I’ve just finished reading the latest installment the New York Times Reckoning series; This look at the current financial crisis has given rise to some queer intuitions on my part when held up against another brilliant article in The Chronicle about how the best historical example of the current crisis is not 1929, but rather 1873.

The latter article suggests a much more probable cause for the current mania; namely that a certain combination of economic forces and fear have given us our current situation. The question in this situation is when the bottom of both fear and the rapid revaluation of our economy will occur. The second question is who stands to profit most when this time comes. The silly thing about the Times article just linked is that it question-begs. It tries to inculcate the reader into thinking that things have bottomed out, and will only get better soon (read: “Buy stock, for gods sake! We need your cash!”)

What then, to make of the panic of 1873? The author of the article in the Chronicle claims that the crisis of 1873 preceded a westward-shift of power; he draws the hazy conclusion that power will continue to shift west, to China: this is an impossibility. Enough has been made of China’s political and social problems, but their economy is predicated on exports to such an extent that a slowdown in the West will surely have negative repercussions in Beijing.

Where does this leave us? I’m inclined to say that we are headed towards a period of general decline, probably no longer than the Great Depression itself was. Commodity prices are already plummeting, leaving the petro-fascists out in the cold, along with most other ‘developing’ (3rd-world) countries that had depended on high commodity prices for economic growth. In this sense, Iraq will probably jump to the fore once again, because it is of little doubt that the current spate of stability has little to do with the increased presence of US troops but $100/barrel oil prices.

Where, are we left? It’s a question I’ve been having some trouble answering. There exists some third variable and presence beyond investor fear and a burst housing bubble. This is no correction. It’s a massive redaction.

Interesting times, to be sure.