Debt Ceiling

A World of Shit

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Aired on the Doomstead Diner on April 26, 2014

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…3- Daily Bizarre Weather Story– Latest is Sandstorms in China, but of course you get the regular 500 year Floods occurring every year, F5 Tornados flattening trailer parks at HFT rates, “Perfect Storms” hitting everywhere from Atlantic City to the Phillipines and HaBoobs bigger than Raquel Welch’s Boobs were before they went saggy…

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Dense Fog Turns into Toxic Smog

Off the keyboard of Jim Quinn

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Published on The Burning Platform on December 31, 2013

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In mid-January of this year I wrote my annual prediction article for 2013 – Apparitions in the Fog. It is again time to assess my inability to predict the future any better than a dart throwing monkey. As usual, sticking to facts was a mistake in a world fueled by misinformation, propaganda, delusion and wishful thinking. I was far too pessimistic about the near term implications of debt, civic decay and global disorder. Those in power have successfully held off the unavoidable collapse which will be brought about by their ravenous unbridled greed, and blatant disregard for the rule of law, the U.S. Constitution and rights and liberties of the American people. The day to day minutia, pointless drivel of our techno-narcissistic selfie showbiz society, and artificially created issues (gay marriage, Zimmerman-Martin, Baby North West, Duck Dynasty) designed to distract the public from thinking, are worthless trivialities in the broad landscape of human history.

The course of human history is determined by recurring cyclical themes based upon human frailties that have been perpetual through centuries of antiquity. The immense day to day noise of an inter-connected techno-world awash in inconsequentialities and manipulated by men of evil intent is designed to divert the attention of the masses from the criminal activities of those in power. It has always been so. There have always been arrogant, ambitious, greedy, power hungry, deceitful men, willing to take advantage of a fearful, lazy, ignorant, selfish, easily manipulated populace. The rhythms of history are unaffected by predictions of “experts” who are paid to spin yarns in order to sustain the status quo. There is no avoiding the consequences of actions taken and not taken over the last eighty years. We are in the midst of a twenty year period of Crisis that was launched in September 2008 with the worldwide financial collapse, created by the Federal Reserve, their Wall Street owners, their bought off Washington politicians, and their media and academic propaganda machines.

I still stand by the final paragraph of my 2013 missive, and despite the fact the establishment has been able to fend off the final collapse of their man made credit boom for longer than I anticipated, they have only insured a far worse outcome when the bubble bursts:

“So now I’m on the record for 2013 and I can be scorned and ridiculed for being such a pessimist when December rolls around and our Ponzi scheme economy hasn’t collapsed. There is no disputing the facts. The economic situation is deteriorating for the average American, the mood of the country is darkening, and the world is awash in debt and turmoil. Every country is attempting to print their way to renewed prosperity. No one wins a race to the bottom. The oligarchs have chosen a path of currency debasement, propping up insolvent banks, propaganda and impoverishing the masses as their preferred course. They attempt to keep the masses distracted with political theater, gun control vitriol, reality TV and iGadgets. What can be said about a society where 10% of the population follows Justin Bieber and Lady Gaga on Twitter and where 50% think the National Debt is a monument in Washington D.C. The country is controlled by evil sycophants, intellectually dishonest toadies and blood sucking leeches. Their lies and deception have held sway for the last four years, but they have only delayed the final collapse of a boom brought about by credit expansion. They will not reverse course and believe their intellectual superiority will allow them to retain their control after the collapse.”

The core elements of this Crisis have been visible since Strauss & Howe wrote The Fourth Turning in 1997. All the major events that transpire during this Crisis will be driven by one or more of these core elements – Debt, Civic Decay, and Global Disorder.

“In retrospect, the spark might seem as ominous as a financial crash, as ordinary as a national election, or as trivial as a Tea Party. The catalyst will unfold according to a basic Crisis dynamic that underlies all of these scenarios: An initial spark will trigger a chain reaction of unyielding responses and further emergencies. The core elements of these scenarios (debt, civic decay, global disorder) will matter more than the details, which the catalyst will juxtapose and connect in some unknowable way. If foreign societies are also entering a Fourth Turning, this could accelerate the chain reaction. At home and abroad, these events will reflect the tearing of the civic fabric at points of extreme vulnerability – problem areas where America will have neglected, denied, or delayed needed action.” – The Fourth Turning – Strauss & Howe

My 2013 predictions were framed by these core elements. After re-reading my article for the first time in eleven months I’ve concluded it is lucky I don’t charge for investment predictions. Many of my prognostications were in the ballpark, but I have continually underestimated the ability of central bankers and their Wall Street co-conspirators to use the $2.8 billion per day of QE to artificially elevate the stock market to bubble level proportions once again. If I wasn’t such a trusting soul, I might conclude the .1% financial elite, who run this country, created QEternity to benefit themselves, their .1% corporate CEO accomplices and the corrupt government apparatchiks who shield their flagrant criminality from the righteous hand of justice.

Even a highly educated Ivy League economist might grasp the fact that Ben Bernanke’s QEternity and ZIRP, sold to the unsuspecting masses as desperate measures during a crisis that could have brought the system down, have been kept in place for five years as a means to drive stock prices and home prices higher. The emergency was over by 2010, according to government reported data. The current monetary policy of the Federal Reserve would have been viewed as outrageous, reckless, and incomprehensible in 2007. It is truly a credit to the ruling elite and their media propaganda arm that they have been able to convince a majority of Americans their brazen felonious disregard for the wellbeing of the 99% is necessary to sustain the .1% way of life. Those palaces in the Hamptons aren’t going to pay for themselves without those $100 billion of annual bonuses.

Do you think the 170% increase in the S&P 500 has been accidently correlated with the quadrupling of the Federal Reserve balance sheet or has Bernanke just done the bidding of his puppet masters? Considering the .1% billionaire clique owns the vast majority of stock in this corporate fascist paradise, is it really a surprise the trickle down canard would be the solution of choice from these sociopathic scoundrels? Of course QE and ZIRP have impacted the 80% who own virtually no stocks in a slightly different manner. Do you think the 100% increase in gasoline prices since 2009 was caused by Bernanke’s QEternity?

Do you think the 8% decline in real median household income since 2008 was caused by Bernanke’s QE and ZIRP policies?

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Do you think the $10.8 trillion stolen from grandmothers and risk adverse savers was caused by Bernanke’s ZIRP?

Was the $860 billion increase in real GDP (5.8% over five years) worth the $8 trillion increase in the National Debt and $3 trillion increase in the Federal Reserve balance sheet? Was it moral, courageous and honorable of the Wall Street plantation owners to syphon the remaining wealth of the dying middle class peasants and leaving the millennial generation and future generations bound in chains of unfunded debt to the tune of $200 trillion?

My assessment regarding unpredictable events lurking in the fog was borne out by what happened that NO ONE predicted, including: the first resignation of a pope in six hundred years, the military coup of a democratically elected president of Egypt – supported by the democratically elected U.S. president, the rise of an alternative currency – bitcoin, the bankruptcy of one of the largest cities in the U.S. – Detroit, a minor terrorist attack in Boston that freaked out the entire country and revealed the Nazi-like un-Constitutional tactics that will be used by the police state as this Crisis deepens, and revelations by a brilliant young patriot named Edward Snowden proving that the U.S. has been turned into an Orwellian surveillance state as every electronic communication of every American is being monitored and recorded. The Democrats and Republicans played their parts in this theater of the absurd. They proved to be two faces of the same Party as neither faction questions the droning of innocent people around the globe, mass spying on citizens, Wall Street criminality, trillion dollar deficits, a rogue Federal Reserve, or out of control unsustainable government spending.

My predictions for 2013 were divided into the three categories driving this Fourth Turning CrisisDebt, Civic Decay, and Global Disorder. Let’s assess my inaccuracy.

Debt

  • The debt ceiling will be raised as the toothless Republican Party vows to cut spending next time. The political hacks will create a 3,000 page document of triggers and create a committee to study the issue, with actual measures that slow the growth of annual spending by .000005% starting in 2017.

The government shutdown reality TV show proved to be the usual Washington D.C. kabuki theater. They gave a shutdown and no one noticed. It had zero impact on the economy. More people came to the realization that government does nothing except spend our money and push us around. The debt ceiling was raised, the sequester faux “cuts” were reversed and $20 billion of spending will be cut sometime in the distant future. Washington snakes are entirely predictable. I nailed this prediction.

  • The National Debt will increase by $1.25 trillion and debt to GDP will reach 106% by the end of the fiscal year.

The National Debt increased by ONLY $964 billion in the last fiscal year, even though the government stopped counting in May. The temporary sequester cuts, the expiration of the 2% payroll tax cut, the fake Fannie & Freddie paybacks to the U.S. Treasury based upon mark to fantasy accounting, and the automatic expiration of stimulus spending combined to keep the real deficit from reaching $1 trillion for the fifth straight year. Debt to GDP was 104%, before our beloved government drones decided to “adjust” GDP upwards by $500 billion based upon a new and improved formula, like Tide detergent. I missed this prediction by a smidgeon.

  • The Federal Reserve balance sheet will reach $4 trillion by the end of the year.

The Federal Reserve balance sheet stands at $4.075 trillion today. Ben is very predictable, and of course “transparent”. This was an easy one.

  • Consumer debt will reach $2.9 trillion as the Feds accelerate student loans and Ally Financial, along with the other Too Big To Control Wall Street banks, keep pumping out subprime auto loans. By mid-year reported losses on student loans will soar and auto loan delinquencies will show an upturn. This will force a slowdown in consumer debt issuance, exacerbating the recession that started in 2012.

Consumer debt outstanding currently stands at $3.076 trillion despite the fact that credit card debt has been virtually flat. The Federal government has continued to dole out billions in loans to University of Phoenix wannabes and to the subprime urban entitlement armies who deserve to drive an Escalade despite having no job, no assets and a sub 650 credit score, through government owned Ally Financial. It helps drive business when you don’t care about being repaid. Student loan delinquency rates are at an all-time high, as there are no jobs for graduates with tens of thousands in debt. Auto loan delinquencies have begun to rise despite the fact we are supposedly in a strongly recovering economy. The slowdown in debt issuance has not happened, as the Federal government is in complete control of the non-revolving loan segment. My prediction has proven to be accurate.

  • The Bakken oil miracle will prove to be nothing more than Wall Street shysters selling a storyline. Daily output will stall at 750,000 barrels per day and the dreams of imminent energy independence will be annihilated by reality, again. The price of oil will average $105 per barrel, as global tensions restrict supply.

Bakken production has reached 867,000 barrels per day as more and more wells have been drilled to offset the steep depletion rates of the existing wells. The average price per barrel has been $104, despite the frantic propaganda campaign about imminent American energy independence. Tell that to the average Joe filling their tank and paying the highest December gas price in history. My prediction was too pessimistic, but the Bakken miracle will be revealed as an over-hyped Wall Street scam in 2014.

