Sunday, May 30, 2010

Deep Breaths...

Okay, sorry that I got a bit overheated on the last post. It is a combination of watching what I regard as very poor public service on the part of the federales coordinating the information flow out of the Gulf and of an anger towards BP for not just screwing up this well and polluting a portion of the Gulf but for giving us a lot of images and memes to hook the brewing wave of anger and fear onto.

  1. There are a lot of great people who work at BP. I'm sure this Suttles character, the COO they are trotting out to interface on this is a genuinely good guy who is appalled at the magnitude of this spill.
  2. At the end of the day the final environmental impact may not be devastating, but that won't really matter because...
  3. ...this spill is going to serve up a number of memes that I believe will gain strength from the brewing storm of anger out there. Look at what happened after the 1969 Union Oil spill off the California coast and the ramifications of that spill on the regulatory environment (not that it was all bad, but net net, EPA has been a political, not a scientific, organization from day one and many of its regs show that - another rant for another time). This could be orders of magnitude worse in the eventual blowback.
  4. Contemplating setting off a nuclear weapon in a badly characterized and dynamic geologic formation like this is not what I consider a great policy move (the rad effects would be minimal, the PR effects would, in my opinion, by catastrophic, especially if it failed).

I'll try and keep the rants a bit more even-headed and the cussing limited from here on out. It is sad to watch the vehicles that will be driven by the anger of this Bear Market get built in front of our eyes. BP as environmental scapegoat. Goldman as finance scapegoat. Now we will wait and see if the polarization extends to groups of individuals. Talking about this in theory is one thing, watching the socionomic model come to life is a whole other beast.

Enjoy the rest of your weekend. For those in the U.S., enjoy Memorial Day and remember its message.

UPDATE: John Robb's "No More Katrinas?" is a must-read on the subject of how this disaster is being played by corporate interests and a compliant federal government.

Saturday, May 29, 2010

BP is the New Goldman Sachs

The lying sacks of sh*t at BP and their enablers in the press and, worse, the United States Coast Guard, have admitted that the "top kill" has failed. The fact that the Coast Guard is still parroting these corporate scumbags is stunning to me. Admiral Allen should have pulled his nine on Mr. Suttles and popped a cap in his ass over this last failure. That admiral is a dead man (in a career sense, of course) walking.

BP is a dead man walking as well. When you have people talking about nuking the leak to stop it (a point I'll briefly address below) and when the oil containment "efforts" have been worthless from the get-go (please read this for one of many reasons I say that), the storm that is going to descend on that company is going to kill it. And good riddance says I.

There are many great people that work for BP and it is a shame they are going to get hurt in this, but the fact remains that a company owned by the Queen of effing England has, through incompetence and greed, basically pulled off a WMD attack on U.S shores. Yes, I am angry and yes I think it will be that bad (both from a direct impact sense and especially from an emotional sense). From a socionomic point of view, BP is going to be to the energy industry what Goldman Sachs is going to be for the finance industry - an obvious scapegoat that will be torn down brick by brick as mood craters.

The Nuclear Option

By the way, Matt Simmons and others have been talking about lighting off a nuclear warhead as one option to seal this leak.

That, my friends, is bad, bad news - especially if these blivots (Southeast Missouri speak for five pounds of shit in a four pound bag) in "charge" get panicked enough in the coming months to actually do it.

From a radiological point of view, this would be a non-event. The radiation released and fission products produced would be minimal and in the context of the spill have zero extra impact (all the bullshit you will hear from Greenpeace be damned - if they want to debate the effects of nuclear weapons with me, game on I say). The effects on public perception and possibly on the leak would be bad to possibly catastrophic.

Public perception would default to the Simpson's view of radiation and freak the hell out, especially in this time of mounting anger and fear. The nuke shot itself might succeed, but then again, this is not a well-characterized site and we haven't done a nuke shot since 1992. Supposedly the Russians have done this several times. Sure. And they didn't succeed every time - and they were pinching off gas wells, above ground, in well-known and well-characterized geologic formations.

There are so many unknowns that it could well wind up ripping open the leak further. Run all the computer modeling you want. This is not some intensely studied piece of dirt in the Nevada desert where we'd know exactly the right place to set the warhead. This is a gushing oil volcano a mile under the sea.


Sorry for the rant, but my friends, this is a bad one. Not just bad in terms of actual effects, but we have the makings of a meme that could go rogue as mood continues to sour and the aftereffects could upend not just Big Oil, but Big Government if this winds up getting painted as a Katrina times 10.

Double Sigh.

Friday, May 28, 2010

What is on the Radar of the Elites?

