"George Lane, served in the last war with the British Army from Vimy Ridge to the Occupation. Two of his sons are in the American Army, one with the Air Corps in Australia. His daughter volunteered for the Women's Army Auxiliary Corps. Seven of his nephews are in the British Army"
Ilargi: There is a relative silence in the international financial press when it comes to Britain. The economic situation of continental Europe gets almost all the attention. Every now and then someone in France or Germany states that Britain, too, should be downgraded, like when S&P cut the ratings of 9 European countries, but such statements attract hardly any interest at all. This might not be overly wise, though.
At the end of last year, Tyler Durden at ZeroHedge published a graph from Haver Analytics/Morgan Stanley that should probably have sounded alarm bells quite a bit louder than it did.
Still, this graph would seem to indicate that the only core issue in the UK is its outsize financial sector with its outsize debt. From time to time, however, news articles pop up that seem to indicate there's more going on than trouble in the City of London.
I found this one alarmingly interesting, for instance, from James Hall in the Telegraph on January 4:
One million people take out emergency loans to pay mortgageAlmost one million Britons have taken out an emergency 'payday' loan to help pay their rent or mortgage in the last year, according to Shelter, the housing charity.
The high degree of borrowing highlights the 'spiral of debt' that people are falling into to keep a roof over their head, Shelter said. The charity also found that seven million Britons are relying on some form of credit to help pay their housing costs.
Campbell Robb, Shelter’s chief executive, said: 'These shocking findings show the extent to which millions of households across the country are desperately struggling to keep their home.'
Ilargi: Payday loans to pay off your mortgage? Sounds like perhaps Britain has a substantial hidden real estate problem, a pre-shadow inventory one that could spiral out of control at a rapid clip.
On January 9, the same James Hall had this follow-up:
Six million households have only five days' savingsAround six million households would be unable to survive for more than five days if they stopped being paid, such are the low levels of savings among Britons, new research shows.
A new report from First Direct, the bank, warns that one in three UK households have less than £250 in accessible savings. A fifth of all households have no savings at all.
The bank said that £250 is the equivalent of three days’ average monthly household take-home pay. With average monthly outgoing currently at £1,536, these savings would last just five days.
Ilargi: Obviously, the two groups, those that take out loanshark payday loans to keep a roof over their head, and those that live paycheck to paycheck, overlap each other to a large extent.
Still, what makes it striking is the sheer number of people affected. One million people need emergency loans to keep their families in their homes, while six million households have nothing whatsoever saved for a rainy day.
If we put the average household size at 2.5 people, that means that, out of 60 million living in Britain, 2.5 million are on the verge of losing their homes, and 15 million, or 25% of the population, risk having to cut on their basic needs, food and heating, if they hit even the slightest speedbump.
And what are the chances this situation will improve any time soon? It doesn't look good; in fact it looks set to worsen. While there's no lack of denial, an increasing number of voices admit that the British economy has already slipped back into recession. This is from the BBC this morning:
UK in recession say Item Club economic forecastersThe UK may have already slipped back into recession, economic forecaster the [Ernst&Young] Item Club has warned. The think tank said gross domestic product shrank in the final quarter of last year and would contract again in the current three-month period.
It said that even if the eurozone could resolve its problems the UK economy would grow by just 0.2% this year. It also predicted unemployment would rise by a further 300,000 to just below three million people. [..]
Meanwhile, the Chartered Institute of Personnel and Development said unemployment would stay above 2.5 million until at least 2016, peaking at 2.9 million next year. Chief economic adviser John Philpott said the jobless rate would rise to 8.8% at the end of next year. [..]
Another forecast from the Centre for Economics and Business Research said the UK would actually shrink this year by 0.4% and by a full 1% if the eurozone broke up.
Ilargi: Nor is it hard to find an ironic twist in all this. In what depicts a fast growing chain of events, Zoe Wood reports for the Guardian:
Royal Bank of Scotland pulls out of deal to rescue PeacocksMore than 13,000 retail jobs are on the line at value fashion group Peacocks after Royal Bank of Scotland walked away from restructuring talks at the heavily indebted retail chain.
Peacocks may have to appoint administrators after the state-backed lender had an abrupt change of heart about a deal to refinance the retailer's £600m debt pile, which would have involved risking more money in the business. RBS and Barclays were in the driving seat of the complex debt-for-equity negotiations – which were said to involve 18 funds and lenders – as they are owed the most. Both banks are owed more than £100m.
Peacocks' advisers have been trying to put together a rescue deal for months, but talks broke down at the weekend, leaving the future of the store, which has 550 branches and employs around 10,000 staff, hanging in the balance. [..] "It's quite a complex deal," said one insider. "It was all going well until RBS walked away last week. There are still conversations going on." [..]
RBS is facing a series of tough decisions this year as a number of struggling high-street chains, including HMV and Clinton Cards, are reliant on its largesse. "Each company restructure is judged on its own merits, but clearly the difficult conditions that retailers face is an important factor," said an RBS spokesman. [..]
A string of high-street chains including La Senza, Blacks Leisure and Barratts Priceless have called in administrators in recent weeks as trading failed to produce enough cash to cover costs such as rent and interest payments on loans.
Ilargi: With the country in a recession, but hardly anyone willing to concede that to date, least of all its government, it's no wonder that things like this happen, mostly hidden from sight.
The ironic twist to it is provided by that fact that RBS is 70% owned by the British government, which has poured billions of pounds into the bank, and then lets it make decisions that cost 10's of 1000's of jobs.
I don't want to get into a political debate about this; however, protecting banks with taxpayer funds, but not jobs, is a decision that is of course as political as it is ironic. Letting bailed out bank executives make decisions that cut all these jobs and at the same time pay themselves multi-million dollar bonuses is way beyond ironic.
But all of the above is just today's prologue. I received an article yesterday that outdoes it all, and then some.
John Ross, Visiting Professor at Antai College of Economics and Management at Jiao Tong University in Shanghai writes a real stunner on his blog Key Trends in Globalisation:
The incredible shrinking UK economyThe magnitude of the blow suffered by the UK economy since the beginning of the financial crisis is very considerably minimized by not presenting it in terms of a common international yardstick. Gauged by decline in GDP, using a common international purchasing measure, dollars, no other economy in the world has shrunk even remotely as much as the UK.
As most countries produce only annualized GDP data it will be necessary to wait before a comprehensive global comparison can be made for 2011. However it is clear no substantial growth in dollar terms took place in the UK economy during that year – GDP at national current prices rose only 1.4 per cent between the 1st and 3rd quarters and the change in the pound’s exchange rate against the dollar during the year was a marginal 0.3 per cent.
Therefore there will have been no significant recovery from the UK data set out in Table 1 below, and the gap between the UK and other European economies, which form the next worst performing major group, is too great to have been qualitatively affected by changes in the Euro’s exchange rate – the Euro declined against the pound by only 3.3 per cent in 2011.
Table 1 shows that the fall in UK GDP in 2007-2010 was $562 billion compared to the next worst performing national economy, Italy, with a decline of $65 billion – i.e. the decline in UK GDP in the common measuring yardstick of dollars was more than 8 times that of the next worst performing national economy. Table 1 shows the 10 national economies suffering the greatest declines in dollar GDP.
It is also extremely striking that the UK’s decline was more than two and a half times that of the entire Eurozone.
The UK accounted for a somewhat astonishing 77% of the EU's decline.
Expressed in percentage terms the situation is no better. Of all economies for which World Bank data is available only Iceland, with a decline in dollar GDP of 38.4%, suffered a worst percentage fall than the UK - even bail out economy Ireland, with a fall of 18.4%, outperformed the UK economy.
Two trends intersected for the UK's performance to be so much worse than that of any other economy. First, contrary to the government's anti-European rhetoric, UK economic performance in constant price national currency terms has been significantly worse than the Eurozone during the financial crisis (Figure 2). [..]
... between the beginning of 2008 and the beginning of 2012, the pound's exchange rate has fallen by 21.0% against the dollar compared to the Euro's 11.4% drop in the same period. The multiplicative effect of the severity of the relative drop in constant price GDP and the fall in the pound's exchange rate accounts for the unequalled decline in UK GDP in dollars.
As at present the UK economy shows no substantial sign of recovery, the present UK government, which maintains a steadfastly ostrich like attitude towards Europe in particular, and most other countries in general, may argue that a measure in terms of dollars at current exchange rates is irrelevant – the UK currency is the pound and what counts is constant price shifts. Such an argument is false and an attempt to disguise the true scale of the decline of the UK economy.
The internationally unmatched decline in UK dollar GDP is a huge fall in real international purchasing ability. The far higher than targeted inflation in the UK during the last two years, which has substantially eroded the population's living standards, is itself in part a reflection of the decline in the UK's exchange rate and consequent raising of import prices. In short, the decline in the international purchasing power of the UK's economy translates into a direct fall in real incomes.
It may also be seen that the government's claim that the UK is outperforming Europe and the Eurozone is entirely without foundation even in constant price national currency terms. But when measured in terms of real international comparisons, i.e. in dollars, the UK's performance is incomparably worse than Europe's.
It appears extremely unlikely that the UK's economy will escape from this circle of decline in the next period. The austerity policies pursued by the present UK government have substantially slowed the economic recovery that was taking place in 2009 and the first part of 2010 - between the 3rd quarter of 2010 and the 3rd quarter of 2011 the UK economy grew by only 0.5%. [..]
Even if any partial recovery takes place, for example by some increase in the exchange rate of the pound against the Euro, the sheer magnitude of the decline in the UK economy makes it implausible that this could be on a scale sufficient to reverse the fall in its relative international position.
Ilargi: Britain lost 20% of GDP from 2007 - 2011. Against this backdrop, and don't let's forget the over-600% debt to GDP ratio just for Britain's financial sector, which will inevitably lead to more - calls for - bailouts, what is the Cameron government's response?
First of all, austerity measures. Which will hit those people very hard who are in the bottom 25% or so who already have no savings, no nothing, to fall back on. And which will also lead to a rise in unemployment, which in turn will exacerbate the vicious problem circle.
Cameron also distances himself, and his country, from continental Europe, even though that is Britain's main export destination. How smart is that?
Britain is a country of relatively large regional disparities as well as wealth disparities. The already rich center increasingly sucks up the remaining wealth of the periphery of society. There is then only one possible outcome of those one million people paying their rents and mortgages with payday loans: the British housing bubble will burst sooner rather than later.
Tax revenue has only one way to go as well. Down. So what will Cameron use to support the banks? How will he attempt to prevent a large scale repeat of last year's Tottenham riots?
Looking at all this, we also need to wonder how much longer, and why in the first place, Britain is perceived as a safe haven, with its sovereign bonds - gilts - much sought after. Sure, Britain has its own currency and central bank, it can "print", it can do QE 1001, but it's not as if it hasn't already tried that route. And still lost 20% of GDP.
Whatever it decides to do, it seems safe to presume that Britain might well steal some of the limelight away from Greece and Italy in the not too distant future.
163 comments:
My gut feeling has been that a certain amount of hiding the facts has been going on, both here in the UK and in the US. Anecdotal evidence points to really severe financial hardship and yet official figures don't support it. Perhaps now the reason has become clear, yet somehow I hope that you're wrong. We'll see.
Regarding the previous post "Dark inventories" of housing and oil.
Perhaps by co-incidence also Greenland ice sheet is growing darker
I find scary the underlying assumption that measuring by US dollars over the Obama years and preceding administration -- is a stable measure.
My observation is that the US economy has been anything but stable.
Measuring the UK decline vs. a drooping standard is just all around scary.
Living in the UK I have for a long time thought the UK mainstream seemed to deliberately and alarmingly avoiding talking about the UK in the same disparaging terms it talked of other EU countries. When France attacked our financial position recently I respected them for telling some hard truths.
I'm not surprised its much worse than publicised. The housing bubble is truly enormous.
I'm trying to decide when the jump to a house with more land to grow more food. Will I have a job to support the move? Will a loose massively when the crash comes?
Its extremely hard to determine how best to ride the storm.
Usaco energy independence is a scam and a bad joke. But I watched the Giant / Packers game, replete with commercials and washed down with the cheapest Virgin Island rum last night, and it dumbed me down enough to believe it. Stoneleigh has dealt with fracking and the "new technologies" in detail here already, especially in terms of NG. I think the most interesting aspect to this charade is **why TPTB are pushing it. Like the pension fund fiasco, it is one way of extracting some serious dumb money, but that doesn't explain the entire disinformation campaign.
Regarding war with Iran. I think it is pretty obvious even to a non-military specialist, that Iran can shut down Persian Gulf oil, maybe indefinitely. Without a successful land invasion in the area surrounding the Straits of Hormuz, this is a no brainer. The Iranian military has specialized in ship killing. I feel that a "NATO" invasion of Iran would be a very tough slog, much, much more difficult than Iraq. As to the theory that this invasion's primary purpose is to keep oil prices hovering just about the USD 100 level, who knows what TPTB are thinking or whatever term one wishes to use for their corporate synaptic activity. But a total shutdown of Gulf Oil, even with the global depression, will result in oil prices vastly about the $100 mark which would plunge the global economy into a much deeper immediate depression. NATO might be counting on a successful land invasion which could keep the shutdown to weeks or a few months, but this would certainly be a gamble. And how much of the Saudi and Emirate oil infrastructure could Iranian missiles and Shia commandos take out is another question. Like the sorcerer's apprentice, this operation could turn into "too much of a good thing."
Of course, the conquest of Syria, Iran, and Pakistan are the incomplete tasks remaining from the detailed strategic plan to surround Russia and China which goes back to the 1990's, and for which 9/11 became the necessary, official kick-off. With the momentum of "the Arab Spring," in which NATO has grabbed the entire North African coast, can the remaining objectives be far behind? Pakistan's nuclear status is posing a roadblock however as is the black hole of Afghanistan, where empires go to die. The fact that NATO chose to replace Kadaffi with al Qaeda Libyan "freedom fighters" recently "reformed" and returned from shooting US soldiers in Iraq should be sending a message to all but the dumbest Usacos.
Regarding, the Internet memory hole, of course the NSA is storing everything for eventual, if not immediate, "data mining." To be honest, if I were younger, I would think twice about being so outspoken. Anyone know where one can get a cyanide tooth implant? Maybe some of the silicone breast surgeons are doing them. After a week in Miami, I have become concerned with peak silicone.
