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Coronavirus and the “Unsinkable” Titanic Analogy

Coronavirus and the “Unsinkable” Titanic Analogy

Unthinkable doesn’t mean unsinkable.

As we all know, the “unsinkable” Titanic suffered a glancing collision with an iceberg on the night of April 14, 1912. A half-hour after the iceberg had opened six of the ship’s 16 watertight compartments, it was not at all apparent that the mighty vessel had been fatally wounded, as there was no evidence of damage topside. Indeed, some eyewitnesses reported that passengers playfully scattered the ice left on the foredeck by the encounter.

But some rudimentary calculations soon revealed the truth to the officers: the ship would sink and there was no way to stop it. The ship was designed to survive four watertight compartments being compromised, and could likely stay afloat if five were opened to the sea, but not if six compartments were flooded. Water would inevitably spill over into adjacent compartments in a domino-like fashion until the ship sank.

We can sympathize with the disbelief of the officers, and with their contradictory duty to simultaneously reassure passengers and attempt to goad them into the lifeboats. Passengers were reluctant to heed the warning because it was at odds with their own perceptions. With the interior still warm and bright with lights, it seemed far more dangerous to clamber into an open lifeboat and drift off into the icy Atlantic than it did to stay onboard.

The evidence was undeniable, but humanity’s first response is denial, regardless of the evidence. The evidence that the coronavirus is contagious is undeniable, as is the evidence that carriers who have no symptoms can transmit the virus to others.

Just as the eventual sinking of Titanic could be extrapolated from the basic facts (six watertight compartments were flooding), so the eventual spread of the coronavirus can be extrapolated from these basic facts.

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

Could the Coronavirus Epidemic Be the Tipping Point in the Supply Chain Leaving China?

Could the Coronavirus Epidemic Be the Tipping Point in the Supply Chain Leaving China?

Everyone expecting a quick resolution to the epidemic and a rapid return to pre-epidemic conditions would be well-served by looking beyond first-order effects.

While the media naturally focuses on the immediate effects of the coronavirus epidemic, the possible second-order effects receive little attention:

first order, every action has a consequence. Second order, every consequence has its own consequence.

So the media’s focus is the first-order consequences: the number of infected people and fatalities, government responses such as quarantines, and so on. The general expectation is these first-order consequences will dissipate shortly and life will return to its pre-epidemic status with virtually no significant changes.

Second-order effects caution: not so fast. Second-order consequences may play out for months or even years even if the epidemic ends as quickly as the consensus expects.

The under-appreciated dynamic here is the tipping point, the imprecise point at which a decision to make fundamental changes tips from “maybe” to “yes.

These tipping points are often influenced by exhaustion or frustration. Take a small business that’s been hit with tax increases, additional fees, more regulatory compliance requirements, etc. When the next fee increase arrives, the onlooker might declare that the sum is relatively modest and the business owner can afford to pay it, but the onlooker is only considering first-order effects: the size of the fee and and the owner’s ability to pay it.

To the surprise of the onlooker focusing only on first-order effects, the second-order effect is the owner closes the business and moves away. Invisible to everyone focusing solely on first-order effects, the owner’s sense of powerlessness and weakening resolve to continue despite soaring costs and declining profits has slowly been moving up to a tipping point.

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

Some Practical Questions about the Coronavirus Epidemic

Some Practical Questions about the Coronavirus Epidemic

Restrictions that allow a significant number of people to move about, either with official approval or unsanctioned “black market” activity, cannot stop the spread of contagious diseases.

Like everyone else, I’ve been reading the mainstream media reports on the Coronavirus epidemic. I haven’t found any information about the practicalities that immediately occur to me, such as:

1. When public transportation is halted and commerce grinds to a halt as people avoid public places and gatherings, thousands of employees no longer go to work. Who pays their wages while the city is locked down? The employers? Then who compensates the employers, since their income has also gone to zero?

Does China have a universal unemployment insurance system that can quickly issue payments to all people who are no longer going to work and getting a paycheck from an employer?

