https://thegreatrecession.info/blog/2020-economic-predictions-guarantee-epocalypse/
2020 Economic Predictions: This Series of Unfortunate Events Guarantees the Epocalypse
The troubles listed here in my 2020 economic predictions are so severe and so likely to get even worse that it’s more difficult to imagine they won’t get worse than to believe they will. Just a few of these misfortunes would be enough to plunge us into an abyss of social and financial catastrophes.
Here are my economic predictions for the remainder of 2020
This list of economic predictions is not hard to come up with. It is, however, the fact that it is so easy to predict these things this year that makes this year’s list so important.
I think most readers will agree with the likelihood of most predictions on this list. The point of the list, then, is to show by the aggregate of calamities that will wash over us how close to certain is a deep economic depression. (Most are problems central banks have zero capacity to resolve.)
This depression is something many people may not perceive until they widen their field of vision to see the full ocean of likely troubles that are nearly certain to pound the entire world in wave after wave for months or even years to come.
(Though I focus on the US, the same economics predictions are likely to apply all over the world with their own variations of local color.)
Many people are living right now in the delusional hope of a V-shaped recovery from the recent Corona crisis lockdown. The list below shows why that is the most unlikely possibility imaginable.
During this time of economic crisis, most of the predictions listed below are current events that are almost certain to continue as the major trends of 2020 and are likely to even worsen, plunging us into the chaos of a deep economic collapse, worse than 2008:
The social unrest of BLM will become even more widespread and intense.
Additional social unrest over forced social distancing will reappear around the nation as distancing measures return.
Social unrest over corporate bailouts is likely to begin as the Federal Reserve and government stack up mega bailouts for the rich (or as bailouts already given become known) via the insanely rich BlackRock, which has been given a monopoly on administering handouts for which only the wealthiest qualify.
Tearing down of monuments and other acts of violence will certainly create backlash against BLM from those who value the monuments or just want the history of both sides preserved.
So, social unrest will beget more social unrest.
All the turmoil of a likely-to-be contested election with all the accusations of Russian tampering and other hacking (like what just happened to Trump’s Tulsa rally) will cause even more social unrest.
All those social conflicts will negatively impact some local businesses already hurting badly from the COVID-19 lockdown because they will be unable to reopen due to the protests at a time when we cannot afford anything that causes further damage to business.
Social distancing being ignored entirely by BLM protestors, will increase the spread of COVID-19 as will reopening, ending the stock market’s fantasy of a V-shaped recovery. (Even if the Coronacrisis is a trumped-up hoax as some say, the same scenario will give the hoax all kinds of new (and news) stories to grow on.)
Travel and hospitality will certainly remain in deep depression as COVID-19 stages resurgences.
Lack of travel assures a continued rise in bankruptcies in the oil and gas industry.
Shutdowns of major summer events will depress local business and government revenue as will shutdowns of sports events and concerts.
Local governments will be forced to downsize staffing quickly and cut back projects of all kinds due to hugely diminished tax revenue caused by all the troubles listed here, causing a new wave of job losses, not just in government but in companies that contract for government projects.
Diminished policing will result in a huge crime wave across America. Some of that will result from police department defunding; some will be required in other ways by liberal governments seeking to placate protestors; and a lot will happen because police officers resign and no new people want to become police in the present atmosphere. This will be as damaging to Black communities as to White and will have a suppressive effect on economic activity.
Business uncertainty due to the continuing trade wars and to additional COVID-19 border lockdowns, as well as inability of businesses to get parts across borders even for products produced and sold within the nation, will act like gravity on the hope of economic lift. (What a time to be doubling down on trade wars, but here we go already!)
We all know the federal debt will keep growing at an exponential rate because of reduced taxes that were supposed to be paid for by a rise to 4% or better GDP growth. That’s now a distant dream when the best we will see is -10% GDP growth. Compounding the retreat in GDP and the resulting drop in tax revenues, we have increased government spending due to COVID-19 stimulus efforts. All of that will require the Federal Reserve to monetize the debt to the moon and back. At some point that will call into question the current US credit rating.
So many bonds sliding toward junk because the weak business economy will force all kinds of already risky credit to become riskier and become downgraded.
Forced offloading of that debt by institutions that are not allowed to carry junk bonds, will cause huge bond market problems and defaults by those who can no longer refinance by issuing new bonds. That will force the Fed to continue to soak up ever larger amounts of junkier debt, moving further down the junk spectrum, even as it also has to fund the federal government’s exploding debt plus the new exploding debts of local governments via new “special vehicles.”
The stock market, being utterly dependent on the Fed continuing to print money while also utterly dependent on COVID-19 keeping its head down, will go down hard again, likely this summer and probably again in the fourth quarter. I predict it will ultimately fall lower than its nadir in March.
That will cause more wealth evaporation, leading to more natural economic tightening across the financial and business spectrum.
The second wave of COVID-19 will be worse than the first when the fall flu season hits or maybe even this summer, given that the hottest rise in cases is happening in our hottest states. That makes it obvious that climate temperature does nothing to slow the spread.
Some major banks and other financial institutions in Europe, such as Deutsche Bank, and in other nations will crash. US institutions will get pulled down by their associations.
Many businesses will never reopen even though the economy has been reopened legally. Many others that do re-open will close for good before long because partial reopening is not enough to sustain them and, in some cases, may even cause them to lose more money than if they stayed closed. (Already, as I predicted prior to the opening would happen all across America, I see restaurants in my own area that did not reopen, and I’ve talked to people in restaurants that did reopen who say they are not even able to fill their reduced 50% capacity under social distancing rules because they can’t get enough customers to return. Restaurants are slim-margin business, so many will fail.) And that is even if the Coronacrisis doesn’t have a resurgence.
More shopping malls that were already marginal will close forever after reopening because of the number of businesses that do not return or that fail during the partial reopening.
That, in turn, will have a knock-on effect for other surrounding businesses that now experience less traffic.
Due to the continuing sweep of all the problems listed above, we are in for a deep, longterm jobs depression.
That means housing and commercial real-estate will crash again as longterm unemployment and business losses result in mortgage defaults.
The resulting deep slowdown in construction will mean even more job losses.
That means some US banks will crash (or have to be bailed out by the Fed) (though maybe not until 2021) due to all the loan problems caused by all of the above, resulting in even more job losses.
Add to all of these near certainties, the growing possibilities of more international wars that we already see rising in risk — North Korea v. South Korea, North Korea v. the US, Israel v. Iran, Israel v. the Palestinians over annexation of parts of the West Bank, Saudi Arabia v. Yemen, China v. Taiwan, China v. Nepal, China v. the US, India v. Pakistan. Many of these conflicts seem to have intensified over the past year, and that’s just a short list of currently rising or continuing international conflicts.
Civil wars within various nations are more likely because of the rising economic troubles and social strife listed here as well as continued growing strife due to immigration pressures that developed under globalization.
I won’t predict the US dollar will collapse, BUT … this is the FIRST year in which I’ve ever said that is a reasonable possibility. Until now, it lay dimly in the future. Nations are angry over how the dollar has been repeatedly weaponized by the US via sanctions. So, I am certain the indomitable dollar will finally start to experience struggles of its own due to all the problems listed here, which will result in the Federal Reserve being less able to manage the financial chaos nationally and internationally, and due to competition from new central bank digital currencies this year, maybe, but especially next.
Add to all of that the normal economic crises from major exogenous events, such as earthquakes, volcanism, hurricanes, tornadoes, floods, droughts, pestilence, wildfires, and, oh, an asteroid or two. The difference this year is that those big catastrophes will be hitting badly crippled economies and stressed societies wherever they hit in this world. (We cannot know what will hit or whether the number of such events will be lighter or heavier than other years because these are black-swan events — things we know CAN happen but have no knowledge of the specific likelihood of any particular event in a particular area in any given year. What we do know is that nations struggling under an economic crisis and an emergency health crisis will be less able to manage those events when they hit. Organizations like FEMA will be stretched way beyond their capacities.)
That’s a long list of finger-in-the-wind economic predictions. I’m not saying all of them will be dominant trends this year, and I can’t say when or in what order each one will happen; but I am certain 80% or more of my 2020 economic predictions will play out as stated above, and that is more than enough to assure the deep economic depression I’ve named “The Epocalyse.”
Tuesday, June 30, 2020
Monday, June 29, 2020
SC214-7
https://www.oftwominds.com/blogjune20/in-charge6-20.html
The Illusion of Control: What If Nobody's in Charge?
I understand the natural desire to believe somebody's in charge: whether it's the Deep State, the Chinese Communist Party, the Kremlin or Agenda 21 globalists, we're primed to believe somebody somewhere is controlling events or pursuing agendas that drive global responses to events.
I submit whatever control we discern is illusory, as the dynamics unleashed by the pandemic have already escaped the control of elites. The fundamental reason the elites have lost control is that all the systems they depend on have been broken for 12 years, but were successfully papered over by doing more of what broke them in the first place. This papering over of broken systems generated an illusion of functionality: everything appeared to function as before even as dysfunction spread into every corner of every system.
As doing more of what broke the systems in the first place is failing, the illusion of functionality has been shredded. Now that the illusion of functionality has been lost, control of the narrative via institutional authority has also been lost.
I've often written about the difference between force and power; elites often mistakenly believe the two are equivalent, but they are worlds apart. Those who wield power persuade the masses to obey without being coerced, and to accept the self-serving narratives of the elite without question. Power leverages institutional authority and cultural myths and beliefs.
Force is costly, as coercion is costly. Force is a poor substitute for power, not only because the costs are so burdensome, but because the masses are not acting on their own volition; they are obeying only because the costs of not obeying are so high. But the unwilling can never be as productive as the willing, and so the regime that depends on force stagnates as the costs of coercion ratchet higher and the productivity of the forced steadily declines.
When power is lost, the masses simply stop listening to the authorities. In W.B. Yeats' line, the falcon cannot hear the falconer; once authority over the narrative is lost, the masses circle away from the voice of their elites.
The systems the elites depend on for their authority and power are now little more than fractals of incompetence, structures dominated by incompetence in every level and every nook and cranny, from the lowest paid employees to the top leadership.
All these systems serve the interests of insiders and vested interests first, the priorities of the elites second and the public / customers third, if at all.
The elites have lost control of everything that is critical to their survival: capital flows, faith in the future of eternal cost-free growth, and the rise of discontent and disillusionment.
The elites are discovering, to their dismay, now that competence has been lost, power has been lost, and force is no substitute for power.
All the papering-over tricks no longer work. Lowering interest rates to zero isn't going to increase consumption or investment, it's only pushing speculative frenzy to new increasingly fragile highs. Printing trillions and sluicing it to the super-wealthy isn't going to fix what's broken because that mechanism is what broke the system in the first place.
The last shred of power the elites hold is the belief of the masses that the elites are still in control. That belief is dissipating, despite the shrieks and cries of the elites that they are still in control. Events are illuminating their hubris and the fractals of incompetence that are crumbling beneath their feet.
Many believe the super-wealthy always transition seamlessly between regimes. But this is not always the case. The greatest personal fortunes in history (owned by private individuals, not royal/Imperial households) were likely accumulated by Roman elites. Their villas were in essence small cities and their fortunes were in Roman terms global.
Yet when the institutions that enabled their fortunes crumbled, these elites did not transition their wealth and power seamlessly to Barbarian rule: everything fell apart, their villas were abandoned and their power vanished.
Phantom capital is ephemeral, and so is power.
The Illusion of Control: What If Nobody's in Charge?
I understand the natural desire to believe somebody's in charge: whether it's the Deep State, the Chinese Communist Party, the Kremlin or Agenda 21 globalists, we're primed to believe somebody somewhere is controlling events or pursuing agendas that drive global responses to events.
I submit whatever control we discern is illusory, as the dynamics unleashed by the pandemic have already escaped the control of elites. The fundamental reason the elites have lost control is that all the systems they depend on have been broken for 12 years, but were successfully papered over by doing more of what broke them in the first place. This papering over of broken systems generated an illusion of functionality: everything appeared to function as before even as dysfunction spread into every corner of every system.
As doing more of what broke the systems in the first place is failing, the illusion of functionality has been shredded. Now that the illusion of functionality has been lost, control of the narrative via institutional authority has also been lost.
I've often written about the difference between force and power; elites often mistakenly believe the two are equivalent, but they are worlds apart. Those who wield power persuade the masses to obey without being coerced, and to accept the self-serving narratives of the elite without question. Power leverages institutional authority and cultural myths and beliefs.
Force is costly, as coercion is costly. Force is a poor substitute for power, not only because the costs are so burdensome, but because the masses are not acting on their own volition; they are obeying only because the costs of not obeying are so high. But the unwilling can never be as productive as the willing, and so the regime that depends on force stagnates as the costs of coercion ratchet higher and the productivity of the forced steadily declines.
When power is lost, the masses simply stop listening to the authorities. In W.B. Yeats' line, the falcon cannot hear the falconer; once authority over the narrative is lost, the masses circle away from the voice of their elites.
The systems the elites depend on for their authority and power are now little more than fractals of incompetence, structures dominated by incompetence in every level and every nook and cranny, from the lowest paid employees to the top leadership.
All these systems serve the interests of insiders and vested interests first, the priorities of the elites second and the public / customers third, if at all.
The elites have lost control of everything that is critical to their survival: capital flows, faith in the future of eternal cost-free growth, and the rise of discontent and disillusionment.
The elites are discovering, to their dismay, now that competence has been lost, power has been lost, and force is no substitute for power.
All the papering-over tricks no longer work. Lowering interest rates to zero isn't going to increase consumption or investment, it's only pushing speculative frenzy to new increasingly fragile highs. Printing trillions and sluicing it to the super-wealthy isn't going to fix what's broken because that mechanism is what broke the system in the first place.
The last shred of power the elites hold is the belief of the masses that the elites are still in control. That belief is dissipating, despite the shrieks and cries of the elites that they are still in control. Events are illuminating their hubris and the fractals of incompetence that are crumbling beneath their feet.
Many believe the super-wealthy always transition seamlessly between regimes. But this is not always the case. The greatest personal fortunes in history (owned by private individuals, not royal/Imperial households) were likely accumulated by Roman elites. Their villas were in essence small cities and their fortunes were in Roman terms global.
Yet when the institutions that enabled their fortunes crumbled, these elites did not transition their wealth and power seamlessly to Barbarian rule: everything fell apart, their villas were abandoned and their power vanished.
Phantom capital is ephemeral, and so is power.
Sunday, June 28, 2020
SC214-6
https://www.peakprosperity.com/into-darkness-where-the-fed-is-leading-us/
Into Darkness: Where The Fed Is Leading Us
The system is hurtling towards breakdown. Protect yourself now.
As you may know, I was one of the very first voices publicly reporting on Covid-19, issuing an alert that the virus was a significant pandemic event on Jan 23rd, 2020.
This was long before most media outlets even managed to write their first “It’s just the flu, bro!” article.
Using the same logic and scientific methodology I was trained in as a PhD, I was able to “predict” things well in advance of nearly every official or mainstream news source.
I’m using quotation marks around the word “predict” because it’s not really a prediction when you’re just extrapolating trends that are already underway.
Just as it’s not really a “prediction” to estimate where a thrown pitch will travel, it wasn’t much of a prediction to state that a novel virus with an R-Naught (R0) of well over 3 would be extremely difficult to contain once it arrived in a country. Note that I didn’t say impossible — South Korea, Australia, New Zealand, Thailand, Taiwan and Vietnam all get high marks for containment — but certainly difficult.
The US and the UK proved this in spades, as they’re both led by below-average ‘managers’ rather than leaders.
Leaders make tough decisions based on imperfect information. Managers dither and hedge and only make up their minds after the facts are already in and events well underway. Naturally, the US/UK managers were simply no match for the exponential rate that the Honey Badger Virus (aka Covid-19) spreads at.
I call it the Honey Badger virus because of its incredible ability to evade quarantine, as eagerly and easily as Stoffle, as seen in this short enjoyable video:
Such a determined foe as Covid-19 cannot be reasoned with, halted by decree or – much to the puzzlement of the central banks – resolved by printing more thin-air money.
It simply operates by natural laws and rules. Which, by the way, makes it rather easy to predict.
Much more difficult to predict, though, is when we humans will truly wake up to our true plight and begin making better decisions. And I’m not just talking about the coronavirus here. I’m talking about the dangerous levels of social inequity that the Federal Reserve is responsible for creating, both pre- and post-covid-19.
Given the enormous difficulty in getting whole swaths of the managerial and retail classes to grasp such simple and obvious logic as “Everyone should wear a mask!”, it seems thoroughly unrealistic to expect these same folks to thoughtfully tackle the hazards of runaway monetary and fiscal policy.
But they really need to.
Why?
Because the current monetary and fiscal trajectory society is on has been well-trod throughout history. We know where it ends — no place we want to be.
Commerce gets destroyed. Households fail. Government and social order fall apart. Fairness and freedoms are lost as it becomes difficult to distinguish between official policies and overt looting.
Real leaders know this history and would both think and act differently in order to avoid the worst risks. But managers? They just keep operating from the same manual, mindlessly repeating the same steps while hoping for a different result.
The Fed’s Dangerous Gamble
I’ve referred to the Federal Reserve as a bunch of psychopaths engaging in cultural vandalism. This is unfair to both psychopaths and vandals.
After all, the most ambitious of them don’t victimize more than several dozen in their lifetime. Maybe a few hundred, tops.
But the Fed? It’s ruining hundreds of millions of lives and livelihoods — both today and in the future.
Sadly, the Federal Reserve has been doing this — unchecked — for a very long time. Here’s a snippet I wrote for MarketWatch.com 6 years ago. Every word remains as true today as it was then:
The academic name for the Fed’s current policy is financial repression. But a more apt name would be “Throw granny under the bus,” because the program boils down to taking from savers and fixed-income recipients and transferring that purchasing power to other entities.