Re triple dash's discussion of the Navajo - this might not be for everyone. I spent a year on the Zuni Res, on the AZ border of NM, in the mid-90's as a purported 8th grade science teacher. We also had a Navajo Res about 15 miles down the road which I would also visit. Of course, they hated each other. I don't think I would want to spend my golden years there but everyone's milage may vary.
The UK is really in an ugly spot. Mind you the whole world is really. A so far slow motion debt spiral. Informative post this.
Brad K,
"Measuring the UK decline vs. a drooping standard is just all around scary."
The U.S. Dollar is THE one and only global [and especially Western] standard of measuring financial debt. That's why a banking crisis in the Euro region starts with a USD shortage, even if it's precipitated by sovereign debt holdings. Same thing with the UK, and given the fact that a solid 600% of their total debt/GDP ratio is financial, I'd say a GDP decline measured in USD is a great way to look at it. And as the referenced article states, it reflects a real drop in purchasing power for imported goods, which significantly effects the ability of households/businesses to service their debts.
The internationally unmatched decline in UK dollar GDP is a huge fall in real international purchasing ability. The far higher than targeted inflation in the UK during the last two years, which has substantially eroded the population's living standards, is itself in part a reflecton of the decline in the UK's exchange rate and consequent raising of import prices. In short, the decline in the international purchasing power of the UK's economy translates into a direct fall in real incomes. The decline in the UKs ranking among world economies in terms of GDP, being recently overtaken by Brazil, statistically reflects the same process.
El G
Nice rundown on the transJordanian Humpty Dumpty blues (anyone want my lyrics for that tune?).
So inspiring that the phrase "hoisted with his own canard" leapt to mind as to the future of the whole PNAC goondoggle (started out as a typo, gonna leave it). My but you inspire.
And we listened to Mr. Daisy and the Apple Factory. "World Made By Hand" indeed - as is remarked, it never stopped being just that. Out of respect for the workers I probably will refrain from the sole instance of pulling a trigger I have ever threatened, which is to put this laptop out of its misery.
It's a sin to long for the day of anguish, but then again the industrialization scheme is fearsome to behold. I don't think I have heard a better portrait than that of Mr. Daisy's.
To understand how the UK came to such pathetic state, one can do worse than view Adam Curtis' The Mayfair Set. The crisis has been building for a long time.
Hey Brad,
I find it an interesting approach. If and when your currency declines/rises, and you calculate your GDP in that currency, needless to say that really influences the picture.
And yeah, since the pound lost 21% vs the USD over the period involved, "Dollar/GDP" is real different from "Pound/GDP". And different in a way that Cameron won't like.
And it's not like you're using forint or some other relatively obscure currency, the USD is the reserve currency. What do I care, you say? Well, Britain has to pay for many of its international purchases, like petrol, in USD. That 21% decline, therefore, truly hurts.
If you take Italy, and see that, first, the Euro lost 11.4% vs the USD, and then that Italy lost "only" 3.1% of GDPvsUSD, and Spain just 2.4%, you're starting to see a picture emerge.
If you would turn it around, and measure US GDP in pounds, you'd see a huge increase in US GDP, something we all know would be baloney.
That and "the paying for imports in USD" factor makes it a viable measure of calculation for me.
Calculating your own GDP solely in your own currency is misleading, provided you are active in international markets, where your currency is not the standard.
.
Ash,
I don’t want to nit pick, but I think this is slightly off:
”... given the fact that a solid 600% of their total debt/GDP ratio is financial .."
Total Debt/GDP ratio is about 950%, financial sector debt about 620% of GDP. Ergo, about 652% (620/950) of total Debt/GDP ratio is financial sector.
.
S&P expects Greece to default soon
Greece will default shortly on its debt obligations, a senior Standard & Poor's official told Bloomberg Television on Monday.
"Greece will default very shortly. Whether there will be a solution at the end of the current rocky negotiations I cannot say," said Moritz Kraemer, the head of the agency's European sovereign ratings unit.
.
My good friend & neighbor to the south says wifey
wants to pull the plug on landscape plant sales this summer, so, given the housing picture, shrinking
profit margins continue to squeeze growers. I've put
my bid in for one of his greenhouses. Best deals are close to home!
Currently reading ICEBREAKER - Who Started the
Second World War? by Viktor Suvorov. (.pdf)
The cast includes Marx, Engels, Lenin, Trotsky, Stalin, and all the Soviet wartime marshals; Soviet publications are the main source.
Of Marxist-Leninist literature I've read, a portrayal
such as this fits with todays blindness regarding who
is America's friend? In circumstances of empire with
attendant over-reach, together with citizens rights
that once were sacrosanct now revoked.... may I dare question this without fear of disappearance? Or
should I expect the role of cannon fodder like the Poles under Stalin?
From Standard&Poor's:
European Financial Stability Facility Long-Term Ratings Cut To 'AA+'
• On Jan. 13, 2012, we lowered to 'AA+' the long-term sovereign credit ratings on two of the European Financial Stability Facility's (EFSF's) previously 'AAA' rated guarantor member states, France and Austria.
• The EFSF's obligations are no longer fully supported either by guarantees from EFSF members rated 'AAA' by Standard & Poor's, or by 'AAA' rated securities. We consider that credit enhancements sufficient to offset what we view as the reduced creditworthiness of guarantors are currently not in place.
• We are therefore lowering our long-term issuer credit rating on the EFSF to 'AA+' from 'AAA'. We are also affirming the 'A-1+' short-term rating on EFSF.
• The outlook is developing, which reflects that we could raise the EFSF's long-term rating to 'AAA' if we see that additional credit enhancements are put in place, but also the likelihood that we could lower the rating further if we conclude that the creditworthiness of the EFSF's members will likely be further reduced over the next two years.
.
@Nobody, have missed your postings. Hope you are able to post more again.
So how will Britain save itself? Dead simple, really. Not grow stuff, or build stuff. Wouldn't want to get tired, would we? No, none of that. Trade renminbi instead. What has the world come to when senior government officials can say these things, and then still be senior government officials the next day? What is this, a failed comedy show?
George Osborne: British businesses must cash in on Chinese opportunities
Britain will become a global hub for trading Chinese currency as businesses cash in on the "huge opportunities" for dealing with China, the Chancellor announces today.
.
"What has the world come to when senior government officials can say these things, and then still be senior government officials the next day?"
It's the way that a world that uses money works. Simple as that. In such a world, "senior government officials" are not public servants but rather politicians corrupted by financial interests. Government doesn't really exist, only politics does.
"George Osborne: British businesses must cash in on Chinese opportunities"
What are the good Brit working folks to do while the rich (Chinese, etc.) ride around London in their new Rolls and Bentleys?
Is that guy's name Osborne or is it Chamberlain!
George Osborne is also the two-bit fool who repeatedly insists that Western taxpayers should keep increasing their contributions to the IMF indefinitely. Let's give it to him - he isn't a man that's afraid to publicly put forth increasingly horrible/repulsive proposals.
Can anybody from the U.K. comment on the rail situation?
I visited London and the surrouding area in 2010 and was actually quite impressed by the rail service.
Can it save Britain? I wonder. I just don't know enough about what's actually happening on the ground.
The UK And Hong Kong Have Worked Out A Deal To Make London A Yuan Trading Hub
Patrick said...
@ NZsanctuary
It's my view that there simply is no viable form of energy that is going to replace oil.
Yes, it is not likely, and given scalability, financing, complexity, and resource issues (as you mention), LENR is most likely just another pipe dream, but it would be interesting to know if there is any merit in it.
Greenland is getting sooted by Red China who has a price cap on electric power rates... which causes the plant operators to use the cheapest ( foulest ) soft coal -- and BYPASS their bag houses.
Soot melts ice like crazy -- which is why sand is used every winter to de-ice I-80 through the Sierras.
--
el gal..
America is ALREADY exporting unleaded gasoline in stunning amounts to Europe. So much so it is bankrupting Petroplus. ( Crack spreads are ruinous. )
America's NET liquid energy imports are plunging at this time.
---
Everyone: Iran's gross crude exports have to be netted against her massive refined imports.
So while 4,300,000 bbl/dy looks tremendous -- something like 1,300,000 of that figure represents crude refined ( in India ) for Iran's direct consumption.
Since Iran gets MASSIVE food imports by way of the Straits -- on top of her gasoline -- there is no chance that Iran can long survive cutting off her own throat.
ALL of the bluster is part of her chronic campaign to get crude prices up; nothing more.
----
Interesting to see that Yanbu is going to clone the 400,000 bbl/dy refinery already under construction -- this time for Red China.
Smaller markets just can't scale up to the size required to economically crack sour, heavy crude -- of which KSA has at least 1,500,000 in reserve export capacity. ( Sweet, light -- not so much. )
Anyone know if it's "standard fare" for a Chinese Premier to make a six day visit to the Arabian Peninsula?
In addition to the new refinery deal djhimm mentioned, there's a new nuclear energy deal. Have they always been such close buds?
Kingdom, China ink nuclear cooperation pact
.
Bluebird,
Thanks for the kind words of appreciation.
I was sufficiently moved by Ilargi's post to inject a link to The Mayfair Set because I believe it suits as a backgrounder to what is happening these days. Not that I think it will do anyone any good to understand it better.
To paraphrase one of those useless economists. That which cannot be preserved, will not be preserved. What is being writ large upon the wall by the good ole invisible hand is an expanded meaning of that old saw about money being the root of all evil.
When the production of goods is sacrificed in favor of producing money, the inescapable by-product is copious quantities of evil, much of it made available for export. As the industrial scale production of goods is one of those things that cannot be preserved, peak evil still lies somewhere ahead.
You should probably switch to hoping that I comment even less often. This will be my last comment for this thread and probably for quite awhile to come. Nor will I be reading this thread again.
That Nobody Guy
Kunstler said:
"One can understand why the last Shah was hated and resented. But here you now have a whole class of despotic maniacs much worse than the Shah ever was and they cannot be gotten rid of. Worse, they are devoted to exacting vengeance on the USA and its kindred western nations."
Oh yes Mr Jim, the Iranians are going to develop a atomic device drop it on Israel and then be quite expressly blown totally to bits! Indeedy do, those are really prime-cut, those maniacs.
Is there some problem going on with 'Jims' these days? first Jim Richards and now Jim Kunstler playing patsy with western war cooks propagandists?
El Buzzard said...
I think the most interesting aspect to this charade is **why TPTB are pushing it. Like the pension fund fiasco, it is one way of extracting some serious dumb money, but that doesn't explain the entire disinformation campaign.
The first things that come to mind: Money (subsidization from the public purse). Experimentation with fault tampering. Delusions of techno-potence. Different people are probably pushing it for different reasons, obviously. What others have you come up with?
I. M. Nobody said...
To understand how the UK came to such pathetic state, one can do worse than view Adam Curtis' The Mayfair Set. The crisis has been building for a long time.
Good to see you are still about
Mr Nobody,
Nice term..."Buccaneer Capitalist".If one has a good understanding of how these scum operate,and how pious and godfearing they act"doing gods work"your comment about peak evil becomes auspicious...and so very true.
We have not seen peak evil yet.
We have seen peak oil,lookslike.
That article about the change in ice reflectivity sent shudders down my spine.That is one of the things that gets close to being THE kinda trigger to all kinds of god-knows-what climate change.We might well start down a path that NO ONE wants to travel.
Anyone care for 250mph hurricanes every other week thru the oil patch in the gulf?.Pour as much warming/heat into a landmass that size and no one knows,or can predict what will happen ...[they still have all kinds of oil spewing out of that one big hole].
No one has a clue now how bad this is going to affect all those estimates about the next century.They basically said the last time they were off by a factor of 100...low.The scale of change is now happening so fast we may get to see some real sights never seen before by this Human Civilization.Like year round ice free arctic...a lot of alaska tundra transformed into swamp,and storms that will boggle the mind with their intensity.
Mother nature bats last,
And she can be a real bitch...
Bee good,or
Bee careful
snuffy
You need to re-examine your sources of data: GDP in the UK has not dropped anything like 20% between 2007 and 2010
Ilargi said:
"Looking at all this, we also need to wonder how much longer, and why in the first place, Britain is perceived as a safe haven, with its sovereign bonds - gilts - much sought after."
I went to hear Stoneleigh talk here in the UK a couple of years ago, and she was advising everyone lucky enough to have savings to move them out of the banks and into short-term government debt. Have the two of you now revised your views on that for us Brits?
GS: I travel 100 miles by rail every weekday and I have to say I'm pretty impressed. It's crowded, but comfortable enough (once you work out a few tricks!) and about 98% reliable on my route. Having said that, fares just went up 6%, which is considerably above even the official rate of inflation.
I must admit the John Michael Greer gets more credible with each passing day.
GS..Rail travel here in UK varies across the country. Here in the North East it is reliable but under funded with old dirty trains and poorly maintained infastructure. If you are a single traveller it is quite affordable but as a family it is much, much cheaper to travel by car. There are no discounts to purchase mutiple tickets (I have 3 children) so family travel on the railways is a no no.
Trimorph.. I too saw Stoneleigh and as a result sold my gold holdings and went into cash. The worst decision i've made so far, with the BOE printing with QE and gold prices increasing since I sold my hord I have lost ALOT of money. Stoneleigh might be right in the long term but her timing stinks. I'm still a fan though!
I agree with others:
THis blog entry throws a lot into question.
WHat are you saying?
Does the UK face inflation or deflation? You seem to be emphasizing our loss of living standard through inflation and the associated rise in the cost of imports.
This muddies the water with respect to TAE's assumptions and positions.
Not well thought out.
Scrofulous,
For all his insights, Kunstler is prone to blind spots, and to overwhelming hatred of things which most would say merit only moderate dislike. He hates Arabs much worse than Persians, not to mention Dixie and Cheese Doodles.
I suspect him of Israel worship, but he talks so much more about what he doesn't like than what he does, it's hard to be sure.
@ Richard Frederickson
Don't even get me started about how much money I've lost following the advice here.
I liquidated my 401K 2 years ago. Lost over $10K worth of company matching funds not to mention >$1K dollars in extra income taxes. Horrible horrible financial insights for individuals.
Interesting writing but only good for very long term vision thing.
Ilargi,
you said:
"Britain has to pay for many of its international purchases, like petrol, in USD."
