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

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...