  • The home price increases generated through inventory manipulation in 2012 will peter out as 2013 progresses. The market has been flooded by investors. There is very little real demand for new homes. Young households with heavy student loan debt and low paying jobs will continue to rent, since the oligarchs refused to let prices fall to a level that would spur real demand. Mortgage delinquencies will rise as job growth remains stagnant, leading to an increase in foreclosures. Rent prices will flatten as apartment construction and investors flood the market with supply.

Existing home sales peaked in the middle of 2013 and have been in decline as mortgage rates have jumped from 3.25% to 4.5% since February. New home sales remain stagnant, near record low levels. The median sales price for existing home sales peaked at $214,000 in June and has fallen for five consecutive months by a total of 8%. First time home buyers account for a record low of 28% of purchases, while investors account for a record high level of purchasers. Mortgage delinquencies fell for most of the year, but the chickens are beginning to come home to roost as delinquent mortgage loans rose from 6.28% in October to 6.45% in November. Rent increases slowed to below 3% as Blackrock and the other Wall Street shysters flood the market with their foreclosure rental properties. My housing prediction was accurate.

 

  • The disconnect between the stock market and the housing and employment markets will be rectified when the MSM can no longer deny the recession that began in 2012 and will deepen in the first part of 2013. While housing prices languish 30% below their peak levels of 2006, the stock market has prematurely ejaculated back to pre-crisis levels. Declining corporate profits, stagnant consumer spending, and increasing debt defaults will finally result in a 20% decline in the stock market, with a chance for losses greater than 30% if Japan or the EU begin to crumble.

And now we get to the prediction that makes me happy I don’t charge people for investment advice. Facts don’t matter in world of QE for the psychopathic titans of Wall Street and misery for the indebted peasants of Main Street. The government data drones, Ivy League educated Wall Street economists, and the obedient corporate media propaganda apparatus declare that GDP has grown by 2% over the last four quarters and we are not in a recession. If you believe their bogus inflation calculation then just ignore the collapsing retail sales, stagnant real wages, and rising gap between the uber-rich and the rest of us. Using a true measure of inflation reveals an economy in recession since 2004. Whose version matches the reality on the ground?

 

Corporate profits have leveled off at record highs as mark to fantasy accounting fraud, condoned and encouraged by the Federal Reserve, along with loan loss reserve depletion and $5 billion of risk free profits from parking deposits at the Fed have created a one-time peak. The record level of negative earnings warnings is the proverbial bell ringing at the top.

negative earnings

I only missed my stock market prediction by 50%, as the 30% rise was somewhat better than my 20% decline prediction. Bernanke’s QEternity, Wall Street’s high frequency trading supercomputers, record levels of margin debt, a dash of delusion, and a helping of clueless dupes have taken the stock market to another bubble high. My prediction makes me look like an idiot today. I’m OK with that, since I know facts and reality always prevail in the long-run. As John Hussman sagely points out, today’s idiot will be tomorrow’s beacon of truth:

“The problem with bubbles is that they force one to decide whether to look like an idiot before the peak, or an idiot after the peak. There’s no calling the top, and most of the signals that have been most historically useful for that purpose have been blazing red since late-2011. My impression remains that the downside risks for the market have been deferred, not eliminated, and that they will be worse for the wait.”

  • Japan is still a bug in search of a windshield. With a debt to GDP ratio of 230%, a population dying off, energy dependence escalating, trade surplus decreasing, an already failed Prime Minister vowing to increase inflation, and rising tensions with China, Japan is a primary candidate to be the first domino to fall in the game of debt chicken. A 2% increase in interest rates would destroy the Japanese economic system.

Abenomics has done nothing for the average Japanese citizen, but it has done wonders for the ruling class who own all the stocks. Abe has implemented monetary policies that make Bernanke get a hard on. Japanese economic growth remains mired at 1.1%, wages remain stagnant, and their debt to GDP ratio remains above 230%, but at least he has driven their currency down 20% versus the USD and crushed the common person with 9% energy inflation. None of this matters, because the .1% have benefitted from a 56% increase in the Japanese stock market. My prediction was wrong. The windshield is further down the road, but it is approaching at 100 mph.

  • The EU has temporarily delayed the endgame for their failed experiment. Economic conditions in Greece, Spain and Italy worsen by the day with unemployment reaching dangerous revolutionary levels. Pretending countries will pay each other with newly created debt will not solve a debt crisis. They don’t have a liquidity problem. They have a solvency problem. The only people who have been saved by the actions taken so far are bankers and politicians. I believe the crisis will reignite, with interest rates spiking in Spain, Italy and France. The Germans will get fed up with the rest of Europe and the EU will begin to disintegrate.

This was another complete miss on my part. Economic conditions have not improved in Europe. Unemployment remains at record levels. EU GDP is barely above 0%. Debt levels continue to rise. Central bank bond buying has propped up this teetering edifice of ineptitude and interest rates in Spain, Italy and France have fallen to ridiculously low levels of 4%, considering they are completely insolvent with no possibility for escape. The disintegration of the EU will have to wait for another day.

Civic Decay

  • Progressive’s attempt to distract the masses from our worsening economic situation with their assault on the 2nd Amendment will fail. Congress will pass no new restrictions on gun ownership and 2013 will see the highest level of gun sales in history.

Obama and his gun grabbing sycophants attempted to use the Newtown massacre as the lever to overturn the 2nd Amendment. The liberal media went into full shriek mode, but the citizens again prevailed and no Federal legislation restricting the 2nd Amendment passed. Gun sales in 2013 will set an all-time record. With the Orwellian surveillance state growing by the day, arming yourself is the rational thing to do. I nailed this prediction.

  • The deepening recession, higher taxes on small businesses and middle class, along with Obamacare mandates will lead to rising unemployment and rising anger with the failed economic policies of the last four years. Protests and rallies will begin to burgeon.

The little people are experiencing a recession. The little people bore the brunt of the 2% payroll tax increase. The little people are bearing the burden of the Obamacare insurance premium increases. The number of employed Americans has increased by 1 million in the last year, a whole .4% of the working age population. The number of Americans who have willingly left the labor force in the last year because their lives are so fulfilled totaled 2.5 million, leaving the labor participation rate at a 35 year low. The anger among the former middle class is simmering below the surface, as Bernanke’s policies further impoverish the multitudes. Mass protests have not materialized but the Washington Navy yard shooting, dental hygenist murdered by DC police for ramming a White House barrier, and self- immolation of veteran John Constantino on the National Mall were all individual acts of desperation against the establishment.

  • The number of people on food stamps will reach 50 million and the number of people on SSDI will reach 11 million. Jamie Dimon, Lloyd Blankfein, and Jeff Immelt will compensate themselves to the tune of $100 million. CNBC will proclaim an economic recovery based on these facts.

The number of people on food stamps appears to have peaked just below 48 million, as the expiration of stimulus spending will probably keep the program from reaching 50 million. As of November there were 10.98 million people in the SSDI program. The top eight Wall Street banks have set aside a modest $91 billion for 2013 bonuses. The cost of providing food stamps for 48 million Americans totaled $76 billion. CNBC is thrilled with the record level of bonuses for the noble Wall Street capitalists, while scorning the lazy laid-off middle class workers whose jobs were shipped to China by the corporations whose profits are at all-time highs and stock price soars. Isn’t crony capitalism grand?

  • The drought will continue in 2013 resulting in higher food prices, ethanol prices, and shipping costs, as transporting goods on the Mississippi River will become further restricted. The misery index for the average American family will reach new highs.

The drought conditions in the U.S. Midwest have been relieved. Ethanol prices have been flat. Beef prices have risen by 10% since May due to the drought impact from 2012, but overall food price increases have been moderate. The misery index (unemployment rate + inflation rate) has supposedly fallen, based on government manipulated data. I whiffed on this prediction.

  • There will be assassination attempts on political and business leaders as retribution for their actions during and after the financial crisis.

There have been no assassination attempts on those responsible for our downward financial spiral. The anger has been turned inward as suicides have increased by 30% due to the unbearable economic circumstances brought on by the illegal financial machinations of the Wall Street criminal banks. Obama and Dick Cheney must be thrilled that more military personnel died by suicide in 2013 than on the battlefield. Mission Accomplished. The retribution dealt to bankers and politicians will come after the next collapse. For now, my prediction was premature.

  • The revelation of more fraud in the financial sector will result in an outcry from the public for justice. Prosecutions will be pursued by State’s attorney generals, as Holder has been captured by Wall Street.

Holder and the U.S. government remain fully captured by Wall Street. The states have proven to be toothless in their efforts to enforce the law against Wall Street. The continuing revelations of Wall Street fraud and billions in fines paid by JP Morgan and the other Too Big To Trust banks have been glossed over by the captured mainstream media. As long as EBT cards, Visas and Mastercards continue to function, there will be no outrage from the techno-narcissistic, debt addicted, math challenged, wilfully ignorant masses. Another wishful thinking wrong prediction on my part.

  • The deepening pension crisis in the states will lead to more state worker layoffs and more confrontation between governors attempting to balance budgets and government worker unions. There will be more municipal bankruptcies.

Using a still optimistic discount rate of 5%, the unfunded pension liability of states and municipalities totals $3 trillion. The taxpayers don’t have enough cheese left for the government rats to steal. The crisis deepens by the second. State and municipal budgets require larger pension payments every year. The tax base is stagnant or declining. States must balance their budgets. They will continue to cut existing workers to pay the legacy costs until they all experience their Detroit moment. With the Detroit bankruptcy, I’ll take credit for getting this prediction right.

  • The gun issue will further enflame talk of state secession. The red state/blue state divide will grow ever wider. The MSM will aggravate the divisions with vitriolic propaganda.

With the revelations of Federal government spying, military training exercises in cities across the country, the blatant disregard for the 4th Amendment during the shutdown of Boston, and un-Constitutional mandates of Obamacare, there has been a tremendous increase in chatter about secession. A google search gets over 200,000 hits in the last year. The divide between red states and blue states has never been wider.

  • The government will accelerate their surveillance efforts and renew their attempt to monitor, control, and censor the internet. This will result in increased cyber-attacks on government and corporate computer networks in retaliation.

If anything I dramatically underestimated the lengths to which the United States government would go in their illegal surveillance of the American people and foreign leaders. Edward Snowden exposed the grandest government criminal conspiracy in history as the world found out the NSA, with the full knowledge of the president and Congress, has been conspiring with major communications and internet companies to monitor and record every electronic communication on earth, in clear violation of the 4th Amendment. Government apparatchiks like James Clapper have blatantly lied to Congress about their spying activities. The lawlessness with which the government is now operating has led to anarchist computer hackers conducting cyber-attacks on government and corporate networks. The recent hacking of the Target credit card system will have devastating implications to their already waning business. I’ll take credit for an accurate prediction on this one.

Global Disorder 

  • With new leadership in Japan and China, neither will want to lose face, so early in their new terms. Neither side will back down in their ongoing conflict over islands in the East China Sea. China will shoot down a Japanese aircraft and trade between the countries will halt, leading to further downturns in both of their economies.