I believe Mish has addressed this before and the above statement is not correct. Major international currencies like the $, Euro, sterling, Yen, Swiss Franc are Fungible. Britain does not pay $ for its oil. It buys oil with sterling
@ Ilargi,
here is the relevant Mish link:
"It makes perfect sense for countries that trade with each other to do so in their respective currencies. Even though oil is priced in dollars, oil trades in Euros right now. Oil trades in Yen now. Currencies are fungible. So if a few minor countries want to trade in Yuan now, it will not matter one iota in the grand scheme of things."
Mish says Britain buys oil in Sterlingn
And, regarding Britannia and it's growing inequality gap, see today's BBC article:
The Wealth Gap - Inequality in Numbers
interesting correlation - the year 1979 is bottom of income inequality and "global peak oil per capita" at the same time....
Erin...Nice to see its not just me that's suffering. Like I said I'm a fan of TAE and enjoy all the article's, however i'm not sure that they realise just how many people are making life changing decisions based on their articles (don't want to say advice, but it does seam that way sometimes). Whilst I agree on much of what they say where is the DOW/FTSE crash, the gold crash, sub $100 oil, UK house price crash, et al? These may come but timing is everything. P.S. the BOE and the FED will print and print, and keep interest rates low forever. It may not stop some assets deflating but they will not default, it is not an option and they will inflate the dept away, simple as.
"The worst decision i've made so far, with the BOE printing with QE and gold prices increasing since I sold my hord I have lost ALOT of money."
This is exactly the kind of mentality that has been and will continue to destroy the social fabric of developed societies as the real losses set in from peak finance and peak oil. As I've wrote before, the pain of losing an amount is more acute than the pleasure of winning that same amount in these societies that value short-term monetary gain above all else (i.e. simply preserving wealth for the long-term). If one cannot handle the pain of losing out on potential gains in the short-term, then one will have a very, very rough time of it in upcoming years.
Ash...LOL 'short-term monetary gain' pays for food on the table and clothes on my families backs. This is what happens in the real world, off the world of internet blogspots and chat rooms.
Saudi Arabia targets $100 crude price
”Saudi Arabia is aiming to keep oil prices at about $100 a barrel, a third above its previous public target, in a sign that Riyadh needs higher oil revenues to sustain a big rise in public spending.
Ali Naimi, the Saudi oil minister, on Monday for the first time said the world’s largest oil producer aimed to keep oil prices at the triple-digit level. .”
Meanwhile, exposure of commingling/rehypothecation about to pick up steam?
Second MF Global Unveiled As Canadian Regulator Accuses Barret Capital Of Commingling Client Funds
“We expect many more, Canadian, and otherwise banks, to follow suit, in a world in which broker funding is virtually nonexistent at this moment.”
.
"I went to hear Stoneleigh talk here in the UK a couple of years ago, and she was advising everyone lucky enough to have savings to move them out of the banks and into short-term government debt. Have the two of you now revised your views on that for us Brits?"
No, why would you think so?
.
Richard,
No, it doesn't. In the real world, currency savings pay for all of that stuff (even that will come to an end at some time, depending on where you are, but not very soon for USD holders). When you turn your savings into speculative investments in RE, stocks, PMs, etc., you make it relatively illiquid and set yourself up for a world of pain when their value vanishes over the course of hours/days/weeks. If your goal is to gamble on picking tops and bottoms, then I recommend you visit the local casino instead, because there you will have less chance of being bent over by your counter-parties.
Ash,.. Look as I said in my previous posts I am a fan of TAE and agree with most of what is said so its not worth arguing to much, however I would like to make one last point on this;
In the video http://www.youtube.com/watch?v=ESYAix1QD1E
'How I Prepared My Home for Peak Oil and Economic Uncertainty' Nicole stated that she was able to sell her home (an asset like gold) in the UK and make a 'short-term monetary gain' mainly due to TIMING the market correctly! She then purchased another cheaper home in another country and used the surplus cash to make some changes to her new home to help her prepare for Peak oil. How can the rest of us make similar preperations like Nicole did if we are unable to sell assets at the RIGHT TIME to help make the same purchases. Are you saying that it's OK for Nicole to make these 'short-term monetary gains' and not us 'normal people'? If she had timed the market wronly, or differenlty surely she may not have had enough surplus cash to make all the changes she did? Please explain to me how this is different to my earlier comment that I am dissapointed that I could have made some extra cash (like Nicole) to ensure I don't go into dept and continue to make preperations for Peak oil?
Richard,
Nicole can obviously speak better to her own intentions with that decision, but let me hazard a guess:
Nicole's goal was not to "time the market correctly" in the short-term, but to avoid having to do that which is impossible to do and take on the unnecessary risk of her wealth being rapidly swept up in a seller's market. She was operating under the same theoretical foundation and empirical observations that she has used to offer general advice to TAE readers, such as yourself, which you are now criticizing for "costing you" monetary gains with your prior investment in gold (assuming you would have realized those gains by selling). But, just like her RE decision, she wasn't telling you how to time the gold market and maximize your short-term gains. She was telling you that, depending on your expenses/liabilities, excess savings and other personal circumstances, you may want to consider selling a portion of your gold and avoid the risk of having illiquid wealth disappear when you need it the most.
djhimm
Last I looked, net USA imports of crude were roughly two thirds of its total usage and totaled about 13 million barrels a day. Perhaps you might indicate how many millions of barrels a day equivalent of gasoline and diesel exports are currently making the USA a net energy exporter. Last I heard, the Fed couldn't print gasoline and it all comes from crude oil. Which would mean that the USA has miraculously erased its 13 mbpd jones in order to become a net petro energy exporter. As we would say in New York, "Who knew?" I will admit that China has increased its share of the peak oil plateau to the detriment of Western usage, but the amounts at this point are not dramatic, though they may become so in the future.
Re JHK
He never outgrew his Brooklyn childhood, Israel uber alles, mentality. If one wishes to pay attention to him at all, once his flights of fancy leave North America terraist firma, one is best off tuning out. JHK is, in a fashion, an interesting case study in selective cognitive dissonance. He has been quite astute at seeing behind the peak oil MSM detractor crap, yet buying into the MSM media crap on Middle East NATO invasions, hook, line and sinker. He also buys in big time to the "conspiracy theory" meme which the security state uses to hide their just so obvious, naked emperor atrocities. Other than his suburban malinvestment theme, I don't take him very seriously, though his snarky writing is often amusing.
"Nicole stated that she was able to sell her home (an asset like gold) in the UK and make a 'short-term monetary gain' mainly due to TIMING the market correctly!"
Funny you should say that, because it fits in perfectly with what’s lacking in your earlier remarks concerning gold.
Nicole's TIMING in selling her UK house, from your point of view, was TERRIBLE. She sold in 2000. A few years later, the same house was worth twice as much.
However, the timing may have been wrong from your point of view, but it wasn't from hers. She realized she would need time, to settle in, get things running, install solar and woodstoves, etc. This for her represented a greater value than more pennies.
An idea you don't really seem to understand.
.
el G Being a _net_ importer does not mean a country's exports are zero. For instance, the US has done contract refining for Mexico for decades. We import their oil, then export the refined products back.
Given that US oil consumption has declined, it is certainly plausible that it has become profitable to import crude into the States and then export the refined product to Europe. I've no idea if it happens, but the idea is not intrinsically silly.
PS. I do find it unlikely that Europe is importing finished gasoline. I find it quite likely however that US refiners are swapping diesel, which they get as a byproduct of making gasoline, for gasoline which the Europeans get as a byproduct of making diesel. This despite both areas being net importers.
Frank,
I was not implying that the USA importing crude, refining it, and then exporting it was intrinsically silly. I was stating that this business certainly does not make the USA magically a net petro energy exporter and erase its industry and consumer net petro energy imbalance. If anyone has hard data that the USA magically has so much crude coming from its domestic wells that it not only covers it domestic needs, but it has become a **net** exporter, I would love to see it. This appears to be another disinformation campaign.
I live on the South Coast, work in London and my parents live in rural Wales. I know the place.
This article is accurate but skewed in the same way that a photo of a tree in winter with no leaves is accurate but takes no account of the summer foliage.
What people fail to realise is that there are 250,000 people immigrating to the UK each year. That's a city the size of Atlanta that needs to be built every two years in a land area smaller than Oregon. The chances, therefore, of a real estate bust are pretty slim. There's too much demand.
The only way a real estate bust will happen is if banks stop lending and giving out mortgages. That's something completely different and is happening. But that is an elite-planned operation, nothing less.
(Yes, a lot of people are emmigrating too, but a fair percentage move back after a few years.)
Our whole economy is based on the fraudulent finance of the City but, as it is still standing, so is the UK. When the City goes down, all bets are off. But, to be honest, they'll have a war long before that happens.
I wish I could believe that the growth of GDP is a sign that my economic condition is improving.
The only way to get that personal improving condition would be to have my cash flow growing faster than GDP growth or to have my expenses go lower than the growth of GDP.
Let’s see ...
Has unemployment payments to individuals improved more than the GDP growth?
Have welfare payments to individuals improved more than the GDP growth?
Have pension payments to individuals improved more than the GDP growth?
Have wages for the same job to individuals improved more than the GDP growth?
Of course, we must also ask, has the cost of “putting food on the table” by individuals been lower than the GDP growth?
There use to be a time, in the 50’s, where a blue collar worker could get a house, feed his family, buy a car, and save to get a two week vacation.
In the 80’s it took a working partner to achieve the same standard.
Now, both must work and they must get a “mortgage helper rental unit” and/or use the savings from their parents to put a roof over their heads and even have the grandparents move into the basement unit. This way, they can afford the “daycare” cost for their children by having the grandparents doing the babysitting, driving the kids to and from school, etc..
Oh!
Did I forget to mentioned that NOW, parents and grandparents MUST save money to send their kids to school or the kids and the parents and the grandparents must go into debt slavery?
Yep!
Growth of GDP has not helped the majority of people.
Things are not getting better for the majority.
jal
More pen to paper in the Arabian Peninsula:
China weighs 'right side of history' in Gulf
“Premier Wen Jiabao's current six-day visit to Saudi Arabia, the United Arab Emirates (UAE) and Qatar is a display of masterly diplomacy. China is probably the only big power today among the permanent members of the United Nations Security Council that can claim a strong partnership with Syria and Iran on the one hand and Saudi Arabia and Qatar on the other.
China is managing this political and diplomatic feat with the least wastage of resources and eschewing any flamboyant acts or rhetoric...”
…
“The two countries also signed a nuclear cooperation agreement during Wen's visit. Saudi Arabia plans to build 16 nuclear power reactors by 2030…”
China, UAE sign $5.54bn currency swap deal
“The agreement signed in Dubai…is the latest in a string of arrangements to facilitate greater use of China's yuan in international trade."
.
What is there to support the subsistence of the UK? "GDP" from banking schemes is only a solution which skims from the rest of the world.
Where will the heat and electricity come from? Where will the fresh food be grown?
I remember listening to Nicole/Stoneleigh, here in Austin, about her situational analysis, which led her to move to a farm, where she could grow food for her family, and reduce energy dependence.
All that takes time to work out, "seasons" must pass, and solutions must arise from experience and insight.
We should not think in terms of winning or losing, short-term, in dollars or gold or pounds sterling, but we need to reconsider our means of survival for the coming decades. We survive as families and coherent communities, not as individuals.
We must build community among those who also see this looming problem, because we can't yet build it among those who do not see.
Blackbird,
Yes, I should have phrased that differently. But oil has still become 20% more expensive for Britain than it would have been had the pound kept pace with the USD.
.
And The Meek Shall Inherit The Earth
IF we can't even fix the political eCONomy, what hope do we have for the environment?
Create a carbon tax that pays a dividend directly to the poor in a new world currency run by a new International Central Bank. The new money flows directly from rich C02 user down to the poor CO2 user. This way the meek will truly inherit the earth. But, don't hold your breathe.
CO2 = $$$ = :)
Two points - first - the "riots" last summer were caused by a temporary and quite uncharacteristic laxity in dealing with public disorder. I suspect there was some behind-the-screens brinksmanship between the Metropolitan Police and the Home Secretary prior to the deployment of extra personnel, and it would be unwise to expect similar violent unrest to gain traction unless it fit the agenda of 'the authorities'.
second - at TestBlog
"The only way a real estate bust will happen is if banks stop lending and giving out mortgages. "
Like the rest of collapse, a RE bust is when you realise you, personally, have the most property you're ever going to be able to buy. How many people in the UK are currently right there?
The fact of the matter is that the advice offered by TAE and others will be judged by its timing and its overall usefulness for the recipients. For example consider the bit of advice:
We are rapidly headed for the edge of a deflationary cliff. In order to preserve your wealth and to buy yourself a learning curve, its best to get liquid now.
In a vacuum, this is neither bad nor good advice. Yet, with an unlimited timeline, it will turn out to be both useful and destructive to peoples lives over time.
In 1937, its fair to say anyone who listened to this advice in 1929 made the best decision possible. At the same time, anyone who listened to this advice in 1977 would now (2012) say that was the worst decision they could ever make.
The flip side is also true. Saying we are on the verge of an inflatonary rocket, and everyone should get illiquid was great advice in 77 and terrible advice in 1929.
Likewise, the same can now be said of the advice that Richard Frederickson and Erin Winthorpe apparently got here from TAE. In late 2008, that advice was looking pretty good. Now in early 2012, not so much so. If its BAU between now and 2035 that advice will continue to look worse and worse over time. Yet if we see TEOTWAWKI in 2012, that same advice will be deemed pretty darn good in hindsight.
So at the end of the day, the worth of every bit of advice will rise and fall on its timing. If you call for something (especially something drastic) to happen soon, and it happens in 1-2 years, you will have done alot of good for alot of people. If it happens in 5 years, you were a bit early but probably still done alot of good. If it happens in 100 years, you have wasted alot of peoples time, and likely made their lives alot worse.
So the reality is, no matter how well intentioned, any advice will be deemed good or bad on where it falls on that 1-100 year timeline. Is this fair? No. Yet, thats just the way it is.
Me: "Stoneleigh...was advising everyone lucky enough to have savings to move them out of the banks and into short-term government debt. Have the two of you now revised your views on that for us Brits?"
Ilargi: "No, why would you think so?"
