Showing posts with label doom and gloom. Show all posts
Showing posts with label doom and gloom. Show all posts

Sunday, May 25, 2008

The Grim Reaper stretches his legs


The news is pretty grim - have you had a look?

China: 69 dams in danger after earthquake
South Africa immigrant violence leaves 25,000 displaced
Tornadoes rake Oklahoma as Midwest tallies damage
Fed warns on inflation as oil prices continue to rise
Bangladesh reports first human case of bird flu
Myanmar still in emergency after cyclone: UN aid
Buffett sees "long, deep" U.S. recession

In an Olympic year, China is scrambling to deal with imminent dam bursts, 80 000 estimated dead in earthquakes with continuing aftershocks, meanwhile the Olympic torch has been shelved. No one is thinking about that now.

South Africa, another country hoping to host 'world games' (the Soccer World Cup in 2010) is facing a lot more crisis than China. The xenophobia/mob violence is perhaps the most troubling. It ought to be obvious by now that if such large scale rioting can erupt with no warning, it can happen in 2010 without warning (that's if it dissipates in the interim), which is an unconscionable threat to the safety of tens of thousands of foreign visitors. Given the inflationary pressures at work, I predict that this violence and criminality will pick up speed towards 2010. South Africa also has many other troubles, including a dodgy electricity network, virtually no public transport and a deep seated corruption in government. The last may not seem to be a problem, except that government will say everything and do nothing, meaning we can't reasonably expect the country's problems to be solved any time soon.

The USA is experiencing crappy weather, and we will have to see whether we have another season of big hitting Hurricanes. While Americans are seeing the worst property market figures in 20 years, they are also facing stagflation - rising prices of goods, but zero growth. And as the world's largest consumer of energy (and largest polluter), at 25% (China consumes 9%), America is being winded by some very hard economic right hooks. The presidency is looking increasingly like a booby prize for whomever is unlucky enough to win it.

H5N1 has been placed on the back burner, but it hasn't disappeared. It's kicking around in Seoul, one of the most densely populated cities in the world. It's also dancing around Bangladesh, Japan and Indonesia.

Finally,if your country hasn't been mentioned above, the bad news still extends to you, because we are now moving fairly rapidly towards a global recession, and then a depression. We can expect oil prices to cruise to about $150 and obviously those commentators yelling 'bubble' will hopefully have their own thought bubbles popped. I had hoped for more sanity in our response to $135 oil. But we remain caught up in a collective sense - a delusion - that everything is just going to carry on humming. Normal is gone.

I don't know about you, but I think there has been a gut feel - among many ordinary people - that we have been heading for trouble for some time. That we just couldn't continue carrying on the way we have been. Reality may take a while still to dawn, and unfortunately when it does, people will have nervous breakdowns, systems will also break down - because even the real world can't stand too much reality. Our world has picked up a terminal disease, and has started dying.

Tuesday, May 20, 2008

Am I Psychic?


My sister comes up to me in the Kalahari in January, okay - are you with me - and she starts pitching to me about how we must buy property together. I start a statement that boils down to 'No,' and she immediately backs up her pitch saying that she's discussed it with my father (a successful property developer and investor) and he supports her idea - we should buy a place together. She is going overseas so I can live there, and we can pay it off together and get rich off the investment. Makes sense ne? So here we are, in a lonely Kalahari campsite, the Gemsbok looking like black and white tropical fish swimming on a distant belly dancing pan, and my sister and my father are bearing down on me. Come on son, just sign on the dotted line.

So I say: "Now is not a good time to go into property. The markets are turning. I know it doesn't look that way, but values are going to go down. I'll buy something when it becomes a buyer's market." I know that it sounds incredibly arrogant, especially since it contradicts what 'the expert' has advised.
My dad shakes his head (and I mean, this oke made all his money in the property business over a period longer than my lifetime) and my sister's face looks like a nuclear war has started in her brain. Both of them basically accuse me of being 'doom and gloom' and appear both frustrated, angry and disgusted.

Cut to 4 months later and we're seeing houses in South Africa devaluing. I don't know when the sub-prime crisis hit in the US, I don't remember if I was aware of it in mid-January when we talked about this in Botswana, but I turned out to be 100% on the money. If any possible buyer had known then what we know now (regarding interest rates and all the rest), they would have been nuts to invest. And here I was, with my dad saying, "Go for it son," and my sister saying, "Well if you don't go in this with me, I'll get someone else." Okay then.

