Clarke and the credit crunch

A while ago I mentioned reading up on Arthur C. Clarke's works, and that many of his science fiction writings are still relevant today, sometimes decades after they were first published. This weekend, while on a short holiday, I bought another one of his volumes: Rama II, the sequel to the well known book "Rendezvous with Rama". Rama II was written in cooperation with Gentry Lee and published in 1989.

Rama II recounts how, after the first encounter with Rama in the 22th century, mankind turns to massive self gratification and self indulgence as a result of that event. People party like it's 1999, loaned money is recklessly spent on consumer goods, and it seems there's no end to economic growth. But there's serious flaws in the underlying economy, and soon warnings are heard to limit credit and balance budgets. These calls are not heeded and on one single day, three large global banks announce insolvency due to the huge amounts of bad loans on their balance sheets. As a result, stock markets all over the world crash, and when people attempt to dump their stocks en masse, the losses worsen to unprecedented lows. The result is a deep global recession that will, essentially, bring modern civilisation to it's knees. A period of unemployment, hunger, worldwide religious and political turmoil follows, resulting in a chaos that's essentially undoing mankinds' progress of several hundreds of years.

Sounds eerily familiar, doesn't it? When I first read this, it really hit me: we haven't seen the "turmoil and chaos" bit, and I sure hope we don't have to, but the rest fairly accurately describes what's been going on recently.

The difference between 2008 and Rama II so far, is that in Rama II politicians are unable to intervene in a meaningful way. We've obviously seen a lot of government intervention lately, but we don't know yet whether that will turn out to be successful or not. Speaking for the Dutch market, it seems that on the short term the government interventions have worked, but this crisis isn't finished yet. We'll have to wait and see. I just hope we'll be spared the turmoil-and-chaos phase that Rama II so accurately describes..