The Japanese/Chinese dispute over the Diaoyu/Senkaku islands has blown hot and cold throughout the year. In the past month the vitriol has grown intense. China has scrambled fighter jets over the disputed islands. The recent visit of Abe to a World War II shrine honoring war criminals has enraged the Chinese. Trade between the countries has declined. An aircraft has not been shot down, but an American warship almost collided with a Chinese warship near the islands, since our empire must stick their nose into every worldwide dispute. We are one miscalculation away from a shooting war. It hasn’t happened yet, so my prediction was wrong.

  • Worker protests over slave labor conditions in Chinese factories will increase as food price increases hit home on peasants that spend 70% of their pay for food. The new regime will crackdown with brutal measures, but the protests will grow increasingly violent. The economic data showing growth will be discredited by what is happening on the ground. China will come in for a real hard landing. Maybe they can hide the billions of bad debt in some of their vacant cities.

The number of worker protests over low pay and working conditions in China doubled over the previous year, but censorship of reporting has kept these facts under wraps. In a dictatorship, the crackdown on these protests goes unreported. The fraudulent economic data issued by the government has been proven false by independent analysts. The Chinese stock market has fallen 14%, reflecting the true economic situation. The Chinese property bubble is in the process of popping. China will never officially report a hard landing. China is the most corrupt nation on earth and is rotting from the inside, like their vacant malls and cities. China’s economy is like an Asiana Airlines Boeing 777 coming in for a landing at SF International.

  • Violence and turmoil in Greece will spread to Spain during the early part of the year, with protests and anger spreading to Italy and France later in the year. The EU public relations campaign, built on sandcastles of debt in the sky and false promises of corrupt politicians, will falter by mid-year. Interest rates will begin to spike and the endgame will commence. Greece will depart the EU, with Spain not far behind. The unraveling of debt will plunge all of Europe into depression.

Violent protests flared in Greece and Spain throughout the year. They did not spread to Italy and France. The central bankers and the puppet politicians have been able to contain the EU’s debt insolvency through the issuance of more debt. What a great plan. The grand finale has been delayed into 2014. Greece remains on life support and still in the EU. The EU remains in recession, but the depression has been postponed for the time being. This prediction was a dud.

  • Iran will grow increasingly desperate as hyperinflation caused by U.S. economic sanctions provokes the leadership to lash out at its neighbors and unleash cyber-attacks on Saudi Arabian oil facilities and U.S. corporations. Israel will use the rising tensions as the impetus to finally attack Iranian nuclear facilities. The U.S. will support the attack and Iran will launch missiles at Saudi Arabia and Israel in retaliation. The price of oil will spike above $125 per barrel, further deepening the worldwide recession.

Iran was experiencing hyperinflationary conditions early in the year, but since the election of the new president the economy has stabilized. Iran has conducted cyber-attacks against Saudi Arabian gas companies and the U.S. Navy during 2013. Israel and Saudi Arabia have failed in their efforts to lure Iran into a shooting war. Obama has opened dialogue with the new president to the chagrin of Israel. War has been put off and the negative economic impacts of surging oil prices have been forestalled. I missed on this prediction.

  • Syrian President Assad will be ousted and executed by rebels. Syria will fall under the control of Islamic rebels, who will not be friendly to the United States or Israel. Russia will stir up discontent in retaliation for the ouster of their ally.

Assad has proven to be much tougher than anyone expected. The trumped up charges of gassing rebel forces, created by the Saudis who want a gas pipeline through Syria, was not enough to convince the American people to allow our president to invade another sovereign country. Putin and Russia won this battle. America’s stature in the eyes of the world was reduced further. America continues to support Al Qaeda rebels in Syria, while fighting them in Afghanistan. The hypocrisy is palpable. Another miss.

  • Egypt and Libya will increasingly become Islamic states and will further descend into civil war.

The first democratically elected president of Egypt, Mohammed Morsi, was overthrown in a military coup as the country has descended into a civil war between the military forces and Islamic forces. It should be noted that the U.S. supported the overthrow of a democratically elected leader. Libya is a failed state with Islamic factions vying for power and on the verge of a 2nd civil war. Oil production has collapsed. I’ll take credit for an accurate prediction on this one.

  • The further depletion of the Cantarell oil field will destroy the Mexican economy as it becomes a net energy importer. The drug violence will increase and more illegal immigrants will pour into the U.S. The U.S. will station military troops along the border.

Mexican oil production fell for the ninth consecutive year in 2013. It has fallen 25% since 2004 to the lowest level since 1995. Energy exports still slightly outweigh imports, but the trend is irreversible. Mexico is under siege by the drug cartels. The violence increases by the day. After declining from 2007 through 2009, illegal immigration from Mexico has been on the rise. Troops have not been stationed on the border as Obama and his liberal army encourages illegal immigration in their desire for an increase in Democratic voters. This prediction was mostly correct.

  • Cyber-attacks by China and Iran on government and corporate computer networks will grow increasingly frequent. One or more of these attacks will threaten nuclear power plants, our electrical grid, or the Pentagon.

China and Iran have been utilizing cyber-attacks on the U.S. military and government agencies as a response to NSA spying and U.S. sabotaging of Iranian nuclear facilities. Experts are issuing warnings regarding the susceptibility of U.S. nuclear facilities to cyber-attack. If a serious breach has occurred, the U.S. government wouldn’t be publicizing it. Again, this prediction was accurate.

I achieved about a 50% accuracy rate on my 2013 predictions. These minor distractions are meaningless in the broad spectrum of history and the inevitability of the current Fourth Turning sweeping away the existing social order in a whirlwind of chaos, violence, financial collapse and ultimately a decisive war. The exact timing and exact events which will precipitate the demise of the establishment are unknowable with any precision, but there is no escape from the inexorable march of history. While most people get lost in the minutia of day to day existence and supposed Ivy League thought leaders are consumed with their own reputations and wealth, apparent stability will morph into terrifying volatility in an instant. The normalcy bias being practiced by an entire country will be shattered in a reality storm of consequences. The Crisis will continue to be driven by the ever growing debt levels, civic decay caused by government overreach, and global disorder driven by resource shortages and religious zealotry. The ultimate outcome is unpredictable, but the choices we make will matter. History is about to fling us towards a vast chaos.

“The seasons of time offer no guarantees. For modern societies, no less than for all forms of life, transformative change is discontinuous. For what seems an eternity, history goes nowhere – and then it suddenly flings us forward across some vast chaos that defies any mortal effort to plan our way there. The Fourth Turning will try our souls – and the saecular rhythm tells us that much will depend on how we face up to that trial. The saeculum does not reveal whether the story will have a happy ending, but it does tell us how and when our choices will make a difference.”  – Strauss & Howe – The Fourth Turning

Culture of Ignorance: Part I

Off the keyboard of Jim Quinn

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Published on The Burning Platform on October 27, 2013

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Discuss this article at the Kitchen Sink inside the Diner

“Five percent of the people think;
ten percent of the people think they think;
and the other eighty-five percent would rather die than think.”

– Thomas Edison

The kabuki theater that passes for governance in Washington D.C. reveals the profound level of ignorance shrouding this Empire of Debt in its prolonged death throes. Ignorance of facts; ignorance of math; ignorance of history; ignorance of reality; and ignorance of how ignorant we’ve become as a nation, have set us up for an epic fall. It’s almost as if we relish wallowing in our ignorance like a fat lazy sow in a mud hole. The lords of the manor are able to retain their power, control and huge ill-gotten riches because the government educated serfs are too ignorant to recognize the self-evident contradictions in the propaganda they are inundated with by state controlled media on a daily basis.

 

“Any formal attack on ignorance is bound to fail because the masses are always ready to defend their most precious possession – their ignorance.” Hendrik Willem van Loon

The levels of ignorance are multi-dimensional and diverse, crossing all educational, income, and professional ranks. The stench of ignorance has settled like Chinese toxic smog over our country, as various constituents have chosen comforting ignorance over disconcerting knowledge. The highly educated members, who constitute the ruling class in this country, purposefully ignore facts and truth because the retention and enhancement of their wealth and power are dependent upon them not understanding what they clearly have the knowledge to understand. The underclass wallow in their ignorance as their life choices, absence of concern for marriage or parenting, lack of interest in educating themselves, and hiding behind the cross of victimhood and blaming others for their own failings. Everyone is born ignorant and the path to awareness and knowledge is found in reading books. Rich and poor alike are free to read and educate themselves. The government, union teachers, and a village are not necessary to attain knowledge. It requires hard work and clinging to your willful ignorance to remain stupid.

The youth of the country consume themselves in techno-narcissistic triviality, barely looking up from their iGadgets long enough to make eye contact with other human beings. The toxic combination of government delivered public education, dumbed down socially engineered curriculum, taught by uninspired intellectually average union controlled teachers, to distracted, unmotivated, latchkey kids, has produced a generation of young people ignorant about history, basic mathematical concepts, and the ability or interest to read and write. They have been taught to feel rather than think critically. They have been programmed to believe rather than question and explore. Slogans and memes have replaced knowledge and understanding. They have been lured into inescapable student loan debt serfdom by the very same government that is handing them a $200 trillion entitlement bill and an economy built upon low paying service jobs that don’t require a college education, because the most highly educated members of society realized that outsourcing the higher paying production jobs to slave labor factories in Asia was great for the bottom line, their stock options and bonus pools.

Instead of being outraged and lashing out against this injustice, the medicated, daycare reared youth passively lose themselves in the inconsequentiality and shallowness of social media, reality TV, and the internet, while living in their parents’ basement. They have chosen the ignorance inflicted upon their brains by thousands of hours spent twittering, texting, facebooking, seeking out adorable cat videos on the internet, viewing racist rap singer imbeciles rent out sports stadiums to propose to vacuous big breasted sluts on reality cable TV shows, and sitting zombie-like for days with a controller in hand blowing up cities, killing whores, and murdering policemen using their new PS4 on their 65 inch HDTV, rather than gaining a true understanding of the world by reading Steinbeck, Huxley, and Orwell. Technology has reduced our ability to think and increased our ignorance.

“During my eighty-seven years, I have witnessed a whole succession of technological revolutions. But none of them has done away with the need for character in the individual or the ability to think.” – Bernard M. Baruch

The youth have one thing going for them. They are still young and can awaken from their self-imposed stupor of ignorance. There are over 80 million millenials between the ages of 8 and 30 years old who need to start questioning the paradigm they are inheriting and critically examining the mendacious actions of their elders. The future of the country is in their hands, so I hope they put down those iGadgets and open their eyes before it is too late. We need many more patriots like Edward Snowden and far fewer twerking sluts like Miley Cyrus if we are to overcome the smog of apathy and ignorance blanketing our once sentient nation.

The ignorance of youth can be chalked up to inexperience, lack of wisdom, and immaturity. There is no excuse for the epic level of ignorance displayed by older generations over the last thirty years. Boomers and Generation X have charted the course of this ship of state for decades. Ship of fools is a more fitting description, as they have stimulated the entitlement mentality that has overwhelmed the fiscal resources of the country. Our welfare/warfare empire, built upon a Himalayan mountain of debt, enabled by a central bank owned by Wall Street, and perpetuated by swarms of corrupt bought off spineless politicians, is the ultimate testament to the seemingly limitless level of ignorance engulfing our civilization. The entitlement mindset permeates our culture from the richest to the poorest. Mega-corporations use their undue influence (bribes disguised as campaign contributions) to elect pliable candidates to office, hire lobbyists to write the laws and tax regulations governing their industries, and collude with the bankers and other titans of industry to harvest maximum profits from the increasingly barren fields of a formerly thriving land of milk and honey. By unleashing a torrent of unbridled greed, ransacking the countryside, and burning down the villages, the ruling class has planted the seeds of their own destruction.

