From Reform To Collapse: The Dysfunctional Status Quo

Tyler Durden's picture


Submitted by Charles Hugh Smith from Of Two Minds

In a Dysfunctional Status Quo, Reform Triggers Collapse

You cannot "reform" away the dysfunction of the Status Quo without dismantling the vested interests and the ruling Elites that benefit from the Status Quo.

The dream of every conventional reform movement is to rid the system of its dysfunctional features while preserving the Status Quo.

But what the reformers don't understand is that the Status Quo is dysfunctional not because of bad policies or a few corrupt officials--it is corrupt and dysfunctional from the ground up.

Dismantle the dysfunctional parts and you've dismantled the entire Status Quo.

This is why it is so difficult for countries to reform their dysfunctional regimes. Consider China, everyone's favorite example that trees can indeed grow to the sky and beyond:

Reform unlikely, says China expert Roderick MacFarquhar (via Maoxian)

MacFarquhar, a professor of history and political science at Harvard University, said the vested interests of the political elite were so entrenched in a corrupt system that an overhaul would amount to dismantling the regime.


Despite hopes the regime can peacefully transform itself into a democracy with rule of law, MacFarquhar said he could not see such a transition, which would require the ruling elite to give up its power and privileges.


Although a political system's inertia often meant a fragile regime could exist for years, MacFarquhar said unpredictable circumstances could trigger its collapse. "You don't know what can unseat a fragile system," he said.

Doesn't this apply not just to China but to Greece, Spain, Italy, the E.U. itself, the U.S., Japan and a host of other developed nations all depending on financial slight-of-hand "extend and pretend" to prop up the dysfunctional Status Quo?

In every case, eliminating the source of the rot and corruption would topple the increasingly fragile regime. In the case of China, corruption isn't a feature of the regime: it is the regime.

In the U.S., financialization isn't a corrupting feature of our financial system: it is the system.

In the E.U., catastrophically misguided central planning isn't a feature of the Eurozone: it is the Eurozone.

In Japan, a stupified government propping up a zombie banking system isn't a feature of the Status Quo: it is the Status Quo.

Any reform that actually excised the source of the moral rot, corruption, malfeasance, fraud, malinvestment, moral hazard and self-serving vested interests would bring the increasingly fragile Status Quo crashing down in a nonlinear cascade of interlocking failed systems.

Here's an example of how unsustainable systems fail: the housing bubble. I prepared this "domino effect" graphic way back in July, 2006, when conventional wisdom held that there was no housing bubble: Housing Dominoes Fall (July 26, 2006)

Just as it was easy to predict the implosion of the housing bubble and the financial system that created it, it is also easy to predict the collapse of the euro: The European Financial Crisis in One Graphic: The Dominoes of Debt (October 24, 2011). It took about 2.5 years for the dominoes to fall:

You cannot "reform" away the dysfunction of the Greek Status Quo without dismantling the vested interests and the ruling Elites that benefit from the Status Quo. The same can be said of the Status Quo everywhere from the U.S. to China.

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Fri, 11/02/2012 - 11:49 | 2941360 Neethgie
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1939 the sequel, this time its nuclear.

Fri, 11/02/2012 - 11:53 | 2941376 Arturo
Arturo's picture

The people who can pacefully change the status quo are the ones making a profit out of it. They are not interested in changing it.

Fri, 11/02/2012 - 12:22 | 2941514 Seer
Seer's picture

The ONLY "change" that can occur is that those in control lose control, and with such loss, their "wealth."

This is ALL about sustainability.  Excess IS excess, and it's not sustainable.  Generally those who demand change are only demanding a bigger piece of the same rotten pie.

The "status quo" IS all to do with "growth."  And we know that this is a finite planet, so...

Fri, 11/02/2012 - 13:19 | 2941731 123dobryden
123dobryden's picture

unfortunately  history is  not on your side this time, those in control will just change the coat again

Fri, 11/02/2012 - 11:58 | 2941392 THX 1178
THX 1178's picture

Noo-Cyuh-Lurr... It pronounced Noo-Cyuh-Lurr. Noo-Cyuh-Lurr.

Fri, 11/02/2012 - 14:10 | 2941979 helping_friendl...
helping_friendly_book's picture

I used to cring every time W tried to say that word. What a dumbass losser! W i.e.

Fri, 11/02/2012 - 11:59 | 2941395 Headbanger
Headbanger's picture

Oh goody!


I'm so glad we kept up the bomb shelter Dad built under the back yard

in '63!

Now where are the batteries for that Geiger counter??



Fri, 11/02/2012 - 11:54 | 2941377 MsCreant
MsCreant's picture

Sooo basically we are doomed, these are the cycles of things, and all we can really do is sit back, watch, and try to carve a life out for ourselves from the remains of the detritus? 

