Monday, March 31, 2008

Massive collpase coming….but when ….2011????

Bear market rallies only delay day of reckoning

Amrose Quote. "In the end, the whole industrial world will stoke a fresh credit bubble to put off the day of reckoning, for another cycle.
The capitalist system is now so deformed by debt that it requires ever lower interest rates to keep going. It survives on perma-bubbles. Monetary rigour at this late stage would endanger democracy.
How did we ever let matters reach this pass?"

Posted by sold 2 rent 1 @ 10:52 AM (548 views)
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10 thoughts on “Massive collpase coming….but when ….2011????

  • Quote from:
    http://jameshowardkunstler.typepad.com/clusterfuck_nation/2008/03/black-swans-eve.html

    What is meant by “meltdown,” by the way, since the word is used so promiscuously by myself and others. I’d define it as the shock of recognition that many big institutions are worse than flat broke and are therefore powerless to conduct normal operations. By “worse than flat broke” I mean they are so deep in hock that all the accountants who ever lived, in the life of this universe and several others like it, using the fastest parallel processing computers ever built, could not keep up with their compounding accelerating losses (now approaching the speed of light).

    The current vacation from reality on Wall Street may last a few more days, or even a couple weeks, but it seems as though a whole flock of black swan events is circling the sky over Financial-land and is about to blot out the sun. By black swan, I refer to the concept popularized by Nassim Nicholas Taleb in his recent book of that name, namely unexpected events of great power that tend to change the course of history.
    For the moment, with the crisis “contained,” and the Boyz getting ready to air out their Hampton villas for the coming season, we are once again primed to be blindsided by potent random events that nobody saw coming. The trouble is, there are enough potent potential fiascos already visible on the horizon.

    The mortgage fiasco is still just gathering steam as it moves from the non-payment stage to the default and repossession level on the grand scale. Even the political wish to bail out feckless mortgage holders will stumble on the mammoth clerical task of administrating the process, especially since we’ve barely begun to sort out who actually holds the mortgages after they’ve been minced into a fine mirepoix of securities off-loaded onto countless dupe “investors” ranging from municipal funds in obscure corners of foreign nations to countless public employee retirement plans.

    No matter how the authorities try to “nationalize” the sucking chest wound of bad mortgages, the body of finance will flat-line — and the American public will get stuck with the bill from the intensive care unit. Those who, for some weird reason, continue to pay their way and meet their obligations, will be none too pleased to pay for misdeeds of the deadbeats and their banker-lenders. This portends a taxpayer rebellion, which may translate into a voter rebellion.

    It’s too bad the current presidential candidates have been unable to address the unfolding economic nightmare. Their collective silence on the matter suggests that they don’t have a clue what to say about it. As the nightmare plays out and black swans flock in to blot out the sun, and the hedge funds come a’tumbling down, and more big banks blunder into black holes, and businesses big and small across the land shutter up their operations, and the unemployment rolls swell, and families are thrown out of their houses even when bailouts are supposed to be saving them (but the bureaucracy can’t get the paperwork done in time) — well now, they are going to be one pissed off bunch of people. What will they do at the conventions? Our outside the conventions?

    In the deeper background of all this is the all-important oil story that nobody in politics or the media wants to pay attention to. Notice that in the fervid unloading of assets this past week, as investors dumped their positions in the commodities markets, the price of oil remained stubbornly above $100-a-barrel when it was all over on Thursday afternoon. Well, maybe they’ll ratchet down a little further this week, but the trend line will prove to continue remorselessly upward in the months ahead.

    Peak oil is for real. The supply can’t keep up with global demand, even if it dips in the USA. And more portentous sub-plots develop in the story every month. Export rates are falling at a steeper rate than depletion rates. The exporting nations are not only buying more cars and running more air-conditioners, they also need to use more energy to lift the oil they’ve got out of the ground.

    Another sub-plot is the fact that the equipment used world-wide to drill for oil and recover oil and move oil around the planet — all that equipment is now so old and rusty that it can barely do the job, and it is going to start failing altogether unless investments are made to replace it, which nobody is making.