Because you wondered why "Britain is perceived as a safe haven, with its sovereign bonds - gilts - much sought after." So presumably you don't think those gilts are safe, whereas it's just those gilts that I understood Stoneleigh to be recommending to her British audience. Did I misunderstand something? Or is that you think it's unsafe, but still to be recommended because it's less unsafe than any alternative?
Finnish Foreign Minister burbed out in FT about Finland NOT to take part in "treaty enshrining a fiscal compact" due signing this March. Of course he got globbered by our righteous Prime Minister Mr Cash. I'm sure verbal beating has been quite horrendous behind the curtains as it was quite severe even in front of the curtains, too (in telly, you know). "Our Foreign Minister doesn't speak for the whole cabinet and all that" (^_^)
"Ilargi said:
At the end of last year, Tyler Durden at ZeroHedge published a graph from Haver Analytics/Morgan Stanley that should probably have sounded alarm bells quite a bit louder than it did."
Yeah that graph of UK's financial sector is scary. I also found TD's post in early December to be even more scary. "Shadow Rehypothecation, Infinite Leverage..." On reading the IMF paper it seemed like it is all a huge financial time bomb. When it blows, London's housing problem and GDP failures will seem small.
http://www.zerohedge.com/news/shadow-rehypothecation-infinte-leverage-and-why-breaking-tyrrany-ignorance-only-solution
Is this why Scotland is revisiting disconnecting from England? Maybe, but chances are their bank is neck deep in doo-doo too.
"Timing is everything".
Only for speculators, which in my mind includes anyone who owns any asset that they don't intend to hold onto for the rest of their days.
@ Ka
We're all speculators.
Do you wonder what tomorrow looks like? Then you're a speculator.
Choosing to hold onto your current assets for life is a speculative investment decision. So is selling everything tomorrow. Two sides of same coin.
The Anon,
"Likewise, the same can now be said of the advice that Richard Frederickson and Erin Winthorpe apparently got here from TAE. In late 2008, that advice was looking pretty good. Now in early 2012, not so much so. If its BAU between now and 2035 that advice will continue to look worse and worse over time."
You have some valid points, but there are still a few factors missing besides simply where the advice falls on a time line.
1) What kind of events are we expecting to occur over these time frames? I&S never said the financial system will disappear overnight. If someone is waiting for a linear progression of Armageddon, then, yes, that person will probably be disappointed as the years pass. In reality, most U.S. RE and stocks hit their highs more than a year ago, with the former steadily deteriorating in many communities and the latter staying relatively flat over the last year. Depending on what kind of stocks/vehicles you were invested in, with what commissions, with how much leverage, etc., you may be beating yourself up for not cashing out your portfolio awhile ago (or for financing/maintaining that real property). PMs (and commodities in general) have performed better, but are now well off their 2011 highs.
2) What are you doing with the cash that you have been saving for several years now (rather than investing)? As others have pointed out, it takes a lot of time, resources and effort to acquire any significant degree of self-sufficiency. The person who "liberated their wealth" early on and missed out on a % rise in stocks/gold may still find themselves much better off physically and psychologically in terms of where they and their families would like to be within the next few years.
3) If we are talking about people of significant wealth (more than enough savings to cover their needs for many years), how much do they value putting that money "to work" earning more money versus generally preserving it and also putting it towards creating a completely different lifestyle than what most people are willing and/or able to sustain? If not much has happened 10 years from now in terms of deflationary or HI collapse, what have these people really "lost" other than the opportunity to stack more money, and will they even care?
Related to #3, there could also be ethical/moral considerations involved. So these factors must also be considered (in addition to time elapsed) when judging whether the type of advice recommended here was "good" or "bad" for someone over that specific time frame, and is also why we can't generally make such determinations for most people without knowing more about them first. OTOH, if we are talking about your run of the mill "put your savings to work for a monetary return" investment advice, then your time line analysis is more accurate.
re. advise
I do not have the means of obtaining a casino to generate a cash flow.
Three choices left.
Should I invest in getting skills to try to get a job at the casino and the cash flow/wage?
Should I take my income and go gambling at the casino?
Should I ignore the casino?
Wikipedia Blackout
Today, the Wikipedia community announced its decision to black out the English-language Wikipedia for 24 hours, worldwide, beginning at 05:00 UTC on Wednesday, January 18
@Rear Entry,
In either case (holding onto, i.e., one's home, or selling everything), one no longer needs to worry about timing.
With wiki down not a few will have their tongues stuck to the cleft of their mouths.
LOL HERE!
I see remarkably little mention, let alone discussion, of the UK's food position. With the massive energy subsidy from fossil fuels, the UK produces enough food to feed 40 million of its 62 million. Without oil and gas, what happens then?
Since the inflation / deflation argument has reared its ugly head in this thread (sort of), I recommend the following article from Mish's blog today. Mish is an exceptionally fine macroeconomic analyst when it comes to what is and why. (When it comes to what should be, well he's a few paces behind the Neanderthal contingent.)
http://tinyurl.com/7xwl6d5
Martin Hanson
Yes, when we were discussing Nicole's move to Canada, the question of what is going to happen to the UK food supply in the coming crash certainly did occur to me. Things look pretty glum in that regard. It seems that the only thing the UK has currently for export is financial fraud. My first bike was a Triumph Bonnevile 650cc in 1968. It was fast and high performance but very unreliable. An hour in the shop and an hour in the garage. Problem was getting it from the road to the garage at 3 AM. And then the Japanese bikes hit the market. All you did was change the oil and change the tires.
The US-China Power Struggle… and What it Could Mean For Oil and Australian Energy Stocks
"what is happening in the Strait of Malacca may become more important than the Straits of Hormuz in coming years...The Strait of Malacca is the Achilles Heel for Asia’s oil supply."
...
"So the recipe for South China Sea stew looks very spicy. With 2 billion people crowded around a pond, some of the busiest shipping ways in the world, overlapping claims and a belligerent China bullying its neighbours. Now enter Team America to save the day.
This story is still brewing. But this could disrupt shipping channels in the future. And that would throw the oil market into chaos."
.
Strikes spreading in China
"Militant strikes have continued to spread in China, leading to violent clashes with police on several occasions over the past week.
According to the Hong Kong-based Oriental Daily, last weekend 4,000 workers at the Sanyo Electric plant in Shenzhen protested over the lack of compensation and job security after a merger with Panasonic Corp this month. The plant is a Sino-Japanese joint venture.
Employees were not told about the takeover until late last week. No compensation offer was made for their years working under the previous employer. This in turn affected their pensions and medical benefits. Workers pointed out that when Sanyo Motors, as well as the nearby Siemens factory, were taken over, employees were compensated for their years of service before being reemployed by the new owners.
Sanyo Electric workers demanded a similar deal. After talks with management and local officials broke down, workers took to the streets in protest, causing a major traffic jam. Riot police and security guards were deployed, leading to clashes in which several workers were injured and four arrested.
A more explosive strike by 2,000 workers erupted last Friday at a factory in Jiangxi province owned by Changhe Auto, a subsidiary of Chang’an Auto. According to the local Jingdezhen Daily, Changhe Auto—a joint-venture with Japan’s Suzuki—planned to transfer its productive assets to Chang’an-Mazda. The decision would end production at Changhe Auto, with no option for new jobs for the employees."
For el gal.
From API:
U.S. refinery gasoline production was up by 3.0 percent from September 2010 and was at a record high on a year-to-date basis. Refinery inputs remained over 15 million barrels per day for the fourth month in a row, although slipping from the month before partly due to the effects of Tropical Storm Lee. Total petroleum imports were down for the month of September from last year by 9.9 percent. Crude imports fell by 2.3 percent while product imports fell by 37.0 percent. Canadian imports of crude oil showed a 9.9 percent jump from last year.
-------
Petroplus is going under because North America is shoving unleaded gasoline into its market.
At no time did I indicate that America had suddenly become a net liquid energy exporter.
It is true that as the world dominant consumer, declines in American gasoline usage ( clunkers are swapped for Kias ) are not being matched by declines in middle distillates. ( #2 diesel )
This compeles refiners to crank out diesel full bore -- and price it firmly -- while exporting surplus gasoline. Out my way the diesel premium is astounding: $ 0.50 per gallon over unleaded! It used to sell for $ 0.30 UNDER unleaded as recently as four years ago.
Now multiply that by the volume. (!)
-----
When natural gas/ methane gets cheap enough refiners can shift over and use it instead of synthesis gas. ( Made from the heavy end/ 'bottoms' of the refinery stream.)
To do so will increase net refinery output -- particularly in gasoline. ( Hydrogen poverty dictates the chemical engineering. )
Fracking is blowing through the Peak Oil roof.
Industry insiders are already projecting massive increases in domestic production so great that America will become the world's largest producer -- by far -- before the decade is out.
America has ALREADY displaced Russia as the largest producer of natural gas. That ramp only took four years.
el gallinazo
"My first bike was a Triumph Bonnevile 650cc in 1968. It was fast and high performance but very unreliable."
My first bike was a Yamaha in the mid 70's - very reliable and was only sold when I ran out of dough buming about in California. Got a decent price as they had not been on the market in the States at the time and i think the garage mechanic wanted to be the first on the block with one. My Last bike was a 2003 680cc bonneville triumph and other than one brake pad had no repair costs. I only sold it this last fall because we wern't using it as we had bought a tandum bike which is very cheap on fuel (just a spoonful of olive oil and, in calories, I am good for 10 or 15 miles).
Ash,
Nice catch - "Strikes spreading in China" article. This part caught my eye:
"The National Development and Reform Commission indicated that new shipbuilding orders fell by 47.3 percent in the first 11 months of 2011 compared with a year earlier.
Seems to me this means that that shipbuilding peaked in early 2011? Is so, does it make sense that $BDI didn't peak until Oct/Nov? I would have thought this would be the other way around.
.
What happened to TAE?
Did the advertisers pull out?
Why did the page shrink by 90%
Where's the news? Just editorials now?
What gives?
Great post. I read a lot of the UK press online and very rarely is there much reference to how deeply screwed the UK is. Instead, the comments seem to revolve mostly around how badly the PIIGS, Hungary, France, even the US are doing. I usually find myself muttering under my breath "but isn't the UK in a similar mess?". The answer seems to be a resounding yes.
herbal floyd, takes a little pressure off don't you think? ilargi installed a relief valve because the local plumber was busy watching an NFL game for the commercials. think it's supposed to be a temporary measure while they're switching to the new website but whatever you do don't hold your breath. ;)
---
trimorph,
"Because you wondered why "Britain is perceived as a safe haven, with its sovereign bonds - gilts - much sought after." So presumably you don't think those gilts are safe, whereas it's just those gilts that I understood Stoneleigh to be recommending to her British audience. Did I misunderstand something? Or is that you think it's unsafe, but still to be recommended because it's less unsafe than any alternative?"
yes, next to least unsafe, after actual cash.
djhimm
Thanks for your last comment. I found your data on USA crude imports and how they have been affected by the depression and re-export of fuels very interesting. You are obviously very well informed, but I still maintain that the corporate controlled MSM is running a disinformation campaign aimed at the cognitively challenged Usaco public that the USA has suddenly become "energy independent" and a net petro energy exporter.
Re NG
I just spent almost a year in Argentina, near Cordoba, and I would guestimate that about one third of the cars and most of the taxis were converted to NG. The conversion was rather inexpensive and the government controlled the pricing and taxing of fuels to make the NG conversion attractive. Most of the gas stations offerred NG refills through high pressure hoses. The systems are quite different than with LP (i.e. propane) which is a liquid under very moderate pressure. Main drawback was the big tank cluttering up the trunk space. Though my driving in AR was restricted to a 125cc Taiwanese bike, as a passenger, I didn't notice any difference in performance, as one would with wood gas.
Regarding the fracking glut. This is very short lived but I will let Nicole's superlative article stand for itself.
djhimm
"Industry insiders are already projecting massive increases in domestic production so great that America will become the world's largest producer -- by far -- before the decade is out."
What else would they do? Funny, though, how they have merely created the conditions for their own collapse with all the hype, as most industries tend to do.
China December Home Prices Posted Worst Performance Last Year on Curbs
“Today’s report is consistent with the unambiguously deteriorating trends seen in property sales, construction, starts and investments,” Yao said. “The data just turned from bad to worse. Contraction in sales and sharp deceleration in investments will send shock waves along industry chain.”
.
el G, regarding your long ago Triumph bike.
As you are aware, Ford is generally regarded in the States as an acronym for "Fix Or Repair Daily".
A few years ago, a real motor head told me that Ford had really improved Jaguar's reliability by replacing the British electrical system with Ford parts from America.
ben,
You, my friend, are a HATER.
" Trimorph said...
Ilargi: "No, why would you think so?"
Because you wondered why "Britain is perceived as a safe haven, with its sovereign bonds - gilts - much sought after." So presumably you don't think those gilts are safe, whereas it's just those gilts that I understood Stoneleigh to be recommending to her British audience. Did I misunderstand something? Or is that you think it's unsafe, but still to be recommended because it's less unsafe than any alternative?"
I was talking about the bond markets, not mom and pop. The former have been fleeing into gilts so much, yields are down. The latter have no such influence. Gilts are fine for now for mom and pop, I'd say, and yields will even go up, though that's not the main reason to buy them. Please note we're talking about short term bonds here.
.
" If its BAU between now and 2035 that advice will continue to look worse and worse over time. Yet if we see TEOTWAWKI in 2012, that same advice will be deemed pretty darn good in hindsight. "
We've never risen to specifics on timing, other than risk assessment, as in "the risks are up". We understand that precise timing is not possible. By the same token, we don't care about precise timing. What's crucial is that this thing must and will burst, there is no alternative. We would like BAU till 2035, and gladly eat our words, but it's not going to happen."
So at the end of the day, the worth of every bit of advice will rise and fall on its timing.
No, not in the sense that the gold boys here are suggesting. But I've already addressed that above. They should read and listen more carefully. We may be responsible for misunderstandings if they're general; I think, however, that most people understand quite well what we say.
.
