Tokyo Damage Report

oligarch self-defense for beginners

In the past, when there was a revolution, gold would get seized.  It didn’t matter if the revolution was Communist Russians, or Jacobin French, or Batshit Ayatollah-Lovin’ Iranian. . . regardless of the ideology, one thing held true:  you “liberated” the gold and jewels from the oppressive rulers.

 

But that’s all about to change.

 

The next revolution – which, honestly I hope will NOT happen, for reasons which will become clear – but the next revolution is going to overthrow Wall Street plutocrats, whose money is NOT gold or jewels or even magical glowing scepters. Their money is all electronic, and what’s worse, the money is 90% in the form of electronic GAMBLES.  That is to say, it’s in the form of “derivatives” or “swaps” or “foreign currency arbitrage index funds”.

 

All these aforementioned items are basically some variation of:  “I made a bet with some other billionaire in another country that the price of something would go up or down in six month’s time. And I am simply trusting that that other billionaire will pay up if he or she loses.”

 

So even if your pitchfork-weilding mob has the tyrant up against the wall and a charismatic Che Guevara-like leader puts a Glock to the tyrant’s temple and says “Give us the password to all your swiss banks and Caymand Island trust funds! This money belongs to The People now!” . . .even if that DID happen, the money would simply VANISH.

 

Not because the Tyrant had some sort of pre-arranged scheme in place for just this contingency.  But Because the billionaires on the other side of those gambles (which constitute 90% of the tyrant’s wealth, remember) would simply refuse to pay up:

 

“OOH GOODY! I lost my billion-dollar bet with the American Tyrant but he’s in the Bastille now so I’ll just pay my billion to Che Guevara here, even though I’m in a different country, and thanks to the deregulation of derivatives, nobody in the world even knows I’m on the other side of this particular bet! Sure.  Hey, Che! Come and get a billion free dollars! HAHAHAHAHAHAHAH!!!”

 

And I’m not a financial wizard, but It seems to me that  if many billionaires around the world stopped honoring their bets, this would cause the entire international casino to shut down, and all the “money” therein would just vanish into thin air.

 

You’d still have a certain amount of gold, and physical assets like factories and mansions and hovercraft, and maybe bonds?  (or maybe not, depending on if the Revolution overthrew just the rich or the whole government). But derivatives, man, kiss those goodbye.

 

It would be like raiding Scrooge McDuck’s giant Olympic-sized pool of gold coins, and then watching 90% of them evaporate in your hands.

 

So whoever is in charge of the revolution, buddy, you got to think of a plan for how to deal with that.

 

Some of the more goofy Occupy people are fond of pointing out that back in the Bible times there was something called a Debt Jubilee – every x number of years all debts would be forgiven, slaves would be freed, repossessed land would be given back to the serfs, etc.  What if we modernized that? What if, instead of a Debt Jubilee we had a SECURITIES JAMBOREE?  Like every June 12th, all the gambles would stop for a moment,  and all the money floating around the financial-economy would have to be liquidated and  invested in the real economy – whether that’s land, paintings, hookers, buying companies or gold or sweet-ass geodes or limited edition lego minifigs or whatever – just real tangible things.  On the minus side, that would make the price of real things go way the fuck up to the point where regular non-millionaires could no longer afford rice crispies or sweet geodes.  But on the plus side, if all the oligarchs had to sell off their intangibles at the same time, the value of their intangibles would fall through the floor. Which would be fun to watch.

 

Or how about another version of a SECURITIES JAMBOREE, where every August 4th, the PHYSICAL ASSETS WHICH UNDERLY ALL YOUR DERIVATIVES  which you’re gambling on . . .they ALL get PHYSICALLY DELIVERED TO YOUR DOORSTEP.  Are you gambling on the future of pork prices or oil? Well here is a million hogs and 2 billion gallons of crude. Maybe you can put it on the tennis courts?  Are you gambling on the price of the Yuan? Well here is a shipping container full of actual coins for you to get your Scrooge McDuck on in.  Make sure and bring a snorkel!  Are you doing high-speed trades of companies where you don’t even know what it is?   Well apparently the microsecond when the jamboree clock ran out, you had just bought a sewage treatment plant. So here it is!  Right to your house! Enjoy!

 

So even though those are crazy ideas, you have to know the problems in order to start thinking of solutions.  And the Tyrant’s Evaporating Money trick is just one of the problems that a revolution will face in this day and age.

 

And this leads to a broader topic, as it usually does when I’ve been drinking.

 

OLIGARCH SELF DEFENSE.

