Easy credit has led to a debt overhang in China, and it’s a dangerous game:
Neil Gough and Keith Bradsher, Markets on Edge as China Moves to Curb Risky Lending
A complex and loosely regulated network of financial go-betweens has sprung up to profit from repackaging and reselling China’s new mountains of debt, turning loans into investment products. Such products have become popular among ordinary investors in China because they pay much higher interest rates than deposits in savings accounts, where rates are capped by the government to protect the state-owned banking system from competition.
But loosely regulated financial businesses can make a dicey business model, as Wall Street learned in 2008. And they pose a particular threat in an economy where growth is slowing, as it has been in China for the last three years.
“The final users of the money will not be able to earn returns high enough to repay the money and promised interest,” said Yu Yongding, a senior fellow at the Institute of World Economics and Politics of the Chinese Academy of Social Sciences and a former member of the monetary policy committee at China’s central bank. “The chains of lending and borrowing can be long, just like the securitized subprime mortgages. The result can be devastating.”
This is smelling like 2009, all over again.
And meanwhile, back in the States, regulators are afraind to force banks to clean out their collateralized debt obligations. Another mess waiting to happen.
Ziauddin Sadar, Welcome to Postnormal Times, 2009
Rick Wartzman, The Robot Invasion
Jonathan Franzen, What’s wrong with the modern world
'We need to become as restless as capitalism itself', could stand as the motto of the globalist, late postmodern, neoliberal economy. But we are not becoming that, despite their plans and plots. Instead, we are drifting past their new normal, and into the postnormal, beyond their control.
Franzen — and many others — fail to see that it may require us getting immediately adjacent to total collapse to break their chokehold on the world. Otherwise, why would they let go, when they have everything, including the means to hold onto it?
To get there we will have to break the spell, sidestep ten thousand dilemmas, and decouple the incestuous bonds of economic complexity that deny the world is our commons and instead treat it like a vending machine.
Varnelis proposes that we have moved past postmodernism into the era of network culture:
Increasingly, the immaterial production of information and its distribution through the network is the dominant organizational principle for the global economy. To be clear, we are far from the world of immaterial production. We manufacture physical things, even if increasingly that manufacturing happens in the developing world. Moreover, the ease of obtaining goods manufactured far away is due to the physical network of global logistics. Sending production offshore – itself a consequence of new network flows – may put it out of sight, but doesn’t reduce its impact on the Earth’s ecosystem. And, beyond global warming, even in the developed world there are consequences: Silicon Valley contains more EPA (US Environmental Protection Agency) Superfund sites than any other county in the nation. But as Saskia Sassen and Manuel Castells have concluded, regardless of our continued dependency on the physical, the production of information and the transmission of that information on networks is the key organizing factor in the world economy today. Although other ages have had their networks, ours is the first modern age in which the network is the dominant organizational paradigm, supplanting centralized hierarchies. The ensuing condition, as Castells suggests in The Rise of the Network Society, is the product of a series of changes: the change in capital in which transnational corporations turn to networks for flexibility and global management, production, and trade; the change in individual behaviour, in which networks have become a prime tool for individuals seeking freedom and communication with others who share their interests, desires and hopes; and the change in technology, in which people worldwide have rapidly adopted digital technology and new forms of telecommunication in everyday life.
As we might expect, the network goes even further, extending deeply into the domain of culture. In the same way that network culture builds on digital culture, it builds on the culture of postmodernism outlined by Fredric Jameson in his seminal essay “Postmodernism, or the cultural logic of late capitalism,” first written in 1983 and later elaborated upon in a book of the same title. For Jameson, postmodernism was not merely a stylistic movement but rather a broad cultural determinant stemming from a fundamental shift to the socioeconomic phase of history that economist Ernest Mandel called “late capitalism”. Both Mandel and Jameson concluded that society had been thoroughly colonized by capital under late capitalism and any remaining pre-capitalist forms of life had been absorbed. Mandel situated late capitalism within a historical model of long-wave Kondratieff cycles. These economic cycles, comprised of twenty-five years of growth followed by twenty-five years of stagnation, provided a compelling model of economic history following a certain rhythm: fifty years of Industrial Revolution and handcrafted steam engines culminating in the political crises of 1848; fifty years of machined steam engines lasting until the 1890s; electric and internal combustion engines underwriting the great modern moment that culminated in World War II; and the birth of electronics marking the late capitalism of the postwar era.
