Thursday, January 29, 2009

Something to Add to Your Model

"Many commentators talk about the government's need to inflate currency so as to pay off debt with "cheaper" dollars/euros/yen/yuan etc., but few ask this key question: What policy benefits the top 1% who own 3/4 of all productive assets?" - Charles Hugh Smith

In The Fog, we here at FutureJacked basically said "who the hell knows what stupid policies will be put into motion as we cascade down into an abyss of negative social mood?" Our model (Elliott Wave Analysis and the Theory of Socionomics that underpins it) gives a nice view from 30,000 feet - but those of us down here on the ground need all the signposts we can get to guide our way to through this downturn and to the eventual American Renaissance that will follow years from now.

Well, Charles Hugh Smith over at Of Two Minds, has, in that quote above, given us another guidepost.

"The Powers That Be" are subject to the same emotional storms as us regular folks. The banksters and financial playerz are constantly being exposed as, well, not quite the supergeniuses they had been marketed as. However, because they have cash and influence, their views are going to get a lot more attention when policy is implemented on a state and federal level.

So when you hear that hyperinflation is inevitable and coming very soon, take a second and think about the effects on the mega-wealthy, the ones that have serious influence on the Congressfolk and Senators. A mass wave of opposition by regular people doesn't mean a damn thing to them as regards financial issues - note the huge wave of opposition to TARP by us pepples. The politicos told us all to shut our little stupid mouths and behave - Daddy knows best, especially when Daddy is being advsied by Goldman Sachs.

This bears more thought, but add it to your toolkit. When policy-makers are about to make a decision, ask yourself, what would benefit the bottom line of the George Soros' of the world and then watch how the policies spin out.

In the end, the mass wave of social mood will overwhelm these efforts, but federal and state laws can definitely deform and warp how it all plays out between here and the endgame.

Monday, January 26, 2009

The Fog

The Fog (courtesy apple.com)
...the week after a new president's inauguration, the deadly fog has rolled in and absolutely everyone dreads what lurks on the other side of it, without being able to discern the path through it. For example, the "bail-out fatigue" being reported suggests that congress may just call a halt to money-shoveling. Where would that leave Mr. Obama's urgent call for "stimulus?" Not to mention further TARP injections for redecorating bank offices...

-Jim Kunstler

I find myself mostly in agreement with Jim Kunstler at the moment when he characterizes the current economic situation as being obscured by a "deadly fog." That is part of the reason postings have slowed here. We know there is a bear in the woods. We know he is hungry. We also know that bear market rallies will be fierce and will fool many into believing the worst is behind us, when in reality, the tough times have barely begun. We need a map through this fog - a way of framing the inflationista argument versus the deflationista argument.

Of course, we do have a map of sorts - socionomics and Elliott Wave Theory. And while I find those models useful in "macro" types of planning, the fact remains that these are just maps - and we must always recall that "the map is not the territory." Had you been following this map for the last decade, you would have a significant amount of your capital in safe assets, would have dodged the collapse of the DJIA from 14,000 and would be in better shape than 99% of the world's citizens right now.

The problem is, these maps will tell you the general features, but in summary. As the crisis built up, this was not a big issue. The dominant social mood was positive. Capital formation, stock trading, property rights, etc. were protected and encouraged. There was no fog obscuring the scenery - you could steer your ship off this map with no issues - other than the disdain and mockery of those wedded to the old and dying paradigm.

This is changing. A fog has rolled in. We know which direction things are headed, but now the tools we would have used in the past to protect ourselves (i.e. selling stocks short, paying down debt, investing in the few companies left with solid earnings, etc.) are not as reliable and could actually backfire.

The maps won't tell you exactly which damn fool plan the federales will implement and when - and that could be the difference between some sort of nest egg or capital left in your hands and being a day late and that same capital or cash being confiscated.