I know what you're thinking. That was a one off fluke, a gelukskoot. Ne? Not so fast. On Thursday this week I interviewed Katharine Euphrat, an American intern. We spoke at length about racism in South Africa, and focused in particular on America's dilemma with...are you ready for this...immigrants. One of the questions I asked, last week, was whether there is any Xenophobia in America. I also speculated that this is a problem that is likely to worsen in countries like the USA, the UK, South Korea and South Africa. Two or three days later, all hell breaks loose. And what word gets thrown around? Xenophobia. Racism. I was specifically studying this two days before it erupted.

In a magazine article I wrote as far back as 2006 I advised the following:
- buy gold
- do not buy new property especially if you already have properties that you are already paying off

Go and check yourself to see how the value of gold has climbed since 2006. I think gold was about 1/3 what it is now.
I've made other predictions too, namely the current oil price level I predicted many weeks ago (before the Goldman Sachs gurus did) and I also predicted $150 by the end of this year, also in advance of the Goldman Sachs moment of enlightenment, and I've predicted, along with many other commentators, that our most immediate crisis would be 'starvation'. I know, before this happened it seemed like a crazy statement to make.

So the answer is, if you live in a fool's world, then yes, I am psychic. As far as I'm concerned, I'm just more closely aligned with reality than by far the majority of people, and these people actively resist to even consider 'bad news', to even think (yes, sometimes that's hard) beyond the ordinary paradigms of society. It's laziness.

There is a very easy explanation for all these things. For why we have a food crisis. Why the world is entering its worst recession, why we will experience chronic stagflation, why property prices in America will spread everywhere, and be chronic in South Africa too. How I know South Africa will not only lose the fight against crime, but eventually be completely overrun (yes, destroyed) by it. How can I make these sweeping statements with any accuracy? Because it is easy to extrapolate our human psychology in terms of our consumption to a macro-version of demand, to see how individual use of energy by a middle class user magnifies on a daily basis to create a worldwide problem of scarcity. Against the background of these simple facts:

- we are dealing with a finite resource against infinite and growing wants
- we are dealing with severe levels of delusional entitlement, mindsets that are not geared to hearing 'bad news' or 'change your habits'
- we have two of the world's biggest populations attempting to come online simultaneously (China and India together have 3 billion people, both countries are growing economically, India is now the world's 12th biggest Economy ahead of South Korea, and rapidly expanding including its human numbers)
- our psychology of previous investment and the 'growth psychology' make it impossible for people or businesses to begin to see how these investments actually have no future (since cheap oil is presupposed to be the underlying resource that these investments run on)
- many obvious past and present patterns are simply ignored in favour of self-reinforcing evidence that calls into question or contradicts unpleasant news (this applies to markets, climate change etc)

So it is easy to see that the downward spiral cannot easily be improved or interrupted. It is an accelerating breakdown, and one that is endorsed by delusional and protracted 'wishful thinking', by our lifestyles and habits, and by the multitude of systems that function solely on these now critical resources. We need oil for fuel, food, to power our homes, to get around, for plastics, medicines. In short, we need it for everything, and in order to afford everything and to continue to live the way we do, we need it to stay cheap. But that's suddenly changed. So is a high oil price important? It's the most important news for you, and for this world. You and everyone else are immediately going to feel those effects, whether you agree that it is important or not.

Here are a few more predictions:

The violence/criminality in South Africa next year will be at least twice as bad as it is now, affecting many other centres, including Cape Town, and we will see a resurgence in numbers that were decreasing, for example murders, rapes, hijackings, bank robberies, cash-in-transit heists, corruption and all the rest (predictions have been made on many occasions about crime increasing prior to this one today). Crime will get worse very quickly, and very soon, and accelerate.

The 2010 World Cup will be shifted to Australia if it happens at all, but it will not happen in South Africa. Crime and electricity will be cited as the chief reasons.
The Eskom crisis will become permanent within a few weeks from today, and within a few months, large areas will no longer have electricity on a permanent basis.
Instability in Zimbabwe will gradually lead to regional instability in Southern Africa. In other words, in the next 5-10 years the subcontinent (as will other regions in the world) will be plunged into a sort of large internecine conflict. Much conflict will not appear any different to either 'racism' or 'criminality', but its roots will be the same: chronic shortages of services, food, shelter and growing levels of intractable poverty.