Why blog? Why comment? Why do anything?

Fri, 11/02/2012 - 11:58 | 2941393 Stuck on Zero
Stuck on Zero's picture

Go to the beach.  Read a good book.  Go fishing.  Buy a MIG welder.  Repair the washing machine.  Turn off the TV.   Enjoy life.

Fri, 11/02/2012 - 12:55 | 2941640 tsx500
tsx500's picture

your list is ALMOST forgot Kick a bankster firmly in the balls .       

Fri, 11/02/2012 - 12:56 | 2941641 centerline
centerline's picture

Beach (check)

Book (check)

Fishing (not really my thing)

MIG welder (actually a check on this one)

Washing Machine (funny.  Check here too... bypassed a broken switch on the lid, machine now unsafe but works... ok with me)

TV off (check)

Fri, 11/02/2012 - 13:39 | 2941842 Gief Gold Plox
Gief Gold Plox's picture

Damn it. Now i'm secodguessing my recent purchase of an Ac/dc TIG welding machine. Think i'll try welding silver one of these days. Cheers.

Fri, 11/02/2012 - 19:02 | 2943167 JKearney3153
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Sat, 11/03/2012 - 01:38 | 2943691 Snidley Whipsnae
Snidley Whipsnae's picture

Buy and repair/maintain a small displacement motorcycle with capacity to carry various loads. MC should get approx 70 - 90 MPG or better. Have tires/spare parts on hand for same. Have enough fuel on hand to keep the MC running for a year... stored safely of course. Learn how to maintain this MC and have necessary tools on hand... maintenence is straight forward and simple for anyone with the slightest mechanical aptitude.

An older Honda 90 - 110 Trail works well and they have no (depending on year) modern electronics to fail. These Hondas are still being produced and sold around the world but were not imported into the US after 1986 due to EPA rules. The Australian Postal Service continues to use the Honda 110 Trail, known there as 'the postie'. Top speed is 40 - 55 MPH, depending on gearing and hills... fast enough to beat walking or waiting on a bus. Definitely NOT for interstate hwy use. The Trail is much more rugged than modern 'scooters' for they are built for road or trail use. My Honda starts on first or second kick even after sitting for a month... they are kick start only and will start/run well even with a completely dead battery because of magneto ignition.

These MCs can be found on EBay Motors under a motorcycle search for 'Honda Trail'. Prices vary from ~ $300 - $2,000 depending on condition, mileage, etc. Sometimes found on Craigs List as well.

Offered as real world practical advice. Also, buy a heavy duty lock/chain cause they will be in great demand and are light enough for a strong person to lift.

Mon, 11/05/2012 - 14:24 | 2949206 aerojet
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Exactly. There's plenty to do until the killing gets started in earnest.

Fri, 11/02/2012 - 12:01 | 2941405 HelluvaEngineer
HelluvaEngineer's picture

Because the last domino is not the end of the world.  There is no capitalism without bankruptcy.  The sooner it happens, the better things will be for the 99%.

Fri, 11/02/2012 - 12:03 | 2941420 Mrmojorisin515
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now you're learning boyo

Fri, 11/02/2012 - 12:30 | 2941538 Seer
Seer's picture

Because we are, if nothing else, optimists at the core.

As Derrick Jensen put it (and I totally agree: It's entirely possible to hold two conflicting views: 1) We're totally fucked; 2) Life is good.

All is subject to the laws of the universe (or, as one may wish, "god").  Balance is only possible with the existence of two extremes, meaning that there cannot be just one side, one "happy" side.  I'd further add that the words "good" and "evil" are highly subjective; example: to MANY the very idea of a cessation of growth means "bad" (or "evil"), yet, continuing to push growth (as was done by the real estate bubble and all the other centrally pushed bubbles) will most certainly result in lots of suffering.

Fri, 11/02/2012 - 20:02 | 2943276 MsCreant
MsCreant's picture

Good post.

Mon, 11/05/2012 - 14:27 | 2949219 aerojet
aerojet's picture

We are totally fucked in the overall cosmic sense--the earth has another 500 million years or so before it becomes uninhabitable.  So if the human race is even still around by then (a really big if), and we don't get moving on to other places, then that's that.

Fri, 11/02/2012 - 12:53 | 2941631 redpill
redpill's picture

Thanks for distilling Chuck "Even love notes to my wife are 3500 words" Smith this time so the rest of us don't have to labor through it.

Fri, 11/02/2012 - 14:09 | 2941975 Diogenes
Diogenes's picture

You make the best of whatever you have to work with. If the system is collapsing and there is nothing we can do to stop it, next best thing is to save what we can and step aside before the wreckage buries us.

If enough people wise up in time it will be possible to side step most of the blows and cushion the blows that can't be  avoided.

