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Long Periods of Drought … Followed by High Winds
Unlike economics, Wildland Fire Science is actually a science. Unlike economists, normal people actually know what the future holds. Debt matters, deleveraging is a bitch, and economist religious rituals ensure our destruction will be more severe and complete than any conceivable alternative. Beware the inevitable conflagration resulting from high levels of debt, followed by extended low interest rates.
One can get a college degree in Fire Science. Remember what it’s like to work in an actual professional discipline? Given a set of preconditions, experts in the field can utilize principles and understanding to deterministically predict a result within an acceptable degree of error. You know, Science.
Your local fire department typically deals with structure fires. There’s a lot involved, and it’s important. However, many of those principles, techniques, and equipment don’t translate over to the fundamentally different world of Wildland Fire Science. One professional may need to know more about electrical, chemical, and combusting metal fires, as well as dynamics within burning sealed structures; while the other deals with conflagrations that can go from zero to more than two thousand acres in a couple hours with changing behaviors in different biotopes and surface features.
Find a professional in wildland fire science. Speak the phrase, “Long periods of drought, followed by high winds.” A sane response by a seasoned professional in that field would be, “Oh, CR*P!”
A quick review:
Wildland Fire Science: A science.
Economics: Not.
The Yellowstone fires that burned more than a million acres in and around Yellowstone National Park in 1988 are an example of long periods of drought, followed by high winds. The Long Mesa Fire at Mesa Verde National Park in 1989 is another example, going from zero to over two thousand acres in a few hours, with 100-foot high walls of flames. Southern California fires in years with the Santa Ana winds are always a good example of “drought, followed by high winds”.
If economics were a science, or even a professional discipline, then every “expert” would similarly understand the corollary, “high levels of debt, followed by low interest rates”. Since economists (other than a very few, like Steven Keen) are too ignorant to say it, we shall say it on their behalf: “Oh, CR*P!”
It is hard to overestimate the significance of long periods of drought, which kills vegetation, increases fuels loading, and dries out even the largest diameter branches on the ground to the point that when they burn, they will do so completely, at high temperature, which can sterilize the soil such that no vegetation of any kind will grow on that spot for decades. Debt has the exact same effect:
Debt (Pro): Can increase productivity through leverage (if taken for productive activity, NOT for consumption).
Debt (Con): Always increases risk and decreases the risk-adjusted return on productive activities.
Debt is always a drag on productive activity, because it must be serviced. Debt tends to compound, unless future expenditures are significantly reduced (as debt principal and interest is repaid). Debt kills, as it increases risks associated with cashflow, and fundamentally changes the worth of productive activities (which must now be productive in excess of debt servicing and repayment). While it’s true that you might be better off by borrowing money for a productive venture, and later paying that debt off (i.e., leverage), you would have made more money if you already had the capital to do that venture without borrowing (because nothing would have gone to debt servicing).
Don’t forget the theorem: Deleveraging is a bitch.
Of course, these are “silly” arguments that apply to households, businesses, and any responsible (or accountable) institution. One might argue that they don’t apply to sovereigns (who never intend to repay their debt, but rather intend to forever “roll” their debt), or central banks (who merely print their way out of any corner in which they find themselves). While we might disagree on whether sovereigns and central banks can really operate like this over an extended period, we can all agree that past debt is always a drag on the present, even for sovereigns and central banks.
High winds merely amplify the speed and severity of what was already going to happen. Within any finite (relatively short) period of time, while it’s possible you won’t get a lightening strike, and it’s possible no camper will lose control of his campfire, increasing debt levels increases the probability that something is going to get started (e.g., it increases “fuels loading”). In time, probability dictates you will get that lightening strike, and you will get that out-of-control campfire. High winds ensure that inevitable event will spread quickly, and severely.
