FutureJacked

Happy Thanksgiving

2009-11-25T07:55:00.003-06:00

Happy Thanksgiving to all. I'll be traveling quite a bit and posts will be light until next week. I think mood has held up well enough that there hopefully won't be any nasty surprises over the next week or so and we can all digest our turkey in peace.

Mass Mood and Climate "Science"

2009-11-24T08:54:00.009-06:00

The breakdown of social mood into negativity, anger and polarization helps breed an attitude of resistance to authority and a questioning of old beliefs.

The mandarins who have been at the forefront, pushing "solutions" to "Anthropogenic Global Warming" have long blasted critics as "global warming deniers" and as foolish individuals who don't understand that the "science is settled."

Well, the rhetoric has esacalated to an insurgency with the hacking and release of a batch of increasingly embarrassing information on just how climate "science" was performed by the "top" minds in the field. The following links are just a few of the places to watch this massive unraveling of an Establishment consensus:

Watts Up With That?

Climate Audit

The Air Vent

Note how the tactics of the anti-AGW proponents the match up well with John Robb's thesis of Open Source Insurgency Through Software Tools. Within days of the hack, the data were released, a searchable database of the massive numbers of emails and documents had been established and opened to all with an internet connection and the crowd-sourcing began in earnest.

Worse for the Al Goristas - the anti-AGW camp has a catchy slogan to hang their hat on: "Hide the Decline" - bad news for them as the marketing of that slogan will take on a life of its own.

From a socionomics point of view, this is not at all surprising that it occurred as this bear market rally begins to run on fumes. From a straight-up science point of view, transparency of the source codes and data sets are long, long overdue. From a legal point of view, some of the "scientists" appear to be pushing the limits and might even be obstructing justice when it comes to fighting FoI requests in the U.K.

The pro-AGW and anti-AGW camps of climate science have long been at war. Looks like the anti-AGW just dropped a multi-megaton thermonuclear warhead directly in the heart of the pro-AGW camp. We'll see how the pro-AGW camp responds. I expect they will only succeed in embarassing themselves.

By the way, this is a minor prelude to what I expect to happen with finance companies and wealthy families when this bear market rally dissolves into the next leg down of the Great Collapse.

Take notes folks, this is like the Spanish Civil War for the coming huge war on the elites that is brewing in the socionomic stew of anger, high unemployment, xenophobia and recrimination.

UPDATE: OMFG, I'm still laughing at this one. Hide the decline, folks...

h/t Watts Up With That

Laugh or Cry, You Choose

2009-11-23T08:31:00.000-06:00

Food for Anger and Conspiracy Worries

2009-11-18T11:22:00.006-06:00

Why in the world did the cops go all Waco on this guy? Talk about fanning the flames of conspiracy theorists everywhere...

...unless, of course...

More Worries for the Coming Bear Era

2009-11-16T14:16:00.002-06:00

The new issue of The Socionomist is out and the lead article holds up one of the dark demons of the past for us to think about as the West sleepwalks into the Great Collapse. Amazing research. Depressing as well as gripping. Looks like I'm going to have to start keeping up with DNA advances and the use of genetic testing as a way to keep an eye on things. My Google News topics are getting crowded...

A Socionomic Study of Eugenics: Will You Make the Cut?
by Alan Hall, The Socionomist, November 2009

...Most people think that the world has banished eugenics to the trash heap of bad ideas. But mounting evidence suggests that declining social mood will produce stronger expressions of dehumanization and social control than did even eugenics. There are three main reasons for this view: 1) Social mood clearly regulated the history of the eugenics movement in the United States and elsewhere. 2) The Wave Principle warns that the deepest bear market in social mood in 300 years is in progress. 3) Today's ideological undercurrents are similar to those of the early eugenics era. Now, as then, many intellectuals are wildlly optimistic about advances in genetics and fearful of impending social crises...

If the socionomic thesis is correct, and so far it has proven a very useful model, then the templates we as a society use to create the future may be as much Gattaca as Mad Max or Silent Spring.

Mr. Hall's discussion over a possible fusion of the environmental movement with a new genetics movement hits home as I have long believed that one of the hallmarks of this Great Bear Market is going to be a radicalized environmentalism that will burn to the ground much of the industrial materialism of the recently dead Supercylce Bull Market.

I Have Seen the Future, and it is Bankrupt

2009-11-16T08:01:00.004-06:00

"I looked as hard as I could at how states could declare bankruptcy," said Michael Genest, director of the California Department of Finance who is stepping down at the end of the year. "I literally looked at the federal constitution to see if there was a way for states to return to territory status..."

A state looking to reorganize its relationship to the central government? Interesting.

I had expected more secessionist tendencies at this point than we have seen. Granted, we have a long way down to go, but an initial desire for Uncle Sugar to take back California as a territory (and, I assume, take on its finances? I am not versed on how territories operated. Hmmm) to make all that ooky debt go away and save California from her self-inflected pain is not the craziest thing I've seen come out of their debt crisis.

h/t Calculated Risk

Peak Oil and Rock Music

2009-11-12T08:14:00.007-06:00

The bright men and women over at the Socionomics Institute are well-known for finding relations between measures of social mood and everything from hemlines to movies.

Well, the Peak Oilers have gotten into the game as well with a fascinating chart at Overthinking It that contrasts oil production in the Lower 48 with Rolling Stone Magazine's list of the "500 Greatest Songs of All Time."

