Thursday, December 29, 2011

A Review of Socionomic Trendspotting for 2011

In January, I layed out the socionomic trends I expected to see play out over 2011 in terms of the "Aspects of Social Polarity" from The Wave Principle of Human Social Behavior by Robert Prechter.  Let's take some time here at the end of the year (how the hell did it get to be the end of 2011 already?) to go over the trends and see where I screwed up and where I was on track.

Wednesday, December 14, 2011

Prechter on CNBC

Almost sterotypical lead-in by Ms. Bartiromo, but nice summation of both the socionomic view of things as well as a market snapshot.

Boo-yah on Prechter demolishing the record earnings myth. Worth your time.

Tuesday, December 13, 2011

Cracked Gets Socionomics (Sort of)

If the flailings of the Eurocrats and the Banksters are not enough to elicit dark laughter from you, you can always turn to the lighter fair offered up at Cracked. While the title is a bit overblown, as one would expect from a site that gets a lot of mileage out of video game humor and drunk jokes, it does show that maybe, just maybe, the socionomic way of thought is creeping into the mainstream:

7 Bizarre Trends That Predict an Economic Collapse
By: Pauli Poisuo, Cracked
If you popped out of a time machine at a random moment in history, how would you know whether or not the country was in a recession? There'd be obvious signs, like lots more ads for payday loan joints and offers to buy your gold for pennies on the dollar. But there are less obvious, much weirder clues all around you. After all, did you know that when the economy is bad...

Reasons #5, #3 and #1 jumped out as very socionomic-ish and #2 jives pretty well too.

Thursday, December 8, 2011

Back in the Saddle

Apologies for the complete silence for several months.  I've had a tremendous number of irons in the fire, between kids, new day job responsibilities and trying to flesh out various options for one or more "crash business(es)" should the economy go sideways in a big way.

Part of the paralysis on getting posts completed and up has been the ongoing expectation that equity markets are going to catch up with my personal interpretation of where I think social mood is heading and that once we got going with the decline we could begin to survey the landscape for how to avoid too much damage and get ready to think about picking up the various pieces.

It has been like Waiting for Godot, so I'll wait no longer and give you my survey of where we are and where we could be heading should this amorphous beast we call social mood plunge deeply into net negative territory.  I am looking at these particular aspects as it is my opinion that these will help frame the language and actions that will be chosen to act our, or express, the deepening negative mood.

1.  The bando theme I followed for some time several years back looks to be finally stirring to life.  A "Bando," in my interpretation, is someone who occupies a home that has been abandoned or foreclosed on and then left neglected.  I can also apply to people who have been foreclosed on, but who remain in the house as they have not been served or removed by the Sherriff for various reasons.

Well the Occupy Movement is looking to take that concept nationally.  One expression of that can be found via Occupy Our Homes, and their work to encourage people to "tak[e] back our neighborhoods from the banks."  If nothing else, it has Bank of America sweating a bit, which always makes me smile.

Long term implication:  When entire rotten edifice of bad debts begins to truly unwind, expect the newly (and no so newly) jobless, the broke and the angry to stop staring at vacant homes and begin occupying them.  If these occupations get formalized in some way down the road, say via elections of radical third party candidates, then get ready for a wild ride in terms of proving title and expect a huge impact on real estate transactions in general.  This may wind up being much more of a problem in some areas (say, Vegas?) than others, but at the very least expect a lot less respect for the rule of law in this arena, until the law changes.  Hey, if corporate persons don't have to obey the law, why should corporeal persons?

2.  A trend I worried over back when the Iraq war was raging full tilt could come back to haunt us and that is the vulnerability of infrastructure to attack.  The vast majority of major infrastructure in the U.S. was built during a time of enormous optimism and positive mood.  Vast numbers of electrical substations, waterworks, power lines, bridges, etc. are exposed and could easily be disrupted should people or groups of people get angry enough to try it, especially if they feel they have nothing to lose by doing it.

Watch as thousands upon thousands of soldiers, sailors and marines return to private life in the teeth of a depression (and yes, we are IN ONE right now, just the early innings of one).  We've worried for years that if even the tiniest of percentages of soldiers trained in urban combat and counterterrorism efforts turn that knowledge loose here at home, you can expect the lights to flicker off on occasion, expect roads to be tough to travel and in general expect a lot more uncertainty in terms of basic utilities.  Get ready for disruption.  It is coming.

3.  MF Global.

I can't even express to you how shocked I am that such a key player in the finance realm could have misappropriated client funds to the tune of either  $1.2 billion or $600 million depending on whom you believe.  This is the gravest of sins in the brokerage world and it reeks of cronyism that Corzine was running the firm when it imploded.

Talk about destruction of trust.  No one who has money in "the market" is safe.  Period.  You can trust your broker all you want, but no one and nothing is safe and for those with real money in the markets, they have to be sweating bullets. 

Where can you turn?  What do you do with your money?  Who is next?
The evisceration of all things financial is on the horizon.  Who will be the next MF Global?  When the next wave hits, expect the impacts to reach deeply into peoples' pensions, 401(k)'s and savings and expect those people to be very, very angry about that.

4.  It is not all doom and gloom.  One good thing about declines is that ossified traditions get smashed and new and vital institutions can grow up from the ashes and rubble.  Keep you eye on science, especially medical science.  There is a growing insurgency known, among other monikers, as "personal science" or "the quantified self."  More and more people are realizing that big box science, especially health care, is not built to help people stay healthy, it is built to take sick people and process them like a widget.  The incentives are not there for preventive medicine or for non-Big Pharma type solutions to medical problems.  With the ability to track data, individuals are learning to tweak their diet and their habits to produce sometimes remarkable improvements in health and well-being.  Big Science doesn't like it and calls it anecdote or pseudo-science.  Those that see vast improvements in their life call it miraculous in some cases.  And in an era of net negative mood, "experts" are going to take a fierce beating in all fields.

This is very disturbing to the Powers That Be.  When you decide to be your own doctor, to be your own priest, to do for yourself (what used to be called a Good American, or the Pioneer Spirit) then you are unplugging from the Matrix and, at least for a time, the backlash might be fierce. 

Famliarize yourself with the quantified self tools.  In an era where access to health care might become uneven, to say the least, be ready to study yourself and keep yourself healthy.

5.  Iran.  Keep an eye on the current rumblings and the ongoing secret war that is already underway there.  This could blow up in a big, big, big way.

In Conclusion

I'll try to be better about posting.  We shall see.  Don't get caught up in the day to day news, but do keep an eye on the trends.  We are building the grooves in our minds down which the river of fear and anger that will flow in the coming years.  Will the Occupy movement flame out or turn into a Third Party?  Will war overseas and domestic terrorism shake your life and your career?  Will corporations that look solid as a rock crumble into bankruptcy overnight when the stress becomes too great?

Be ready and be ready to face the challenges with a smile and a plan to help your little patch of the globe get along a little better.  Times like this don't come around often.  How you react will help tell the tale of your life.

Monday, October 24, 2011

Free is Good

I'm a bit behind here, but wanted to make sure you have noticed that EWI is hosting a "Free Week" for their Commodities offerings.  This is a great chance to check out one of their products that has had a long and accurate track record.

This is good through noon Thursday, October 27 (Eastern time), you'll get complete access to all of EWI's most-promising daily, weekly and monthly opportunities in the world's leading commodities, plus all the charts, world-class analysis, video forecasts along with a treasure chest of trading lessons and more! (Subscribers normally pay $49/month for these services.)

Learn more and get instant access to EWI's FreeWeek of commodity forecasts and trading education now -- before the opportunity ends for good.

The usual notice on this - I am an EWI affiliate.  If you use the link above to go to Free Week and sign up for a free account with them, I get a small credit.  If this makes you uncomfortable, please access Elliott Wave International via a web browser or by directly typing in the address.  Don't ignore this fantastic opportunity.

