Friends, looking at the current state of affairs in four nations around the world, I'm seeing signs that worry me very much. They're caused by different problems, but the end result in every case is very similar - a breakdown in the basic structures of society, to a greater or lesser extent. If it's developing this fast in these four nations, what are the odds that it can spread to other nations - and regions - just as quickly? To my mind, the odds are very good indeed. I think we might be in for a very unpleasant last quarter of 2012 . . .
Let's look at each of the four nations in turn, starting in Europe.
Society in urban areas has broken down to a very large extent. Nationalist paranoia has given rise to a neo-Nazi party, 'Golden Dawn'. It's become so influential, it's reported that the official police force is referring victims of crime to Golden Dawn, instead of tackling crime itself.
A recent short documentary, 'Athens: Social Meltdown', makes dismal but riveting viewing. 'Culture Matters' says of it:
The film deals with the changes in Greek society since 2010 and paints a picture of increasing radicalisation of the middle, a society alienated from its political elites and the caste of police — itself increasingly viewed as an enemy of the people — that protect them.
The film contains plenty of scenes of conflict between protesters and police, but what makes it particularly rending are the emotionally charged scenes of Greek protesters explaining the nature of their anger. It also presents a fairly dark view of the future for Greece. Although there are some hopeful signs of Greeks self-organising in order to create alternative systems of currency and exchange, this development of informal economic spheres could also be taken as evidence of increasing social fragmentation as people disconnect from the formal structures of economy and governance.
This film helps to show the human side of current events and to make tangible the sense of desperation that is underpinning what seems to be a thoroughgoing radicalisation of Greek society.
Here's the 14-minute documentary. Please, friends, take the time to watch it (preferably in full-screen mode). It's important - because the same thing could happen here, too.
A so-called 'Day Of Rage' in Greece last week saw tens of thousands of people take part in (sometimes violent) demonstrations. The Independent reports:
Police fired stun grenades and tear gas at protesters yesterday as tens of thousands poured into the streets of Athens as part of a nationwide strike to challenge a new round of austerity measures that are expected to cut wages, pensions and healthcare once again.
Dozens of youths, some masking their faces with helmets and T-shirts, hurled Molotov cocktails and rocks at police who fired back in an effort to scatter the angry crowds around the parliament building. More than 50,000 people are believed to have participated in the mass walk-out in Athens alone.
Hospital doctors, pensioners, teachers and shopkeepers were among the demonstrators that participated in over 60 rallies throughout the debt-ridden country. Even the president of Greece's police officers participated in the trade union march in Athens alongside uniformed colleagues from the fire department and coastguard.
"We don't owe [money] to anyone, bring back what's stolen," was one of the chants that could be heard in Athens, echoing the violent resentment of many Greeks against politicians and their purported embroilment in tax evasion and corruption scandals.
There's more at the link. Bold print is my emphasis, because government corruption isn't limited to Greece. For example, look at what they've just uncovered in Italy: tax collectors have been siphoning off millions of Euros for their own entertainment and indulgence. (There again, tax collector rapacity and corruption in Italy, ancient or modern, is hardly something new. As Juvenal famously asked, "Quis custodiet ipsos custodes?") For that matter, look at the results of a simple Internet search on the topic 'Tax Evasion In Obama Administration'. Eye-opening, isn't it?
Spain isn't as far down the road of social collapse as is Greece, but it's rapidly catching up. Reuters reported last week:
Violent protests in Madrid and growing talk of secession in Catalonia are piling pressure on Spanish Prime Minister Mariano Rajoy as he moves closer to asking Europe for rescue money.
. . .
With protesters stepping up anti-austerity demonstrations, Rajoy presents painful economic reforms and a tough 2013 budget on Thursday, aiming to persuade euro zone partners and investors that Spain is doing its deficit-cutting homework despite a recession and 25 percent unemployment.
Figures released on Tuesday suggested Spain will miss its public deficit target of 6.3 percent of gross domestic product this year, and on Wednesday the central bank said the economy continued to contract sharply in the third quarter.
. . .
