World stability hangs by a thread

World stability hangs by a thread as economies continue to unravel - Telegraph

The working assumption of the "Great Boom" is – or was – that we live in a benign era where most societies are converging towards some form of market liberalism; where trade and capital flows are unrestricted; where governments have enough legitimacy to keep order by light touch; where a major war is unthinkable.

This illusion is now being tested.

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"The global financial crisis has not bottomed yet. The impact is spreading globally and deepening," said Zhang Pin, head of the national development commission. "Excessive bankruptcies and business closures will cause massive unemployment and stir social unrest".

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In the 1930s, it was not obvious to people living through debt deflation that their world was coming apart. The crisis came in pulses, each followed by months of apparent normality – like today.

The global system did not snap until September 1931. The trigger was a mutiny by Royal Navy ratings at Invergordon over pay cuts. Sailors on four battleships refused to put out to sea. They sang the Red Flag.

News that the British Empire could not uphold military discipline set off capital flight. Britain was forced off the gold standard within five days. A chunk of the world followed suit.

Nor was it obvious that Germany would go mad. Bruning persisted with deflation, blind to the danger. The result was the election of July 1932 when two parties committed to the destruction of Weimar – the KPD Communists and the Nazis – won over the half the seats in Reichstag.

We can hope that governments have acted fast enough this time – with rate cuts and a fiscal firewall – to head off such disasters. But then again, the debt excesses are much greater today. If in doubt, cleave to those countries with a deeply-rooted democracy, a strong sense of national solidarity, a tested rule of law – and aircraft carriers. The US and Britain do not look so bad after all.

To me, it's quite frightening to realize that we may be closer to large-scale civil unrest or even outright war than anyone in this country is letting on. The Telegraph is under no such illusions, which is one of the reasons I tend to follow their reporting. Although I hope this author is correct, and share his hope that "governments have acted fast enough this time" I don't have a great deal of confidence that this is the case. Especially when another piece of breaking news today is that "the U.S. military expects to have 20,000 uniformed troops inside the United States by 2011 trained to help state and local officials respond to a nuclear terrorist attack or other domestic catastrophe, according to Pentagon officials." That may not be frightening, if that were all you had read about it, but I've been following this story closely. When this story first broke in September, it was only a single brigade. The number was increased to 4,700 troops over 3 years, and now we find ourselves at 20,000 troops. Initially, the Army Times reported that

The 1st BCT’s soldiers also will learn how to use “the first ever nonlethal package that the Army has fielded,” 1st BCT commander Col. Roger Cloutier said, referring to crowd and traffic control equipment and nonlethal weapons designed to subdue unruly or dangerous individuals without killing them.

The package is for use only in war-zone operations, not for any domestic purpose.

“It’s a new modular package of nonlethal capabilities that they’re fielding. They’ve been using pieces of it in Iraq, but this is the first time that these modules were consolidated and this package fielded, and because of this mission we’re undertaking we were the first to get it.”

Since then, they've issued this terse correction:

Correction:

A non-lethal crowd control package fielded to 1st Brigade Combat Team, 3rd Infantry Division, described in the original version of this story, is intended for use on deployments to the war zone, not in the U.S., as previously stated.

Well, I certainly feel better. So it appears to me that they've been dramatically ramping up military forces (battle-trained and used to dealing with insurgencies) in the heimat, in violation of the Posse Comitatus Act and during possibly the worst economic crisis since, or possibly including the Great Depression. Heads of state around the world are saying the things our leaders are not, and they are making their plans for dealing with civil unrest and wars. Although much of the rhetoric has been about the new New Deal that will save us from all of this nastiness, don't forget that it was a World War that finally created enough artificial demand to lift America out of the Great Depression I. The concept of World War III ought to be chilling, especially since we're not the only ones with nuclear weapons this time around.