If digital culture flourished during late capitalism, then it should not be surprising that Jameson observed that in that period, everything became interchangeable, quantified and exchangeable. With the gold standard done away with, capital would be valued purely for its own sake, no longer a stand-in for something else, but pure value. The result was the disappearance of any exterior to capital and with it the elimination of any place from which to critique or observe capital. As a consequence, postmodern culture lost any existential ground or deeper meaning. Depth, and with it emotion, vanished, to be replaced by surface effects and intensities. In this condition, even alienation was no longer possible. The subject became schizophrenic, lost in the hyperspace of late capital.
As capital colonized art under late capitalism, Jameson suggested, even art lost its capacity to be a form of resistance. The result was cross-contamination, as art became not just an industry but an investment market, and artists, fascinated by the market, began to freely intermingle high and low. With the art market calling for easy reproducibility and marketing, and with authenticity no longer a viable place of resistance, some artists began to play with simulation and reproduction. Others, finding themselves unable to reflect directly on the condition of late capital but still wanting to comment upon it, turned to allegory, foregrounding its fragmentary and incomplete nature.
History, too, lost its meaning and purpose, both in culture and in academia. In the former, history was recapitulated as nostalgia, thoroughly exchangeable and made popular in the obsession with antiques as well as through retro films such as Chinatown, American Graffiti, Grease, or Animal House. In academia, a spatialized theory replaced historical explanation as a means of analysis.
Modernism’s obsession with its place in history was inverted by postmodernism, which, as Jameson points out, was marked by a waning of historicity, a general historical amnesia. But if postmodernism undid its ties to history to an even greater extent than modernism, it still grounded itself in history, both in name – which referred to its historical succession of the prior movement – and in its delight in poaching from both the premodern past and the more historically distant periods of modernism itself (e.g. Art Nouveau, Russian revolutionary art, Expressionism, Dada).
Today, network culture succeeds postmodernism. It does so in a more subtle way. No new “ism” has emerged: that would lay claim to the familiar territory of manifestos, symposia, museum exhibits, and so on. Instead, network culture is a more emergent phenomenon.
Evidence that we have moved beyond postmodernism can be found in economic cycles. If late capitalism is still the economic regime of our day, it would be the longest lasting of all the Kondratieff cycles. Assuming the Kondratieff cycles are accurate, Jameson’s theorization would come in a downswing on the cycle that began after World War II. Indeed, given the protracted economic downturn of post-Fordist restructuring during the 1970s and 1980s, this seems entirely reasonable. A critical break took place in 1989 with the fall of the Soviet Union and the integration of China into the world market, instantiating the “new” world order of globalization. In turn, the commercialization of the Internet during the early 1990s set the stage for massive investment in the crucial new technology necessary for the new, fresh cycle. New Kondratieff cycles are marked by spectacular booms and bust – the delirious dot-com boom and the subsequent real estate boom are hence legible as the first and second booms of a Kondratieff cycle on the upswing. It is this second upswing, then, in which network culture can be observed as a distinct phenomenon.
Even if we abandon Kondratieff cycles as overly determinist, no cultural movement since the turn of the twentieth century has lasted more than twenty-five years. It would require special dispensation to argue that we are still in the same moment as Jameson when he first formulated his thesis.
I agree that postmodernism is done, and for all of the reasons Varnelis cites, but also a long list of others left unsaid in this overly long bit of cultural criticism, like climate change, political intransigence, and rising economic inequality. But it’s not just web culture emerging, or video games becoming the dominant medium. We are left with all the hot potatoes baked in the postmodern, burning our postnormal hands.
Welcome to the postnormal.
Charles Blow, ‘The Most Dangerous Negro’
'We speak in splinters' - Charles Blow
'We speak in splinters' is a great metaphor for the lack of solidarity in our society today. People are unable to find common cause, and the traditional organizations that relied on collective power — the Southern Christian Leadership Council in the civil rights movement, the unions in the labor movement, NOW in the women's rights movement — have lost their clout and their way.
The hyper individualism and splintering of identity that characterize the consumerist postmodern world means that we cannot organize around common cause, we cannot find a shared territory from which to march forward together.
Like other sides of human life, ‘the fierce urgency of now’ fails to pulls us into solidarity, not because we have overturned the ills of the past, but because one of those ills is our inability to see ourselves in others, and others in ourselves.
