions to be taken into account as well, includ­ing the numer­ous fil­a­men­tary streams of of human attrib­utes and hence col­lec­tive divi­sions that com­prise the whole stream of all the social ele­ments and the active and weighed attrib­utes of dom­i­nate pow­ers which con­tributes to the gov­er­nance strata which holds the Empire together in a cohe­sive order­ing. All coloured by the pas­sions, emo­tions, desires, bents, milieux of men and envi­ron­ment; wet and dry; hot and cold.

    Nor­mally, the glue that does main­tain the order is the par­a­digm and hence the directed will of each indi­vid­ual of the State and it is my the­sis that observes that when the elite du jour of “lead­er­ship” rises to its peak dys­func­tional lev­els, as today, the struc­ture that holds together the nec­es­sary socio-eco­nomic orga­ni­za­tions, crum­bles, and this in turn, frag­ments, and frac­tures those orga­ni­za­tions. ‘Min­sky: Sta­bil­ity leads to Insta­bil­ity…’ the col­lapse begins at the begin­ning of Empire; it is so writ­ten in the sands of time.

    That which needs to be said, has been said.

    So, what has hap­pened? Indeed, the will of courage, hon­our, vision, com­pas­sion becomes in time, extrap­o­lated far beyond the com­pe­tences of those of the found­ing fathers at the time of the orig­i­na­tion of State and Empire. They have for­got­ten. They have no expe­ri­ence of… , and they lack the wis­dom of hav­ing a cul­tural mem­ory that has been entrenched into the soul and minds of the time before yet that is, at the time of the orig­i­nat­ing expe­ri­ences (Erfahrung)

    So, these more mod­ern elite “lead­ers” inherit a sys­tem that they do not under­stand and fail to appre­ci­ate its com­po­nen­tial rela­tion­ships and their inher­ent val­ues. IOW they per­pet­u­ate a com­plex sys­tem founded on opin­ion — their opin­ions — extended beyond any thresh­old of intel­li­gi­ble and rel­e­vant thought in rel­e­vance and ref­er­ence. This is why we see these cycles as the intel­lec­tual assets and expe­ri­ence of gov­er­nance devolves to a default where lit­eral inter­pre­ta­tions of Laws, Statutes and Reg­u­la­tions are deter­mined in rote and imi­ta­tion with­out the forces of wis­dom and sagac­ity; and so, super­fi­cially. Nat­u­rally as the cycle advances, the par­a­digm of the ori­gins of Empire are for­got­ten and dis­carded for child­ish rep­e­ti­tion of par­roted patri­o­tism themes and such like mind­less streams of pul­sat­ing pro­pa­ganda.

    No, the sin­gu­lar cause of the end of Empire, is the failed state of mind of the cho­sen “lead­er­ship” who become more men­tally chal­lenged as time passes. The nei­ther have the steele nor capac­ity to arise to intel­lect nor the inher­ent but earned val­our of courage which cre­ates greater dilemma by the build­ing of fear and shame of fail­ure. This is the cor­rup­tion by power which is basi­cally of shame, aris­ing fear, incom­pe­tence, lack of courage and inabil­ity and arro­gance through influ­ence of wealth and by wealth.

    All mod­ern day “lead­er­ship” demand sta­tism and reject change; change is a mat­ter of the nat­ural enquiry, sci­ence, phi­los­o­phy, art, music but lead­er­ship is drawn from the pro­fes­sion of scribes and mid­dle­men, that is to say, the camp fol­low­ers and their pots and pans. Today’s “lead­er­ship” know only the Pol­icy of the Recur­sive.

    Pen­sions goug­ing are just another exam­ple of active coinage clip­ping that has been going on well over 2000 years, and remains today good sport where the prey are those that are con­sid­ered too old and too spent to be of any fur­ther value to today’s “lead­er­ship”.

    Empire is the hun­gry State that needs and demands exoge­nous inflows to main­tain its cor­rupted arro­gance and lever­aged imbal­ances.

    A Politi­cian will never let suc­cess stand in the way of fail­ure: ancient sage.