The cornerstone element of financial repression is negative real interest rates, of which the Federal Reserve is the prime architect and owner.
From the start of the Fed’s post-crisis intervention through 2013, the total cost of these negative real interest rates was over $750 billion just to savers alone. The loss of income to fixed-income investments (such as bonds held in pensions and money markets) was even larger.
But here’s the rub. That loss of income and purchasing power didn’t just vanish. It was transferred from pocket A to pocket B.
It magically appeared again in record Wall Street banking bonuses, in shrinking government deficits (due to lower than normal interest rates), in rising corporate profits (mainly benefiting the already rich), in record stock buybacks (ditto), and in rising wealth inequality.
More directly, when the Fed buys financial assets with printed money and — by definition — drives up the price of those assets, it cannot then act mystified why the main owners of financial assets have grown wealthier. Doing so simply insults our intelligence.
Federal Reserve Chair Alan Greenspan, then Ben Bernanke, then Janet Yellen, and now Jay Powell have all operated as mere managers (not leaders) choosing predictably safe plays from the Federal Reserve cookbook. It prescribes a gruel-thin routine of actions the main ingredient of which is printing currency out of thin air.
Each Fed Chairman has dutifully cooked up unhealthy dishes seasoned with hefty amounts of social corrosion, structural unfairness, elitism, and without even a whiff of historical context.
With no leadership on display and cheered on by a compliant press unable to formulate a single critical question, the Fed is now too deep into its cookbook to do anything besides see the process out to its inevitable conclusion.
The Fed has long pretended to be mystified by the rising inequality its policies are obviously causing. Jerome Powell recently and (in)famously declared during Q&A after a speech that the Fed “absolutely does not” contribute to inequality. That bold-faced lie is infuriating to those who realize just how socially and culturally unfair and damaging the Fed’s actions really are.
When things become too unfair, people stop participating. If laws are too one-sided and rigged, people stop following them. If new hires receive a higher salary for equivalent work, the veteran employees stop working as hard. If students know that their classmates are cheating and getting good grades, they’ll begin to cheat, too.
It’s just how we’re wired. An aversion to unfairness is in our social DNA.
Peak Prosperity readers know I’m a huge fan of this short video. It explains everything about the rising tide of social rebellion in America (and features cute monkeys, to boot!):
By unfairly accelerating the wealth gap between the top 1% and everyone else, the Fed is playing with fire. Seemingly with the same level of ignorance to the consequences as a chimpanzee with a magnifying glass on a tinder-dry savanna.
Money is our social contract.
When that contract is broken, that’s when things really go south for a nation. Zimbabwe, the Wiemar Republic, Venezuela and Argentina are all past (and some current again, sadly) examples of just how badly the standard of living can plummet when a nation’s money system breaks down.
The Inevitable
I cannot predict when all this breaks down as easily as I can predict that it will break down. A balance must always be maintained between money, which is a claim on things, and the things themselves. Too many claims and we get inflation. Too few and we get deflation.
The Fed and the other world central banks have always (always!) erred on the side of “too many claims” in this story. When in doubt, they print more currency.
And that process is now on hyperdrive. The post-Covid economy is in a very bad state, and so the money printing at the heart of the “rescue” efforts by the central banks is the biggest ever in history. By a long shot.
So claims go up and up and up, while the economy shrinks. Leaving us with a LOT more money chasing a LOT less “stuff”.
This also applies to financial assets, like stocks and bonds. Printing makes the markets go higher in price and makes investors increasingly dependent on more money printing to support these prices. Eventually, like the era we’re in now, the Fed must keep injecting liquidity on a permanent basis or else the markets will immediately crash.
So, the money printing just keeps happening.
And as a side benefit, those closest to the Fed get stupendously rich from all that fresh money flooding into the world. These are the same Wall Street firms who hire Fed staffers at the end of their tenure there, thanking them with plush jobs that have little responsibility and huge salary.
But, out in real America, there are hundreds of millions of us angry monkeys watching the Fed stuff grapes into the already full bellies of the elites. Eventually wide-scale pushback against the Fed’s injustice will erupt. Protests will increase in size and become more violent. The police will realize that they’re protecting the wrong people and switch sides. Then things will get really messy.
My strong preference in life is to avoid unnecessary pain and suffering. Why wait for the Fed to ruin everything for us? I’d prefer we get pro-active here to avoid a full-blown crisis. If we don’t we’ll be forced to repeat history, whether we want to or not.
Sadly, repeating history and preserving the status quo is exactly what the national managers in the US are intent on doing. Most of the public still thinks of the Fed as the hero in this story instead of the villain it truly is, and so too much of the populace cheers the Fed along. The EU and the UK are more or less in the same boat.
All of which means that, just as I warned people to prepare for the Covid-19 pandemic before it hit with full force, you need to prepare now for the coming Fed-created economic/social crisis....
....
Money/Currency/Claims created out of thin air by the various Fed entities around the world is in reality legalized counterfeiting for the rich/powers that be. These activities represent massive corruption/criminality but will continue until it crashes the economies. Energy supplies are in irreversible decline which by itself is causing huge negative social issues and economic contraction. Off the scale debt and unlimited creation of computer entry claims ( on things ) from nothing never ends well and will precipitate societal collapse.
Into Darkness: Where The Fed Is Leading Us
The system is hurtling towards breakdown. Protect yourself now.
As you may know, I was one of the very first voices publicly reporting on Covid-19, issuing an alert that the virus was a significant pandemic event on Jan 23rd, 2020.
This was long before most media outlets even managed to write their first “It’s just the flu, bro!” article.
Using the same logic and scientific methodology I was trained in as a PhD, I was able to “predict” things well in advance of nearly every official or mainstream news source.
I’m using quotation marks around the word “predict” because it’s not really a prediction when you’re just extrapolating trends that are already underway.
Just as it’s not really a “prediction” to estimate where a thrown pitch will travel, it wasn’t much of a prediction to state that a novel virus with an R-Naught (R0) of well over 3 would be extremely difficult to contain once it arrived in a country. Note that I didn’t say impossible — South Korea, Australia, New Zealand, Thailand, Taiwan and Vietnam all get high marks for containment — but certainly difficult.
The US and the UK proved this in spades, as they’re both led by below-average ‘managers’ rather than leaders.
Leaders make tough decisions based on imperfect information. Managers dither and hedge and only make up their minds after the facts are already in and events well underway. Naturally, the US/UK managers were simply no match for the exponential rate that the Honey Badger Virus (aka Covid-19) spreads at.
I call it the Honey Badger virus because of its incredible ability to evade quarantine, as eagerly and easily as Stoffle, as seen in this short enjoyable video:
Such a determined foe as Covid-19 cannot be reasoned with, halted by decree or – much to the puzzlement of the central banks – resolved by printing more thin-air money.
It simply operates by natural laws and rules. Which, by the way, makes it rather easy to predict.
Much more difficult to predict, though, is when we humans will truly wake up to our true plight and begin making better decisions. And I’m not just talking about the coronavirus here. I’m talking about the dangerous levels of social inequity that the Federal Reserve is responsible for creating, both pre- and post-covid-19.
Given the enormous difficulty in getting whole swaths of the managerial and retail classes to grasp such simple and obvious logic as “Everyone should wear a mask!”, it seems thoroughly unrealistic to expect these same folks to thoughtfully tackle the hazards of runaway monetary and fiscal policy.
But they really need to.
Why?
Because the current monetary and fiscal trajectory society is on has been well-trod throughout history. We know where it ends — no place we want to be.
Commerce gets destroyed. Households fail. Government and social order fall apart. Fairness and freedoms are lost as it becomes difficult to distinguish between official policies and overt looting.
Real leaders know this history and would both think and act differently in order to avoid the worst risks. But managers? They just keep operating from the same manual, mindlessly repeating the same steps while hoping for a different result.
The Fed’s Dangerous Gamble
I’ve referred to the Federal Reserve as a bunch of psychopaths engaging in cultural vandalism. This is unfair to both psychopaths and vandals.
After all, the most ambitious of them don’t victimize more than several dozen in their lifetime. Maybe a few hundred, tops.
But the Fed? It’s ruining hundreds of millions of lives and livelihoods — both today and in the future.
Sadly, the Federal Reserve has been doing this — unchecked — for a very long time. Here’s a snippet I wrote for MarketWatch.com 6 years ago. Every word remains as true today as it was then:
The academic name for the Fed’s current policy is financial repression. But a more apt name would be “Throw granny under the bus,” because the program boils down to taking from savers and fixed-income recipients and transferring that purchasing power to other entities.
The cornerstone element of financial repression is negative real interest rates, of which the Federal Reserve is the prime architect and owner.
From the start of the Fed’s post-crisis intervention through 2013, the total cost of these negative real interest rates was over $750 billion just to savers alone. The loss of income to fixed-income investments (such as bonds held in pensions and money markets) was even larger.
But here’s the rub. That loss of income and purchasing power didn’t just vanish. It was transferred from pocket A to pocket B.
It magically appeared again in record Wall Street banking bonuses, in shrinking government deficits (due to lower than normal interest rates), in rising corporate profits (mainly benefiting the already rich), in record stock buybacks (ditto), and in rising wealth inequality.
More directly, when the Fed buys financial assets with printed money and — by definition — drives up the price of those assets, it cannot then act mystified why the main owners of financial assets have grown wealthier. Doing so simply insults our intelligence.
Federal Reserve Chair Alan Greenspan, then Ben Bernanke, then Janet Yellen, and now Jay Powell have all operated as mere managers (not leaders) choosing predictably safe plays from the Federal Reserve cookbook. It prescribes a gruel-thin routine of actions the main ingredient of which is printing currency out of thin air.
Each Fed Chairman has dutifully cooked up unhealthy dishes seasoned with hefty amounts of social corrosion, structural unfairness, elitism, and without even a whiff of historical context.
With no leadership on display and cheered on by a compliant press unable to formulate a single critical question, the Fed is now too deep into its cookbook to do anything besides see the process out to its inevitable conclusion.
The Fed has long pretended to be mystified by the rising inequality its policies are obviously causing. Jerome Powell recently and (in)famously declared during Q&A after a speech that the Fed “absolutely does not” contribute to inequality. That bold-faced lie is infuriating to those who realize just how socially and culturally unfair and damaging the Fed’s actions really are.
When things become too unfair, people stop participating. If laws are too one-sided and rigged, people stop following them. If new hires receive a higher salary for equivalent work, the veteran employees stop working as hard. If students know that their classmates are cheating and getting good grades, they’ll begin to cheat, too.
It’s just how we’re wired. An aversion to unfairness is in our social DNA.
Peak Prosperity readers know I’m a huge fan of this short video. It explains everything about the rising tide of social rebellion in America (and features cute monkeys, to boot!):
By unfairly accelerating the wealth gap between the top 1% and everyone else, the Fed is playing with fire. Seemingly with the same level of ignorance to the consequences as a chimpanzee with a magnifying glass on a tinder-dry savanna.
Money is our social contract.
When that contract is broken, that’s when things really go south for a nation. Zimbabwe, the Wiemar Republic, Venezuela and Argentina are all past (and some current again, sadly) examples of just how badly the standard of living can plummet when a nation’s money system breaks down.
The Inevitable
I cannot predict when all this breaks down as easily as I can predict that it will break down. A balance must always be maintained between money, which is a claim on things, and the things themselves. Too many claims and we get inflation. Too few and we get deflation.
The Fed and the other world central banks have always (always!) erred on the side of “too many claims” in this story. When in doubt, they print more currency.
And that process is now on hyperdrive. The post-Covid economy is in a very bad state, and so the money printing at the heart of the “rescue” efforts by the central banks is the biggest ever in history. By a long shot.
So claims go up and up and up, while the economy shrinks. Leaving us with a LOT more money chasing a LOT less “stuff”.
This also applies to financial assets, like stocks and bonds. Printing makes the markets go higher in price and makes investors increasingly dependent on more money printing to support these prices. Eventually, like the era we’re in now, the Fed must keep injecting liquidity on a permanent basis or else the markets will immediately crash.
So, the money printing just keeps happening.
And as a side benefit, those closest to the Fed get stupendously rich from all that fresh money flooding into the world. These are the same Wall Street firms who hire Fed staffers at the end of their tenure there, thanking them with plush jobs that have little responsibility and huge salary.
But, out in real America, there are hundreds of millions of us angry monkeys watching the Fed stuff grapes into the already full bellies of the elites. Eventually wide-scale pushback against the Fed’s injustice will erupt. Protests will increase in size and become more violent. The police will realize that they’re protecting the wrong people and switch sides. Then things will get really messy.
My strong preference in life is to avoid unnecessary pain and suffering. Why wait for the Fed to ruin everything for us? I’d prefer we get pro-active here to avoid a full-blown crisis. If we don’t we’ll be forced to repeat history, whether we want to or not.
Sadly, repeating history and preserving the status quo is exactly what the national managers in the US are intent on doing. Most of the public still thinks of the Fed as the hero in this story instead of the villain it truly is, and so too much of the populace cheers the Fed along. The EU and the UK are more or less in the same boat.
All of which means that, just as I warned people to prepare for the Covid-19 pandemic before it hit with full force, you need to prepare now for the coming Fed-created economic/social crisis....
....
Money/Currency/Claims created out of thin air by the various Fed entities around the world is in reality legalized counterfeiting for the rich/powers that be. These activities represent massive corruption/criminality but will continue until it crashes the economies. Energy supplies are in irreversible decline which by itself is causing huge negative social issues and economic contraction. Off the scale debt and unlimited creation of computer entry claims ( on things ) from nothing never ends well and will precipitate societal collapse.
Saturday, June 27, 2020
SC214-5
http://energyskeptic.com/2020/oil-discoveries-in-2015-lowest-since-1947-2016-likely-to-be-even-lower-bloomberg/
Global oil discovered 7.7 times less than consumption in 2019
The global conventional discovery chart above lists natural gas and oil discoveries since 2013. The fossil fuel that really matters is oil, since it’s the master resource that makes all others available, including natural gas, coal, transportation, and manufacturing.
As you can see, in 2019 the world burned 7.7 times more oil than was discovered, with a shortfall of 31.74 billion barrels of oil to be discovered to break even in the future. This can’t end well, as anyone whose covid-19 pantry is emptying can easily grasp.
FYI from Peak Oil Review Feb 10, 2020: worldwide production of oil was 60.27% sourced from conventional on-shore oil, 21.59% conventional offshore shallow-water oil, 8.1% conventional offshore deep water, 6.93% U.S. Tight Oil (Fracking), and 3.10% Canadian Oil Sands oil extraction 3.10%.
And an editorial in oilprice.com notes that: “US oil production has peaked, and it will be difficult to climb back to these levels ever again, given how much capital markets have soured on the industry. The EIA said that the US will once again become a net petroleum importer later this year, ending a brief spell during which the US was a net exporter”.
Mikael, H. August 29, 2016. Oil Discoveries at 70-Year Low Signal Supply Shortfall Ahead. Bloomberg.
2016 figure only shows exploration results to August. Discoveries were just 230 million barrels in 1947 but skyrocketed the next year when Ghawar was discovered in Saudi Arabia, and is till the world's largest oil field. Source: Wood Mackenzie
2016 figure only shows exploration results to August. Discoveries were just 230 million barrels in 1947 but skyrocketed the next year when Ghawar was discovered in Saudi Arabia, and it is still the world's largest oil field, though recently it was learned that Ghawar is in decline at 3.5% a year. Source: Wood Mackenzie
Explorers in 2015 discovered only about a tenth as much oil as they have annually on average since 1960. This year, they’ll probably find even less, spurring new fears about their ability to meet future demand.
With oil prices down by more than half since the price collapse two years ago, drillers have cut their exploration budgets to the bone. The result: Just 2.7 billion barrels of new supply was discovered in 2015, the smallest amount since 1947, according to figures from Edinburgh-based consulting firm Wood Mackenzie Ltd. This year, drillers found just 736 million barrels of conventional crude as of the end of last month.
That’s a concern for the industry at a time when the U.S. Energy Information Administration estimates that global oil demand will grow from 94.8 million barrels a day this year to 105.3 million barrels in 2026. While the U.S. shale boom could potentially make up the difference, prices locked in below $50 a barrel have undercut any substantial growth there. Ten years down from now this will have a “significant potential to push oil prices up. Given current levels of investment across the industry and decline rates at existing fields, a “significant” supply gap may open up by 2040″.
Oil companies will need to invest about $1 trillion a year to continue to meet demand, said Ben Van Beurden, the CEO of Royal Dutch Shell Plc, during a panel discussion at the Norway meeting. He sees demand rising by 1 million to 1.5 million barrels a day, with about 5 percent of supply lost to natural declines every year.
New discoveries from conventional drilling, meanwhile, are “at rock bottom,” said Nils-Henrik Bjurstroem, a senior project manager at Oslo-based consultants Rystad Energy AS. “There will definitely be a strong impact on oil and gas supply, and especially oil.
Global inventories have been buoyed by full-throttle output from Russia and OPEC, which have flooded the world with oil despite depressed prices as they defend market share. But years of under-investment will be felt as soon as 2025, Bjurstroem said. Producers will replace little more than one in 20 of the barrels consumed this year, he said.
There were 209 wells drilled through August this year, down from 680 in 2015 and 1,167 in 2014, according to Wood Mackenzie. That compares with an annual average of 1,500 in data going back to 1960.
Overall, the proportion of new oil that the industry has added to offset the amount it pumps has dropped from 30 percent in 2013 to a reserve-replacement ratio of just 6 percent this year in terms of conventional resources, which excludes shale oil and gas, Bjurstroem predicted. Exxon Mobil Corp. said in February that it failed to replace at least 100 percent of its production by adding resources with new finds or acquisitions for the first time in 22 years.
“That’s a scary thing because, seriously, there is no exploration going on today,” Per Wullf, CEO of offshore drilling company Seadrill Ltd., said by phone.
....