Plus, the October Socionomist is out and the hot-button issue of "Democracy Under Attack" is the lead article.  If we have the wave counts right and we are headed towards an era of deep negative mood, know this topic will be the source of a lot of conflict.

Friday, October 14, 2011

Occupy This


Color me conflicted on the Occupy Wall Street movement/effort/open source protest.  Having gotten myself worked up about the banksters and the Congress they bought fair and square, I can relate to the emotion behind it.  They seem a bit amorphous to actually accomplish much in the way of changing bank, corporation or government behavior.  From the outside, it looks like a bunch of people standing around, saying they are angry at the system and want to engage in "resistance" to that system.

While I am skeptical of the ability of #ows to accomplish much in the way of reform, the more I consider it, perhaps that is not the function of this group/movement.  Perhaps, whether by plan or by the herding instinct that is the root of socionomics, #ows is one (of many) matches that may light a bonfire that could burn down 200 years worth of the development of the Central Bank/Nation-State/Corporate/Nanny-State model for governing societies and shaping world politics.

Aside from the Monty Python flashbacks I have when seeing some of the more fringe elements of this fringe movement, there is some real anger, real purpose and real grievances behind this - just as there was (and might still be in places) when the Tea Party movement sprang up.

Maybe #ows and, to a lesser extent now that it has been mostly co-opted, the Tea Party, are the early groups that will incite/act as an excuse for the entrenched elites to resort to force.  Resorting to force will only amplify the anger and, assuming our read on social mood is correct, that anger will spread deep and wide.  #ows and the Tea Party both showed the power of small groups to leverage modern technology to organize and spread a message.  John Robb has chronicled the rise of what he calls the Open Source Insurgency and has even codified the parameters that Open Source Insurgencies should follow if they want to succeed.  These groups have shown amazing abilities to thrive during the peaceful demonstration phase.  If the guns comes out and the tear gas flies, we will see how they adapt to the next phase.

Keep an eye on this effort and try to use news outlets not related to standard corporate media.  Their story on this is easy - whiny unemployed people who should get a job.  The reality is far more nuanced.  I personally suggest the following:

You are seeing the development of tactics that could very well prevail across the globe in the years to come as anger builds and needs an outlet.  Here's hoping it all stays peaceful.

Friday, October 7, 2011

Brave New Subdivision

It may take a few years, but as fear and anger build, more and more walls will go up and local groups will begin to take matters of security and basic services back into their own hands as the bureaucracy fails. This development in Pakistan, a country well down the path of failure, is on the leading edge of where housing developments will go in a world of violence, collapsed municipal finances and general uncertainty:

Pakistan gated community sparks controversy
By Mark Magnier, Los Angeles Times
The houses and manicured lawns slope up the artificial hill edged by unbroken sidewalks and white picket fences, as children play and residents exchange pleasantries.

This sprawling subdivision called Bahria Town — "Come home to exclusivity," it boasts — operates its own garbage trucks, schools, firehouse, mosques, water supply and rapid-response force — a kind of functioning state within a nonfunctioning one. And all supplied without the bribes you'd pay on the outside, residents say.

"I like living here," said Abdul Rashid, a sixtysomething retired government worker. "It's like you're in a little protected country — tidy, utilities work, the family can relax. If there's any problem, you just ring up security..."

The article discusses the standard rich vs. poor argument against this kind of development, which is not without merit, but that misses the broader point - the combination of a turn in mood centuries in the making, paired with technologies that allow for small groups to wield immense violence is going to drive people towards an almost medieval view of living arrangements.

This is just the first glimmer of what is to come.  And these kinds of fortified towns don't have to be playgrounds for the rich.  The ones that will probably prove most durable will be those grown organically, by groups of people without tremendous resources looking to secure what they have and build a better future for their kids.  The walls that may go up could be enormous hedges around neighborhoods, or security systems based on cheap webcams, local wi-fi and volunteers who know how to use a shotgun.  Those in the building industry will change with the attitudes of their consumers.  This trend could get legs and fast in the U.S. if things continue to deteriorate in finance, politics and society.

Tuesday, October 4, 2011

Greasing the Skids of the Breakdown

I've been dwelling on socionomics for quite some time now.  We are trying to use that model to get a feel for what we'll face as over two centuries of optimism and progress get unwound over the next generation or so. There are other tools in my toolkit that I have neglected to discuss in quite some time. With the markets unraveling before our eyes, it is time to revisit another model that you should familiarize yourself with: megapolitics.

Megapolitics is a phrase revived by James Dale Davidson and William Rees-Mogg in their books Blood in the Streets, The Great Reckoning and The Sovereign Individual.  Of the three, The Sovereign Individual is most relevant to our current needs and well worth adding it to your bookshelf.

The very short version of the basic thesis of megapolitics is that technology, especially the technology of violence, drives how large states can grow, how much input citizens have in those governing structures and what changes to expect when technology shifts the balance between offense and defense.

The same technologies that allowed the West to colonize Africa and sweep opponents from the field in battlegrounds across the world would lead to the breakdown of those empires as the technologies spread.  A machine gun can wreak havoc on tribal opponents armed with spears or flintlocks, allowing for the conquest of tribes and empires that had lasted for millenia.  Those same machine guns (and radios, and later social media connections), in the hands of "rebels" all of a sudden made empire an expensive proposition.  Increase the ability for small groups to mount an effective offense (adding guidance systems to missiles, roadside bombs, the "flattening" of the globe and the enabling of small groups to finance their activities via gray or black markets, etc.), add in the "mental software" of open source insurgency theory and you have a recipe for the collapse of large state structures, or at the very least the "hollowing out" of countries as well as the means to mount effective armed resistance to "invaders" of various stripes.

In an era of positive mood bias, the dark extremes of this technology are generally ignored or glossed over.  As we move into an era of anger and violence, the logic of the microchip - whether in a computer or smartphone that allows some individuals to be productive any place on the globe or whether mated to an explosive in the form of guided missile or controlled bomb - we could quickly see the "Kosovo-isation" of many parts of the globe, where grievances long-supressed get worked out in low-intensity wars that could go on for years.  Mix this with the "need" for governments to raise revenues in an age of austerity and you can see where this could go.

I suggest you trek over to the library and check out a copy of The Sovereign Individual or purchase a copy at your bookseller of choice.  We will be covering topics such as the one below more and more as we watch the old system disintegrate around us and the language that Davidson and Rees-Mogg have used to describe their thesis will come in handy:

Iraq Militants Brag: We’ve Got Robotic Weapons, Too
By Noah Shachtman, Wired Danger Room
U.S. forces used a combination of spy drones and bomb-handling robots to help beat back Iraq’s insurgents. Now, those militants have a warning for those American troops still remaining in Iraq: We’ve got robots, too.

In a slick new online video just released by the Ansar al-Islam extremist group, kafiya-clad engineers brag about their skill and designing and making weapons of their own. They show off homemade silencers, fire custom-built rockets, and solder their own circuit boards.

But the climax to the nearly four-minute clip comes when the camera focuses on a car driving in the desert; there’s no one inside the vehicle. Then a tripod-mounted machine gun fires off a few rounds; there are no fingers on the trigger. The car and the gun are remotely-operated — crudely robotic...

We've been living this technological revolution for many decades.  Time to pay the piper.  While we will focus on the breakdown aspects in the coming years, my read of this trend is actually quite optimistic.  We just have to survive the transition crisis...

Tuesday, September 20, 2011

People On Ludes Should Not Drive

One of the tenets of socionomics (as I read it) is that during periods of net positive mood bias, especially the massively optimistic phase that metastisized in the 1990s, a People will turn to caffeine, sugar, uppers and other stimulants to accentuate the buzz and excitement of a Bull era.

As we transition to a deeply net negative mood era, one can expect the "uppers" industry (both legal and illegal) to suffer, while "downers" get a new lease on life. 