When the underclass observes Wall Street bankers committing the crime of the century with no consequences for their actions, they learn a lesson. When billionaire banker/politicians like Jon Corzine can steal $1.2 billion directly from the accounts of farmers and ranchers and continue to live a life of luxury in one of his six mansions, they get the message. Wall Street bankers are allowed to commit fraud, reaping profits of $25 billion, and when they are caught red handed pay a $5 billion fine while admitting no guilt. No connected bankers have gone to jail for crashing the worldwide financial system, but teenage marijuana dealers are incarcerated for ten years in our corporate prison system. The message has been received loud and clear by the unwashed masses. Committing fraud and gaming the system is OK. Only suckers play by the rules anymore. A culture of lawlessness, greed, fraud, deceit, swindles and scams was fashioned by those in power. Reckless disregard for honesty, truthfulness, fair dealing, and treating others as you would like to be treated, has permeated the beliefs and behavior of our society.

The ever increasing number of people in the SNAP program along with abuses committed by retailers and recipients, the skyrocketing number of people faking their way into the SSDI program, billions of taxpayer dollars lost to Medicare fraud, billions more lost paying out earned income tax credit refunds based on non-existent children, public schools falsifying test scores, students cheating on SAT tests, credit card fraud on a grand scale, failure to report income and falsifying tax returns, and a myriad of other dodges and scams are just a reflection of a moral and cultural collapse. The dog eat dog mentality glorified by the media, with such despicable men as Dimon, Greenspan, Corzine, Clinton, Trump, Rubin, Bernanke and Bloomberg honored as pillars of society, has displaced honesty, compassion, humanity, shared sacrifice, and caring about our descendants. Self-interest, self-indulgence, and a narcissistic focus on what is in it for me today has led to an implosion of trust and an attitude of “who cares” about our fellow man, morality, right or wrong, and the fate of future generations. We ignored the warnings of our last President who displayed courageousness and truthfulness when speaking to the American people.

“As we peer into society’s future, we — you and I, and our government — must avoid the impulse to live only for today, plundering for our own ease and convenience the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage. We want democracy to survive for all generations to come, not to become the insolvent phantom of tomorrow.” Dwight D. Eisenhower

The Me Generation has devolved into the Me Culture. While the masses have been mesmerized by their iGadgets, zombified by the boob tube, programmed to consume by the Madison Avenue propaganda machines, enslaved in chains of debt by the Wall Street plantation owners, and convinced by their fascist government keepers that phantom terrorists are hiding behind every bush, they surrendered their freedoms, liberties and sense of self-responsibility. There will always be evil men seeking to control and manipulate the ignorant and oblivious. A citizenry armed with knowledge, critical thinking skills, and moral integrity would not passively submit to the will of a corporate fascist oligarchy. Well educated, well informed citizens, capable of critical thinking are dangerous to rich men of evil intent. Obedient, universally ignorant, distracted, fearful, morally depraved slaves are what the owners of this country want. As the light of knowledge flickers and dies, we sink into the darkness of ignorance.

 

“No people will tamely surrender their Liberties, nor can any be easily subdued, when knowledge is diffused and virtue is preserved. On the Contrary, when People are universally ignorant, and debauched in their Manners, they will sink under their own weight without the Aid of foreign Invaders.”Samuel Adams

Cult of Ignorance

“There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that “my ignorance is just as good as your knowledge.”Isaac Asimov

  

“While every group has certain economic interests identical with those of all groups, every group has also, as we shall see, interests antagonistic to those of all other groups. While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups. The group that would benefit by such policies, having such a direct interest in them, will argue for them plausibly and persistently. It will hire the best buyable minds to devote their whole time to presenting its case. And it will finally either convince the general public that its case is sound, or so befuddle it that clear thinking on the subject becomes next to impossible.

In addition to these endless pleadings of self-interest, there is a second main factor that spawns new economic fallacies every day. This is the persistent tendency of man to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences.”Henry Hazlitt

America’s cult of ignorance, combined with the selfish interests of various constituencies, the character weakness of the people elected to office, a lack of understanding or interest in basic mathematical concepts, and inability to comprehend the long term and unintended consequences of every piece of legislation, have brought the country to the brink of fiscal disaster. But still, the vast majority of Americans, including the supposed intellectuals and economic “experts”, are basking in their ignorance, as the stock market reaches a new high, the local GM dealer just gave them a 7 year $40,000 auto loan at 0% on that brand new Cadillac Escalade, Bank of America still hasn’t foreclosed on their McMansion two years after making their last mortgage payment, and they just received three pre-approved credit card notices from Capital One, American Express and Citicorp. As long as Bennie has our back printing $1 trillion new greenbacks per year, nothing can possibly go wrong. Our best and brightest economic minds are always right:

“Stocks have reached what looks like a permanently high plateau.” – Irving Fisher, Professor of Economics, Yale University, 1929

“Many of the new financial products that have been created, with financial derivatives being the most notable, contribute economic value by unbundling risks and shifting them in a highly calibrated manner. Although these instruments cannot reduce the risk inherent in real assets, they can redistribute it in a way that induces more investment in real assets and, hence, engenders higher productivity and standards of living.” – Alan Greenspan – March 6, 2000

“We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.” Ben Bernanke – July 2005

The profound level of ignorance displayed by economists, politicians, business leaders, media personalities, and the average American, regarding the mathematically unsustainable path of our fiscal ship is perplexing to me on so many levels. If the Federal government was a family, the budget ceiling debate would be put into the following terms. Our household earns $28,000 per year, but we spend $38,000 per year and add $10,000 to our credit card balance, which stands at the limit of $170,000. In addition, we owe our neighbors $2 million we don’t have because we promised to pay if they voted for us as Treasurer of our homeowners association. We celebrate our good fortune of getting approved for another credit card with a $30,000 limit by increasing our spending to $39,000 per year. Intellectuals scorn such simplistic analogies by glibly pointing out that the family has a crazy uncle with a printing press in the basement and can pay-off the debt with his freshly printed dollars. And this is where the deliberate and calculated ignorance by the highly educated Ivy Leaguers regarding long term and unintended consequences is revealed. They ignore, manipulate, cover-up and obscure the facts because their wealth, power and influence depend upon them doing so. But ignorance doesn’t change the facts.

“Facts do not cease to exist because they are ignored.” Aldous Huxley

Nothing exposes the ignorance of various factions within our society better than a debate about budgets, spending, and unfunded liabilities. This is where every party, group, special interest, and voting bloc ignore any and all facts that are contrary to their selfish interest. They only see what they want to see. The fallacies, errors, omissions and mistruths of their positions are inconsequential to people who only care about their short-term self-seeking interests. When I question the out of control spending on entitlements and our impossible to honor level of unfunded liabilities, those of a liberal persuasion lash out with accusations of hating the poor, starving children and throwing granny under the bus. Anyone suggesting we should slow our spending is branded a terrorist by the overwhelmingly liberal legacy media.

When I accuse Wall Street bankers of criminal fraud and ongoing manipulation of the financial markets, the CNBC loving apologists for these felons bellow about the market always being right. When I rail about the military industrial complex and our un-Constitutional invasions of other countries, the neo-cons come out in force blathering about the war on terror and imminent threats. When I point out the horrific results of our government run educational system and how mediocre union teachers are bankrupting our states and municipalities with their gold plated health and pension plans, I’m met with howls of outrage about the poor children. The common thread is that facts are ignored because each of their agendas requires ignorance on the part of their team’s fans.

The following chart of truth portrays an unsustainable path. Ignoring the facts will not change them. This isn’t a Republican problem or a Democrat problem. It’s an American problem.

 

“There are men regarded today as brilliant economists, who deprecate saving and recommend squandering on a national scale as the way of economic salvation; and when anyone points to what the consequences of these policies will be in the long run, they reply flippantly, as might the prodigal son of a warning father: “In the long run we are all dead.” And such shallow wisecracks pass as devastating epigrams and the ripest wisdom.” Henry Hazlitt

Henry Hazlitt may have written these words six decades ago, but they aptly describe Paul Krugman and the legions of Keynesian apostles whose bastardized interpretation of Keynes’ theory has led us to this fiscal cliff. How anyone can truly believe that borrowing to consume foreign produced goods versus saving and making job creating capital investments is a rational and sustainable economic policy is the height of ignorance. One look at this chart exposes the political party system as a sham. When it comes to the fiscal train wreck, set in motion thirty years ago, the ignorant media pundits peddle a narrative about politicians failing to compromise as the culprit in this derailment. Nothing could be further from the truth. Compromise is what has gotten us to this point. The Republicans compromised and allowed the Democrats to create a welfare state. The Democrats compromised and allowed the Republicans to create a warfare state. The Federal Reserve compromised their mandate of stable prices and preventing financial calamities by inflating away 95% of the dollar’s purchasing power in 100 years, while creating bubbles every five or so years, like clockwork. There are a myriad of facts related to the chart above that cannot be ignored:

  • It took 192 years for the country to accumulate $1 trillion in debt. It has taken us 30 years to accumulate the next $16 trillion of debt. We now add $1 trillion of debt per year.
  • If the Federal government was required to use GAAP accounting, the annual deficit would amount to $6.7 trillion per year.
  • The fiscal gap of unfunded future liabilities for Social Security, Medicare, Medicaid, and government pensions is $200 trillion.
  • Using realistic growth assumptions adds another $6 trillion of state and local government unfunded pension benefits to the equation.
  • The Federal government has increased their annual spending from $1.8 trillion during Bill Clinton’s last year in office to $3.8 trillion today, a 110% increase. The population has increased by 12% over that same time frame, and real GDP has advanced by 25% since 2000.
  • Defense spending has increased from $358 billion in 2000 to $831 billion today, despite the fact that no country on earth can challenge us militarily.
  • The average Baby Boomer will receive $300,000 more than they contributed to Social Security and Medicare over their lifetime. Over 10,000 Boomers per day will turn 65 for the next 17 years.
  • The Social Security lockbox is filled with IOUs. The funds collected from paychecks over the last 80 years were spent by Congress on wars of choice, bridges to nowhere, and thousands of other vote buying ventures.
  • A normalization of interest rates to long-term averages would double or triple the interest on the national debt and increase our annual deficits by at least 30%.
  • Obamacare and the unintended consequences of Obamacare will add tens of trillions to our national debt. The initial budget projections for Medicare and Medicaid showed only a modest financial impact on the financial situation of the country. How did that work out?
  • Entitlement spending in 2003 was $1.3 trillion. Entitlement spending in 2008 was $1.7 trillion. Entitlement spending in 2013 was $2.2 trillion. Entitlement spending in 2018 will be $2.8 trillion, as these programs are on automatic pilot.