ATTENTION HUMAN YEAST:
**Sugar Supplies Are Running Low**
Global oil discovered 7.7 times less than consumption in 2019
The global conventional discovery chart above lists natural gas and oil discoveries since 2013. The fossil fuel that really matters is oil, since it’s the master resource that makes all others available, including natural gas, coal, transportation, and manufacturing.
As you can see, in 2019 the world burned 7.7 times more oil than was discovered, with a shortfall of 31.74 billion barrels of oil to be discovered to break even in the future. This can’t end well, as anyone whose covid-19 pantry is emptying can easily grasp.
FYI from Peak Oil Review Feb 10, 2020: worldwide production of oil was 60.27% sourced from conventional on-shore oil, 21.59% conventional offshore shallow-water oil, 8.1% conventional offshore deep water, 6.93% U.S. Tight Oil (Fracking), and 3.10% Canadian Oil Sands oil extraction 3.10%.
And an editorial in oilprice.com notes that: “US oil production has peaked, and it will be difficult to climb back to these levels ever again, given how much capital markets have soured on the industry. The EIA said that the US will once again become a net petroleum importer later this year, ending a brief spell during which the US was a net exporter”.
Mikael, H. August 29, 2016. Oil Discoveries at 70-Year Low Signal Supply Shortfall Ahead. Bloomberg.
2016 figure only shows exploration results to August. Discoveries were just 230 million barrels in 1947 but skyrocketed the next year when Ghawar was discovered in Saudi Arabia, and is till the world's largest oil field. Source: Wood Mackenzie
2016 figure only shows exploration results to August. Discoveries were just 230 million barrels in 1947 but skyrocketed the next year when Ghawar was discovered in Saudi Arabia, and it is still the world's largest oil field, though recently it was learned that Ghawar is in decline at 3.5% a year. Source: Wood Mackenzie
Explorers in 2015 discovered only about a tenth as much oil as they have annually on average since 1960. This year, they’ll probably find even less, spurring new fears about their ability to meet future demand.
With oil prices down by more than half since the price collapse two years ago, drillers have cut their exploration budgets to the bone. The result: Just 2.7 billion barrels of new supply was discovered in 2015, the smallest amount since 1947, according to figures from Edinburgh-based consulting firm Wood Mackenzie Ltd. This year, drillers found just 736 million barrels of conventional crude as of the end of last month.
That’s a concern for the industry at a time when the U.S. Energy Information Administration estimates that global oil demand will grow from 94.8 million barrels a day this year to 105.3 million barrels in 2026. While the U.S. shale boom could potentially make up the difference, prices locked in below $50 a barrel have undercut any substantial growth there. Ten years down from now this will have a “significant potential to push oil prices up. Given current levels of investment across the industry and decline rates at existing fields, a “significant” supply gap may open up by 2040″.
Oil companies will need to invest about $1 trillion a year to continue to meet demand, said Ben Van Beurden, the CEO of Royal Dutch Shell Plc, during a panel discussion at the Norway meeting. He sees demand rising by 1 million to 1.5 million barrels a day, with about 5 percent of supply lost to natural declines every year.
New discoveries from conventional drilling, meanwhile, are “at rock bottom,” said Nils-Henrik Bjurstroem, a senior project manager at Oslo-based consultants Rystad Energy AS. “There will definitely be a strong impact on oil and gas supply, and especially oil.
Global inventories have been buoyed by full-throttle output from Russia and OPEC, which have flooded the world with oil despite depressed prices as they defend market share. But years of under-investment will be felt as soon as 2025, Bjurstroem said. Producers will replace little more than one in 20 of the barrels consumed this year, he said.
There were 209 wells drilled through August this year, down from 680 in 2015 and 1,167 in 2014, according to Wood Mackenzie. That compares with an annual average of 1,500 in data going back to 1960.
Overall, the proportion of new oil that the industry has added to offset the amount it pumps has dropped from 30 percent in 2013 to a reserve-replacement ratio of just 6 percent this year in terms of conventional resources, which excludes shale oil and gas, Bjurstroem predicted. Exxon Mobil Corp. said in February that it failed to replace at least 100 percent of its production by adding resources with new finds or acquisitions for the first time in 22 years.
“That’s a scary thing because, seriously, there is no exploration going on today,” Per Wullf, CEO of offshore drilling company Seadrill Ltd., said by phone.
....
ATTENTION HUMAN YEAST:
**Sugar Supplies Are Running Low**
Friday, June 26, 2020
SC214-4
https://ourfiniteworld.com/2020/06/25/covid-19-and-the-economy-where-do-we-go-from-here/
COVID-19 and the economy: Where do we go from here?
....[5] The basic underlying issue that the world economy faces is overshoot, caused by too high a population relative to underlying resources.
When an economy is in overshoot, the big danger is collapse. The characteristics of overshoot leading to collapse include the following:
Very great wage disparity; too many people are very poor
Declining health, often due to poor nutrition, making people vulnerable to epidemics
Increasing use of debt, to make up for inadequate wages and profits
Falling commodity prices because too few people can afford these commodities and goods made from these commodities
Gluts of commodities, causing farmers to plow under crops and oil to be put into storage
Thus, pandemics are very much to be expected when an economy is in overshoot.
One example of collapse is that following the Black Death (1348-1350) epidemic in Europe. The collapse killed 60% of Europe’s population and dropped Britain’s population from close to 5 million to about 2 million.
Figure 1. Britain’s population, 1200 to 1700. Chart by Bloomberg using Federal Reserve of St. Louis data.
We might say that there was a U-shaped population recovery, which took about 300 years.
A later example that almost led to collapse was the period between 1914 and 1945. This was a period of shrinking international trade, indicating that something was truly wrong. On Figure 2 below, the WSJ calls its measure of international trade the “Trade Openness Index.” The period 1914-1945 is highlighted as being somewhat like today.
Figure 2. Trade openness index corresponds to the average of world imports and exports, divided by GDP. Chart by Wall Street Journal.
Many of the issues in the 1914-1945 timeframe were coal related. World War I took place when coal depletion became a problem in Britain. The issue at that time was wages that were too low for coal miners because the price of coal would not rise very high. Higher coal prices were needed to offset the impact of depletion, but high coal prices were not affordable by citizens.
The Pandemic of 1918-1919 killed far more people than either World War I or COVID-19.
World War II came about at the time coal depletion became a problem in Germany.
Figure 3. Figure by author describing peak coal timing compared to World War I and World War II.
The problem of inadequate energy resources finally ended when World War II ramped up demand through more debt and through more women entering the labor force for the first time. In response, the US began pumping oil out of the ground at a faster rate. Instead of depending on coal alone, the world began depending on a combination of oil and coal as energy resources. The ratio of population to energy resources was suddenly brought back into balance again, and collapse was averted!
[6] We are now in another period of overshoot of population relative to resources. The critical resource this time is oil. The alternatives we have aren’t suited to fulfilling our most basic need: the growing and transportation of food. They act as add-ons that are lost if oil is lost.
If we look back at Figure 2 above, it shows that since 2008, the world has again fallen into a period of shrinking imports and exports, which is a sign of “not enough energy resources to go around.” We are also experiencing many of the other characteristics of an overshoot economy that I mentioned in Section 5 above.
Figure 4 shows world energy consumption by type of energy through 2019, using recently published data by BP. The “Other” combination in Figure 4 includes nuclear, hydroelectric, wind, solar, and other smaller categories such as geothermal energy, wood pellets, and sawdust burned for fuel.
Figure 4. World energy consumption by fuel, based on BP’s 2020 Statistical Review of World Energy.
Oil has been rising at a steady pace; coal consumption has been close to level since about 2012. Natural gas and “Other” seem to be rising a little faster in the most recent few years.
If we divide by world population, the trend in world energy consumption per capita by type is as follows:
Figure 5. World Per Capita Energy Consumption based on BP’s 2020 Statistical Review of World Energy
Many people would like to think that the various energy sources are substitutable, but this is not really the case, as we approach limits of a finite world.
One catch is that there are very few stand-alone energy resources. Most energy resources only work within a framework provided by other energy sources. Wood that is picked up from the forest floor can work as a stand-alone energy source. Wind can almost be used as a stand-alone energy source, if it is used to power a simple sail boat or a wooden windmill. Water can almost be used as a stand-alone energy source, if it can be made to turn a wooden water wheel.
Coal, when its use was ramped up, enabled the production of both concrete and steel. It allowed modern hydroelectric dams to be built. It allowed steam engines to operate. It truly could be used as a stand-alone energy source. The main obstacle to the extraction of coal was keeping the cost of extraction low enough, so that, even with transportation, buyers could afford to purchase the coal.
Oil, similarly, can be a stand-alone energy solution because it is very flexible, dense, and easily transported. Or it can be paired with other types of less-expensive energy, to make it go farther. We can see our dependence on oil by how level energy consumption per capita is in Figure 5 since the early 1980s. Growth in population seems to depend upon the amount of oil available.
As I have mentioned in previous posts, the economy is a self-organizing system. If there isn’t enough of the energy products upon which the economy primarily depends, the system tends to change in very strange ways. Countries become more quarrelsome. People decide to have fewer children or they become more susceptible to pandemics, bringing population more in line with energy resources.
The problem with natural gas and with the electricity products that I have lumped together as “Other” is that they are not really stand-alone products. They cannot grow food or build roads. They cannot power international jets. They cannot build wind turbines or solar panels. They cannot put natural gas pipelines in place. They can only exist in a complex environment which includes oil and perhaps coal (or other cheaper energy products).
We are kidding ourselves if we think we can transition to modern fuels that are low in carbon emissions. Without high prices, oil and coal that are in the ground will tend to stay in the ground permanently. This is the serious obstacle that we are up against. Without oil and coal, natural gas and electricity products will quickly become unusable.
[7] A major problem with COVID-19 related shutdowns is the fact that they lead to very low commodity prices, including oil prices.
Figure 6. Inflation-adjusted monthly average oil prices through May 2020. Amounts are Brent Spot Oil Prices, as published by the EIA. Inflation adjustment is made using the CPI-Urban Index.
Oil is the primary type of energy used in growing and transporting food. It is used in many essential processes, including in the production of electricity. If its production is to continue, its price must be both high enough for oil producers and low enough for consumers.
The problem that we have been encountering since 2008 (the start of the latest cutback in trade in Figure 2) is that oil prices have been falling too low for producers. Now, in 2020, oil production is beginning to fall. This is happening because producing companies cannot afford to extract oil at current prices; governments of oil exporting countries cannot collect enough taxes at current prices. They hope that by reducing oil supply, prices will rise again.
If extraordinarily low oil prices persist, a calamity similar to the one that “Peak Oilers” have worried about will certainly occur: Oil supply will begin dropping. In fact, the drop will likely be much more rapid than most Peak Oilers have imagined, because the drop will be caused by low prices, rather than the high prices that they imagined would occur.
Amounts which are today shown as “proven reserves” can be expected to disappear because they will not be economic to extract. Governments of oil exporting countries seem likely to be overthrown because their major source revenue for programs such as food subsidies and jobs programs is disappearing.
[8] What our strategy should be from now on is not entirely clear.
Clearly, one path is straight into collapse, as happened after the Black Death of 1348-1352 (Figure 1). In fact, the carrying capacity of Britain might still be about 2 million. Its current population is about 68 million, so this would represent a population reduction of about 97%.
Other countries would experience substantial population reductions as well. The population decline would reflect many causes of death besides direct deaths from COVID-19; they would reflect the impacts of collapsing governments, inadequate food supply, polluted water supplies, and untreated diseases of many kinds.
If a large share of the population stays hidden in their homes trying to avoid COVID, it seems to me that we are most certainly heading straight into collapse. Supply lines for many kinds of goods and services will be broken. Oil prices and food prices will stay very low. Farmers will plow under crops, trying to raise prices. Gluts of oil will continue to be a problem.
If we try to transition to renewables, this leads directly to collapse as well, as far as I can see. They are not robust enough to stand on their own. Prices of oil and other commodities will fall too low and gluts will occur. Renewables will only last as long as (a) the overall systems can be kept in good repair and (b) governments can support continued subsidies.
The only approach that seems to keep the system going a little longer would seem to be to try to muddle along, despite COVID-19. Open up economies, even if the number of COVID-19 cases is higher and keeps rising. Tell people about the approaches they can use to limit their exposure to the virus, and how they can make their immune systems stronger. Get people started raising their vitamin D levels, so that they perhaps have a better chance of fighting the disease if they get COVID-19.
With this approach, we keep as many people working for as long as possible. Life will go on as close to normal, for as long as it can. We can perhaps put off collapse for a bit longer. We don’t have a lot of options open to us, but this one seems to be the best of a lot of poor options.
COVID-19 and the economy: Where do we go from here?
....[5] The basic underlying issue that the world economy faces is overshoot, caused by too high a population relative to underlying resources.
When an economy is in overshoot, the big danger is collapse. The characteristics of overshoot leading to collapse include the following:
Very great wage disparity; too many people are very poor
Declining health, often due to poor nutrition, making people vulnerable to epidemics
Increasing use of debt, to make up for inadequate wages and profits
Falling commodity prices because too few people can afford these commodities and goods made from these commodities
Gluts of commodities, causing farmers to plow under crops and oil to be put into storage
Thus, pandemics are very much to be expected when an economy is in overshoot.
One example of collapse is that following the Black Death (1348-1350) epidemic in Europe. The collapse killed 60% of Europe’s population and dropped Britain’s population from close to 5 million to about 2 million.
Figure 1. Britain’s population, 1200 to 1700. Chart by Bloomberg using Federal Reserve of St. Louis data.
We might say that there was a U-shaped population recovery, which took about 300 years.
A later example that almost led to collapse was the period between 1914 and 1945. This was a period of shrinking international trade, indicating that something was truly wrong. On Figure 2 below, the WSJ calls its measure of international trade the “Trade Openness Index.” The period 1914-1945 is highlighted as being somewhat like today.
Figure 2. Trade openness index corresponds to the average of world imports and exports, divided by GDP. Chart by Wall Street Journal.
Many of the issues in the 1914-1945 timeframe were coal related. World War I took place when coal depletion became a problem in Britain. The issue at that time was wages that were too low for coal miners because the price of coal would not rise very high. Higher coal prices were needed to offset the impact of depletion, but high coal prices were not affordable by citizens.
The Pandemic of 1918-1919 killed far more people than either World War I or COVID-19.
World War II came about at the time coal depletion became a problem in Germany.
Figure 3. Figure by author describing peak coal timing compared to World War I and World War II.
The problem of inadequate energy resources finally ended when World War II ramped up demand through more debt and through more women entering the labor force for the first time. In response, the US began pumping oil out of the ground at a faster rate. Instead of depending on coal alone, the world began depending on a combination of oil and coal as energy resources. The ratio of population to energy resources was suddenly brought back into balance again, and collapse was averted!
[6] We are now in another period of overshoot of population relative to resources. The critical resource this time is oil. The alternatives we have aren’t suited to fulfilling our most basic need: the growing and transportation of food. They act as add-ons that are lost if oil is lost.
If we look back at Figure 2 above, it shows that since 2008, the world has again fallen into a period of shrinking imports and exports, which is a sign of “not enough energy resources to go around.” We are also experiencing many of the other characteristics of an overshoot economy that I mentioned in Section 5 above.
Figure 4 shows world energy consumption by type of energy through 2019, using recently published data by BP. The “Other” combination in Figure 4 includes nuclear, hydroelectric, wind, solar, and other smaller categories such as geothermal energy, wood pellets, and sawdust burned for fuel.
Figure 4. World energy consumption by fuel, based on BP’s 2020 Statistical Review of World Energy.
Oil has been rising at a steady pace; coal consumption has been close to level since about 2012. Natural gas and “Other” seem to be rising a little faster in the most recent few years.
If we divide by world population, the trend in world energy consumption per capita by type is as follows:
Figure 5. World Per Capita Energy Consumption based on BP’s 2020 Statistical Review of World Energy
Many people would like to think that the various energy sources are substitutable, but this is not really the case, as we approach limits of a finite world.
One catch is that there are very few stand-alone energy resources. Most energy resources only work within a framework provided by other energy sources. Wood that is picked up from the forest floor can work as a stand-alone energy source. Wind can almost be used as a stand-alone energy source, if it is used to power a simple sail boat or a wooden windmill. Water can almost be used as a stand-alone energy source, if it can be made to turn a wooden water wheel.
Coal, when its use was ramped up, enabled the production of both concrete and steel. It allowed modern hydroelectric dams to be built. It allowed steam engines to operate. It truly could be used as a stand-alone energy source. The main obstacle to the extraction of coal was keeping the cost of extraction low enough, so that, even with transportation, buyers could afford to purchase the coal.
Oil, similarly, can be a stand-alone energy solution because it is very flexible, dense, and easily transported. Or it can be paired with other types of less-expensive energy, to make it go farther. We can see our dependence on oil by how level energy consumption per capita is in Figure 5 since the early 1980s. Growth in population seems to depend upon the amount of oil available.
As I have mentioned in previous posts, the economy is a self-organizing system. If there isn’t enough of the energy products upon which the economy primarily depends, the system tends to change in very strange ways. Countries become more quarrelsome. People decide to have fewer children or they become more susceptible to pandemics, bringing population more in line with energy resources.
The problem with natural gas and with the electricity products that I have lumped together as “Other” is that they are not really stand-alone products. They cannot grow food or build roads. They cannot power international jets. They cannot build wind turbines or solar panels. They cannot put natural gas pipelines in place. They can only exist in a complex environment which includes oil and perhaps coal (or other cheaper energy products).
We are kidding ourselves if we think we can transition to modern fuels that are low in carbon emissions. Without high prices, oil and coal that are in the ground will tend to stay in the ground permanently. This is the serious obstacle that we are up against. Without oil and coal, natural gas and electricity products will quickly become unusable.
[7] A major problem with COVID-19 related shutdowns is the fact that they lead to very low commodity prices, including oil prices.