One of the few subscriptions for news services that I keep up is one for Stratfor. They provide some of the best conventional analysis out there - certainly more in-depth than mass market websites and magazines and often sourced very well when it comes to high-level strategic decisions made by military and political leaders in the U.S. and around the world. They cut through the partisan haze and get down to the mechanics of how power is exercised around the globe.

Having a source that is plugged-in so well gives us a fantastic window into the minds of the Western power elites.

It also, in my opinion, hinders them from catching dramatic turns in mass sentiment such as the one we are living in today. Now, not to pick on Stratfor - they are among the best at what they do and I regard that subscription as worth the money - but I don't rely on them to inform me of how to plan in a strategic sense. And if I won't use the best in the business for that purpose, I certainly wouldn't use newspaper articles, blog opinion pieces or, heaven forbid, television talking heads.

Looking over the topics on Stratfor's main page, I am amazed by the lack of ongoing attention to potential fracture points in the conventional framework. Scanning the topics this morning, I see:

So what, you may ask?

In the late 1700's conventional analysis would have been discussing how the numerical and training superiority of British troops meant almost sure victory over a dispersed rabble in the North American colonies and a few years later, how the enraged peasants of France stood no chance against a monarchical structure in place since the Middle Ages. I won't even go into how bankrupt conventional "economic analysis" has become. This is the type of stuff the elites in politics are seeing, reading and "understanding" as hard facts. The decisions that will be made - or not made - in the coming weeks and months will probably not reflect the fact that the Powers that Be recognize that we are at a watershed moment in history, but will probably reflect painfully conventional thinking and absorption into the minutiae of tactics of a political hustle or the treatment of anger and violence as isolate expressions of local unrest, divorced of any grand understanding of the big picture.

Well friends, in my opinion, we are rapidly approaching a turning point in history that will present the elites with those kinds of challenges. This turning point that will rival if not surpass the upheavals of the French Revolution and the Cultural Revolution in Modern China. I think by the end of the year we'll all be living it and knowing it.

Every one of the stories that is pimped out in the mainstream media or via excellent conventional outlets like Stratfor is given better context and allows you to scenario plan by using socionomics. That's why I use that model often and why I harp on it in these blog posts.

For instance, the story above on Hungarian efforts to reclaim influence via the use of dual-citizenship (and why now? and what comes next?) gets deeply informed by knowing that we are entering a long period of negative-biased mass mood. The story about the trade spat between Argentina and Brazil is given much more life in that context as well. As for the story about security in South Africa, well, let's just say that socionomics illustrates very well what can happen to minority populations during periods of negative mass mood and if one uses that information properly, one could avoid the horrible wave of violence that the model indicates might be headed towards those minorities.

Also, what I find amazing, especially with Stratfor's deep connections to the energy industry, that there is no running analysis of the oil spill in the Gulf. I still regard that spill as a key "hook" on which much of the U.S. population will hang a lot of anger in the coming weeks and months, if not years. The latest story posted by Stratfor on this issue is from May 21st.

If this is the best that our conventional news sources can provide to the elites in coporate America and throughout the U.S. government, then you can imagine the types of responses that will be attempted based on this "analysis."

News is good. Conventional analysis isn't too dangerous for your health during bull market upswings. Unconventional tools are needed during times of change.

Be prepared.

Wednesday, May 26, 2010

Fracturing Jamaica

The official death toll is up to 44 in Jamaica, where troops loyal to the government have been on the hunt for a reputed drugs kingpin. "Dudus" Coke has been targeted for extradition by the U.S. government and apparently didn't decide to go peacefully. His network of supporters and associated criminals have so far been able to fight police and troops to a standstill.

Mr. Coke had to resort to overt violence after years of being one of the most successful parasites feeding off the government structure through bribes, artificially high costs for his products via drugs prohibition, and protection money paid out to government officials (allegedly). He should have taken a lesson from the criminal parasites in the U.S. and gone into finance, then he could have chipped in with the Wall Street Bankster Posse and bought the SEC, FDIC, Treasury and DOJ and been in on the looting of the United States to the tune of a trillion dollars when their paper-trading schemes went bad instead of going into the drugs production and transportation business. If nothing else his security costs would have been lower. Plus, virtual businesses have much lower overhead.

As an aside, this may be one of the many facets of how the looming catastrophic breakdown will play out. Secessionist tendencies, anger, etc. might not result in many official "independence" movements or outright civil wars (in the early years), but an increasing hollowness of the state with occasional flashes of violence like this, which happen when the state feels forced to make sure that everyone respects the fig leaf of legitimacy by resorting to force - which is all many governments have left.

Hard times for Jamaica. A warning for the rest of us.