The government's drive to rein in regional overspending as part of its austerity measures has prompted a flare-up in independence fervor in Catalonia, the wealthy northeastern region that generates one-fifth of Spain's economic output.
Just as the euro zone crisis has strained relations between wealthier nations of the north and heavily indebted countries to the south, Spain's crisis has aggravated tensions between the central government and its self-governing regions.
Catalonia needs a 5 billion euros bailout from the central state to meet debt payments this year, but Catalans are convinced they bear an unfairly large share of the country's tax burden.
More than half say they want independence from Spain, the highest level ever.
. . .
Anti-austerity groups planned a fresh demonstration on Wednesday evening in Madrid, a day after police fired rubber bullets at thousands of protesters who tried to form a human chain around the parliament building.
More at the link.
Last July Global Post offered an in-depth analysis of the effect of unemployment on Spanish society.
Meet Spain's lost generation.
More than half of people under 25 here are out of work. That's Europe’s highest rate, ahead of even Greece, which has come close. Spaniards are worried the strain it’s exerting on society is putting stability at risk as the government prepares to cut unemployment benefits among other tough measures aimed at meeting the obligations of a euro-zone bailout.
The country’s largest labor union, Comisiones Obreras, or CCOO, says 1.73 million people under 30 are unemployed.
However, it says the real situation is worse than the figure shows. Of the 2.4 million under 30 who have jobs, half of them are working on precarious short-term contracts. Another 200,000 are believed to be on unpaid or poorly compensated "internships" the union criticizes for offering no real training. It says many are schemes for unscrupulous businesses to exploit cheap labor.
. . .
Like so much that's wrong with Spain's economy, the soaring youth unemployment has its roots in last decade’s property boom.
Skyrocketing real estate values prompted construction companies to increase wages to attract workers. Many young men dropped out of school to earn good money working on building sites.
By the height of the boom in 2007, more than a third of Spaniards between the ages of 18 and 24 had dropped out of high school, more than double the European Union’s average.
"A lot of these kids who left school early in the boom days to work in construction are pretty much unqualified for anything else," says William Chislett of the think tank Real Instituto Elcano.
"No one has any answers in terms of where new jobs will come from,” he adds. “The generation under 30 is pretty much a lost one in this country."
At the other end of the spectrum, there’s [a] glut of overqualified workers.
In most European countries, 40 percent of high school graduates attend university and 60 percent enter vocational training. “In Spain it's the other way round," says Cristina Bermejo Toro, youth secretary at CCOO. "We have people loaded down with degrees, titles and diplomas who are completely unsuited for our labor market."
. . .
"There's an enormous feeling of frustration and a sense of hopelessness in the future, that people are going to be worse off than their parents," CCOO’s Bermejo Toro explained. "Their expectations are evaporating."
. . .
"More than a million families have no economic resources at all right now," Bermejo Toro says. "Those people can't support their children. If the government cuts unemployment benefits again, I really think we'll see a social breakdown."
Again, more at the link.
Look up video and images of the latest Spanish unrest for yourself - they're freely available on the Internet. Very like Greece, aren't they?
Following the tragic violence and loss of life at the Marikana mine a couple of months ago, I wrote: "this bloodshed will call forth further bloodshed in the weeks and months and years to come. It's always that way in Africa." Events have proved me correct. Quite apart from ongoing violence on the mines, wildcat strikes have spread across the mining industry and into other sectors of the economy. The latest, among transport drivers, is paralyzing much of the national economy.
ATMs lacked cash, fuel stations were running dry and hospitals saw vital coal supplies diminish Tuesday as South Africa felt the pinch from a truck drivers' strike that entered its second week.
The strike has halted the delivery of goods across the country, as more than 20,000 workers dig in on their demand for higher wages.
Fuel pump stations have begun to dry up in several areas in Gauteng province, the country's economic centre, according to the South African Petroleum Industry Association (SAPIA).
. . .
SAPIA warned the public to refrain from panic buying, saying the shortages were not yet widespread.
Since the beginning of the stayaway, striking drivers have torched delivery trucks and assaulted non-striking workers, aggravating the supply crunch.