The Hubbert Peak Theory of Rock, or, Why We’re All Out of Good Songs
Overthinking It, 23 September 2009

Many rock purists and music snobs (myself included) often lament the quality of most modern pop/rock music. “Music these days is so trite and derivative,” they say. “It’s just been downhill since the 60’s and 70’s. Those were the days.”

A few years ago, Rolling Stone magazine added fuel to the music snobbery fire with its “500 Greatest Songs of All Time” list. Anyone casually paging through the list would notice that the bulk of the list was comprised of songs from the 60’s and 70’s, just like the music snobs always say.

I, however, wasn’t content with the casual analysis. So I punched the list into Excel, crunched some numbers, and found an interesting parallel between the decline of rock music quality and, of all things, the decline in US oil discovery and production...

Peak oil. This huge bear market about to roll over. Now, song depletion. Rough times ahead for sure...

h/t The Oil Drum

Collapse

2009-11-09T13:50:00.005-06:00

In a sign (to me) that despite what the algos and taxpayer-financed banksters that are helping drive this rally higher think, mass social mood is decidedly negative and becoming darker every day.

That someone with Mike Ruppert's history could get so much favorable press and that this documentary could score as well as it did in Toronto screams out that something big is coming.

There is a growing audience out there is ready for ugly truths, for hard times, for disaster, for a Collapse.

Congrats to Mike.

Violence on the March

2009-11-09T08:27:00.003-06:00

Yes, there will always be wars and rumors of wars. That said, it only takes a few percentage points more worth of violent crime to cost society huge amounts in terms of lives, costs for security, militarization of the police, draconian laws that wind up crushing the economy through restrictions and taxes.

The media is going to play the "lone gunman" refrain for quite awhile, I think, but there is more to it. Much more. Social mood is turning and Lind's Boomerang Effect thesis gives a dark foreshadowing of what we face in the coming years...

Seattle police: Suspect in slaying of officer is 'lone domestic terrorist'

(CNN) -- A suspect in the shooting of a Seattle, Washington, police officer is also believed to be behind the bombing of four police cars, Seattle Assistant Police Chief Jim Pugel said at a press conference Saturday.

Christopher Monfort, 41, remained hospitalized in serious condition after being shot by officers during a confrontation Friday...

...Police named Monfort as a suspect in the Halloween night killing of Officer Tim Brenton, who was shot while sitting in his patrol car. A student officer was injured in the attack.

Investigators also suspect Monfort in the October 22 arson of four police vehicles with homemade explosives, Pugel said...

...Investigators found improvised explosive devices and two weapons, including a military assault rifle, inside Monfort's apartment, Pugel said. The suspect's car had not yet been searched....

Note how they are referring to Monfort as a terrorist - not a crazy gunman.

And let's not forget the potential for violence on a larger scale. This is almost certainly the tried and true ploy of whipping up a war frenzy to distract from problems at home, but it bears watching:

Chavez steps up Colombia war talk
from the BBC
Venezuelan President Hugo Chavez has urged his armed forces to be prepared for possible war with Colombia amid growing diplomatic and border tensions.

...Venezuela blames the tension with its neighbour on closer military ties between Colombia and the US.

Colombia says US forces are there to help in the fight against rebels and drug traffickers.

"Let's not waste a day on our main aim: to prepare for war and to help the people prepare for war, because it is everyone's responsibility," Mr Chavez said during his TV and radio show Alo, Presidente.

Mr Chavez has also ordered 15,000 troops to the border, citing increased violence by Colombian paramilitary groups.

The BBC's Jeremy McDermott in Bogota, Colombia, says that normally such declarations would not cause alarm, but because of the current tensions there are fears of a possible spark on the border which could lead to further violence...

Must Reads

2009-11-06T13:53:00.002-06:00

John Robb has a new set of links that are all must-reads, in my opinion. Take a few minutes and check them out.

For those of you keeping tabs on the building anger and making notes for the future show trials, pay special attention to the story about how Goldman Sachs got more H1N1 vaccine doses than Lenox Hill Hospital in New York.

How can these bankster playerz be so blind? This is pouring gasoline on dry tinder and dancing on the woodpile, lit matches in hand kind of stupid.

Some Good News

2009-11-05T09:37:00.002-06:00

Good news on the innovation front. Another example of the vast potential to blow open the doors of innovation during the coming Bear Market. Lot's of smart men and women out there doing big things. Fun to see advances in a "market" that has always been dominated by government structures.

Rocketeers Win $1 Million in Lunar Lander Contest
By Tariq Malik, Managing Editor, space.com

A California-based team of engineers has snagged a $1 million NASA prize by winning a pitched competition to fly homemade rockets on mock moon landing missions.

Masten Space Systems of Mojave, Calif., successfully flew its rocket Xoie (pronounced Zoey) twice within a set time limit to qualify for the top Level 2 prize in the Northrop Grumman Lunar Lander Challenge, a NASA-sponsored contest to build mock lunar landers.

The Masten team beat longtime front-runner Armadillo Aerospace, a Texas-based team led by video game developer John Carmack, with precision flying on Oct. 30 that gave their Xoie vehicle the best landing accuracy of the multi-month competition. An award ceremony is set for Thursday in Washington, D.C....

