On January first, there is a rule being reintroduced in Australia concerning insolvency. For most of 2020, Australian businesses have been able able to trade while insolvent, while normally this is not possible and the CEO is personally responsible. While a lot of people get the sense that things will be okay which is indicated by the consumer spending levels I mentioned the other day, insolvency companies are expecting that this is just the start. Not only this, the money to keep employees on is drying up from the governments at the same time, meaning that it is likely that a lot of companies are going to fail and once one does, more will follow suit, as being insolvent means a company doesn't have the money to cover debts and, companies owe debts to other companies and banks of course - with the banks taking priority in the queue to be repaid.
I suspect that Australia isn't the only country that will face issues such as these and this highlights the problem with continually borrowing on the future in order to artificially prop up the economy as eventually, the ability to borrow ends and the repayments on the debt begins. But, if many companies collapse and unemployment skyrockets, there is not enough tax revenue coming in to manage the debt, which means more money has to be found so that a country itself doesn't become insolvent. Where do people think that money comes from?
I believe that we are headed into an unprecedented area of risk, where government services that so many have come or ben forced to rely on, are systematically cut away in order to pay creditors first, leaving citizens struggling even more than they have been. If the civil unrest due to economic and social conditions in the US is anything to go by, we haven't seen anything yet, with a global "pandemic" of social disorder that could see the fracturing of society that has been encouraged for the last decades, formalize into organized factions in what would surmount to a free-for-all, group against group. It is going to get very complicated, messy and I suspect, unfortunately bloody.
While we have faced economic collapses in the past, I think that this one is not like what has been experienced in living memory, if ever. We have never been this connected with our economic fates intertwined globally and we have never had the ability to influence and organize across the world. What this means is that just like we have seen the social movements sweep across the internet to affect all corners of the earth, the same is going to happen with evermore people brought into the fray, as the hands of financial pressures reach further up the ladder to pull more down, further stretching the gap to the top.
While the government debts may never be paid off, corporate insolvency means that businesses collapse, businesses that earlier were able to survive and even thrive. it is not that their goods and services are no longer demanded however, which means with each that falls, a gap is left in the market, a slice of vacuumed air that will be filled by the companies that can, which are those who survived. while survival of the fittest may work well in nature, when it comes to what is best for citizens, competition and diversity provide options - when the strongest swallow those who fall, paying them 10 cents on the dollar for their business, it results in further consolidation and a narrowing of competition, moving toward monopolistic conditions. With each acquisition, the borders expand, the wealth increases and the hurdle for competition to enter becomes higher, wider, thicker and deeper, so that eventually, the few that exist are in unassailable positions, as they control the entire market.
Perhaps it is this realization that is needed for people to see the corners they have continually backed themselves into, where a company server goes down and people all over the world are no longer able to access their email, do their business tasks or, adjust their thermostat and dim their lights. We are already seeing how the internet has become consolidated to the point where a literal handful of companies control nearly every facet in some way - but will we stay course until no choice remains except to bend the knee or take up arms.
Time will tell, but one thing we know for sure is, the rich keep getting richer and the gap is increasing. In the economic system we play, wealth is a finite resource, which means when a small group takes so much, it is at the expense of the large. Social disruption in the past has never had the tools available it has today and the conditions for revolution are aligning.
While people might want change, most would not wish to live the conditions of the storm on the horizon. We are a society of convenience, which is part of the reason we are in this mess to begin with. We want the ease that consolidation brings so much so, we ignore the risks of centralization of the things we rely upon in order to live, work and play.
Taraz
[ Gen1: Hive ]