* UK:
- Facts have been hidden in the UK
- UK economy is unstable
- UK crisis has been building for a long time
- UK will save itself by trading Yuan
- UK rail system is still great
- UK faces inflation or deflation
- As long as UK has net immigration housing will rise
- The UK is in an ugly spot
* Wikipedia, google and craigslist, o.a. are all blacked out; Greenland ice sheet darkened as well
* Being a storm rider is hard and requires you to move in mysterious ways
* Iran can shut down the straits at will; US energy independence is a joke; America's NET liquid energy imports are plunging
* Buccaneer capitalists are scum; Mother nature bats last; Greece will default shortly; Longing for collapse is a sin
* Kunstler is prone to blind spots; He hates Arabs and Cheese Doodles; He suffers from selective naked dissonance syndrome
* TAE has shrunk; The young should be careful what they post; Following advice can lose you money; The pain of loss trumps the pleasure of gain; One man's timing is another man's doh; Advice stays freshest in a vacuum; We're all speculators now
* Getting hoisted on your own canard is painful, especially if your canard is crooked and has barbs on it
This post is actually about the topic du jour, "January 16 2012: Quo Vadis, Britannia?.
Imagine that.
Max K and guest Steve Keen mercilessly pistol whipping the ever loving snot out of the UK for 3 solid minutes of action packed analysis.
The UK Has 1000% Debt to GDP! Much Worst than when the US Had It's 08 Crisis
First premise of UK debt figure:
include PRIVATE debt
Max K: ...that people pretty much (clueless economists) omit PRIVATE DEBT (from the reporting), it should be included...
Steve Keen: ...Absolutely.
The whole idea you can have a model of capitalism without including MONEY or DEBT in your model,...99.9% of Neoclassical models neither include money or debt,[WTF] it's as if I was trying to model how a bird flies by assuming it doesn't have wings...."
Priceless
And the MSM douche keeps mis-reporting to the 99% for the 1% in the City that it's 'not that bad..', look, look, the Euro is on F.I.R.E.!!!
There that about says it all for the MSM reporting on the true nature of UK debt to GDP.
The UK is so utterly, completely clusterfucked on this that it's just sheer government propaganda and desparate wishful thinking by the populous that is keeping it from pushing up the daisies.
Max has maintained that only in the UK, NOT WALL ST, that INFINITE re-hypothacation was not only legal but encouraged and that Wall St exported stuff to the UK for just this purpose.
Hey Kids, reminds me of exporting and subcontracting torture and rendition to a foreign turf for maximum effect.
Bottom line, the UK is the Ninth Circle of financial fraud, the Axis Mundi of Ponzi.
Pioneered and franchised many moons ago by the Bank of England, or as it is known among the 1%: Satan.
~
http://www.govtrack.us/congress/bill.xpd?bill=h112-3166&tab=summary
"SECTION 1. SHORT TITLE.
This Act may be cited as the ‘Enemy Expatriation Act’. H.R. 3166
To add engaging in or supporting hostilities against the United States to the list of acts for which United States nationals would lose their nationality.
SEC. 2. LOSS OF NATIONALITY.
(a) IN GENERAL. —Section 349 of the Immigration and Nationality Act (8 U.S.C. 1481) is amended—
(C) by adding at the end the following:
‘(8) engaging in, or purposefully and materially supporting, hostilities against the United States.’; and (2) by adding at the end the following:
‘(c) For purposes of this section, the term ‘hostilities’ means any conflict subject to the laws of war.’."
The proven act of 'engaging in or supporting any conflict subject to the laws of war against the United States' is constitutionally defined as treason in Article III section 3, whereas only criminal prosecution and conviction on evidence of such a defined act of treason may yield established grounds for expatriation by legal process, the intent of HR 3166 is in direct contradiction to the 14th amendment and the right to citizenship.
'Amendment XIV Section 1.
All persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.
No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.'
As expatriation of citizens yet requires substantial legal process and proper court proceedings effecting criminal conviction on the basis of criminal evidence, the administration has attempted to invoke symmetry in its legal barbarism and subversion of the courts, making extralegal expatriation of citizens as easy and arbitrary as their extralegal killing.
The Extralegal Expatriation Act HR 3166 constitutes seditious material advocating the coerced abolishment of due process and protected citizenship; it declares that autonomous executive discernment should effect extralegal expatriation of citizens in identical fashion to that discernment effecting extralegal killing of citizens; to effect undue punishment without [the intent of] legal process.
Considering the singular purpose to subvert the 14th amendment and destroy the state protection of civil security encompassed in legal citizenship, [it may be successfully argued that] HR 3166 is admissable criminal evidence of seditious intent to coerce permanent alteration of constitutional structure by the executive. Voting in favor or signing of HR 3166 would yield a criminal act of sedition as impeachable offense, so coerced by political enactment of the legislation on specific authority of governmental office. Any [public [political] advocation of] implementation may yield additional felonies [of speech] in offense of civil securities.
Ahhhh!
Remember when a blue collar worker could support his family on his own income.
---
As Rothbard wrote, “The longer the inflationary boom continues, the more painful and severe will be the necessary adjustment process… the boom cannot continue indefinitely, because eventually the public awakens to the governmental policy of permanent inflation, and flees from money into goods, making its purchases while [the currency] is worth more than it will be in future.” “The result will be a ‘runaway’ or hyperinflation, so familiar to history, and particularly to the modern world. Hyperinflation, on any count, is far worse than any depression: it destroys the currency – the lifeblood of the economy; it ruins and shatters the middle class and all ‘fixed income groups;’ it wreaks havoc unbounded… To avoid such a calamity, then, credit expansion must stop sometime, and this will bring a depression into being.”
Read more at
http://www.zerohedge.com/news/guest-post-final-countdown
The Final Countdown
Ash - agree pretty much on points 2 and 3. If I may, can I ask for an expansion on point #1
"1) What kind of events are we expecting to occur over these time frames? I&S never said the financial system will disappear overnight. If someone is waiting for a linear progression of Armageddon, then, yes, that person will probably be disappointed as the years pass."
If I may, I think TAE did expect things to disappear pretty much overnight. Witness Stoneleigh's thesis on a liquidity trap and deflationary spiral. She saw this as being rapid enough and severe enough such that she expected various near term calamaties (like the DJIA to hit 1000 by 2010, President obama unlikely to finish his term, etc)...
Are you suggesting that things might play out in a slow progression of decline over multiple years - the so called "boiled frog" hypothesis?
If so, I think this would represent a seachange in one of the principal tenents of TAE is that things go "wooosh" downward in a very very rapid fashion, and any other outcome (such as a slow grinddown) was so remote that it bears no need for discussion.
"Ilargi said: We've never risen to specifics on timing, other than risk assessment...We would like BAU till 2035, and gladly eat our words, but it's not going to happen"
Respectfully, arent you making a timing prediction right here? Im my view, this is not too dissimilar to what our goldboys are complaining of here, just on a much greater timescale.
For example, I recall back in late 2009 (when this was a much more contentious blog), someone had the temerity to suggest that BAU may go on for two years, at which point you said it was "nonsense" and even dedicated the next post towards why BAU "going on for years" wasnt going to happen.
Well as we sit here now in Jan 2012, its fair to say this was probably not the best of statements. Likewise if BAU reigns until 2017, that 2009 exchange looks worse over time. On the flipside, if BAU goes "woooosh" in a massive downward spiral in Feb 2012, that 2009 exchange will look to be pretty much on the mark.
Going forward, I think its fair to say the things you just said about BAU expiring by 2035 will be judged by that same standard in 2036 and beyond (perhaps not by us, but by some internet archaeologist digging for clues about the Great Collapse of 2041 :)
Now in all fairness, what you said in my 2009 example, and what you said here today do not constitute "advice" as such, but I think you get what I am trying to say here. And in that regard, I this is related to something you say a bit further in your response.
"Ilargi said...We may be responsible for misunderstandings if they're general; I think, however, that most people understand quite well what we say."
If I may, I think these misunderstandings are a bit more widespread than you think. And its not just the goldboys. Just a few days ago, Greenpa said "Stoneleigh DID hint pretty hard that full scale collapse was imminent, in the next few months, (probably!) - several years ago..." He went on to say that he had no idea what to do to fix this problem, and frankly really I dont either. Yet, again, I think it may be more prevalent than you suspect and (if somehow "fixed") would help in clearing up any misunderstandings.
Oh, and there is not even debt problem mentioned:
The Limits to Growth at forty: Is collapse now inevitable?
and there:
Has anything changed, and have we managed to divert from the path towards collapse in the intervening forty years? Pause and think about this for a second. It doesn’t take a lot of analysis to realise that little has changed since the first publication of The Limits to Growth.
Our economic system is still entirely dependent on the need for long term economic growth to survive, our food, economic and social structures are less resilient than ever before, the effects of Climate Change are becoming more prevalent with increased natural disasters, and we are teetering on the brink of global peak production of oil, the very life blood of our globalised, growth dependent system.
Alex
In China is is possible to build
30 Storey Building In 15 Days!
what Collapse? :)
Ilargi has been much more measured in his comments for many months.
Stoneleigh, on the other hand, has been full-bore black horizons and 90-99% market collapses for years. Real estate recomvery in 100 years -- that sort of thing. Every market dip brings dire warnings of 99% collapse.
Now again, it would be nice to get these differences in tone and expectations cleared.
I too support Ilargi's willingness to moderate the message. It jives with reality so much better.
Extremist messages need to at some point show some sign of connection with events on the ground. You can profess an extremist viewpoint 6 months out, maybe 12 months out. In an extreme case, 18 months out.
After 3 years? Come on. It starts undermining the whole project. Perhaps good to pay for fancy trips abroad, but not helpful to us common folks trying to warn friends and family.
Stoneleigh quit her day job to do this stuff full time.
If you're going to make this pay the bills, you've got to stand out from the crowd. You've got to press harder than your neighbor.
Did somebody threaten TAE with copyright infringement?
Is that why the news is gone?
I wonder if a €10 trillion LTRO might work kinda like a shot of of hyper-steroids in the can kickers legs? :-)
$10 TRILLION Liquidity Injection Coming?"
"According to Credit Suisse the new LTRO number could be up to a gargantuan, and unprecedented, €10 TRILLION!
.
The Anon,
"If I may, I think TAE did expect things to disappear pretty much overnight. Witness Stoneleigh's thesis on a liquidity trap and deflationary spiral. She saw this as being rapid enough and severe enough such that she expected various near term calamaties (like the DJIA to hit 1000 by 2010, President obama unlikely to finish his term, etc)...
I can really only speak to this matter by making the following two points,
a) I believe nearly everyone's assessment, including I&S (but also many other respected analysts), has evolved and become slightly more nuanced since the onset of the GFC, taking into account factors such as the power of central intervention and coordinated propaganda by TPTB (which is still increasingly less effective by many measures);
b) The tone of I&S message may sometimes appear to come off as more "Armageddonish" than it really is, and that's a delicate balance to strike, because one certainly does not want to induce complacency in these times.
A "complete deflationary collapse", as you seem to use the phrase, is actually in opposition to TAE's message. If everything were set to fall apart within a year or two, then HI would always be right around the corner, and that's obviously something we have cautioned against. There's a difference between periods of sharp market declines and increases in sociopolitical unrest, and a linear plummet into the abyss of complete systems failure. I do not believe the latter has ever really been a part of TAE's message.
Let me add another point to the above:
What is the difference between the risk of a severe market decline over the first 4 years of the GFC and the risk in the second 4 years? Similarly, what's the difference between the chance of Obama failing to finish his first term and failing to finish his second term (if he wins)? I believe it is clear that the difference is not at all proportional to the time elapsed. Nothing is certain, and even very probably events do not always come to pass, but that disproportionate risk differential is also a core part of TAE's message and a good reason for an urgent tone.
http://www.thestar.com/article/1117793--td-bank-ordered-to-pay-67-million-for-its-role-in-a-1-2-billion-ponzi-scheme
TD Bank ordered to pay $67 million for its role in a $1.2 billion Ponzi scheme
A federal jury in Florida has put the TD Bank, the U.S. arm of the TD Financial Group, on the hook for $67 million (U.S.) over the role it played in a $1.2 billion Ponzi scheme.
I have to laugh at whoever alluded to Stoneleigh's fancy trips abroad. Stoneleigh, don't you love traveling in tiny cramped airplanes full of germs, and sleeping in peoples' guest rooms or couches and being away from your family, you fancy lady you?
Normalcy bias as usual.
BAU was when I could still pay my bills, when servicing my debt didn't consume half my disposable income, when the global financial superstructure had not yet disintegrated and all public faith in banking institutions and monetary systems lost for generations to come. It wont be BAU again for some time. At the current rate of decline I wont survive another 5 years of this business.
The rate of decline in living standards is quite steep, if some cannot feel it they are insulated from its immediate effects or psychologically dissonant, but others are already being crushed and ruined, if collapse does not accelerate from here we might have another year or two of such relative stability where grocery bills shoot up 20%-30% per year and housing prices drop only 10% or so annually.
Didn't some british central banking chief mention last month that housing prices may never recover to previous levels, not in this century? how could that be usual business?
I can only surmise that if for some, business has not changed at all in the past years from what was usual before, this business must be distorted and insulated from real economic feedback, so being a poor measure of real economic activity.
Also, the only definition of politically extremist speech is that speech in offense of human rights or civil liberties, no other speech can be extremist. Speech could be 'extreme' in style or content, not 'extremist' as a defined term of political persecution, such as the content of HR3166, which is politically extremist speech to the extent of being criminally seditious.
@ Ash...
Good evening. :)
Given TAE does not incorporate militarization, geopolitics, NATO vs SCO polarization, etc. their message is quite conservative by a margin. It may be pragmatic to use TAE scenario as an upper bounds. Most likely things are going to be far worse.
Over 70% of humans are crammed into dense urban areas. Urban areas have 3-4 orders of magnitude greater ecological footprints than their land base can support sustainably. When credit markets implode, global trade ceases, and 70% of the worlds people are in areas that are in vast overshoot (100-1000 fold) of their domestic biocapacities. Demand Destruction and depopulation; Type and token.
That scenario precludes emergent global conflict and potential thermonuclear war.
all great things emerge from chaos.
Ash,
I've read you
I've read Ilargi
I've read Stoneleigh
The message is getting scattered.
What do you guys want TAE to be?
You all should get together and decide and then let us all know clearly.
If TAE decides to split up, then let me at least put in a request for El G to set up a blogspot page.
His writing is the funniest and the most consistently insightful here. El G is really the reason behind my bookmark here.
Keep writing El G!
Herbal Floyd,
If you pay close attention, then the message is not scattered at at all. TAE is what it is and what it has been since I&S created it. From where I sit, TAE will continue to be the most intellectual, open-minded, inclusive, informative, engaging and inspiring blog AND online community out there, and the new site, scheduled to be "live" within short order, will only add that much more to this community par excellence. Patience, grasshopper - all good things come to ye who wait.