  • Will there be another ban on short-selling, removing this tool for protecting your assets?
  • Will the federal government step in and shovel money into a debt-laden, poorly run company, keeping it afloat and saturating the market, punishing the well-run companies that didn't get a bailout?
  • Will the federales follow the lead of Argentina and seize retirement assets held in IRA and 401(k) plans and block your ability to withdraw that capital from those accounts?
  • Will the stress on the house-selling markets become so great that property rights laws are radically altered - allowing things like squatting to occur on a property that you may have wanted to purchase in foreclosure or via a tax sale?
  • What opaque financial derivative will blow up next? What will the blowback be?

Action Items

This doesn't mean the future is unknowable. It does mean you have to pay attention to what is being debated in Washington, D.C. You have to find a map you like and follow it. I prefer the one presented in Conquer the Crash, but there are others. A map gives you some sort of guidance, even though you may have to change plans to fit the circumstances. The control (or, illusion of control) implied by a plan, however flawed that plan may be, can help focus the mind - especially if it a tested and proven one.

There is a storm raging. I can't tell you which trees will fall where. Keep your eyes open and your powder dry.

Best of luck.

Friday, January 23, 2009

Gettin' Out While the Gettin's Good

The speed and ferocity of the worldwide economic flameout is amazing, even for those of us who have been screaming about the imbalances that built up over the last decade or so (or longer, depending on your views).

Dubai is another of those very important canaries in the coal mine. The thumps you hear as they hit the floor of their cages is beginning to sound like machine gun fire. I was tempted to take a gig in Dubai ~ 18 months ago. Glad I passed.

Indians flee Dubai as dreams crash
SOURCE : N. RAGHU RAMAN - DNA
Mumbai/DUBAI - JAN 14: It's the great escape by Indians who've hit the dead-end in Dubai.Local police have found at least 3,000 automobiles -- sedans, SUVs, regulars -- abandoned outside Dubai International Airport in the last four months. Police say most of the vehicles had keys in the ignition, a clear sign they were left behind by owners in a hurry to take flight.

The global economic crisis has brought Dubai's economic progress, mirrored by its soaring towers and luxurious resorts, to a stuttering halt...

...Mumbai resident D Nair (name changed) had been living in a plush highrise in Sharjah for the past four years. However, the script went horribly wrong when his contract was terminated. Nair used all his credit cards to their maximum limit, shopping for people back home. He then discarded his Honda Accord before returning to India for good. Nair, who stays in a rented apartment in Navi Mumbai today, has a Rs15 lakh loan with a Dubai bank.

Another such victim of the meltdown said he bid goodbye to his car in a small bylane near the airport and hailed a cab. "I was scared because a number of us were doing the same and did not want to be questioned by the police. There was no way I could afford to pay the EMI of 1100 Dhirams for my Ford Focus," he told DNA on condition of anonymity.

When contacted, the dealer for Asgar Ali cars in Sharjah said, "We are helpless and do not know how to tackle this issue. A large number of such owners are from Indian, Sri Lanka, Bangladesh and other South Asian countries."

Considering the treatment that guest workers have received in the past in the oil sheikhdoms, these men and women are probably making a very rational choice to get out quickly. What will these folks do back home? What will happen to the ones who haven't fled or can't afford to get back to their homes?

Hat tip to Mike Ruppert for the link.

Why do we care?

Mainly this is just another interesting anecdote. However, it does shed serious light on the shifting psychology in what has been a very dynamic part of the world over the last decade or so (read - petro economies juiced by war, soaring petroleum prices until last year, and all sorts of money laundering of gray and black money flows from the region).

Mood makes markets. Psychology rules all.

Wednesday, January 21, 2009

Those Who Want to See the World Burn

“He can’t be bought, bullied or negotiated with… some people just want to see the world burn.”— Alfred (Michael Caine) speaking of the Joker, in
The Dark Knight (2008)

Fabius Maximus has posted a three-part series, discussing "people who just want to see the world burn." I think it is well worth your time to read them and ponder this type of individual, especially in the light of the socionomic model of mass human behavior.