One example of this can be found in a recent National Survey on Drug Use and Health (NSDUH).  This survey is a great example of using a headline to simplify complex behavior: 

National survey shows a rise in illicit drug use from 2008 to 2010
SAMHSA News Release, 8 September 2011
The use of illicit drugs among Americans increased between 2008 and 2010 according to a national survey conducted by the Substance Abuse and Mental Health Services Administration (SAMHSA). The National Survey on Drug Use and Health (NSDUH) shows that 22.6 million Americans 12 or older (8.9-percent of the population) were current illicit drug users. The rate of use in 2010 was similar to the rate in 2009 (8.7-percent), but remained above the 2008 rate (8-percent).

So, there you have it.  People continue to do drugs even when the Powers That Be say they shouldn't and the number of people is increasing according to this survey.

However, digging deeper, you can detect socionomics at work:

...An increased rate in the current use of marijuana seems to be one of the prime factors in the overall rise in illicit drug use. In 2010, 17.4 million Americans were current users of marijuana - compared to 14.4 million in 2007. This represents an increase in the rate of current marijuana use in the population 12 and older from 5.8-percent in 2007 to 6.9-percent in 2010...

...The number of current methamphetamine users decreased by roughly half from 2006 to 2010 -- from 731,000 people age 12 and older (0.3-percent) to 353,000 (0.1-percent). Cocaine use has also declined, from 2.4 million current users in 2006 to 1.5 million in 2010...

Now, from what my friends and the cops who taught my DARE class many years ago tell me, the effects of marijuana are generally to slow things down a bit, while meth and coke tend to pep one up.

The Socionomist has had a number of outstanding research papers on the Drug War and Marijuana Prohibition over the last year or so and I suggest you review them.  The social trends driving the passions behind the drug war and drug use in general seem to be shifting and we may not recognize the legal landscape when it comes to drugs, booze and other mood-altering techniques.

In a recent issue of either the Elliott Wave Theorist or the Elliott Wave Financial Forecast, it was suggested that one way to play this move towards downers would be to open a micro-distillery.  Not a bad idea at all in my opinion.  Might be time to check the laws in your state regarding micro-distilleries and then try and hunt down Grandpa's recipe for White Lightning.

And as more and more folks turn to downers, always recall the words of wisdom from Jeff Spicoli in Fast Times at Ridgemont High, a movie made during another net-negative mood period (1982):  People on Ludes should not drive.

Tuesday, September 13, 2011

Defense on the Field

I've been thinking a lot lately about what comes next.  Events in Europe continue to weave a pattern and build a story expressing extreme negative mood.  Here in the U.S., the popularity of El Senor Presidente and the ladies and gentlemen making up the Senate and House continue to plumb new lows.  Items like that continue to show, in my opinion, that we are going to see the elites in politics and finance discredited to a degree most can't envision right now. 

I viewed Robert Prechter's video presentation of his August Theorist recently. Watching him step through not just the bear case, but his projections for the near future makes for one amazing presentation.  This only adds to the conviction that we best hang on tight.  The overlay between current equity market patterns and the patterns formed back in the 1930's are striking.  If his projections are correct, we have several more years until the "ideal" date for the bottom is reached and there will be massive unrest and uncertainty in society and politics between here and there.

Down in the trenches, we can see how the stress of this uncertain environment is making itself felt.  Here is a Google Trends result for the search terms "apply food stamps"

And here is a Trends result for the search terms "buy seeds"

I view these as important as they relate to food.  I may be pushing it here, but if we are all subject to mass herding and subconscious survival impulses as posited by socionomics, I'd expect food and food security to be a primal urge that would need expression in uncertain times.  Even though most people are not going to grow more than a trace fraction of food in their own garden, this series of "higher highs and lower lows" year-over-year from 2007, give a glimpse into the collective mind. 

The upward trend of the "apply food stamps" search terms is another indicator of stress.  Expect that one to go exponential soon.
I hope and assume you have your defensive positions in place.  For the few readers with considerable wealthy out there, you are probably as well hedged as you are going to be.  For the rest of us, defensive positions will mean a lot of things in addition to money.  These are things I've harped on before - know your neighbors, try to build up a network of friends you can rely upon, be active in making your community, your neighborhood or at least yourself resilient, have a few gardening tools on hand, pick up a few handy skills - you never know what you are going to need to be able to barter or trade in the coming years as we prepare to accelerate the plunge to lows in markets and mood that most can't picture right now.

If your defense is not set up yet - do it.  Then, while others are scrambling, you can begin to plan to go on offense at the bottom.  We are going to be able to build the foundation for great fortunes and great success in a few short years.  But we have to be able to ride the storm out between now and then.

Batten down the hatches and best of luck.

Wednesday, September 7, 2011

Culturnomics

I blog a good bit on Socionomics, a very useful model for behavior and forecasting. Just ran across a journal article (h/t Next Big Future) describing something called "Culturnomics," which appears to be an attempt to aggregate media sources to predict trends.

Here is the abstract from their article at First Monday:

Culturnomics 2.0:  Forecasting Large-Scale Human Behavior Using Global News Media Tone in Time and Space
by Kalev H. Leetaru, First Monday, Vol. 16, No. 9, 5 September 2011
News is increasingly being produced and consumed online, supplanting print and broadcast to represent nearly half of the news monitored across the world today by Western intelligence agencies. Recent literature has suggested that computational analysis of large text archives can yield novel insights to the functioning of society, including predicting future economic events. Applying tone and geographic analysis to a 30–year worldwide news archive, global news tone is found to have forecasted the revolutions in Tunisia, Egypt, and Libya, including the removal of Egyptian President Mubarak, predicted the stability of Saudi Arabia (at least through May 2011), estimated Osama Bin Laden’s likely hiding place as a 200–kilometer radius in Northern Pakistan that includes Abbotabad, and offered a new look at the world’s cultural affiliations. Along the way, common assertions about the news, such as “news is becoming more negative” and “American news portrays a U.S.–centric view of the world” are found to have merit.

No mention that I saw of Prechter, et al, or even the more odd-ball work done over at HalfPastHuman (caution: extremely high woo-woo content).

I am very intrigued by the concept of a "media civilization" and how that might affect social mood "patterns" for various places around the world. Not sure how well the "Culturnomics" hypothesis will hold up without a solid framework (like the structure the Elliott Wave Theory gives to Socionomics), but it is great to see that academia is beginning to take "tone" and "mood" more seriously as drivers of social change.

The growth of interconnected communications networks look to finally make it possible to build tools to create benchmarks of social mood - just as mood is plunging and, if the socionomic model (as I interpret it) is correct, just as societies and governments are clamping down on those communications networks.  Sigh.

Tuesday, September 6, 2011

Broke Back Market

Looking at my Yahoo! Finance page this morning, I see the 10 year yielding 1.941%, the S&P 500 down 2.49% and growing talk of an insolvent Europe facing the collapse of the Euro currency regime.

Take a moment and think back to 1999. If someone had told you that in 2011 the 10 year would be below 2%, that the DJIA, S&P and NASDAQ would have not made any net gains over that time, that rumors would be swirling about the imminent destruction of the Euro, that the U.S. would be fighting multiple wars overseas and that the U.S. debt would be over $14.5 trillion - what would your impression have been about what life would be like for an everyday citizen of the U.S. in that far-away year?

Tough times are coming. Hell, tough times are here for the over 16% of the population un- or under-employed. Things will get rougher in politics, society, the media and religion. You think people are angry and polarized now? Well, just wait.

Knowing worse is to come, take some comfort from the fact that even with the foreknowledge of rough times to come, it does not mean that life will be unbearable, or "nasty, brutish and short." Keep your head about you as we ride this wave down. There will be plenty of opportunities to do good to a neighbor, to learn a skill, to invest in your community and to maybe even plant the seeds of future wealth.

Tuesday, August 30, 2011

A Chill Wind from the North

The Oil-Rich Alaska North Slope (image from DOE)

The petroleum engineer at The Oil Drum who posts under the handle "Heading Out" drew my attention recently to one of those potentially big stories that serve as a great example of the mountain of challenges facing those of us who will be manning the walls as the Great Collapse gets underway.

