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January 1, 2013 at 11:00 pm #8409Raúl Ilargi MeijerKeymaster
I came upon this quote a few weeks ago in an interview that Der Spiegel had with Dennis Meadows, co-author of the Limits to Growth report published by
[See the full post at: Quote Of The Year. And The Next.]January 2, 2013 at 10:07 am #6693Viscount St. AlbansParticipant
The trouble with E. coli, rodents and reindeer: they never evolved the brains for loan sharks and street corner bruisers.
Bless the bankers. If we’re lucky, 30% interest and busted-kneecaps will buy our species an extra generation.January 2, 2013 at 10:25 am #6694snuffyParticipant
Too many of “right sort”will get fried by the destruction of bloated .mil budgets,by a stock meltdown of the big defense guys.
They will come up w/a fix,or the powers that are will put in a new set of clowns.
It was interesting to see top generals use the tea party as a example of a home-grown terrorist type organization that would be targeted should they start making noises about the Constitution,and the necessity of a revolution every twenty years or so….
When I saw that I just went wow….
We really are on the edge now kiddies.I haven’t a clue what will start the ball rolling,but it will go bat-shit crazy fast when it does.[ ] Where we go from here is anyone’s guess.Best put in goodly amount of popcorn and your fav. beverage
Bee good or,
snuffyJanuary 2, 2013 at 10:27 am #6695snuffyParticipantJanuary 2, 2013 at 2:18 pm #6697
Naomi Klein gave a 20-minute Ted Talk called “Addicted to Risk”. She spoke of greed, hubris, and men (greater risk-takers than women are). She said we use narratives such as 1) dominating nature is our destiny; 2) nature is so nurturing and so resilient, that we can never make a dent in her abundance, that no matter how much we mess up, there will always be more water, more land, more untapped resources, a new bubble will replace the old one, a new technology will come along to fix the messes we made. There will always be a new frontier, so stop worrying and keep shopping.
She said another narrative is at the very last minute we’re going to get saved and endless growth can continue.
It’s a great listen.
Excellent article again, Ilargi. Thank you!January 2, 2013 at 6:25 pm #6698
Peripheral bonds and the equity markets don’t share in the pessimism. As one might have expected, the combination of avoiding any semblance of fiscal responsibility in the US (while fully monetizing all new treasury issuance) and happy articles in bloomberg suggesting shrinking bond supplies in Europe has caused core euro bonds to drop, PIGS bonds to rise (italian 10 year now is yielding 4.3%), and the US equity market is set to open within striking distance of the cycle high.
I haven’t done a thorough analysis of the article above, but my guess is “falling” actually means “rising less rapidly than previously predicted” since very few nations in the eurozone have actual budget surpluses – and it would require real surpluses to shrink supply of bonds outstanding.
Still in all, I’m not one to poop all over someone else’s party (or stand in front of a speeding train) so – I’m predicting new cycle highs in the SPX.
Happy New Year everyone!!January 2, 2013 at 8:05 pm #6699p01Participant
The Last Call for credit has been made!
Now it seems as good time as any to find a quiet spot to pop that corn Snuffy mentioned and watch the carnage if you have the stomach for it. Actually you must develop the stomach anyway, because reality does not ask nicely.
Try to delay joining the fray, for as long as you possibly can. You will, at some point, of course.January 2, 2013 at 10:13 pm #6700
@p01 – Last Call for Credit!!
You are possibly right. Then again, maybe not.
We’ve gone through a whole lot of “top” calls during the past four years. I’ve been guilty of it as well. So I suppose yet another call for this being the REAL, FINAL top can’t hurt – that “last call for credit” and all – and if we keep on doing it ad infinitum, it will be correct eventually.
I’m trying a different technique. I prefer to watch my indicators and guide on what they’re telling me. At the moment – things continue pointing up, not down. Much as I imagine debt deflation should seize the world by the throat, it hasn’t happened. At least not yet.January 3, 2013 at 1:31 am #6701
davefairtex – but wouldn’t Bloomberg’s article have been a lot more honest if they had included this:
“For example, the Grand Poo-Bah of the Keynesian Cargo Cult, Paul Krugman, loves to repeat that massive fiscal-stimulus deficits haven’t raised interest rates, confounding doomsdayers, but he never mentions the Federal Reserve’s role in this magic: what would interest rates be if the Fed wasn’t buying hundreds of billions of dollars of Treasury bonds every year?
