Thursday, December 30, 2010

If We Close Our Eyes...

...the monster will go away.

Charles Hugh Smith takes a look at the psychology involved in this plateau of self-delusion the U.S. has been living on since the rebound in mood that began in early 2009. The socionomic implications of this continued denial of reality are going to be horrendous:

If We Close Our Eyes, The Monster Will Go Away
by Charles Hugh Smith, Of Two Minds Blog
...Clinging to denial sets up pathology, anger and collapse. If we continue to keep our eyes closed, and demand the Monster go away because we don't want to deal with change and challenge, then we either detach ourselves from reality altogether (a pathological psychosis perfectly depicted in the classic film Sunset Boulevard) or we rage in fear and dread at the challenge/Monster, as if it is somehow unfair that change has occurred without our express permission...

This combination of rage, a sense of how it is "unfair" that this collapse happened on our watch and a host of other emotions will drive decisions in politics, business and warmaking - and probably all to the detriment of the Old Republic.

Tuesday, December 28, 2010

The Thin Blue Line as a Socionomic Warning

This is an ugly statistic, that could get uglier should mood in the U.S. slide more deeply into a net negative-bias:

Law Enforcement Fatalities Spike Dangerously in 2010
issued by the Law Enforcement Officers Memorial Fund
Following a twoyear decline, law enforcement fatalities in 2010 spiked to 160. This was an increase of nearly 40 percent compared to last year, when 117 officers were killed in the line of duty...

Some of these numbers are from an increase in traffic-related deaths (car crash, struck while outside their vehicle, etc.). One statistic that I think should be especially monitored is firearms-related fatalities, especially the ambush killings. Ambush killings show a focused rage against the most visible piece of the power structure - cops. I think this will be a proxy for a lot of anti-establishment violence in the coming years. The legislators make the often stupid laws and the cops get to eat the anger those laws engender. Pile on top of that a socionomically predicted move towards more anger and a desire to break things apart and we could see a lot more dead officers, should 2011 be the year that mood plunges.

I fished through the basic data, looking for trends that might match up with stock market prices.  There appear to be some correlations at times to declines in stock prices (2001 being a big example, tied I assume to the 9/11 attacks).  I am going to look for data specific to violent deaths of officers and see if that subset (ignoring traffic deaths) shows sensitivity to mood as measured by stock price signals.

Friday, December 24, 2010

Merry Christmas

Whether or not this is "the last Christmas in America" as Charles Hugh Smith puts it or not, I wish you a Merry Christmas and a New Year filled with adapability, the fortitude to endure what is coming and the serenity to pull joy from amidst the chaos I fear awaits us.

Keep in mind that, as a wise scientist once said, "all models are false, but some are useful." I think socionomics is one of those useful models as it can point out the potholes ahead and gives us all hope for the future.

Wednesday, December 22, 2010

Glimpses of the Future

Most of you reading FutureJacked also follow folks like Mish and Karl Denninger, so you are probably familiar with their thoughts on the recent bill submitted by Rep. Kucinich that would wipe out the Fed and return monetary authority to Congress.

Karl looks like he is for it at the moment and Mish is rather vehemently against it.

You can read it here for yourself:


Leaving aside the "good" or "bad" of this bill, what we are seeing are the seeds of the future being nurtured, seeds that will blossom when negative-bias mood deepens.

Think about consistent themes you are seeing as we waddle through this delusional rally:

  • Ron Paul, soon to be head of the House Domestic Monetary Policy Subcommittee (overseeing the Federal Reserve), has called for the abolition of the Fed. His bill to audit the Fed gained a lot of traction before this rally kicked back in.
  • Rep. Kucinich is calling for not only the abolition of the Fed with this bill, but the abolition of fractional reserve lending!  (See page 10 line 21, page 28 line 9, and pages 36 and 39 of the bill where ending fractional reserve lending is proposed)

 Talk about a deflationary mind-set - ending fractional reserve lending would aboslutely wipe out the kind of economic growth most business pro formas factor in.  It very well might also match up with the moods of the coming times.

Ending the Fed and ending fractional reserve lending especially, would be revolutionary acts. The kind of revolutionary acts you see in negative-bias times, especially when the bear market we are entering has been centuries in the making.

Look for consistent themes like the "abolish the Fed" stuff. These ideas that get batted around during the good times are the life rings that society will grab at when the current system sinks.

Monday, December 20, 2010

Power and Negative-Bias Mood

Ran across this article from a few months back (h/t Seth Roberts) on studies showing that power makes the powerful more dismissive of evidence that does not agree with their established world view:

The Power Trip

by Jonah Lehrer, Wall Street Journal
Contrary to the Machiavellian cliché, nice people are more likely to rise to power. Then something strange happens: Authority atrophies the very talents that got them there...

...The very traits that helped leaders accumulate control in the first place all but disappear once they rise to power. Instead of being polite, honest and outgoing, they become impulsive, reckless and rude. In some cases, these new habits can help a leader be more decisive and single-minded, or more likely to make choices that will be profitable regardless of their popularity. One recent study found that overconfident CEOs were more likely to pursue innovation and take their companies in new technological directions. Unchecked, however, these instincts can lead to a big fall...

I bring this up in an attempt to shine a light on current events from a different direction. The decision-makers, who are feeling better than they were a year ago, are collecting more and more power into their hands in terms of Federal Reserve policies, letting the banks ignore bad loans, wide-ranging stimulus and tax-cut packages, clamping down on travelers via the TSA, etc. When the mood shifts under their feet and when public response to their authority and authoritarian responses kicks in, the powerful will be biased to retreat to well-established views of keeping hold of their power and they'll also be influenced by the anger, xenophobia and fear sweeping the general population - and be expected to do something about it. That their tools will fail them at this important time is pretty evident. What is more frightening is that these studies indicate that the decision-makers won't be able to adjust or think themselves out of this hole.