"We are concerned about the safety of our workers, as a result plans have been made to provide additional security to non-striking workers to deliver fuel," said Tshifularo.
The strike has also halted the delivery of coal to public hospitals, which need the fuel to operate boilers for cooking and water heating.
. . .
According to transport authorities, 80 percent of all freight in South Africa is conducted by road.
. . .
Business Unity South Africa (BUSA), an organisation representing business interests, sounded the alarm about the rash of strikes that has hit the country, including the ongoing wildcat stayaways in the mining sector, saying they may have a long-term effect on the economy.
More at the link. Bold print is my emphasis, because union violence directed against those still working has long been a feature of industrial unrest in many nations, even in the USA in modern times. Will it get worse as economic conditions deteriorate? Your guess is as good as mine . . . but my guess is, it probably will.
Iran's currency is collapsing as the result of international sanctions and internal economic mismanagement. The Washington Times reports:
Iranian authorities used aggressive measures Wednesday in an attempt to halt the nosedive of the country’s currency, making arrests, vowing to stamp out sidewalk money changers and warning merchants against fueling the mounting public anger over the economy.
There were unconfirmed reports of sporadic violence.
. . .
One of Ahmadinejad’s main critics, parliament speaker Ali Larijani, has led the calls to blame the currency crisis mostly on allegedly misguided government monetary policies.
In reply, Ahmadinejad warned that he could consider resigning if his government is put under too much pressure.
. . .
Tuesday’s rate of 35,500 rials against the U.S. dollar compared with 24,000 a week ago on the unofficial street trading rate, which is widely followed in Iran. It was close to 10,000 rials for $1 as recently as early 2011.
Exchange houses were closed Wednesday, and currency websites were blocked from providing updates on the latest rates.
Public grumbling has grown steadily louder over a punishing combination of a falling currency and rising prices, which have put some staples such as chicken and lamb out of reach of many low-income Iranians. Earlier this week, a petition signed by about 10,000 workers was sent to the labor minister to complain that even paying rents has become a struggle.
The owner of a furniture showroom said he hasn’t made a sale in 10 days while his workshop rent has been increased by 30 percent. He said one of his workers bought a can of tuna for lunch Saturday for 35,000 rials, or about 98 cents at the current exchange rate. The next day it was 45,000 rials, or $1.26, said Hamid, who gave only his first name because of warnings by Iranian officials not to discuss the economic situation with the media.
“Even Afghan workers are going home since it doesn’t make sense to work in Iran with a currency that’s worth less and less,” he said.
At Tehran’s bazaar — the traditional business hub in Iran’s capital — merchants appeared to stage widespread closures to protest the stumbling economy. The sprawling bazaar has played a critical role in charting Iran’s political course — leading a revolt that wrung pro-democratic concession from the ruling monarchy more than a century ago and siding with the 1979 Islamic Revolution.
The semiofficial Mehr news agency quoted police Col. Khalili Helali as saying the bazaar was not officially closed and that authorities will take action against many merchants who have shuttered their shops.
There's more at the link.
Israel and the US should take this seriously. Only last week a senior officer of Iran's Revolutionary Guard threatened both countries - a standard technique of Iranian authorities to distract attention from internal problems by focusing on alleged external 'threats'. Reuters reported:
Iran could launch a pre-emptive strike on Israel if it was sure the Jewish state was preparing to attack it, a senior commander of its elite Revolutionary Guards was quoted as saying on Sunday.
Amir Ali Hajizadeh, a brigadier general in the Islamic Revolutionary Guard Corps, made the comments to Iran's state-run Arabic language Al-Alam television.
"Iran will not start any war but it could launch a pre-emptive attack if it was sure that the enemies are putting the final touches to attack it," Al-Alam said, paraphrasing the military commander.
Hajizadeh said any attack on Iranian soil could trigger "World War Three".
"We can not imagine the Zionist regime starting a war without America's support. Therefore, in case of a war, we will get into a war with both of them and we will certainly get into a conflict with American bases," he said.
"In that case, unpredictable and unmanageable things would happen and it could turn into a World War Three."