I know these are dire predictions, and I know they appear very dark and negative, but I can be confident that they will happen simply because I also know that an oil price of $141 this year will simply produce so many economic losers in South Africa, that the majority of people in this country will be poor, unemployed and getting hungrier and unhappier by the day. Any country that has a vast majority of recently disenfranchised poor is going to be angry and restless. And there will be huge resentment towards the middle class (and anyone else really) sitting prettier. Celebrity and wealth in the next decade will become vulgar and will be hidden, an opposite condition to the present 'showing off ' of wealth.

Is there an antidote to all this misery? There is, but I don't expect anyone to buy into it, and I don't expect it will happen. The antidote is farming. Becoming self-sufficient locally. I don't expect you to give up your job and go and toil in some farmers field. Which is also why I know we are on the road that we are on, and will remain on this highway, wherever it takes us.

Tuesday, February 19, 2008

World: Get Used To Doom and Gloom - My Predictions


When serious information is communicated, people quickly filter it into good/bad news, and the worst news goes immediately to a recycle bin called: Doom and Gloom. And the purveyors of these facts are called Doomsayers and 'Negative'. C'mon people, a bit of critical thinking...think you can do that? It's the least you can do.

I have predicted on this website $100 oil for about 2 years before it happened. I've suggested investing in gold when gold was still $300. (Invest in coal now too). Stock exchanges worldwide are at an extreme level of volatility. This will get worse, with some massive downward corrections. To be clear, by July this year, $90 oil will be a distant memory; two digit oil will have a 'feel-good' factor about it. By July oil will be anywhere between $105 and $120. What people simply don't realise is that none of this is temporary. It's not a temporary blip, temporary problems, temporary shutdowns, temporary crisis. It's something else, and all human beings will be swept into the torrent. It will be chaotic downward shift.

Economists will calmly tell you that high oil prices will dampen demand, and thus prices will not rise any more. Wrong. Oil right now is cheap. Wait until exporters decide to keep the oil for themselves, to run their own countries with their remaining reserves. The voracious race to buy cars and build houses and malls and to run suburbia and the world (with all its festivals and world cups) is not concerned with oil prices, they're concerned with making money. To make money they have an immediate individual focus on meeting deadlines, finishing projects. There is no global view. There is no community consciousness. Bad weather? Who cares. Howz my bottom line? Demand is already powering far, far in advance of the supply curve...even if just the demand for motor vehicles.

Right now oil is cheap. Did I say that already? I'm repeating it here again because some aren't getting the obvious. Oil is cheap. We drive out the stuff to go to gym or a convenience store 3km away. In time, we will be accused of squandering...we'll be indicted by our children for our reckless greed. What were you doing? Our excuse will be that 'everyone was doing it', that it was a lifestyle, that we were distracted, and people were contradicting each other. If that's going to be your excuse, read this website. It's clear. The signal is consistent.

Peak Everything really means that stock exchanges will never again surpass peaks reached roundabout now/recently. There will be small crashes and corrections, and then more carnage, with an overall downward bloodletting. Stagflation is a scenario with slow economic growth (soon to become a permament recession) and relatively high unemployment, coupled with high prices. The reason we face this is because of low capacity in virtually every sector worldwide. The financial system that we have based all the wealth of the world will collapse. It always was going to, what with the system of interest rates and it's inflationary effect. On a more basic level, the collapse we face is due to the everyday demands of a large human population on Earth, where each human organism expects to have their own car, house and appliances, consumes goods with exdpensive packaging transported sometimes thousands of miles by container ships.

The WWF estimates that we currently consume the equivalent of 1.4 planets. If that doesn't make sense, the fossil fuels we're using are 'stored energy'. It's like using up a credit card when you have no money in the bank. You just can't keep on doing this. Take away our fuel inheritance and we're short of half a planet for 7 billion voracious predators/consumers to run our shopping malls, suburbia and everything else.

Power supply is a problem worldwide, from Pakistan to Britian, from China to South Africa. High food prices are affecting everyone, not only because of higher fuel price inputs, but because of climate change and pollution as well. The poor will suffer, and increase in number. Crime and unemployment will increase.