There is much "doom" on the horizon for a lot of entrenched elites and interests. It certainly isn't all "gloom" though.

A Week of Free Planning and Investment Resources

2009-11-04T13:27:00.003-06:00

Elliott Wave International is hosting another "Free Week" and giving total access to their financial forecasting products for the next full week. These are not "teaser" reports, but the same stuff they charge hundreds of dollars to access. Most of you already take advantage of their work, so you know the score. If you have not taken advantage of EWI products before, now is the time.

Caveat: The usual - I am an EWI affiliate. If you sign up for the free EWI Club then I get a small credit, same if you buy a subscription. If you do not agree with this or find it too commercial or offensive, then please go ahead and go directly to the Elliott Wave International site (instead of clicking a link from my blog) and access Free Week from there. This information is too important to ignore - especially at this juncture in the financial markets. Take advantage of this offer, whether I get credit or not. Yes, in my opinion, arming yourself with this information is too important to get caught up in worrying about who gets credit for what and how.

For those skeptical of using the Wave Principle to help model the future, now is a time to stress test it for yourself.

From EWI:

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Individuals Swimming in the Mass Mood

2009-11-03T08:08:00.008-06:00

Here at FutureJacked, we burn many a byte discussing the nature of "mass mood" or "social mood" and the huge waves that, according to the socionomics model, propel humanity along the herky-jerky path of excess and retrenchment that can be mapped out using the Wave Principle.

Theory and the many useful action items that can be derived from that theory aside, always remember that the individual matters most. The individual can wake up a bit and recognize his or her situation, he or she can estimate what the Crowd is doing and which particular cliff that Crowd is rushing towards.

And the individual can act.

Whether it is a Jewish family exiting Germany in the mid-1930's with diamonds sewn in the cuffs of their clothing or individuals making the decision to act in the face of rampant violence and establish some sort of civic peace or whether it is a man who sees financial madness about him and chooses to exit before the inevitable crash - individuals can make choices and act in the face of this creepy fog known as mass mood and they can pave the way for a brighter future.

Well, as the very bright mind that calls himself the Epicurean Dealmaker reminds us, individuals can also look out over the terrain and see the world they have helped create, the world in which they have thrived, being torn down by those they regard as mob-driven fools - and they can make a different type of decision. These individuals can decide that if regulators and demagogues want to burn down their world - finance, in this case - then why not pour gasoline over the most explosive parts of the system and drop a match on that son of a bitch.

Character Study
by The Epicurean Dealmaker

I have argued elsewhere at length that the bulk of commentators and regulators confronting the Panic of 2008 and its aftermath put far too much emphasis on the supposed causal effect misaligned compensation incentives had on these events. While these no doubt added to the problem in some instances, for the most part the focus on banker pay is poorly judged. Some of this error can be laid at the foot of natural envy, but some of it can be attributed to a fundamental misreading and simplification of the investment banker's character...

...These people are dangerous because they are smarter than you, because they are smarter than any regulator likely to be sent to control them, and because they hold in their hands the map and the controls to the vast and intricate system of pipes and valves which undergirds the global economy. Give them any reasonable set of legal and regulatory constraints—more stringent than the recent past, by all means, I implore you—and they will happily adapt and innovate around them in the future. Push them, and box them in, and reinstate Glass-Steagall if you must: they will grumble, but they will get over it.

But can you imagine what would happen if you pressed them too far? If you tried to turn the entire financial industry into a bunch of unionized, rule-bound clerks? These are personalities who do not go gentle into that good night. All you would need would be for one or two of them to decide they would rather watch the world burn than crawl into a hole.

And believe you me, you do not have enough water to put out that fire...

I might take issue at how much smarter some of these Wall Street playerz are than me, especially if you were to recall the atrocious state of underwriting that they helped foster in their psychopathic focus on obtaining riches and outscrewing the competition - but I will totally concede that there are many genius SOB Wall Street playerz who are feeling the pinch and all it would take would be a few to decide they wanted to pull the temple down with them, crushing their "enemies" to death along with themselves.

Mass mood is darkening. Very intelligent men and women who lord over the nexus of finance that allows the division of labor that keeps 300 million Americans alive and kicking to function are being pursued as criminals for behavior many of them regard as totally legal. All it would take is one or two to succumb to the anger and divisiveness that negative mass mood encourages to have ourselves a good old-fashioned market shitstorm.

Just a thought. Take the Epicurean Dealmaker seriously. He is in tune with the mood of the Wall Street playerz.

It also makes you wonder how in the hell we allowed ourselves to be boxed into a system in which all it takes is some incompetent underwriting and a few years of massive liquidity injections to put the whole system of finance, production and distribution at risk and at the mercy of maybe less than 100 individuals on Wall Street. Shit people, when we design nuclear reactors we always make sure the system is self-correcting, easy to shut down and does not allow for individual error to lead to catastrophic meltdown or a major reactivity event. You'd think that we would regard our system of finance with at least as much respect.

Socionomics: Nonfiction Psychohistory

2009-11-02T12:56:00.006-06:00

For you SF fans out there, Asimov's psychohistory concept is a compelling vision of what a discipline such as socionomics might some day provide.

For those of you just wanting a way to more accurately chart the murky waters of the coming dark days of the Great Bear Market, socionomics can at least provide you with the tenor of the coming times and a method of judging when to pull back and later when the time is right, what to invest your time and resources into - and why.