When you consider the facts in a rational manner, without vitriolic denials, bitter accusations, acrimonious blame, and rejection of the entire premise, you come to the conclusion that we’ve passed the point of no return. Decades of bad choices, bad leadership, bad men in important positions, bad education, bad governance, and bad citizenship have led to bad times. But very few people, across all socio-economic classes, have any interest in understanding the facts or making the tough choices required to save future generations from a life of squalor. We willfully choose to ignore the facts.

“Most ignorance is vincible ignorance. We don’t know because we don’t want to know.” Aldous Huxley

Our degraded and ignorant society is incapable of comprehending their dire circumstances or acting for the common good of the country. We are a nation on the take. Greed really is good. Everyone needs to play the game. From the top floor corporate CEO suite to the decaying urban wastelands, we have chosen comforting ignorance to uncomfortable knowledge. Our warped form of democracy enriches the few at the top, while dispensing enough subsistence payments to the lower classes to keep them from revolting, while enslaving the middle class in debt and convincing them it’s really wealth. Mencken understood the pathetic impulses of the American populace decades before we reached our point of no return.

“Democracy is a pathetic belief in the collective wisdom of individual ignorance.” – H.L. Mencken

The only way a democracy can survive is if the population is knowledgeable, vigilant, skeptical, educated, individually responsible, self-reliant, moral, capable of critical thinking and willing to accept the consequences of their actions. A nation of takers, fakers and blamers will not last long. We’ve degenerated into a nation of knowledge hating book burners. Our culture of ignorance will lead to the destruction of our culture and the ignorant masses will wonder what happened.

 

“But you can’t make people listen. They have to come round in their own time, wondering what happened and why the world blew up around them. It can’t last.”Ray Bradbury – Fahrenheit 451

In Part Two of this examination about our culture of ignorance I’ll explore the roles of technology, family breakdown, government, and propaganda in creating the ignorance that is consuming our system like a mutant parasite. If you are seeking a happy ending, I suggest looking elsewhere.

Debt Ceiling Political Crisis

Off the keyboard of Mr. Roboto

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Published on Domo Arigato, Mister Roboto on October 14, 2013

Discuss this article at the Economics Table inside the Diner

A lot of bandwidth has been used up by various liberal analyses of the debt ceiling hub-bub, but what it boils down to is that it’s really an entirely premeditated crisis. And the reason for it is because the white-supremacist coalition that has been running this country for the past three decades, as well as the value system associated with it, is on the verge of becoming a minority political tendency in this country. (And it is this coaltion, by the way, whom we can thank for having to settle for the sort of “halfway healthcare reform” represented by Obamacare, because they killed true universal healthcare before I or Barack Obama were even born.) The most fanatical acolytes of this political tendency would rather destroy the country they claim to love so fetishistically, than allow that to happen. They may have thought that they were on the rise with the Republican victories in 2010, but the fact that more votes for Congress were cast for Democrats than Republicans (Republicans retaining their majority in the house with brazen and desperate gerrymandering) in 2012, shows us that 2010 was merely a swan song. After all, the same state that handed Scott Walker a victory in the recall election, also went for Obama and sent Tammy Baldwin to the Senate a mere few months later. So I guess I’m back on board with the Democrats for a while, as long as the alternative is a bunch of foaming-at-the-mouth Klansmen who want to drive the country over the edge of a cliff.

But of course, there is a much bigger story at work behind the scenes, which is well summarized by Reverse Engineer over at Doomstead Diner. This really explains as well as anyone could why the problems this country is facing in the near future aren’t like those in the past, and claiming otherwise is just the rankest sort of denial. So given that, yes, I believe that collapse is inevitable and unpreventable because the whole system is in a rather more fragile state than most people seem to want to realize. Austrian-school economists such as Peter Schiff think we shouldn’t raise the debt ceiling no matter what and face the pain of a serious depression, and then the Magick Market will eventually fix everything and we can all live in a devil-take-the-hindmost libertarian paradise with a gold-backed currency. It’s a pretty little fantasy, to be sure, but it only goes to show how both Keynsians and Austrians blind themselves to the deeper reality by clinging to the insane notion that you can have infinite growth on a finite planet. I guess I just want to delay the disaster until some of my current health problems improve somewhat. Though a doomer case can certainly be made for embracing an economic depression.

And speaking of the Archdruid, his own perspective on the shutdown and the fiscal cliff also provides much-needed context and food for thought.

And as long as I’m piling on links, here’s another way of explaining the same situation.

Journey to the Center of the Financial Earth

Off the keyboard of RE

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Published on the Doomstead Diner on October 20, 2013

Discuss this article at the Energy Table inside the Diner

I’m beginning this article in the Wee Hours of Monday Morning October 14, 2013 here on The Last Great Frontier, with Da Goobermint still mired in Partial Shutdown mode, and the Debt Ceiling issue set to hit a Crisis Point on Thursday October 17th still unresolved.  It looks to be a Watershed Week in Doom Observation, so I am going to make this article a Daily Diary of what goes on here.  If not a Journey to the Center of the Earth, the beginning of a Journey to the Center of Financial Collapse of Industrial Civilization.

Journey_to_the_Center_of_the_Earth_RideAs Jules Verne Sci-Fi goes, Journey to the Center of the Earth was NOT one which held up very well over the years on a Scientific level, but it does provide a nice metaphor for retreating through History as well as reminding us of our complete dependence on the Earth for continued survival of our species.  For a long time, Homo Sapiens only worked within a VERY narrow band on the Surface of the Earth, most living at or near Sea Level within perhaps about 2ooo meters to the upside of that.  Resources extracted to keep said population expanding going down maybe 100 meters most in terms of pulling up fish, though really such deep fishing only possible recently in the Age of Oil.

Similarly, extracting Mineral resource from below ground level did not happen much prior to the Age of Industrialization.  Each level of further development of the Industrial Economy leveraged itself on the back of another prior energy source, more or less in this order:  Wood, Peat, Coal, Oil, Nuclear.

Wood was the first thing used to Smelt Metal, and whole forests in MENA where the technology developed first were cut down to do this.  Said Metal Tools enabled the large scale harvesting from Peat Bogs, enabling still more tools to be made to dig into the earth a little ways and start recovering Coal deposits, fossilized plant life basically.  Coal in turn made possible really BIG Steel Plants to be built, which then could create the equipment necessary for Oil Drilling.  With further inventions like the Steam Engine and then the Internal Combustion Engine, you could start moving this energy supply around, and going wherever it was to be found to dig it up.  In the final phase, it could be used to mine Uranium, build reactors and generate more power through Nuclear Fission.

This was supposed to leverage us into the Big One, the Holy Grail of Energy, Fusion Power on Earth.  Sadly, the technological problems this has have been insurmountable over the 50 years I’ve been reading about it, starting on the pages of Popular Science when I was a kid.  We are now running out of the legacy sources of energy easily mined up, and the whole Engine here is beginning to seize up because of that.

Energy is the REAL problem faced here, not the Debt Ceiling.  The Debt accumulated through the course of the Industrial Era is the RESULT of financing this type of Civilization.  You can read more about that in last week’s Sunday Brunch Article on the Diner, Tower of Babel Moment.  The Pols and Banksters running the show do not/will not/cannot own up to this, so they make fools of themselves in a sad Kabuki theatre, of which the current Goobermint Shutdown and Debt Ceiling Crisis are just the Opening Act.

 http://ci.i.uol.com.br/album/viagem_ao_centro_da_terra_f_010.jpg

Monday October 14, 2013

The weekend passed with CONgress Jokers and Clowns getting NOWHERE with Fool-in-Chief Obama-sama.  This after a 2 day RAMP in the markets based on the idea that the Leadership was coming to a Compromise of some sort and by Monday all would be Well again.  Shortly after the Markets closed on Friday, it was revealed that the Bozos in Charge were not really talking to each other and no good ideas for Solving the Problem had emerged yet.  So at the moment, one can only expect the Monday Markets to take another Tumble downwards, which when it gets significant enough usually gets Millionaires on BOTH sides of the Aisle to agree to dish out more Debt.  Starving People do not get more Debt Issued, but Falling Stock Price in Apple does.  You get the Picture I am sure.

I’m not kidding about this, another main story over the weekend was that the EBT/SNAP card program went down in 17 States, rendering those people currently receiving this Goobermint Benny unable to use the Cards to buy food at the local Walmart or Safeway. Lotta Right Wing Websites applaud this of course, but if there is any sure way of getting a Civil War going it is to make millions of Starving People with Nothing Left to Lose.

Said problem with the “glitch” in EBT/SNAP was attributed to the fault of XEROX, the Corporation apparently Entrusted to run the hardware end of this system.  Possible, but given the timing, highly unlikely.  Seems more like a Trial Balloon to see how the population at large would react to a financial meltdown which hits the bottom rung of the society, and as might be expected the reaction was not too good.  This for a shutdown that was relatively brief, and nobody likely starved as a result of it.

http://gorgview.com/wp-content/uploads/2013/07/journey-trex.jpg

Tuesday October 15, 2013

Note:  Last night I wrote a bunch more that does not appear above, jacking in a whole series of graphs, which I then lost in a failed upload. AARRGGGH.  I didn’t have energy to write it again last night, so here we go again on Tuesday night.

As expected, day went by here with still no resolution either on the Goobermint Shutdown OR the Debt Ceiling.  We are working our way quickly to the 11th Hour on this one, which the Markets have “Priced In” as being resolved before anything major gets defaulted on.  Obama-sama likely is getting advice from Lloyd and Jamie to Stonewall, and force a Capitulation by the opponents here.

Personally, I do figure they will capitulate for a Temporary Debt Ceiling Extension at the last minute, it is really playing with fire to let this thing flip over this way.  However, you do have a lot of ideologues voted into office here who don’t understand how this system works, so it might just go over the edge, which will undoutably be major entertainment if it does.

For tonight, let us take a good look at the current economic setup we have in the Balance here, which in most respects is entirely dependent on further debt issuance.

There are currently living in the FSoA about 300M People.  Of those 300M, approximately 120M are employed to one degree or another:

http://floatingpath.wpengine.netdna-cdn.com/wp-content/uploads/2013/09/US-Employed-PersonsFT-PT-August-2013.png

Of said Employed People, here is the Distribution of how they are getting paid:

http://upload.wikimedia.org/wikipedia/commons/a/aa/Distribution_of_Annual_Household_Income_in_the_United_States.png

A good 25% of these currently employed people are living at or below Poverty Level when you take into account their dependent children, also a significant portion of the population.  They can barely afford to put a roof over their own heads and feed their kids, much less help anyone else out through Taxation of their meager incomes.