The honest position would [be] for Keynesians to state that the Central Bank’s role is to print money to enable unlimited, fiscally reckless spending by the Central State. But dishonesty is a modest Keynesian fault compared to the blindspots in their core policies.”
Bloomberg’s article should have read, “There is No Risk: Dials are being turned, levers are being pulled, everything is being manipulated. So, come on, jump! It’s fattening-up season.
Caveat: Risk returns once enough of you get sucked in – er, pile on. Then shearing season starts, and you will be sheared but good. But don’t worry, we’re good with scissors!”January 3, 2013 at 1:41 am #6702
davefairtex – “Much as I imagine debt deflation should seize the world by the throat, it hasn’t happened. At least not yet.”
Imagine? Should? Rewrite: “Debt deflation HAS the world by the throat, the owners know this. That’s why there is NO market. Everything is being engineered through corruption, fraud, collusion, manipulation and outright engineering instead. I make my trades, keeping a close eye on the engineers.”January 3, 2013 at 1:49 am #6703
“This multilevel manipulation creates a Boolean either/or for any Bear market: either it is a planned “panic” that profits the banks or a systemic failure of the orchestrated campaign of market manipulation.
Here is B.C.’s commentary:
Consider the possibility that the banksters now effectively control the stock market in ways never before possible, using the NY Fed acting in concert with the dark pools, offshore shell companies and pass-through entities, PTFs, and high-frequency trading (HFT) via the for-profit exchanges.
How much would it “cost” the primary dealers to manage the markets using leveraged derivatives, assuming a complicit counterparty or counterparties?
Hypothetically, if the banks wanted to keep the SPX to no lower than, say, 3% to 7% of the 200 dynamic moving average (DMA) indefinitely, thereby keeping the 200 DMA in a steady uptrend, what would it cost? A few tens of billions at the margin?
If one or more parties could leverage 10:1 futures and then 10:1 again with options, it would cost a small fraction of banks’ ~$13 trillion in assets and $1.7 trillion in cash assets.”January 3, 2013 at 2:00 am #6704
“Where Are the Bond Vigilantes?
The outstanding stock of U.S. Treasury bonds held outside American intergovernment agencies (such as the Social Security Administration but excluding the Federal Reserve) is about $10 trillion. The proportion of outstanding Treasury debt held by foreigners—mainly central banks—has been increasing and now seems well over 50% of that amount. Since 2001, emerging markets alone have accumulated more than $5 trillion in official exchange reserves. And in the last two years the Fed itself, under QE1 and QE2, has been a major buyer of longer-term Treasury bonds to the tune of about $1.6 trillion—and that’s before the recently announced “Operation Twist,” whereby the Fed will finance the purchase of still more longer-term bonds by selling shorter-term bonds. So the vigilantes have been crowded out by central banks the world over.”January 3, 2013 at 3:19 am #6705jalParticipant
So the vigilantes have been crowded out by central banks the world over.
They are keeping the interest rates at zero. End of story.
The vigilantes are so old school.
Its a good thing that they have erectile disfunction and are left impotent. Otherwise, their action would crash the system.
They used to be be in the drivers seat.
Now all they can do is grit their teeth and hang on for the ride.
Why do you think China is running around the world trying to exchange its US money for assets that they can use to generate more cash flow/real wealth.January 3, 2013 at 5:35 am #6706mrawlingsMember
We can try to save Civilization and the Environment -or- we can try to save the Economy. The we have a slim chance with the first option, failure in the second is axiomatic. But we will forge ahead with the wisdom of reindeer.January 3, 2013 at 8:42 am #6707ProfessorlocknloadParticipant
“So the vigilantes have been crowded out by central banks the world over.”