In the future we will need to become farmers, and become a community again. Computers and the internet can keep our communication and inefficiencies down. We will live more locally and the world will become a lot larger. Superstores will become extinct. Airlines will fall out of the sky. Trains will become big, so too streetcars. You will be restricted at the market to what can be grown or made locally. Life will be about what is essential, addressing fairly basic our needs on a large scale, not so much about convenience or what we 'want'

But the emphasis should be on this kindset: a permanent decline. A permament contraction. A strong likelihood of war, and a nuclear exchange as resource depletion begins to bite on a planetwide scale. This is not the distant future, it's now. It's happening.

Do you expect petrol prices to come down again after a few months? Then clearly you still have not heard or understood a word being spoken or written. You have no idea how serious our collective situation. Wake up!

Peak Everything: Waking Up to the Century of Declines

Tuesday, February 12, 2008

South Africa Faces Grim Epilogue

With the world in tow we now enter the decade starting with the soccer world cup on our knees

Let’s face it, for a while there South Africa had me fooled. I thought this damned country was going to make it happen. We seemed poised – with our mineral resources and growing economy, and certainly our coal energy supplies – to ride out this next wave of global malaise. While America sukkeld, we saw mineral prices shoot through the roof. But then we started sukkeling too: it turns out we will start what Kunstler calls The Long Emergency period in an even worse position than the war wearied USA.

The word ‘recession’ will soon be a cliché. The Long Emergency is essentially a period of worldwide contraction, where the limits to growth are realized, where food (for human beings), fuel (for transport to and from suburban sprawls) and energy supplies (electrification of that suburban sprawl) become concomitantly unaffordably expensive. In plain language, increasing numbers of people, including the conventional ‘Middle Class’ of Western society, will no longer be able to afford the costs of living. In even plainer language: there will not be enough to go around.

$90 oil is now a baseline average infecting the economic mechanism. Where house prices begin to lose value (as suburbia becomes less affordable), all bets are off in all dispensations that have invested so heavily in suburbia, in property. China, whose growth seems to many to be good, simply has reached adolescence too late. It will not find enough fuel to transition its populace into the lifestyle they are aiming for. They are struggling now to find the resources, scouring the world, especially Africa. When countries cannot themselves survive depletion, they will forget about trade, try to survive and either diminish, or strike out.

The world has experienced a supernatural period of growth lubricated, cushioned, unleashed by the potent energies we’ve harnessed from millennium’s worth of solar stores: fossil fuel oil. It has allowed our species to explode over this planet from around a billion a century ago, to close to 7 billion, a 7 fold increase. As excess demand for food, fuel and generic energy becomes the norm, so the number of economic losers will begin to climb.

We return from this background sketch, to our domestic scenario. How will South Africa fare in the Emergency scenario of a world facing the stranglehold of depletion? For a while we seemed to be poised very well. We are isolated from the larger military powers of the world. And until recently, seemed energy efficient at least in terms of keeping the lights on. We could possibly have bought our way out of trouble, selling coal to the Chinese, and enjoying their protection from other large military powers. Japan for example imports something like 90% of its energy; but Japan is also the world’s most energy efficient country, with advanced rail transit systems. As South Africa begins to develop one small urban rail project, the lights have begun to flicker. We are told they will continue to flicker for the next 7-8 years.
We now have to focus on finding ways to cope with a local emergency, we’re focusing already on survival, rather than having the luxury of brokering deals with nations that need our resources.
Unfortunately, this period coincides with the opening chapter of The Long Emergency. The introduction to this period has been the incredible peaks seen in affluence, peaks in stock exchanges. If it seemed like the world was awash in oil, if it seemed like we had never grown faster, or to such an extent, well this is exactly what Peak Oil presents. Our planet at Peak Capacity. Unfortunately, the curve takes us irrevocably down from there. Permanent Decline. The Infinite War. A war that will not end during our lifetimes. It is inevitable that we will see the lobbing of nuclear weapons, and all countries participating in global terrorism. Who will be the last man standing? Which country will emerge relatively unscathed? Not this one.