What about the thousands of migrant workers who don’t have regular employers? Who pays them? If they’re technically not officially sanctioned residents of the city, they don’t exist in government records.

2. If people idled by the lockdown are supposed to live off savings, what about all the marginal workers with few resources? What are they going to live on once their meager savings are gone?

3. Given the choice of obeying the lockdown rules and starving or slipping out of the city to find paid work somewhere else, how many migrant workers will choose to slip away?

4. Unlike the developed West, many people in China still have ancestral villages to return to, rural towns where their grandparents or or other close relatives live. If work has dried up and you’re fearful of catching a potentially lethal virus, wouldn’t it make sense to slip out of the city and make your way back to the village where you can hunker down until the epidemic blows over?

Since people who caught the virus may not know they’re a carrier, how will this migration not spread the disease to rural areas with few medical resources?

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

Welcome to the Era of Intensifying Chaos and New Weapons of Conflict

Welcome to the Era of Intensifying Chaos and New Weapons of Conflict

Geopolitics has moved from a slow-moving, relatively predictable chess match to rapidly evolving 3-D chess in which the rules keep changing in unpredictable ways.

A declining standard of living in the developed world, declining growth for the developed world and geopolitical jockeying for control of resources make for a highly combustible mix awaiting a spark: welcome to the era of intensifying chaos and the rapid advance of new weapons of conflict as ruling elites attempt to stamp out dissent and global powers pursue supremacy by whatever means are available.

Gordon Long and I discuss these dynamics in a new video The New Weapons of Conflict (28:30) that explores the drivers of increasing global chaos and a permanent state of intensifying conflict in both domestic (internal) and global (external) affairs.

Domestic conflict is erupting and intensifying across the globe: political polarization and populism, driven by soaring wealth/income inequality and the decay of the social contract and the erosion of standards of living, and social disunity and disorder as cooperation has failed to fix what’s broken.

Geopolitical conflicts are now expanding across a vast spectrum from endless wars in contested regions to cyber-meddling in other nation’s domestic affairs, cyber-warfare via theft of intellectual property and targeting essential digital infrastructure, economic sanctions and currency-based warfare, along with a wide array of disruptive military technologies, including “first strike”-enabling hypersonic weaponry, anti-missile technologies and space-based weaponry.

The relative stability of the Cold War has given way to a multi-polar world in which nations are competing with a host of other nations, including erstwhile allies and economic/trade rivals. Geopolitics has moved from a slow-moving, relatively predictable chess match to rapidly evolving 3-D chess in which the rules keep changing in unpredictable ways.

There’s much more in the program; click on either graphic to go to the video:

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

Skyrocketing Costs Will Pop All the Bubbles

Skyrocketing Costs Will Pop All the Bubbles

The reckoning is coming, and everyone who counted on “eternal growth of borrowing” to stave off the reckoning is in for a big surprise.

We’ve used a simple trick to keep the status quo from imploding for the past 11 years: borrow whatever it takes to keep paying the skyrocketing costs for housing, healthcare, college, childcare, government, permanent wars and so on.

The trick has worked because central banks pushed interest rates to zero, lowering the costs of borrowing more as costs continued spiraling higher.

But that trick has been used up. The next step–negative interest rates–has failed to spark the “growth” required to pay for insanely overpriced housing, healthcare, college, childcare, government, etc.

We’ve reached the end of the line on lowering interest rates as a way of borrowing more to keep our heads above water. We’ve reached the point where households and enterprises can’t even afford the principle payments, i.e. no interest at all.

How are banks supposed to make money at zero interest rates? By charging outrageous overdraft fees and offering marginally qualified borrowers sky-high credit cards, and getting in on the federally guaranteed mortgage/student loan racket, that’s how.

The point here is the discipline of rising costs has been destroyed by easy money. Take higher education as an example. If there was no federally backed student loan “industry,” universities would have been forced to innovate 20 years ago to lower costs and improve the market value of their “product.”Instead, they left their bloated cost structure untouched as it spiraled ever higher, and simply passed the higher costs onto students, who have had to borrow over $1.5 trillion to feed the bloated higher education cartel.