The vigilantes are in the bonds. Holding on for survival. There must be a profitable alternative for them to bolt. There isn’t. All is now nationalized by the Fed, which is attempting to present the illusion of functioning markets, in hope of somehow finding an exit strategy someday, from it’s ill advised seizure of…well…any semblance of free market functions. There is no exit door now. Only the ultimate destruction of the currency involved, wherever such hubris is practiced. This includes China. Wealth creation is not found in empty high rise apartments, in empty cities, either.
We are on our own.January 3, 2013 at 9:38 am #6708ProfessorlocknloadParticipant
“As individuals we need to drastically reduce our dependence on the runaway big systems, banking, the grid, transport etc., that we ourselves built like so many sorcerers apprentices, because as societies we can’t fix the runaway problems with those systems, and they are certain to drag us down with them if we let them.”
And there, my friend, you have it! The very essence of Liberty. The key. The individual. As Mackay put it…
“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.”January 3, 2013 at 11:23 am #6709
We all have our pet theories as to why the market doesn’t do what we expect it to. If we expect it to crash, and it doesn’t, its manipulation. Sure, maybe. But that is a lot of energy to expend just so we can prove that either we were right, or that but for Mysterious Intervention, we *would* have been right. The key being of course the very strong desire to feed our egos and “be right.”
My pet theory is very simple, and doesn’t require mysterious manipulation to explain the situation. The US economy has been growing based on ever-increasing debt levels for a long time now. This used to be primarily private sector focused, but now that the private sector is tapped out, its the public sector doing the heavy lifting, aided and abetted by the Fed’s total monetization of the public sector deficit.
As long as the public sector debt-funded “growth” continues, the market doesn’t require “manipulating” to keep going up. Its going up courtesy of all that debt-funded spending.
When the public sector spending stops, so will the growth. And then the market will tank, manipulation or no. It won’t be some inner cabal “shearing the sheep” (at least any more than normal), it will just be normal economic forces finally acting on an unsustainable system that finally ran out of lenders.
And of course every year that we take on more debt to keep the wolves at bay for just one more time, the more we will have to unwind when the debt funding stops.January 3, 2013 at 8:02 pm #6710LochParticipant
The problem with problems is one for philosophy.January 3, 2013 at 9:08 pm #6711SteveBParticipant
Just learned that his majesty is coming to town:
Don’t know whether I’ll bother to get a ticket, watch the webstream, or chop kindling.January 4, 2013 at 12:17 am #6713ChartistFriendPghMember
From The Boardroom: Hey Labor – Go Fuck Yourself https://chartistfriendfrompittsburgh.blogspot.com/2013/01/from-boardroom-hey-labor-go-fuck.htmlJanuary 4, 2013 at 4:32 am #6714hughoParticipant
Thank you for another well constructed blog, Illargi. We missed you the last few days . You are still one of a small group of voices telling us not what we want to hear but what we need to hear but I do think that we are well past the point of rescue. We are living in in two modes as James Schlesinger noted: complacency or panic. Despite a few intelligent voices in government, it is the elite at the top who just don’t get it, or if they do get it,wont say it. A few days ago Bloomberg reported that the House Speaker told Harry Reid to “go F— yourself” just outside the oval office, no less!. These are the donkeys leading us. Remember the old expression about the British Army in WW2 as “Lions led by Donkeys!”. Not too many lions left here in the good ole US of hay, I’m afraid. More like “Sheep led by donkeys.” I cannot see a future limned by meadows and others as anything other that what you laid out. Our shitwagon is starting to fly apart but Newtonian Laws are now in control with an object in motion tending to remain in motion unless acted upon by an outside force. I can think of one last quote, poorly paraphrased:” people will tend to do what they always done for as long as they can, until they can’t. And then they wont. Pax Vobiscum.January 5, 2013 at 6:43 am #6715
davefairtex – “We all have our pet theories as to why the market doesn’t do what we expect it to. If we expect it to crash, and it doesn’t, its manipulation. Sure, maybe. But that is a lot of energy to expend just so we can prove that either we were right, or that but for Mysterious Intervention, we *would* have been right. The key being of course the very strong desire to feed our egos and “be right.”