With a population already ravaged by rape, and murder, with a one party government more appalling and far more corrupt than the bullshitting Bush administration, we can expect the rule of law to diminish rapidly here, and for the demoralization and Africanisation of South Africa to go into high gear. Those who engineered the phrase ‘one settler, one bullet’ will return to centre stage. The number of jobless and poor South Africans will dwarf the ‘haves’. This trend will be paralleled worldwide, but South Africans will experience this in a chronic context. AIDS, poverty and crime will morph the majority of the populace into roving, rampaging, spectacularly self destructive mobs. Looting and burning will be common place. Our President will either endorse this ‘final overthrow’ with incidental ‘Machine Gun’ performances, or will attempt, unsuccessfully, to oppress and resist it. All Presidents in the era to come will be tragic figures: Brown, Obama, Zuma.

The solution to these dire circumstances will be (what may seem an ineffectual response) setting up organic, self sufficient systems: farms able to grow locally, households connected directly to local streams and crops. Secure, walkable communities. Given the state of flux, this will require massive resources and some time to procure and develop, and naturally, any and all surviving camps will be targeted by an overwhelming majority of economic losers. Also, most people – used to the ‘something for nothing’ mindset – will be more motivated to make war and take what they can from others, than to work on farms.

In this highly destructive, highly chaotic downward plunge, ordinary people without homes or jobs, will wonder how it all happened. The already stressed and disenfranchised human population will then have to deal with the inevitable bird flu pandemic, as attention is focused away from culling H5N1 infected chickens towards culling humans. During all this bloodletting, we will blame governments, we will blame our leaders, but more and more people will die unabated.

In the end, we became too many, and too many became too greedy. What happened to us is simply what happens to any species reaching overshoot: there is a crash. Ours will be spectacular. We will see a great culling not only in South Africa, but everywhere. Nuclear weapons will cut down the human race like wheat. Our number will plummet to below the billion number margin, to some hundred million, mostly in the Southern Hemisphere. Endless war will create massive pollution and radioactive contamination, and the climate of the world by then will have deteriorated obviously, becoming an interminable drain on what little motivations our species have to continue living.

For now it is appropriate in South Africa to remind ourselves how we engineered fate to be even less kind (to us) than the rest of the world. Don’t laugh: the dismantling of a world number one rugby team in favor of political chauvinism demonstrates a lack of will to succeed. A focus not on reality, but on personal politics at the expense of success is always risky. It’s also shooting yourself in the foot. This is symptomatic of a widespread delusion. It is this corrupt attitude of personal enrichment at the expense of the natural interest that causes the country to no longer be able to function: not having the capacity to keep the lights on is only one crisis South Africans currently endure. There are many others besides. We have lost the chance to come together as a unified community, we had a chance once upon a time, but I doubt whether there were enough of us whohad it in us to really accept and care about one another in this country.

Racism, religion, riches – will be used to target and terminate large groups of people. Blacks will prey on whites, in the US, the opposite, tribalism especially religious tribalism will be rife right around the world. There will be a ferocious baying for blood. It will be a terrible and systematic slaughter, probably taking place locally in schools and sports stadiums. The carnage in South Africa will reach epic proportions, but this will be echoed elsewhere as the bloodlust gathers momentum in other countries too.

David Bullard once said: “How can you NOT make a success of South Africa?” Indeed. But we have not, and now, cannot. Where to from here? I’m guessing an island state like the Seychelles, Mauritius, Reunion, New Zealand or Australia. But millions of others from here and abroad will make similar choices, and upon arrival we will fight each other over the scraps. The world was not enough. Or perhaps there was a hole in human beings we did not listen to, and have since spent lifetimes pouring our brokenness into the world. We now cover full circle, circumnavigating the great abyss created by our avarice, our vast ignorance. The circle opens like a dark volcano, and the dreamers fall into it, the nightmare and its engineers finally fulfilling its destiny. Let’s be clear that the austerity we face is one we have collectively authored, and as such, it will be an utterly bleak epilogue for our species on this planet.

Ps. I hope I'm wrong and that I won't be the one saying, 'Told you so.' If I am wrong it's good for everyone (including me). If I'm right, shit is on the cards. Unfortunately, I don't believe this to be a question of right or wrong, optimism or pessimism, negative or positive. I believe it to be a matter of logic.

Tuesday, February 05, 2008

The Future's Bright, The Future's Orange

NVDL: Apparently from Alan Knott-Craig (CEO of Vodacom) to his staff...

2008 has certainly started with a bang! The future was rosy on 31 December 2007, but suddenly everyone is buying candles and researching property in Perth!

A combination of recession in the USA, global equity market negativity, high interest rates, the National Credit Act and power outages have combined to create the perfect storm.