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

A “Market” That Needs $1 Trillion in Panic-Money-Printing by the Fed to Stave Off Implosion Is Not a Market

A “Market” That Needs $1 Trillion in Panic-Money-Printing by the Fed to Stave Off Implosion Is Not a Market

It was all fun and games enriching the super-wealthy but now the karmic cost of the Fed’s manipulation and propaganda is about to come due.

A “market” that needs $1 trillion in panic-money-printing by the Fed to stave off a karmic-overdue implosion is not a market: a legitimate market enables price discovery. What is price discovery? The decisions and actions of buyers and sellers set the price of everything: assets, goods, services, risk and the price of borrowing money, i.e. interest rates and the availability of credit.

The U.S. has not had legitimate market in 12 years. What we call “the market” is a crude simulation that obscures the Federal Reserve’s Socialism for the Super-Wealthy: the vast majority of the income-producing assets are owned by the super-wealthy, and so all the Fed money-printing that’s been needed to inflate asset bubbles to new extremes only serves to further enrich the already-super-wealthy.

The apologists claim the bubbles must be inflated to “help” the average American, but that claim is absurdly specious. The majority of Americans “own” near-zero assets that earn income; at best they own rapidly-depreciating vehicles, a home that doesn’t generate any income and a life insurance policy that pays off only when they pass away.The average American uses the family home for shelter, and so its currently inflated price does nothing to improve the household income: it’s paper wealth, and we’ve already seen how rapidly that paper wealth can vanish when Housing Bubble #1 popped. (Housing Bubble #2 is currently sliding toward the edge of the abyss.)

Were legitimate price discovery allowed, the asset bubbles would pop, and the real-world impact on the average household that owns essentially zero income-producing assets would be minimal.

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

Suppressing Dissent Guarantees Disorder and Collapse

Suppressing Dissent Guarantees Disorder and Collapse

The frantic efforts of am exploitive elite to eliminate dissent only accelerates the regime’s path to collapse.

Regimes that are losing public support always make the same mistake: rather than fix the source of the loss of public trust–the few enriching themselves at the expense of the many– the regime reckons the problem is dissent: if we suppress all dissent, then everyone will accept their diminishing lot in life and the elites can continue on their merry way.

What the regimes don’t understand is dissent is the immune system of society: suppressing dissent doesn’t just get rid of pesky political protesters and conspiracy theorists; it also gets rid of the innovations and solutions society needs to adapt to changing conditions. Suppressing dissent dooms the society to sclerosis, decline and collapse.

Dissent is the relief valve: shut it down and the pressure builds to the point that the system explodes. Regimes that no longer tolerate anything but the party line fall in one of two ways: 1) the pressure builds and the masses revolt, tearing the elite from power or 2) the masses opt-out and stop working to support the regime, so the regime slowly starves and then implodes.

Here in the U.S., the suppression of dissent is the work of the corporate media and the Big Tech monopolies: Facebook, Twitter and Google.  As Mark St.Cyr and I discuss in a new no-holds-barred podcast (1:08 hours, 4 segments), Big Tech is effectively suppressing dissent via shadow banning, de-platforming and de-monetization:– shadow banning: the audience who gets to see your content is throttled back to a fraction of your pre-shadow-banning audience.

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

Costs Are Spiraling Out of Control

Costs Are Spiraling Out of Control

And how do we pay for these spiraling out of control costs? By borrowing more, of course. 

If we had to choose one “big picture” reason why the vast majority of households are losing ground, it would be: the costs of essentials are spiraling out of control. I’ve often covered the dynamics of stagnating income for the bottom 90%, and real-world inflation, i.e. a decline in purchasing power. 

But neither of these dynamics fully describes the relentless upward spiral of the cost basis of our economy, that is, the cost of big-ticket essentials: housing, education and healthcare.

The costs of education are spiraling out of control, stripping households of income as an entire generation is transformed into debt-serfs by student loan debt. The soaring costs of healthcare are a core driver of higher costs in the education complex (and government in general), and to cover these higher costs, counties raise property taxes, which add additional cost burdens to households and enterprises as rents rise. 

