Wednesday, 13 April 2016

The 5 phase of the global crisis and the 6 and 7 and 8!



Since 1984 (in Denmark and in the 1960ties in e.g. the USA) the globalization has gradually but with accelerating speed reduced the industrial production in “The Old Industrialized Countries” and simultaneously their companies has become internationalized.
As the prevailing economic theories did not enable an adequate understanding of what was happening, it was believed that the successful international expansion of national companies was a sign of success for those nation states too.  It has now been proven that it is only the activities taking place within the national economies that benefit said country.
Due to that misconception, very loos economic policies were continued resulting in a bubble. When the bubble burst in 2008 we saw the FIRST PHASE of the crisis where especially the financial sector but also the business community in general was severely hit.   
All ideas of successful national growth based on “nonphysical production” were suddenly abandoned and focus was reoriented to just saving the old industrialised economy. That was done through the national states (FED, ECB and all the other central banks) taking over the risk and some of the “bad loans”, and through the unprecedented low rates of interest the bubble economy was then in fact continued. That was the SECOND PHASE.

Due to the fact that the old industrialized countries – especially in a time of crisis – still were the most reliable economies, their currencies did not tumble, but due to their gradually decreasing spending power they could not import quite as much from China and the other newly industrialized countries as before. This resulted in a slowing down of the mainly export oriented growth in e.g. China. This was the THIRD PHASE.
Due to the national banks enormous and continued outpouring of liquidity (especially the ECB and FED) an open crisis was still prevented. Those three phases resulted never the less in a global downturn, depressing raw material prices, especially the price of oil that had seen a sharp production rise due to new shale oil technology. That was the FOURTH PHASE.

Before the crisis China, and the other newly industrialized counties and raw materials producing countries and firms had seen a huge rise in their wealth. That surplus had in great part been reinvested in the old industrialized countries. Now that the crisis has hit China and others, two opposing trends are emerging . On the national and cooperate scale investments are being withdrawn from the old industrialised counties to compensate for the economic reductions. On the individual scale capital are pouring out of China and other second and third world countries to safe havens in the old industrialized countries.  Those two opposing trends are still being played out, but as they both are the result of the continued downturn the inevitable result will be that the negative effects will spill over to the old industrialized countries, that by now has stretched their ability to intervene.  That may be called the FIFTH PHASE of the economic and production crisis

As said major crisis has still not been recognised but are explained as isolated events – economic crisis - China crisis - oil crisis - raw material crisis - corruption crisis - tax evasion crisis – and so on, the next phase the SIXTH PHASE where the general societal level in the old industrialized countries will be further reduced resulting in political troubles. 
Such a development will probably (officially) also come as a great surprise to the economists and the politicians.



The SIXTH PHASE has already materialized in the form of BREXIT protest votes, the Trumph candidacy, Marine Le Pen in France and the general chaotic political situations in the lesser developed EU countries!



The SEVENTH PHASE takes the form of protectionism as that is the logical but primitive answer to the increasing desperation in the populations. This Development can escalate into trade wars!



While everybody still hope that the economic downturn somehow will stop, they have never the less started the EIGHT PHASE in the form of cyberwar, political misinformation and blackmailing. (See footnote)

For a deeper understanding of the basic economic mechanism go to:
“The fundamental causes of the crisis”
“History is repeating itself”
http://unifiedscience2.blogspot.dk/2014/03/history-repeat-itself.html



(  ) Until the Second World War the dominating powers went into direct military confrontations with each other. After the Second World War, where atomic capabilities had been developed, the confrontations were in the form of proxy wars (e.g. Cuba – South Africa in Angola). That tool is still used, BUT now a further step has been developed in the form of information war and blackmail attacks.
The positive aspect of this development is that there now are one more – less violent – layer between the confrontations of the great powers. Another positive aspect is that it by now will be apparent to all involved that securing the digital flow is so vital that it overrides the national intelligence convenience of a “big brother society”! The key to a higher level of information security will probably be the Blockchain technology!
The obvious answer to Russia and China from the (still dominating) West will be to establish free of charge satellite connection to the whole world thereby circumventing the censorship in Russia and China. As the weak underbelly of the totalitarian states are the dissatisfactions of their populations. 
Technically it can be done by making a blueprint available, a blueprint that describes the simple construction of a device to put between a smartphone and the tele communication satellite system.