Figure 6. Inflation-adjusted monthly average oil prices through May 2020. Amounts are Brent Spot Oil Prices, as published by the EIA. Inflation adjustment is made using the CPI-Urban Index.
Oil is the primary type of energy used in growing and transporting food. It is used in many essential processes, including in the production of electricity. If its production is to continue, its price must be both high enough for oil producers and low enough for consumers.
The problem that we have been encountering since 2008 (the start of the latest cutback in trade in Figure 2) is that oil prices have been falling too low for producers. Now, in 2020, oil production is beginning to fall. This is happening because producing companies cannot afford to extract oil at current prices; governments of oil exporting countries cannot collect enough taxes at current prices. They hope that by reducing oil supply, prices will rise again.
If extraordinarily low oil prices persist, a calamity similar to the one that “Peak Oilers” have worried about will certainly occur: Oil supply will begin dropping. In fact, the drop will likely be much more rapid than most Peak Oilers have imagined, because the drop will be caused by low prices, rather than the high prices that they imagined would occur.
Amounts which are today shown as “proven reserves” can be expected to disappear because they will not be economic to extract. Governments of oil exporting countries seem likely to be overthrown because their major source revenue for programs such as food subsidies and jobs programs is disappearing.
[8] What our strategy should be from now on is not entirely clear.
Clearly, one path is straight into collapse, as happened after the Black Death of 1348-1352 (Figure 1). In fact, the carrying capacity of Britain might still be about 2 million. Its current population is about 68 million, so this would represent a population reduction of about 97%.
Other countries would experience substantial population reductions as well. The population decline would reflect many causes of death besides direct deaths from COVID-19; they would reflect the impacts of collapsing governments, inadequate food supply, polluted water supplies, and untreated diseases of many kinds.
If a large share of the population stays hidden in their homes trying to avoid COVID, it seems to me that we are most certainly heading straight into collapse. Supply lines for many kinds of goods and services will be broken. Oil prices and food prices will stay very low. Farmers will plow under crops, trying to raise prices. Gluts of oil will continue to be a problem.
If we try to transition to renewables, this leads directly to collapse as well, as far as I can see. They are not robust enough to stand on their own. Prices of oil and other commodities will fall too low and gluts will occur. Renewables will only last as long as (a) the overall systems can be kept in good repair and (b) governments can support continued subsidies.
The only approach that seems to keep the system going a little longer would seem to be to try to muddle along, despite COVID-19. Open up economies, even if the number of COVID-19 cases is higher and keeps rising. Tell people about the approaches they can use to limit their exposure to the virus, and how they can make their immune systems stronger. Get people started raising their vitamin D levels, so that they perhaps have a better chance of fighting the disease if they get COVID-19.
With this approach, we keep as many people working for as long as possible. Life will go on as close to normal, for as long as it can. We can perhaps put off collapse for a bit longer. We don’t have a lot of options open to us, but this one seems to be the best of a lot of poor options.
SC214-3
http://themostimportantnews.com/archives/americans-have-already-skipped-payments-on-more-than-100-million-loans-and-job-losses-continue-to-escalate
Americans Have Already Skipped Payments On More Than 100 Million Loans, And Job Losses Continue To Escalate
Those that have been hoping for some sort of a “V-shaped recovery” have had their hopes completely dashed. U.S. workers continue to lose jobs at a staggering rate, and economic activity continues to remain at deeply suppressed levels all over the nation. Of course this wasn’t supposed to happen now that states have been “reopening” their economies. We were told that things would soon be getting back to normal and that the economic numbers would rebound dramatically. But that is not happening. In fact, the number of Americans that filed new claims for unemployment benefits last week was much higher than expected…
Weekly jobless claims stayed above 1 million for the 13th consecutive week as the coronavirus pandemic continued to hammer the U.S. economy.
First-time claims totaled 1.5 million last week, higher than the 1.3 million that economists surveyed by Dow Jones had been expecting. The government report’s total was 58,000 lower than the previous week’s 1.566 million, which was revised up by 24,000.
To put this in perspective, let me once again remind my readers that prior to this year the all-time record for a single week was just 695,000. So even though more than 44 million Americans had already filed initial claims for unemployment benefits before this latest report, there were still enough new people losing jobs to more than double that old record from 1982.
That is just astounding. We were told that the economy would be regaining huge amounts of jobs by now, but instead job losses remain at a catastrophic level that is unlike anything that we have ever seen before in all of U.S. history.
With the addition of this latest number, a grand total of nearly 46 million Americans have now filed initial claims for unemployment benefits since the COVID-19 pandemic began.
If you can read that statement and still believe that the U.S. economy is not imploding, I would like to know what you are smoking, because it must be pretty powerful.
Some of the things that we are seeing happen around the country right now are absolutely nuts. For example, earlier this week in Kentucky it was being reported that people were waiting in line for up to 8 hours to talk with a state official face to face about their unprocessed unemployment claims…
This wasn’t supposed to happen.
By now, the U.S. economy was supposed to be roaring back to life and we were supposed to be entering a new golden age of American prosperity.
Unfortunately, the truth is that more bad economic news is hitting us on a continual basis, and that isn’t going to change any time soon.
Over the past few days, we have learned that Hilton is laying off 22 percent of its corporate staff, and AT&T has announced that it will be eliminating 3,400 jobs and closing 250 stores…
The wireless carrier AT&T is cutting 3,400 jobs and shutting down 250 stores over the next few weeks, according to a statement from the Communications Workers of America, a union representing AT&T workers.
The AT&T Mobility and Cricket Wireless retail closures will affect 1,300 jobs, while the other layoffs are said to be affecting technical and clerical workers.
Needless to say, all of these job losses are having a tremendous ripple effect throughout the economy.
Without paychecks coming in, a lot of Americans are having a really tough time paying their bills, and the Wall Street Journal is reporting that payments have already been skipped on more than 100 million loans…
Americans have skipped payments on more than 100 million student loans, auto loans and other forms of debt since the coronavirus hit the U.S., the latest sign of the toll the pandemic is taking on people’s finances.
The number of accounts that enrolled in deferment, forbearance or some other type of relief since March 1 and remain in such a state rose to 106 million at the end of May, triple the number at the end of April, according to credit-reporting firm TransUnion.
Wow.
To me, that is an almost unimaginable number, and it has become clear that a tremendous amount of pain is ahead for the financial institutions that are holding these loans.
A lot of people out there are going to keep hoping that there will be some sort of an economic rebound, but the cold, hard reality of the matter is that fear of COVID-19 is going to keep a large segment of the population from resuming normal economic activities for the foreseeable future. And it certainly doesn’t help that the number of confirmed cases in the U.S. has been steadily rising over the past couple of weeks and that the mainstream media has been endlessly warning that a “second wave” is coming.
If you doubt what I am saying, just look at what is happening to the restaurant industry. We had started to see a small bit of improvement in the numbers, but now fear of a “second wave” has caused restaurant traffic to start cratering again…
After three months of slow but consistent improvement in restaurant dining data in the US and across the globe, in its latest update on “the state of the restaurant industry”, OpenTable today reported the biggest drop in seated restaurant diners (from online, phone and walk-in reservations) since the depth of the global shutdown in March.
As shown in the OpenTable graphic below, on Sunday, June 14, restaurant traffic suddenly tumbled, sliding from a -66.5% y/y decline as of June 13 to -78.8% globally.
This was mostly due to a sharp drop in US restaurant diners, which plunged by 13% – from -65% to -78% – the biggest one day drop since the start of the shutdown in the US, and the second biggest one day drop on record.
Business travel is another area where we are seeing signs of big trouble ahead. The following comes from Yves Smith…
Business travel is not coming back any time soon. People are getting accustomed to Zoom. And word may also get out that domestic flying is much worse than it used to be, which will be a deterrent to those who might be so bold as to want to get on a plane. That is a fundamental blow to airlines, airport vendors, hotels, restaurants, and convention centers. Hotel occupancy in April was 24.5% which if anything seems high based on my personal datapoints. The pricings I see say that hotel operators are not expecting much if any improvement through the summer.
Like many of you, I wish that economic conditions would go back to the way they used to be, but that simply is not going to happen.
Yes, we will see economic numbers go up and down over the coming months, but a return to “the good times” is not in the cards.
And what hardly anyone realizes is that this is just the beginning of our problems....
Americans Have Already Skipped Payments On More Than 100 Million Loans, And Job Losses Continue To Escalate
Those that have been hoping for some sort of a “V-shaped recovery” have had their hopes completely dashed. U.S. workers continue to lose jobs at a staggering rate, and economic activity continues to remain at deeply suppressed levels all over the nation. Of course this wasn’t supposed to happen now that states have been “reopening” their economies. We were told that things would soon be getting back to normal and that the economic numbers would rebound dramatically. But that is not happening. In fact, the number of Americans that filed new claims for unemployment benefits last week was much higher than expected…
Weekly jobless claims stayed above 1 million for the 13th consecutive week as the coronavirus pandemic continued to hammer the U.S. economy.
First-time claims totaled 1.5 million last week, higher than the 1.3 million that economists surveyed by Dow Jones had been expecting. The government report’s total was 58,000 lower than the previous week’s 1.566 million, which was revised up by 24,000.
To put this in perspective, let me once again remind my readers that prior to this year the all-time record for a single week was just 695,000. So even though more than 44 million Americans had already filed initial claims for unemployment benefits before this latest report, there were still enough new people losing jobs to more than double that old record from 1982.
That is just astounding. We were told that the economy would be regaining huge amounts of jobs by now, but instead job losses remain at a catastrophic level that is unlike anything that we have ever seen before in all of U.S. history.
With the addition of this latest number, a grand total of nearly 46 million Americans have now filed initial claims for unemployment benefits since the COVID-19 pandemic began.
If you can read that statement and still believe that the U.S. economy is not imploding, I would like to know what you are smoking, because it must be pretty powerful.
Some of the things that we are seeing happen around the country right now are absolutely nuts. For example, earlier this week in Kentucky it was being reported that people were waiting in line for up to 8 hours to talk with a state official face to face about their unprocessed unemployment claims…
This wasn’t supposed to happen.
By now, the U.S. economy was supposed to be roaring back to life and we were supposed to be entering a new golden age of American prosperity.
Unfortunately, the truth is that more bad economic news is hitting us on a continual basis, and that isn’t going to change any time soon.
Over the past few days, we have learned that Hilton is laying off 22 percent of its corporate staff, and AT&T has announced that it will be eliminating 3,400 jobs and closing 250 stores…
The wireless carrier AT&T is cutting 3,400 jobs and shutting down 250 stores over the next few weeks, according to a statement from the Communications Workers of America, a union representing AT&T workers.
The AT&T Mobility and Cricket Wireless retail closures will affect 1,300 jobs, while the other layoffs are said to be affecting technical and clerical workers.
Needless to say, all of these job losses are having a tremendous ripple effect throughout the economy.
Without paychecks coming in, a lot of Americans are having a really tough time paying their bills, and the Wall Street Journal is reporting that payments have already been skipped on more than 100 million loans…
Americans have skipped payments on more than 100 million student loans, auto loans and other forms of debt since the coronavirus hit the U.S., the latest sign of the toll the pandemic is taking on people’s finances.
The number of accounts that enrolled in deferment, forbearance or some other type of relief since March 1 and remain in such a state rose to 106 million at the end of May, triple the number at the end of April, according to credit-reporting firm TransUnion.
Wow.
To me, that is an almost unimaginable number, and it has become clear that a tremendous amount of pain is ahead for the financial institutions that are holding these loans.
A lot of people out there are going to keep hoping that there will be some sort of an economic rebound, but the cold, hard reality of the matter is that fear of COVID-19 is going to keep a large segment of the population from resuming normal economic activities for the foreseeable future. And it certainly doesn’t help that the number of confirmed cases in the U.S. has been steadily rising over the past couple of weeks and that the mainstream media has been endlessly warning that a “second wave” is coming.
If you doubt what I am saying, just look at what is happening to the restaurant industry. We had started to see a small bit of improvement in the numbers, but now fear of a “second wave” has caused restaurant traffic to start cratering again…
After three months of slow but consistent improvement in restaurant dining data in the US and across the globe, in its latest update on “the state of the restaurant industry”, OpenTable today reported the biggest drop in seated restaurant diners (from online, phone and walk-in reservations) since the depth of the global shutdown in March.
As shown in the OpenTable graphic below, on Sunday, June 14, restaurant traffic suddenly tumbled, sliding from a -66.5% y/y decline as of June 13 to -78.8% globally.
This was mostly due to a sharp drop in US restaurant diners, which plunged by 13% – from -65% to -78% – the biggest one day drop since the start of the shutdown in the US, and the second biggest one day drop on record.
Business travel is another area where we are seeing signs of big trouble ahead. The following comes from Yves Smith…
Business travel is not coming back any time soon. People are getting accustomed to Zoom. And word may also get out that domestic flying is much worse than it used to be, which will be a deterrent to those who might be so bold as to want to get on a plane. That is a fundamental blow to airlines, airport vendors, hotels, restaurants, and convention centers. Hotel occupancy in April was 24.5% which if anything seems high based on my personal datapoints. The pricings I see say that hotel operators are not expecting much if any improvement through the summer.
Like many of you, I wish that economic conditions would go back to the way they used to be, but that simply is not going to happen.
Yes, we will see economic numbers go up and down over the coming months, but a return to “the good times” is not in the cards.
And what hardly anyone realizes is that this is just the beginning of our problems....
Wednesday, June 24, 2020
SC214-2
https://www.oftwominds.com/blogjune20/depression-dominoes6-20.html
The Depression Dominoes Are Toppling
The pandemic lockdown will be blamed for the Greater Depression, but the lockdown only toppled all the dominoes that were already lined up. The lockdown would have been survivable if the economy hadn't been over-indebted, over-leveraged, burdened by insanely high costs, stripmined by greedy monopolies, dependent on stock market fraud, destabilized by extreme inequality, corrupted by political pay-to-play and addicted to speculation.
The apologists always blame depressions on central banks not printing money fast enough, while overlooking the real drivers: debt, high costs and dependence on speculative bubbles. As noted here many times, revenues and income can quickly slide lower, but debt must be serviced regardless of revenues and income.
Once debt payments dominate expenses, any wobble in revenues / income / cash flow triggers default.
Regarding unbearably high costs that only go higher, year after year: as noted here many times, Sickcare Will Bankrupt the Nation all by itself, never mind soaring higher education / student loan debt serfdom, skyrocketing rents, junk fees, taxes, etc.
U.S. Lifestyle + "Healthcare" = Bankruptcy (June 19, 2008)
How Healthcare Is Dooming the U.S. Economy (Three Charts) (May 2015)
The truth is the cost of living is unaffordable but we can't even acknowledge this obvious fact because even acknowledging it would threaten the entire house of cards. So instead we play-act as if we believe the bogus "inflation is dead" narratives.
The top 5% technocrat/managerial class have done very well for themselves in the speculative run-up of destabilizing inequality, and since they run the narrative machines, we're swamped with happy stories about the economy, all of which boil down to this absurd fantasy: since I'm doing so well, everyone else must be doing well, too.
Since the top 5% own the lion's share of the nation's productive assets--stocks, bonds, business equity, investment real estate, etc.-- the enormous asset bubbles have greatly boosted their wealth and income. This has enabled the wealthy to service their debt or pay it off. The bottom 95% aren't quite so well-placed to survive a decline in income.
Everyone who was barely keeping their head above water in making their debt payments is already in default or will soon be in default. Since the banks and shadow-banking lenders have gorged on the profits skimmed by loaning huge sums to marginal borrowers, now that these marginal borrowers are defaulting en masse the banks and lenders are about to be crushed by one wave of catastrophic losses after another.
Student loans--already in mass default. Credit cards--the wave is rolling in as we speak. Auto loans--looking like Waimea Bay on a big day. Mortgages--better not to look.
Corporate debt has exploded to unprecedented levels, and this is what will break the financial system. Zombie corporations are rushing to borrow billions of dollars (thanks to the Federal Reserve) but increasing their debt is only doing more of what created their fragility in the first place.
Being able to borrow more to service your old debts is not solvency, it's merely the semblance of solvency. We're in the eye of the hurricane right now, as everyone holds their breath and hopes some sort of magic will make all the debt that has to be serviced every month vanish.
It's worth recalling that every dollar of debt is someone else's asset and the source of their income. So when the defaults and bankruptcies sweep through the financial system, they'll obliterate all the "wealth" of those holding bundled student and auto loan securities, mortgage backed securities, corporate bonds, and destroy the income streams these trillions in debt generated.
All the linked fragilities and dependencies of our economy are like lines of dominoes: one default topples the entire line of dominoes of debt, leverage, derivatives, counterparty risk, credit default swaps and most devastating of all, any certainty that borrowers won't default in the future.
If banks and lenders can't lend with a high degree of certainty, lending dries up and profits collapse, along with the consumer spending that was enabled by the borrowing.
Despite their high incomes and net worth, some consequential percentage of top 5% households bringing in $300,000 a year are one layoff away from default: never mind their pristine 830 credit score; that was last month. Next month,next quarter, next year--all bets are off.
Once you allow your economy to become dependent on extremes of debt, leverage, inequality, legalized looting, monopoly, pay-to-play politics and speculative asset bubbles, a depression is inevitable. The only question is "when," and that's been answered, though nobody wants to hear it: 2020 and beyond.
It didn't have to end this way. If our leadership / Power Elites had acted to reduce all these painfully obvious speculative extremes, dependencies and fragilities and made even modest efforts to limit the exploitation of predatory parasites that generated unprecedented inequality and corruption over the past 12 years, the economy would have been much less brittle / fragile.
The Depression Dominoes Are Toppling
The pandemic lockdown will be blamed for the Greater Depression, but the lockdown only toppled all the dominoes that were already lined up. The lockdown would have been survivable if the economy hadn't been over-indebted, over-leveraged, burdened by insanely high costs, stripmined by greedy monopolies, dependent on stock market fraud, destabilized by extreme inequality, corrupted by political pay-to-play and addicted to speculation.