More at the link. Such warnings, from Shi'ite religious fanatics who believe that such a war would accelerate the return of the Twelfth Imam, are not to be taken lightly. They literally don't care whether they live or die, provided only that they're doing what they see as God's will.
Let's remember, too, that increasing food prices were one of the triggers that started the recent Arab Spring revolutions, and massively increased the influence of Islamic fundamentalists. If they have a similar effect in Iran, who knows what might happen? As Gulfnews.com points out:
A collapse in the [Iranian] rial is not a cause for celebration but for fear.
. . .
But one thing should be clear to all from the experience of global recession, ensuing austerity programmes, and recent global disturbances prompted by high grain prices. While it is easy to predict that people may become angry as they feel rapidly poorer, in such times of febrile politics how they will react is far harder to predict.
So to those celebrating Iranian pain, be careful what you wish for in desiring a crisis. It was hyperinflation under a regime of reparations that contributed to the collapse of the Weimar Republic. Few foresaw then what might occur. And few, now, are considering what a sanctions-triggered economic crisis might really mean for Iran and the region.
More at the link.
Putting all four nations together, we see different causes, but similar effects - societal breakdown to a greater or lesser extent. What's more, each of those nations has the ability to destabilize an entire region if its society disintegrates. Greece and Spain would take the Eurozone with them; Iran would take the Persian Gulf; and South Africa would affect most of sub-Saharan Africa. The more distant trading partners of these areas (including the many nations that get much of their energy supplies from the Persian Gulf) couldn't help but be affected in their turn.
Back in July Zero Hedge reviewed a paper titled 'Trade-Off: Financial System Supply-Chain Cross-Contagion: a study in global systemic collapse'. It included this summary of potential danger.
This study considers the relationship between a global systemic banking, monetary and solvency crisis and its implications for the real-time flow of goods and services in the globalised economy. It outlines how contagion in the financial system could set off semi-autonomous contagion in supplychains globally, even where buyers and sellers are linked by solvency, sound money and bank intermediation. The cross-contagion between the financial system and trade/production networks is mutually reinforcing.
It is argued that in order to understand systemic risk in the globalised economy, account must be taken of how growing complexity (interconnectedness, interdependence and the speed of processes), the de-localisation of production and concentration within key pillars of the globalised economy have magnified global vulnerability and opened up the possibility of a rapid and large-scale collapse. ‘Collapse’ in this sense means the irreversible loss of socio-economic complexity which fundamentally transforms the nature of the economy. These crucial issues have not been recognised by policy-makers nor are they reflected in economic thinking or modelling.
As the globalised economy has become more complex and ever faster (for example, Just-in-Time logistics), the ability of the real economy to pick up and globally transmit supply-chain failure, and then contagion, has become greater and potentially more devastating in its impacts. In a more complex and interdependent economy, fewer failures are required to transmit cascading failure through socio-economic systems. In addition, we have normalised massive increases in the complex conditionality that underpins modern societies and our welfare. Thus we have problems seeing, never mind planning for such eventualities, while the risk of them occurring has increased significantly. The most powerful primary cause of such an event would be a large-scale financial shock initially centring on some of the most complex and trade central parts of the globalised economy.
. . .
It is argued that in the coming years there are multiple routes to a largescale breakdown in the global financial system, comprising systemic banking collapses, monetary system failure, credit and financial asset vaporization. This breakdown, however and whenever it comes, is likely to be fast and disorderly and could overwhelm society’s ability to respond.
More at the link. Bold print is my emphasis.
I can't argue with the report's conclusions: and right now, looking at these four countries and considering what the wider impact of their troubles might be . . . I see real danger ahead.
Some may wonder whether my periodic articles on emergency preparations indicate that I think the end of the world is coming. No, I don't - but the sort of social disruption identified in these news reports shows clearly that you need to have made basic preparations before such incidents prevent you from doing so! It's like a parachute, or a gun. You may never need one: but if you do, it'll most likely be too late to go out and get one!
What was that old 1960's Bob Dylan lyric? "You don't need a weatherman to know which way the wind blows". I can see its direction pretty clearly right now . . . can you?