Rising rents push the cost structure of almost every enterprise and agency higher.

Then there’s the asset inflation created by central bank ZIRP (zero interest rate policy) which has inflated a second echo-bubble in housing that has pushed home ownership out of reach of many, adding demand for rental housing that has pushed rents into the stratosphere in Left and Right Coast cities.

The increasing dominance of monopolies and cartels has eliminated competition in sector after sector. Monopolies and cartels skim immense profits even as the value, quality and quantity of their products and services decline: The U.S. Only Pretends to Have Free Markets From plane tickets to cellphone bills, monopoly power costs American consumers billions of dollars a year.

Thanks to their political influence, monopolies and cartels have legalized looting, raising prices and evading anti-trust regulations because they can pay whatever it takes in our pay-to-play political system.

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

Crunchtime: When Events Outrun Plan B

Crunchtime: When Events Outrun Plan B

Not only will events outrun Plan B, they’ll also outrun Plans C and D. 

We all know what Plan B is: our pre-planned response to the emergence of risk. Plan B is for risks that can be anticipated, regular but unpredictable events such tornadoes, earthquakes, hurricanes, etc. In the human sphere, risks that can be anticipated include temporary loss of a job, stock market down turns, recession, disruption of energy supplies, etc.

Hidden in most Plan B’s are a host of assumptions that all the systems running in the background of the economy will remain stable. Even if electrical and cell-phone service go down, for example, we assume the outage will be temporary. We assume delivery of energy and food will resume shortly, we assume medical care will be available somewhere nearby, roadways will soon be cleared and so on.

In other words, we assume emergencies will be short-lived and that these non-linear events will leave the rest of our social and economic orders as fully intact linear systems, that is, predictable because the outputs (results) will continue to be proportional to the inputs.

If one road crew can clear five roads of debris, then if ten roads are blocked, we reckon adding another crew will generate a proportional result: two crews will clear all ten blocked roads. This is a linear system and response.

But if for some reason the second crew can’t clear even a single road, and adding a third crew also fails to make progress, the situation becomes non-linear: increasing inputs doesn’t generate proportional outputs.

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

We Can Only Choose One: Our National Economy or Globalization

We Can Only Choose One: Our National Economy or Globalization

The servitude of society to a globalized economy is generating extremes of insecurity, powerlessness and inequality. 

Does our economy serve our society, or does our society serve our economy, and by extension, those few who extract most of the economic benefits? It’s a question worth asking, as beneath the political churn around the globe, the issues raised by this question are driving the frustration and anger that’s manifesting in social and political disorder.

A recent essay examines these issues in light of Brexit, which the author sees as a manifestation of dramatic but poorly understood changes in Britain’s economy over the past 60 years:

How Britain was sold: Why we need to rethink the case for a national capitalism in the age of uncertainty.

“One of the reasons Brexit has become unstuck is that the changing nature of the British economy since the 1970s and 1980s has made it hard to identify what the economic interests of the nation really are.

If nothing else, Brexit has been a long overdue education in the realities of Britain’s economy.

While both liberals and Marxists argue that the nationality of capitalism does not matter, there is a need to rethink the case for a national capitalism in this age of economic inequality, political fracture and geopolitical uncertainty. If nothing else, by embedding the economy more deeply into the nation and the daily lives of its citizens, and by directing itself towards national purposes and having a greater stake in developing national skills and innovations, a national capitalism would underline and reinforce that lost idea of the common good.”

It’s shocking to recall that Britain had a large and vibrant domestically owned auto industry in the 1960s, and remained a major industrial power / exporter.

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

Political and Social Conflict Is Accelerating: Here’s Why

Political and Social Conflict Is Accelerating: Here’s Why

All the status quo “fixes” only hasten the collapse of the status quo.

That economic, social and political conflict is accelerating is self-evident. What’s open to debate are the core drivers of conflict / disorder /unraveling.