As an example, take a look at this graphic from the November issue of the Elliott Wave Financial Forecast:

Courtesy EWI, used with permission

Goldman is already becoming the scapegoat (and with very good reason, I might add) for the coming decline. Make sure you don't become collateral damage - either through ruined investments, ruined careers or dependence on financing from outfits like Goldman Sachs. Socioniomics gives a framework to explain what is coming and at least provide you with the kinds of events that will decorate that chart twenty years from now. Extrapolate this to other industries and you begin to see the value of the practice.

If you are in investment banking, this should give you pause. This young Bear Market we find ourselves in will be of an order of magnitude more intense - and that means a more intense reaction to High Finance and a correspondingly worse fallout.

If you are into investigative journalism, or aspire to producing documentaries or are wondering what professions to enter into, that graphic tells a different tale.

Disintermediation and the Bear Market

2009-10-28T08:33:00.005-06:00

Looking ahead to survival strategies when the Bear rears its vicious head again, the following story - and especially the headline - got my attention:

DIY Laser Market Exploding, Cosmetic Surgeons Not Happy
by Alexis Madrigal, Wired Science Blog

Want to get rid of some unsightly hair, but don’t want to spend the big bucks for electrolysis or a laser clinic? Now, you can buy your own laser and do it yourself.

And people are...

...Other cosmetic procedures appear to be taking place at home, despite dubious legality. One website, discountmedspa.com purports to sell its clients Botox, which is a prescription drug, over the internet. Wired Science was able to proceed through the order form on the website up to the method-of-payment details without being asked for a prescription...

Laser tech (applications from secure communications to medical uses to entertainment) and Biotech (from "fabbing" chemicals and even materials using biological reactors to homebrew medicine to all the potential horrors of bioterrorism) and all the massive leverage you get by using microchips to give dumb machines "brains" - it is has been eroding competitive advantages for years and in my opinion, the pace will only quicken as times grow tougher.

We in the West have been wealthy enough and secure enough to ignore the vast potential to hack these now-common technological advances for fun, profit and survival. We haven't needed to. It is hard to learn to crack code and it takes work to cook up your own home system to run a drip-irrigation system for an in-home greenhouse to supplement your food supply and we haven't needed to hack microwave ovens to build weapons to fend off mob attacks.

But the potential is there.

The U.S. has a vast pool of talent in technology and a deep and rich history of tinkerers and home inventors. Much of that talent is currently sedated by internet porn, teevee and texting, but when the collective "we" wake up from our stupor and that percentage of the population that loves to tinker and fix and invent bumps up a few percentage points - then an already weakened corporate economy is going to be eaten up from below by black market products, local "unauthorized" production sites and all sorts of violations by what is currently referred to as intellectual property law.

The guilds have fallen, one by one, to the disintermediation that technology affords the common folks. As more and more turn their talents to using what they have on-hand to survive and thrive, watch for a huge hole to be blasted in current property laws, patent laws and the current methods of deriving income from licensing and sales. This has been coming for a long time and many are aware of the potential. That potential energy is going to be converted to kinetic energy as the Bear slashes away at the complacency induced by the old system.

Figure out where you are in the chain of production. Look at how you might get your butt disintermediated. Take action.

Low Level Minions Always Suffer First - and Worst

2009-10-27T14:18:00.005-06:00

UPDATE: Mexican citizens are taking direct action as well - and kicking things up a notch.

Note that it was not Angelo Mozillo getting the vigilante treatment, nor any Wall Street Bankster or Goldman-Sachs part-owner of the Executive Branch. It was a couple of small time scam artists or, if not outright scammers, then no-results paper-pushers who were on the receiving end of this outburst:

5 charged with beating, robbing loan agents
By Baxter Holmes, Los Angeles Times

A La Cañada Flintridge couple trying to save their home from foreclosure were arrested along with three others on suspicion of beating, torturing and robbing a pair of loan modification agents they believed had done nothing to help them rescue the residence.

Daniel Weston and Mary Ann Parmelee, both 52, allegedly sought mortgage assistance from Lamond Dean and Luis Garcia, two loan modification specialists, according to the Los Angeles County district attorney's office.

Authorities said the homeowners thought agents had taken their money and done nothing to help them.

On Oct. 20, the agents were lured to a meeting in Glendale where Weston and another man, Gustavo Canez, 36, allegedly beat and robbed them, prosecutors said.

Authorities said a handgun and wooden knuckles were used in the attack...

This is the ugly tip of the iceberg, in my opinion. I've said before - read up on the French Revolution if you want a flavor of what is coming.

Also, always keep in mind that the key elites are rarely savaged at first. The low-level flunkies or truly innocent minions (cops on the beat, bureaucratic functionaries, code enforcement agents, etc.) are out there, exposed to the wrath of the mob when social mood turns against order and the old system.

If you or a loved one serve in some capacity like that, just be careful. Explosions of anger, especially mob anger, won't be a reasoned affair, complete with due process and civil manners. The dam is breaking apart. This is the just the early flotsam that is visibly breaking loose. The whole thing is primed to come down. I don't know when, but I do think it will be catastrophic when it goes.

