We read a morning update from John Robb that we liked so much we thought we'd ask John if we could pass it on in its entirety. Robb's book, Brave New War: The Next Stage of Terrorism and the End of Globalisation was one of the best books we've read in the last few years about the world we're moving toward. He continues to write about the major changes in the world and today's letter is a doozy. If you like what you read below, make sure you check out his blog at http://globalguerrillas.typepad.com/globalguerrillas/
Today Robb wrote about "The Three Horsemen of the Global Apocalypse." He writes that, "There's some confusion relative to whether the depression (D2 in shorthand) is over or not. It's not. The process will be uneven, but it will continue. Why? The three horsemen continue to ride:
- A huge, complex, and fast moving global system that isn't under any meaningful level of control. The computer automated interconnectedness of this system makes very easy to spread contagion. Worse, this system is leveraged to the hilt with debt and riven with imbalanced feedback loops (Chinese/German mercantilism). Any crisis can set off a global crash. NOTE: Rick Bookstabber (via Kedrosky) thinks a collapse in the municipal bond market will be the source of the next crisis.
- A financial oligarchy that has shifted loyalties to the global market (think in terms of the shift to primary loyalties in fourth generation warfare). This group is highly destructive to its host, and in a process similar to cancer have co-opted normal market function via the establishment of the shadow banking system. The huge size and opacity of this system has allowed them to systematically loot the middle class and gut national treasuries (via a process known as control fraud). If municipal bonds are the cause of the next global financial collapse, these oligarchs will be center stage: note JP Morgan's role in the collapse of a municipality in Alabama.
- A plethora of violent super-empowered guerrilla groups. The legitimacy of nation states will continue to diminish due to a financial insolvency (which means it won't be able to finance social/stability programs), successive global shocks, and tolerance of looting by a financial oligarchy. As national legitimacy weakens, people will give their loyalty to groups (gang, church, tribe, etc.) that can protect and provide for them. Many of these groups will be violent. As these groups multiply in number, open source warfare and systems disruption will spread. For the US, think in terms of what is going on in Mexico or what went on in the USSR post collapse, but bump it up a couple of orders of magnitude.
There's a lot to think about there. More on the value of a big picture view tomorrow. Until then...
for The Daily Reckoning Australia
- Cyber Warfare: When Your Credit Card Stops Working
- Why Retirements Are Going Bust, Again
- Apocalypse Now
- Football, a Substitute for Armed Warfare
- What Makes the Wheels on a Bus Go “Round and Round”? Electricity!
About the Author
Dan Denning is the author of 2005's best-selling The Bull Hunter (John Wiley & Sons). He began his financial publishing career in 1997 and has covered financial markets form Baltimore, Paris, London and, beginning in 2005 Melbourne. He’s the editor of The Daily Reckoning Australia and the Publisher of Port Phillip Publishing.