    By the way, Americans blame the familiar private oil companies for all the trouble with oil in their lives — Exxon-Mobil, Shell, et al — but they don’t seem to know that oil nationalism is in the driver’s seat now. The old private “majors” are only producing five percent of the world’s oil. The rest is coming from the national companies — Aramco, Petrobras, Pemex, et blah blah — and the very operations of the oil markets are entering a phase of radical instability as they move away from auctioning their stuff on the futures markets and start making long-term favored customer contracts instead.

    The bottom line is that high prices for oil is hardly the only thing America has to worry about. Pretty soon the US will have to worry about getting the oil at any price — meaning, we’re in for shortages and supply disruptions sooner rather than later.

    Also unbeknownst to most of America, the financial markets reflect all this instability around the basic resource of oil because industrial economies like ours are set up in such a way that they can’t run without cheap and reliable supplies of the stuff. So the least little twitter in the reality-based world of peak oil means that everything to do with money and capital investment will naturally go batshit, since our expectations for increased wealth — i.e. “growth” — are predicated on the activities driven by oil.

    It will be interesting to see what new machinations are unveiled this week. Whatever else this catastrophe is, it’s a good show from the cheap seats.

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  • sold 2 rent 1 says:

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  • Yep, the bubble cycle has replaced the business cycle. Some think that the next bubble will be in alternative energy – but can that one be funded?

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  • sold 2 rent 1 says:

    cornishman,

    Great post.
    “As the nightmare plays out and black swans flock in to blot out the sun.”

    I love the bit on peak oil too.
    Remember this is Calleman/Lungold’s fifth night – a destruction phase that leads to a change of reality (consciousness).
    No mention of the corruption in the media and 9/11 being an inside job

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  • sold 2 rent 1 says:

    Icarus,

    You may be right about alt energy. Martin Armstrong’s model points to a peak in April 2009. By the autumn we will see global capital flowing somewhere. Wherever that is, it might be worth joining in the rush, making a quick buck, and then bailing in the spring. The bubble are getting closer together.

    Japan 1990
    Nasdaq 2000
    Property 2007
    ?????? 2009.

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  • @Cornishman – agree with a lot of what you say, and certainly the ‘Great Shew’ is interesting from our vantage point. I’m not convinced about Peak Oil being real, but this may be moot as I do agree that the infrastructure needed for refining is old and unable to cope, so this becomes the bottle neck regardless of whether or not there is more of the amazing substance available readily. And that will have to lead to rationing and curtailing of the average person’s mobility.

    I would like to find out more about Hydrogen fuel cell technology though as this ‘appears’ to be the panacea for our local energy needs – even Clarkson mentioned this in the Sunday Times. The idea that the cell is powerful enough to power the car and house, and produces only water as a waste by-product. Sounds too good to be true, so I’ll be watching closely how Honda perform with their first fuel-cell car and what the ramifications of this may be.

    @S2R – 9/11 et al – well of course the media are silent as no-one is ready to deal with that hot potatoe – but it certainly provided the catalyst event that PNAC called for eh? Have you read LKJ’s book on the subject?

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  • sold 2 rent 1 says:

    layers,

    Haven’t read the book. Just found it on Amazon

    9/11 the Ultimate Truth (Paperback)
    http://www.amazon.co.uk/11-Ultimate-Truth-Laura-Knight-Jadczyk/dp/1897244223/ref=sr_1_1?ie=UTF8&s=books&qid=1206968408&sr=1-1

    I see it is out of stock.

    Great book reviews

    “She demonstrates that those in power now, today are likely the puppets of a cabal that run the show. The true puppet masters always hide in the shadows, pulling the strings, acting as éminences grises (trusted advisor) without taking the spotlight. The control the media, many governments, and the military industrial establishment. They fear only one thing: Exposer. If mankind were to accept he was and has been ruled by Those Without Conscience he would shed his chains and demand justice. If he knew that his religion, his government, his economy was infected with a plague of consciencelessness he would stop dead in his tracks and begin to figure out a way to solve the problem”

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  • Give it rest guys.

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  • S2R1 – you can get it at http://www.qfgpublishing.com/ And it is excellent – careful on putting the quotes here though as most aren’t ready for this 😉

    @P doff – Yeah, yeah I know, but you can choose to ignore it.

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