In a recent speech, governor Elizabeth Duke of the Federal Reserve told an anecdote from just after the failure of Lehman Brothers last September. Ben Bernanke, chairman of the Federal Reserve, was asked, ‘Well, what if we don’t do anything?’ To which he replied: ‘There will be no economy on Monday.’ (cited in Wolf 2009)

The global financial system has been constructed to serve three economic imperatives: the need for growth; the necessity for efficient allocation of resources; and the maintenance and enhancement of credit, grounded in stability. The current financial crisis demonstrates a failure in each of these tasks (Mason, 2009). Common wisdom about the significance of the crisis is that it is a Keynesian moment: individual states have had to step in to maintain growth, allocate resources, and provide stability. Once the global financial system has been repaired through tighter regulation and rebuilt balance sheets, then it may take up the strain once more, leaving states the opportunity to rebuild their own balance sheets.

I shall argue here that this common wisdom entirely misses the apocalyptic significance of the current financial crisis. What is wrong with the global financial system is that it threatens us with a live and devastating weapon: the possibility of its own implosion. Such an implosion matters for three essential reasons:

  • banking networks are scarce resources – we can no longer buy and sell without our current network;

  • banking networks hold and preserve nearly all our liquid wealth in the form of deposits – we would lose all this wealth if they went bankrupt;

  • the global economy is a complex network of interlocking liabilities: the failure of Lehman Brothers placed many others at risk of being forced into default, threatening to unravel the entire system of liabilities, and preventing any institution from evaluating the net worth of any other – we would lose all knowledge of the creditworthiness of all institutions.

Major financial institutions are at once players within the financial system as well as conditions for the survival of the system: this is why taxpayers have been forced to offer a free insurance policy to underwrite them. It is a matter of economic survival, not of political ideology. So the financial crisis is also ‘apocalyptic’ in the ancient, biblical sense (explained in Rowland 1982): it is a disclosure of underlying powers. Political decisions have been shaped by economic forces. Far from a return to state sovereignty over economic affairs, the current crisis discloses the submission of the state to economic forces, often in complete opposition to the ideology of the state leaders involved. The global financial system exercises its power of coercion through its own fragility. It is this predicament which discloses the problem I wish to consider here: what is the significance of this strange power of coercion that is exercised through weakness?