The apologists always blame depressions on central banks not printing money fast enough, while overlooking the real drivers: debt, high costs and dependence on speculative bubbles. As noted here many times, revenues and income can quickly slide lower, but debt must be serviced regardless of revenues and income.
Once debt payments dominate expenses, any wobble in revenues / income / cash flow triggers default.
Regarding unbearably high costs that only go higher, year after year: as noted here many times, Sickcare Will Bankrupt the Nation all by itself, never mind soaring higher education / student loan debt serfdom, skyrocketing rents, junk fees, taxes, etc.
U.S. Lifestyle + "Healthcare" = Bankruptcy (June 19, 2008)
How Healthcare Is Dooming the U.S. Economy (Three Charts) (May 2015)
The truth is the cost of living is unaffordable but we can't even acknowledge this obvious fact because even acknowledging it would threaten the entire house of cards. So instead we play-act as if we believe the bogus "inflation is dead" narratives.
The top 5% technocrat/managerial class have done very well for themselves in the speculative run-up of destabilizing inequality, and since they run the narrative machines, we're swamped with happy stories about the economy, all of which boil down to this absurd fantasy: since I'm doing so well, everyone else must be doing well, too.
Since the top 5% own the lion's share of the nation's productive assets--stocks, bonds, business equity, investment real estate, etc.-- the enormous asset bubbles have greatly boosted their wealth and income. This has enabled the wealthy to service their debt or pay it off. The bottom 95% aren't quite so well-placed to survive a decline in income.
Everyone who was barely keeping their head above water in making their debt payments is already in default or will soon be in default. Since the banks and shadow-banking lenders have gorged on the profits skimmed by loaning huge sums to marginal borrowers, now that these marginal borrowers are defaulting en masse the banks and lenders are about to be crushed by one wave of catastrophic losses after another.
Student loans--already in mass default. Credit cards--the wave is rolling in as we speak. Auto loans--looking like Waimea Bay on a big day. Mortgages--better not to look.
Corporate debt has exploded to unprecedented levels, and this is what will break the financial system. Zombie corporations are rushing to borrow billions of dollars (thanks to the Federal Reserve) but increasing their debt is only doing more of what created their fragility in the first place.
Being able to borrow more to service your old debts is not solvency, it's merely the semblance of solvency. We're in the eye of the hurricane right now, as everyone holds their breath and hopes some sort of magic will make all the debt that has to be serviced every month vanish.
It's worth recalling that every dollar of debt is someone else's asset and the source of their income. So when the defaults and bankruptcies sweep through the financial system, they'll obliterate all the "wealth" of those holding bundled student and auto loan securities, mortgage backed securities, corporate bonds, and destroy the income streams these trillions in debt generated.
All the linked fragilities and dependencies of our economy are like lines of dominoes: one default topples the entire line of dominoes of debt, leverage, derivatives, counterparty risk, credit default swaps and most devastating of all, any certainty that borrowers won't default in the future.
If banks and lenders can't lend with a high degree of certainty, lending dries up and profits collapse, along with the consumer spending that was enabled by the borrowing.
Despite their high incomes and net worth, some consequential percentage of top 5% households bringing in $300,000 a year are one layoff away from default: never mind their pristine 830 credit score; that was last month. Next month,next quarter, next year--all bets are off.
Once you allow your economy to become dependent on extremes of debt, leverage, inequality, legalized looting, monopoly, pay-to-play politics and speculative asset bubbles, a depression is inevitable. The only question is "when," and that's been answered, though nobody wants to hear it: 2020 and beyond.
It didn't have to end this way. If our leadership / Power Elites had acted to reduce all these painfully obvious speculative extremes, dependencies and fragilities and made even modest efforts to limit the exploitation of predatory parasites that generated unprecedented inequality and corruption over the past 12 years, the economy would have been much less brittle / fragile.
Tuesday, June 23, 2020
SC214-1
https://resourceinsights.blogspot.com/2020/06/the-financialization-of-end-of-world.html
The financialization of the end of the world
For those who are fans of cartoons from The New Yorker magazine and consistent readers of this blog, you might be able to guess my two favorite cartoons. In the first one, a man in a coat and tie stands at a podium and tells his unseen audience the following: "And so, while the end-of-the-world scenario will be rife with unimaginable horrors, we believe that the pre-end period will be filled with unprecedented opportunities for profit."
In the second, a man in a tattered suit sits cross-legged near a campfire with three children listening to him intently as he says this: "Yes, the planet got destroyed. But for a beautiful moment in time we created a lot of value for shareholders."
Now, in the you-can't-make-this-stuff-up category, financial writer Paul Farrell used the caption from the first cartoon in a 2015 piece for MarketWatch entitled: "Your No. 1 end-of-the-world investing strategy." The subheading is: "How to pick stocks for the near term when long-term trends say collapse is near." The subhead actually seems like it might be another caption from a New Yorker cartoon (or possibly one from The Onion). Why exactly would you invest in stocks—as opposed to seeds of food crops and sturdy garden implements—"when long-term trends say collapse is near"? But I'll put that down to bad headline writing.
In Farrell's defense, he frequently used his column in MarketWatch to warn his readers of the coming collapse of modern civilization if we don't change our ways. He was obliged to give investment advice, of course, because that's what the column was for.
Few other investment gurus are as intellectually honest as Farrell. Among prominent investment managers, only Jeremy Grantham comes close to understanding the scope of the challenges we face. Grantham wrote a piece in 2013 called "The Race of Our Lives" that outlines the myriad challenges humans face. He starts with a discussion of the fall of civilizations. (He updated his views in 2018.)
One would think that the coronavirus pandemic would allow for some sober reflection among those in the financial community as the pandemic-induced crash of the economy and the markets has called into question the stability of practically all the arrangements of modern civilization. Instead, the focus is on how stock markets could be back at or near all-times highs at the beginning of what is arguably the next Great Depression.
The New Yorker cartoons linked above appropriately characterize the madness that grips late-stage civilizations as their pillars begin to fall. Instead of attempting to adapt to new realities, every attempt is made to maintain the current fragile system. The trillions of dollars pumped into the world financial system by central banks and governments in the wake of the pandemic have done little except stoke renewed financial bubbles in practically all financial markets (and thereby bailed out the mostly wealthy owners of financial assets).
The disconnect is hard to miss. The latest reading of the U.S. Federal Reserve Bank of Atlanta's GDPNow indicator, which is frequently updated as new data becomes available, now predicts that U.S. GDP will contract by 45.5 percent in the current quarter. (The number is annualized and seasonally adjusted.)
Even so the NASDAQ Composite Index hit a new all-time high earlier this month just three months after the recent trough reached during the crash. The S&P 500 is now very close to a new all-time high. Neither development makes sense in the middle of the worst economic downturn since the Great Depression. For comparison, it took more than two years for the NASDAQ Composite from the bottom in 2009 during the Great Financial Crisis to regain its 2007 highs. It took the S&P 500 more than four years.
Of course, the financialization of everything continues. Vaccine makers are in line for government funds. Naturally, it takes money to develop a vaccine. But drug makers aren't in the business of keeping people healthy. They are in the business of making money. In the United States at least they are helped by the fact that they aren't liable if their vaccine kills or injuries someone. And, executives in one money-losing pharmaceutical firm cashed in stock right after their company goosed the shares significantly higher with a very preliminary announcement about the company's coronavirus vaccine research.
When it comes to real estate, it used to be that people bought it for income and as a store of value. Now firms buy real estate mostly with borrowed money and try to make gains mostly through property price appreciation. Often the real estate loans are packaged into securities that are sold and resold as part of the giant Wall Street and worldwide financial casino.
One of the surest signs of the financialization of everything and the growing disconnect of finance from reality is the credit default swap (CDS). The CDS is essentially insurance for loans and bonds. The buyer pays the seller a premium every month. If the instrument insured defaults, the seller provides a predetermined payment to reimburse the CDS buyer. Now here's the weird thing: An investor doesn't even have to own the loan or bond to insure it. It's like me taking out an insurance policy on your home against fire when I have no ownership or interest in the home. In fact, I have every incentive to make sure your house burns down. Do you see any problem with that?
For normal insurance, the buyer must have an insurable interest. Typically, this means the buyer must actually own the thing he or she is insuring. The CDS, on the other hand, is an ideal instrument for those who want to bring on a financial end-of-the-world scenario. The buyers have every reason to want the economy to go down the drain as their payments may be 10 or even 20 times their initial investment.
Many wealthy people fear and even believe an end-of-the-world scenario is possible or probable. Some think they can hole up in luxury bunkers until the dust clears. But what if, when the dust clears, their wealth is gone and the financial world they used to inhabit has vanished.
Perhaps they will sit around campfires telling their grandchildren about the old days when finance was king and the real economy of goods and services was just a place where rubes got their daily bread—while, of course, simultaneously handing over an outsized portion to the rich.
The financialization of the end of the world
For those who are fans of cartoons from The New Yorker magazine and consistent readers of this blog, you might be able to guess my two favorite cartoons. In the first one, a man in a coat and tie stands at a podium and tells his unseen audience the following: "And so, while the end-of-the-world scenario will be rife with unimaginable horrors, we believe that the pre-end period will be filled with unprecedented opportunities for profit."
In the second, a man in a tattered suit sits cross-legged near a campfire with three children listening to him intently as he says this: "Yes, the planet got destroyed. But for a beautiful moment in time we created a lot of value for shareholders."
Now, in the you-can't-make-this-stuff-up category, financial writer Paul Farrell used the caption from the first cartoon in a 2015 piece for MarketWatch entitled: "Your No. 1 end-of-the-world investing strategy." The subheading is: "How to pick stocks for the near term when long-term trends say collapse is near." The subhead actually seems like it might be another caption from a New Yorker cartoon (or possibly one from The Onion). Why exactly would you invest in stocks—as opposed to seeds of food crops and sturdy garden implements—"when long-term trends say collapse is near"? But I'll put that down to bad headline writing.
In Farrell's defense, he frequently used his column in MarketWatch to warn his readers of the coming collapse of modern civilization if we don't change our ways. He was obliged to give investment advice, of course, because that's what the column was for.
Few other investment gurus are as intellectually honest as Farrell. Among prominent investment managers, only Jeremy Grantham comes close to understanding the scope of the challenges we face. Grantham wrote a piece in 2013 called "The Race of Our Lives" that outlines the myriad challenges humans face. He starts with a discussion of the fall of civilizations. (He updated his views in 2018.)
One would think that the coronavirus pandemic would allow for some sober reflection among those in the financial community as the pandemic-induced crash of the economy and the markets has called into question the stability of practically all the arrangements of modern civilization. Instead, the focus is on how stock markets could be back at or near all-times highs at the beginning of what is arguably the next Great Depression.
The New Yorker cartoons linked above appropriately characterize the madness that grips late-stage civilizations as their pillars begin to fall. Instead of attempting to adapt to new realities, every attempt is made to maintain the current fragile system. The trillions of dollars pumped into the world financial system by central banks and governments in the wake of the pandemic have done little except stoke renewed financial bubbles in practically all financial markets (and thereby bailed out the mostly wealthy owners of financial assets).
The disconnect is hard to miss. The latest reading of the U.S. Federal Reserve Bank of Atlanta's GDPNow indicator, which is frequently updated as new data becomes available, now predicts that U.S. GDP will contract by 45.5 percent in the current quarter. (The number is annualized and seasonally adjusted.)
Even so the NASDAQ Composite Index hit a new all-time high earlier this month just three months after the recent trough reached during the crash. The S&P 500 is now very close to a new all-time high. Neither development makes sense in the middle of the worst economic downturn since the Great Depression. For comparison, it took more than two years for the NASDAQ Composite from the bottom in 2009 during the Great Financial Crisis to regain its 2007 highs. It took the S&P 500 more than four years.
Of course, the financialization of everything continues. Vaccine makers are in line for government funds. Naturally, it takes money to develop a vaccine. But drug makers aren't in the business of keeping people healthy. They are in the business of making money. In the United States at least they are helped by the fact that they aren't liable if their vaccine kills or injuries someone. And, executives in one money-losing pharmaceutical firm cashed in stock right after their company goosed the shares significantly higher with a very preliminary announcement about the company's coronavirus vaccine research.
When it comes to real estate, it used to be that people bought it for income and as a store of value. Now firms buy real estate mostly with borrowed money and try to make gains mostly through property price appreciation. Often the real estate loans are packaged into securities that are sold and resold as part of the giant Wall Street and worldwide financial casino.
One of the surest signs of the financialization of everything and the growing disconnect of finance from reality is the credit default swap (CDS). The CDS is essentially insurance for loans and bonds. The buyer pays the seller a premium every month. If the instrument insured defaults, the seller provides a predetermined payment to reimburse the CDS buyer. Now here's the weird thing: An investor doesn't even have to own the loan or bond to insure it. It's like me taking out an insurance policy on your home against fire when I have no ownership or interest in the home. In fact, I have every incentive to make sure your house burns down. Do you see any problem with that?
For normal insurance, the buyer must have an insurable interest. Typically, this means the buyer must actually own the thing he or she is insuring. The CDS, on the other hand, is an ideal instrument for those who want to bring on a financial end-of-the-world scenario. The buyers have every reason to want the economy to go down the drain as their payments may be 10 or even 20 times their initial investment.
Many wealthy people fear and even believe an end-of-the-world scenario is possible or probable. Some think they can hole up in luxury bunkers until the dust clears. But what if, when the dust clears, their wealth is gone and the financial world they used to inhabit has vanished.
Perhaps they will sit around campfires telling their grandchildren about the old days when finance was king and the real economy of goods and services was just a place where rubes got their daily bread—while, of course, simultaneously handing over an outsized portion to the rich.
Monday, June 22, 2020
SC213-15
https://www.globalresearch.ca/america-dysfunctional-economy/5716506
America’s Dysfunctional Economy. Massive Unemployment. Economic Collapse
The US ruling class bears full responsibility for the economy’s unprecedented dysfunctional state. What was unimaginable long ago is reality today, redefining what house of cards economic conditions are all about.
It’s an unsustainable situation certain to implode ahead with longterm devastating consequences for ordinary Americans — paying the price so privileged ones can benefit.
Since March, unprecedented numbers of US workers applied for unemployment benefits, around 46 million so far, according to Labor Department data.
It’s an undercount as applications of many filers haven’t been processed, more coming as layoff announcements continue.
According to Bloomberg News, about one-third of Americans who applied for unemployment benefits received nothing so far.
A Bloomberg analysis showed that unemployed US workers should have received $214 billion in benefits through May.
As of early June, they’ve only gotten $146 billion — benefits for recipients to expire at end of July if not renewed, what’s likely because of GOP leadership opposition to continue them.
An earlier McKinsey research analysis said up to one-third of US workers could be unemployed by 2030 because robots are replacing humans, adding:
Around “60 percent of occupations have at least 30 percent of constituent work activities that could be automated.”
Who’ll buy what industry produces if mass unemployment as the new normal greatly reduces personal income overall?
The extraordinary disconnect between equity prices and economic reality in the US is unprecedented.
According to economist David Rosenberg, “(w)hat we have now is nothing short of market manipulation.”
“Reducing the cost of overnight funds is one thing.”
“Extending the intervention to Treasuries or high-quality securities is something we became accustomed to in the aftermath of the last Great Recession.”
“That’s when the (Wall Street owned) Fed became a duration bond manager.”
“But the central bank is now becoming a hedge fund.”
“Adding low-quality corporate credits to its balance sheet is a whole different game.”
Fed market manipulation is “keeping zombie companies alive, rendering fundamental analysis and price discovery obsolete, and leading to a complete misallocation of resources.”
“Capitalism has taken a semi-permanent vacation. AWOL.”
“And what it means for the future of society, to be running such reckless and feckless fiscal and monetary policies, is troublesome to say the least.”
“There is zero chance this ends well…The market is rigged pure and simple.”
“(R)emember that (earlier) bubble(s) came crashing down, and there was nothing the Fed could do about it.”
“Societies that run their policies on such guilt truly are doomed, and that is what historians will be writing about in the future.”
By going all out to benefit corporate favorites and investors through unprecedented and reckless casino capitalism, US policymakers and the Fed sacrificed the economy and ordinary Americans.
A Thursday Wall Street Journal article reflected a key aspect of the US economy’s dismal state, saying:
“Americans have skipped payments on more than 100 million student loans, auto loans and other forms of debt since the coronavirus hit the US, the latest sign of the toll the pandemic is taking on people’s finances,” adding:
“The surge in missed payments suggests that the flood of layoffs related to the coronavirus has left many Americans without the means to keep up with their debts.”
“Many people have used up their stimulus checks, and unemployment benefits in high-cost areas aren’t enough to replace paychecks or to help debt-laden borrowers pay down their bills.”
An unfolding situation in Kentucky is happening elsewhere nationwide.
Numbers filing for unemployment benefits are so large and backed up that state police said individuals at the end of a Frankfort queue will wait up to eight hours to speak to a representative to get their claim processed.
A queue at the Kentucky Career Center had people waiting 10 hours for unemployment claim help.
All of the above is on top of growing US food insecurity, hunger, and homelessness in the world’s richest nation.
Its ruling class under both right wings of the one-party state proved it’s dismissive of public health and welfare even during unprecedented hard times, likely to be protracted.
There’s no economic recovery in prospect, only the illusion of improvement at a time of unprecedented widespread deprivation and continuing layoffs.
Increasing numbers of COVID-19 outbreaks in many US states are part of the first wave.
A second, potentially much larger, one may come this fall and winter, making economic collapse worse if happens.
It’s why self-protection caution is essential to maintain, what’s likely to be the case for some time.
Economic collapse caused far greater harm to millions of Americans than coronavirus outbreaks.
Manufactured main street Depression begun in 2008 was deepened this year by its ruling class.
It’s all about the greatest ever wealth transfer from ordinary people to privileged US interests, along with enabling corporate favorites to reduce competition.
