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Surviving 2020 #3: Plans A, B and C

Surviving 2020 #3: Plans A, B and C

Readers ask for specific recommendations for successfully navigating the post-credit/speculative-bubble era and I try to do so while explaining the impossibility of the task.

As the bogus prosperity economy built on exponential growth of debt implodes, we all seek ways to protect ourselves, our families and our worldly assets. There are any number of websites, subscription services and books which offer two basic “practical recommendations:”

1. Buy gold (and/or silver) and don’t worry about timing the market as everything else will become worthless.

2. Establish a heavily armed and well-supplied hideaway before everything implodes.

My problem with these suggestions is that they are predicated on a decisive “end of the world as we know it” collapse of civilization.

While I am alive to the possibility of this cataclysm, an analysis of the many feedback loops which will slow or counteract such a decisive collapse suggests other alternatives are even more likely: my term for the slow, uneven decline of the credit/speculative-bubble era is devolution.

I cover feedback loops, historical cycles and why a lengthy devolution is as least as likely a scenario as abrupt collapse in my book Survival+ (free downloadable version is linked below).

In other words, I do not see planning for eventualities as “either/or.” I look at it in terms of three levels:

1. Plan A: dealing with devolution: government services are cut back, prices for essentials rise over time, fulltime paid jobs become scarce, the State (all levels of government) becomes increasingly repressive as it pursues “theft by other means,” i.e. the stripmining of private assets to feed its own fiefdoms and Elites; most assets fall in purchasing power (value) as the system’s financial props erode.

…click on the above link to read the rest of the article…

Deutsche Bank: The Market’s Current “Metastability” Will Lead To “Cataclysmic Events”

Deutsche Bank: The Market’s Current “Metastability” Will Lead To “Cataclysmic Events”

With the VIX slammed at the close of trading on “quad-witch” Friday, sending it just shy of single-digits once again and pushing stocks back in the green in the last seconds of trading, the much discussed topic of (near) record low volatility simply refuses to go away, which means even more attempts to i) explain it, ii) predict what ends the current regime of “endemic complacency” and iii) forecast the “catastrophic” damage to markets when it does finally end as JPM’s Kolanovic did earlier this week, when he set the bogey on a modest increase in the VIX from 10 to just 15.

Overnight, applying his typical James Joycean, stream-of-consciousness approach to capital markets, Deutche Bank’s derivatives analyst Aleksandar Kocic penned his latest metaphysical essay on this topic, which covered most of the above bases, and which postulates that far from “stable” the current market equilibrium is one which can be described as “metastable”, the result of widespread complacency, and which he compares to an avalanche:”a totally innocuous event can trigger a cataclysmic event (e.g. a skier’s scream, or simply continued snowfall until the snow cover is so massive that its own weight triggers an avalanche.”

He also inverts the conventionally accepted paradigm that lack of volatility means lack of uncertainty, and writes that to the contrary, it is the ubiquitous prevalence of uncertainty that has allowed vol to plunge to its recent all time lows, keeping markets “metastable.”

How does the regime change from the current “metastable” regime to an “unstable” one? To Kocic the transition will take place when uncertainty, for whatever reason, is eliminated: “Big changes threaten to explode not when uncertainty begins to rise, but when it is withdrawn.” He also points out that while there is punishment for those who seek to defect from a “complacent regime”…

…click on the above link to read the rest of the article…

Cataclysm

Cataclysm

Collapse generally comes as a surprise, even to those who predict it.

The USSR didn’t just fail one day, as does a person who dies of a sudden heart attack or stroke. It was more like a wasting illness brought on by an unhealthy lifestyle. A physician tells a morbidly obese patient: “Your daily consumption of twelve cocktails, three packs of cigarettes, and 4,000 calories, and your refusal to engage in exercise more strenuous than walking to the refrigerator will kill you, but I can’t say when.” For both individuals and governments, certain choices are incompatible with continued existence, and the Soviet government made plenty of those.

Very few people foresaw its failure when it was imminent, even purported experts. The small group who said Soviet communism wouldn’t work because it couldn’t work were disparaged right up until it didn’t work. However, the deck is always stacked in favor of those predicting this or that government will fail. Ultimately they all do because they all come to rest on a foundation of coercion and fraud, which doesn’t work because it can’t work.

There is both a quantitative and qualitative calculus for individuals subject to a government: what the government takes versus what individuals get back. Government is a protection racket: turn over your money and it promises physical security from invasion and crime, and adjudication and restitution in the event of civil or criminal wrongs. The quantitative calculus: am I getting more back than I put in? The qualitative calculus: what activities and people does the government help or hinder?

Protection rackets are often indistinguishable from extortion rackets, the “protector” a bigger threat to the “protected” than the threats against which they’re supposedly protected. Such is the case with the US government, as it was with the former Soviet government.

…click on the above link to read the rest of the article…

2016 Will Be A ‘Cataclysmic Year’ And ‘Investors Should Be Afraid’

2016 Will Be A ‘Cataclysmic Year’ And ‘Investors Should Be Afraid’

Royal Bank Of ScotlandThe Royal Bank of Scotland is telling clients that 2016 is going to be a “cataclysmic year” and that they should “sell everything”.  This sounds like something that you might hear from The Economic Collapse Blog, but up until just recently you would have never expected to get this kind of message from one of the twenty largest banks on the entire planet.  Unfortunately, this is just another indication that a major global financial crisis has begun and that we are now entering a bear market.  The collective market value of companies listed on the S&P 500 has dropped by about a trillion dollars since the start of 2016, and panic is spreading like wildfire all over the globe.  And of course when the Royal Bank of Scotland comes out and openly says that “investors should be afraid” that certainly is not going to help matters.

It amazes me that the Royal Bank of Scotland is essentially saying the exact same thing that I have been saying for months.  Just like I have been telling my readers, RBS has observed that global markets “are flashing the same stress alerts as they did before the Lehman crisis in 2008″

RBS has advised clients to brace for a “cataclysmic year” and a global deflationary crisis, warning that the major stock markets could fall by a fifth and oil may reach US$16 a barrel.

The bank’s credit team said markets are flashing the same stress alerts as they did before the Lehman crisis in 2008.

So what should our response be to these warning signs?

According to RBS, the logical thing to do is to “sell everything” excerpt for high quality bonds…

…click on the above link to read the rest of the article…

Olduvai IV: Courage
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Olduvai II: Exodus
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