Tuesday, May 25, 2010

On Schedule for a Very Long Bear Market

Here is a video where Robert Prechter discusses the recent global sell-off that has sent all major U.S. averages 10% below their 2010 highs with Yahoo! Finance Tech Ticker host Aaron Task. This is from last week. Prechter says that the current climate shows that "we're in a wave of recognition" where the fundamentals are catching up to the technicals and that it's time to prepare for a "long way down."

The usual note - I am an affiliate of Elliott Wave International as I have found their products very useful over the years in helping me protect what little green money I have. If you do register with them for their free services, I do get a small credit. If you don't feel comfortable with that then please go directly to Elliott Wave International instead of through one of my links. You'll still get access to the material without me getting the credit. You need this stuff more than I need the credits. Sign Up - or at least get the free Elliott Wave Theorist being offered by EWI.

For more information from Robert Prechter, download a FREE 10-page issue of the Elliott Wave Theorist. It challenges current recovery hype with hard facts, independent analysis, and insightful charts. You'll find out why the worst is NOT over and what you can do to safeguard your financial future.

For Your Radar

Lot's of potentially severe expressions of negative mass mood on the horizon:

Do please keep an eye on the developing situation on the Korean Peninsula. This is one of those things that logically seems like it should die down without a war being touched off. I claim zero expertise on internal North Korean politics, but I do know that anger is rising around the globe and a few missteps could lead to a tragedy.

UPDATE: North Korea cuts ties with South

The equity markets look to open down today. The 9850 area on the DJIA is important in my opinion. Probably we'll se a big bounce off of it. If we crack through it, it could collapse and collapse quickly.

The Deepwater Horizon spill continues to act as a lightning rod. The federales don't want to take it over and everyone is praying this "Top Kill" will work. Otherwise, this will be a bleeding wound that will serve as a path to vent lots of anger and fire up the Environmentalists as well as property owners along the Redneck Riviera. That's a combustible combintation BP doesn't want to deal with on top of Senators and Congressmen aching for soundbite time chewing on them.

I hope you have some minimal preparations in place to handle supply chain disruptions and possible banking system interruptions. Going to be a long, hot summer I fear.

North Korea cuts ties with South

Thursday, May 20, 2010

Outta Here

FYI there will be no posts until Monday (at least). I am a volunteer for a FEMA urban search and rescue team and we are conducting a training deployment this weekend. Watch the markets on my behalf while I feast on MREs and do the night shift moving concrete around and conducting haz mat operations. Things seem to be unravelling fast. Gonna be a hot summer...

Restrictions in Action

Negative mass mood and restrictions go hand in hand. Pakistan today. Don't be shocked when it is the U.S. in some not-to-distant tomorrow. In our case it will probably be to "combat terrorism" or some such other tag to put the emotions the restrictions will seek to satisfy.

Pakistan Blocks YouTube, 450 Web Links in Crackdown
By Ketaki Gokhale and Farhan Sharif
May 20 (Bloomberg) -- Pakistan, home to the world’s second- largest Muslim population, blocked Google Inc.’s YouTube service and more than 450 web links as the government widened a crackdown on Internet material deemed as blasphemous.

The sites and links were blocked because of the increasing level of sacrilegious and derogatory material, the Islamabad- based Pakistan Telecommunication Authority said in a statement today. The regulator, which shut access to Facebook Inc.’s website yesterday, may block other links with blasphemous content, said Khurram Mehran, a spokesman at the regulator.

Pakistan began its censorship campaign after a Facebook user set up a page inviting others to draw caricatures of the Prophet Muhammad, an act considered blasphemous by Muslims...

The Peak Oil Meme

Here is a talk by Michael Ruppert who has been speaking and writing about Peak Oil for years. If you want a flavor of what the intellectual climate is going to be like (in my opinion) in the coming decade - the kinds of ideas informing political and social decisions - here is a long talk about Peak Oil and the potential effects on corporations and governments. As I've said before, I think the Peak Oil meme is going to infect vast populations and be used as a powerful way of expressing the coming fear and anger that is only beginning to wash over the world.

Mike doesn't begin speaking until the six minute mark and doesn't get going until ten minutes. Watch as he touches on several topics of interest to socionomic analysis such as secession, violence, anger, etc.

Wednesday, May 19, 2010

These Are BP's Rules, Not Ours

UPDATE: John Robb is talking about the legitimacy issue swirling around the Deepwater Horizon spill as well.

BP is playing a dangerous game here. At the end of the day, whether the true environmental impact is relativley mild or severe, it might not matter. This spill is happening at a time of intensifying negative mood. The "herding" or "wolfpack" mentality shown by large groups and modeled by socionomics tells us that scapegoats will be designated and BP is doing their best to beg for the job.

