Global Fluidity and the Planetary Panic!
Published in 24 Heures
(Switzerland) on 9 October 2007
by Dr. Claude Monnier (link to original)
(Switzerland) on 9 October 2007
by Dr. Claude Monnier (link to original)
Translated from
by Mike Goeden.
Edited by .
There is now a great deal of concern over the global effects of the American subprime crisis. Even our very own UBS [a financial services company], well known for its supposed prudence, didn't emerge from this risk mortgage affair unscathed - indeed, it ended up losing billions of dollars - and that says quite a lot.
But to focus exclusively on this crisis, we lose sight of the overall picture: that of the planet's ultimate "decompartmentalization." The final boundaries have fallen before capital, which now flows unfettered across the planet in search of greater profits, before merchandise, and before human migration, both legal and illegal.
Therefore the overall picture now is of a planet whose surface is entirely fluid, where everything circulates and flows freely. This presents enormous advantages, as we are now able to take systematic advantage of the best opportunities, thereby raising global wealth - which, it is true, remains unequally distributed. But it also presents an important drawback: any local upheaval, especially financial, now threatens to provoke a worldwide tsunami and global panic.
Three examples of this neo-fluidity: firstly, that of this same subprime crisis. Sixty years ago, we would hardly have noticed if a few thousand modest American workers suddenly found themselves incapable of paying their mortgages. Today, however, we're afraid of drowning.
Secondly, that of "sovereign investors." Several countries which were miserable only yesterday, thanks to the system's fluidity have accumulated wealth and intend to invest some $2.5 billion in our best Western businesses. But if rejoicing, we are appalled. And so the United States prevented the Chinese from buying their oil company, Unocal; French Arcelor screamed blue murder when the Indian Mittal attempted to take it over; and Vladimir Putin's Russia prevents Western oil companies from freely investing in its economy. And yet, what could be more natural in an entirely fluid system than such an "ebb and flow"?
Finally, that of a "return of inflation". To put it simply: China and a few other countries have become the world's factories thanks to an over-abundance of very cheap labor.
But the Chinese, Indians and Vietnamese have somewhat improved their standard of living and are now playing companies against one another and demanding higher salaries. Suddenly, the sweater that yesterday cost €100 in Europe today costs €120 - with higher prices still to come. Also, since the global factory is working at full capacity, global prices for raw materials, from oil to zinc to wheat, are soaring. Our beloved Asian factories have hit us square in the face with a return of inflation.
In short, when it proceeds smoothly globalization serves everyone's best interest. However, in the case of a serious local accident, it can quickly turn on us with the force of a tsunami - and you can imagine the resulting panic and damage! My Goodness, our elders were certainly right when they repeated to us: "You can't have your cake and eat it, too" - in other words, we can't have both the advantages of complete fluidity and complete protection from this same fluidity.
But to focus exclusively on this crisis, we lose sight of the overall picture: that of the planet's ultimate "decompartmentalization." The final boundaries have fallen before capital, which now flows unfettered across the planet in search of greater profits, before merchandise, and before human migration, both legal and illegal.
Therefore the overall picture now is of a planet whose surface is entirely fluid, where everything circulates and flows freely. This presents enormous advantages, as we are now able to take systematic advantage of the best opportunities, thereby raising global wealth - which, it is true, remains unequally distributed. But it also presents an important drawback: any local upheaval, especially financial, now threatens to provoke a worldwide tsunami and global panic.
Three examples of this neo-fluidity: firstly, that of this same subprime crisis. Sixty years ago, we would hardly have noticed if a few thousand modest American workers suddenly found themselves incapable of paying their mortgages. Today, however, we're afraid of drowning.
Secondly, that of "sovereign investors." Several countries which were miserable only yesterday, thanks to the system's fluidity have accumulated wealth and intend to invest some $2.5 billion in our best Western businesses. But if rejoicing, we are appalled. And so the United States prevented the Chinese from buying their oil company, Unocal; French Arcelor screamed blue murder when the Indian Mittal attempted to take it over; and Vladimir Putin's Russia prevents Western oil companies from freely investing in its economy. And yet, what could be more natural in an entirely fluid system than such an "ebb and flow"?
Finally, that of a "return of inflation". To put it simply: China and a few other countries have become the world's factories thanks to an over-abundance of very cheap labor.
But the Chinese, Indians and Vietnamese have somewhat improved their standard of living and are now playing companies against one another and demanding higher salaries. Suddenly, the sweater that yesterday cost €100 in Europe today costs €120 - with higher prices still to come. Also, since the global factory is working at full capacity, global prices for raw materials, from oil to zinc to wheat, are soaring. Our beloved Asian factories have hit us square in the face with a return of inflation.
In short, when it proceeds smoothly globalization serves everyone's best interest. However, in the case of a serious local accident, it can quickly turn on us with the force of a tsunami - and you can imagine the resulting panic and damage! My Goodness, our elders were certainly right when they repeated to us: "You can't have your cake and eat it, too" - in other words, we can't have both the advantages of complete fluidity and complete protection from this same fluidity.