Is that why we have a judicial system, to “be right”? Or is it something much more fundamental, such as looking at ALL of the facts in an open and clear manner, determining guilt or innocence based upon those facts, and then, if guilty, the party can be put away so as to limit his/her ability to PROCREATE?
They used to hang people for stealing someone’s horse, trying to get “something for nothing”. Earlier societies used to either kill or eject the guilty parties, which made it a lot harder for them to pass on their genes. You either cooperated or you were out. This went a long way towards ensuring that sociopathic individuals were seen as unsuccessful, not something to emulate. Today, the sociopaths (because no one is going after them) are the “successful” ones. Go figure!
You are correct in saying that people “want to be right,” but this is more than that. The Internet is filled with people much more articulate than I (Automatic Earth, Charles Hugh Smith, Jim Quinn, etc.) who daily write about the injustices the elite have committed. Let’s have transparency. If I and so many others are wrong, I’ll be the first to step forward and say it.
There are many who just want to follow the “successful”, who say, “Leave them alone, I’m making bank,” but there will come a time when even these followers realize that they have been wrong. When morality, values, essential resources are stripped to the bone and there is nothing left resembling a society, they may regret the day they said “sure, maybe”. Because when there’s no one else to strip, when the bottom has been picked over, they come looking for followers too.
Pet theories? I think you know better.January 5, 2013 at 7:59 am #6716plumb localMember
Then there’s the example of the scientist describing the situation in the womb in the seventh month. Getting crowded and troubled. Eighth month worse and worse. Ninth . . . holy s%$t. Then the even more constricted birth canal and the immersion into a “new world” and lord-a-mercy a big flowing breast.
I don’t think this scenario is automatic, guaranteed or done for us, but I do think that this growth into limits and finding a way through (or not) is an evolutionary driver, how evolution works. Apparently there was a time when early life was poisoned by the growing amounts of oxygen in the air and it had to develop to “breathe” it.
My point is that this story may have some surprising developments.January 5, 2013 at 9:21 am #6717
I take it your pet theory involves Mysterious Manipulators. Ok. My pet theory is certainly no better than yours (all theories are equal in explaining the workings of a difficult-to-predict complex system) but based on my experience its one I give the highest chance of being correct.
The Cargo Cult folks believed in Cargo Gods. They were right – in a sense – but their painted rocks didn’t result in successful delivery of cargo, so we could say their theory was incomplete. Likewise, Mysterious Manipulators are those magical forces to which everything is attributed when things don’t go the way you expect, but this explanation is ultimately not helpful in predicting the way the market will go. At least, it hasn’t been to date.
Markets often function in what appear to be counterintuitive (magical) ways to people not so experienced in the ways of these things. Great earnings in a company can often lead to a fall in price. Terrible earnings lead to selloffs, and then immediate rebounds from which a rally forms. The announcement of QE3 led to an immediate stock market selloff. These are all explainable events – not using Mysterious Manipulators, but through market forces alone. But viewed from the outside, its frustrating, and thus magical (in a bad way) and it often doesn’t make sense.
A related issue that is very common problem with newer traders is the desire to “be right” whatever the cost, regardless of how badly a trade is going. This often leads to a big loss taken eventually (near the bottom, when the fatigue from loss is at an extreme point) rather than a small loss taken immediately. The newer trader will blame manipulators or bad luck, and double down (or more) in an attempt to “make back” the loss.
In trading, the desire (which we all feel) to “be right” is often fatal. Its far better to make money than be right. Doing that requires you to acknowledge when your trade is a losing one quickly, rather than endlessly sticking to your story (say about the market “being about to crash” throughout the entire 2009-2012 bull market) and pouring in more and more into a trade that clearly isn’t working out – and then blaming the whole thing on mysterious and invisible forces so as to preserve the ego.
An alternate approach is to look for more visible forces that could possibly explain the surprising 4-year bull market. That’s what I believe I’ve done.