But don't panic!

This is not the first time there's been doom and gloom. Every few years the same thing happens. We experience massive economic growth, everyone is optimistic and buying Nescafe Gold, and holiday homes, and Merc's. The positivity gets ahead of itself and the economy overheats, and then panic sets in because the economy seems to be collapsing when in actual fact it's simply making an adjustment back to a reasonable level.

It happened in 1989, when SA defaulted on its international loans and the stock market and Rand crashed, it happened in 1994 when the ANC took power and everyone thought war would break out, it happened in 1998 when interest rates hit 25% and you couldn't give away your house, and it happened in 2001 when a fairly unstable guy by the name of Osama arranged for 2 Boeings to fly into the tallest buildings in New York!

On each of those occasions everyone thought it was the end of the world and that there was no light in sight. And on each occasion, believe it or not, the world did not actually end, it recovered and in fact things continued to get better.

I think 2008 will be a tough year, but I also see it as a great opportunity to seize the day whilst everyone else is whinging and get a front-seat on the inevitable boom that we'll experience in 2009, 2010 and beyond.

Make sure you make a mental note of everything that is happening now, because it will happen again and again, and if you don't recognize the symptoms you'll be suckered into the same negativity, and forget to look for the opportunities.

It's easy to be negative. Subconsciously, you WANT to be negative! Whenever you open the papers they tell you about the goriest hi-jacking and the most corrupt politicians. Why don't they dedicate more pages to the fact that Joburg is the world's biggest man-made forest, or to the corruption-free achievements of the vast majority of public officials? Because bad news sells. Good news is boring.

SA still has the best weather in world! We're lucky enough to possess a huge chunk of the world's resources, i.e.: gold, platinum, coal, iron. The growth in India and China will continue to accelerate (India and China sign 10mil new mobile customers every month), and so will their demand for our resources. The government has already embarked on massive infrastructure projects (some of them a tad late, i.e.: electricity), and this will pump money into the economy.

We are all lucky enough to be a part of the birth of a massive and all-encompassing industry. The Internet has and will continue to change the world. The enormity of its impact is up there with the wheel, electricity, TV, telephones, and possibly man's greatest ever invention, coffee. Not only does it open up an entirely untapped world of commerce, but it is also the ultimate disseminator of information and news. Apartheid would not have lasted 40 years if the Internet had existed! And you're part of it!

I'm looking forward to another year of ASA complaints, IR issues, Plug & Wireless parties, BTS roll-outs, billing runs, irate customers, happy customers, orange bubbles, faulty elevators, etc, etc. The nice stuff makes me feel good, and the challenges remind me why we can beat the competition. Most importantly I'm looking forward to having fun and making memories.

So ignore the doomsayers, install a timer on your geyser, and buy Ricoffee for a couple of months.

NVDL: Yes, it's all very positive and constructive, and at any other time I'd agree and go along with these sentiments. Except we're dealing with an overarching paradigm that is simply this: we have reached the limit to (what we thought was limitless)growth. It's absolute for as long as we are unable to solve cold fusion as a way to get lots of energy out of virtually nothing, and know how to manage/use/control it. Massive populations of human beings tied to resource limits is our current reality. We were able to reach 7 billion thanks to the magical benefits of cheap oil. With oil no longer cheaps, fewer and fewer human beings can enjoy those benefits. That's a long term, I daresay, permanent shift.

Tuesday, January 29, 2008

I Scream

Last night I did the unthinkable. I got up at about 3am, opened the freezer, and started chowing icecream. Now first off, I haven't had icecream in my fridge for yonks. I basically feel like a Jew walking around Germany wearing a Swastika: Ja vol, very uncomfortable. Why? Because my stated intention is to lose weight, do the Ironman, blah de blah, yada yada yada.
I didn't even go to gym yesterday (although I did do some exercises on the carpet - no, not those kind of exercises...)

I'm also holding back on two very gloomy stories. If you think this blog has cornered the market on gloom and doom, the two stories waiting in the dark corridors will probably propel you into a depression. Basically they amount to a probable end game scenario in this country, against the backdrop of world woe. If you read this stuff you might not be able to sleep for a while (I am struggling, as the thought originator). Do you really want to hear this?

If so let me know.