  • alain­ton

    Sur­prised noone has posted link to the BIS shrap­nel report pre­dict­ing no fall in house prices in OZ to 2013
    http://finance.ninemsn.com.au/newscolumnists/chris/8265886/oz-property-prices-to-grow-through-2013-bis-shrapnel

    To my mind rental yields in key cities look dan­ger­ously low and close to security/gilts lev­els. http://www.globalpropertyguide.com/Pacific/Australia/Rental-Yields

    Once that hap­pens its a pretty sure fire indi­ca­tor that there will be a crash within 24 months or so as invest­ing in prop­erty becomes a fun­da­men­tally ponzi/irrational prac­tice dis­conec­cted from rental return real­i­ties. BIS Shrap­nel do make a few good points though about the need to split growth in house­holds by age brack­ets because of dif­fer­ing propen­sity to form house­holds — par­tic­u­larly with the 24–34 age cohort

    ROME, the new obses­sion of every­body and rightly so.

    Just to say I didnt say eco­log­i­cal degra­da­tion was pri­mary cause, but one of many (in Carthage began by Carthagin­ian) includ­ing as Peter­JBolton says the costs of sup­port­ing land­less retired legion­naires.

    As Peter Turchin has said ‘more than two hun­dred expla­na­tions have been pro­posed for why the Roman Empire fell. But we still don’t know which of these hypothe­ses are plau­si­ble, and which should be rejected. More impor­tantly, there is no con­sen­sus on what gen­eral mech­a­nisms explain the col­lapse of his­tor­i­cal empires.’ Not a coun­cil of despair but a call to arms, many of those work­ing in the Clio­dy­nam­ics field are try­ing to stitch the con­nec­tions together and the more we do the greater the par­al­lels to today become.
    http://cliodynamics.info/

    I see it as a bit like when in the early renais­sance clas­si­cal sculp­tures were dug up as trad­ing cities expanded, caus­ing many to reflect on the mori­bund state of art, today we find the same from dig­ging up his­tory to explain our mori­bund eco­nom­ics.

  • sir­ius

    @Lyonwiss

    I would be inter­ested in a more schol­arly treat­ment of this idea, if any­one has other ref­er­ences on this sub­ject.”

    I don’t know if you have read the fol­low­ing…
    http://www.contrahour.com/contrahour/files/ItsJustTimeMartinArmstrong.pdf

    I read that doc­u­ment a long time ago (in the “early days”) and found it inter­est­ing. Arm­strong starts writ­ing around at page 13 where he writes…
    “This is where the phase tran­si­tion takes place. The mon­e­tary sys­tem col­lapses dur­ing the reign of Gal­lienus (253-260AD)”

    I also found this doc­u­ment (which I have never read)…
    http://armstrongeconomics.files.wordpress.com/2011/05/armstrongeconomics-rome-unfunded-pensions-051811.pdf

    He has writ­ten loads of stuff and life story is of note.

    Here is another…
    Mar­tin wrote: “The entire period of ris­ing polit­i­cal chaos appears to begin with 1999 going into at least 2011 but more likely late 2012. The 224 year cycle that began with the start of the Amer­i­can Rev­o­lu­tion will reach its end of the most chaotic period 2012.471 which is 224 years from the last state of Nine required to rat­ify the con­sti­tu­tion, which was New Hamp­shire on June 21, 1788.
    http://princetoneconomics.blogspot.com/2008/09/decline-fall-of-united-states.html

    It is likely that you are aware of all these writ­ings but I thought to post in any case for any­one else that is inter­ested.

  • sir­ius

    Miantream atten­tion.

    NewsWeek” is a reg­u­lar main­stream TV pro­gram that I just hap­pened to watch last night (I don’t ordi­nar­ily watch TV).

    The pre­sen­ter Jeremy Pax­man (a well known name in the UK) was talk­ing about China and USA. The del­cine of the USA was the topic of dis­cus­sion.

    It appears that the sen­ti­ment is becom­ing more wide­spread, acknowl­edged and vocal. 

    (It tran­spired that China has been buy­ing up large parts of Africa and also resources).

