Sunday, October 26, 2008

The Prophet, Arthur

I told you I might pop in a bit. I just read something... eerie?, disturbing?, bizarre?... and wanted to chronicle it so I thought it best to put it here.

Several months ago, I read, finally, Rendezvous With Rama by Arthur C. Clarke. I enjoyed it very much and recently came across a copy of Rama II, its sequel. Rama II was published in 1989 so maybe this wasn't as prophetic as I first thought... maybe it was a warning. Here is what I read:
The surge of unabashed self-indulgence on a global scale was easy to understand. Something fundamental in the human psyche had changed as a result of the encounter with Rama I.... Thus it was easy to comprehend why the life patterns of most human beings suddenly veered toward self-gratification....

An unrestrained burst of conspicuous consumption and global greed lasted for just under two years. Frantic acquisitions of everything the human mind could create was superimposed on a weak economic infrastructure that had already been poised for a downturn in early 2130, when the first Raman spaceship flew through the inner solar system. The looming recession was first postponed throughout 2130 and 2131 by the combined manipulative efforts of governments and financial institutions, even though the fundamental economic weaknesses were never addressed. With the renewed burst of buying in early 2132, the world jumped directly into another period of rapid growth. Production capabilities expanded, stock markets exploded, and both consumer confidence and total employment hit all-time highs. There was unprecedented prosperity and the net result was a short-term but significant improvement in the standard of living for almost all humans.

By the end of the year in 2133, it had become obvious to some of the more experienced observers of human history that the "Raman Boom" was leading mankind toward disaster. Dire warnings of impending economic doom started being heard above the euphoric shouts of the millions who had recently vaulted into the middle and upper classes. Suggestions to balance budgets and limit credit at all levels of the economy were ignored. Instead, creative effort was expended to come up with one way after another of putting more spending power in the hands of a populace that had forgotten how to say wait, much less no, to itself.

The global stock market began to sputter... and there were predictions of a coming crash. But to most humans... the concept of such a crash was beyond comprehension. After all, the world economy had been expanding for over nine years, the last two years at a rate unparalleled in the previous two centuries. World leaders insisted that they had finally found the mechanisms that could truly inhibit the downturns of the capitalistic cycles. And the people believed them....

Terrestrial affairs were dominated by the emerging world economic crisis. On May 1, 2134, three of the largest international banks announced that they were insolvent because of bad loans. Within two days a panic had spread around the world. The more than one billion home terminals with access to the global financial markets were used to dump individual portfolios of stocks and bonds....

By the end of the week two things were apparent - that over half of the world's stock value had been obliterated and that many individuals, large and small investors alike, who had used their credit options to the maximum, were now virtually penniless. The supporting data bases that kept track of personal bank accounts and automatically transferred money to cover margin calls were flashing disaster messages in almost twenty percent of the houses in the world.
He goes on to explain a situation of electronic gridlock that causes delays in transaction processing that I don't feel is possible given the ruggedness of the internet and automatic safeguards that have been put in place to halt trading.

My point is that much of this sounds very familiar. Some of it has already happened. Some of it in the same order, some of it in a different order. Some of it hasn't happened yet. Some of it probably won't happen. I think the key to avoiding a total disaster is in the very first part of this passage. We must address the fundamental economic weaknesses or nothing we do is going to solve the issue, merely, perhaps, postpone it.

For a good breakdown of how we got to where we are now and exactly how long this has been brewing, check out this article by the daughter of one of my coworkers.

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