Ye have heard that it was said by them of old time;
Thou shalt do business as usual for years to come; But I say unto you, that the cause of time is relativistic mass, and Gravity is a compounding algorithm.
@Ash,
No need to answer my question about the relationship between the Baltic Dry Index and shipbuilding orders - I know you're busy. Someone answered the question in fairly short order on another board this afternoon. No worries...I just thought this might be in your wheelhouse...or at least something you'd be interested in.
g.nite
.
Hi Ash,
I love your writing and you should be out in front more often. You have a law degree and you deserve to do more than moderate comments.
Coming from impoverished roots, I never thought much about money until the early 1980s, when I finally achieved net positive worth. It did not take long even then, once one's mind became focused on things monetary, to realize that capitalism as practiced in the US is largely hopelessly corrupt. Of course back then there was no TAE, CHS, Club Orlov or ZeroHedge. But smart people, probably mostly relatively isolated outsiders for one reason or another, experienced over time waves of trepidation thinking a societal collapse was imminent. But it never happened. My own philosophy was to work as hard and long as possible while opportunity existed, live way below my means, maximize savings, and invest very conservatively, mostly T-bills. Not to have a flashy materialistic lifestyle, but because money equaled freedom. Never made an easy dime, but never lost money, either, except in PMs. Now I am still invested in T-bills and have no debt. But my savings, like those of other saver-retirees, are getting decimated. We have all been taken for chumps by the system. Bloggers here are saying we will muddle through as usual and that timing projections are hopelessly off in various decomplexity scenarios. But have we ever seen the amount of leveraged financial shenanigans that currrently exist? Even the creators of these legalized Ponzi scams don't seem to know the potential ramifications if negative feedback spirals become activated. Or the in-your-face disregard
for uniform application of our laws? Or increasing lack of HOPE in our young people that if they are honest and constructive they will be able to decently support their families and have a secure old age?
Two things make me think that we are truly approaching the cliff edge. First, the observation that creating more debt no longer has a positive effect on GDP. Second, we are getting to the point where we get no net useful energy in the process of finding and transforming fossil fuels into useful forms. These concepts seem inarguable, which mean we are getting very close to the LIMIT of our current life paradigm and that our lifestyle is close to being turned on its head. Ignoring this possibility is the height of personal irresponsibility. The extent to which it is addressed will vary according to the total package with which each individual must contend. I think it will pay to take the long view and structure some insurance NOW rather than to narrowly focus on short-term timing and "pray". This time around, those taking the latter course are truly playing Russian roulette.
With apologies for the rant, s
Joe in nc
Sorry i saw the qstion but had no idea of the answer and didnt think to look into it further. My first guess is that baltic dry tracks shipping orders rather than new shipbuildng orders. What answer did uget?
You know,every time that stoneleigh has gotten to the point of disclosing a real concern to the current events that are occurring,and serious warnings...we seem to have a lot of Nay Sayers,and those who wish to discount her point of view and stance on the current state of world...nasty ,catty little quips and snits about "well you got it wrong here"...and this or that...
Take it elsewhere...
There are many of us who have decided her and Ilargi are providing a gift.. to many who see ... who are unable to.... verbalize..the troubling sense that all is not well,and something wicked this way comes.
You are free to discount her and Ilargi work,and words...Hell,go borrow a ton of money and invest in real estate and laugh all the way to ...where ever you end up at.
But I tire of those whose only message is "Dont worry,be happy"..invest invest...buy borrow...CONSUME...
And those who seem to only want to say"Well ,nothings happened yet".
Thats the same words of someone whos jumped off a 40 story building,as they pass the 20th floor....
Sure,nothings happened yet.
..Except congress has passed some of the most terrifying legislation I have ever seen...all dealing with keeping the public order in "Time of War".
Rebellion in brewing in the street,and if you don't think the dem and repug conventions aren't going to be a hellatious Knock-down-drag-out with OWS your living in a dreamworld.
Sure,they have used bailing wire,spit,and duct tape to keep it "together"...sorta,with massive intervention of the "Free" market, and count em,...3 wars.Do you really think the powers that be are good enough to keep this game going w/o ...consequence?
Stoneleighs&Ilargis only failure of analysis,as she/he has repeatedly stated [And which I believe true]was a disbelief to the extent of illegality,rule bending,and general criminal behavior,of those in power,and the extent that they would go to prevent harm to the 1%.
By these actions,the crisis we will soon face,has been magnified by a huge factor.
I would rather be 5 years too soon,than 5 seconds to late.Much of my lifestyle,is that of someone who is prepared for change in lifes circumstance.
I got a couple of pretty good scares from my government when once,they made noises about going to war with the Chinese...and looked like they were going to do it...and the y2k non-event.Sure nothing much happened.But the insurance{preps}I made in both cases I would do again today should the same info come my way.Its "Insurance",plain and simple.
Most folks who see part, of the writing on the wall,are very happy to hear S%I reading of the same.If you dont like what they say,or have said,Go elsewhere for your reading material.
Nets a big place.
Bee good,or
Bee careful
snuffy
Seychelles: Fine rant and I generally agree. It reminds me of when I was a kid and I participated in rubber powered model airplane contests. The propellers were quite large and the rubber bands quite small so one could get the maximum revolutions of the slow turning propeller which kept the plane airborne longer. We would wind and wind until the fuselage was stressed to the maximum and the to get that last turn in, often the stress was too much and the tail retainer would break and smash all the insides as it rushed to the front. I feel we have wound this economy, environment, energy thing up to maximum and I sweat out every additional turn. There are so many hazards on the horizon I don’t know which will be the final turn … and crunch.
Greer seems to think that we will meet our future in a long descent but I think my analogy is more likely. Greer does have an excellent “Green Wizard” site here.
http://www.greenwizards.org/?q=node
It is very real time and practical; a place to relax and think about real problems you can do something about rather than just watch the train wreck.
Thanks for the greenwizard link, Lynnford1933. Am thinking of putting in a small raised vegetable garden and chicken coop this year. GW looks like a great site for helping with the practicalities.
I've heard the analogy that the severity of the coming peak-everything-meltdown will be relative to your situation. For a third-world culture that already lives on a fraction of the resources of what a First World culture does now, it will be like falling out of a ground floor window.
This is too crude for the dilemma we face.
Visualize this.
For every month since July 2007, which is when, IMHO, the Great Unraveling started, imagine everyone in every town across the land, had their houses and their cars raised up gradually off the ground on a cable by a crane, one centimeter for every month since 7-07. (about 2.5" per month)
Hardly noticeable on a daily basis. Just one measly centimeter a month.
That's about 55 months ago X 2.5" per month = 138 inches or about 11.45' off the ground.
Every car and every house in the country, swinging 11.45' off the ground since July 2007.
Some commenters at TAE seems agitated that nothing much has 'happened' to date because they don't notice anything different, except with this analogy, everything is still 'up in the air.'
Pay attention kids.
Now if you cut the line and let a car drop from say, two feet above the ground, it would probably sustain some damage but it could be repaired 'without breaking the bank' as the expression goes. The shock absorbers might blow, the muffler might be crushed, a water hose might come loose, some radiator leaks.
Use your imagination.
A house being dropped from 2' above the ground might sustain more damage relative to a car by way of it's mass, but it too could be repaired, abet with a large home repair loan. Think moderate earthquake damage.
Two feet off the ground is about nine and a half months of one centimeter per month increases and spread over an entire country would add up to a pretty good repair bill, like a natural disaster of sorts.
See where this is going all you 'timeline' fans?
to be continued....
.....Let's now consider the Half Way Point: all the houses and cars in the entire country, your house in particular, after 28 months of one centimeter increases, are dangling by cables 5.72' off the ground. The doubting Thomas's are still asking, "I don't see anything wrong yet!"
And there's the rub. The financial implosion is still just kinetic potential like all those houses and cars suspended in the air by a thread.
Add in the rest of the infrastructure to the houses and cars. Bridges and waterworks, you name it, all suspended above the ground, waiting to drop.
You feeling lucky punk?
The longer it goes on without everything crashing to the ground, the higher the stakes, the higher the potential energy in the situation.
Were at the 11.75 foot level now. In a year, 2.5 feet higher. That's a lot of mass hurtling to the turf, even if it's a staggered affair.
I worked in a junk yard once as a young man and we did drop cars from a crane. Dropping a relatively intact car from 12' really can damage it beyond economical repair.
And dropping a house from 12', well, imagine your aquarium, and the china, and the chimney and the windows. You get the picture.
By not dealing with the 1% gangster monsters of global finance earlier in the crisis, we humans, as a species, have 'upped the ante' to unrepairable heights.the longer it goes, the harder it falls.
The sound we all are going to be hearing is not the sound of one hand clapping.
It will be the sound of many, many cables snapping.
~
Ilargi and Ash have a tone that just doesn't mesh with Stonleigh's perspective.
She comes across as too self-promotional. She sounds like she wants it too much. Objectivity is key in these things and she lost it somewhere along her path.
I think the site would benefit strongly if she went off on her own.
Perhaps a sister-site for those inclined to the darkness.
An all-inclusive message dilutes the impact. Where belief and desire merge, parody is not far behind.
Interesting discussion ...
Test-Blog TFC sez:
"What people fail to realise is that there are 250,000 people immigrating to the UK each year. That's a city the size of Atlanta that needs to be built every two years in a land area smaller than Oregon. The chances, therefore, of a real estate bust are pretty slim. There's too much demand."
Sounds like my brother, "They aren't making any more land ...!"
I would say, "They aren't making any more people with money."
250k broke people looking for a hand hold on a sinking paradigm. Not much luxury housing demand unless they are all mafia dons.
Have read a lot of the collapse literature (and have had the pleasure to spend time w/ Stoneleigh). There are differences of opinion, some differences wider than others, because perspectives are not identical.
How to prepare for the future is something instinctively do even if they have no concrete plans. It's a giant mental leap from 'investing in future growth' to steering clear of the finance casino as a hazard. Not possible to get from one to the other without pitfalls.
Its very risky to rely on any one person or source for vital information. Relying on one doctor or one lawyer can get you in trouble. Relying on one finance analyst -- particularly someone who has little personal experience in finance markets -- is definitely not recommended. A response to any future requires study and some sort of consensus. This cannot be bought but is earned laboriously.
A big problem is that the world's so-called 'liberal' governments have channelized the critical process for the benefit of govt sponsors. Included are pensions, retirement accounts, life insurance, stock ownership funds, annuities, etc.
The change to the present includes dangers that did not exist 20 years ago. Any market can crash completely in minutes, brokers can steal your account funds with impunity, government can 'adjust' the currency or close your bank and sequester your funds. The key is to become self-reliant, to learn how to exist at the fringe of an increasingly hostile system.
That means info from AE along with other web sites, newspapers, books and seminars plus a critical state of mind.
Alfred.
Haven't been around here long,have you?
If you knew how silly your last post looked to the folks that have been here a while,I doubt if you would post under that handle again.
Bee good,or
Bee careful
snuffy
I have put a number of charts together which show the Sterling/US dollar exchange rate since 1988 - a period of 24 years. I was unable to find anything quite like it on the internet.
British Pound Sterling Versus US Dollar - 1988-2012
I think it is worthwhile keeping in mind the fact that Sterling has already been lower than the dollar on two occasions - in 1992 and in 1999-2001. Of course, I remember when it was 2.80 dollars to the pound - twice its current rate and I also remember well the devaluation which led to it becoming 2.40 dollars. I was a kid at the time, but I travelled a lot between school in the UK and locations like Switzerland, Greece and Spain where my parents lived.
For literally decades, I had been expecting sterling to sink towards total oblivion - based on the visible parts of the UK economy. More recently, when I finally understood the tremendous importance of the City of London as a tax and illicit-money haven, I changed my mind. Now, I don't think that the British pound will descend much more - because of the vast flood of money pouring in from places like South America, Africa, the Middle East, China and Russia. These people do not mind losing half their money - provided something is left over. "Easy come, easy go" is their motto.
Naturally, ordinary people will continue to see a visible fall in their standard of living. However, the lawyers, accountants, bankers and property-dealers of Central London will not suffer.
Seychelles,Lynford1933
Your comments convinced me to head to the green wizard site.Interesting.I went ahead and got in.It looks like another place for "focusing" those who wish to "see" more better.Thanks
I like the term "Green Wizard" ;-}
Bee good,or
Bee careful
snuffy
@Herbal Floyd
I read TAE religiously. I see I & S & Ash as distinctly in synch and the site as a whole very consistent. Keep in mind that no one here believes they can predict every event, the precise timing, or exact consequences. But they continue to exhibit total consensus on the macro-view--the big deflationary picture, which is a picture that you will not find this thoroughly explored anywhere else on the web. I don't really know how much more you can expect from three distinct individuals all analyizing and sharing their knowledge and insights.
@ Snuffy Lynford Seychelles
It's worth noting that John Michael Greer (organizer of Green Wizards)
Has been distinctly critical of Stoneleigh and her message.
Greer's new book:
'Apocalypse Not'
Is one long and very thorough rebuttal to Stoneleigh's message and approach.
@ Herbal Floyd and others,
I agree with your take here. The site is all over the map these days. I honestly don't know what the message is. One day you've got Stoneleigh saying take out a year or more worth of cash, then you've got Ilargi saying put aside your Christmas present money. ? . If
the medium is the message, this pudding is murky.
And no, I'm not making a demand for precise timing -- that's such a strawman defense of any and all criticism.
I'm criticizing the fact that the site doesn't stand for anything clear and obvious anymore. I don't know where Ash is on the spectrum. He seems to align with whichever boss is writing that day.
Herbal Floyd - the first Amazon review of the Greers' book (and others are quite similar):
Easy to read, easy to understand guide to the idea of apocalypse and its effects through history. Greer concentrates on the types of end of the world scenerios that must be taken on faith rather than based on research or statistical studies. From Zarathustra's first assertion that the world would end in a battle between the forces of the good god and his evil opponent to the current preoccupations with Rapture or Mayan prophecies, the idea of an end time has provided a reason to neglect work on real world problems. Why conserve trees if God is going to create a new earth for His followers?
That does not sound relevant here - am I missing something?
