18 November 2008

Meltdown and cover-up

It's remarkable how the term meltdown has come to dominate all references to the current financial crisis. It's very apt, in a sense, because it's caused by an ‘overheated’ economy — the financial world having apparently forgotten that in our system, money is made of debt, and becomes ‘hot money’ (cf. ‘hot air’) when the debt which constitutes the currency grows to several times the total value of goods and services produced in the real economy. But it's equally apt to call this inflation of the money supply a ‘bubble’, since it is so insubstantial. When the bubble breaks, though, ordinary terms like ‘pop’ feel too light to suit the seriousness of the situation. ‘Correction’ would be technically correct, since the credit bubble was a kind of delusion which is now being revealed for what it is; but using it would be an admission of having been deluded, if you're a financial speculator, and the term is too bland to catch on in the popular media. ‘Crash’ on the other hand evokes vague memories of the Great Depression, which is maybe too serious for folks to contemplate — though the fallout from this crash could actually turn out to be worse than the 1930s version.

Meltdown works because it sounds both serious and substantial, and the word isn't associated with an earlier financial collapse because it only entered the lexicon with the rise of nuclear technology. (Like fallout, which i found myself using in the previous paragraph … ) I wonder how many of today's children will grow up thinking that the word refers ‘literally’ (i.e. primarily) to a financial collapse, or to this one in particular, and only by extension does it mean the kind of major nuclear accident that happened at Chernobyl. Or maybe we'll be lucky and there won't be any more meltdowns of nuclear reactors.

But there, perhaps, is the real reason why the people most responsible for the ‘meltdown’ like the term so much: it makes the whole thing sound like an accident, something that couldn't be foreseen. Calling it a ‘meltdown’ amounts to a cover-up of the fact that it was inevitable (though the exact timetable of events was unpredictable) and could have been foreseen by anyone who understood the post-Bretton Woods financial system. It was allowed to happen because the system, while it lasted, was very profitable for those in charge of it. The bailout packages are designed mainly to squeeze the last bit of financial gain out of the situation, before handing over the insupportable debt to those already impoverished by it — the American taxpayers, and their counterparts around the world.

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