When debt levels are high, and have been high for an extended period, it’s the same thing as high fuels loading after extended drought. It’s inevitable that deleveraging will begin, and will be significant, even if you’re merely talking about the increasing roll-risk of existing debt. When those high debt levels coincide with an extended period of low interest rates, you can be assured that people have maximized their leverage, and dreamed up mechanisms for risk never previously imagined. When interest rates are high, there is at least a possible “pressure valve” of lowering interest rates (indeed, that’s what central banks for decades promised us was their job), and the cost of money helps ensure truly stupid ideas are not funded (because the money is expensive). However, with low interest rates, we are sure to fund even the most moronic bridges to nowhere, and there is literally no pricing pressure on stupidity (an infinite governmental resource).
High levels of debt, followed by extended low interest rates… Are these morons serious? This is an inviolable principle, if these economic imbeciles actually treated seriously their “field of study”. Aren’t these central planners supposed to be “adults” who dress themselves, tie their own shoes in the morning, and make themselves cold cereal before they go off to work to destroy people’s lives? What the hell are they thinking?
This is like surgeons in the 1840’s strutting around, “Hey, we’re surgeons, and our brains are HUGE, and hand washing is stupid, because we’ve never heard of these things called ‘germs’!” Surgeons continued to kill over a quarter of their patients for decades, including women delivering babies in hospitals, until the 1880’s when Pasteur extended Koch’s germ theory of disease. The murderers had no idea they were killing literally every one they touched, and were even so bold as to ridicule, show hostility, and discredit anyone who suggested hand washing was a good idea. Poor Holmes. Poor Semmelweis.
Our central planners in our central banks are religious nuts. They show none of the attributes of professionals in a disciplined field of study, and all the attributes of brain-dead zombies performing ritualistic incantations (like the banks they pretend to manage and regulate). Our treasury departments are equally insane. They refuse to wash their hands as they un-invitedly break into each of our homes to devalue our currency, and ensure sovereign defaults worldwide. They have muddy feet too.
“We’re economists, and our brains are HUGE, and we can have free lunches FOREVER because we’ve never heard of this thing called ‘debt’!” There’s no possible way to engineer a setup for more complete destruction. Murderers. Morons.
Being charitable: Economists have a different world view from “normal” people.
Being non-charitable: Economists are literal economic and common-sense morons.
By artificially forcing interest rates too low for an extended period, economists are literally fanning the flames of stupidity. When deleveraging begins, the rates will rise sharply, causing a feedback loop that explodes the conflagration of debt unwind to the point where it will annihilate everything in its path. Can this be avoided? Not anymore, with Captain Jackass at the helm ensuring that little old ladies can no longer live on their fixed income CDs. We’ve already had our record levels of leverage and our extended period of low interest rates.
It’s a good thing economists don’t have any professional standards, or they would be guilty of professional incompetence. It’s a good thing they remain unaccountable to society, because their actions are criminal negligence.
When a fire science professional screws up, someone usually dies, and the professional goes to jail. When an economist screws up, people lose everything they have spent a lifetime accumulating, people starve, nations fall, we go to war, and millions die. Economists will then pretend to tweak their theories and go on book tours.
How hard is this to understand? With high fuels loading, you will get a fire. We hope and pray the acreage burns when we have high humidity and low winds, to ensure it doesn’t burn too hot and too fast. That helps ensure the destruction is not *so* complete that nothing remains. It’s silly talk to say you won’t get a fire, because that immediately disqualifies you from any sensible participation in the discussion with actual adults.
With record high debt levels, you will deleverage. We hope and pray the deleveraging occurs when you have a relatively healthy economy (ha!) and relatively high interest rates (ha!), to ensure leverage remains only for productive activities (ha!) and deleveraging starts with non-productive activities (ha!).
We are in a period of record high debt levels, followed by an extended period of record low interest rates. Oh, CR*P! At this point, because of the debt levels and leverage, raising interest rates is impossible (nearly all sovereigns would default instantly with even a one or two percentage point increase in interest rates). CR*P! CR*P! CR*P! Even today, we are held together only through accounting fraud collusion among private institutions, central banks, and sovereigns. (Yes, we’re talking about go-to-jail fraud.) CR*P! CR*P! CR*P! CR*P! CR*P! CR*P! Still, we can be assured that defaults will inevitably happen, and interest rates will inevitably rise. These private institutions, central banks, and sovereigns are all toast. Pathetically, they all earned it.
