Thoughts on Coming Apart and the Coming Great Reset
Turning and turning in the widening gyre
The falcon cannot hear the falconer
Reviewing the Bidding
Thoughts and Theses
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No changes this week
In the early 1990s, I predicted a severe crisis in the US in the early 2000s - see My Journey for details of how those thoughts were developed, and a description of my predictions, essentially all of which have held up well. That crisis would result in a resetting of the country's financial system and financial institutions and therefore would profoundly affect all parts of the culture and all institutions, including government and military.
The crisis would be precipitated by debt, deficits, entitlements and demographics.
The purpose of this web site is to Contemplate Out Loud about ways in which current events are reinforcing or contradicting my predictions. And to create a continual update of thoughts for the future.
The Fed, Congress and the Executive Branch have now made that crisis inevitable and of a much higher order of magnitude than I anticipated.
The crisis should be played out over the remainder of this decade. There will be a new world with a new financial system and a new culture under construction at the end of the crisis.
The Fed has three alternative paths: inflation, austerity and default. For now, they have chosen inflation.
We are deep into a multi-year end game and to the point at which things will generally become worse, faster, although nothing will move in a straight line.
The Fed will likely continue on its current path until something breaks.
When the Fed signals the end of raising interest rates, we will likely enter a new era of currency devaluation and yield curve control.
Biden is significantly contributing to underinvestment in fossil fuels that will result in a multi-year, perhaps multi-decade, energy crisis. He is attempting to cross the green energy chasm in two steps. We will get to the point where even leftists will treasure every drop of oil and every lump of coal. I discuss this critically important issue, perhaps the most important issue we face today, in The Energy Crisis.
Biden made a major strategic error by confiscating Russian currency reserves.
The last stimulus payment, and arguably the one before that, were major errors, contributing significantly to inflation, shortages, extraordinary speculation and the increase in asset prices.
Inflation is peaking - for now (January 2023) - and it will remain at a high level. In the long run, because of debt levels, there is no practical alternative to continued, elevated inflations - which will probably rise and fall in waves. Stagflation is my bet for the foreseeable future.
There will be deflationary / disinflationary crosscurrents including demographics (retirement of Boomers, declining birth rates), and debt rationalizing and blowing up of debt, worldwide. Temporarily, we will have the interesting phenomenon of too much retail inventory as a result of overordering during supply chain issues and a slowing economy. Inflation is necessary; deflation /disinflation is the wild card.
The economy is weakening - recession is probable, and there is definite slowing down at a fairly rapid pace. Actually, there is a good possibility that a recession has already begun. However, recessionary pressures may recede for a quarter or so. The third and fourth quarters of 2022 are two of those quarters where the pressures are temporarily receding.
Housing is weakening.
Ukraine should lose the war. A combination of Russian incompetence and advanced weapons from the West, primarily the US, is resulting in at least short term advantage to Ukraine. It is not clear what Russia's next moves are. See Ukraine.
Russia may be winning the financial / energy war. Energy is so fundamentally important, and Russia has so much of it, while the US is burdened by extraordinary levels of debt, that Russia holds the better hand. The West's counter to that better hand is sanctions. Having said that, sanctions, particularly those leading to an inability for Russia to maintain their oil fields, will begin to create problems over time. These problems will be for Russia and for the whole world, because the world needs Russian oil. Very high stakes poker. See Ukraine.
Europe will have serious energy challenges this winter. Now that the Nordstream pipelines have been damaged, they do not have the alternative to reach accommodations with Russia. Nature has smiled on Europe for half a winter with mild weather. The bullet was dodged until next year.
Food disruptions over at least the next year, and probably for several years, primarily as a result of the Ukraine war, will be significant.
I outline my thoughts about how the next few years will unfold here.
Beth tells me, enough with the analysis, already. People want to know how you feel. I am not so sure about that, but if you are interested, I emote here.
September 29, 2023
What I Got Wrong
How Do You Tell When Trump Goes Too Far?
(Discussing the gargantuan amount of Treasuries that need to be sold over the next year) No private sector entity or entities (other than the Fed) have the balance sheet to absorb this amount of UST supply at current rates. - Luke Gromen
As with food, we spent most of our history deprived of information and craving it; now we have way too much of it to function and manage its entropy and toxicity. - Nassim Nicholas Taleb
Where there is hope, there is delusion. - Beth Webster
A Change In Presentation Of Information
I carefully consider every line that is posted to this site. The primary purpose is to contemplate my theses out loud, but I also include what I consider interesting bits of information and occasional attempts at humor. To assist those that only want the first category of information, I have begun this week to highlight those thoughts I believe are most important.