 

This “all my wealth will evaporate if you try to grab it” scenario is just ONE of MANY counter-attacks the oligarchs can pull if the rabble rises up. And by “rises up”, I don’t mean armed revolution.  Oligarchs have been known to go into self-defense, blow-up-the-economy mode if people pressure their governments for simple things like closing tax loopholes or raising living standards for workers.

 

The main other O.S.D. attacks are:

 

1)    capital strike – refusing to invest any money in new businesses, or refusing to loan any more money.  This might seem at first like it would only work in small developing countries who are like “Please sir may we build a power plant so we can have electricity?”  but the shocking fact is, even in rich countries like Japan, USA or Germany, successful big companies depend on banks for loans just to handle daily business.

2)    Fire everyone and move the factory to a different country where people are more grateful to us!  AKA the Friedman (Thomas or Milton, take your pick)

3)    Capital FLIGHT. This is different than a capital strike. It means, “take all the profits I made/embezzled in country A, and stash them in a secret bank account in countries B through F.”  This is like a capital strike but with more money laundering, and different motivations.  Capital Strikes typically are done by legitimate banks, working together, in order to influence the governments to be more business-friendly. Capital flight is more of a solitary, shameful persuit, and with no goals to influence the government. Capital flight is more associated with banana republics, collapsing African nations, or Russia, where the rich are just like “OK, this country is over.”

4)    Currency attack!  AKA the Soros AKA the Asian Crisis of ’97.  Here is how this goes: if enough billionaires get together and start making bets that the Yen (or the Deutschmark, or the Peso) will go down in value, then everyone else jumps on the bandwagon, and lo and behold! The price DOES start to go down. And down. And down.  The first people to sell can make a shitload of money somehow, because they placed bets in advance that the price would go down. But for all the little suckers who are faced with the choice of, “Holy shit, my Dinars are worth 50% of what they were worth yesterday, either I sell them at a loss (thereby further driving the price down) or I hold on to them until they become altogether worthless!”

5)    Bond attack!  Like currency attack, but on government bonds.  AKA China and Saudi Arabia Basically Own Most of America Now.  This is more of a crazy suicide attack, because bonds are like money America owes China. So  they could destroy us by wiping their ass with our bonds, saying “These American bonds are bullshit funny-money from a not-legitimate government!”,  setting them on fire, then selling the fecal ashes on Ebay for $2 bucks per pound. But they’d be destroying themselves in the process. But it might be worth it!  Actually I’m not really sure of all the ramifications of a bond attack.

6)    The CRISIS OF CONFIDENCE. AKA the “BUNCH OF FUCKING BOND TRADERS?!??” Unlike the currency attack, and the bond attack, the C.O.C. (shoutout to Mike Dean!) is deployed early and often, since the ‘70s.  It goes like this:  “You, the government, need to borrow from us, the bond traders, in order to finance your pet liberal/conservative/whatever programs.  But we bond traders won’t buy any more government bonds unless you convince us that inflation will go down, enabling us to make more profits on our bonds.  And the only way to keep inflation down is austerity, and cutting social programs. Oh and incidentally this will cripple other non-wall-street industries like housing, exports, and cars, but none of those industries can destroy your political career like we can, so they can go fuck themselves.”

7)    RUN ON THE BANK aka TOO BIG TO FAIL. This one became super popular since 2008:  “Mr President/ Fed Chairman/ Secretary of the Treasury!  You have to bail out me and my friends because if we go out of business, we’ll take the whole economy with us! All the companies who deposited money with us will go bankrupt. And everyone who THEY owed money to will likewise go bankrupt. And no one will ever buy American stocks or bonds again!”

 

Anyway, those (plus the SCROOGE MCDUCK EVAPORATING MONEY revolution-foiler I described above) are just the Oligarch Self Defense strategies THAT I KNOW OF.  And I’m not even a member of the Bohemian Grove!  Who knows how many other shady tactics oligarchs are paying accountants and economists to invent?  My point is, there are like 100 books about the 2008 crash, and 200 perfectly redundant books about AMERICA IS UNFAIR AND WE’RE NOT GOING TO TAKE IT, and Noam Chomsky alone has written over 500 books.  All these books are full of ideas for reform or calls for mass protest.

But there is, as far as I know, NOT EVEN ONE book that even begins to address how reforms or protests or revolutions are going to cope with all the Oligarch Self Defense strategies. And unless someone writes that book, we’re all doomed.

 

DOOMED I TELL YOUUUUUUUUUUUUUUUU.

 

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