The ship has sailed, and we are betrayed by the economists. Central banks and sovereigns the world over utterly failed in their job, not that they were ever qualified to do the job they pretended to perform. We will get a spark. Some happy camper will be irresponsible with his adult beverage around the too-big campfire. When the spark happens, a million acres burning across Yellowstone will look like a cute evening of nostalgic fun.
No, at this point, there is no way out. Thanks a lot, you friggin’ central planning feeble-minded morons! Unlike you, normal people can actually do the math. Even now, you economists won’t recognize your utter failure in your “field of study”? You pretend to use big words, but it’s easy to recognize them as merely confused baby-mumblings. Clearly nobody should have let you wear “big boy” pants. In the true mark of immaturity, you won’t even admit to the increasing stench from the pile of brown stuff in your underwear. Who the hell do you think will actually have to clean up that mess?
Mammas, don’t let your babies grow up to be economists.
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The elk were not photoshopped. That fire was in the upper bitterroot drainage, near darby, mt.
I don't get why a 'smart economist' -what we fondly refer to here as an oxymoron- the guy in Australia that posters admire- would sell a tangible asset, like a house, that provides shelter, and go to cash, which is debased, and has no value? Granted, the home ties one to a geographic locale, but hopefully when we chose to buy we were aware and made a rational, well-thought out decision about the location, community, and amenities.
I know a good, worthwhile economist that does good because... check out Headwaters Economics in Bozeman, MT... they provide hard data and analysis which is pointing out the value of protected federal lands to local economies. Unmasking the true heavily subsidized unwarranted cost of allowing McMansions / sprawl in the urban-wildland interface. Their findings are slowly impacting local communities as their work influences decisions by lawmakers.
Those are separate issues.
For example, is it inflation or deflation? Do you bet your life? If you bet your life, then you must be ready to die. The decision will be explicitly made for inflation or deflation, but not by you or me.
I asserted that he's an economist, behaving as an economist. He's not an investment guy. He doesn't do stock picks.
Separate are issues between economist vs. investment guy, and separate are issues for goldbug vs. not-goldbug. Finally, separate are issues for whether you think it's a good idea for you to continue making interest payments on a depreciating asset, and whether I think I should, especially when we're talking about personal financial decisions (for immediate and extended families, with knowledge of current and future job opportunities, knowledge of current and future financial liabilities, etc.)
You're going to criticize an individual for making a personal decision about buying or selling a house? Wow. That's out there.
Informative, interesting, and entertaining to boot - Bravo! I lost a few I.Q points listening to the mainstream news this morning, and I thank you for assisting in their recapture.
While you have laid out a clear case with respect to economists in general, I would contend that you are overlooking a much more sinister enabler of the coming clusterf*ck: the media. Over and over I read in the posts and comments on this site an undertone of 'how can they get away with this?', 'why aren't more people angry?', etc. It's because, aside from a few inquisitive minds that frequent sites like ZH, most people get their information from the nightly news or the newspapers or CNBC and therefore basing their opinions on propaganda and misdirection.
Borrowing from your wildfire analogy, not only are the lookouts not warning the populace of the danger and the approaching flames, they are picking off any first responders who would organize the firefighting effort. They play whack-a-mole with any potential leader who might lead the cause, ridicule those who would pick up shovels to help, and marginalize or make sure no one hears the voices of warning calling out from the trees.
As one who has recently become more aware of how my beliefs were subtly being shaped by where I got my information, I can only sit back in awe at how effective NPR, CNN, FOX, NYT, etc. spin stories to fit their agenda (political or economic) and keep the herd docile. I am pretty sure that the idiot economists, politicians, and bureaucrats currently running the show would be thrown out in short order if more people had a little more awareness regarding what is going on. That's why I find hope in sites like ZH, as well as certainty that as more such outlets of less biased information gain popularity, a significant effort will be directed at silencing them.
