I've been having a weird tingling sensation in my spine for the last several days that happens when I am consciously aware that History (in the Hegelian sense of Geist) is turning and turning in a widening gyre. It's a physical symptom of a heightened psychological state of awareness that things are shifting in a fundamental, radical way: a direct consciousness that my fundamental political bearings are being unhinged, that the old order is disappearing, that a new order is emerging.
I've only had this feeling so strongly twice before. The first time was my freshman year at Berkeley, when I sat, stoned, watching people dancing on the Berlin Wall. The second time was right after 9-11.
We're at the same sort of world historical turning point now with the global financial crisis.
Six months ago (specifically: March 8, before even Bear Stearns had collapsed) I undertook a scenario planning exercise with Peter Schwartz, Steve Weber, and several other colleagues, trying to assess where this whole "sucker" (to use Bush's choice phrase) could possibly end up. We spent a lovely, sunny afternoon on Peter's balcony in the Berkeley Hills thinking rational but black thoughts about where it could all end up.
By the end of the exercise, as we discussed the various risks in the system, and how it might all play out, we had laid out a scenario whereby the money center banks, that is, the very core of the Western financial system (in the U.S., these are Citigroup, JP Morgan Chase, and Bank of America) could end up insolvent, necessitating a wholesale nationalization of the banking sector. We then looked around the table at each other and tried to imagine what this would mean for Western capitalism and democracy, and it just seemed too crazy to even consider. Political and ideological apocalypse on a scale of the collapse of the Soviet Union.
We all sat there, feeling a little crazy, and then finally one of us (who shall remain, for now, unnamed) uttered the most taboo words in scenario planning: "That could never happen. Impossible."
And we all agreed, and wrapped up the session.
Well, here's Australia's leading free-marketeer, writing in a Murdoch-owned paper:
Inevitably, the US, Britain and Europe are going to end up with nationalised banking systems in one form or another, and with governments guaranteeing not only their deposits but probably all their liabilities. The nationalisation will be a temporary emergency measure. But for some time at least the systemically important banks effectively are going to be public utilities and must be regulated accordingly.
The wholesale ideological and political collapse of Communism? There were lots of smart people as late as 1989 who said that couldn't ever happen, either....