His post, with the fairly innocuous title of "Tech Talk - The Coming Problems for the Alaskan Pipeline" illustrates the enormous bind our society will find itself in as the credit bubble unwinds, mood turns surly and magical thinking rears its ugly head in policy circles.

Monday, August 22, 2011

Obsolete Software and New Operating Systems

When, to paraphrase the words of the 43rd President, this sucker goes down, my main worry will not be the immediate rise of an overtly Fascist or Socialist guvmint that will impose martial law and set up internment camps. I'm also not immediately concerned about the total breakdown of the division of labor in the U.S., leading to famine next year, imminent death by radiation exposure from the Fukushima meltdown site, or any of the other extreme scenarios (well, aside from the extreme scenario calling for a turning of mood so deep and vicious that financial markets collapse to points that most can't envision today) being trotted out as to how "it" is all going to end and that right soon. That is magical thinking of the highest order.  The DJIA could go to 776 tomorrow and we'd still have a continent-spanning country teeming with citizens (many of whom will be in an angry mood) with bills to pay or default upon, kids to feed, communities to dwell in and, in short, lives to be lived.  The Great Collapse is not going to (immediately) wipe out your credit card debt or ignite the world-spanning war that will relieve you of the necessity to make hard choices about your life and lifestyle (that war comes later and it should be a doozy).

"Reforms," similar to what Diocletion did to Rome, or the breakdown of industrial farming techniques, are on the horizon and will impact you and yours, of that I am convinced.  There will be vast changes to how we as a country do business and interact.  The country (or countries?) on the other side of the Great Collapse is going to be barely recognizable to those of us living with the mindset and mental programming used to navigate today's America.

It is that gap that worries me.  The years between the collapse of this finance-centric, debt-fueled, internet-businesses-will-save-us, enormous goverment interventions in private life, world-spanning military and financial empire mindset and the rise of what comes next will be a mad mixture of chaos and denial.  This will be when the foundation of tragedies and tyrannies to come are laid and when the great struggles to restore human liberty will be fought.

Much of what will frustrate and enrage those who will be building future during this time of negative mood will be the denial of those who refuse to acknowledge the world has changed and, worse, the enormous layers of laws and penalties that will be brought to bear against those who will seek to refashion the world into something better.  And so much of it will be so petty. 

Case it point, straight out of Chicago:

Kitchen Lore Blog
The State of Illinois is shutting down local, artisan ice cream makers for such terrible offenses as using fresh fruit instead of fruit syrup and fresh cream instead of pre-packaged soft serve mix. What, you say? How can this be? Health officials in this state are known for being overzealous when it comes to making sure that small, independent businesses follow obscure rules - and when I say small and independent, I'm talking about businesses that are often owned and run by 1-2 people renting space in a shared, licensed commercial kitchen. These are not corporations with large amounts of money who have the capital to hire lawyers or contribute significant sums to political campaigns. No, these are real people, individuals who do their best to follow labyrinthine food regulations based on the information that they're given by governmental agencies who don't always agree on what the rules should be...

The most bankrupt (on many levels) state in the Union is actively crushing small entrepreneurs and using a web of insane laws as the hammer.

But this isn't just Illinois.  When this network of debt collapses in a heap, many people will be forced to turn to their own resources to get by.  If the current logistics chains are broken and Wal-Mart or the local Mega Grocery Store can't restock on a regular basis due to the collapse of their supplier networks, then the "doers" in your local community will rise to the occasion.  Bread will get baked.  Food will get sold.  Goods will get transported - but how much of that activity will be legal under the existing rules at the local, state and federal level?  And how lenient are the bureaucrats going to be when they fear for their jobs if they don't enforce silly laws or fear liability or get leaned on by the existing corporate powers that be?

The coming era will probably be marked by a retrenchment in many activities and a return to more localized production of foodstuffs and goods.  But just how much of this localization revolution will be legal?  How many of the activities of the Maker Movement is technically illegal?  When we see community fabrication plants spring up, how long before traditional manufacturers use lawfare to try and crush them? 

What happens when much of your population still uses mental "software" shaped by growing up during the great boom in credit, the great expansion of government "help" and a striking decay in localized effort in favor of being a consumer suckled up to large corporate structures tries to deal with the up and coming segment of citizens who want to leverage technology for independence, localized production and even new currencies?

I don't have answers, but do keep this in mind.  When you hear others railing and stressing about the macro scale things such as the collapse of Medicare or the destruction of public pensions, be more concerned about what the local helper in your Health Department can do to you and yours in a changed world.

Friday, August 19, 2011

You Are Here

For those who are not Elliott Wave subscribers, I wanted to post this chart, giving you an idea of what kind of potential we have for a plunge if the break in the long-term trendlines is sustained.  This is an older chart, but gives you the picture of where we can go from here - deep into Free Fall territory.

More to come as I get time, but there are multiple levels we need to be planning on. First, obviously, is the financial and markets level - where do you put your money, what happens to your money or equities or bonds if the bank fails or a systemic crash won't let you access your account to trade or a moratorium is put in place by governments. The next level is community - what happens to you if you can't get to your bank account or you get fired and you still have a high debt load and low savings and unemployment insurance dries up, or this happens to ten of your neighbors along with city services drying up. The other level will be political - national, state and local - and what panicked decisions at high levels may mean for you now and ten years from now.

The problem is we still don't know what is going to happen when the big decline comes. I still don't have clarity on the politics that may ferment out (secession? radical parties? a decade-long muddle through? all the above?) nor am I clear on what will happen to those huge numbers of folks still living paycheck to paycheck, who are doing fine now, but couldn't keep paying the mortgage three months after they lost their jobs.



Thursday, August 18, 2011

This is not 2008

Well, as Bernard Baruch once put it, the market fluctuated again today, this time heavily to the downside.

But don't worry, this isn't 2008, just ask an expert:

Is This Lehman Again? No, But It Sure Feels Like It

by Jeff Cox, CNBC
More than whether the European debt crisis is exploding, or if the US is re-entering a recession, or what the Federal Reserve's next move is, the markets want to know one thing: Is this another Lehman?

..."You've got a risk-off trade and it's on steroids right now," Art Hogan, managing director at Lazard Capital Markets, told CNBC. "What we're having right now is panic, indiscriminate selling. History has proven these are not the days that you want to be selling on."

Hogan flatly declared "this is not 2008" and cautioned against joining the selling fray.

"These are the days you want to sit back and...make your wish list and look for those opportunities where stocks got washed out in this baby-out-with-the-bathwater environment," he said.

Well, if the bright boys and girls over at EWI are correct in their wave counts, then Messr. Hogan is correct, this is not 2008. This is 1937 or thereabouts, if not back in the weeks following the popping of the South Sea Bubble.

Markets are falling, the very solvency of the entire world system is being called into question, sentiment is cratering and it leaves one to wonder, is Mr. Prechter correct, and that we are headed into Free-Fall Territory (I've pasted in a video and some links directly from EWI, just in case you are interested in picking up some of the free offerings):

Prechter Discusses Market Forecasts on CNBC Closing Bell

"The problem is deeper than just a minor recovery or a minor recession."

Robert Prechter joins CNBC hosts Bill Griffeth and Maria Bartiromo on Closing Bell to talk about the still-unfolding forecasts presented in his New York Times bestseller Conquer the Crash.

We invite you to watch the interview below. Then download Robert Prechter’s free report that uses an 84-year study of stock market values to help you prepare for and understand today’s critical market juncture.

Download Robert Prechter’s Free Report To Discover How You Can Prepare For Today’s Critical Market Juncture

While we're sure you're reading countless articles and analysis about the market's recent volatility, if you're not reading what EWI's subscribers read, you're missing the valuable, prescient perspective contained in each issue of Robert Prechter's market letter, The Elliott Wave Theorist.

Access Robert Prechter’s free report and read in-depth analysis -- including an 84-year study of stock values -- that will help you prepare for and understand today's critical market juncture.

