Fall Back Strategy

The world had better have a fall back strategy. Suppose we wake in the morning and find that overnight America has collapsed. It had gone the way of the Soviet Union. The central government was no more and States, areas, and special interests were declaring their sovereignty.  The military would be slower to weigh in because of conflicts of allegiance within its ranks.

America is the financial and political hub of the world. On the morning of the fall the stock market will drop over 400 points. Big holders of the dollar will unload as much as half their holdings as the dollar falls. Others will take flight because the dollar will no longer represent a safe haven. These moves will exacerbate the falling of the dollar.

The world will be in panic. The consensus will be that somehow stability must be achieved. Traditionally the gap would have been filled by Japan in conjunction with some major Western power, most likely Britain. Japan is in turmoil due to the tsunami. Its cash is spoken for at this time. Britain would not be desired by the American wealthy special interests. The British government does not subscribe to “the divine right of capitalism”. It is a euphemism for “nothing must stand in the way of the pursuit of profits”.

The new British government has taken a less laissez-faire approach because of the financial crisis. But the American wealthy special interests may no longer be in the driver’s seat to determine the outcome. For many wealthy Americans they would be financially trapped like during the 1929 stock market crash. They would be witnessing all their holdings vanish in value.

Most likely the stability will be the result of a triumvirate formed by Britain, Germany and France, sanctioned by the EU. Certainly China, Russia, and Israel will be heavy handed in their attempt to shape the new world order.

The second act will be the loss of cohesion in the American military establishment. There are bases all over the world. They will be largely abandoned or become fiefdoms. Things would be little different with the Diplomatic organization. There will be shouting by some and silence by others in the American diplomatic organization. They also will not be speaking from the same page. The fragmentation will result in domestic and foreign American “privateering”.  

Things domestically will be filled with uncertainty. Faith will be gone in the police, the fire fighters and civil service. Schools will be closed. Children will roam. Adults will be derelict.  Bandits and disorder will reign. The green back would be an uncertain medium of exchange. Medical care would only be provided on a humanitarian basis. We would be subsisting in the dark without much electric power. The whole society would be holding its breath, while demigods rage. Everyone will be hoping for a messiah to lead them out of the nightmare.

Gold will go to $4,000 dollars an ounce. But gold deposit certificates would be worthless. The asset holders would just not honor them. The legal system would have no leverage to compel them. Ice and some other things would become very valuable as commodities in trade. People will horde vinegar, bleach, alcohol, cigarettes, liquor, peroxide, ammonia, and soap. Two things would be premium products cementing wealth, sex and drugs.

The coup de grâce for America will be the ignoring of American copyrights and patents. America would no longer have the leverage to force adherence. The individual entities that result from the American collapse would rush to cut their own international deals. This would further undermine the old order.

How prepared is the world? Will they be as unprepared as they were for the financial crisis, believing the odds are too great for it ever to likely happen?