Markets and the Economy
This will provide context - providing a comparison of conditions during the Great Depression to today. The primary thing she leaves out is that unemployment then was around 25%.
School loan repayments (are supposed to) begin next week.
It's so bad, it's good - I'm not saying there can't be a recession and rising unemployment. I'm just saying with a pro cyclical gov deficit this high I've never seen it, and that rate hikes further contribute to the deficit/support output/employment/etc. - Warren Mosler
The Biden administration announced Thursday that Vice President Kamala Harris will oversee the first-ever White House Office of Gun Violence Prevention to reduce gun violence.
Much more efficient shoplifting in San Francisco
Finally! Something that actually works - I define a woman as anyone who doesn’t think about Ancient Rome every day. - Scott Adams
The times, they are a'changin
A raft of polls now show Trump beating Biden by as much as 10 percentage points. Things are going to get even more interesting for the Democrats.
From Nature - it's going to go badly
Up to 92% of Earth could be uninhabitable to mammals in 250 million years. As the planet’s landmasses drift, a merged Afro-Eurasian continent will eventually crash into the Americas to form a new supercontinent: Pangaea Ultima. The supercontinent’s creation will drive volcanism, which will increase carbon dioxide levels and turn most of the land into a barren, hot desert. In a worst-case scenario, just 8% of the planet’s surface would be habitable to most mammalian life, which would lead to a mass extinction. “I think life will make it through this one,” says geologist Hannah Davies. “It’s just kind of a grim period.”
Target is taking action in response to retail theft.
On Tuesday the big box retailer announced plans to close nine stores, effective Oct. 21.
"We cannot continue operating these stores because theft and organized retail crime are threatening the safety of our team and guests, and contributing to unsustainable business performance," the company said in a statement.
The stores set to close include one in Harlem, N.Y; two in Seattle, Wash.; three near San Francisco and Oakland, Calif.; and three in Portland, Ore.
Alrighty then - BIDEN SAYS HE AGREES UAW SHOULD GET A 40% INCREASE
This could be big - lots of second-order consequences - A New York judge ruled that Trump committed fraud by inflating the value of his properties and other assets by hundreds of millions of dollars in order to receive better loan terms and lower insurance premiums. The decision came in the civil case brought by New York Attorney General Letitia James against the former president. Justice Arthur Engoron also rescinded some of Trump’s New York business licenses.
It's coming - The analysis, based on data reported to the Equal Employment Opportunity Commission, shows that S&P 100 companies added 323,094 new jobs between 2020 and 2021. Of that total, 302,570 of them—94 percent of the total increase—went to "people of color," defined as blacks, Asians, and Hispanics, the analysis found. Together, those groups make up just 40 percent of the U.S population.
The disparities raise new questions about the role of race in corporate hiring, which is already under scrutiny following the Supreme Court’s ban on affirmative action in college admissions. With many companies and law firms now facing lawsuits over their diversity programs, the numbers suggest that race-conscious decision-making has gone beyond flashy fellowships or supplier diversity initiatives; in 2020, it appears to have permeated routine employment decisions.
The Senate reverted to its decades-old business attire dress code, one week after the rules were relaxed. The standards will now be enforceable.
I just watched a clipping from an interview with the controversial Charles Murray, one of my heroes. He is 78 and been in a great marriage for 40 years. When asked when the worst year of his life was, he replied that it was yet to come - whenever he or his wife dies.
I can relate.
We will see more of this - elephants, dolphins, apes - maybe even octopi - The City of Ojai is now the first city in America to recognize the legal rights of a nonhuman animal.
The ordinance defines and protects elephants’ rights to liberty, NhRP said in a press release.
Exactly zero of the moments labeled historic by the media are actually historic. Historic is just another entry in the lexicon of clickbait. The same thing as listening to a football game to learn that a player is the first, left-handed, less-than-six-feet-tall player to score running backwards in the first three games of the season. We are participating in history being made!
A sign of the times - the New York City health commissioner is asking every New Yorker to carry Narcan, the antidote to opioid overdose.
Is organic food, grown without synthetic chemicals, healthier than conventionally grown food? Roughly 40 percent of Americans say at least some of the food they eat is organic, so quite a few eaters clearly believe it is.