Download Robert Prechter's Free Report.

Tuesday, August 16, 2011

If We Ignore Him, He Will Just Go Away

The MSM has no clue how to handle a Ron Paul that is doing well among many Republicans. Another example of the frantic, desparate efforts of the elites to pretend that all is well and things really aren't that different from the 1990s.

h/t Zero Hedge

Thursday, August 11, 2011

Are the Markets Undergoing a Criticality Accident?

Watching the market action over the last week, the action on the equity market charts reminds me nothing so much as what we call a "criticality accident" in nuclear engineering. This is when the control systems for a critical system (typically a nuclear reactor) fail.  Power excursions begin, resulting in wild power fluctuations and, if control is not regained, leads to the destruction of the critical system and leaves behind one hell of a mess:

Just an observation.  Enjoy the ride.

Stone Dumb

Ban short selling. Kill price discovery. Guarantee big gaps down in equity pricing. That sounds like a great idea for a region in the early innings of waking up to a banking and sovereign debt crisis...

Europe Considers Ban on Short Selling
by Stephen Castle and Louise Story, New York Times
BRUSSELS — A European market regulator is considering recommending a temporary ban on negative bets against stocks across the continent, in an effort to stop the tailspin in the markets, according to two people with knowledge of government discussions.

The European Securities and Markets Authority, a body that coordinates the European Union’s market policies, has been requesting information from member states about such bets against stocks, known as short-sales...

Translation of the above article: "But, but, but, it sounds nice and I really want it to work, so let's do it!"

Magical Thinking at work, friends. This really may be the Big One.

Wednesday, August 10, 2011

Which Way the Political System?

CNN/ORC has a new poll out showing that, for the first time in their polling data (and going back to the CNN/Gallup polls stretching back to November of 1991 - see page 9), we have dipped below 50% of Americans who believe their U.S. Congressional Representative deserves to be re-elected:


CNN/ORC Poll Conducted August 5-7, 2011, Page 8

Readers of FutureJacked are well aware of the business-as-usual game typically played in this arena - it is always the Other Guys who are the problem.  "Your" representative is a Good Joe, fighting the good fight for "our" interests in the face of a bunch of unreasonable and corrupt politicians from other districts.  If that facade is cracking and if this is a trend and not a blip, then 2012 may be a bloodbath for incumbents.  If the stock market is signalling the big shift into deep negative-bias mood for the U.S., expect this to grow worse.

I am still not sure 2012 will see success for the Third Party I keep expecting to erupt onto the scene.  None of the existing Third Parties seem to be gaining any traction, though that could obviously change.  Various, shall we say, non-constitutional threats to the system are probably not on the horizon at the moment, but that could change if we were to see, deep, deep cuts in military spending or an outbreak of violence similar to what the U.K. is experiencing.

For those contemplating a political career, it may still be a bit early to jump into the ring, though starting your non-profit organizing and propaganda arm needs to begin soon.

Monday, August 8, 2011

Free Access to Elliott Wave Financial Forecast

Elliott Wave International is once again offering free access to one of their premium products, the Elliott Wave Financial Forecast.  Below is their description of the offer.  It requires a free sign-up, but no comittment.

As usual - I am an affiliate of EWI.  If you don't already have one of EWI's free accounts, then if you follow the links below and sign up, I would get a small credit for this.  I am all for full transparency, so there it is.  That said, this is a critical time in the markets (and in society) and getting a free peek at the Financial Forecast is something I strongly suggest you jump at.  If my getting a credit for this is a problem, then do not follow a link from my site, but go directly to EWI and sign up from there.  I don't care either way - we are at a juncture as important as the wild rides we saw in 2008.  Getting solid information on where this might end up is critical.  Sign up, read up, be ready:

Elliott Wave International - World's Largest Market Forecasting Firm


From the Desk Of: Robert Folsom
Date: August 4th, 2011
Subject:

This brief message is all about you. To start with, however, I have to say something "about me." I've been with Elliott Wave International since 1992: That's a good long time, long enough to have seen lots of days when our staff did all it could to deliver forecasts that prepared subscribers for what's next.

Yet today stands above virtually all those others. I can scarcely recall a day when we've been able to offer 1) So much, 2) So immediately, that is 3) So urgent.

Here is where it's all about you. Earlier this year, The Elliott Wave Financial Forecast (EWFF) specifically forecast the juncture we've arrived at now -- it said most people believe the markets and economy are recovered and growing. But there were TWO parts to that forecast; the time has come for the second part to unfold. You're a few keystrokes away from what EWFF is saying now for free (new issue posts tomorrow, Aug. 5).

What's more, you're a few keystrokes from reading Robert Prechter's current commentary in The Elliott Wave Theorist, again, for free. He provides you with a context to understand the events of the past week and month, which you simply cannot find elsewhere (you won't need to wonder why the blue chips are now down on the year for 2011 -- you'll know why).

Finally there's the forecast in The Short Term Update: Earlier this week we alerted subscribers to action in the S&P 500 and Dow Industrials which broke below critical price levels. Perhaps you've heard some of the chatter on news and financial websites in the past 48 hours about a "head and shoulders" pattern. Yet Short Term Update subscribers got THAT news two weeks ago, back on July 20 -- along with a specific price level that would confirm the forecast.

This is a wealth of forecasting; you can have it immediately; and the moment is indeed urgent. I've never seen a day quite like it.

My colleagues here at EWI have put together a two-week free trial to all three of the services I mention above. Together, they we call them the Financial Forecast Service and they deliver the most comprehensive coverage of the US markets available anywhere. Now, if you are already familiar with EWI, you know that we NEVER offer free trials to these services. But you must act now as this offer ends Wednesday, August 10.

Find out what's next for the US markets.

Thanks for reading,

Robert Folsom
Elliott Wave International

About the Publisher, Elliott Wave International

Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world's largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private around the world.

Future Shock

The markets are going to hell, riots are tearing into London, the U.S. is downgraded to AA+ by S&P, spree killings and cop assassinations erupt across the U.S. and I've had no time to blog.

Well, we'll just have to make time.

I'll leave the obvious stories to your normal news grazing. Today I want to drill down on a nugget at the end of a story that, if you read it at all, you probably read for a far different reason.

Finding the Potential in Vacant Lots
By Michael Tortorello, The New York Times
This city contains 20,000 vacant lots, more or less. Probably more. Every year, demolition crews knock down another 1,000 houses. And the housing market being what it is, few souls are returning...

This is the kind of story I would normally take and riff on about re-purposing vacant lots through urban gardening or some sort of on-the-sly repurposing via planting things like raspberries, squash, strawberries - but without making it look too obvious as a cultivated area.  Part of my standard spiel that you should be thinking about adding small amounts of resiliency to your life and your community, bracing for the day you may need to face a world where the division of labor has dramatically shrunk and you will be forced to do more with less.

However, there is a far more significant (in my opinion) item to be gleaned from this article - the mindset of the vast majority of people out there, woefully unprepared for a world radically different than the one in which they were raised or the one they are still told to expect.

...A man with a straw hat and a brown paper bag — Eddie Thomas, 55 — charged across the street. “When are you going to mow that place?” he yelled, including a few other words for emphasis. The answer, “Not today,” appeared neither to please nor surprise him.

Mr. Thomas lives in Ms. McGriff’s house, and Dr. Gardiner had met him in the yard before. “The first time we came out, he was very nice,” she said. “And every time we come back, he gets progressively more frustrated.” For this, Dr. Gardiner blamed him not at all.

With Ultra-Ex researchers visiting the site every week, “there’s 40 people walking around here, looking in the air, vacuuming the leaves,” she said. ”He’s sick of a lot of people coming up here and doing a lot of things, except the one thing he wants done. Which is to mow the grass.”

Driving away from Site 6 and Cleveland’s east side, you can imagine someone like Mr. Thomas cursing the unmown grass every morning and evening, for years on end. Until one day, he will look over from the porch and the grass will be gone. And a wood will have taken its place...

