# A Scary Strategic Problem: A failure in imagination.



## Edward Campbell (9 Jul 2015)

Part 1 of 2

Maybe this doesn't deserve its own thread, but I couldn't find a closely related one, and I believe that economics drives strategy (at least in part) and so economics is germane to "International Defence and Security," and I hope it will provoke some discussion about economics impact on strategy and security and defence, so ...

This article, reproduced under the Fair Dealing provisions of the Copyright Act from _Foreign Affairs_, is a review of Martin Wolf's new book, The Shifts and the Shocks (which I have not, yet, read):

https://www.foreignaffairs.com/reviews/review-essay/2015-06-16/what-caused-crash


> What Caused the Crash?
> *The Political Roots of the Financial Crisis*
> 
> By Athanasios Orphanides
> ...



End of Part 1 of 2


----------



## Edward Campbell (9 Jul 2015)

Part 2 of 2



> THE POST-HONEYMOON BLUES
> 
> When it comes to Europe, Wolf identifies the political challenges inherent in creating a single currency across the continent, but he is less attuned to the ways in which politics also inform crisis management. Wolf describes the eurozone as a “polygamous monetary marriage entered into by people who should have known better, in haste and with insufficient forethought, without any mechanism for divorce.” The wedding was followed by an irresponsible honeymoon: debtor countries, such as Greece and Portugal, borrowed freely and spent recklessly, while Germany, the creditor spouse, built up a competitive export sector and an external surplus “matched by growing claims on the debtors.” When the crisis hit, the marriage turned bad: Germany blamed the debtor countries for wasting its money, and they blamed Germany for forcing them into destitution.
> 
> ...




I was struck, early on, by Martin's Wolf's notion that "A failure of imagination," complacency, if you like, was a main cause of the financial crisis, which, _I believe_, exacerbated underlying security issues ~ like Russia's dissatisfaction with the West's forays into South-Eastern Europe: a _sphere_ Russia regards as its own.


----------



## a_majoor (19 Jul 2015)

This article could go under many different threads, from "Grand Strategy" to the "Election 2015" to "Making Canada Relevant again". The essential point, I think, is that disruptive technologies are forcing systems that currently exist towards failure mode, simply because the current systems are not able or willing to adapt. We see various examples running at different speeds here in Canada, the slow moving demographic evolution as people move to the West, the faster economic transformation as business and capital flow westward and the incredibly disruptive arrival of communications technology in the form of the Internet removing the "need" for many "gatekeepers" and intermediaries in politics, economics, academia and so many other areas of life. The book "The Big Shift" provides the Canadian context for this, but we see the stresses in the EUZone, the disruption in the Middle East, the rise of China and the positive and negative effects it is having on the region and even the general collapse of the US political system in providing any answers to the pressing issues of the day. When Donald Trump is drawing crowds because he is speaking about issues other candidates from both parties won't, then there is a serious issue.

The biggest issue of all isn't that things change (they always do), but rather how the change is going to be managed for a successful transition. Digging in and fighting to the last taxpayer to retain the perques and privileges of power is unappealing at best, and the general historical result of that process is armed revolution and the arrival of "The Man on the White Horse" to create stability. Most of us know how that ends.

Sadly I certainly don't know the answer, and don't know anyone who does either. This is going to be a long, drawn out process.

http://pointsandfigures.com/2015/07/18/disrupting-government/



> *Disrupting Government*
> Posted by Jeff Carter on July 18th, 2015
> 
> I have been watching Uber blow up governments all across the world.  In France, taxi drivers didn’t like their cartel being upset, and became violent towards Uber cars and drivers.  In St. Louis, Ed Domain was almost killed in a taxi cab that had no insurance.  He is exposing the taxi cartel for exactly what it is.  In NYC, Mayor De Blasio wants to put a cap on Uber growth.  Amazingly, even the left wing NY Times disagrees with the Mayor.
> ...


----------



## Edward Campbell (8 Aug 2015)

No one will ever accuse the famous American economist Anne Krueger of lacking imagination, as she proves, yet again, in this article which is reproduced under the Fair Dealing provisions of the Copyright Act from the _Financial Times_:

http://www.ft.com/intl/cms/s/0/e3fb48a2-3bae-11e5-8613-07d16aad2152.html


> Anne Krueger: the economist in a hurry
> 
> Elaine Moore
> 
> ...



Should whole countries, like large corporations ~ think _Lehman Bros_ ~ be allowed to file for bankruptcy? (_Lehman Bros_ filed for bankruptcy when it had $(US)639 Billion in assets and $(US) 619 Billion in debts; Greece's GDP, in contrast, is only $(US)237 Billion and its debts are only 175% of that, i.e. about $(US)415 Billion.)

It is, on the surface, a shocking idea ... but ...

Why not? 

If _Lehman Bros_ was not too big to fail, if it's collapse did not "sink the world," then why is Greece so different?


----------



## Brad Sallows (8 Aug 2015)

Are they talking about bankruptcy - selling off assets to compensate creditors, and writing off any remaining debt obligation as a loss to the creditors - or about simply telling creditors "You're SOL"?

What are the assets proposed for sale?  What prevents an asset sale followed immediately by "nationalization"?


----------



## Edward Campbell (8 Aug 2015)

Brad Sallows said:
			
		

> Are they talking about bankruptcy - selling off assets to compensate creditors, and writing off any remaining debt obligation as a loss to the creditors - or about simply telling creditors "You're SOL"?
> 
> What are the assets proposed for sale?  What prevents an asset sale followed immediately by "nationalization"?




My _guess _is that creditors would be SOL for the very reason you cite: _nationalization_.


----------

