The anti-globalism rhetoric is heating up, as I predicted it would. The next fallout will be as governments fail to make a difference, populist anti-government anger will increase. Any and every country will have to watch out for its very own Timothy McVeigh.

In Europe, labor markets will become less fluid as foreigners are blamed for stealing the remaining jobs. That will not end well.

Here in the U.S., the housing bubble is still not deflated all the way. Obama will put America's real estate market on life support, much to the annoyance of those of us who acted responsibly by NOT buying a house during the bubble. Quite frankly, unless Obama can take the bull by the horns and rework the system itself, the country is sunk (as in the 70s, rather than Bolshevism). I hate to sound so dire, but that is where we are at here.

The anti-government crowd is going to get bigger and louder unless Obama can do most of the following:

• Quickly and aggressively place all zombie banks into receivership.
• Allow Detroit to fail.
• Provide an unemployment benefits backstop for the workers who lose their jobs.
• Maintain a tax structure that creates incentives for innovation and hiring; and
• Catch Osama bin Laden.

The current path, which coddles obstructionist Republicans and gives Pelosicrats too much power, will only lead to failure. Obama's desire to create unity is the right approach for another era. Right now, the country needs leadership and vision, which is what we thought when we went to the polls in November.

Globalism Update

As I mentioned in an earlier post, globalism itself will come under fire. Here's the first stirrings, albeit from a source that is presumbably very pro-globalism:

http://www.foreignpolicy.com/story/cms.php?story_id=4592

Here's Roach's statement statement on globalism:

A second megaforce at work is globalization—the cross-border linkages that
during the past decade have increasingly taken the form of trade flows, capital
flows, information flows, and labor flows. The credit crisis itself is
essentially a powerful cross-product contagion—a virus that began with subprime
mortgages but then quickly spread to asset-backed commercial paper,
mortgage-backed and auction-rate securities, and other instruments throughout
the credit markets. But because financial engineers were so adept at
distributing the complex products they created, there is a critical cross-border
dimension to this crisis as well. Little wonder this is the worst financial
crisis in 75 years.

In a conversation with my wife, I posited that failure to recycle is not that big of a deal because eventually some economic event will transpire that incentivize raiding landfills for reusable materials. Such an event could be triggered if we see any notable combination of protectionism and scarcity wrought by war and strife.

Please note that the image appearing above is an illustration done by Nenad Jakesvic for Foreign Policy Magazine. Link: http://www.foreignpolicy.com/story/cms.php?story_id=4595

Next Contender: Globalism

The marauding financial crisis slaughtered the GOP and ransacked Reagan’s capitalism. Libertarians have run for the hills, pondering their fate. Will they regroup and form an organized guerrilla resistance, or will they skulk back into town and be assimilated with the rest of us into the next iteration of market theory?

We have learned that our financial systems, in their interdependence, rest on a fragile base, knees knocking with hysteria from the bursting of the mortgage bubble. Indeed, defaults on home loans are at a peak. Yet, at the same time, the actual dollar loss directly attributable to the imprudent loans is not anywhere near the dollar loss to capital markets in the G-20.

As the churn works its way around the world, exposing even greater fragility, the concept of globalism itself will be challenged. At risk is more than wealth, prosperity, and access to mangoes in December. The international cooperation in other matters will feel the strain. For example, the international terrorist black list is maintained and enforced through mutual cooperation. It is expensive to adequately check your customer base for terrorist financiers. As goodwill dissipates in tandem with financial losses, the incentive for countries like Ireland and Singapore to expend resources for the benefit of terrorist target nations will likewise diminish.

As the commodity bubbles burst with global recession and a strangely resurgent dollar, nationalist socialism a la Venezuela and Iran will become more attractive to whichever warlords can benefit from the misery and chaos caused by the meltdown. Warlordism like this will self-perpetuate, and isolationism will become an international norm due to a lack of trust and a breakdown of observing international standards.

Prior to World War I, many believed that the era of European wars was over because of the interconnectedness of markets and the free flow of people and ideas across borders that characterized the 30 years prior to the assassination of Franz Ferdinand. Yet, devastating war did break out, mostly as a result of the vestigial inferior political systems of Germany, Austria-Hungary, and Russia. If the march of democracy is reversed and the world is gripped by a new era of warlordism, not even the allure of global interchange of commercial goods and cultural artifacts will prevent a repeat of the horrors of multinational, intercontinental war.