Those pictures were photo shopped. There were no damn elk standing majestically watching the fire from the river. The wind at the base of the fire was 60 mph going in. It fed an absolutely incredible wall of flame. The sky above was totally black except for the pieces of burning wood being carried aloft to start a another fire and trap you from behind. Objective reality is an absolute bitch and can become most unpleasant. Usually it's deadly to someone just not me, yet. But at least I'm cognizant of that. I don't think the bankers and politicians and traders and other types are even cognizant of what happens when bad things happen. My only real question is if these people can avoid the guillotine. Americans get real nasty once they figure out that they were screwed which is why the evil bastards will most likely start a war. Not a good time right now. If you are unfortunate enough to know where you are.
Bullshit on economics not being a science.
Just because opinion plays a role doesn't mean it isn't a science. Science has lots of opinion in play. Consider climatology. Despite supposed "consensus" AGW, there really is none. They have simply muffled those who debate the facts.
Quantum Physics had years of opinion which slowed its development and even now String Theory has supporters and detractors.
Science is about EXPLANATION. Prediction can be a side effect, but isn't necessary. In general, economists agree about many things at the root of the science, such as the role of supply and demand on price, what constitutes market anomalies or imperfections, and that people are not always rational (and hence the growth of behavioral economics).
But economics, since purchases are frequently driven by desire - a psychological factor, must also engage their role of psychoanalyst to the masses. This is where the supposed lack of science comes into play. While science DOES take effect, it's more like quantum physics - very theoretical and based on statistical probabilities. Hard to always understand and get exactly right. Quantum Physics has come a long way, as has economics, since the 1930s.
But it is not a perfect science. And as a result, the lack of perfection is held against it as a sin.
On the other hand, medicine is not always an exact science, either, as doctors sometimes misread the body's signals, or the body sends odd or different signals. But we still consider the doctor a "scientist" even though he can be wrong. Or have a different opinion than one of his compatriots.
Not so Economists. Why not?
People have biases (opinions, philosophies, reference frameworks, whatever you want to call them), but those are irrelevant to science. As a scientist, your job is to establish controls such that those things are irrelevant.
Science: Idea ==> test
If you don't do that, you're not science.
"Climate science" is a science. It has nothing to do with what you hear in the news, and there is no such thing as "consensus" in science. Science operates under demonstrable principles. However, I concede that some fields are fundamentally difficult, (e.g., "ecosystem science") because terms and driving principles are harder to "pin down".
No. If you want to go that route, then science is about understanding. However, it is not science just because you assert an internally consistent tautology. Rather, if it's science, you can demonstrate actual proven principles.
For example, "God created the world." There -- I just explained that to you. You will never prove it wrong. Therefore, I am forever right. However, that's not science because the assertion is fundamentally untestable.
This also fails understanding. Why did He create the world? A scientist would accept no assertions regarding "why" unless they were demonstrably tested.
I don't know where you're going with this, other than yes, lots of complicated things happen every day, and no, I don't know at what price the S&P500 will close tomorrow. That's not science either.
It's not a science at all. "Lack of perfection" is a straw-man argument (nothing is perfect, no expectations exist that any field be perfect). Sin is irrelevant.
Rather, my complaint is that economists don't wash their hands, and have no idea what they are doing, kill millions of people, provide nothing good that we wouldn't have gotten had they never been born, and economists don't even have the discipline to keep a scorecard of their abysmal record and all the deaths they cause. It is inexcusable that society puts them in such positions of power.
In short, economists are Alzheimer's patients wandering around, bumping into walls and each other, while discharging fully automatic weapons.
Medicine is a science. There is ample room for human error, and it can be fundamentally complex (e.g., no two forms of cancer are the same, each based on the genetics of the individual.) However, medicine has established controlled tests, dose-response curves, clinical pathways for diagnosis and treatment, and solid documentation.
I accept your phrase "not an exact science", and suggest a rephrase, "medicine is an imperfect science" because we understand the "degrees of freedom" in what we predict to be the result can be quite wide. For example, we are usually highly confident that aspirin will cure a headache, but in atypical cases it won't (depending on the source of the headache, the individual's physiology, tolerance for the compound, interaction with other medications, etc.) However, even in the case where medicine tries experimental procedures, the field has the discipline for that to ONLY occur after potential was already demonstrated, and we can clearly illustrate and explain in detail what the procedure ideally might do in an individual case. Finally, unlike economics, the medical scientists will write down the results of their tests and keep track of how many people they killed, so they can learn from their mistakes.