Regarding injustice and the elites, I’m all for justice, and transparency. We should prosecute and convict every one of those bankers who committed mortgage fraud. The fact we haven’t is simply appalling. Corzine is just the latest perp that we’ve allowed to walk, and he stole a billion-six from his customers and gave it to JPM. Because he’s a bundler for Obama, he gets a free pass. Free markets require transparency in most things, and above all the rule of law. That failure of justice has been bipartisan, but I will dump a bigger chunk of the responsibility on the Republicans because I think they deserve it. Call it a 60/40 thing.
That said, this should not imply that the vast majority of market movement is to be explained by manipulators. Certainly intraday moves can happen based on trading trickery (anyone who follows the market has seen that) but over the longer time periods, the most effective and inexpensive manipulation happens in the minds of the participants through manufactured news releases and the resulting groupthink.
The true manipulation happens when the public is fed a series of news stories that get them to willingly take action – to leave the market in fear at the bottoms, and to buy in greed at the tops. One recent rumor after a sell-off in gold – “perhaps Paulson is selling his gold.” Bam, instant panic, even more selling, then a few days later once all the weak hands had been shaken out, a nice rebound.
But sometimes, markets repeatedly “break out” to new highs. Fund managers fear “missing out” on rallies and underperforming their averages, so they feel compelled to buy the breakout. Then buying pressure eventually subsides, fear comes back in, the market falls back, and the dip-buyers appear, providing support after a brief tumble. Rinse, repeat a few times, and you get a bull market.
That’s where we are right now. Am I recommending we buy stocks now? No. But in my world, the movements of this market can easily be explained over the longer term by money pouring into the economy through massive debt-funded government spending – there’s no need to have manipulators doing the heavy lifting when you get a trillion a year of new cash funneled through government directly into the hands of people. Our 2009-2012 bull market was funded indirectly through about 5 trillion borrowed and spent by the US Treasury. Not by Fed manipulation – at least not the direct kind where they buy stocks, anyway.
Occam’s Razor – the simplest explanation is more likely to be correct. We can all see the government spending and the low rates. Yet should we imagine that manipulators (whose behavior we can’t see) rather than the trillion PER YEAR of fresh money (that we can see) is the CAUSAL factor in our current bull market?
That explanation just smacks of painted rocks to me.
Manipulation does happen, but it doesn’t happen the way you think it does. In my experience anyway.January 5, 2013 at 2:00 pm #6718John DayParticipant
There is a reference even older and more perplexing than the Limits to Growth thesis, and it’s not actually different, but comes at it from a very different angle.
Some of the greats were involved in this project, but sadly, they are mainly known for their later efforts, which really don’t make the same point at all. This was brilliant in 1972.
January 5, 2013 at 7:01 pm #6719gurusidParticipant
Thanks for the article and Happy New Year to yourself and Stoneleigh. Actually its not that we build dams to ‘stop’ our land from flooding, but rather that they are built to ‘gain more land’ this is a vital but crucial distinction. For most of humanity its always about ‘more’; greed in other words, too much is never enough. Another example of this monetary gaining principle is in the use and abuse of such miracles as anti-biotics; these bacterial infection fighting compounds are routinely used by industrial factory farming and have allowed this process to grow to enormous scales. Problem is there are now growing numbers of superbugs that are resistant to anti-biotics.
And don’t get me started on the wasteful practice of harvesting ‘sharkfins’ this industry is but the last in a long line of stripping the oceans of all life for again primarily financial gain.
A kilogram (two pounds) of premium dried fin can fetch up to HK$10,000 ($1,290) in Hong Kong
There are a few societies that attempted a more balanced approach, such as the Tokagowa (Edo) period in Japan, though their population still grew. Some tribal peoples sought to manage their environs with a multi generational mindset, but generally these are the few exceptions to the general rule of human greed and ignorance.
It will be population that gets us in the end, shear weight of numbers on St Mathew Island Earth – but we won’t ‘know’ until its too late.