There are going to be tens of millions of "Mr. Thomas"'s mentioned in this article spread all over this country. As municipalities go bankrupt and services implode, imagine trying to explain to someone who grew up in the heart of the Baby Boomer Generation - a generation that saw vast wealth deployed in the service of making communities comfortable, drivable and beautiful - all without the citizens having to actively take part in that beautification. Millions of dollars in a budget to mow lawns? When the choice comes between paying cops or mowing vacant lots, I expect the lots will go umowed (and the cops unpaid a short time later).

In my view, the beating, raging heart of the coming wave of anger is going to be "little" things like the unmowed lots above. The expectation for all living generations of Americans is extremely high in what they view as the services local, state and federal governments provide. Imagine the anger that will build if the food stamp program implodes or the interstate highway system begins to crumble as maintenance money dries up, or levees go unrepaired after flooding.

This is where the "Green Religion" I expect to see rise up could come into play. News and philosophies are, in the mian, stories we tell ourselves to help us work out the emotional herding pattern we are bound up in. Stories such as the one above will get rebranded into glorious nature reclaiming her own. That power outage that lasted two weeks before you could get connected back to the grid? An energy-fast that is helpful in getting you closer to nature by turning down the noise of television and the internet. Who knows what tales we will craft to tell ourselves as the infrastructure crumbles. They will be dark tales, I imagine.

Don't be one of the ones left raging over things like unmowed lots. Either get to work repurposing it to our new conditions, or get over it.

Thursday, August 4, 2011

Tipping Point or Head Fake?

DJIA Down 4.31% on Thursday

Wow.  What a day.  I was only able to check in a few times but it was relentless.

Is this just another Flash Crash or head fake?  Or are we finally starting the big Wave 3 down that will kick off many of the negative mood events we've puzzled over here at FutureJacked for the last several years?  Time will tell, but the edifice looks rotten, Europe is ailing and this dull haze of delusional optimism that has hung over the markets for the last few years may be breaking up:


By John Carney, Senior Editor, CNBC.com
Mutual funds and financial institutions may be so concerned about the direction of financial markets that they are willing to pay to stay on the sidelines.

Ordinarily, banks pay interest on cash deposits. But Bank of New York Mellon, the largest custodial bank in the U.S., announced that it would start charging customers with balances over $50 million. This indicates that the short-term demand for cash is extremely high. Which, in turn, implies that demand for almost every other kind of longer-term investment assets is extremely low...

Not much else to say at the moment, but today could be significant.

Monday, August 1, 2011

While Others are Partying...

While we watch the chattering class engage in cheerleading about the new debt deal, I suggest that you pay attention to the Fiscal Gap.


Here is the short Kotlikoff article that gives a brief overview on the fiscal gap, which is the genesis of the article linked to above.

Listening to these talking heads discuss tweaking the system, whether pledges are a good idea or not, etc. and I just can't help but think that when the crisis comes, the entire leadership cadre in the United States is going to be left jabbering nonsensically, if they can must the courage to speak by that time, while the entire system comes crashing down. This is the best we have?

The only honest part I heard came around 7:45 or so, when there was a discussion about soaking the rich - one of the chatterers at least honestly said, that while it wouldn't make much of a difference even if we confiscated all the wealth of the top 1%, he would feel better. Think about that when hard decisions have to be made...

Wednesday, July 27, 2011

Tipping Points


In this visualization, we see the tipping point where minority opinion (shown in red) quickly becomes majority opinion. Over time, the minority opinion grows. Once the minority opinion reached 10 percent of the population, the network quickly changes as the minority opinion takes over the original majority opinion (shown in green).

Here is some fascinating research out of RPI where a team has constructed a model for how ideas spread:

Friday, July 22, 2011

The Psychology of Standing Apart From the Crowd

Socionomics provides us with a model to not just analyze herd behavior and how those waves of mood affect markets and society, but also provides us with warning signs that allow us to part ways with the crowd when necessary to reap great rewards or avoid negative consequences.

Standing apart from the crowd can be extremely difficult. Embedded below is an episode of Bloomberg's Risk Takers that profiles Michael Burry, the founder of Scion Capital, LLC, who anticipated the housing crash. There are some fantastic examples of how emotion - be it mass mood or the individual anger of investors towards Mr. Burry, even when he was proven right - trumps logic and reason most every time.

Monday, July 18, 2011

Ain't No Tyranny Like Small Town Tyranny

I have often written here about the need to build ties to your local community (the real world one, not just the online communities you belong to). It will be important to have strong ties to your neighbors once the gale force winds of the Grand SuperCycle decline whip across the country.

This is not to say that I believe that smaller units of governance are always best or that small-towns offer some sort of shiny happy alternative to the problems that are going to crush urban areas. The wave of negative mood and the anger, fear and authoritarian tendencies will be on display all around you. Case in point, Gould, Arkansas, where the city council is trying to pass an ordinance banning the formation of any groups that discuss city business, unless those groups fill out all the necessary papers (modern tyranny always comes back to that, doesn't it?):


You may laugh and say it is just Arkansas, but this very well could be coming to a polity near you - and you best hope you have a mayor or civic groups willing to stand up to it like the Mayor of Gould.

Tuesday, July 12, 2011

Rich and Scared

Just to re-emphasize what you already know intellectually. As events spiral downward during major negative-mood eras, fear can take over and rational thought goes out the window. For men and women grinding it out as employees, that can mean being paralyzed by fear after getting fired from their job or a deep-seated rage at some faceless entity that is the cause such as "the government" or "big corporations" or one of a hundred various ethnic or social groupings. Policies favored by voters in times of extreme negativity can very well lead to catastrophic social consequences down the road.

For the wealthy, especially the very wealthy, fear plays an enormous factor in decisions to deploy that wealth, to support (or oppose) political candidates or even to choose where and how to live.

As a recent article from WSJ.com puts it:

Why the Rich Fear Violence in the Streets
By Robert Frank
Last year, I was at a billionaire’s home in California and I asked him to describe his biggest worry. He pointed to a 19th century painting on the wall, which depicted a female beggar receiving alms from a wealthy gentleman and giving her patron a flower in return.

“That’s what I worry about,” he said. “But instead of flowers, she’s got guns. Violence in the streets, aimed at the wealthy. That’s what I worry about...”

The socionomic drivers for this era of negative mood are still murky to me. I do think the global conglomo banks will suffer immensely - first financially (the tremors in Europe are making more than one highly paid banker sweat in his $1,000 suit right now), then politically as they are easy targets. But could we see a descent into full-blown "class" warfare? That's something the U.S. has historically been fairly immune to, especially compared to Europe. But how will the rich react when the riots come? Will they flee in droves? Build up fortified residences? Actually engage their communities and deploy their wealth to keep some of the angry young males off the streets? Something else?

Home and personal security will continue to be big earners if you have the right clientele, I imagine, at least in the near term.

h/t globalguerrillas

Monday, July 11, 2011

How The (Mood of the) Grinch May Steal Christmas

This is out of the U.K., but I imagine the situation is similar on this side of the Atlantic. This is a deflating credit bubble. Credit and leverage underlies everything in our modern financial world and the whole system is built to only operate efficiently in expansion mode.

Cash-strapped retailers face collapse over cost of Christmas stock
by Rupert Neate, The Guardian
The cost of stocking the shelves for Christmas may force the collapse of several more high street retailers, a leading accountancy firm has warned.

Ernst & Young said retailers who had been "hanging on in there" since the 2008-09 recession might not be able to build up enough cash to pay for extra stock for the crucial festive season as well as the rent due at the next quarter-day in September...

There is another point as well - some of these companies might even be projecting positive numbers that would move them from "hanging in there" to profitability, but if their credit gets choked off, they could very easily collapse very quickly to the surprise of their employees, shareholders and suppliers.