Hope

2009-10-26T08:36:00.002-06:00

"... Perhaps it's time to redefine "hope" in the greater social sense of the word. To me, hope is not synonymous with "wishes fulfilled." In fact, hope should not be about wishing at all. Hope should be based on confidence that the individual or group is reliably competent enough to meet the challenges that circumstances present. Hope is justified when people demonstrate to themselves that they can behave ably and bravely. Hope is not really possible in the face of patent untruthfulness. It is derived from a clear-eyed and courageous view of what is really going on. I don't think that defines any of the behavior in the United States these days. We've become a self-jiving nation intent on playing shell games, running Ponzi schemes, and working Polish blanket tricks on ourselves..." - James Howard Kunstler

Another One Suicided

2009-10-26T07:48:00.003-06:00

I'm going to have to start a spreadsheet if these big money playerz keep dropping. I'm sure it was natural causes, but the trend is not their friend. If I am State Farm or some other insurer, I may have to raise my rates on high net work individuals...

Death of Madoff Friend Raises Questions
from The Deal (a must-read every day, by the way, FJ)

Florida investor and philanthropist Jeffry Picower, alleged to have extracted billions dollars in his long time friend Bernard Madoff's Ponzi scheme, died Sunday after he was found at the bottom of his swimming pool, according to local reports. Palm Beach police are investigating the death as a drowning, but have not ruled out anything on the cause of death. The former New York lawyer and accountant had been a friend of Madoff for decades...

At least he wasn't suicided out of a window. And speaking of that creepy/odd/nothing-to-see-here death (and the one from the same building a few months back) - I had considered a gig with IAEA last year and would have been working in an office near where the CTBT guys are. Interesting. I wonder what his computer systems were picking up with CTBT's massive monitoring network?

These deaths will probably wind up being either from natural causes in Picower's case, to a tragic suicide or criminal action in Mr. Hampton's case. That said, odd things seem afoot in the world of finance and in the typically staid world of nuclear arms control.

Satire, the Snarky Cousin of Anger

2009-10-23T07:48:00.005-06:00

Laugh or cry. You choose.

Original FT link

"...It's nice to know that no matter how stupid and incompetent I am, it's not going to make any difference..."

h/t zerohedge

Yet More Anger

2009-10-21T14:15:00.003-06:00

When Mr. Ratigan got his own teevee show, I expected more of the same, maybe not quite a Crameresque comic opera, but it seems like he has picked up on the anger and death-to-Goldman-Sachs meme that is spreading quickly:

Visit msnbc.com for Breaking News, World News, and News about the Economy

"Culture of corporate communism" - it has a catchy ring.

More to come, I'm sure.

h/t zerohedge

Dancing on the Precipice

2009-10-19T08:48:00.004-06:00

"[Primary] Wave 2's peak will be the last time that society feels this optimistic for years to come." - R. Prechter, Elliott Wave Theorist, October 18, 2009

Know that we are social creatures, swimming in a sea of mass mood and complex social interactions. The plunge is there, just beyond our fingertips. Soon it will embrace us with the wrenching grasp of a Grizzly.

Remain aware that you do have the free will to act independently of the herd - though you can still be trampled through bad luck or poor planning. Hold this thought fast in your mind in the coming years - as ugly and angry as the times will become - you can act, you can create, you can make things happen, for good or for ill. These will years for serious actions and serious behavior. Glitz, glam, shallow foolishness - they will be present in abundance, but the easy way will not be the path for you.

Times of crisis allow for new directions in society. Be one of the independent actors pushing for a better world. And if you must move with the mob, well, move fast and make sure that if you are among those who would rise up against the king, make sure you strike him down...

The Book on the Meltdown

2009-10-14T10:41:00.002-06:00

I'm passing along an offer from Elliott Wave International. They have released a 2nd edition of Conquer the Crash. This book was immensely influential on me when the original version came out and because I think it saved me from a lot of mistakes, I have decided to pass along the EWI sales offer.

Note: I am not an Amazon or B&N affiliate, so I get no credit from book sales. This is an FYI only - an FYI I think you should consider seriously.

From EWI:

Mark Hulbert's Sept. 11, 2009, column for MarketWatch.com says, Robert Prechter "came the closest … to forecasting what was about to take place." One thing the noted financial columnist left out was that many of Prechter's forecasts still lie in the future. The long-awaited second edition of Prechter's bestseller, Conquer the Crash, is finally here! Prudent investors should read his prescient insights, what he believes is still ahead and what you can do to protect your wealth today. Learn more about the special pre-order offer for Robert Prechter's bestseller,Conquer the Crash, Second Edition.

Greetings,

Today's financial and economic tribulations were a long time in the making. Many people ask, "Why didn't someone see it coming?"

But a New York Times bestselling book did see it coming. More than 100,000 people read it in time to protect their wealth.

They read this about real estate:

What screams 'bubble' – giant, historic bubble – in real estate today is the system-wide extension of massive amounts of credit to finance property purchases.... Many people have been rushing to borrow the last pennies possible on their homes. They have been taking out home equity loans so they can buy stocks and TVs and cars and whatever else their hearts desire at the moment. This widespread practice is brewing a terrible disaster.

And this about stocks:

...the number one precaution to take at the start of a deflationary crash is to make sure that your investment capital is not invested in stocks, stock mutual funds, stock index futures or any other equity-based investment.