Tuesday, January 22, 2008

Kunstler: Fullbown Panic



"It's nature's way that waves crest just before they break." - James Howard Kunstler

Knees knocked last week from sea to shining sea as the shape-shifting monster of economic reality cut a swathe of destruction through the markets and financial ranks. The exact nature of this giant beast still remained largely concealed in a fog of accounting gambits, policy blusters, and reporting dodges, but a few intrepid scouts who glimpsed the behemoth up close said it looked like Godzilla with Herbert Hoover's face.

George W. Bush, tried to appease the beast by offering each American adult the dollar equivalent of half a month's mortgage payment -- with the exhortation to drive forthwith to the nearest WalMart and blow it on salad shooters and plasma TV's -- but Hooverzilla just laughed at the offering and pounded the equity markets further into the dust of loss, while the "bank-like" guardians of wealth lay in the drainage ditches bleeding from their ears and eyes.

My favorite moment was seeing Treasury Secretary Paulson and one of his fellow shaved-head deputies at a press conference rostrum frantically trying to calm the news media rabble like a couple of extraplanetary high priests from a Star Trek episode -- the batteries having run down in their laser wands, and their incantations ("liquidity! liquidity!) veering into mystifying glossolalia.

I resort to such admitted extreme hyperbole because it may be the only language that an infotainment-drunk society can still process in the face of an epochal calamity that will transform the lush terms of everyday life as we've known it into something like a bleak surrealist landscape in the manner of Tanguy. That crashing sound out there is the armature of confidence needed to support an economy based on faith that borrowed money will be paid back. It's as simple as that. (Doesn't seem so exciting now, does it?)

The United States is so broke, its people at every level from the Federal Reserve on down don't know whether to shit or go blind. The homeowners cringing in the media rooms of their 5000-square-foot personal family resorts don't know how long they can stay put microwaving pepperoni hot pockets with the default clock ticking. The mortgage "servicers" don't know how they will persuade interested parties like, say, the Illinois State Cafeteria Workers' Pension Fund (holder of X-amount of mortgage-backed securities underwritten by, say, Merrill Lynch or Deutsche Bank) to foreclose on properties scattered everywhere from Key West to Bainbridge Island -- or if there is actually any legal mechanism known to man that would make it possible to "work out" the sliced-and-diced collateral.

The millions of maxed-out credit card holders and the issuers of their plastic are stuck together paddling a leaky tub in a sea of troubles every bit as wide, deep, and polluted as the one the mortgage junkies and their enablers are sinking in. The developers of malls, office parks, and power centers are weeping into their filing cabinets as the harsh daylight of insolvency stops the orgy of "consumption" and the retail tenants pack up their unsellable goodies for the liquidators, and the rent checks stop arriving in the mail, and the notes on this mall and that mall enter the eerie realm of "non-performance."

And, of course, there are the genius wonder boyz and Wall Street playerz whose algorithms and turpitudes underwrote the script of this horror show -- for all I know they'll end up laughing into sugary skull drinks on a beach in the Cayman Islands, or doing Chinese fire drills in federal prison (or simply ass-fucked on the granite countertops of their Tribecca aeries by mobs of angry, repossessed, swindled former American dreamers pouring into Manhattan from the tract house dormitories of New Jersey and Long Island).

There's a lot to be concerned about out there. I don't mean to be too cute about it. But, as the master once said, nothing is funnier than unhappiness.

A whole closet full of "other shoes" is now waiting to be dropped. Surely the biggest clodhoppers in the closet belong to the hedge funds, representing trillions and trillions of dollar-denominated "positions" which, however hallucinatory, had previously yielded enough real "money" year-by-year to keep all the realtors and Humvee dealers in the Hamptons goose-stepping to Goldman Sachs's drumbeat. These "positions" can't help now from moving into counterparty crisis territory, especially as the bond insurers such as MBIA and Ambac go up in a vapor, and if that happens the damage could be so colossal globally that Stephen Hawking might have to be brought in to run the Federal Reserve.

This is going to be a rough week. Fastening your seat belts may not be enough for this ride. Better superglue yourselves to the floorboards and pray for God's mercy.

Tuesday, December 11, 2007

Kunstler: Clowns in Charge

Maybe all the players really know that keeping the ship afloat until Christmas is really the best they can hope for. Christmas means a lot in this country. It represents all Americans' old hope that miracles can happen. Bums turn out to be Santa Claus. Old curmudgeons are transformed overnight into loving uncles. Angels save us when we jump despairingly into icey torrents. And Goldman Sachs executives pass out multi-million-dollar checks to the wizards who "innovated" an ingenious way for the rest of their country to commit financial suicide.