Ordinary Americans are paying the price, exploited so privileged ones can benefit.
That’s the disturbing reality of today’s new normal.
Manufactured current conditions made the US more unsafe and unfit to live in than at any previous time in modern memory — with no end of harder than ever hard times for ordinary Americans in prospect.
America’s Dysfunctional Economy. Massive Unemployment. Economic Collapse
The US ruling class bears full responsibility for the economy’s unprecedented dysfunctional state. What was unimaginable long ago is reality today, redefining what house of cards economic conditions are all about.
It’s an unsustainable situation certain to implode ahead with longterm devastating consequences for ordinary Americans — paying the price so privileged ones can benefit.
Since March, unprecedented numbers of US workers applied for unemployment benefits, around 46 million so far, according to Labor Department data.
It’s an undercount as applications of many filers haven’t been processed, more coming as layoff announcements continue.
According to Bloomberg News, about one-third of Americans who applied for unemployment benefits received nothing so far.
A Bloomberg analysis showed that unemployed US workers should have received $214 billion in benefits through May.
As of early June, they’ve only gotten $146 billion — benefits for recipients to expire at end of July if not renewed, what’s likely because of GOP leadership opposition to continue them.
An earlier McKinsey research analysis said up to one-third of US workers could be unemployed by 2030 because robots are replacing humans, adding:
Around “60 percent of occupations have at least 30 percent of constituent work activities that could be automated.”
Who’ll buy what industry produces if mass unemployment as the new normal greatly reduces personal income overall?
The extraordinary disconnect between equity prices and economic reality in the US is unprecedented.
According to economist David Rosenberg, “(w)hat we have now is nothing short of market manipulation.”
“Reducing the cost of overnight funds is one thing.”
“Extending the intervention to Treasuries or high-quality securities is something we became accustomed to in the aftermath of the last Great Recession.”
“That’s when the (Wall Street owned) Fed became a duration bond manager.”
“But the central bank is now becoming a hedge fund.”
“Adding low-quality corporate credits to its balance sheet is a whole different game.”
Fed market manipulation is “keeping zombie companies alive, rendering fundamental analysis and price discovery obsolete, and leading to a complete misallocation of resources.”
“Capitalism has taken a semi-permanent vacation. AWOL.”
“And what it means for the future of society, to be running such reckless and feckless fiscal and monetary policies, is troublesome to say the least.”
“There is zero chance this ends well…The market is rigged pure and simple.”
“(R)emember that (earlier) bubble(s) came crashing down, and there was nothing the Fed could do about it.”
“Societies that run their policies on such guilt truly are doomed, and that is what historians will be writing about in the future.”
By going all out to benefit corporate favorites and investors through unprecedented and reckless casino capitalism, US policymakers and the Fed sacrificed the economy and ordinary Americans.
A Thursday Wall Street Journal article reflected a key aspect of the US economy’s dismal state, saying:
“Americans have skipped payments on more than 100 million student loans, auto loans and other forms of debt since the coronavirus hit the US, the latest sign of the toll the pandemic is taking on people’s finances,” adding:
“The surge in missed payments suggests that the flood of layoffs related to the coronavirus has left many Americans without the means to keep up with their debts.”
“Many people have used up their stimulus checks, and unemployment benefits in high-cost areas aren’t enough to replace paychecks or to help debt-laden borrowers pay down their bills.”
An unfolding situation in Kentucky is happening elsewhere nationwide.
Numbers filing for unemployment benefits are so large and backed up that state police said individuals at the end of a Frankfort queue will wait up to eight hours to speak to a representative to get their claim processed.
A queue at the Kentucky Career Center had people waiting 10 hours for unemployment claim help.
All of the above is on top of growing US food insecurity, hunger, and homelessness in the world’s richest nation.
Its ruling class under both right wings of the one-party state proved it’s dismissive of public health and welfare even during unprecedented hard times, likely to be protracted.
There’s no economic recovery in prospect, only the illusion of improvement at a time of unprecedented widespread deprivation and continuing layoffs.
Increasing numbers of COVID-19 outbreaks in many US states are part of the first wave.
A second, potentially much larger, one may come this fall and winter, making economic collapse worse if happens.
It’s why self-protection caution is essential to maintain, what’s likely to be the case for some time.
Economic collapse caused far greater harm to millions of Americans than coronavirus outbreaks.
Manufactured main street Depression begun in 2008 was deepened this year by its ruling class.
It’s all about the greatest ever wealth transfer from ordinary people to privileged US interests, along with enabling corporate favorites to reduce competition.
Ordinary Americans are paying the price, exploited so privileged ones can benefit.
That’s the disturbing reality of today’s new normal.
Manufactured current conditions made the US more unsafe and unfit to live in than at any previous time in modern memory — with no end of harder than ever hard times for ordinary Americans in prospect.
Sunday, June 21, 2020
SC213-14
https://www.oftwominds.com/blogjune20/Fed-junkies6-20.html
Dear Junkies Addicted to Fed Smack: The Monkey on Your Back Is Now a Gorilla
Dear junkies addicted to the Federal Reserve's free-money smack: like all addicts, you firmly believe you're not addicted. Never mind those tracks, you can stop any time. Yeah, sure, but we all know you're going to buy the dip and max out your margin account because the craving cannot be denied.
Speaking of denial: you don't realize you're the dealers' chumps, the bagholders who bought at the top who the dealers are counting on to cling on to the bitter end because those Fed speedballs have inspired a euphoric faith in your god-like trading powers.
Here's how it ends, figuratively speaking: you'll wake up inside your Mercedes in a god-forsaken patch of urban wreckage, all the doors will be locked and you won't remember even leaving the party, much less how you got here.
You'll compulsively check your account and find that your margin call exceeds the value of your entire portfolio because the bottom dropped out while you were in a Fed-smack-induced haze, dreaming of prancing unicorns and angels dancing in the head of a pin.
Only now will you understand you were not a trading genius who would get out at the top, no problem, but a bagholder, played perfectly by the big dealers who sold to you. Now you're wiped out because you don't have enough cash to cover the margin call that's left after your portfolio was liquidated.
You thought that monkey on your back was light as a feather, but now it transmogrified overnight into a crushing gorilla. The dealers who you thought were your pals at the party made sure you wouldn't be around to cause a scene when you found you could no longer count on the Fed's baggies of the good stuff.
While you gird yourself for the agonies of cold turkey, consider Exhibit 1, the Fed'a balance sheet in February 2020:
2/5/20 $4.166 Trillion
2/12/20 $4.182 Trillion
2/19/20 $4.171 Trillion
Notice anything about the Fed's supply of free-money smack? It dried up. But all the junkies didn't notice because they were so sure that the Fed's supply of junk was infinite.
A funny thing happened on February 19--the market topped out and crashed the following week. Now look at this month's supply of Fed smack:
6/3/20 $7.165 Trillion
6/10/20 $7.168 Trillion
6/17/20 $7.094 Trillion
Umm, notice any similarity?
Fed junkies know one thing: the only thing that matters is the Fed's junk. Real economy: doesn't matter. Corporate sales: doesn't matter. Corporate profits: doesn't matter. Tax receipts: doesn't matter. Household income: doesn't matter.
The only thing that matters is the Fed is supplying baggies of the good stuff. Spoken like a true junkie, my friend, but once the high wears off consider what the Fed can't do:
1. It can't reverse the unprecedented wealth inequality its policies have pushed to the point of social disintegration and breakdown.
2. It can't make people take on the risks and heartaches of starting new businesses.
3. It can't force employers to hire more employees.
4. It can't make unprofitable businesses profitable.
5. It can't force people to buy assets at prices that no longer make financial sense.
6. It can't make insolvent businesses and local governments solvent.
7. It can't force people who now realize their priority is to save money to spend their cash, even if the Fed forces negative interest rates.
8. It can't lower the unaffordable cost structure of the entire economy.
9. It can't de-link all the financial dependencies in the financial system that make it so vulnerable to the first domino falling.
10. It can't stop people from selling their assets.
In summary, The Fed can't stop the unwinding of an unsustainable bubble of epic proportions. We are entering The Greatest Depression because Fed smack has zero effect on the real world; its only effect is to increase the delusion that asset bubbles are all that matters.
Also recall that the Deep State is not going to allow Jay Powell to re-elect Donald Trump with a stock market rally. From the point of view of the inner circle of the Deep State, the market collapse in March was simply a test to confirm what happens when the free-money smack is withdrawn. The test was a success and now the real crash can begin. Only this time it won't last three weeks. It will last all the way through October because, well, you know why: Deep State to Powell: Stop Goosing Stocks Higher Or You'll Re-Elect Trump.
....
https://cluborlov.blogspot.com/2020/06/post-collapse-administration.html
Post-Collapse Administration
I have noticed a marked tendency to think that once the coronavirus blows over everything will go back to the way it was before—or even better, because of Elon Musk’s electric flying cars and fly-thru sex change clinics or what have you. A simple explanation for this tendency is that it is what people want to think: everyone just wants to go back to what they are used to, picking up where they left off and tickling their wild fancies any way they wish. A slightly more nuanced explanation is that the new, post-collapse reality is a mysterious, unfamiliar realm and that for many people thinking about it is too uncomfortable (if done right) or downright pointless (if it consists of cobbling together stereotypes from movies such as Mad Max and Waterworld or other such post-apocalyptic theme park attractions).
Those who wish to think that what’s happening is just a hiccough caused by a not particularly deadly virus and that this will all blow over soon enough are sure to be disappointed. Taking the US as an example, the crisis clearly started before the virus hit, as evidenced by the steady and quite noticeable slowing of the physical economy since 2018, evidenced by such boring statistics as the lack of sales of new long-haul trucks. But that was before all hell broke loose.
Since February 2020 the US lost 46 million full-time jobs, which is over a third of the overall workforce. Bloomberg forecasts that these jobs will come back no sooner than in six years—and only if in the meantime there is steady economic growth. But then the Congressional Budget Office predicts a GDP decrease of 5.6% and 10 years for it to recover (assuming that the worst is already over) so steady economic growth seems like a bit of a pipe dream. In fact, the Federal Reserve is predicting a second quarter GDP decrease of 52.8%, and so the CBO prediction is only plausible to believers in a V-shaped recovery that doesn’t seem to be happening. I, on the other hand, believe that this recession/depression/collapse has been brought to you by the letter L and the number 0.
A more reasonable expectation is that with the economy already shrunk by half another 20% of full-time jobs will need to be lost in the coming months in a wave of bankruptcies that have so far been held back by various emergency measures such as temporary unemployment benefits, moratoria on evictions and foreclosures, delays in student loan repayment, three-month tax holidays, etc. To keep the financial house of cards from pancaking the US federal debt had to go from $21 trillion to $28 trillion in a rather short period of time, and how much longer this can go on is anyone’s guess, but there seems to be consensus that it can’t go on forever. Meanwhile, data from May 2020 indicates that 26% of Americans could not feed themselves independently, and as this number continues to go up it will become increasingly impossible to ignore the fact that the cupboard is indeed bare and that the once wealthiest nation in the world is now a nation of beggars.
Once a solid majority of the population becomes destitute, what will become of the world’s greatest superpower, the indispensable nation, that shining beacon of freedom and democracy and embodiment of the can-do spirit with liberty and justice for all? On the ground, there are sure to be lots of dumpsters on fire, lots of shops looted, boarded up and out of business, various sections of downtowns becoming police no-go zones (if police are still to be found anywhere) presided over by heavily armed thugs. After all the statues of white imperialist exploiters and oppressors of yore are toppled and all the white people forced to kneel before some very nice people who hail from the ghetto, there is sure to come a moment (at least for those who at that point are still capable of some semblance of rational thought) to ask an obvious question: What, if anything, comes next?....
Dear Junkies Addicted to Fed Smack: The Monkey on Your Back Is Now a Gorilla
Dear junkies addicted to the Federal Reserve's free-money smack: like all addicts, you firmly believe you're not addicted. Never mind those tracks, you can stop any time. Yeah, sure, but we all know you're going to buy the dip and max out your margin account because the craving cannot be denied.
Speaking of denial: you don't realize you're the dealers' chumps, the bagholders who bought at the top who the dealers are counting on to cling on to the bitter end because those Fed speedballs have inspired a euphoric faith in your god-like trading powers.
Here's how it ends, figuratively speaking: you'll wake up inside your Mercedes in a god-forsaken patch of urban wreckage, all the doors will be locked and you won't remember even leaving the party, much less how you got here.
You'll compulsively check your account and find that your margin call exceeds the value of your entire portfolio because the bottom dropped out while you were in a Fed-smack-induced haze, dreaming of prancing unicorns and angels dancing in the head of a pin.
Only now will you understand you were not a trading genius who would get out at the top, no problem, but a bagholder, played perfectly by the big dealers who sold to you. Now you're wiped out because you don't have enough cash to cover the margin call that's left after your portfolio was liquidated.
You thought that monkey on your back was light as a feather, but now it transmogrified overnight into a crushing gorilla. The dealers who you thought were your pals at the party made sure you wouldn't be around to cause a scene when you found you could no longer count on the Fed's baggies of the good stuff.
While you gird yourself for the agonies of cold turkey, consider Exhibit 1, the Fed'a balance sheet in February 2020:
2/5/20 $4.166 Trillion
2/12/20 $4.182 Trillion
2/19/20 $4.171 Trillion
Notice anything about the Fed's supply of free-money smack? It dried up. But all the junkies didn't notice because they were so sure that the Fed's supply of junk was infinite.
A funny thing happened on February 19--the market topped out and crashed the following week. Now look at this month's supply of Fed smack:
6/3/20 $7.165 Trillion
6/10/20 $7.168 Trillion
6/17/20 $7.094 Trillion
Umm, notice any similarity?
Fed junkies know one thing: the only thing that matters is the Fed's junk. Real economy: doesn't matter. Corporate sales: doesn't matter. Corporate profits: doesn't matter. Tax receipts: doesn't matter. Household income: doesn't matter.
The only thing that matters is the Fed is supplying baggies of the good stuff. Spoken like a true junkie, my friend, but once the high wears off consider what the Fed can't do:
1. It can't reverse the unprecedented wealth inequality its policies have pushed to the point of social disintegration and breakdown.
2. It can't make people take on the risks and heartaches of starting new businesses.
3. It can't force employers to hire more employees.
4. It can't make unprofitable businesses profitable.
5. It can't force people to buy assets at prices that no longer make financial sense.
6. It can't make insolvent businesses and local governments solvent.
7. It can't force people who now realize their priority is to save money to spend their cash, even if the Fed forces negative interest rates.
8. It can't lower the unaffordable cost structure of the entire economy.
9. It can't de-link all the financial dependencies in the financial system that make it so vulnerable to the first domino falling.
10. It can't stop people from selling their assets.
In summary, The Fed can't stop the unwinding of an unsustainable bubble of epic proportions. We are entering The Greatest Depression because Fed smack has zero effect on the real world; its only effect is to increase the delusion that asset bubbles are all that matters.
Also recall that the Deep State is not going to allow Jay Powell to re-elect Donald Trump with a stock market rally. From the point of view of the inner circle of the Deep State, the market collapse in March was simply a test to confirm what happens when the free-money smack is withdrawn. The test was a success and now the real crash can begin. Only this time it won't last three weeks. It will last all the way through October because, well, you know why: Deep State to Powell: Stop Goosing Stocks Higher Or You'll Re-Elect Trump.
....
https://cluborlov.blogspot.com/2020/06/post-collapse-administration.html
Post-Collapse Administration
I have noticed a marked tendency to think that once the coronavirus blows over everything will go back to the way it was before—or even better, because of Elon Musk’s electric flying cars and fly-thru sex change clinics or what have you. A simple explanation for this tendency is that it is what people want to think: everyone just wants to go back to what they are used to, picking up where they left off and tickling their wild fancies any way they wish. A slightly more nuanced explanation is that the new, post-collapse reality is a mysterious, unfamiliar realm and that for many people thinking about it is too uncomfortable (if done right) or downright pointless (if it consists of cobbling together stereotypes from movies such as Mad Max and Waterworld or other such post-apocalyptic theme park attractions).
Those who wish to think that what’s happening is just a hiccough caused by a not particularly deadly virus and that this will all blow over soon enough are sure to be disappointed. Taking the US as an example, the crisis clearly started before the virus hit, as evidenced by the steady and quite noticeable slowing of the physical economy since 2018, evidenced by such boring statistics as the lack of sales of new long-haul trucks. But that was before all hell broke loose.
Since February 2020 the US lost 46 million full-time jobs, which is over a third of the overall workforce. Bloomberg forecasts that these jobs will come back no sooner than in six years—and only if in the meantime there is steady economic growth. But then the Congressional Budget Office predicts a GDP decrease of 5.6% and 10 years for it to recover (assuming that the worst is already over) so steady economic growth seems like a bit of a pipe dream. In fact, the Federal Reserve is predicting a second quarter GDP decrease of 52.8%, and so the CBO prediction is only plausible to believers in a V-shaped recovery that doesn’t seem to be happening. I, on the other hand, believe that this recession/depression/collapse has been brought to you by the letter L and the number 0.
A more reasonable expectation is that with the economy already shrunk by half another 20% of full-time jobs will need to be lost in the coming months in a wave of bankruptcies that have so far been held back by various emergency measures such as temporary unemployment benefits, moratoria on evictions and foreclosures, delays in student loan repayment, three-month tax holidays, etc. To keep the financial house of cards from pancaking the US federal debt had to go from $21 trillion to $28 trillion in a rather short period of time, and how much longer this can go on is anyone’s guess, but there seems to be consensus that it can’t go on forever. Meanwhile, data from May 2020 indicates that 26% of Americans could not feed themselves independently, and as this number continues to go up it will become increasingly impossible to ignore the fact that the cupboard is indeed bare and that the once wealthiest nation in the world is now a nation of beggars.
