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.

2 comments:

David said...

1) Institutional arrangements of private property only hold when there is a general agreement that they arise from fair transactions. As with property rights in 3rd world countries, when (Orwell's) The High get too greedy and leverage the political system to rob the Middle and Low too much, property rights (a key component of rising living standards in good times) break down. Squatting is a typical response.

2) Reports of widespread street gang membership within the military confirm the trend toward 4th Generation Warfare on which Creveld and Lind have written volumes. Lots of starry eyed optimists speak of localism's rising star, but they forget that localism also brings tribalism and a more personal organized crime than what we're used to (e.g., the IRS). Local gangs are going to be VERY well trained and organized, given their military inputs.

3) MF Global is a symptom of your first point. When those in Power become so drunk with it that they forget that rules matter, they sow the seeds of a complete loss of trust in the very institutions of their power base. Through their own actions they invite the termites into their own homes. This is confirmation of the rule that "Nothing sets up failure like success."

4) Years ago I disagreed with Bob Prechter over the role of organized medicine in coming years. He appeared to have more faith that the mob would retain its trust in their Doctor/Gods, but I believe the focus is likely to shift away from the SickCare industry as it exists. Alternatives (some successful, some not) are already flourishing, but those in Power have a monstrous vested interest in perpetuating the status quo. Look for a protester, fed up with the jack-booted thuggery of the cops with their batons and pepper spray, to pull out a gun an cap the nearest goon.

That is the match our Power Elite awaits to justify their final solution, overt Martial Law. Given recent developments, it's obvious they are salivating over the prospect of dropping the pretense and giving full reign to their impulse to Total Control. Chaos, of course, will be the result.

Flagg707 said...

It is weird, watching move after move by various governments and governmentish entities, all struggling towards total control - Predator drones over US cities, TSA stopped motorists, video monitoring everywhere, etc.

I agree that chaos can be the only result when they try and take it to the next step. The paranoid worldview of these would-be rulers combined with a boiling mass of negative sentiment is going to produce a self-reinforcing feedback when they go to impose further control.