Watch CBS News Videos Online

By God I am an American and to hear an officer of the United States Coast Guard utter the words "these are BP's rules, not ours" when discussing a tragedy that has occured in U.S. territorial waters is stunning. And enraging.

The information ops being run by BP have been to obfuscate and wall off independent experts - the exact opposite of what they should be doing. The blowback could be devastating.

Tuesday, May 18, 2010

An American Chernobyl

I somehow missed this from over a week ago, but Dmitry Orlov has, in my opinion, hit the nail on the head with his comparison of the unfolding of the Deepwater Horizon disaster to that of the explosion of Chernobyl Station Number 4.

An American Chernobyl
by Dmitry Orlov at Club Orlov
The drawing of parallels between industrial accidents is a dubious armchair sport, but here the parallels are just piling up and are becoming too hard to ignore:

An explosion at the Chernobyl nuclear power plant in 1986 spewed radioactive waste across Europe
A recent explosion and sinking of BP's Deepwater Horizon oil drilling platform is spewing heavy oil into the Gulf of Mexico

These accidents were both quite spectacular. At Chernobyl, the force of the explosion, caused by superheated steam inside the reactor, tossed the 2500-tonne reactor lid 10-14 meters into the air where it twirled like a tossed penny and came to rest back on the wrecked reactor. The cloud of superheated vapor then separated into a large volume of hydrogen gas, which detonated, demolishing the reactor building and adjoining structures. At Deepwater Horizon, a blowout of a recently completed oil well sent an uncontrolled burst of oil and gas, pressurized to over 10,000 psi by the 25000-foot depth of the well, up to the drilling platform, where it detonated, causing a fire. The rig then sank, and came to rest in a heap of wreckage on top of the oil well, which continues to spew at least 200,000 gallons of oil a day. Left unchecked, this would amount to 1.7 million barrels of oil per year, for an indefinite duration. This amount of oil may be enough to kill off or contaminate all marine life within the Gulf of Mexico, to foul the coastline throughout the Gulf and, thanks to the Gulf Stream, through much of the Eastern Seaboard, at least to Cape Hatteras in North Carolina and possibly beyond. A few tarballs will probably wash up as far north as Greenland...

...The political challenges, in both cases, centered on the inability of the political establishment to acquiesce to the fact that a key source of energy (nuclear power or deep-water oil) relied on technology that was unsafe and prone to catastrophic failure. The Chernobyl disaster caused irreparable damage to the reputation of the nuclear industry and foreclosed any further developments in this area. The Deepwater Horizon disaster is likely to do the same for the oil industry, curtailing any possible expansion of drilling in deep water, where much of the remaining oil is to be found, and perhaps even shutting down the projects that have already started. In turn, this is likely to hasten the onset of the terminal global oil shortage, which the US Department of Energy and the Pentagon have forecast for 2012...

I have seen a number of stories comparing this accident to the partial core meltdown that happened in the United States at Three Mile Island. I think in this instance, Mr. Orlov has it correct.

At TMI, at the end of the day, the final safety systems held. The core didn't melt through the pressure vessel, the public was not exposed to high doses of radiation, there was no "China Syndrome," and, in the end, due to the massive reforms it forced onto the industry, it may have very well saved the U.S. nuclear power industry by forcing it to adhere to stringent best-practices. That all came at the cost of severe damage to public perception and a few billion dollars worth of investment, but the end result was probably net neutral, if not slightly positive.

Chernobyl cost the world far more dearly. It put the nail in the coffin of nuclear power development in Europe for decades, it helped undermine the legitimacy of the Soviet state and the mood associated with the "Chernobyl meme" was irrevocably tied to negativity, anger, suspicion and fear and that meme helped kill any hopes of rationally evaluating nuclear power from the mid-80's on. Plus, it helped kill advanced reactor development in the U.S. - the kinds of reactors that would now be up for licensing consideration - fast breeders, compact liquid metal designs, thorium designs, etc.

Deepwater Horizon could very well do the same for the United States. There are experts who are loudly doubting the official leak rate number of 5,000 barrels per day. The government and BP claim that they are more worried about sealing the leak than measuring it - which makes no sense as you need to have an established leak rate to know whether or not your remediation efforts are working. If we later find out that the leak rate truly has been an order of magnitude higher, we could see every BP gas station on the Gulf Coast firebombed to smoking rubble in days.

The show trials that will fall out from this accident will feed anger at corporations and government, will give new life to the eco movement and will severely curtail future domestic petroleum production.

This one is bad, folks.