Once a solid majority of the population becomes destitute, what will become of the world’s greatest superpower, the indispensable nation, that shining beacon of freedom and democracy and embodiment of the can-do spirit with liberty and justice for all? On the ground, there are sure to be lots of dumpsters on fire, lots of shops looted, boarded up and out of business, various sections of downtowns becoming police no-go zones (if police are still to be found anywhere) presided over by heavily armed thugs. After all the statues of white imperialist exploiters and oppressors of yore are toppled and all the white people forced to kneel before some very nice people who hail from the ghetto, there is sure to come a moment (at least for those who at that point are still capable of some semblance of rational thought) to ask an obvious question: What, if anything, comes next?....
Saturday, June 20, 2020
SC213-13
http://endoftheamericandream.com/archives/rumors-of-wars-china-india-north-korea-south-korea-israel-and-turkey-all-move-toward-war
Rumors Of Wars: China, India, North Korea, South Korea, Israel And Turkey All Move Toward War
As if we didn’t have enough already going on in 2020, now we are facing the possibility that several regional wars may erupt. China and India had both been pouring troops into a disputed border region, and now there has been an incident where they were actually killing each other. On the Korean peninsula, North Korea just blew up “a joint liaison office” that it had used for talks with the South Korean government. And in the Middle East, Turkey is warning of grave consequences if Israel goes ahead with a plan to annex portions of Judea and Samaria. If a major regional war erupts at even one of these flashpoints, it will be another devastating blow for a global economy that is already imploding, and there is a very strong probability that the U.S. and other major western powers could be drawn into the conflict.
Right now, most Americans are focused on our internal problems, and so they are paying very little attention to the growing crisis on the border between China and India.
Both nations had sent substantial contingents of troops to an area of the border that has long been disputed, and a meeting that was supposed to defuse tensions actually resulted in soldiers killing one another…
Chinese state media described the incident Monday night in the Galwan River valley where both countries have deployed troops in recent weeks as “the most serious clash between Chinese and Indian soldiers so far,” confirming casualties but offering no further details about them. Indian government sources speaking on the condition of anonymity told The Times of India that 20 Indian army personnel had died in the fighting.
American intelligence believes 35 Chinese troops died, including one senior officer, a source familiar with that assessment tells U.S. News. The incident took place during a meeting in the mountainous region between the two sides – both of which had agreed to disarm – to determine how the two militaries would safely withdraw their presences from the region.
This is the very first time in decades that Chinese and Indian troops have killed each other, and apparently very little shooting was involved…
The meeting grew tense and resulted in a physical confrontation between the troops. According to the assessment, all of the casualties were from the use of batons and knives and from falls from the steep topography, the source says.
That sounds like a scene from an overly gory Hollywood war movie, but reportedly this actually happened.
Hopefully the leaders of the two nations will be able to cool tensions for a while, but the Chinese have a very long history of very bitter border disputes with their neighbors, and without a doubt China will continue to make attempts to exercise sovereignty over this area.
Meanwhile, tensions on the Korean peninsula have risen to a level that we haven’t seen in many, many years. On Tuesday, North Korea actually blew up a building that had been used for negotiations with South Korea…
North Korea has blown up a joint liaison office used for talks between itself and South Korea, the latest sign that ties between the two longtime adversaries are rapidly deteriorating.
North Korean state media reported that the four-story building, which is located in the town of Kaesong just north of the demilitarized zone that divides the two Koreas, was “completely destroyed by a “terrific explosion” at 2:50 p.m. local time.
That is certainly one way to make a statement.
And this comes just days after Kim Jong Un’s sister, Kim Yo Jong, had issued a very ominous warning…
In a cryptic statement late Saturday, Kim Yo Jong vowed her country would “soon take a next action” against South Korea — a move she suggested would be carried out by the country’s military.
“By exercising my power authorized by the Supreme Leader, our Party and the state, I gave an instruction to the arms of the department in charge of the affairs with enemy to decisively carry out the next action,” Kim said in the state-run Korean Central News Agency.
All of a sudden, North Korea’s approach to relations with South Korea has dramatically shifted, and that shift has coincided with Kim Yo Jong taking a much more prominent role in national affairs.
I believe that there is much more going on in North Korea than we are being told, and Kim Yo Jong appears to favor a much more militant approach than what we have become accustomed to in recent years.
Over in the Middle East, the Times of Israel is reporting that the IDF is gearing up for a “state of war” as Israel prepares to annex portions of Judea and Samaria…
Just over two weeks before a possible Israeli annexation of some as-yet unspecified portion of the West Bank, the Israel Defense Forces is preparing for a wide range of scenarios for potential regional fallout — up to and including a large-scale wave of terror attacks — while still not being told exactly what the government has in mind.
The military is gearing up for possible massive unrest, Channel 12 reported Sunday evening, including what it is calling a potential “state of war” characterized by a Second Intifada-style onslaught of suicide bombing attacks.
This week, Israeli Prime Minister Benjamin Netanyahu once again made it clear that he does not intend to alter his plans, and that means that the process of annexation could start as soon as the beginning of July.
A few weeks ago, I wrote an entire article about how this could potentially spark a major war in the region, and Arab leaders continue to make it clear that there will be “consequences” if Israel goes through with this…
Israel’s plan to extend its sovereignty to the Jordan Valley, and parts of Judea and Samaria, will “destroy all hopes” for lasting peace in the Middle East, Turkey’s top diplomat said on Wednesday.
“If the occupying power [Israel] crosses the red line, we [Muslim countries] must show that this will have consequences,” Turkish Foreign Minister Mevlut Cavusoglu said during a special meeting of the Organization of Islamic Cooperation Executive Committee, according to Turkey’s Anadolu Agency.
We shall see what happens.
I think that Netanyahu is convinced that Donald Trump is probably going to lose in November, and so that means that he probably believes that he only has a window of a few months in which he could annex portions of Judea and Samaria with U.S. support.
It appears that Netanyahu is absolutely determined to move forward, and it also appears that Israel’s Arab neighbors are prepared to respond very forcefully.
In just a few weeks, missiles could start flying back and forth, and the entire Middle East could erupt in flames....
....without a doubt we are living during a time of “wars and rumors of wars”, and it certainly isn’t going to take much to unleash a major conflict.
Rumors Of Wars: China, India, North Korea, South Korea, Israel And Turkey All Move Toward War
As if we didn’t have enough already going on in 2020, now we are facing the possibility that several regional wars may erupt. China and India had both been pouring troops into a disputed border region, and now there has been an incident where they were actually killing each other. On the Korean peninsula, North Korea just blew up “a joint liaison office” that it had used for talks with the South Korean government. And in the Middle East, Turkey is warning of grave consequences if Israel goes ahead with a plan to annex portions of Judea and Samaria. If a major regional war erupts at even one of these flashpoints, it will be another devastating blow for a global economy that is already imploding, and there is a very strong probability that the U.S. and other major western powers could be drawn into the conflict.
Right now, most Americans are focused on our internal problems, and so they are paying very little attention to the growing crisis on the border between China and India.
Both nations had sent substantial contingents of troops to an area of the border that has long been disputed, and a meeting that was supposed to defuse tensions actually resulted in soldiers killing one another…
Chinese state media described the incident Monday night in the Galwan River valley where both countries have deployed troops in recent weeks as “the most serious clash between Chinese and Indian soldiers so far,” confirming casualties but offering no further details about them. Indian government sources speaking on the condition of anonymity told The Times of India that 20 Indian army personnel had died in the fighting.
American intelligence believes 35 Chinese troops died, including one senior officer, a source familiar with that assessment tells U.S. News. The incident took place during a meeting in the mountainous region between the two sides – both of which had agreed to disarm – to determine how the two militaries would safely withdraw their presences from the region.
This is the very first time in decades that Chinese and Indian troops have killed each other, and apparently very little shooting was involved…
The meeting grew tense and resulted in a physical confrontation between the troops. According to the assessment, all of the casualties were from the use of batons and knives and from falls from the steep topography, the source says.
That sounds like a scene from an overly gory Hollywood war movie, but reportedly this actually happened.
Hopefully the leaders of the two nations will be able to cool tensions for a while, but the Chinese have a very long history of very bitter border disputes with their neighbors, and without a doubt China will continue to make attempts to exercise sovereignty over this area.
Meanwhile, tensions on the Korean peninsula have risen to a level that we haven’t seen in many, many years. On Tuesday, North Korea actually blew up a building that had been used for negotiations with South Korea…
North Korea has blown up a joint liaison office used for talks between itself and South Korea, the latest sign that ties between the two longtime adversaries are rapidly deteriorating.
North Korean state media reported that the four-story building, which is located in the town of Kaesong just north of the demilitarized zone that divides the two Koreas, was “completely destroyed by a “terrific explosion” at 2:50 p.m. local time.
That is certainly one way to make a statement.
And this comes just days after Kim Jong Un’s sister, Kim Yo Jong, had issued a very ominous warning…
In a cryptic statement late Saturday, Kim Yo Jong vowed her country would “soon take a next action” against South Korea — a move she suggested would be carried out by the country’s military.
“By exercising my power authorized by the Supreme Leader, our Party and the state, I gave an instruction to the arms of the department in charge of the affairs with enemy to decisively carry out the next action,” Kim said in the state-run Korean Central News Agency.
All of a sudden, North Korea’s approach to relations with South Korea has dramatically shifted, and that shift has coincided with Kim Yo Jong taking a much more prominent role in national affairs.
I believe that there is much more going on in North Korea than we are being told, and Kim Yo Jong appears to favor a much more militant approach than what we have become accustomed to in recent years.
Over in the Middle East, the Times of Israel is reporting that the IDF is gearing up for a “state of war” as Israel prepares to annex portions of Judea and Samaria…
Just over two weeks before a possible Israeli annexation of some as-yet unspecified portion of the West Bank, the Israel Defense Forces is preparing for a wide range of scenarios for potential regional fallout — up to and including a large-scale wave of terror attacks — while still not being told exactly what the government has in mind.
The military is gearing up for possible massive unrest, Channel 12 reported Sunday evening, including what it is calling a potential “state of war” characterized by a Second Intifada-style onslaught of suicide bombing attacks.
This week, Israeli Prime Minister Benjamin Netanyahu once again made it clear that he does not intend to alter his plans, and that means that the process of annexation could start as soon as the beginning of July.
A few weeks ago, I wrote an entire article about how this could potentially spark a major war in the region, and Arab leaders continue to make it clear that there will be “consequences” if Israel goes through with this…
Israel’s plan to extend its sovereignty to the Jordan Valley, and parts of Judea and Samaria, will “destroy all hopes” for lasting peace in the Middle East, Turkey’s top diplomat said on Wednesday.
“If the occupying power [Israel] crosses the red line, we [Muslim countries] must show that this will have consequences,” Turkish Foreign Minister Mevlut Cavusoglu said during a special meeting of the Organization of Islamic Cooperation Executive Committee, according to Turkey’s Anadolu Agency.
We shall see what happens.
I think that Netanyahu is convinced that Donald Trump is probably going to lose in November, and so that means that he probably believes that he only has a window of a few months in which he could annex portions of Judea and Samaria with U.S. support.
It appears that Netanyahu is absolutely determined to move forward, and it also appears that Israel’s Arab neighbors are prepared to respond very forcefully.
In just a few weeks, missiles could start flying back and forth, and the entire Middle East could erupt in flames....
....without a doubt we are living during a time of “wars and rumors of wars”, and it certainly isn’t going to take much to unleash a major conflict.
Friday, June 19, 2020
SC214-12
https://www.globalresearch.ca/america-empire-eating-itself/5716163
America: An Empire Eating Itself
Empire has one trick - divide and conquer. When it runs out of territory, nations, and people abroad to consume, it turns inward on itself.
The United States finds itself in a less-than-unique position of an empire in terminal decline. With nations around the globe standing up economically, militarily, and politically – closing off once lucrative avenues of exploitation – the US finds itself turning more and more inwardly upon its allies and even its own population – either to wring from it whatever wealth it can or at the very least – to prevent the displacement of America’s current ruling special interests by any sort of alternative.
Geopolitical expert and analyst F. William Engdahl did an impressive job pointing out how current turmoil in the United States is being driven not by grassroots efforts to confront these special interests but by these special interests themselves.
No matter what people thought they were going into the streets for – for a nation adept at engineering revolutions abroad – there is no way it won’t turn those same tools and techniques inward on unrest at home – ensuring it is channeled in the safest and most profitable way possible.
Cancel Culture’s Deliberate Futility: A Tale of Two Chain-Restaurants
To point out just how absurd America’s “woke revolution” and its opponents are, consider Domino’s Pizza and Shake Shack. Both find themselves the targets of opposite ends of America’s current turmoil. Domino’s for at one point in the distant past supporting people who now find themselves among US President Donald Trump’s administration, and Shake Shack for its anemic response to allegations its employees poisoned New York City police officers.
Those promising to boycott one and patronize the other to spite their political opponents never bothered to check who actually owns these two large food and beverage businesses. If they did – they’d see that the exact same handful of investment firms own both.
Investors at Blackrock, Vanguard, or State Street Global Advisors – who own significant shares and profit from both Shake Shack and Domino’s – don’t care which restaurant you boycott so long as you patronize another in their portfolio to spite your superficial political opponents. They are deliberately funding both sides of the turmoil to ensure that this is precisely how America’s “woke revolution” plays out.
Notice no one in the spotlight is saying “Wall Street.” Or saying “boycott them all.” Or pointing out that while poisoning cops or supporting President Trump seems “bad,” it pales vastly in the face of the injustice many of these corporations are guilty of.
It is classic divide and conquer – with Americans at each other’s throats – oblivious to the common threat to their peace and prosperity literally right in front of them, consuming their paychecks every month, funneling it from mainstreet and into gargantuan concentrations of wealth and power on Wall Street.
When rebuilding begins – if it begins – it will be Americans paying through taxes, not Blackrock and others on Wall Street.
Despite the apparent chaos in America’s streets, these companies will continue to profit and their investors will continue accumulating wealth and power. America’s political landscape will continue to burn ensuring nothing of any significance can ever be built to change this basic fact.
How the Rest of the World Escaped American Hegemony
If you watch movies or listen to activists running wild in America’s streets – you’d probably be inclined to believe burning down your own community and endlessly complaining is how to throw off oppression – real or imagined.
In reality, the rest of the world has begun to move out from under the shadow of America’s global-spanning hegemony. They did it not by burning down their own nations or complaining endlessly to the United Nations – they did it by building superior alternatives to what the US offered the world.
China is a perfect example of a nation that offers industry and infrastructure as an alternative to America’s “investments,” overpriced weapons, and political meddling. China builds dams, railways, factories, and affordable weapons with no political strings attached.
Russia has provided nations around the globe with alternatives for everything from weapons and energy to political and economic alliances.
Individually, nations have begun creating alternatives to once unrivaled American monopolies. Huawei’s rise – first out from under Apple – then far above it – is a perfect example. Russia positioning itself as a key partner for Middle Eastern nations exhausted from America’s “stewardship” of the region is another.
Even in smaller nations the idea of creating alternatives to things like social media platforms monopolized by the US is taking hold – empowering these nations, keeping income local, and displacing America’s unwarranted influence within their borders.
America’s problem is that it has long since abandoned building and making things and instead has focused on coercion, exploitation, thievery, schemes, and moving numbers around on ledgers. This only works as long as no one else starts building and making things and as long as no one attempts to insulate themselves from financial trickery by creating alternative systems for investing in tangible progress.
This process – in fact – of doing just that has dominated the topic of geopolitics for years as America declines and lashes out and as nations patiently and systematically create these very sort of alternatives. Collectively it is called the “multipolar world order” and is one built on physical infrastructure like factories and railways – not spreadsheets and ticker symbols.
At Home: Build the Community You Want to Live in
Wall Street has no problem with “woke” activist burning down businesses across the country – even ones they own. They know whatever investments they have that are found to be “offensive” – they have 10 more that the “woke” community will continue paying into.
What Wall Street doesn’t want is for communities to boycott all of the businesses they own and creating local alternatives that keep wealth inside communities. The concentration of wealth on Wall Street and all the power and influence it buys would thus be spread more evenly across the country.
Fake socialism is offered as a solution – something Wall Street can keep in Washington close by and under their control – rather than any genuine distribution of wealth the people themselves control by actually owning businesses, land, and the means of production by building and operating local factories.
If money is power – asking or even demanding it from those who have it to give it back is not the answer. By no longer giving it to them willingly and instead keeping it in communities is the only way to redirect that money and its power to work for the people rather than Wall Street.
If Americans want a better society to live in – they are going to have to build it – not ask for it from those who have nothing to gain by giving it to them. Those who are burning instead of building, complaining instead of collaborating – are either deliberately attempting to obstruct real reform and progress in the US, or have fallen into traps laid by those who are.
Protesting has its place – particularly when used to protect what is being built. But as far as a medium for change in and of itself – history is devoid of a single example where blind violence and loud complaining alone changed anything of significance.
The “woke revolution” will most certainly not be any sort of exception. With many protesters citing things like the “French Revolution” – this is painfully clear. The French Revolution of course ended with one monarchy overthrown, and another – much larger one headed by Napoleon Bonaparte – taking its place.
To this day France remains controlled by immense corporate-financier interests which exist far above the superficial “democracy” and “protests” of the French people. The French military remains deployed in numerous “former” colonies in Africa where it seeks to reassert itself and the wider West alongside its allies on Wall Street and in Washington.
Clearly something of more substance needs to be done than committing to mindless mayhem in the streets and endless complaining across the media. If people want power, they need to possess the means to acquire it – money. To do so they need to stop handing their paychecks over to Wall Street and keep it in their communities. That is how China and Russia and the rest of the multipolar world has changed things globally and it is the only way things will change for Americans domestically.
Abroad: Now is the time to Judo-Throw America’s Hypocrisy
In Judo, the energy of an attacking enemy is turned against them – generally in the form of a spectacular throw.