  • “Some people just want to see the world burn” - This is the first post in a series... ...It’s not about India, or specific religions. This is the dark side of humanity, a battle that has to be fought each generation. Sometimes the battle goes poorly, as these killers find homes in both sides of the many non-trinitarian (or 4th generation wars) that rage across the globe.
  • India looks at the monster in the mirror - ...This is the third in a series about a special kind of person, people who just want to see the world burn. It’s not about India, or specific religions. These people find homes on all sides of every 4GW conflict. These are our enemies. The practitioners of real-politics who ally with them betray our civilisation and do us no good...

As Fabius points out, these types of personalities have been part of civilization since its onset. Various strains exist and we can look to art for dramatic examples. One being Tyler Durden in Pahlaniuk's "Fight Club," another being the psychotic rebel leader Jack Cade from "Shakespeare's" Henry VI, Part 2.

Tyler Durden: "You have to consider the possibility that God does not like you. He never wanted you. In all probability, he hates you. This is not the worst thing that can happen. We don't need Him. Fuck damnation, man, fuck redemption! If we are God's unwanted children, so be it!"

Jack Cade to Dick the Butcher: They fell before thee like sheep and oxen, and thou behavedst thyself as if thou hadst been in thine own slaughter-house: therefore thus will I reward thee, the Lent shall be as long again as it is; and thou shalt have a licence to kill for a hundred lacking one.

These men (and women) are tiny sparks that float along in the wind. Most of the time the mass social mood works against them. They flame out in drunken brawls in bars or wind up dead or in prison, a victim of their own consuming rage.

Every now and again, the winds of social mood shift. The optimism that underpins the hard work and reasoned efforts that build up great civilizations shifts to a nihilistic pessimism. When these waves of behavior are on a smaller scale, such as the late 1960's and much of the 1970's in the United States, there is a malaise, a floundering of "national purpose" and an attack on the superstructures of society.

Rarely, the mood shift is very deep and profound. It is my personal belief that we are at one of those hinge points in history, a turning of a centuries-long cycle towards a time of anger and destruciton.

During such times, it is not the superstructure that is attacked, but the foundations themselves. Anger and pessimism flourish. Vast numbers of citizens find little reason to continue to "buy in" to the social norms set up during the previous flood tide of optimism. When large numbers find themselves ambivalent about the project of civilization, these men and women who want to see the world burn, these angry sparks, alight on the dry kindling of corruption, foolishness and indebtedness that has grown up during the decadent last days (the fifth wave in EW terms) of the preceding boom. There they have a much greater chance of setting the whole thing on fire.

Now, just because the social "weather" is conducive to such a storm does not mean that a violent storm of 4GW and 5GW is guaranteed to erupt in all places. It does mean that you should consider what sort of umbrella you will need to guard against that storm.

Action Items

We are in low supply on answers at the moment, here at FutureJacked. If, as expected, job losses continue to mount. If, as expected, the ability of the federal government to direct events in a vaguely competent manner continues to deteriorate. If, as expected, state governments continue to implode under the twin pressures of high debt loads and shriveling tax bases. Then we might see an angry reaction, a violent and irrational and destructive reaction that is little more than an excuse to act out the rage building in a growing number of our fellow citizens.

Such explosions need only the occasional "bad actor" to help spark them. King Mob needs only a few individuals to coalesce around.

We can hope that reactions will be more on the side of a "screw it" attitude. A sort of Russian response to collapse and all that it entails - drunken idleness, passive-aggressive destruction of entrepreneurs via local bureaucrats, petty crimes, public displays mocking The Powers That Be and other such low-grade responses to the frustrations building up.

You might look at your place of residence, your workplace and yourself for a moment. Imagine looking at it from the eyes of an enraged mob. How would you be able to defend yourself against a mob? Who could you count on to help (here's one option)? What signs would you look for in your local community that could lead to mob actions? What sorts of unresolved grievances are held by various groups (if any)? Is there a history of large-scale violence in your area?

No real answers, more of a storm warning for you today. The "answers" remain the same - connect with friends and family. Know your neighbors. Enjoy each day to the fullest. Be prepared.