Friday, May 14, 2010

The Descent of Power

Here's a short write-up by one of my favorite authors, Robert Greene, entitled The Descent of Power - Thoughts on the Great Transformation and How to Master It. I think it will be well worth your time to read and consider:

The Descent of Power—Thoughts on The Great Transformation and How to Master It by Robert Greene (an ebook)

Wednesday, May 12, 2010

A Pause for Art

For your viewing pleasure, Thomas Cole's "Course of Empire" series of paintings. Niall Ferguson had a long and well-worth-reading piece describing the Course of Empire and his views on our current situation. He focuses on complexity and rightly (in my opinion) disparages the post hoc ergo propter hoc "historical" stories we tell ourselves about events after they occur.

From a Socionomic point of view, think about what stories these societies were telling themselves during each phase and how each phase was viewed once mood changed.

The Savage State.

The Arcadian State.

The Consummation of Empire. It sure has been fun - for the Empire. Maybe not so much for those on the periphery...

The Destruction of Empire.


Tuesday, May 11, 2010

Ire in Eire

When Congress ignored the 99% of their constituents who called to say "no" to the bankster looting under TARP, TALF, et al, we Americans rolled over and took it from the corruption machine.

When the Irish Parliament tried it, their citizens stormed the building. Which represents the actions of a people who would be free?

Banks protesters storm Irish parliament

Protesters have stormed Ireland's parliament during a march against government plans to inject billions of euros into the country's banks...

Friday, May 7, 2010

Panic and Loathing in the Pits

Must-listen from the S&P trading pits, courtesy Zerohedge. I suggest you download it on your machine - Zerohedge was getting so much traffic yesterday it crashed for awhile.

Random walk my ass. Rational economic man my ass.

Thursday, May 6, 2010

There's Something Out There And It Ain't No Man...'s a Bear, a civilization-ripping grizzly and he just announced his presence with authority.

image courtesy Bloomberg

Yes, the rebound was swift and decisive-looking, but the damage has been done. "Investors" know that the abyss can open up beneath them at any time. I'm sure that is doing wonders for their psyches.

As a wise man once said:

Billy: I'm scared Poncho.
Poncho: Bullshit. You ain't afraid of no man.
Billy: There's something out there waiting for us, and it ain't no man. We're all gonna die.

UPDATE: Looks like a fat-fingered trade got tangled up with an algo gone bad and gave us the worst of this downdraft. This should make you more nervous, not less. When people get upset and anxious these things will happen with more frequency. Enjoy. Best guess - HFT will be blamed, much like program trading did in 1987, for the upcoming debacle.

Tuesday, May 4, 2010

Mayor Bloomberg Jumps to Conclusion, Hilarity Does Not Ensue

Polarization proceeds apace. The failed Times Square car bombing is a symptom of many things and the reaction to it, a symptom of many other things that bode ill for the Republic.

Watch CBS News Videos Online

Folks the whole "us" vs. "them" mindset, which is called for and described well by socionomic theory, is building. The political and economic elites, the ones who think that they are in charge, are going to be making some very provocative statements in the months and years to come. This clip from Hizzoner makes it clear what the political elites are worried about (money quote starts at the 2:20 mark):

“If I had to guess, twenty five cents, this would be exactly that [a homegrown terrorist]. Homegrown, maybe a mentally deranged person or someone with a political agenda that doesn’t like the health care bill or something. It could be anything.”

If you are attending Tea Party events, this should be a screaming warning that the political elites consider you mentally ill and potentially part of a terrorist organization. This is only getting started, friends.

Drums of War Across the Pacific

Hopefully we are not so deep into negative mood in the Pacific Rim that war is around the corner in Korea, but I don't subscribe to the Asian-Pacific Financial Forecast Service (sorry Mark!) and don't have a handle on the wave count there.

Minister vows retaliation
By Jung Sung-ki, Staff Reporter, The Korea Times
Defense Minister Kim Tae-young said Sunday that retaliation over the sinking of the Cheonan must be carried out.

Kim's remarks came on the heels of Chief of Naval Operations Adm. Kim Sung-chan's reprisal pledge made during last week's funeral for the 46 dead sailors from the mysterious sinking of the frigate on March 26.

The Navy chief said, "We'll never forgive whoever inflicted this great pain on us. We will track them down to the end and we will, by all means, make them pay..."

A war could be locally devastating and possibly another hit to U.S. military prestige if we are unable to quickly repulse the North Korean Army. And, worse, if North Korea were perceived to have actually gained from a conflict (i.e. occupying part of Seoul, then giving it back after some "reparations" of some sort - a very low probability outcome I would think) then imagine what encouragement that would give to would-be warlords across the globe.