For the rest of the world – now is a perfect time to capitalize on the wall-to-wall hypocrisy of a nation that has for decades lectured the world regarding “democracy,” “human rights,” and “free speech” while it now openly crushes all of the above at home.
Fronts funded by the US State Department via the National Endowment for Democracy (NED) operating overseas find themselves in the very unenviable position of taking money from a nation being exposed as chronically ill, systemically racist, divided, and increasingly violent.
How are these NED-funded fronts going to claim they are advancing “democracy” or “human rights” abroad for the US and thanks to generous US funding when democracy and human rights in the US is exposed as dysfunctional at best and nonexistent at worst?
Nations plagued by US meddling could easily make a case to sweep from within its borders fronts funded by a divided, racist, violent, and increasingly hypocritical US – that is – if foreign-funded subversion isn’t already a good enough reason to do so.
With US tech-firms hand-in-glove with the government purging thousands of accounts from platforms like Facebook and Twitter for allegedly being involved in “coordinated inauthentic behavior” it is an easy case to make that NED is the king of coordinated inauthentic behavior and should likewise be “purged.”
With all the energy the US has invested in meddling abroad – that energy has never been more vulnerable and likely to be thrown back against the US.
Empire’s End is Inevitable
But nations could just as easily patiently wait.
The US is an empire eating itself.
As long as the rest of the world remains determined to continue building better alternatives to America’s “international order” it will continue to displace American hegemony around the globe. Most nations desire greatly to work with the American people themselves – 99.999% of whom are likewise victims of Wall Street and Washington – whether they realize it or not. This helps explain the almost endless patience of nations like Russia and China in the face of daily provocations by the West.
For Americans, it is up to them regarding what kind of nation they will live in once the dust settles.
One where power and wealth is still very-much concentrated on Wall Street and the violence sown helps justify an even bigger police state than ever before? Or one in which Americans learn that no one in Washington, on TV, or with blue check marks next to their names on Twitter are on their side and start thinking and acting for themselves?
Only time will tell.
America: An Empire Eating Itself
Empire has one trick - divide and conquer. When it runs out of territory, nations, and people abroad to consume, it turns inward on itself.
The United States finds itself in a less-than-unique position of an empire in terminal decline. With nations around the globe standing up economically, militarily, and politically – closing off once lucrative avenues of exploitation – the US finds itself turning more and more inwardly upon its allies and even its own population – either to wring from it whatever wealth it can or at the very least – to prevent the displacement of America’s current ruling special interests by any sort of alternative.
Geopolitical expert and analyst F. William Engdahl did an impressive job pointing out how current turmoil in the United States is being driven not by grassroots efforts to confront these special interests but by these special interests themselves.
No matter what people thought they were going into the streets for – for a nation adept at engineering revolutions abroad – there is no way it won’t turn those same tools and techniques inward on unrest at home – ensuring it is channeled in the safest and most profitable way possible.
Cancel Culture’s Deliberate Futility: A Tale of Two Chain-Restaurants
To point out just how absurd America’s “woke revolution” and its opponents are, consider Domino’s Pizza and Shake Shack. Both find themselves the targets of opposite ends of America’s current turmoil. Domino’s for at one point in the distant past supporting people who now find themselves among US President Donald Trump’s administration, and Shake Shack for its anemic response to allegations its employees poisoned New York City police officers.
Those promising to boycott one and patronize the other to spite their political opponents never bothered to check who actually owns these two large food and beverage businesses. If they did – they’d see that the exact same handful of investment firms own both.
Investors at Blackrock, Vanguard, or State Street Global Advisors – who own significant shares and profit from both Shake Shack and Domino’s – don’t care which restaurant you boycott so long as you patronize another in their portfolio to spite your superficial political opponents. They are deliberately funding both sides of the turmoil to ensure that this is precisely how America’s “woke revolution” plays out.
Notice no one in the spotlight is saying “Wall Street.” Or saying “boycott them all.” Or pointing out that while poisoning cops or supporting President Trump seems “bad,” it pales vastly in the face of the injustice many of these corporations are guilty of.
It is classic divide and conquer – with Americans at each other’s throats – oblivious to the common threat to their peace and prosperity literally right in front of them, consuming their paychecks every month, funneling it from mainstreet and into gargantuan concentrations of wealth and power on Wall Street.
When rebuilding begins – if it begins – it will be Americans paying through taxes, not Blackrock and others on Wall Street.
Despite the apparent chaos in America’s streets, these companies will continue to profit and their investors will continue accumulating wealth and power. America’s political landscape will continue to burn ensuring nothing of any significance can ever be built to change this basic fact.
How the Rest of the World Escaped American Hegemony
If you watch movies or listen to activists running wild in America’s streets – you’d probably be inclined to believe burning down your own community and endlessly complaining is how to throw off oppression – real or imagined.
In reality, the rest of the world has begun to move out from under the shadow of America’s global-spanning hegemony. They did it not by burning down their own nations or complaining endlessly to the United Nations – they did it by building superior alternatives to what the US offered the world.
China is a perfect example of a nation that offers industry and infrastructure as an alternative to America’s “investments,” overpriced weapons, and political meddling. China builds dams, railways, factories, and affordable weapons with no political strings attached.
Russia has provided nations around the globe with alternatives for everything from weapons and energy to political and economic alliances.
Individually, nations have begun creating alternatives to once unrivaled American monopolies. Huawei’s rise – first out from under Apple – then far above it – is a perfect example. Russia positioning itself as a key partner for Middle Eastern nations exhausted from America’s “stewardship” of the region is another.
Even in smaller nations the idea of creating alternatives to things like social media platforms monopolized by the US is taking hold – empowering these nations, keeping income local, and displacing America’s unwarranted influence within their borders.
America’s problem is that it has long since abandoned building and making things and instead has focused on coercion, exploitation, thievery, schemes, and moving numbers around on ledgers. This only works as long as no one else starts building and making things and as long as no one attempts to insulate themselves from financial trickery by creating alternative systems for investing in tangible progress.
This process – in fact – of doing just that has dominated the topic of geopolitics for years as America declines and lashes out and as nations patiently and systematically create these very sort of alternatives. Collectively it is called the “multipolar world order” and is one built on physical infrastructure like factories and railways – not spreadsheets and ticker symbols.
At Home: Build the Community You Want to Live in
Wall Street has no problem with “woke” activist burning down businesses across the country – even ones they own. They know whatever investments they have that are found to be “offensive” – they have 10 more that the “woke” community will continue paying into.
What Wall Street doesn’t want is for communities to boycott all of the businesses they own and creating local alternatives that keep wealth inside communities. The concentration of wealth on Wall Street and all the power and influence it buys would thus be spread more evenly across the country.
Fake socialism is offered as a solution – something Wall Street can keep in Washington close by and under their control – rather than any genuine distribution of wealth the people themselves control by actually owning businesses, land, and the means of production by building and operating local factories.
If money is power – asking or even demanding it from those who have it to give it back is not the answer. By no longer giving it to them willingly and instead keeping it in communities is the only way to redirect that money and its power to work for the people rather than Wall Street.
If Americans want a better society to live in – they are going to have to build it – not ask for it from those who have nothing to gain by giving it to them. Those who are burning instead of building, complaining instead of collaborating – are either deliberately attempting to obstruct real reform and progress in the US, or have fallen into traps laid by those who are.
Protesting has its place – particularly when used to protect what is being built. But as far as a medium for change in and of itself – history is devoid of a single example where blind violence and loud complaining alone changed anything of significance.
The “woke revolution” will most certainly not be any sort of exception. With many protesters citing things like the “French Revolution” – this is painfully clear. The French Revolution of course ended with one monarchy overthrown, and another – much larger one headed by Napoleon Bonaparte – taking its place.
To this day France remains controlled by immense corporate-financier interests which exist far above the superficial “democracy” and “protests” of the French people. The French military remains deployed in numerous “former” colonies in Africa where it seeks to reassert itself and the wider West alongside its allies on Wall Street and in Washington.
Clearly something of more substance needs to be done than committing to mindless mayhem in the streets and endless complaining across the media. If people want power, they need to possess the means to acquire it – money. To do so they need to stop handing their paychecks over to Wall Street and keep it in their communities. That is how China and Russia and the rest of the multipolar world has changed things globally and it is the only way things will change for Americans domestically.
Abroad: Now is the time to Judo-Throw America’s Hypocrisy
In Judo, the energy of an attacking enemy is turned against them – generally in the form of a spectacular throw.
For the rest of the world – now is a perfect time to capitalize on the wall-to-wall hypocrisy of a nation that has for decades lectured the world regarding “democracy,” “human rights,” and “free speech” while it now openly crushes all of the above at home.
Fronts funded by the US State Department via the National Endowment for Democracy (NED) operating overseas find themselves in the very unenviable position of taking money from a nation being exposed as chronically ill, systemically racist, divided, and increasingly violent.
How are these NED-funded fronts going to claim they are advancing “democracy” or “human rights” abroad for the US and thanks to generous US funding when democracy and human rights in the US is exposed as dysfunctional at best and nonexistent at worst?
Nations plagued by US meddling could easily make a case to sweep from within its borders fronts funded by a divided, racist, violent, and increasingly hypocritical US – that is – if foreign-funded subversion isn’t already a good enough reason to do so.
With US tech-firms hand-in-glove with the government purging thousands of accounts from platforms like Facebook and Twitter for allegedly being involved in “coordinated inauthentic behavior” it is an easy case to make that NED is the king of coordinated inauthentic behavior and should likewise be “purged.”
With all the energy the US has invested in meddling abroad – that energy has never been more vulnerable and likely to be thrown back against the US.
Empire’s End is Inevitable
But nations could just as easily patiently wait.
The US is an empire eating itself.
As long as the rest of the world remains determined to continue building better alternatives to America’s “international order” it will continue to displace American hegemony around the globe. Most nations desire greatly to work with the American people themselves – 99.999% of whom are likewise victims of Wall Street and Washington – whether they realize it or not. This helps explain the almost endless patience of nations like Russia and China in the face of daily provocations by the West.
For Americans, it is up to them regarding what kind of nation they will live in once the dust settles.
One where power and wealth is still very-much concentrated on Wall Street and the violence sown helps justify an even bigger police state than ever before? Or one in which Americans learn that no one in Washington, on TV, or with blue check marks next to their names on Twitter are on their side and start thinking and acting for themselves?
Only time will tell.
Thursday, June 18, 2020
SC214-11
https://www.shtfplan.com/headline-news/manipulating-the-masses-edward-bernays-why-the-system-needs-your-compliance_06142020
Manipulating The Masses: Edward Bernays & Why The System Needs Your Compliance
You are being controlled. You are being manipulated. You are being brainwashed. If you are still stuck believing that your vote counts and choosing sides is “moral” in a system set up against you from day one, the propaganda has worked.
In this video, we look at the ideas of Edward Bernays, nephew of Sigmund Freud, and a pioneering mind behind the field of public relations and modern propaganda – particularly his ideas on how group psychology, and the illusion of choice, can be used to manipulate the masses.
This is all about dividing and conquering. While we argue about which political puppet is less evil than the other, they wreak havoc on us and destroy everything in their path for power, fame, and wealth.
If you want to make the best change, reject the system, the entire system, and refuse to vote. The task of any control system, therefore, is to maintain the facade of political choice and central to this is “the people’s right to vote,” writes Ben O’Hanlon for Medium.
The easiest way to divide people is through political theater. This is going to be a tough red pill for people to swallow…
It literally doesn’t matter who you vote for. If your vote actually mattered, it would have already been made illegal.
“Let us control the money of a nation, and we care not who makes its laws.” – A “maxim” of the House of Rothschilds.
This isn’t an astonishing or groundbreaking statement. On some visceral level, we all understand this. So why then, is it so easy to divide people into political groups so a small handful of other people can rule over them? Basically, propaganda – the illusion of choice keeps people stuck believing they are free to decide when it really doesn’t matter much anyway. You don’t get to vote for the people behind the scenes that make all the decisions anyway, only the puppet whose face will be attached to those decisions.
Voting provides a corrupt system with legitimacy, regardless of who you vote for. It implies that you consent to the outcome because you participated even if you wanted the other guy to win. The use of dividing people into political parties is not new, but the desire to break free from them and the ruling class. in general, is.
There is something being concocted in the dens of power, far beyond the public eye, and it doesn’t bode well for the future of this country.
Anytime you have an entire nation so mesmerized by political theater and public spectacle that they are oblivious to all else, you’d better beware. –John W. Whitehead
Voting is nothing more than an illusion of choice. It’s akin to slave putting a piece of paper in a box that asks the master to be free. It doesn’t work that way. Figure out the difference between right and wrong, and one of the first things that happen is a refusal to vote for the lesser of two evils…which is still evil, by the way. Because any master who thinks they own anyone else is evil and all politicians think they own you to some degree.
Besides, how do you know who won? The mainstream media tells you, right? And they are so honest, just, and trustworthy, and would NEVER do what they are told…oh, wait. Yeah, it’s that insane.
Americans Are Too “Idiotic To See How Enslaved They Are” Even As the Gates of Hell Open Up
Trump bent immediately to the will of the deep state. Like a twig in the wind.
It’s time to be honest about that. The people never had a champion in the ring.
Let us talk no more of “democracy,” or of “voting”. Of course, that is hard to accept and acknowledge, because it is so devastating to the delusions that hold individuals together from day to day.
Many people may not even be capable of holding the thought or notion that they might oppose or stop it. Most Americans are now literally numb to the actions of its own government, the lives it is destroying and the lies it is working for.
The candidates and the creatures of the state who have willingly lied and deceived the people while looking them in the eye (and pretending to have good reasons) are recklessly and wantonly jeopardizing the world in a way that that hasn’t been seen since the cold war. –SHTFPlan, April 13, 2017
“None are more hopelessly enslaved than those who falsely believe they are free.” – Johann Wolfgang von Goethe
If you are being honest with yourself, you would surely know by now that you don’t require a ruler, a master, or an authoritarian to make decisions for you. It’s time we begin to own ourselves and reject the power-hungry politicians will to rule over us all. People seem to be getting increasingly angry at those who are trying to wake them up and free them from the mental chains they’ve put on themselves. I see this as a sign that the system’s propaganda has worked, but only on those easy to control from the start.
Manipulating The Masses: Edward Bernays & Why The System Needs Your Compliance
You are being controlled. You are being manipulated. You are being brainwashed. If you are still stuck believing that your vote counts and choosing sides is “moral” in a system set up against you from day one, the propaganda has worked.
In this video, we look at the ideas of Edward Bernays, nephew of Sigmund Freud, and a pioneering mind behind the field of public relations and modern propaganda – particularly his ideas on how group psychology, and the illusion of choice, can be used to manipulate the masses.
This is all about dividing and conquering. While we argue about which political puppet is less evil than the other, they wreak havoc on us and destroy everything in their path for power, fame, and wealth.
If you want to make the best change, reject the system, the entire system, and refuse to vote. The task of any control system, therefore, is to maintain the facade of political choice and central to this is “the people’s right to vote,” writes Ben O’Hanlon for Medium.
The easiest way to divide people is through political theater. This is going to be a tough red pill for people to swallow…
It literally doesn’t matter who you vote for. If your vote actually mattered, it would have already been made illegal.
“Let us control the money of a nation, and we care not who makes its laws.” – A “maxim” of the House of Rothschilds.
This isn’t an astonishing or groundbreaking statement. On some visceral level, we all understand this. So why then, is it so easy to divide people into political groups so a small handful of other people can rule over them? Basically, propaganda – the illusion of choice keeps people stuck believing they are free to decide when it really doesn’t matter much anyway. You don’t get to vote for the people behind the scenes that make all the decisions anyway, only the puppet whose face will be attached to those decisions.
Voting provides a corrupt system with legitimacy, regardless of who you vote for. It implies that you consent to the outcome because you participated even if you wanted the other guy to win. The use of dividing people into political parties is not new, but the desire to break free from them and the ruling class. in general, is.
There is something being concocted in the dens of power, far beyond the public eye, and it doesn’t bode well for the future of this country.
Anytime you have an entire nation so mesmerized by political theater and public spectacle that they are oblivious to all else, you’d better beware. –John W. Whitehead
Voting is nothing more than an illusion of choice. It’s akin to slave putting a piece of paper in a box that asks the master to be free. It doesn’t work that way. Figure out the difference between right and wrong, and one of the first things that happen is a refusal to vote for the lesser of two evils…which is still evil, by the way. Because any master who thinks they own anyone else is evil and all politicians think they own you to some degree.
Besides, how do you know who won? The mainstream media tells you, right? And they are so honest, just, and trustworthy, and would NEVER do what they are told…oh, wait. Yeah, it’s that insane.
Americans Are Too “Idiotic To See How Enslaved They Are” Even As the Gates of Hell Open Up
Trump bent immediately to the will of the deep state. Like a twig in the wind.
It’s time to be honest about that. The people never had a champion in the ring.
Let us talk no more of “democracy,” or of “voting”. Of course, that is hard to accept and acknowledge, because it is so devastating to the delusions that hold individuals together from day to day.
Many people may not even be capable of holding the thought or notion that they might oppose or stop it. Most Americans are now literally numb to the actions of its own government, the lives it is destroying and the lies it is working for.
The candidates and the creatures of the state who have willingly lied and deceived the people while looking them in the eye (and pretending to have good reasons) are recklessly and wantonly jeopardizing the world in a way that that hasn’t been seen since the cold war. –SHTFPlan, April 13, 2017
“None are more hopelessly enslaved than those who falsely believe they are free.” – Johann Wolfgang von Goethe
If you are being honest with yourself, you would surely know by now that you don’t require a ruler, a master, or an authoritarian to make decisions for you. It’s time we begin to own ourselves and reject the power-hungry politicians will to rule over us all. People seem to be getting increasingly angry at those who are trying to wake them up and free them from the mental chains they’ve put on themselves. I see this as a sign that the system’s propaganda has worked, but only on those easy to control from the start.
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