Sid.January 5, 2013 at 9:39 pm #6720isttMember
I agree with the premise that nothing will be done until things reach crisis levels. The solution will be heavy-handed government intervention. The solution eventually will be force fed. Populations will be greatly reduced to come in line with resource availability. It is inevitable. What sounds crazy today will be common place in the future. Forced sterilization, consumption and movement. There will be no tolerance for free speech and thought. We are already seeing hints of it today even in the US, a place once thought to be a beacon of hope, freedom and mobility.January 6, 2013 at 11:27 am #6721
Zeitgeist: Moving Forward. Great documentary (third in the series).January 7, 2013 at 12:47 am #6722rlmrdlParticipant
FB, you are an optimist. The size of government big enough to enforce such ideas over sufficiently long periods relies totally on the existing support systems for that government. Those supports will cease to exist, along with everything they hold up. In any case it would take years to sterilise enough people to make a difference. Apart from the armed resistance it would generate among the DNA driven, the scale and pace of the unfolding problem will defeat any such attempt.
We had a choice between early, effective action (including forced sterilisation if that’s what floats your boat) or messy, chaotic, uncontrolled natural forces working inside the tent.
We chose the second option 20 years ago, actually, we chose it when we collectively rejected The Limits to Growth. The only question now is when and how the late stages of the process will play out and how many of us will survive.
I admire davefairtex for being smart enough to make the most of the realities of the markets, I stay well away. But I do use them as a barometer of how much time I have to complete my own bridge to the future – whether, as an asthmatic and cholesterol carrying member of the species, I will personally make it is moot.
Every day I check the state of the markets and if they are rising or still bubbling along, I know I have a few more days at least to make progress. BTW, the trillions are not entering the economy, if they had we would have a very different, hyperinflationary situation. We haven’t because those trillions are locked into a small circuit among those with the power to trap and tap them. Its not a conspiracy, they are doing what they can just as I, on my 10 acres, am doing what I can.January 7, 2013 at 3:09 am #6723
I enjoyed the Zeitgeist documentary (the behavioral, indoctrination, planned obsolescence aspects), but it lost me at the 1 hour 30 minute point. Yes, I stupidly posted it before I had watched it all.
I kept waiting until the very end for them to address “limits to growth”, overpopulation, but to no avail. Somehow a central overseer will track and manage everything for us so we don’t run out of stuff – yeah, right! Ridiculous and utopian!January 10, 2013 at 1:21 pm #6738GlenndaParticipant
Overpopulation as a cause of reource depletion is an illusion.
I can’t find an electronic graph version of this world bank info, but I’ll try to put it down without the graph.
Percent of world consumption
0.5 1.0 1.4 1.9 2.4 3.3 4.8 8.1 17.6 59.0
1(poor) 2 3 4 5 6 7 8 9 10
So even if we killed off the bottom 50% of the population, we only save slightly over 7 % of resources. It’s the top 10% that are using almost 60% of all resources. And I’d guess that includes a very large part of the US middle class and up. Course, the middle class is sinking back down into its (wishing it was) working class roots. 🙁January 11, 2013 at 10:19 pm #6745pipefitParticipant
I pretty much agree with the entire article. I am little more optimistic with respect to one subset of the species, however. That would be homesteaders with internet access. There is a lot of technology and other really good ideas out there in the World, and many of them are making there way to the internet, for general use.
Here’s one incredibly simple example. Hugelkultur has ben around Eastern Europe for centuries (apparently) and Sepp Holzers has been practicing it in Austria for 40 years. But most internet postings on the matter are only a few years old, or less.
Basically, Hugelkultur is the practice of taking a fallen tree and burying it, and some other organic matter, under a foot of soil. Had the tree been left to rot on the surface, it would create energy (heat) and waste (CO2 and methane), with all three vented to the atmosphere over a 20 year period.
WITH Hugelkultur, all three are trapped in the soil, so you have less greenhouse gasses vented to the atmosphere, and you have heat trapped as well, for a longer growing season. You also have water trapped, making your bed drought proof!!!!
Ever read Asimov’s ‘Foundation Trilogy’? They knew the empire was going to collapse, so they designed a way to preserve centuries of technology, so the next wave of the race wouldn’t have to start from scratch, reinventing the wheel and everything else. Same deal here, I suspect.
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