The Inauguration Speech

Well, as of yesterday, it was official - President Obama is now the 44th President of the United States of America. I must say I was surprised a bit by the speech. "The time has come to set aside childish things" indeed. Again, here's hoping he can steer this unwieldy ship of state through troubled waters with a skill that matches his rhetoric.


Friday, January 16, 2009

Shattering the Scientific Consensus

One of the big themes I expect to see play out during the coming decade(s) of this Grand Supercycle correction is the tearing down of the current scientific consensus.

Much of the destruction of the scientific consensus will be the result of the poison of "magical thinking" that will infect and warp the teaching (or the acceptance by those being taught) of science as we know it today. At some point, it may get so bad that science has to go underground or learn to practice in a decentralized and informal manner, as it mostly was up until the "Invisible College" became the Royal Society, the Granddaddy of Big Science establishments.

Another factor in the tearing down of the current scientific consensus will be the introduction of new theories that work better, are simpler and have a deeper explanatory power than current models.

One area ripe for a complete rewrite of the current consensus is in astrophysics, solar system interactions and planetary studies. The basic model of planetary "science" is based on theories that rely almost exclusively on gravity as the driving force and imagines space to be an empty vacuum devoid of much mass or any electrical charge, a product of the early days of astronomy when the foundations for this new science were being built up using little more than earth-based optical telescopes. The problem is, this "science" has not changed the fundamentals of the theories it proposes, even in the face of decades of new data from radio telescopes, satellites and probes that have revealed the solar system and galaxy to be a churning sea of high-energy plasma activity. The old theories are so decrepit that at this point we are asked to believe such absurdities that include:

  • The vast majority of the "stuff" that makes up Universe is "dark matter" - a mysterious substance that can't be seen, tasted, smelled or viewed - only measured via a fudge factor that helps "scientists" balance their equations (so that they don't have to actually revisit their base assumptions and develop new equations).
  • Our Sun is a seething mass of contradictions according to the current "sun as a thermonuclear device" theory. Aspects of our Sun, such as the Corona (and electrical sheath around the sun that shouldn't be there under a strictly nuclear interpretation), the fluctuation in the solar wind, the issues with the fact that the sun is hotter in the corona region that the surface, among many other theoretical problems.

Long story short - we will live to see a new model of the solar system proposed. My money is on the Electric Universe theory, but who knows what the final model will look like.

Why Should You Care?

Aside from the watching socionomics play out in the inspiring and sometimes hateful world of Big Science, the overturning of accepted theories can have huge impacts on your life and career as new developments sweep away the "buggy whip manufacturers" of our era.

Watch out for developments in physics, power generation and biological sciences.

It's not just the Luddites and anti-Reason folks we have to worry about. The cracking of the Scientific Consensus of the last boom will create openings for all sorts of new theories and new ideas. You might be asked to invest in some - possibly making your fortune or losing a bundle, you might watch your job disappear as a new process is developed or you might have your lifestyle enhanced by a new biotech process that uses photosynthesis to drive electrical generation.

Who knows? Do be aware of the basics of science in the areas of power generation and food production (at least). Keep abreast of heretical ideas, even if you disagree with them. Be on the watch for new talent in these fields. The coming years of negative mood mean opportunity for those willing to look for it. Be one of those.

The 2008 Fly Award

The Fly gives out his Asshat of the Year Award for 2008. Anger, humor, foul language and accuracy. Enjoy.

Hat tip to naked capitalism and expect more of this kind of anger. Much, much more - though I still think we'll see the start of a substantial rally in the coming weeks.

Wednesday, January 7, 2009

The Elite and the Dead

Not sure if it means anything, but news coverage of "elite" individuals (through the ownership or wielding of money, political power, social influence, etc.) who are being suicided or who are comitting suicide is definitely on the uptick.


French fund manager caught in Madoff case found dead

Facing Losses, Billionaire Takes His Own Life

Real-Estate Executive Found Dead in Apparent Suicide

Something to keep an eye on. If nothing else, it is another indicator that the "smart money" (ha ha) is scared out of their minds and some have apparently lost so much they felt the need to kill themselves.