Blackbird & others,
Here's an idea - instead of generally stating that "the message" is murky and contradictory, and leaving us to explain all the ways in which it is not, why don't you point out the few (if any) ways in which it is, and anyone here who wishes to can clarify the distinction. I'd say that process has worked quite well for some time. Blackbird starts us off with an example:
"One day you've got Stoneleigh saying take out a year or more worth of cash, then you've got Ilargi saying put aside your Christmas present money.?"
Those statements from I&S are the exact same advice. Ilargi said to take out the cash you normally would set aside for "Christmas spending", but then not to spend it.
The centre(s) (patterns within patterns) trying to preserve themselves at the expense of the periphery has been a major theme here, and is clearly visible even if only following the MSM. (The hypothermia analogy is almost perfect)
I suspect much of the readership, aside from being concentrated in the english-speaking world (the centre), is also closer to the centre of their own societies than average. (Thus the predictable hostility to some of VKs observations about the foundations of BAU most here have grown up with)
Have you not noticed the the "bankruptcies" and restructurings that result in wages slashed by half and pensions lost? Have you not noticed union negotiations resulting in explicit two-tiered agreements, setting the stage for intergenerational conflict?
To Ilargi, Ash, and the "StoneLady" (as I use the term respectfully).
Keep up the good work of informing and publishing informed critical reviews of the actions and manipulations of powerful economic and political powers!
For one, I am glad your message isn't "...clear and obvious..." for I don't live in a box and don't want to think in box-bound terms, nor to adopt an "ism" or to find a set of mental rails to ride on. Life is complex and proper navigation through it has to be versatile and dynamically adjusted.
Also, I think it is preferable to "get right" over to "get rich".
Snuffy--some fine comments above!
A phrase I first heard in a gestalt training session comes to mind as I read the negative comments about Stoneleigh,Ilargi and Ash.
" A group forms, then storms before it performs. "
Looks like our TAE group/community is in a storming phase.
I would even say TAE is mirroring the storm of global affairs.
Back in the day I drove one of those British made motorcycles. It was a Birmingham Small Arms edition aka BSA. Left it's mark whenever parked. It did have a bearish sound to it and the power was there when you needed it mostly. Vrooom! Vrooom!
Richard Frederickson,
As for the timing of my move to Canada, it could have been much better from a purely monetary perspective. Had I waited a few years I would easily have made twice as much on the difference between my UK sale and Canadian repurchase. The problem is that I would have missed out on the years I spent adapting to a new lifestyle (ie learning how to use a farm). Also, my kids would have been teenagers who would not have appreciated being dropped in the countryside. As it was they were dropped there at a time when they were too young to object to our intentions to drastically decrease their expectations and teach them vountry skills. Two out of three are no firmly country people. That is worth far more to me than the monetary profit foregone.
When you are playing the leverage game (a ponzi scheme), you take major risks, and those risks increase over time. At the same time the potential upside becomes more and more limited. At some point you need to get out or you will take major losses. People find it hard to get out because there's always the temptation of further potential gains. Sometimes those gains are realized and sometimes not. The risks are always there waiting in the wings to pounce, often with very little notice. Those who stay too long can lose everything, or most of everything. Those who get out early and sit on the sidelines in cash do often forego some remaining upside, but they have bought security. All security is relative of course, but the risks of bing on the sidelines in cash are small compared to the risk of being stuck in a collapsing ponzi scheme when it implodes. It comes down to minimizing the consequences of being wrong - some opportunity cost on the one hand, versus catastrophic losses on the other.
I am trying to keep people safe if I possibly can. Almost everyone loses something in a massive deflation. Typically, he who loses the least is the winner (notwithstanding certain very lucky and very ruthless exceptions who will make a fortune). I want those losses to be as small as possible, so that familes can be looked after in a future that will be almost infinitely harder than the present. Whatever cash you hold will serve you well in a credit crunch.
As for short term government debt, I regard it as less good than cash, but if one has a lot of cash one wouldn't want to keep all of it in one basket. I usually suggest a year's worth of cash and the rest in either relatively secure, plain vanilla government instruments (in the UK that could be gilts or premium bonds or a post office account) or in hard goods. Unfortunately in the UK and the rest of Europe, you can't get really short term government debt instruments like you can in the US, so the risk is higher. That means you may want to opt for more hard goods sooner than you otherwise might have.
Continued...
Liquidity is uncommitted choices. The point of remaining liquid is to preserve you freedom of action for a time when you have far more opportunities and far more information as to what are the right choices to make. Under some circumstances it makes sense to be more liquid and under others it's better to make some of those choices sooner rather than later. In the US liquidity will be easier than in Europe (ie shorter term debt instruments and an appreciating currency). In Europe I would balance liquidity with more hedges against general economic disruption. That's what hard goods represent - gaining control over the essentials of your own existence.
The pound could temporarily benefit from the situation in the eurozone. The value of sterling could increase as capital flight from the eurozone picks up into almost anything that isn't euros. I wouldn't expect the effect to last given how dire the UK's long term fortunes are, but it might increase international purchasing power in the short term. In the long term it is the purchasing power of cash relative to goods and services domestically that will count, not so much the value of sterling against other currencies, at least directly for individuals.
The UK is facing massive deflation of its debt bubble over the next few years, probably beginning sooner rather than later. When I spoke in England a couple of years ago I said the worst of it would be between two and five years from then. I stand by that forecast today. I think the worst of of the deleveraging will lie between 2012 and 2015.
In this deflation, prices will fall, but that does NOT mean things will be cheaper - far from it in fact. Purchasing power will be falling off a cliff, so having preserved purchasing power will be vital (e preserve capital as liquidity). In the longer term the UK will be facing major difficulties with imports. The UK has off-shored almost everything. It relies on North Sea oil and gas and money chasing its own tail in the City of London. Both of those are going away. Whatever prices do in nominal terms (and I think they will first fall then rise later on scarcity), they will rise in real terms, and probably substantially over the coming years.
I left the UK because I didn't see how it was going to be possible to feed and warm 70 million people in the long term, especially looking at people's expectations in comparison with reality. There's nothing so dangerous as dashed expectations. I still love the place and visit whenever I can, but I couldn't stay. I'll be back this summer. If you'd like to chat about anything while I'm there, drop me a line. As always, I'll talk to anyone who'll listen.
Erin Winthrope and The Anonymous,
The heart of the problem is that a collapse can indeed happen almost overnight. Just ask the customers of MF Global what happened to their accounts between one day and the next. Or look at Enron, which went from seemingly robust company to implosion and non-existence in two weeks. Things can go 'poof' from a state of seeming normality very quickly. No one can tell you months or years in advance exactly what day that will occur on, but they can tell you it's coming and how to protect yourself from it when it happens. We are getting uncomfortably close, and too late really means too late. Better to be early and as safe as possible.
Imagine you are on the Niagara River in a canoe. You know that up ahead somewhere is Niagara Falls, but you don't know exactly where. If you hear white water ahead, it would make sense to pull over to the bank and see if you could check it out before continuing on the water. You really don't want to go over Niagara Falls in a canoe, even with a life-jacket, and certainly not without one.
By the way, real estate recovery in only 100 years after the fall from this bubble is far too optimistic IMO. In the UK I think 99% RE price collapse is far more likely than in many other places. That would only take prices back to where they were in the 1960s/70s, which is standard for a bubble undershoot. My parents sold their four bedroom village house on an acre of lovely Wiltshire countryside near the present M4 for nine thousand pounds in 1970. Other relatives bought a lovely four bedroom village home an hour out of London at about the same time for about four and a half thousand. These were not wealthy people at all. Both properties have appreciated by at least 100x in nominal terms since then. Neither family could conceivably afford to buy those properties now. The undershoot will take prices back there, but with no credit available to almost anyone, they will be far less affordable to ordinary people then they are today. It is the purchasing power of ordinary people that will take so long to recover, because credit is going away for most effectively forever once this bubble bursts (ie for longer than most of us will live).
Blackbird and Herbal Floyd,
I do this because I couldn't sleep at night if I didn't warn people. Urgency is warranted. It was two years ago, and even more so now. Thank your lucky stars that you had extra time to prepare. Preparation is hard enough with plenty of time.
I don't do fancy trips. I couch-surf all over the world. I wouldn't have it any other way (for reasons of sociability and learning opportunities as well as cost). I earn less from this than I would if I flipped burgers for a living. If I was trying to maximize my earnings this isn't what I would be doing, to put it mildly. I do it beause I want to help people.
In reply to Stoneleigh with regards to keeping money in the post office account. In the UK the post office is owned by the Bank of Ireland. You can still buy national savings online though.
Alfred,
What I say about the big picture does not swing from optimism to pessimism with the collective emotional state of the herd. That is the point of objective analysis. It makes me seem to optimistic at times and too pessimistic at others. Mostly, since we are still near a peak of optimism and complacency, it makes me seem too pessimistic. Much later (ie a few years down the road), when everyone else is saying things can only ever get worse, I will be saying it's always darkest before the dawn. Timely warnings are never credible unfortunately. They are contrarian, and therefore always fly in the face of received wisdom. This is not a bug, it's a feature. It's all about anticipating trend changes and explaining their impact while the information is still useful, rather than extrapolating current trend forward unthinkingly. Fortunately I have a thick skin, as all contrarians must. TAE readers will just have to continue to put up with me ;)
In my mail this morning:
Choteau and Teton County residents NEED YOUR HELP THIS MORNING before 10 a.m.
Goldman Sachs has purchased a large amount of property along our Rocky Mountain Front west of us. THIS MORNING the County Commissioners have to decide if the public has the right to access roads we have always accessed that involve the Salmon Ranch ... that this large company is trying to now close.
THIS IS EXACTLY what all Montanans fear - big corporations moving in and changing things!
TODAY is an important day ... This decision will effect everyone from now on - generations to come!
Gordon Dyal, a GS executive, believes the Elizabeth Road is now "his private driveway". This is inclusive of the Stafford Road, also.
PLEASE EMAIL THE TETON COMMISSIONERS AND VOTE: ON THE SUBJECT LINE WRITE 'KEEP ACCESS OPEN'
IN YOUR email LETTER STATE THAT AGAIN AND THEN sign your name and current city please:
jdellwo@3rivers.net
arnie@3rivers.net
jimhodgskiss@3rivers.net
Copy and paste your info. and email each of them ASAP even if you plan on attending the Meeting -
PASS THIS ON TO OTHER FORMER CHOTEAUANS IN YOUR EMAIL LIST AS WELL -
THANK-YOU!
The big picture is just that - big, as well extremely complex. We do our best here to weave together threads of complexity and make it comprehensible, but no one can make it easy. In fact it keeps getting more difficult the more aspects of reality one tries to include. Excluding aspects on the grounds of complexity would weaken what we're trying to do though. Contary to one comment above we do look at and comment on geopolitics, population, carrying capacity, pollution, climate etc etc, but we don't focus on them since the point right now is to warn of the very large financial crisis that presents the most immediate threat.
I find presenting the big picture to people orally is very effective, and doing so in person is even better. This is why I travel and speak to people personally wherever I can. I am also trying to draw communities together in person, so as to capitalize on virtual community by making it real. Come and talk to me if I'm in your neighbourhood. I like people, and, as Ilargi knows, I like to talk :)
Josh,
Thanks for your kind words.
Snuffy
Great comments.
Re some of the criticism of the editors. There has been one individual here who has been dedicated to the disruption of this web site through various means including, at one time, impersonating other posters. He often posed as Cheryl though I refer to him in my private correspondences as "Butthead." He appears to have become quite active again. He has become quite adept at using the holes in blogspot security as well as individual site software corruption (Google's comment is that blogspot is orphan software and you are on your own). My basic message is, because of this, the multitude is often just one misguided individual. The amount of effort he has put into it and the duration may indicate that he is getting a stipend from the government , either the DoD component or our illustrious constitutional Harvard lawyer ensconced in one of O'bumma's administrative offices. OTOH, he may be closer to Robert De Niro's Taxi Driver.
I personally see very little difference in the outlook between the editors: Ilargi, Nicole, and Ash, and for that matter myself, though my affiliation is far more distant as the tin foil hat wearing bastard child. There have been some good analogies as to how stress can be added to a system until it suddenly breaks. As someone initially trained in chemistry, I was once heating up a liter of hydrobromic acid and realized that I had forgot to throw in a couple of boiling chips, which like an idiot I proceeded to do. Unfortunately, the HBr was already superheated and when the chips landed, I blew the liter of HBr as well as a very expensive reflux condenser off the ceiling of the lab. My popularity suffered from this event. So that is my own analogy to add to the others.
Nicole is not only one of the brightest people I know (I also know a Russian professor of mathematics and material science who is a genius in a different way), but she may well be the least personally egotistical. Don't know where some of this comment shit comes from, but as a former plummamon, I know how to evaluate it.
I personally see a rapid collapse, as my analogy might portend. However, as Nicole often states, it will be in a downward zag zag pattern. Two comments regarding timing. One is that the primary advice of the editors here is to invest in self sufficiency, which may be exemplified by Snuffy and Lyndford, though not everyone here has their technical knowledge and energy. The other advice is also to invest in local community. This advice is good whether the collapse is sudden or more gradual; deflation or hyperinflation. The critics point to the "markets" as proof of the TAE being off track. Well, the markets are rigged now by the central banks. The truth is that many felt that they were too big for the central bankstas to pull it off. But supercomputers gave them the hyper leverage derivative technology to do it. And the Bloomberg FOIA successful lawsuit, already revealing gifts, loans, and guarantees to the Fed's patroni exceeding the GDP of the USA gave them the economic firepower. Even in alternative media, when TSHTF in 2008, few foresaw that the Fed would indulge in that degree of recklessness and illegal and corrupt activity.
Ash and I do disagree about JMG. Ash regards him as the cat's meow. I regard him as an idiot savant with the emphasis on idiot. He is quite good at going on with considerable eloquence and panache about current and historical details of trees and usually misses the forest. Furthermore, I regard him as rather pompous which does not reflect on his validity as an analyst but makes reading or listening to him unpalatable to me.
Snuffy said...But I tire of those whose only message is "Dont worry,be happy"..invest invest...buy borrow...CONSUME..."
Do you really think thats what we are trying to say Sunffy? How bout something more moderate than that?
Suppose one's goals is not to be 87 years old and still paying rent. And in order to accomplish this, most people, will at some point have to take on some degree of debt. When, if ever, is there a relatively safe time for them to start that journey?