About Fannie Mae and Freddie Mac:

Investors in these companies’ stocks and bonds will be just as surprised when [Fannie and Freddie's] stock prices and bond ratings collapse. Most rating services will not see it coming.

About junk bonds:

Don't think you will be safe buying bonds rated BBB or above. If you have invested in municipal bonds, consumer debt, real estate debt, junk bonds or anything other than top-grade paper, sell it at today’s lofty prices.

All these observations are from Robert Prechter's Conquer the Crash, first published in early 2002, when the Dow was above 10,000 and the financial world was partying around-the-clock. Fast forward to today: The average U.S. homeowner has suffered a decline of 30% to 40% in property value. Stocks and commodities had their biggest fall since 1929-1932. Fannie Mae is a zombie corporation under the government’s protection.

If Prechter thought a whole new book would help, he'd have written one. But Conquer the Crash is a book-length forecast that's still coming true-- only some of the future has caught up with the specific predictions he published back then. There is much more to come. And that means more danger but also great opportunity.

The same authorities who said "the worst can't happen" now claim that "the worst is over." That's one of the many reasons why Prechter is choosing now to put out a second edition of Conquer the Crash.

Conquer the Crash, Second Edition, offers you 188 new pages (480 pages total) expanding Prechter’s unique deflationary argument and escorting the reader through the stock market’s manic climb to the 2007 peak. (If you think you remember this period, wait till you read Prechter’s description.) And it still includes all the original forecasts and recommendations that make the book as compelling and as relevant as the day it published.

In every disaster, only a very few people prepare themselves beforehand. Think about investor enthusiasm in 2005-2008, and you'll realize it's true. Even fewer people will be ready for the soon-approaching, next leg down of the unfolding depression.

Prechter warns that the doors to financial safety are closing all over the world. Prudent people need to act while they still can.

Out of the Ashes

2009-10-13T15:52:00.006-06:00

For those of you following this blog over the years (and the growing number of new readers), we’ve pondered a variety of scenarios on how this enormous Potemkin Village of brain dead finance, corrupt politics, hypersensitive factions in government and society, as well as the gutting of household balance sheets will handle the coming conflagration of anger, fear and default.

The short version: badly.

As we scenario plan our way up to the edge of the abyss of the Great Collapse, dystopias abound.

Recalling Nietzsche’s warning to those who stare too long into the abyss, let’s raise our eyes over the yawning chasm into which the hopes and delusions of an entire culture raised up in the warm sunshine of a Grand Supercycle Bull Market will plunge, screaming, and look towards that undiscovered country where those of us that survive the coming decade may find ourselves.

The Challenges

What kind of society will emerge from the hordes of dropouts that will have chosen, or been forced, to go off the grid, to become vagabonds, to go bando (and not this kind of bando, brought to my attention by WL)?

What is the “art of the possible” in working with existing local/county/state government structures to provide some minimal level of services when states and localities will be functionally bankrupt?

What is the nature of your local government? By that I mean, if you and your neighbors team up to install water catchments or move in to “farm” park areas or take over maintenance of abandoned houses – how will the Sherriff’s department or the local cadre of inspectors and enforcement agents respond?

Many of the highest-growth areas in the United States are in formerly “extreme” environments, such as Phoenix, Southern California, the Old South, etc. Without cheap energy and cheap water, how sustainable are those areas?

The fractional reserve system in place since the founding of the Old Republic and its solidification under the Federal Reserve system has required continuous, solid growth for it to thrive. We are entering a long, deep bear market. Can fractional reserve banking survive a long period of slow to no growth? What can replace it?

What sorts of big decisions by entities like the U.S. Armed Forces, FEMA, state National Guards, etc. will be made in the heat of the moment that could later be solidified into ongoing social structures? I use the example of the decay and eventual collapse of the Western Roman Empire – numerous decisions were made, allowing for legions and auxiliaries to draw upon the locals for food and supplies, to house them, etc. that eventually morphed into European Feudalism.

There will be thousands more – everything from the stresses inherent in growing more food locally, to the types of militias that will spring up in response to the waves of violence that are coming our way, to attitudes of the returning soldiers and marines when the U.S. can no longer fund wars in Iraq, Afghanistan and elsewhere (hint – they are already angry and they won’t, in general, be fans of civilians).

Some Assumptions

I will make the following assumptions. Many, especially strict Peak Oilers will take issue with some of the technological assumptions probably. I am going on the assumption that the human “death wish” is way overblown and, once the initial die-off occurs, there will be plenty of motivation and resources available for an intermediate “age” where we can use much of our current technology to sustain and eventually propel a new cycle of growth.