Here’s the core self-reinforcing dynamic in my view:

1. The status quo elites can no longer mask soaring costs of essentials nor soaring wealth / income inequality between the top .01% (Oligarchs), the top 9.99% who enrich the Oligarchs with their discretionary spending and technocratic/managerial labor, and the bottom 90% who are rapidly losing ground on all fronts: economic, social and political.

2. The elites’ “fixes” to the social / political conflicts unleashed by the rigged financial system and winner take most economic order are politically expedient, meaning they don’t actually address the sources of conflict, they merely paper them over with PR as a means of preserving the elites’ wealth and power.

3. The elites’ fundamental financial “fix” is to create trillions in newly issued currency and distribute it to the banks, financiers, super-wealthy families and global corporations– the top .01% Oligarchs.

4. This “fix” accelerates the asymmetric distribution of wealth by enabling the already-wealthy to buy more productive assets, fund stock buybacks, etc., while forcing the bottom 90% to borrow money from the Oligarchs to make ends meet: the rich get richer, the poor get more indebted.

5. The only possible output of these inputs (political expediency to preserve the elites’ wealth and power, the creation and distribution to the Oligarch class of trillions in new currency) is the acceleration of the very erosion that fueled social / political conflicts in the first place. In effect, the elites’ “fixes” are accelerating the conflicts that will ultimately lead to their downfall.

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

Darn, This Is Inconvenient: Apple Is Destroying the Planet to Maximize Profits

Darn, This Is Inconvenient: Apple Is Destroying the Planet to Maximize Profits

Stripmining the planet to maximize profits isn’t progressive or renewable–it’s just exploitive and destructive.

How do we describe the finding that the planet’s most widely-owned super-corporation is destroying the planet to maximize its smartphone sales and profits? Shall we start with “inconvenient?” Yes, we’re talking about Apple, famous for coercing customers to upgrade their Apple phones and other gadgets if not annually then every couple years, as the most effective way to maximize profits.

Unfortunately, smartphones require stripmining the planet, as described in this report, Smartphones Are Killing The Planet Faster Than Anyone Expected

Researchers are sounding the alarm after an analysis showed that buying a new smartphone consumes as much energy as using an existing phone for an entire decade.

Smartphones are particularly insidious for a few reasons. With a two-year average life cycle, they’re more or less disposable. The problem is that building a new smartphone–and specifically, mining the rare materials inside them–represents 85% to 95% of the device’s total CO2 emissions for two years. That means buying one new phone takes as much energy as recharging and operating a smartphone for an entire decade despite the recycling programs run by Apple and others, “based on our research and other sources, currently less than 1% of smartphones are being recycled,” Lotfi Belkhir, the study’s lead author, tells me.

The researchers point out that mobile apps actually reinforce our need for these 24/7 servers in a self-perpetuating energy-hogging cycle. More phones require more servers. And with all this wireless information in the cloud, of course we’re going to buy more phones capable of running even better apps.

Google, Facebook, and Apple have all pledged to move to 100% renewable energy in their own operations. In fact, all of Apple’s servers are currently run on renewable power. “It’s encouraging,” says Belkhir of these early corporate efforts. “But I don’t think it’d move the needle at all.”

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

Political and Social Conflict Is Accelerating: Here’s Why

Political and Social Conflict Is Accelerating: Here’s Why

All the status quo “fixes” only hasten the collapse of the status quo.

That economic, social and political conflict is accelerating is self-evident. What’s open to debate are the core drivers of conflict / disorder /unraveling.

Here’s the core self-reinforcing dynamic in my view:

1. The status quo elites can no longer mask soaring costs of essentials nor soaring wealth / income inequality between the top .01% (Oligarchs), the top 9.99% who enrich the Oligarchs with their discretionary spending and technocratic/managerial labor, and the bottom 90% who are rapidly losing ground on all fronts: economic, social and political.

2. The elites’ “fixes” to the social / political conflicts unleashed by the rigged financial system and winner take most economic order are politically expedient, meaning they don’t actually address the sources of conflict, they merely paper them over with PR as a means of preserving the elites’ wealth and power.