Monday, December 10, 2007

Oil-Rich Nations Use More Energy, Cutting Exports


Luis J. Jimenez for The New York Times


The economies of many big oil-exporting countries are growing so fast that their need for energy within their borders is crimping how much they can sell abroad, adding new strains to the global oil market.

Experts say the sharp growth, if it continues, means several of the world’s most important suppliers may need to start importing oil within a decade to power all the new cars, houses and businesses they are buying and creating with their oil wealth.

Indonesia has already made this flip. By some projections, the same thing could happen within five years to Mexico, the No. 2 source of foreign oil for the United States, and soon after that to Iran, the world’s fourth-largest exporter. In some cases, the governments of these countries subsidize gasoline heavily for their citizens, selling it for as little as 7 cents a gallon, a practice that industry experts say fosters wasteful habits.

“It is a very serious threat that a lot of major exporters that we count on today for international oil supply are no longer going to be net exporters any more in 5 to 10 years,” said Amy Myers Jaffe, an oil analyst at Rice
University
. By CLIFFORD KRAUSS
More.

Monday, November 26, 2007

Kunstler: Economy Deathwatch


The great debate among those of us on the Economy Deathwatch seems to be whether the debacle we observe around us will resolve as a crash or a slow-motion financial train wreck. It seems to me that at every layer of the system, we're susceptible to both.... Some things are crashing as I write.

The dollar is losing about a cent every three weeks against other currencies. A penny doesn't seem like much, but keep that pace up for another year and the world's "reserve currency" becomes the world's reserve toilet paper....

Of course the government's consumer price inflation figures and employment numbers are dismissed broadly as lacking credence. But anybody who has bought a bag of onions and a jar of jam lately knows that things are way up in the supermarket aisles, and so many illegal Mexican migrants were employed in the Sunbelt housing boom, that their absence in the bust won't register on any chart.

...the very real realm of poor choices, fiscal and fiduciary irresponsibility, deliberately deceptive policy, criminal malfeasance, and the broad abandonment of standards in acceptable behavior by people in authority. A lot of observers attribute this to the Gordon Gecko ethos -- the discovery back in the 1980s that "greed is good," which was meant to trump a previous ethos that life is tragic.

... it is hard to imagine we will get through the month of December without some major trauma in the markets. In fact, I'd go so far as to predict a thousand-point drop (or more) in the Dow just in this week after Thanksgiving. Real wealth "out there" is evaporating like popsicles...

... My own hunch is that average Americans are so maxed out on debt that they don't know whether to shit or go blind. Perhaps lots of them are willing to take a last step into fatal insolvency in order to put a plasma TV screen under the Christmas tree and appear as heroes to their families. If that's the case, it would only imply a greater bloodbath in credit card default thundering through the system in February and March, which would only deepen the carnage in collateralized debt instruments further up the food chain.

...The rise in price is only the mildest symptom of growing instability for the system that allocates the world's most critical resource. Even in the face of "demand destruction," weird changes are occurring in the way that the oil producers do business. The decline in export rates and the new spirit of "oil nationalism" will take center stage now, even if the US economy seizes up. These phenomena will represent a new cycle in world affairs: the global contest for remaining fossil fuel resources.

Sooner rather than later, the next symptom will appear: spot shortages around the US and hoarding behavior. This is what will finally wake the American public out of its long sleepwalk (and Matthew Simmons said this first, by the way) -- when the lines form at the gas stations and the tempers flare and the handguns come out of the glove compartments.

NVDL: In a high level meeting between the Chinese oke who bought a massive stake in Standard Bank, question were put to a power broker from Goldman Sachs about the long term future of world energy. He was somewhat dismissive (others would say sensible) in saying: if the US and China can reach the levels of efficiency that Japan now has, no one is going to have a problem.
Simple. All the bankers Ja'd and went 'Amen'.

Problem is, Japan is one of the smallest countries in the world (in terms of landmass), China and the US are amongst the largest. Even if they start building train stations in backyards across the country, the pinch has already started. I'm going to give some very counterintuitive advice: Start Partying! Party like there is no tomorrow, 'cos guess, what, tomorrow ever after just got cancelled.