    Appar­ently China has now dis­placed Japan from 2nd posi­tion in the ranks of “world’s largest economies” (USA cur­rently hold­ing “top spot”).

    p.s. I don’t care what the fig­ures say — it is the mes­sage that is impor­tant.

  • sir­ius

    Clar­ity

    It appears that the sen­ti­ment.. ”

    I should have said…
    “It appears that the sen­ti­ment of China assum­ing posi­tion as the No 1 global econ­omy is becom­ing more wide­spread, acknowl­edged and vocal”. 

    I see this as a “phase shift”

  • MMitchell

    @Peterjbolton
    June 28, 2011 at 4:47 pm | # 

    The ref­er­ence I sug­gested is the one I know best. It is inter­est­ing as it looks at the same pat­tern across a num­ber of civil­i­sa­tions to make its case for Rome.

    An early ver­sion of Top­soil and civ­i­liza­tion. by Ver­non Gill Carter and Tom Dale is avail­able from the Soil and Health library.”

    I agree that this soil degra­da­tion was prob­a­bly not the only cause but I sug­gested it was the pri­mary cause, of course I don’t have the breadth of knowl­edge that some peo­ple do here. In any case, I am not sure that is rel­e­vant. Peo­ple in future will prob­a­bly have the same thing to say about our cri­sis today i.e it could be attrib­uted to any num­ber of things. What is pos­si­bly true is that any one of these crises (now and then in Rome) on its own, would prob­a­bly be suf­fi­cient to bring down the empire, given suf­fi­cient time, a com­bi­na­tion of things maybe just moves the even­tual col­lapse for­ward.

    I think another the­ory was put by Joseph Tain­ter in “The Col­lapse of Com­plex Soci­eties” which I think sug­gests that over time rules, pro­ce­dures, insti­tu­tions etc become so unwieldy as to be unwork­able. I can see that already with my local coun­cil bylaws 🙂

  • Lyon­wiss

    Sir­ius June 29, 2011 at 4:43 am

    Thanks. The sec­ond ref­er­ence appears most rel­e­vant. But Mar­tin Arm­strong is cer­tainly het­ero­dox, with some­thing to mull over.

  • alain­ton

    Thanks for the Rome ref­er­ences peo­ple

    The thing about top­soil is that it doesnt degrade if it is fer­tilised and nutri­ents are recy­cled. The Roman empire extended to a degree that didnt hap­pen, large scale wheat farm­ing to sup­ply large cities with bread. With the decline in soil qual­ity the mar­gin of cul­ti­va­tion declines and prices rise — trig­ger­ing other eco­nomic effects

    North Chi­nas Arable regions have only 20 years of water left, hence the dash to Africa.

  • alain­ton

    Very inter­est­ing inter­view with Andrew Sheng at INET Bret­ton Woods think­ing (he’s an advi­sor to the Chi­nese Bank­ing Reg­u­la­tory Com­mis­sion)

    http://ineteconomics.org/video/andrew-sheng-sustainability-requires-caging-godzillas

    His the­sis is the finan­cial sec­tor is ungovern­able and debt is the prob­lem. Firmly cir­cuitist reproacher. Quote:

    Sheng says that what he learned about free mar­kets at uni­ver­sity — and what he prac­ticed until 2008 — he now views as an intel­lec­tual dead-end. He believes that the takeover of pri­vate debts and zero-inter­est rate poli­cies by gov­ern­ments around the world are both attempts to post­pone the busi­ness cycle. He calls large com­plex finan­cial insti­tu­tions that move finan­cial cap­i­tal around the globe ungovern­able Godzil­las. These are a few of the many firm judge­ments com­ing from the Chief Adviser to the China Bank­ing Reg­u­la­tory Com­mis­sion.

    The world econ­omy would see the mother of all crises, Sheng warns, if gov­ern­ments fail at man­ag­ing the lever­aged cap­i­tal that is flow­ing into emerg­ing mar­kets these days.’

  • sir­ius

    The thing about top­soil is that it doesnt degrade if it is fer­tilised and nutri­ents are recy­cled.”

    From my research that appears not to be the case.