This represent the “Productive Side” of our current economy.  Now let us look at the Dependency Side of people who for one reason or another do NOT have jobs.  Start with the most currently FAMOUS chart, people getting SNAP Card/EBT/Food Stamp Bennies administered by Jamie Dimon and Minions at JP Morgan Chase:

http://www.dailyjobsupdate.com/wp-content/uploads/Food-Stamps-Yearly.jpg

Subtotal: 47M

Next let us look at everyone receiving SS Retirement Bennies and SS Disability Insurance:

http://www.ssa.gov/oact/progdata/icpBenies.gif

Subtotal: 55M

Next let us look at the currently REPORTED number of people receiving UE Insurance:

http://floatingpath.wpengine.netdna-cdn.com/wp-content/uploads/2012/10/US-Unemployment-Insurance-Recipients1.png

Subtotal: 3M

Finally, let’s add in the population of Prisoners here in the FSoA, the largest such population in the world right now:

http://static6.businessinsider.com/image/4f79b67569beddcc69000004-1200/since-the-war-on-drugs-started-in-1970-americas-prison-population-has-surged-700-percent-to-24-million.jpg

Remember also, unlike the UE, SSDI and Retired folks, prisoners have a large Liability the others cover from the transfer payments.  You gotta maintain the Prisons, pay the Prison Guards, etc here, so a few million Prisoners is a much bigger liability than many more Retired or SSDI people.  Forgetting that issue for a moment, in RAW NUMBERS I get:

47M SNAP Card Recipients

55M SS Reciepients

UE 3.5 M

Incarcerated: 2.5M

For a GRAND TOTAL of 109M people on the receiving end of transfer payments, to be paid IN THEORY by around 90M people (substracting off 25% the Working Poor who can’t cover their own bills) who still have Jobs and Pay Taxes.  Sense a PROBLEM here?

This does not even take into account the ENORMOUS cost of running the FSoA Military, Medicair (even prior to Obamacare) or of course the all important Parks Department either.  JUST in terms of one person picking up the Bills for somebody else, in current Modern Amerika the Taxation System if it was to Balance Out would require each working person to cover the basic needs of AT LEAST one other non-working person.  Obviously this does not work, even IF you Taxed the Living SHIT out of the Uber Rich.  Most Wealth is not being sequestered or recorded as Individual Income here, it mainly goes on Corporate Balance Sheets, which largely can be shielded from Taxation in numerous ways.  At this point though, even if it WAS possible to effectively Tax Corporations like Exxon-Mobil, Royal Dutch Shell or any of the TBTF Banks like Goldman Sacks-the-Taxpayer or JP Morgan-Chase-you-into-poverty,  you likely could not cover all the bills and still provide Lights On and Happy Motoring to All, due of course to the reality of Global Energy Deficit relative to Total Population, mentioned in my previous article Tower of Babel Moment.

The ONLY way to keep this game running is through further Debt Issuance, and EVERYBODY KNOWS this.  Obama-sama knows it, and so does Boner.  Even Freshman CON-gress Critters KNOW this, because they get hit on every day by Lobbyists who let them know if they DON’T increase the Debt Ceiling, all FUCKING HELL will break loose!  Secure in this Knowledge, Obama-sama could Stonewall Boner, knowing that in the end he would Capitulate.  Up goes the Ceiling again until this Kabuki Theatre gets replayed once again in January 2014, assuming no major Black Swan comes in for a Landing in the interim.

http://vi.ill.in.ua/m/0x0/57412.jpg

Wednesday, October 16, 2013

As was TOTALLY EXPECTED by everybody here, Boner and the Republocrats and Tea Baggers alike CAPITULATED, and the Can Has Been KICKED AGAIN, this time to January of 2014!  GREAT NEWZ for my friends and me on the Diner currently setting up the SUSTAINING UNIVERSAL NEEDS Non-Profit 501C3 Corporation, now that the Shutdown is over I can file my papers with the IRS with slightly less concern that they will get lost in the shuffle from too much Paper with too few Goobermint Drones to push it around!

From Zero Hedge:

And so, in the proverbial 11th hour, or technically 10th hour and 10th minute before the midnight of the X-Date, the House gets the necessary 216 votes to pass the Senate bill to raise the debt ceiling, and in a final 285-144 tally, in which 87 Republicans voted yea to 144 GOP noes as all 198 Democrats vote yea, has agreed to restore funding.

Next up: the BLS random number generator starts cranking again and informing everyone in just how sorry a state the economy finds itself, which of course is bullish for stocks because it means that the taper is indefinitely delayed, potentially until June 2014. Also next up, as the emergency Treasury measures are netted out against the new debt limit, it means that once the new Daily Treasury Statement hits, the total US Federal debt will be just at, or over $17 trillion. Rejoice.

Finally – see you all again here in three months. In the meantime the interim status quo is as follows:

  • The government will be reopened through January 16

  • The debt ceiling has been lifted through February 7, while the Treasury is allowed to use its assortment of emergency measures to delay running out of funds, which means the next true X-Date will hit sometime in April

  • The House and Senate budget conference must real a deal by December 13, but it may very well not achieve anything.

  • Government workers get back pay for 16 days, and tomorrow return from a 2 + week vacation.

  • The only thing that was actually “achieved” as a result of the government shutdown is to have income verification for Obamacare beneficiaries: something which should have been embedded in the ACA from the beginning.

Not too much to say about this bullshit tonight, the Markets expected this result so nothing real major made any kind of Big Move here overall.  It should be obvious by now that the Pols themselves will not put a Hard Ceiling on Debt Issuance, EVERYBODY KNOWS that is a recipe for a virtually instantaneous LOCK-UP in the Financial Markets.  The REAL CEILING is in moving Debt further out from the Balance Sheet of Da Fed and the TBTF Banks to the Population at Large, to keep some kind of Real Economy moving about here.  This is not controlled by Da Goobermint, it is controlled in reality by the BIS, the Bank for International Settlements Headquartered in Basil, Switzerland (on their OWN Property not controlled by the Swiss People).

Secret Meetings will be held here, mainly determining who gets CUT OFF first and most from the Credit Bandwagon.  The Chinese are making all sorts of NOISES of discontent with Amerikan Goobermint FOOLISHNESS, stop rocking the boat and just pitch out more debt!  We’ll buy it!  We don’t have any money other than the Trash you already sold us,  or resources of our own that haven’t been polluted and poisoned, but we’ll issue out our own Trash to buy your Trash!  LOL.

More on this one tomorrow, I am DONE for tonight Ranting on this Global Stupidity.  Even I have a Nightly Limit for dealing with this shit.

http://pic.powertracker.org/relwiz/282157/101006171643282157_f25_4.png

Thursday, October 17, 2013

Goobermint Drones in the Parks Department are BACK to Work!  YEA!  Now you can head up to Denali National Park and employ one of the Guides there to take you Fishing on the Copper River headwaters!  Drive on up in your Bugout Machine, spend a FORTUNE in Gas to experience the Great Oudoors life with your Fiberglass Fishing Pole and Tackle from Walmart, another FORTUNE employing your Goobermint Licensed Fishing Guide, and still another FORTUNE on the Plane Ticket to get you up here to enjoy the Great Outdoors one more time, before it is GONE, and so are YOU.

By the time you add up all the costs involved in getting your ass out there to what is left of Nature and then packaging and freezing whatever it is you catch or hunt down and shipping it OUT from such locations, it is FAR CHEAPER just to buy a Fish Fillet or Rib Eye Steak at Safeway.  Even if you LIVE in Anchorage, it is still more expensive by the time you factor in your driving costs to get anywhere good for Fishing and Hunting.  If Gas is unavailable or Rationed, FUHGETTABOUDIT!    You need to be living right on the damn rivers out in the Bush to do this type of living, and REALLY few people do that.  However, at least it is in theory possible to do it when TSHTF finally, which it will eventually no matter how long the Bozos keep Kicking the Can.

Which of course is all that occurred here, no “solutions” have been figured out for reducing dependence on Debt to finance Da Goobermint.  As my Tuesday Chronicle PROVES, it is mathematically IMPOSSIBLE to keep this show going without perpetual issuance of more Debt.

http://4.bp.blogspot.com/_qdycDWHqEkY/Swr7lOEzUwI/AAAAAAAAAko/mYHi0Erazv8/s1600/journey-to-the-centre-of-the-earth-3d-6.jpg

Friday, October 18, 2013

Here as the working week comes to a close, you can be certain of one thing, which is that Da Goobermint Clowns & Jokers will keep on Kicking this Can down the Road, until they run OUT of Road.  The Road in this case being Cheap Energy to keep on building out the Great Amerikan Parking Lot and Suburban Sprawl, along with Cheap Energy to fuel the Drones cruising MENA Airspace to insure the delivery of said fuel to our shores.

We are nicely set up for Act 17 of this Kabuki Theatre Presentation to repeat itself in 3 months, great entertainment for Ringing in the New Year.

Meanwhile, everybody in the Blogosphere is taking this opportunity to criticize the various Clowns & Jokers running this show, which is making the Clown-in-Chief very upset.  Why can’t these folks just join the Pahhhty and play along like the Jokers we have shilling the story line for us in the MSM?  Happy Daze are Here Again!

On the UP side, you can view this as another Reprieve and opportunity to continue to Prep Up and plan for the future of a low per capita energy world where lots of people will be buying a Ticket to the Great Beyond.  If you do not feel the time is yet right for you to go Exploring Eternity, a good idea would be to GTFO of Dodge, aka any Big Shity in the Industrialized world.  If it is impractical for you to leave said BS now, at least have a well planned Bugout and some good Survival Tools to get you started.

At least until the Internet Goes Dark or the Boys in the Black Cadillac Escalades come to ship me off to GITMO, I will continue to chronicle this insanity with the View from the Bugout Machine, here on the Last Great Frontier.

RE-BM-WindowLongView

Seeya next week, Doomfans!

RE

Tower of Babel Moment

Off the keyboard of RE

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Published on the Doomstead Diner on October 13, 2013

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Discuss this article at the Economics Table inside the Diner

This week over in China, the Chinese had to SHUT DOWN Beijing due to SMOG problems.  This is pretty radical, since far as I know not even Los Angeles ever got shut down due to Smog, and it was pretty nasty there particularly before CA Greenies went big time into emissions restrictions on the plethora of Carz that started hitting the LA Freeways in the 60s and 70s.

From Bloomberg:

China started reopening roads and airports in Beijing and surrounding areas that were shut by heavy smog, allowing millions of travelers to return from a week-long holiday.

Air quality index readings for half of Beijing’s 12 urban areas fell below 200, the level dividing medium and heavy pollution, as of 12 p.m. today, according to data on the website of the Beijing Municipal Environmental Monitoring Center.

Tennis fans wear masks to watch the women’s semi-final match of the 2013 China Open during severe pollution at the National Tennis Center in Beijing on Oct. 5, 2013. Photographer: Feng Li/Getty Images

“Beijing will see light rain tonight, which will make it easier for air pollutants to dissipate,” Beijing Meteorological Bureau said today in its official microblog. The bureau lifted a yellow alert on smog at 8:50 a.m., predicting that visibility will improve.

The closures yesterday of six expressways and disruption at Beijing Capital International Airport underscore the severity of pollution that has become the top cause of social unrest in China. Premier Li Keqiang has pledged a cleanup that includes cutting coal consumption, shutting steel plants and controlling the number of cars.

An estimated 430 million people were expected to travel during the holiday that ends today, according to the China Tourism Academy.