The Public Pension Fault Line

If you haven't seen this clip yet, take time today to do so (h/t Mish):

Chris Christie isn't indulging in "magical thinking" - but everyone else is. Socionomics has been warning us about this for years now. The endgame is upon us.

Thursday, December 9, 2010

WikiLeaks, Thorium, and Mood

Finally back from my travels. Not much has changed in the last week, but my interpretation remains that we are teetering on the edge of the abyss, not building a base for the next huge Bull market. Time will tell. As for the socionomic landscape, I want to touch on a few mountains rising up in distance.


I initially regarded the media storm over the WikiLeaks release of U.S. diplomatic cables as just another media event. More bread and circuses for the media-consuming public while the political elites conducted a take-down on Assange via the laughable “sex crime” charges that have been brought against him. But the law of unintended consequences, teamed with a negatively biased mood, may turn this into a larger story about the struggle between authoritarianism and freedom.

The Socionomist has covered the basics of this struggle, so those of you who subscribe to the newsletter, get it. The thumbnail version is that there is significant evidence to support the socionomic thesis that controls over information flow and behaviors will increase as mood darkens. At least, the various political and policing elites will attempt to cram such controls down on societies across the globe. The technological wildcard presented by the internet is now being tested. I alluded to this in an earlier blog post and an expanded version in last month’s Socionomist, where I suggested that computer systems, “connectivity,” social networking and the various darlings and feel-good stories of the previous positive-bias era (and the rallies since 2000) would turn into Frankenstein monsters of some sort during this negative-bias era we are slowly, but steadily, marching into.

Operation Payback is one of those Frankenstein monsters, at least in the eyes of those who would govern our Republic and “guard” the liberties spelled out in the Bill of Rights:

Just a note on this YouTube clip – it is a bit unpolished in parts, but that is not the point. Those who would oppose the authoritarians are just learning. You are seeing it born. This is just an low-scale operation right now – but this is how you learn to get better at your trade. And it is all happening outside government control.

The hacktivists continue to fight back against various corporate and government authorities. They have the tools, they have an excuse which enables them to paint their cause as just and they can scale their attacks as needed:

1. WikiLeaks backers threaten more cyber attacks
2. Facebook Confirms It Pulled Operation Payback Page
3. Anonymous' 'Operation Payback' Twitter Account SUSPENDED
4. Teenager held over WikiLeaks web assaults

All the ingredients of an open-source war are being cooked up right before our eyes. Note that I am quite sure that these initial attacks against various websites will be fought off successfully and that funding sources, various sites that host Anon and others will be challenged and that in general this initial wave will fizzle. What is important, though, is that the hacktivist community will get their initial lesson in how to handle the response and watch the terrain development. Just as the car and roadside bombers in Iraq learned to quickly adapt to countermeasures, you may rest assured that Anon and others will learn as well.

The key piece, in my opinion, is whether or not the mildly negative-bias mood shifts to positive or whether it will intensify. The more anger and negative emotion, the more fuel these groups will have and the more grievances they will find worthy of using as a reason to hack and attack established authority and corporate entities on the web.

Thorium Power

Another “mountain” looming on our landscape of mood and markets is energy and resources – and the potential for protectionism and anger to shatter existing market structures.

I’ve blogged a bit before on the socionomic thesis of negative mood driving trade barriers, specifically when it comes to the “rare earth” minerals and energy products. China has generated rather severe anxieties over their monopoly on rare earth mineral supplies (see here for more details).

By a stroke of luck or fate, we here in Missouri have a significant ore seam that could be exploited for Rare Earth minerals at Pea Ridge. In addition, wherever you find Rare Earths, you find Thorium – a mineral that can be used as a material to generate fuel for nuclear reactors (see here and here for all you would ever need to understand thorium fueled reactors). I attended a conference discussing which hopes to develop a combined approach of putting the Rare Earths back on the list of “strategic” minerals, get some government help in avoiding the inevitable low-ball pricing China would unleash on a producer and to find a use for the Thorium that will drop out of the Rare Earths refining process as a fuel source for a new generation of reactors.

It was all entirely reasonable. As an American, I sat there appalled at the way we allowed ourselves to become utterly dependent upon China for the raw materials of pretty much every high tech device on Earth. The Thorium reactor concept is well known to me, as I helped design one in college for a project. It is a great design that would be safer than current reactors and the fuel costs ridiculously cheap. There was talk of lobbying Congress to develop a new regulatory agency and avoid the heavy hand of the NRC. All very well thought out and all of it would benefit America.

And with all that, likely none of it will get done. If this coming era is defined by net negative mood bias, then big plans such a new regulatory agencies (to get things done, as opposed to obstructing or enforcing laws) will be impossible, the mining part might happen as part of a trade war, but we have to also build a refinery for ~$1 billion to just meet current U.S. needs (we sold the refinery we did have to… China – who literally took it apart and rebuilt it there. Sigh.). Not impossible, but again, we’ll be going upstream against the forces of anger and breakdown and large projects will suffer. The thorium reactors themselves are a great idea – for a positive mood era. A negative mood era, colored by extremist environmentalism (a course I expect) and anti-science mood will not treat Big Science projects well.

We are watching it all unfold, friends. It is a slow process, but the wheels of time grind fine.