However, there is no reliable evidence showing that organically grown foods are more nutritious or safer to eat. In 2012, a review of data from 237 studies conducted at the Center for Health Policy at Stanford University concluded there were no convincing differences between organic and conventional foods in nutrient content or health benefit. The organic ban on synthetic chemicals also fails to improve food safety in the U.S., since the use of pesticides is now significantly regulated in conventional farming (insecticide use today is 82 percent lower than it was in 1972), and because produce in supermarkets has been washed to remove nearly all of the chemical residues that might remain.
In 2021, the USDA conducted its annual survey of pesticide residues on food in the American marketplace, testing 10,127 food samples from nine different states. It found more than 99 percent had residues safely below EPA’s tolerance levels, which are cautiously set at only 1/100th of an exposure that still does not cause toxicity in laboratory animals. Food scientists at the University of California, Davis, conclude from such surveys that the “marginal benefits of reducing human exposure to pesticides in the diet through increased consumption of organic produce appear to be insignificant.”
By one estimate in 2014, only 8 percent of organic sales in the U.S. were still being made by small farmers through farmers markets or through community supported agriculture.
Many consumers continue to think organic foods come from small local farms, but most now come from distant industrial farms. By one estimate in 2014, only 8 percent of organic sales in the U.S. were still being made by small farmers through farmers markets or through community supported agriculture. Over 80 percent of all U.S. organic sales are now made by corporate conglomerates like ConAgra, H.J. Heinz, and Kellogg. The biggest retailers of organic foods are Walmart, Costco, and Kroger.
Remember When Any Drive In The Summer Resulted In Bug Splats All Over The Windshield? What Happened?
Did They Catch The Person That Left The Cocaine in the White House?
My Two Commentaries This Week Are Two Different Sides Of The Same Coin
What I Got Wrong
I have discussed, ad nauseum, how I began my intellectual journey about 30 years ago, trying to essentially describe the decline of the United States.
While essentially all of my thoughts have held up well, which was actually unexpected over such a long period of time, I inevitably got some things wrong.
Every step of the way, I have examined my assumptions and fine-tuned my thoughts. The Fourth Turning led me to think about what the next First Turning would be.
I got some details wrong, but I really missed two, key things.
First, while I am very cynical about voters and politicians, and I know that democracy tends to chaos, and I expected civil unrest, I never in a million years thought we would take it as far as we have.
And, we are still in the 4th or 5th inning.
Everyone abandoned all restraint. Free goodies for all. Absolutely unimaginable amounts of debt and deficits. Without retribution.
Riots in the streets with essentially no arrests, except for those associated with January 6th.
Free goodies to any shoplifter or those who break into cars.
Defunded police who cannot respond, even when they want to or are allowed to.
The homeless terrorizing cities in a million petty ways.
Civil society self-destructing.
The Fed accommodating every bad political idea.
The bond market playing along.
Even these days, when I witness these things on television, it is like having an out-of-body experience.
America is destroying itself.
Which brings up the second, significant area that I got wrong: the destruction of the very idea of America. The distrust and gaming of institutions.
Somewhere in the back of my mind, when I thought about deterioration and chaos, I thought that, at some point, saner heads would prevail.
The future would not look like the past, but we would not piss in our own soup.
Now I fundamentally understand that we are going to test everything to the breaking point. We are going to sacrifice ourselves to goodies, race and gender. We are going to bomb the house to get rid of the termites.
I am going to continue to look for limits to these processes, but so far, I do not see any.
We are just that determined.
We are in an orgy.
Yes, there is hedonism, but that is not the issue.
We are in a self-reinforcing spiral of self-indulgence and self-righteousness.
I did not see that and that is the primary thing I got wrong.
And I have no idea how bad it will get.
How Do You Tell When Trump Goes Too Far?
(I know some of you are MAGA, but bear with me, as you have done in the past.)
Trump just says the damnedest things.
He has normalized lying and extreme statements to the point that, when he says that General Milley should be executed for treason, most just sigh, shake their heads, and say, that's just Trump being Trump.
Several years ago, he said he could murder someone and not lose voters.
He is proving himself right.
Therefore, while Democrats will point in disgust, which I share, I want to discuss the other side of the coin.
Some 30-40% of the people in this country, increasingly including hispanics and blacks, feel trapped with nowhere to go.