Meanwhile the more people who are self sufficient the less load on the system and the better for the unfortunates who didn't get the word.

Fri, 11/02/2012 - 11:54 | 2941380 orangegeek
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Euro markets rolled over in mid-2011.  The last two markets to go are the NYSE and NASDAQ.


Take a look at what the last few days have transpired into.

Fri, 11/02/2012 - 11:55 | 2941384 The trend is yo...
The trend is your friend's picture

Burn bitch Burn

Fri, 11/02/2012 - 11:57 | 2941390 Blazed
Blazed's picture

Let 'Er Rip!

Fri, 11/02/2012 - 11:59 | 2941401 The Limerick King
The Limerick King's picture



The Ponzi is reaching new peaks

Our financial alchemy reeks

Despite what we try

Our system will die

The crash will begin with the Greeks

Fri, 11/02/2012 - 12:00 | 2941402 LiesAreTheOnlyTruth
LiesAreTheOnlyTruth's picture

You forgot to put a printing press between each domino ... thereby stopping any from falling ... and everything is perfect!

It's the "5P" world plan ...


Print and Produce Perfect Prosperity in Perpetuity!!

Fri, 11/02/2012 - 12:01 | 2941407 SDRII
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Turkey: Finance Minister denies paying in gold for fuel to Iran

Iran: Iranians can no longer export gold without approval by the central bank, an official was quoted as saying on Wednesday, in a new effort by the government to restrict outflows of wealth. The move follows media reports on Tuesday that Iran had banned the export of some 50 basic goods, as the country moves to secure supplies of essential items in the face of tightening Western sanctions which have destabilized its rial currency.

Turkey Exports to UAE (Gold): Gold sales, particularly to the United Arab Emirates, in September help the overall exports of Turkey, economists say. The Gulf state has purchased more than $1.1 billion worth of gold last month

Fri, 11/02/2012 - 12:49 | 2941611 SmallerGovNow2
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The question that comes to mind, with all of these countries buying gold, how does the price continue to get manipulated down, and when does physical gold become decoupled from the manipulated market that includes paper gold?

Fri, 11/02/2012 - 15:49 | 2942468 Thisson
Thisson's picture

Maybe you're overlooking the obvious fact that for every entity buying gold, another entity is selling gold?  Duh.

Nobody knows what gold will do.  If it is re-recongized as money, its perceived value will increase.  If interest rates go up, gold's perceived value will decrease.

"I am a student of uncertainty" - Hugh Hendry

Fri, 11/02/2012 - 12:03 | 2941421 Sleepless Knight
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OK so lets get this show on the road and over with already - time to re set and move forward.

Sat, 11/03/2012 - 01:45 | 2943695 Snidley Whipsnae
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S Knight...

I suggest that you relax and enjoy this period of 'phony normalism' while it lasts. Once the shtf the era ahead will be long and fraught with unexpected pit falls and obstacles. Use this time wisely... and, good luck to us all.

Fri, 11/02/2012 - 12:05 | 2941425 The Axe
The Axe's picture

Rockdelle   pulling a NITE      Dick Bove   must have left a old trade tickets in his desk........BOOM

Fri, 11/02/2012 - 12:15 | 2941461 LouisDega
LouisDega's picture

Que Rick Santellis Howard Beale schtick. 3..2..1...

Fri, 11/02/2012 - 12:24 | 2941507 JuliaS
JuliaS's picture

The foundation of all rights is the right to property, yet it makes no sense to enforce it now, when most of valuables currently in possession belong to crooks that acquired them illegitimately. A confiscation, on the other end, opens door to abuse and misappropriation. The strongest members of the current elites will end up segregating even more wealth under any redistribution scheme not involving total asset destruction. Under redistribution, rights become subjective and methods come into conflict with the ideals.

The only fair way to restore justice (and the most painful) is an economic singularity and possibly war, where assets are physically destroyed and those that aren't, revalued. The world where everyone starts from scratch and earns their worth back into the new society. The world where old accomplishments and track records don't matter, where everyone's initial credibility is zero.

Fri, 11/02/2012 - 12:54 | 2941632 centerline
centerline's picture

Seems that the more the status quo is attempted to be maintained, the more likely that outcome becomes.

Fri, 11/02/2012 - 18:22 | 2943074 Optimusprime
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The first paragraph of your post is masterful.  Bravo.  May it sink into our minds and stay.


The second is speculative, as must be so much of our thinking these days.

Fri, 11/02/2012 - 12:29 | 2941533 Nehweh Gahnin
Nehweh Gahnin's picture

We'll know that last domino has been hit when the Bundesbank demands its gold back.  Oh wait...