“Air pollution will be an additional factor for holiday traveling that needs to be considered,” said Chen Yifeng, a Shanghai-based accountant who didn’t travel during the holiday to avoid crowds. “I won’t go to heavily polluted places like China’s north region as it’s either hazardous to your health or causes trouble when traveling.”

Roads Closed

Police closed six expressways linking the capital city to Shanghai, Tianjin and Harbin yesterday, and 47 flights at Beijing Capital International Airport were affected.

Some parts of the expressways linking Beijing to Shanghai and Tianjin were still closed as of 9:40 a.m. because of haze, according to Beijing Capital Highway Development Group Co., which operates the highways.

Flights have resumed at Beijing Capital International Airport, an official said, declining to be identified citing company policy. Air China Ltd. (753), the nation’s biggest carrier by market value, will put on additional services after the smog affected at least 47 flights yesterday, an official said.

The State Council, China’s cabinet, said last month it will cut coal consumption, close steel plants and control the number of cars on its roads to gradually eliminate heavily polluted days in as soon as a decade.

Control Pollution

China will build a nationwide network within three to five years to monitor the impact of air pollution on health, the official Xinhua News Agency reported on Oct. 5, citing the Chinese Center for Disease Control and Prevention.

A total of 43 monitoring spots will be set up in 16 provinces and municipalities frequently engulfed by smog to facilitate research on air pollutants in different regions, the impact on the health of vulnerable groups and the study of related diseases, the report said.

Separately, Typhoon Fitow, which killed two people in the eastern city of Wenzhou, led to the cancellation of 22 flights in Hangzhou today and the suspension of at least 59 bullet trains in Zhejiang province, Xinhua reported. The storm made landfall in the southeast Fujian province, according to Xinhua.

So, now the Chinese sorta realize they got a pollution problem, and will start to Monitor it more closely.  Also TALK of closing Steel Plants, shutting down Coal Fired Electric plants and Limiting the number of Carz on the road.  If implemented, all these ideas would make some dent in the currently COPIOUS quantities of Carbon, Sulfur etc being jacked into the local atmosphere, but no mention here of what this would do to the Chinese Economy, which is basically to completely destroy what they built up over the last 20 years on Debt Financing.

With the current group of countries who buy Chinese Goods in the Deep Doo-Doo and Demand dropping for their products, the general idea was the Chinese would substitute “Internal Demand” through a rising Middle Class who in theory would buy the Carz Amerikanz and Europeanz can no longer afford.  If the Chinese are going to keep selling Carz, they have to sell MORE of them to their own population, not LESS of them!  Produce less Steel, produce less Electricity, sell fewer Carz, the Chinese GDP goes DOWN, not UP!

So essentially, the Chinese DEPEND on further polluting their Environment in order to make the game work!  This is the ESSENCE of the Waste Based Economy, discussed at great length here on the Diner.  Unfortunately for the Chinese, they came in to this game a Day Late and a Yuan Short, as I like to put it.  The Industrial Economy was built up in Germany, England, Japan and the FSoA during a period in History when copious Energy came a Bubblin’ Up out of the ground practically for FREE.  In my last article View From the Bugout Machine, I Googled up what is really an ASTONISHING Graph, and not one you see put up too often.  It is however the Graph that Explains EVERYTHING!

http://www.evsroll.com/images/Historic-Oil-Price-Graph.gif

The Flatline near ZERO from 1880 to around 1950 is what this is all about.  This is the Mispricing Phase which allowed the Industrial Economy to develop as it did.  Did this occur through “Free Market Forces”?  Of course not.  This was the period begun with John D. Rockefeller MONOPOLIZING the Energy Industry with Standard Oil.

Standard Oil began as an Ohio partnership formed by the well-known industrialist John D. Rockefeller, his brother William Rockefeller, Henry Flagler, chemist Samuel Andrews, silent partner Stephen V. Harkness, and Oliver Burr Jennings, who had married the sister of William Rockefeller’s wife. In 1870 Rockefeller incorporated Standard Oil in Ohio. Of the initial 10,000 shares, John D. Rockefeller received 2,667; Harkness received 1,334; William Rockefeller, Flagler, and Andrews received 1,333 each; Jennings received 1,000; and the firm of Rockefeller, Andrews & Flagler received 1,000.[7] Using highly effective tactics, later widely criticized, it absorbed or destroyed most of its competition in Cleveland in less than two months in 1872 and later throughout the northeastern United States.

In the early years, John D. Rockefeller dominated the combine; he was the single most important figure in shaping the new oil industry.[8] He quickly distributed power and the tasks of policy formation to a system of committees, but always remained the largest shareholder. Authority was centralized in the company’s main office in Cleveland, but decisions in the office were made in a cooperative way.[9]

In response to state laws trying to limit the scale of companies, Rockefeller and his associates developed innovative ways of organizing, to effectively manage their fast growing enterprise. On January 2, 1882,[10] they combined their disparate companies, spread across dozens of states, under a single group of trustees. By a secret agreement, the existing thirty-seven stockholders conveyed their shares “in trust” to nine Trustees: John and William Rockefeller, Oliver H. Payne, Charles Pratt, Henry Flagler, John D. Archbold, William G. Warden, Jabez Bostwick, and Benjamin Brewster.[11] This organization proved so successful that other giant enterprises adopted this “trust” form.

Officially, Standard Oil was dissolved in 1911 (note the very CLOSE date with the founding of the Federal Reserve Bank in 1913).  However, in no way did that dissolution stop the consolidation occurring here, which was transferred at Jekyll Island to the Federal Reserve Bank.  The Monopoly created there was in Currency Creation, and for the Banks that OWN the Federal Reserve, it has allowed them to Borrow on the Public Dime to make their own Bets through the Age of Oil, creating a nearly endless series of Bubbles everybody bet on using the currency they created.  An ENORMOUS Ponzi Scheme, where the Founders could NEVER really “Go Broke”, not as long as they always could declare bankruptcy and shift the Losses back to the Public Dime.

Steve from Virginia on Economic Undertow makes the case that our Billionaire Elite really are just the biggest debtors of them all, and this is to a large extent quite true.  If you are close enough to the center of Money Creation, you can float yourself Loans in a myriad of ways that the average J6P simply has no access to.    Create an IPO of stock offering on your company, which TBTF Banks then Borrow Money from the Federal Reserve Bank to buy!  The Hundreds of Millions of Dollars spent to buy your company never EXISTED before this! Do you really think thousands of small investors lined up to buy the Facepalm IPO?   PoopOn? The TBTF Bank borrowed the money from the Money Creator (Da Federal Reserve Bank), their Prop Desks buy the Stock, and this now goes into the system as “Equity”.  If you then hold Stock in said company, you can use this as Collateral to borrow still more.  And on and on of course.

It should be no wonder to you these two famous Quotes came from the minds of the early Ubermeisters beginning this show:

Mayer Rothschild:

“Give me control of a nation’s money and I care not who makes it’s laws” — Mayer Amschel Bauer Rothschild

Henry Ford:

Talk about two guys who were Beneficiaries of being on the Inside of this Ponzi from the early years!

How many times did Henry Ford go BK before finally getting his Production Line operational and successful selling Model T’s?  About 5 best as I can Google it up, and similarly Edison had difficulty getting an Electric Grid up and running too.  Go back to the BEGINNING of this…look at that MISpricing Chart once again here at the very beginning of it:

http://www.evsroll.com/images/Historic-Oil-Price-Graph.gif

Notice before the long Flatline from 1880 to 1945 or so, there was quite a bit of Voltility in Energy Pricing.  On an Absolute Level of Dollar Pricing, this looks a lot smaller than the current level of Volatility, but remember here there were many FEWER dollars in circulation at that time.  Distribution of the energy was tough, even if getting it out of the ground was not at the time.  Delivering the Energy around the country was quite difficult in those years, the Pipelines simply did not exist for the most part. Energy pricing as a result was wildly volatile to begin with.  It was a Leveraging Process to consolidate and control all of it, which once accomplished made it possible to drop the cost of the energy SO LOW nothing else could compete with it.  This put Outta Biz just about every other paradigm out there.  With energy this cheap, you could run Tractors capable of doing FAR more work than Horses or Oxen, so anybody expecting to make some kind of living farming HAD to switch over.

You will I am sure bring up the Refusenik Population of Amish, who foreswore off this shit based on their Religious Principles.  However, said folks generally also had to foreswear off all the advantages the system started handing out, Plasma TVs and all that stuff.  Besides that, they in the end were dependent on this system to move the production they did make off their farms, they just did not do it themselves.  They contracted to Non-Amish who showed up with Trucks to load the farm produce onto.  So they still participated, just they took a lower level of income to do it, and did not Buy the Toys being offered over time here by an increasingly complex industrial society.

This is the HISTORY of it, bringing us to today where we are now BACK to the enormous Volatility in Pricing, which all tracks back to Credit the Banks will offer to buy anything.  The question is, WHY would you offer out Credit to buy something you no longer have in copious quantities, which just ends up being burned up and which you have no reasonable expectation you will be paid back for in the future?  It makes no sense to do that, and so at the “retail” level of Credit, TBTF banks generally are NOT making the big loans necessary to keep this economy growing.  Not unless there is HYPE that some great new Energy source is coming down the pipe, such as with “Tight” Oil, which is basically tough to get stuff at low EROEI like Shale Oil and Tar Sands.

http://static.guim.co.uk/sys-images/Guardian/Pix/pictures/2010/12/26/1293390865262/Eike-Batista-007.jpgA nice example of this problem would be Eike Batista, the FORMER Billionaire from Brasil who just a couple of years ago was one of the world’s Top 50 “Richest” Men.  Eike owned OGX, the second largest Oil Production company in Brasil after Petrobras, and CLAIMED to have a $TRILLION$ in Oil in the ground they were going to yank up.  On the basis of this “projection”, Eike gets $BILLIONS$ in loans, which he can then use to buy lots of other assets.  Slight problem, turns out the huge Oil reserves either are not there or cannot be brought to market at any kind of profit, so Eike’s lenders start to call in the markers.  DOWN GOES THE EMPIRE OF EIKE!  Headed now for BK court, and Eike will have to make do with a few Hundred $MILLION$ he has stashed away in Swiss Bank Accounts or the Cayman Islands.  Sorta like Dick Fuld from Lehman, no longer the Big Player in the Game, but highly unlikely in the Near Term that Eike ends up living in the Favelas after the Collapse of his Energy Ponzi.

Its not just Eike Batista having this kind of Credit Problem either now, even Royal Dutch Shell is admitting their Tight Oil plays are not profitable, and they too are trying to unload their Leases on Land in the FSoA they were supposedly going to make the Fascist State Energy Independent of OPEC with.  Not just Energy Independent, but EXPORTERS!  The HYPE was that we are on the road to Energy Independence, but in REALITY, the Debt to fund this shit is drying up and Globally Speaking, country after country is going into Net Energy Deficit.  In reality, this explains why all these countries have enormous Debt problems, it is NOT fundamentally related to “Goobermint Waste & Inefficiency” or even the outrageously corrupt Banksters and Pols running this show, though to be sure they exacerbated the problem tremendously as time went by here, trying to keep the system propped up and running.