Adding this potential retail pain on top of the ongoing struggles in Europe over the bailout of Greece, Portugal, Spain, Ireland and Italy and we certainly have the "excuses" or "emotional targets" that will be used to express the coming rogue wave of negative mood.

Friday, July 8, 2011

Things To Come...

Charles Hugh Smith has an excellent blog post up, describing some of the outlines of the coming crisis. There is a strong socionomic flavor to it (and to most of his writings) and I highly recommend his work:

The Shape of Things to Come
by Charles Hugh Smith
Yesterday I laid out why the U.S. will inevitably experience The Great Reset. What comes after that systemic devolution/crisis is unknown, but we can speculate on the shape of things to come.

Though we cannot know the outcome, we can certainbly discern the outlines of the crisis itself. These destabilizing conditions will force a crisis at some point and will be resolved one way or another:

1. Profound political disunity...

2. A dearth of leadership...

3. The unstable double-bind of rule by Financial Plutocracy...

4. The political corruption of religion...

I especially appreciate his paying attention to the religious aspect of the coming crisis. Great Awakenings have occurred multiple times in the past and these non-material shifts in mood/consciousness brought on by new or revitalized belief structures have had a profound influence on history, economics and politics.

Will this next Great Awakening be the Green Religion I continue to worry about? A revitalized and possibly more mystical version of Christianity as opposed to the Pharisee-like efforts to mate religion with the sanctioned guns of government we've seen over the past few decades? Something "new" that will burst upon the scene much like the irruption of Islam under the hand of the Prophet Muhammad? A "back to the land" or commune movement like the Trascendalists of the 1800s or the Hippies of the 1960s?

This Awakening may not happen until this coming crisis has bottomed out, but in a way that is almost too bad, as these Awakenings, like them or not, tend to set up the new guideposts for society. We will be stumbling into this one with no moorings and all the guideposts deconstructed to dust.

Friday, July 1, 2011

Happy 4th of July Weekend

Life is hectic and posts have been few here at FutureJacked. It can't be helped at the moment, but I did want to take a minute to wish you all a Happy 4th of July.

Take a few moments to think about what the Founders of the Republic accomplished, think about some of the founding documents and the debates held both during the Revolutionary period and the events surrounding the Ratification of the Constitution, and take a moment to enjoy just what they did accomplish, what was left undone and perhaps raise a glass as we march resolutely into the storm of the Grand Supercycle decline to what might be again in the decades to come...

Tuesday, June 21, 2011

The Education Complex

Over at Zero Hedge, they and Bill Gross are catching up to the Socionomist in casting a critical eye on Higher Education as it has manifested itself over the past couple of decades:

Bill Gross: "College is Worthless"
submitted to ZH by Tyler Durden
...In his just released latest letter (below) Bill Gross piggybacks on this observation in what is one of the most scathing notes blasting the traditional of higher education, and in essence claiming that college, as means of perpetuating a broken employment status quo whcih redirect labor to a now-expiring Wall Street labor model, is now worthless: "The past several decades have witnessed an erosion of our manufacturing base in exchange for a reliance on wealth creation via financial assets. Now, as that road approaches a dead-end cul-de-sac via interest rates that can go no lower, we are left untrained, underinvested and overindebted relative to our global competitors. The precipitating cause of our structural employment break is both internal neglect and external competition. Blame us. Blame them. There’s plenty of blame to go around." And why college graduates have only a 6 digit loan to look forward to: "American citizens and its universities have experienced an ivy-laden ivory tower for the past half century. Students, however, can no longer assume that a four year degree will be the golden ticket to a good job in a global economy that cares little for their social networking skills and more about what their labor is worth on the global marketplace..."

The article reposts Bill Gross' usual insightful writing. Agree with him or not, he is a sharp man and one worth listening to. I fear his insistence on a massive goverment jobs program is going to run into the brick wall of empty public coffers, but you can expect many to echo his call.

It is nice to see that he is catching up to an issue that was reviewed in detail by Alan Hall back in the February issue of the Socionomist:

Back to the School of Hard Knocks?
The Education Industry Faces a Multi-Decade Peak
by Alan Hall
America's higher education business is about to hit a patch of trouble. It is in the late stages of a bubble, one that is credit-fueled, government-supported and widely popular.

A massive shift in society's attitudes toward education is beginning, as we shall see. If it continues in earnest, as we expect, educational institutions will soon encounter spectacular challenges to survival.

If your income depends on higher education, get ready by taking clues from the crumbling housing business...

Alan's article is a ten-page review of the state of higher education in the U.S., complete with supporting wave counts and variety of supporting evidence. The socionomic model once again proves its worth as a forecastsing tool relevant to your daily life - at least if you have kids that are headed to college, or work in a town or city reliant on a big university, or are like many of us who review our individual state budgets and see the vast sums of money steered towards higher education and know that it will become a ripe target in the coming years when "austerity" makes its trip from Europe to the U.S.

Edu-Bubble

This bubble is going to have multi-generational impacts, in my opinion. In the interests of full disclosure, I get my paycheck from a public university (my facility is operated under the University system). My particular facility makes 85% - 90% of its own budget every year from products & services, research grants from corporations and government and specialty analytical work. While we are a bit insulated from the "typical" attitudes of academia, we do get to see it in full force. And I can promise you that large academic institutions are in full-fledge denial that anything could ever change in the model used to deliver education to their students.

In an era when you can get an undergraduate level of education for free on Youtube from the Khan Academy in math and finance, the large education institutions are relying more and more on the credentialing and research aspects of their mission while lagging behind in lowering costs and providing better service seen in most every other "industry" touched by the digital revolution.

In my opinion, it is going to take a crash in revenues to change the model.  Entire universities and university systems will go broke when revenues collapse.  The new "rust belt" of the early 21st century may very well be a string of ruined "ivory towers" stretched from coast to coast.

Vast amounts of emotional energy and fiscal resources will be plowed into these institutions before they are allowed to finally die.  Entire generations of men and women have a significant portion of their self-worth bound in their college experience.  Soccer moms all across America who hover over their children, demanding they jump through the right hoops to get into the "best" colleges are not going to let their hours of work "helping" their kids prepare for the "best" schools.

But the crash will come.

Action Items

If a massive contraction in the education business happens, as I expect, expect a major social revolution on top of the financial problems that will beset those who rely on a university paycheck or from spending from university employees. If you are in that group (like me), have a Plan B.

And what happens when wave after wave of kids stop going off to college every year?  Small and mid-sized towns see an exodus every year of talented kids who leave town and never come back.  Some of those kids will still leave of course.  All universities are not going to dry up and of course many will leave for larger cities and more opportunities there, but what happens when a higher percentage stay in their home towns? 

Could the popping of this education bubble be the catalyst for the rebirth of more vibrant small and middle-sized towns?  Pile on the other effects of a Grand Supercycle sized wave of negative mood and who knows, perhaps instead of just another generation of beer-drinkers, we might get a generation that become future civic leaders and small business owners.

There are surely many ways to play the potential for this retention of talent. Small business owners take heart, you may have a more talented pool to draw from in the coming years.

Friday, June 10, 2011

Music, Movies and Social Mood

Here is an offering from the Socionomics Institute to remind you of what we can expect in the arts in the coming years. Load up your phone and .mp3 player with happy tunes while you can...

Friday, June 3, 2011

A Socionomically Predicted Birth Rate Blip

I recently ran across a report from the CDC entitled "Recent Decline in Births in the United States, 2007–2009" that tickled something in the socionomic part of my brain. 

I sat down and plotted the birth rate data from CDC against the monthly close figures for the DJIA in Excel and out popped a trend that looks like it could be described using the socionomic model:


DJIA Monthly Close vs. U.S. Birth Rate from CDC data

With the trend in mind I then visited the ever-useful socionomics.net site to confirm that Robert Prechter had done a similar, and much more thorough review over decade ago, entitled "Stocks and Sex: A Socionomic View of Demographic Trends."  The report is well worth your time and I especially encourage you to think about some of the ramifications as we head into a period of negative mood as deep or deeper than anything the U.S. has experienced since its foundation as a Republic.

