The Nation: How America Could Collapse

[marmar]

How America Could Collapse

Matt Stoller
July 27, 2011


A few months ago, a friend in the entertainment industry told me of a new business model in Hollywood: hoarding videotapes. Apparently, the earthquake in Japan knocked offline a Sony factory that makes certain types of tape. That factory was also in the tsunami zone, so now there’s a serious tape shortage threatening the television industry. The NBA scrambled to get enough tape to broadcast the NBA finals; one executive told the Hollywood Reporter, “It’s like a bank run.”

In the last few years, economists have spent a lot of time and energy thinking about bank runs. A bank run happens when depositors think a bank is weak and scramble to get their money out before it collapses. “Tight coupling” of financial institutions, like when banks are overly dependent on each other, can create a cascading series of problems for the system itself. We saw this with Lehman Brothers when it went bankrupt. Its AAA-rated debt instruments lost value unexpectedly; that caused money market funds that held those presumably safe bonds to suddenly lose value. A shadow bank run was the result, as investors rushed to withdraw from the money market funds.

Worryingly, there’s been very little consideration of how systemic collapses can happen in another, perhaps more dangerous realm—the industrial supply system that keeps us in everything from medicine to food to cars to, yes, videotape. In 2004, for instance, England closed one single factory, which caused the United States to lose half of its flu vaccine supply.

Barry Lynn of the New America Foundation has been studying industrial supply shocks since 1999, when he noticed that global computer chip production was concentrated in Taiwan. After a severe earthquake in that country, the global computer industry nearly shut down, crashing the stocks of large computer makers. This level of concentration of the production of key components in a globalized economy is a new phenomenon. Lynn’s work points to the highly dangerous side of globalization, the flip side of a hyper-efficient global supply chain. When one link in that chain is broken, there is no fallback. ..........(more)

The complete piece is at: http://www.thenation.com/article/162317/how-america-could-collapse

[PATRICK]

1. The entire global trade system

has gone insane. Wasteful, dangerous, crippling to all local economies and eventually everything everywhere must collapse under its burden. Natural and good ideas wasted and perverted for profit with no local control or benefit are the temporary refuge of dark dreamers and profiteers. We get food from Latin America depending upon seasons. Resources exists in some places not another. This form of globalism creates MORE exclusivity unnecessarily, wastefully and destructively and made it a threat not a natural sharing and commerce of goods and services. It guts abilities to create needs and resources that do not help the local people where they are artificially placed.

[fivepennies]

8. Exactly.

Great post!

[ewagner]

2. Great article!

Great but frightening....

the point that corporations have evolved from "productive" to "extractive" policies is most enlightening.

Highly recommended.

[Sarah Ibarruri]

3. Aaaah, that's the magic of capitalism. A piece of shit that's been glorified.

The pro-capitalism propaganda has been astounding because it enriches some beyond our wildest imaginations. However, capitalism is a nuclear bomb.

[Speck Tater]

4. The free market system at its best...

* If there's no profit to made in saving someone's life, then that person should be left to die.

* If there's no profit to be made in bringing clean drinking water to a village then that village should be left to die.

* If there's more profit in making bombs and bullets then peace is something we can't afford to allow.

* If we can profit by having more people in jail then we can't afford to do anything that would prevent children from turning to a life of crime.

* If we can't profit from education then people should be left to live in ignorance.

* If we can't profit by helping those less fortunate than ourselves then they should be left to rot in poverty.

[Kaleko]

5. Well said.

[HughBeaumont]

7. Rec'd.

'Tis not "How will this help Humanity". 'Tis "How will this make me RICH??"

[amborin]

6. single supplier chokepoints is not a new concept