No, stop, anti-Trumpers. Listen. This is real and it is very serious.
Trapped with nowhere to go.
They will take nether-region grabbing, infidelity, clear lies (although Biden is giving him a run for his money in the lies department - just Biden being Biden, you know) and outrageous statements, not because these people are stupid or crazy, but because they are trapped, with nowhere to go. He is the only one to appear to take on a broken system that is oppressing them. He is the only one giving them hope. They will hold their noses and vote for him.
Ramaswamy says some of the "right" things, but he comes across as a shrill twit.
RFK, Jr. is taking on the establishment, but he, ultimately, is one of "them." Perhaps if he runs on a third party ticket, things could get interesting.
Trump has been indicted and has lost a serious case in New York pertaining to his companies and assets. He, himself, is getting cornered, and could implode as the walls close in.
But, if he does not, he is the clear frontrunner for the Republican nomination.
Because people feel trapped with nowhere to go.
Not only are they afraid for their livelihoods, they see America slipping away every day - statues down, rioting without consequence, an epidemic of shoplifting, free speech stifled, debt and deficits piling up, inflation, gender insanity. These are real, not imaginary things.
And, there is little Trump can say or do to change their support, except at the margins.
That's the problem. Not Trump, per se. He continues to be an emergent property of the real and perceived dysfunctions of our country. "Trump" will not go away until these issues are addressed.
Which, of course, they are unlikely to be.
Until there is no choice.
This is a Fourth Turning, after all.
War, Energy and Food
War, Energy and Food
The world’s oil refiners are proving powerless to make enough diesel, opening a new inflationary front and depriving economies of a fuel that powers industry and transport alike.
Conventional oil production has now unequivocally rolled over. Unconventional production, the only source of growth in global oil supply over the last 12 years, has also significantly slowed.
Microsoft is plunging ahead on nuclear energy. They want a fleet of reactors powering new data centers. And now they're hiring people from the traditional nuclear industry to get it done. Why? Lack of stable long-term power, whether clean or dirty, is constraining Microsoft's growth. They need to build big data centers that consume electricity all the time and the old assumption that somebody else's reliable plants will always be around to firm up your wind and solar is falling apart.
No comment - FRENCH PRESIDENT EMMANUEL MACRON SAYS FRANCE WILL ASK OIL INDUSTRY TO SELL FUELS AT COST
The fact that Russia did not come to Armenia's aid in the loss of Nagorno-Karabakh to Azerbaijan may indicate that Russia is, indeed, weakening due to the war in Ukraine.
It Ain't Easy Being Green
Phasing Out Fossil Fuels Is ‘Unrealistic,’ China Climate Envoy Says Fossil Fuels are essential to maintain grid stability and energy security given the sometimes unreliable nature of renewables, Xie Zhenhua said, according to a video recording of a speech at a conference in Beijing. “Completely phasing out fossil fuel is unrealistic,” Xie said. “We should build the new before discarding the old,” he said, calling for an understanding of the challenges faced by individual countries.
Now, they've gone and done it - Decreases in global beer supply due to extreme drought and heat
According to a survey of almost 800 climate researchers, 73% are sceptical of the idea of green growth. Instead, approaches such as agrowth and degrowth are gaining ground.
Sea ice levels around Antarctica just registered a record low — and by a wide margin — as winter comes to a close, according to the National Snow and Ice Data Center (NSIDC). This significant milestone adds worry that Antarctic sea ice may be entering a state of decline brought on by climate change.
“There is some concern that this may be the beginning of a long-term trend of decline for Antarctic sea ice, since oceans are warming globally, and warm water mixing in the Southern Ocean polar layer could continue,” read the NSIDC announcement released Monday.
“Nissan will make the switch to full electric by 2030 in Europe – we believe it is the right thing to do for our business, our customers and for the planet…there is no turning back now…The world needs to move on"
From Berkley Earth
Lego has stopped a project to make bricks from recycled drinks bottles instead of oil-based plastic, saying it would have led to higher carbon emissions over the product’s lifetime.
The move followed efforts by the world’s largest toymaker to research more sustainable materials, as part of a wave of companies reassessing their contribution to global emissions as the climate crisis hits.
Granholm is incompetent, but even she gets it - US energy secretary Jennifer Granholm has warned that transitioning from fossil fuels will make energy security “infinitely more complex” because of China’s stranglehold on the processing of the critical minerals essential for renewable power
So many things this guy does not understand ...