The initial die-off will consume the most vulnerable, especially the elderly, as Big Pharma products become tough to get due to budget constraints and supply chain disruptions – this will amount to up to ten million people in the U.S. over an 18 month period, once Primary Wave 3 (per the current EWI count) arrives in force
The banking and finance system as we have known it will be shattered, along with the stock/commodity/derivative investment “industry”
The U.S. government will default on its debt, converting all short term notes to 30 year bonds, forbidding any transfer of monies offshore and renege on many social “entitlements”
Violence against U.S. interests, pipeline bombings, natural depletion of wells, anti-U.S. sentiment and eventually the collapse of the dollar will make access to inexpensive oil (from Saudi Arabia, Iraq, Mexico, Venezuela, et al) prohibitive. The U.S. still produces significant amounts of oil and natural gas, but not enough to provide for the vast petrochemical complex, the ag sector and our car-addicted nation. The supply chain will suffer greatly. Harvests and food distribution will suffer as well. Get ready to eat a lot more local produce. “Grow your own” will take on a whole new, and urgent, meaning
Most currently illegal “drugs” will be legalized
Several states will attempt to secede during the Great Collapse
Ethnic violence will polarize many communities
Local violence will increase. Depending on the part of the country you are in, the reaction will be either very strict gun control and regimentation of society by police and paramilitary forces, or a proliferation of personal carry options for handguns and firearms in general as well as a rise in local militias
Large segments of the population will “check out” in the early stages of the crisis and never quite recover. They will not be able to mentally handle the vast changes in store for us all. I think a lot of this will be focused in the white collar “work” force
All kinds of motivated individuals will quickly begin leveraging technology and playing around with “open source” technologies – and breaking currently proprietary codes open for use. During the crash phase, the true creative destruction that computer processing allows will be felt in force as businesses find ways to bootstrap codes and create new ways for systems to work together – without all those pesky licensing fees imposed by big, centralized corporations
Corporations themselves may come under attack as a structure for deploying capital. We could see a reversal of the Supreme Court cases that made corporations such a force during the latest Grand Supercycle Wave III up
Walls, fences, hedges, etc. will make a big comeback, both for local protection against non-military types of threats, as well as part of a psychological reaction to the mass wave of negative mood
Many formerly very wealthy families will have been persecuted during the Great Collapse and much of their land and property redistributed during the revolution phase
Whether from lack of funds, strategic blunder or corruption that eats away at the ability to respond to adversity, the U.S. military will suffer and tremendous setback in either Iraq or Afghanistan. A possible scenario would be an attack on Iran that leads to a backlash in Iraq that isolates U.S. forces for weeks on end, leading to major casualties and possibly withdrawals from some bases. The ongoing budget crisis on top of military setback leads to major withdrawals from most U.S. bases worldwide

This is just a sampling. I think we are in for quite a ride, folks.

Out of the Ashes

Society and culture springs up amongst groups of humans to meet the many challenges we face when dealing with a hostile and brutal world. All eco-ninny crap aside, the natural world is meaner than the streets of Detroit and harsher than the most radical wingnut. We’ll get to re-learn all the old wisdom that serves as the bedrock for strong cultures and build up a new society when the ashes finally settle about us and the smoldering coals die down in the ruins.

The rebound will come, limping out of the darkness of war and poverty.

A society wracked by polarized politics, war overseas, civil war, riots, famine and disease finally finds its feet somewhere around 2017 - 2020. Much has changed in the intervening years.

The borders of the United States have changed, possibly radically. Portions of the former U.S. Southwest have been sheared off to form the quasi-state of Aztlan are not officially recognized as having been lost, but the facts on the ground prove otherwise. Negotiations continue with the Kingdom of Hawai’i, mainly over reparations to the few Anglo survivors of the reinstitution of the kapu system and its zealous enforcement by vigilantes lead by a former UFC champion. Alaska is little more than a series of city-states worried about piracy, with the north slope little more than a series of corporate fortresses guarding the oil production facilities.

What remains of the Union after the Second Constitutional Convention is more akin to the government of the Articles of Confederation – a thin patina of federal governance covering an increasingly vital group of states and free cities.

Some of the states, especially those nearest the smoking ruins of Washington, D.C. – where rebuilding efforts will be ongoing for another decade – and still in reach of the few remaining active Army Divisions have turned to a regimented solution to the troubles. The federal capital shifts between Atlanta in the winter and New York City in the summer, in an attempt to keep the Original 13 stitched together more tightly than the rest of the country west of the Appalachians.

Corporations run most public services in the Original 13. Public co-ops, set up in response to abuses by the corporate entities form a counterbalance in local safety nets and provide for open markets and private money that is backed by agricultural commodities and exchangeable with other co-ops up and down the East coast. The corporate campuses which rose up in the early days of the Great Collapse are no longer Fort Apaches built up to control local resources or protect corporate assets. Some are dwindling as there is no longer a mass “consumer” to profit from. Others, which have managed to secure rapid and secure transportation networks via shipping, air and heavy-lift dirigible thrive and expand, learning to work in a multi-currency and barter world. New currencies have arisen, but most are shunned. After the Great Inflation of 2012, trust in paper money will take decades to rebuild. Local property taxes have been beaten back to allow for small-holders to survive on small plots of land and not be evicted for lack of payment. Local governments have become creative and are allowing payment in kind via hours of service to the community, acceptance of agricultural products at a fixed rate and other creative means of serving their public, not acting as a parasite on it.

Other states, especially those west of the Mississippi were forced by necessity to let the locals devise solutions to their problems. The Second American Revolution was particularly fierce in the Midwest and many major landowners suffered greatly. The vast holdings of the late Ted Turner are still being parceled off as part of the New Frontier program and a lot of former white collar workers are still suffering to learn how to farm and ranch, even with the suite of technological tools and the re-education cadres assigned to assist them.