'We are in a time when things are not merely changing, but when everything is being pulled inside out'
My belief is that the only hope now is fluidarity, the postnormal replacement of solidarity. We do not need to form a collective, with a well-articulated platform for health care, women’s rights, civil rights, anti-surveillance, LGBT rights, and so on. We don’t need a leader and a march. We are in a time when things are not merely changing, but when everything is being pulled inside out.
Barbara Ehrenreich and Bill Fletcher Jr, wrote Rising to the Occasion back in 2009, they were holding onto the postmodern progressive ideal: that a body of people could collectively and democratically decide how to solve shared problems. But that now seems to be increasingly impossible. They wrote:
We admit: we don’t even have a plan for the deliberative process that we know has to replace the anarchic madness of capitalism.
(I might amend to ‘the anarchic madness of capitalism, market economics, globalism, and party-based democracy’.)
But modernity erased the solidarity necessary for a progressive movement to come together. As I wrote in May,
We should aspire to fluidarity in place of the modern era’s solidarity. So, postnormal progressive thought has to move past searching for the lost solidarity of the last century, and contrive social tools to allow us to build — connection by connection — a new fluidarity together.
UNSOLVED MYSTERIES via GinAndTacos
Paul Krugman, This Age of Bubbles
A globalist monetary system — where those with capital can arbitrage freely, exploiting differences in regulations, salaries, and cost of goods without any checks — with lead to wild and dangerous oscillations in prices, currency differences, and investment. These oscillations are now endemic: they form the basis of what Roubini is calling the new abnormal, which is his take on the postnormal. We have a world economy which is a unstable disequilibrium, but our leaders act as if it is just a temporary blip — an unstable equilibrium — and we will soon return to normalcy. Nothing is further from the truth.
The monied benefit from the chaos: it increases the concentration of wealth and inequality, because the poor and small businesses cannot afford the arbitrage to shelter their small savings, and they can’t predict costs or risks. It’s not that the traders and financiers are trying to make others poor, it’s merely a side effect of their unregulated greed.
Of course they will continue to oppose regulation of the economic markets, and they will continue to support elected stooges who will block regulation, propagandizing about ‘free markets’ and ‘job creating investors’. Meanwhile, we are headed for decades of postnormal economics.
Adam Frank levels a strong polemic against denialism — those that deny scientific findings that have been overwhelmingly supported by the evidence — like human evolution and anthropogenic climate change.
Adam Frank, Welcome to the Age of Denial
In 1982, polls showed that 44 percent of Americans believed God had created human beings in their present form. Thirty years later, the fraction of the population who are creationists is 46 percent.
In 1989, when “climate change” had just entered the public lexicon, 63 percent of Americans understood it was a problem. Almost 25 years later, that proportion is actually a bit lower, at 58 percent.
The timeline of these polls defines my career in science. In 1982 I was an undergraduate physics major. In 1989 I was a graduate student. My dream was that, in a quarter-century, I would be a professor of astrophysics, introducing a new generation of students to the powerful yet delicate craft of scientific research.
Much of that dream has come true. Yet instead of sending my students into a world that celebrates the latest science has to offer, I am delivering them into a society ambivalent, even skeptical, about the fruits of science.
Today, however, it is politically effective, and socially acceptable, to deny scientific fact. Narrowly defined, “creationism” was a minor current in American thinking for much of the 20th century. But in the years since I was a student, a well-funded effort has skillfully rebranded that ideology as “creation science” and pushed it into classrooms across the country. Though transparently unscientific, denying evolution has become a litmus test for some conservative politicians, even at the highest levels.
Meanwhile, climate deniers, taking pages from the creationists’ PR playbook, have manufactured doubt about fundamental issues in climate science that were decided scientifically decades ago. And anti-vaccine campaigners brandish a few long-discredited studies to make unproven claims about links between autism and vaccination.
Denialism has led to a policy gridlock around mitigating climate change, when our only hope have become worse hurricanes and increased drought to shake the disbelievers out of the propaganda trance they’re in.
Welcome to the postnormal, where the postmodern era’s voodoo versions of economics, climate science, and business management are deeply embedded in the discourse about our future, and it will likely take us a generation or longer to rewire our society, and defuse the IED that the deniers constructed out of distorted science propaganda.