We need metaphors to think with when thinking about global finance. Well, at any rate, I do. And Karel Williams, a non-muppet academic in Manchester, has come up with a corker…
It is also very difficult to explain all this to non-specialists who have never heard of arcane technical matters like rehypothecation or balance sheet interconnections. The dangers of the present system are therefore best understood by analogy with the problems which the British aviation industry encountered when it made the transition to jet aircraft.
In October 1963 a BAC 1-11 prototype in routine stall testing for airworthiness certification fell out of the sky and crashed disastrously. The problem was a “deep stall” which could not be recovered by the pilot using the standard drill of stick forward/elevators down and add thrust. Deep stall was an unintended consequence of a change of design configuration when jet aircraft with T tails were introduced; in some stalls the turbulent air from the stalled wings could spill up and prevent the elevators at the top of the tail from working….
Aircraft which fall out of the sky can be re-engineered as the BAC 1-11 was. The problems with T tails could be fixed, and were fixed, because we had relevant engineering knowledge and the private interests of plane makers and airline operators coincided with the social interest of regulators and the flying public. European banking is unfixable because our technical knowledge is rudimentary and because the basic political condition about coincidence of private and social interest is not satisfied.
The eurozone crisis and “deep stall”
CRESC News, Issue 15 August 2012
The second half of that last sentence is, I think, academese for “rich people are gonna cling to their riches even if it takes everyone – themselves, their kids, the entire frickin’ biosphere – down with them.”
So it goes.