3. The elites’ fundamental financial “fix” is to create trillions in newly issued currency and distribute it to the banks, financiers, super-wealthy families and global corporations– the top .01% Oligarchs.

4. This “fix” accelerates the asymmetric distribution of wealth by enabling the already-wealthy to buy more productive assets, fund stock buybacks, etc., while forcing the bottom 90% to borrow money from the Oligarchs to make ends meet: the rich get richer, the poor get more indebted.

5. The only possible output of these inputs (political expediency to preserve the elites’ wealth and power, the creation and distribution to the Oligarch class of trillions in new currency) is the acceleration of the very erosion that fueled social / political conflicts in the first place.

In effect, the elites’ “fixes” are accelerating the conflicts that will ultimately lead to their downfall.

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

If Not-QE Is QE, then is Not-a-Blowoff-Top a Blowoff Top?

If Not-QE Is QE, then is Not-a-Blowoff-Top a Blowoff Top?

Can $300 billion, or $600 billion, or even $1 trillion continue to prop up an increasingly risk-riddled, fragile $330 trillion global bubble in overvalued assets?

When is “Not-QE” QE? When Federal Reserve Chairperson Jerome Powell declares QE is not QE. We can constructively recall the story that Abraham Lincoln famously recounted in 1862

:‘If I should call a sheep’s tail a leg, how many legs would it have?

”Five.

”No, only four; for my calling the tail a leg would not make it so.’

Calling QE not-QE doesn’t make it different than QE, but it does communicate the Fed’s panicky desire to mask its stupendous injection of financial cocaine into the financial system. The Fed’s level of panic is noteworthy, as is the absurd transparency of its laughable attempt to conceal its panic.

In the same fashion, the financial media is loudly declaring the current blowoff top in stocks is not a blowoff top. The delicious irony here is these denials are reliable markers of blowoff tops: the louder the denials, the greater the odds that this is in fact the blowoff top that many pundits have been expecting for some time, but always in the future.

Garsh darn it, maybe the future has arrived. The financial media denied the Q4 1999 – Q1 2000 blowoff top was a blowoff top, and it repeated its denial of a blowoff top in housing in 2006-2007. The pundits of 1929 also denied the Q3 blowoff top in stocks was a blowoff top.

If you want a reliable signal that the blowoff top has peaked, listen to the screechy adamance of the deniers. The list of reasons why blowoff tops can’t be blowoff tops is practically endless: sentiment isn’t bullish enough, there’s a Wall of Worry for stocks to climb (overlooking the inconvenient reality that there is always a Wall of Worry)…

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

What We’ve Lost

What We’ve Lost

This is only a partial list of what we’ve lost to globalism, cheap credit and the Tyranny of Price which generates the Landfill Economy.

A documentary on the decline of small farms and the rural economy in France highlights what we’ve lost in the decades-long rush to globalize and financialize everything on the planet— what we call Neoliberalism, the ideology of turning everything into a global market controlled by The Tyranny of Price and cheap credit issued to corporations and banks by central banks.

After Winter, Spring (2012) was made by an American who moved to a small village in the Dordogne region of France to recover something of her childhood on a small Pennsylvania farm.

The farmers–self-described as paysanspeasants in English, (a translation I don’t consider entirely accurate, for reasons too complex to go into here)– describe the financial difficulties of earning enough to survive without outside jobs.

One young farmer who is taking over the family dairy from his aging parents encapsulates the economic reality of small farms: in the 1960s, they had 3 or 4 cows, now they have 100, but their income is the same.

Corporate mega-farms can produce huge quantities of agricultural products of questionable quality because they have the scale, access to cheap credit and expertise to deal with the voluminous bureaucratic paperwork imposed by the EU and the French government. (One slip-up on a form and you’re sunk if you’re a one- or two-person operation.)

Artisanal producers can’t compete, and will never be able to compete in a global marketplace where there is always a cheaper source. (Up to half a small farmer’s income comes from EU subsidies, which the EU is trying to cut.)

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

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
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