Figuring out and explaining the connection between Energy Extraction, Money/Debt Production and Goobermint Economics is extraordinarily difficult.  The fundamental issue is that any issuance of Money has to be backed by some real resource that can be extracted, then the Credit issued can be used to buy said resource.  The greater the Energy content of the resource, the more Credit you can issue, because more Work can be done.  Issuing the Credit requires REAL control over the resources, which is why Monopolization is essential, and why the Credit Creation was held extra-goobermentally in Private Hands, through the Corporate Ownership system.  It is not really the People of the FSoA issuing the Dollars that buy the Oil, it is the TBTF Banks that do that.  So as long as there was still GOBS of cheap energy in the ground to be extracted, the Elite running the TBTF Banks could and did continue to extend enormous amounts of credit on this Energy source, building up the enormous Industrial Infrastructure we have today on the back of that Energy.  Those running the show collect enormous personal wealth through Management Fees and Interest charged on the Money they Loan out, which can constantly increase as long as there is constant increase in the amount of available energy.

To make it all run, a Goobermint and Legal system needs to be in place to enforce Property Laws, and this Goobermint gets funded by the Taxation system.  Da Goobermint also then increases in size and complexity because as ever more develops here, you need more and more rules to manage it, and more people to enforce those rules.  As Steve from Economic Undertow’s First Law indicates, the Management costs of Surplus rise faster than the actual Surplus does, so eventually with too much surplus and too much complexity, it costs more to manage the whole thing than it really is worth.

http://content.worldcarfans.co/2008/12/medium/general-motors--chrysler-going-bankrupt.jpgThus virtually EVERY large Infrastructure arrangement built since the beginning of the Industrial Revolution has in the end gone BANKRUPT.  The Railroads all went BK.  Private Electric Companies went BK.  Telecommunications Companies went BK.  Automotive manufacturers went BK. Airlines went BK.  Dot Coms went BK. See Edison Electric, first Ford Motor Company,  Chrysler, GM, American Airlines, yadda yadda. To continue to run them, the Losses were shifted to the Public Debt, and the Profits made early on in developing them went into Private Hands.  The outcome of this is to shift most of the Assets into Private Hands, while the Debt side of this balance sheet is held by the Public at large, through Goobermint Debt.

This leads us finally to the TOWER OF BABEL MOMENT.  This is the point at which GLOBALLY there are insufficient Resources left to issue new Credit on.   Too many People in need of those Resources competing for them, and the Management Cost for running the whole system exceeding the worth of running it.  Debts at EVERY level, Personal, Corporate and Goobermint can no longer be serviced through Growth and monetary expansion, and the ISSUERS of CREDIT, the TBTF Banks are no longer predisposed to issuing it out.  There really are NO “creditworthy’ BORROWERS anymore.  Not even SOVEREIGN STATES are Credit Worthy Borrowers!  So it really does not matter if Da Fed will issue endless Credit to their Owner TBTF Banks, said Banks won’t pass that on to lower levels of Borrowers.

http://upload.wikimedia.org/wikipedia/commons/e/e1/Brueghel-tower-of-babel.jpg

Cut to the CHASE here.  How does this affect the FSoA Goobermint, and WHY do we have this problem of Nincompoop CONgress Critters Grandstanding and running around like Headless Chickens unable to come up with any “Compromises” to make the system work?  Because NO COMPROMISE can work!  If you continue to issue Credit on Resources that are not THERE, you won’t get paid back.  If you STOP issuing Credit, the Monetary System COLLAPSES, likely quite rapidly also.  One side wants to keep issuing Credit regardless of resource deficiency, all that does is devalue the currency.  Other side wants to STOP issuing debt, that just Deflates the whole balloon here.  You cannot win EITHER WAY, because it is the Resource Constraint that is the Limiting Factor.  All the Debt Issued by Da Fed will not put more cheap Oil under the ground in Saudi Arabia, and these folks actually still HAVE something of a surplus.  Mexico really does not anymore, it is quite marginal there already.  They will flip from Exporter to Importer soon enough, then they go the way of Syria to Failed State status.

Maintaining this system is INSOLUBLE.  Cannot be done without CHEAP ENERGY that credit can be issued on.  The structures built on the back of that will collapse, and they include the large Nation-States and the Mechanized Military as well.  HOW it collapse, how fast and where first are interesting questions to ponder on, they certainly make a BIG difference as far as the individual is concerned, where you live and so forth makes a BIG difference in how it will play out in your neighborhood.  that it will in the end Collapse though is not an Open Question anymore.  It will, and it is well along the way to doing so in many locations already.

Locally, we watch the CONgress Critters look FOOLISH as they bicker about things completely beyond their control now.  BLAME is place by one Faction on the other, as though it would make some real DIFFERENCE here if Austrian School Gold Backed Currency would change the outcome of Keynesian Fiat Based Currency.  NEITHER will work.  There is not enough STUFF to go round, relative to the Populations size and Relative to the Complexity developed through the Age of Oil.

The system built up for 100 years based on Cheap Energy, and Cheap Energy exists no longer, though some Expensive Stuff stil does.  Issue there is, the vast majortiy of the population cannot AFFORD it, and when the Goobermints go belly up, the ability to debt finance it disappears.  This is where we are at NOW.  Where we go in the FUTURE is still an Open Question, but one can be pretty certain many fewer people will be living on what is left of the Planet in the aftermath of that.

RE

 

Knarf plays the Doomer Blues

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CleanTechnicaSupport CleanTechnica’s work via dona [...]

QuoteThe FACT that the current incredibly STUPID e [...]

 LONDON (Reuters) - Investors managing more than $ [...]

Build a wall around voting rights. If they try to [...]

SPRINGFIELD, Ill. (AP) — Illinois’ new governor de [...]

ST. LOUIS (AP) — Repairs and cleanup following the [...]

BILLINGS, Mont. (AP) — Climate change in the Weste [...]

In November 2018, a 66-year-old man named Tommy Th [...]

Dear Readers, Things in Venezuela are getting mess [...]

Quote from: Golden Oxen on April 27, 2019, 01:49:4 [...]

Quote from: Eddie on April 25, 2019, 09:09:46 AMQu [...]

Quote from: Eddie on June 23, 2019, 07:06:14 AMYou [...]

You're gonna have to hire an assistant for th [...]

Go to Global Collapse Issues to read more or subsc [...]

Alternate Perspectives

  • Two Ice Floes
  • Jumping Jack Flash
  • From Filmers to Farmers

The Brainwashing of a Nation by Daniel Greenfield via Sultan Knish blog Image by ElisaRiva from Pixa [...]

A Window Into Our World By Cognitive Dissonance   Every year during the early spring awakening I qui [...]

Deaf, Dumb and Blind Who Is Better at Conceding They Are Wrong - Conservative or Liberal Extremists? [...]

The Apology: From baby boomers to the handicapped generations. by David Holmgren Re-posted from Holm [...]

Society Is Made Of Narrative. Realizing This Is Awakening From The Matrix. By Caitlin Johnstone Orig [...]

Event Update For 2019-06-24http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.htmlThe [...]

Event Update For 2019-06-23http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.htmlThe [...]

Event Update For 2019-06-22http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.htmlThe [...]

Event Update For 2019-06-21http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.htmlThe [...]

Event Update For 2019-06-20http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.htmlThe [...]

With fusion energy perpetually 20 years away we now also perpetually have [fill in the blank] years [...]

My mea culpa for having inadvertently neglected FF2F for so long, and an update on the upcoming post [...]

NYC plans to undertake the swindle of the civilisation by suing the companies that have enabled it t [...]

MbS, the personification of the age-old pre-revolutionary scenario in which an expiring regime attem [...]

Daily Doom Photo

man-watching-tv

Sustainability

  • Peak Surfer
  • SUN
  • Transition Voice

Riding the Whale’s Tail"Our biological and cultural blinders are equal in every way to those worn by Material Evangeli [...]

Carbon in the Dale"Rather than put back the coal mines, we should seriously think about putting back the forests. [...]

Farewell to the Fishes"Ninety percent of the world’s marine fish stocks are now fully exploited, overexploited or dep [...]

Climate Change Reversal at Whole Village"During the burn people were taken around the farm to see the 40,000+ trees we have planted, ou [...]

Pitching Seaweed Straws"Kelp-based straws will beat the price of paper straw competitors later this year and could und [...]

The folks at Windward have been doing great work at living sustainably for many years now.  Part of [...]

 The Daily SUN☼ Building a Better Tomorrow by Sustaining Universal Needs April 3, 2017 Powering Down [...]

Off the keyboard of Bob Montgomery Follow us on Twitter @doomstead666 Friend us on Facebook Publishe [...]

Visit SUN on Facebook Here [...]

Why has it taken so long for the climate movement to accomplish so little? And how can we do better [...]

To fight climate change, you need to get the world off of fossil fuels. And to do that, you need to [...]

Americans are good on the "thoughts and prayers" thing. Also not so bad about digging in f [...]

In the echo-sphere of political punditry consensus forms rapidly, gels, and then, in short order…cal [...]

Discussions with figures from Noam Chomsky and Peter Senge to Thich Nhat Hanh and the Dalai Lama off [...]

Top Commentariats

  • Our Finite World
  • Economic Undertow

Education seems to be of the form, “Whatever you wish for can come true. Anything is possible. We hu [...]

Mar on has the right idea. Keep adding debt, as long as it is possible to do this. [...]

If potential purchasers were receiving higher and higher wages, there would nur be a fear and f rece [...]

The US still has a ways to go to get to the government of Japan’s debt level. [...]

“The [US] nation’s federal debt is projected to reach “unprecedented levels” over the next 30 years [...]

Hi Steve. I recently found what I believe is a little gem, and I'm quite confident you'd a [...]

The Federal Reserve is thinking about capping yields? I don't know how long TPTB can keep this [...]

As some one who has spent years trying to figure out what the limits to growth are. let me say that [...]

Peak oil definitely happened for gods sake. Just because it isn't mad max right now is no indic [...]

@Volvo - KMO says he made some life choices he regrets. Not sure what they were. And I don't th [...]

RE Economics

Going Cashless

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Simplifying the Final Countdown

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Bond Market Collapse and the Banning of Cash

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Do Central Bankers Recognize there is NO GROWTH?

Discuss this article @ the ECONOMICS TABLE inside the...

Singularity of the Dollar

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Kurrency Kollapse: To Print or Not To Print?

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SWISSIE CAPITULATION!

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Of Heat Sinks & Debt Sinks: A Thermodynamic View of Money

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Merry Doomy Christmas

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Peak Customers: The Final Liquidation Sale

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Collapse Fiction

Useful Links

Technical Journals

The South Atlantic Ocean is currently undergoing significant alterations due to climate change. This [...]

This paper assessed the variability and projected trends of solar irradiance and temperature in the [...]

Following the impact of droughts witnessed during the last decade there is an urgent need to develop [...]

A “nadir-only” framework of the radiometric intercomparison of multispectral sensors usi [...]

A fuzzy random conditional value-at-risk-based linear programming (FCVLP) model was proposed in this [...]