I dont mean to pick on you, but there is no need to conflate questioning the analysis so as to assume we are saying we want to be moguls. Like medeverything in life, its all matters of degree.
"Stoneleigh said...The heart of the problem is that a collapse can indeed happen almost overnight. Just ask the customers of MF Global what happened to their accounts between one day and the next. Or look at Enron, which went from seemingly robust company to implosion and non-existence in two weeks. Things can go 'poof' from a state of seeming normality very quickly. No one can tell you months or years in advance exactly what day that will occur on, but they can tell you it's coming and how to protect yourself from it when it happens."
While I agree with you fully here, this sounds more like a black swan type event, which by definition, will always be a background risk in life, is it not?
"Stoneleigh said...We are getting uncomfortably close, and too late really means too late. Better to be early and as safe as possible."
Ok, but why now, versus say 3 years ago. Or perhaps 2005 when you first uttered a similar sentiment? What makes this decision to "pull over now", any more timely than the same one you first uttered 7 years ago?
Stoneleigh - there is no need to answer that. That was rhetorical...
If I may, I think my main concern in the way you convey your message in that you always seem to be on red alert, on the edge of a cliff mode, with very little, to no moderation over time. And unfortunately, this is far from helpful.
Consider, someone sent you the following message:
I have spent the past 10 years researching and studying various fringe groups who are preparing to detonate a series of dirty bombs in XYZ areas. I study the chatter, the trends, their tendencies, etc. and it is indeed inevitable that they shall succeed. Its not a matter of “if” but “when” they shall succeed, and I can tell you now, with a highest degree of confidence possible, that time is VERY VERY SOON. Accordingly, I urge you to take every precaution necessary. Don’t do X, get plenty of Y, etc, etc, etc.
Understandably, you as a comparative layman in such areas, would be wise to briefly go into crisis mode, and take all or most of the precautions they recommend. After all, the person seems sincere, they do not appear to have any financial motive, they really appear to be genuinely concerned with helping people.
Now, if this person sent you a nearly identical message, month after month after month. How long would it take before you seriously started to doubt the “urgency” of the message? As you know, people will only stay in “crisis mode” for so long before the let down their guard somewhat. In my example, they will stay in their fallout shelter for only so long before they start to venture out, and since you are still repeating the same message, over and over and over again, they simply will not believe you when the dirty bomb does hit and they are all the worse off.
By comparison, imagine that the same person who first warned you about the dirty bomb came back after a few months and said:
As XYZ amount of time has gone on, and no dirty bomb has detonated, I am forced to conclude that I misread the signs that a coordinated attack was imminent. As such, I want to now convey to you that you can get out of crisis mode, and instead, be on a state of moderate alert. Let me say this as clearly as I can, moderate alert means exactly that. There are still multiple risks out there that could come at any time, and its very possible that I could miss them altogether. However, these are all background risks that have been part of our lives for years, even decades. They may blow up tomorrow, they may blow up 100 years from tomorrow, we simply cannot know when, so we must strike a balance between managing this risk and living our lives. Make no mistake, it is Inevitable that IT WILL HAPPEN eventually, and when it seems clear to me that an event is imminent, I will be back to let you know. In the mean time, stay vigilant, and watch this space. I will be back when the time is right.
Now, wouldn’t this moderation of the message be a lot more helpful in the long run? In short it’s the chicken little parable. If you are consistently on the highest alert possible, how will you convey an even higher stage of alert when the time is right? If you tell the people all of the time, we are NOW at the edge of the cliff, how will you be able to get them to believe you when we REALLY are at the edge of the cliff?
"Ok, but why now, versus say 3 years ago. Or perhaps 2005 when you first uttered a similar sentiment? What makes this decision to "pull over now", any more timely than the same one you first uttered 7 years ago?"
Another common theme here has been the issue of trust. To live ones life as a specialized cog in a complex society requires trust. People in the west have "trusted" that their savings and "investments" will be there to look after them in their old age. If you have any serious interaction with people under 40, how many of them have that level of "trust" in the system?
Bread and I-circuses are holding things together for now, but what will happen when there is no trust and no bread for the masses?
The Anonymous
Your argument since you arrived here is that moderate inflation as BAU is a possibility into the foreseeable future. While I respect your attitude to propose this possibility, I regard it as very unlikely. In brief, I propose the following reasons though not comprehensive:
1) Huge attempts to increase debt, mainly through the central banks and governments, are now having a negative effect on GDP.
2) The conversion of the USA into a total police state and martial law as of New Years Eve, indicates that the Security State and Status Quo also regard imminent collapse as a probability. Police states are generally bad for business when they can be avoided.
3) The USA annual deficit has quintupled since 2008. This is an attempt by the federal government to try to counteract the contraction in the money-credit supply, so far most extreme in the shadow banking system. Additionally, published markets are becoming even less meaningful as the Big Boyz trade in the "dark (shark infested) pools."
In my opinion, as the "remedial" actions of the central banksta and national political gangstas and hookers are in an inverse exponential collapse, I see moderate inflation into the future as very unlikely. For me, the more interesting debate is between the deflationistas and the hyperinflationistas. I am in the former camp but regard the latter as a possibility worthy of analysis.
Regarding bikes, yes Ogardener, those BSA's sure did sound mellow, and the Triump Bonnevilles as well.
My 70's ride was an RD 400 Yamaha, which didn't sound real sweet but handled really well and ran like a scared cheetah! It also never quit running and was virtually trouble free.
The RD was great fun but in my old age the Chevy S-10 is safer and functions well for the chores I now attend to. :)
StoneLady, some great posts!
The Anonymous (follow-up)
I was disappointed with your dirty bomb analogy to TAE positions. You had been reasonably sensible for the last 18 months. Oh well :-(
Re bikes
Back in the early 70's while I still had my Triumph running, one of my closer friends and neighbors had a BSA (pronounced Beezer) vintage 1950, 500cc one lunger. It vibrated quite a bit, which is one good reason not to have a single cylinder bike that big. He did managed to keep it going nicely. On the other hand, he was, at the time a middle management GM executive, who commuted to the train station in a Model A Ford, replete with leather upholstered rumble seat, which he found rotting into a front yard in upstate New York. He also had a Ford truck, about 1922, with a wooden front cab that resembled a telephone booth.
New post up.
Don't Be Fooled : Nothing's Priced In
.
El G,
There have been some good analogies as to how stress can be added to a system until it suddenly breaks. As someone initially trained in chemistry, I was once heating up a liter of hydrobromic acid and realized that I had forgot to throw in a couple of boiling chips, which like an idiot I proceeded to do. Unfortunately, the HBr was already superheated and when the chips landed, I blew the liter of HBr as well as a very expensive reflux condenser off the ceiling of the lab. My popularity suffered from this event.
LOL, you did that too? That was one of my more ignominious moments in the second year organic chem lab. I was working with grignard reagents. It didn't occur to me at the time that quietly putting the boiling chips in afterwards was a seriously bad idea. My lab coat didn't survive the experience, and my reputation was left a bit tattered as well. The TA watched me pretty closely after that. In my defence, I was only 19, and pretty good at organic chem in general because, being a geeky kid, I spent my free time playing with molecule kits and doing every question in the textbook for fun. I decided not to become a chemist though. Probably just as well.
The folks who are complaining about TAE being a stuck clock are missing the point about timing.
The Anon has used analogy. Which is nice, always good to read analogies, except the analogy is flawed, which is why it was used. Otherwise (s)he could have reiterated his/her point regarding the actual situation and got no further in attempting to force a qualification of the message, which could then be used to prove the "editorial muddle" line via another identity.
The truth is, either you are investing in BAU, or you're trying to work out an alternative. The first step to the latter is realising that money in the bank is the banks money. Get your head round that and the rest follows.
Oh, flawed analogy? The bomb exploded in the 1980s with the repeal of Glass-Steagal. This site is just trying to explain where the debris is coming from, and why not to carry any large chunks in to keep warm with.
"El G Said...I was disappointed with your dirty bomb analogy to TAE positions. You had been reasonably sensible for the last 18 months. Oh well :-("
Dammit! As our resident tin foil hat wearer, I hesitated to use the dirty bomb analogy. :) If it helps for your purposes, imagine the astronomer warning about an imminent solar flare "Carrington Event".
As far as my long term outlook, it is not as sanguine as you may believe.
As I see myself as a herd member, I never discuss this in polite company, but with regard to the US specifically, I believe (on the balance of probabilities) it very well may have reached its peak as a modern day empire. Thus the question in my mind is (if this is the case) how does it experience decline, and what does that "decline" mean?
1. Will it simply "grow" more slowly than the rest of the nation states competing for dominance for the worlds resources? (BAU)
2. Will it stagnate, neither growing nor shrinking while the rest of the emerging states try to play catch up? (also what I call BAU).
3. If it reverses, does it simply go WOOOOSH into a fantastically rapid catclysmic decline and not engage in any meaningful recovery in my lifetime? (TAE's opinion...not BAU).
4. Does it reverse in an agonizingly, slow, oozing type decline over multiple generations such that the majority (but not all) of the herd members can live the majority of their lifetime and not really realize much of a difference? (boiled frog type, BAU)?
5. If it is #4, will there be multiple manic fits of zig, zagging volatility, (i.e. multiple 2008 events, with multiple rounds of can kicking), but if averaged out, still end up on the same overall declining track as #4 above? (manic, boiled frog, BAU)?
I really really, dont want to get too deeply into the specifics of 1-5 above, as that gets into peak energy and similar debates that (while important) are beyond the scope of this finance related website. So if I may, I would apreciate a non, or minimal response to this as I do hope to keep (to the extent anyone is willing) on the timing issue. I just wanted to make sure you had a better understanding of my position, even if you did not believe it to be likely.
I can not post a link to Fred. The system here keeps spitting it out.
I keep wanting to say that for those who are critical of the writers here, this is cotton candy compared to the potential for total dislocation the instant Usakistani military primacy - MAD - is ever challenged.
If I put in the link to his column - the first of two about candidates - this comment will be spit out. So I will just see if I can post what he said to the repuXXXXXX field of hopefuls:
Perhaps a little humility, perish the thought, and a little self-examination might be in order.
Peering into your own depths, you will probably find that the humility does not come easily. In my decades of covering the armed services, I noticed among men a belief in their innate jock-strap competency regarding wars. Men who would readily admit ignorance of petroleum geology, ophthalmology, or ancient Sumerian grammar nonetheless believe that they grasp matters military. Usually they do not.
In particular, they have an utterly unexamined belief in America's military invincibility.
Testing... I can not post a certain comment in favor of the authors here... no matter how drastically I edit it...
OK, now the meat of it... Fred's advice to rowdy hopefuls for the office of [censored]
Perhaps a little humility, perish the thought, and a little self-examination might be in order.
Peering into your own depths, you will probably find that the humility does not come easily. In my decades of covering the armed services, I noticed among men a belief in their innate jock-strap competency regarding wars. Men who would readily admit ignorance of petroleum geology, ophthalmology, or ancient Sumerian grammar nonetheless believe that they grasp matters military. Usually they do not.
In particular, they have an utterly unexamined belief in America's military invincibility.
---,
No idea why you can't post certain things. Very strange. I just checked the spam box and nothing's been added to it. If you email your comment to me, I'll see if I can post it for you.
Anonymous and others...
If you feel as you appear to,why do you feel the need to hang here?
We are with S&I message.
I see no need to "Moderate"...Why do you wish for them to "Moderate" a message of the truth,as they [and I]see it?
No one is forcing you to tarry here...your life's time is slipping away as you chat with those whom disagree with you.Do you wish to sit and argue as to the validity of the material ?or the message?
Or are you just a paid shill?
As I have observed stoneleigh "Close up and personal",and have read her writings from the oil drum on...I,have the same take as the old bird...she is one of the savveyist people I have ever met,and one of the kindest/nicest.
Hurry and get the new site up
folks.
Bee good,or
Bee careful
snuffy
"Snuffy said...I see no need to "Moderate"...Why do you wish for them to "Moderate" a message of the truth,as they [and I]see it?"
Yet, as you yourself have learned, being a veteran of the y2K non-event, the "truth" is not always as the adherents believe.
Its a shame, as it was then, so is the case now, anyone (such as myself) who is outside the mainstream of a certain communitiy worldview is marginalized. Not on the facts, per se, but that they are a "shill" or a "troll". If the moderator is heavy on the ban hammer, the dissenters are expelled so much so, that the community becomes echochamber of groupthink.
There is a lesson here. The world is full of risks that we seek to manage. Some of these risks are real, some are not. Thus in order to make an educated determination that a risk is real or not, you need to become informed. Take in a variety of outlooks, and decide for ourselves.
Now, thanks to some of the trolls and shills, I was able to quickly determine that "enough programming work had been done" such that y2K was not going to be a big deal. I thus, made my decision, and moved on, preferring to focus my energies on more legitimate risks out there. I was satisfied that even if I was wrong, I had done enough to make an educated decision. If those trolls and shills were not there to help me, I may not have been able to make an educated decision.
Likewise, I looked very briefly (and I mean very very briefly) at both the "2011 rapture" and "2012 mayan apocalypse", weighed the competing claims of the adherents on one side, and (what the adherents call) the trolls and shills on the other, decided it was not worth any more of my time, and moved on.
Now, unlike the risks I noted, above, I have determined that certain risks, vis a vis, peak energy, and a deflationary spiral ARE real! In this case, the adherents have won out over the trolls and shills.
Yet among the REAL risks, I, again, wanting to prioritize, need to determine which ones are "imminent" and which ones are not. And it is primarily here that you and I are in disagreement.
Thus, my heavy handed interrogation of our hosts is not about the truth of the matter, but merely its TIMING. Just because it is "inevitable" (which I agree with), is it really "imminent" (which frankly I am not)?
And frankly, I find it a bit offensive that you brand me a shill because I have the temerity to question merely the timing. Unlike y2K and other such risks, this one has no "date certain" where it either happens or does not. Could this be a slippery slope? Will I come back 10 years later and find I&S still on high alert, claiming, just wait, the implosion, is right around the corner?
And again, its not because I want to become a heavy hitter, a 1%, to CONSUME as you put it. I simply want to know, when, if ever, I can put this risk into the "inevitable" but not necessarily "imminent" category, and focus my life on more important things.
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