Tuesday, January 6, 2009

Another Alarm in South Asia

The fight between Israel and the Palestinians in Gaza is getting most of the headlines at the moment, but don't forget India and Pakistan. Nervous, angry people caught up in a wave of negative emotion can make bad decisions that spiral out of control quickly.

India PM says Pakistan "agencies" linked to attack
By Krittivas Mukherjee
NEW DELHI (Reuters) - Indian Prime Minister Manmohan Singh accused Pakistan on Tuesday of acting irresponsibly, saying November's Mumbai attacks must have had support from some of its nuclear-armed neighbor's official agencies.

Pakistan rejected the accusation as unacceptable, saying India had embarked on a propaganda offensive and such charges jeopardized chances of cooperation against terrorism...

I regard this as important mainly because by tying the Mumbai attackers to the Pakistani State, India can make a case to attack Pakistani State targets should war erupt, much like Israel justified hitting Lebanese infrastructure during the 2006 War with Hizbullah because Hizbullah was part of the Lebanese government.

Media as Scapegoat

Hat tip to Mish, who dug up a story with clear socionomic implications for the coming year.

77% of Americans blame media for making economic crisis worse
Seventy-seven percent of Americans believe that the U.S. media is making the economic situation worse by projecting fear into people's minds.

The majority of those surveyed feel that the financial press, by focusing on and embellishing negative news, is damaging consumer confidence and damping investment, making a difficult situation much worse...

...Richard Scheff, a national expert on corporate liability and white collar crime issues, warns media that they could potentially be exposed to liability despite apparent constitutional protections:

"Although statements by the media are protected by the First Amendment, the survey results demonstrate that the public believes that the press bears some responsibility for the lack of confidence in the economy. One would hope that the media would act less out of self-interest in these times of national crisis," said Mr. Scheff, vice chairman and partner with Philadelphia-based law firm Montgomery
McCracken Walker & Rhoads...

More magical thinking from the "leaders" in the news media. You see, if we just don't report bad news, then there will BE no bad news. Got it?

Please note the statement from Mr. Scheff. How long before we see television commercials from law firm syndicates rounding up folks to sue the newspapers, CNBC, et al for reporting "bad" news and "making" their stock prices go down? Asbestos is old news, there haven't been any major drug reactions reactions recently, and law firms are hurting for business. As for the Constitution? Well, why let that get in the way of a good racket?

Government at various levels might feel the need to jump in on this as well. As was discussed in Socionomic Trendspotting for 2009, I think serious restrictions on speech and eventually on movement of goods and people will be a trend this year. This could be the one of several issues that act as an excuse by judges and legislators to clamp down on information flow. Something to keep an eye on.

Monday, January 5, 2009

A Vulnerable Infrastructure

Think about what this implies for the oil and natural gas lines and storage facilities that span the North American continent:

RCMP investigate fourth pipeline bombing in B.C.
There has been a fourth pipeline explosion in northeast British Columbia, the RCMP said Monday.

The RCMP said there appears to have been a "deliberate explosion." The incident was discovered on Sunday after EnCana gas line workers located the partial destruction of a metering shed at a wellhead site near the community of Tomslake, B.C..."

Friday, January 2, 2009

A Literary Aside

Over the holidays I finally got around to reading Blumenfeld's The Shakespeare Marlowe Connection - which tackles the "authorship question" that swirls around the great poet known as Shakespeare.

I've been a Marlovian for many years, but this work brought new evidence to the debate and, even better, is a fascinating review of the great works produced by this genius. For anyone interested in literature - or who just loves a great mystery - The Shakespeare Marlowe Connection is a fascinating read.

The swirl of violence, passion and intrigue that surrounded Marlowe and the Court of Queen Elizabeth I gives us hope that, even in the face of potential invasion, internal enemies sponsored by foreign powers and economic turmoil, great art and great lives are still there to be lived. In the coming times of economic turmoil and potentially violent upheavals, it's something to remember. The tides of the times may sweep us all along, but it is up to you to steer your ship, no matter how troubled the waters.

Here are a couple of YouTube clips of an interview with Mr. Blumenfeld on the book. Enjoy.