Mr. Prechter did his study on stock prices vs. births and conceptions.  I took the CDC birth rate information as I think it provides a new riff to work from.

What jumps out at me is the flat-lining of the birth rate as SuperCycle Wave IV transitioned to the optimism of SuperCycle Wave V in the mid-1970's.  SuperCycle Wave III was accompanied by a massive boom in the birth rate, a demographic "wonder to behold" as it were.  As the Elliott Wave model teaches, "[t]hird waves are wonders to behold" with "favorable fundamentals (text, 10th edition, page 80).  The birth rate certainly shows reflects this, tied in as it is with the socionomic concept that decisions are shaped in the aggregate by herding instincts wired into the brain and not necessarily pure, cold reason and rationality.  Moving into Wave V, the birth rate flat-lined, showing small bumps in times of excessive positive mood, but in the main, remaining stagnant.  The personality of a Wave V is described as always "less dyanmic" than a Wave 3 (text, 10th edition, page 80) and the data starkly confirm this observation.

Assuming I am correct and mood plunges into a deep negative bias for an extended period of time, one can expect the rate of births to plummet as well.  While this is not something that may immediately impact your life, we need to think about what would drive such a collapse in births.

As Rome decayed and fell, birth rates collapsed as well.  One path a significant number of Roman citizens took to act out their feelings of negativity in terms of birth rate was the adoption of fiercely anti-reproduction stances on the part of the rising Christian that eventually rose to dominate the Empire.  Mr. Prechter touches on the demographic challenge faced by Rome, even before the rise of the Christians, and this fact has been noted by many scholars as a factor in, or the "cause" of the Fall of the Roman Empire.  By using the new religion of Christianity to justify the adoption of a life aesticism and chastity, this enabled men and women to act out the negative herding impulse that had swept the Empire and that eventually brought about its decay and destruction.

Looking ahead what new philosophies might encourage or support and crash in the birth rate assuming demographic trends are driven by mood?  A newly revived and ascetic Christianity that comes to dominate a large portion of the population?  A brand new "green" religion that views humans as a destructive force and works to limit the birth rate to zero population growth or an outright decline through persuasion or force?  A combination of plagues and a philosophical or religious shift in attitudes towards children and child birth?

It is a trend worth following and if you work for Gerber, you might be sweating out the coming years...

Tuesday, May 31, 2011

Pruned Revenues

The coming downturn is going to show the truly ugly face of the Nanny State.  We've endured decades of layer upon layer of absurd laws and once mood turns towards anger and local revenues get squeezezd, this kind of revenue generation activity by local jurisdictions is bound to increase.

Albemarle Road church fined $100 per branch for excessive tree pruning
By Brittany Penland, The Charlotte Observer
Every two to three years, Eddie Sales trims and prunes the crape myrtles at his church, Albemarle Road Presbyterian Church.

But this year, the city of Charlotte cited the church for improperly pruning its trees.

"We always keep our trees trimmed back because you don't want to worry about them hanging down in the way," said Sales, a church member.

The church was fined $100 per branch cut for excessive pruning, bringing the violation to $4,000...

..."We are trying to be pro-active and not trying to fine people excessively," [Senior Urban Forester for City of Charlotte Land Development Division Tom] Johnson said.

In cash-strapped cities across the country, expect every silly law on their books that contains a provision for a fine to be dusted off and inspectors sent out to enforce them.

Monday, May 30, 2011

What Will Get Corrected When Mood Plunges Again (Part 2)


Sunrise in Joplin on May 23rd, somewhere near 20th and Connecticut (I think...)

I had planned for this post to be about the failed prophecy by Harold Camping that the world begin its end on May 21st, discuss some reasons why his claim went viral and received so much mainstream attention (socionomic reasons, noting the timing of his previous calls in 1988 and 1994, his own significant holdings and advertising campaign, etc.) but that got overtaken by events, as they say, and I want to touch on another aspect of modern society that could get corrected in a big way

I spent that weekend suited up and deployed as part of Missouri Task Force One. MOTF-1 is an Urban Search and Rescue team.  I am a hazardous materials and rescue specialist for the task force and we were participating in a national level exercise simulating a response to a massive earthquake in the New Madrid Seismic Zone.  I spent the evening of the 21st, when the world was supposed to be ending sitting on the tarmac of the Spirit of St. Louis Airport (where our base had been established) eating MREs with a bunch of twenty-somethings made up of firefighters, emergency medical techs and the occasional odd engineer or other specialist like myself thrown in.  We had flown in on a C-130 and flew out on the 22nd the same way.

A few hours after getting back (and without washing the clothes in my grab and go bag) my phone goes off and the task force got deployed to Joplin to help with search and rescue after the tornado.  After a quick emails to my boss, I was off again, this time in a van.  We hit Joplin around 2:30 a.m. on Monday morning and got to work.

I have never seen such devastation.  If you caught the news accounts of it, you probably saw more than I did.  Suffice it to say it was unlike anything I've ever seen.

However, this post is not about the suffering in Joplin, which is quite real, or what little part I was able to play to help mitigate it.  As we swept through a vast area that looked like the aftermath of a massive bombing campaign, it struck me just how much of this response was a product of the great era of positive mood and the wealth that flourished during that era.

MOTF-1 is unusual for a USAR team in that we are an all-volunteer force.  Deployments in-state, like that to Joplin, mean we must take vacation or time without pay or otherwise work it out.  Federal deployments (where we go down to the Gulf Coast, for instance, to help out with a hurricane) do pay a stipend, but that also depends on the feds having the money to pay that stipend.  The expense to assemble, deploy and support a USAR team in the field can be substantial (I don't have any public figures for the Joplin deployment at the moment).  This expense is on top of the already-incurred expense of training a large team in urban search and rescue techniques, maintaining the large caches of equipment, warehousing everything, buying gas and food, etc.  It is like supporting a small brigade at the end of the day.

And we were not the only specialized teams in the field.  "Strike Teams" from fire departments in St. Louis and Kansas City were also on hand, along with small teams from large numbers of fire departments all over Western Missouri.  Each of these teams has vast numbers of hours and money poured into them on a yearly basis just to support the equipment and training, not to mention the cost to deploy them in the field.

Then you have the logistics involved in coordinating the response and working out the plan to somehow demolish the vast miles of damaged structures and then rebuild.

This was on top of having wrapped up the National Level Exercise that weekend - having deployed our trucks, flown a portion of the team on Air Guard C-130s, conducting exercises in the St. Louis metro area and then getting home.

I just kept thinking - what happens when mood turns and the money dries up?  Fire Departments are going to be prime targets for cost cutting in the coming era of austerity and anger.  Many departments have racked up excellent pension plans (well, excellent on paper) and salary structures.  The rising anger and turn towards fiscal austerity is going to ravage those plans.  The fire departments themselves have hugely expensive equipment and trucks to maintain and preventive maintenance is always a place where the budget knife cuts deep.  A lot of equipment is purchased with federal matching money.  What happens when that money is not there?

If you are reading this blog then you know where I am going with this.  What will the response look like when a massive tornado hits a city in 2014?  Or a hurricane storms ashore in South Florida in 2015?  What equipment or personnel will be available to be sent across a state or across the country to help out?

One thing I must note, the outpouring of support and the number of volunteers wanting to help was very impressive.  That part of the American Spirit will remain intact, I think, but the core group of professionals or trained part-timers (like me) could very well shrink dramatically in the coming years, as well as the resources to coordinate teams in the field and the logistics of cleaning things up, counting the bodies, helping the wounded, etc.

This brings us back to preparedness and finding a way to have local networks of people available to be mutually supportive during a crisis.  After seeing the scale of the devastation in Joplin, I have a bad feeling that the natural disasters in the years to come may wind up being far more deadly and have longer term impacts that what we are used to today as we will have fewer resources to throw at them and more anger and suspicion to overcome.