Fri, 11/02/2012 - 12:37 | 2941568 NEOSERF
NEOSERF's picture

Collapse is a grey area.  By all accounts most of us would say 25-50% unemployment is a "collapse" but apparently the markets say collapse is when someone forces those with Greek bonds to take the default and by that account, we can play this game a whole lot longer.  They can vote for more austerity and stop paying for everything.  Heck they can sell off all assets and watch the riots but as long as ECB, France and other banks don't take a writedown..then there is no collapse.  Ridiculous

Fri, 11/02/2012 - 12:41 | 2941588 Hayabusa
Hayabusa's picture

The Flynn Effect proves that IQ increases over time in people... we evolve intellectually.  Some of you (the naive) believe change can occur to the status quo prior to the time the Flynn Effect hits critical mass and people's brains evolve to the point they are smart enough to figure things out - won't happen.  I will never live to see it, but one day the stupid sheeple may evolve intellectually enough to see things for how they are and... when that point is reached and critical mass takes over, THEN the status quo may be uprooted.  Of course this would require that the smartest/evolved people not allowed themselves to be controlled by fear and rest assured the sociopaths/psychopaths will utilize every bit of fearmongering they can in order to maintain the status quo and "their world."  Keep wishing/waiting everyone.

Fri, 11/02/2012 - 15:51 | 2942476 Thisson
Thisson's picture

I hate to break it to you, but the scammers at the top of our ponzi economy are getting smarter too, pursuant to the same Flynn Effect.

Sat, 11/03/2012 - 02:33 | 2943730 Snidley Whipsnae
Snidley Whipsnae's picture

Not only are the people at the top getting smarter, their manipulation via mass media is getting better. Trial and error of various methods of manipulation/indroctrination via more sophisticated means of communication is helping them.

For instance, Joseph Goebbels didn't have the internet to use as an arm of propaganda distribution.

Turn off the boob tube and carefully select/filter 'news and opinion' gleaned from the internet... might help those at the lower end even though bias will always enter into the outcome. Of course, the lower end is not reading ZH... lol.

Fri, 11/02/2012 - 12:58 | 2941651 harami
harami's picture

Power is not a means, it is an end.  One does not establish a dictatorship in order to safeguard a revolution; one makes the revolution in order to establish the dictatorship.

-George Orwell

Enjoy playing into their hands.

Fri, 11/02/2012 - 13:07 | 2941678 lolmao500
lolmao500's picture

And the stupidity of NJ hits ...

The hurricane-ravaged east coast has been receiving north Alabama help, but crews from Huntsville Utilities learned they’ll be doing work in Long Island, New York instead of in New Jersey.

Crews from Huntsville, as well as Decatur Utilities and Joe Wheeler out of Trinity headed up there this week, but Derrick Moore, one of the Decatur workers, said they were told by crews in New Jersey that they can’t do any work there since they’re not union employees.

Fri, 11/02/2012 - 13:29 | 2941780 blunderdog
blunderdog's picture

Yeah, stupid.  What I don't understand is why anyone would want to pay for overpriced 'Merkin labor when the illegals are available for a far cheaper rate.

Fri, 11/02/2012 - 13:13 | 2941704 blunderdog
blunderdog's picture

It's interesting, but it seems to me that CHS is mistaking the GOAL for "dysfunction."

The objective here, in all the places he lists as problematic, is the creation of a global (and decentralized) social organization in which the rich dominate and direct the lives of the vast majority of the human population.

Stability and protection of the wealth of the 20,000 folks who own the planet is what *everyone* is working towards.

Where's the problem?  I see plenty of cause for *complaint* if you're not one of the 20,000, but you don't really matter unless you're prepared to do something about it.

Fri, 11/02/2012 - 13:32 | 2941797 Madcow
Madcow's picture

10 more years of deflationary collapse - and the bankers will be able to foreclose on 90% of the businesses, real estate, city monuements, public parks, etc, of the "West."

that is obviously the plan.  

all you have to do to get rich is hold cash, short rallies, an GTFO of the big cities.

Fri, 11/02/2012 - 14:33 | 2942106 madcows
madcows's picture

um, the only thing deflating is incomes.  I'm looking for an inflationary crash.

Either way, I'll shoot the bankers before they foreclose on my country.

Fri, 11/02/2012 - 14:38 | 2942123 akak
akak's picture

Madcow, you are indeed mad ---- that cash that you cling to is constantly losing value, as all fiat currency has throughout history, and in fact must lose due to its inherent fraudulent nature.  But go ahead and throw away your wealth if you chose to; you will only have yourself to blame.

Fri, 11/02/2012 - 14:43 | 2942150 madcows
madcows's picture

You must have aced your SAT's.  I say we are in an inflationary environment and you respond by saying i'm clinging to cash that is constantly losing value. 

AKAK for scholar of the year.  Quick, here's a nobel prize and a Dick and Jane book.

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