The Northwest, especially west of the Rockies, is a sea of experimental communities, armed camps and bustling cities. Localized manufacturing has taken off around the world, dampening shipping of manufactured goods to near non-existence. Agricultural products are spurring the rebirth in globalized trade and specialty items are again flowing to Japan, Singapore and the city-states along the Chinese coast. Seattle has rebounded from the early rioting that shook and, along with Vancouver, is serving as a hub of entrepreneurial efforts in North America. Most of these are focused on open-source technology systems to leverage the new wave of local manufacturing operations.

Life is harder for most people, but in many ways, more fulfilling. The “back to the land” movement imposed by most of the state governments has weeded out the weak and incompetent. Former tax accountants and social service administrators are now learning to intensively cultivate the 50 acres deeded to them during the Great Collapse as part of the efforts to cut urban populations in half.

Reclamators are still thriving, harvesting the copper, aluminum, steel and brick from long-abandoned strip malls and office parks. They still come up against armed bands of Greens, who fight to keep vast areas in a “state of nature”. Large battles happen all up and down the Mississippi River valley as river transport has returned to prominence, but the vast network of levees and ditches fell into disrepair during the Collapse and swamplands and cypress forests have reclaimed hundreds of thousands of acres. Much of Memphis, Tennessee, is an urban waterworld, a wet wasteland home to gangs and river pirates that prey on the increasing shipping that plows up and down the Mississippi.

The tech clubs are still important features in communities, though some of the passion has flamed lower since the recovery began. The huge wave of innovation that sprung up during the Revolution and the Collapse is now in the consolidation phase and ability to efficiently manufacture goods locally, as well as to process almost any plant material into edible substances is well-established. With the great corporations broken, the networks of co-ops have stepped in to reclaim America’s reputation as an agricultural and manufacturing powerhouse.

Transportation is still expensive. More and more people live more and more of their lives in a 30 mile radius of their towns. Much focus is still placed on local clubs and service. Local sports teams are beginning to travel again, though the great baseball and football stadiums are still in the hands of local Committees of Public Need and still serve as huge gardens for local produce – vast green bowls of fruits and vegetables that still serve as monuments to the early uprisings against the Man.

Education is widespread and vibrant. The educational system is a tattered shell of the institution it once was. The proliferation of electronic delivery of lectures, of the ability of skilled teachers to build their own content and deliver it to students, of educational forums and online resources have shattered the high school-college model prevalent up until the Great Collapse. Efforts are underway to codify much of this learning and the ossifying efforts of committees to sanction some learning and not others are still strong, though not yet ascendant.

Careers are a thing of the past. Many communities provide large tracts of allotments for local production of food supplies – memories of the Great Famine of 2013 die hard. Local taxes have withered to payment in kind or volunteer service and many people can go weeks without using money to exchange for goods. Much of this is community based and many live in fear of being run out of town – and cut off from the community’s supply of food, medical attention and support. Large areas are still lawless and vagabonds and drifters are not looked upon favorably.

Mercenaries still control the Port of New Orleans, the Port of New York and many of the West Coast ports, extracting taxes to make payments to international bond holders who formed the Gang of Ten back in 2012 to force the U.S. to make good on their treasury obligations. The bombings of the mercenary compounds are few and far between these days and since most don’t worry about foreign commerce, the duties imposed upon good shipped out is just lumped into the general feeling that “they” are still out to get “us,” though the humiliating terms of the Treaty of Dubai are starting to fade a little in the memories of most, though not for former soldiers, sailors, marines and airmen, especially the work crews forced into labor battalions by the U.N. to clean up the radioactive ruins of Tehran.

The empire has fallen. A new day is dawning.

Thoughts?

The country I know best is the U.S., so this “thought experiment” on What Comes Next was focused on the situation in the U.S. For those of you in India, Canada, the U.K., South Africa and the other countries that I get hits from – all I can say is find what applies to your country and take what you can and apply it to your local situation.

This is more of a thought-experiment-in-progress. Please do feel free to point out holes in my assumptions and suggest better alternatives. Many minds make easier lifting of the rubble of the old System that is collapsing on top of us.

Quote of the Day for Monday 12 October

2009-10-12T09:48:00.003-06:00

Good advice from SurvivalBlog:

"The coming years will be difficult ones, globally. If you are at risk of a layoff, then hedge your bets by developing a second stream of income, now. And if you are laid off, do not hesitate. Do whatever it takes to find steady work, even if means moving, or taking a lower-paying job. Don't just wallow in self-pity and draw unemployment insurance. Be proactive and do something!"

Trust Continues to Disintegrate

2009-10-08T10:35:00.003-06:00

Imagine what it will be like six months from now...

Belligerent Bosses: National Study finds Employee Trust Sacrificed in the Financial Crisis
from Resumark Blog

A national study finds bosses use threats and intimidation during the financial crisis. Employees complain of a “culture of fear” and eroding trust.

...Increased belligerent behavior and eroding employee trust are disturbing leadership trends in the financial crisis, according to the study’s researchers, Dr. Ruby Rouse and Dr. Richard Schuttler. Employees repeatedly described threatening communication: “Be thankful you have a job,” “You can be replaced,” “There are lots of qualified people on the street who would love your job.” Such statements remind workers their jobs are on the “chopping block.” According to Rouse, some supervisors seem to purposefully foster a “culture of fear” to maintain control during the financial crisis. “Several people believe employers are using the crisis as an excuse to ‘throw people under the bus,’” she said...

Not to get all "workplace consultant" on you, but once eroded, trust is very hard to recapture in an organization.