Science doesn't require you to always be correct -- it requires that you know when you are correct.
i hope someone marks your post as junk - i am
too lazy to log in to do so....
This post defines our US culture.
"Our central planners in our central banks are religious nuts. They show none of the attributes of professionals in a disciplined field of study, and all the attributes of brain-dead zombies performing ritualistic incantations "
so well said....and they do their incantations like most protestant clerics - in total disbelief knowing that they are pounding sand up someone's ass to hide their own wicked works....
great vent. nobody gets out of this shit house alive.
A brilliant piece.I have 2 questions.You sight Steven Keen as being one of the few economists who understand the current sitation.Does he not believe in deflation?How do you have rising interest rates in a deflationary enviroment.
How do you reconcile the very low rates in Japan with their rising debt levels?
He does believe in deflation. He's not a goldbug, (doesn't really comment on metals), and he thinks everything is over-valued (e.g., he's sold his house). He currently thinks people should go to cash.
However, realize that he doesn't really comment on investment philosophy -- the above is stuff I gleaned from reading a lot of his work. He's an economist, and not really an investment guy.
Where things get interesting is that as an economist, he cannot calibrate towards the idea of a confidence crisis (i.e., currency collapse). He understands it is a very real risk, but what are you going to do against that? (That's really social and political speculation, and he doesn't do that, because he's an economist.)
Interest rates directly reflect risk. People will not loan because they fear they will not be paid back. Rates will rise because nobody will trust they will be paid back, so nobody will loan. (Rates can rise during deflation as well as inflation).
This is a *huge* topic, google "The US is not Japan" (or "The US is Japan") and see the differences in creditor/debtor status, import/export, culture of saving, demographics (Japan is so screwed), etc.
No matter how you slice it, the dollar is the world reserve currency, so things are a little weird and different between us and Japan. Japan owns the carry trade at present, and we don't.
I think there is an aspect missing to the topic. I believe one major reason the discreditied economic theories of our leadership were adopted is because they rationalized the ability to make the most money for the oligarchy. donations, job hires, over time reinforce the faulty oparadigm and you get a conspiracy of thought. Other economic models will limit earnings, bonuses. So no wonder they don't get advanced. this is wy you get idiots like greenspan and berneke there (yellen to be new vice chair). those that own the system ensure the sytem adopted enahnces theor power. This happens in any and all systems.
The real problem arose when the financial system was able to own the fed. If you believe in austrian economics you don't get the jobs, you don't move up the corporate ladder, you don't get the consultation fees, and you are excluded from the power structure. Just look at those in power and look at those who aren't. People like Faber have to go it alone because they advance a theory of thought that would rduce the incomes of those in power.
This is no different that a communist system, or a theocracy. Those in power work to advance and maintain the systems that give them power. Over time, esp in the UNited States, we have come a believe the accepted dogma like a religion. Just look at all the poor whate trash that keeps voting against theor own economic interests as they move ever lower on the economic ladder because of the evils of socialism, communism, etc. The propaganda machine has become so effective that people don't even realize it.
I love how communist Russia was evil, and communist China
is the place we have shipped all of our factories. In essence we have allowed a dysfunctional belief system to take hold that people can't see through. in reality evil is those systems which don't allow our corporations to maximize their profits. We are too stupid to see through it.
totalitarian governments that allow us to profit are OK, deomcratic socialist systems (that don't allow max profits) are the enemy and we assinate the leadership of destabilize them (Chile). Why did we embrace Pakistan but shun democratic/socialist India for years? the real issue is money, nothing more. Why is Venezuela a threat, cuba, they aren't. But if they succeed they are a threat to the ownership class of our system. That explains why we do what we do.
Fairly stated.
If I may be so bold (please feel free to correct):
We agree. I even agree that corruption, and today's forced looting of the public coffers is perhaps one of the biggest reasons for (1) above (i.e., it has nothing to do with economics, and everything to do with paying mercenaries to rationalize forced looting).
However, my assertion for (1) above stands (the mercenaries themselves are morons), and I assert the world would be better off if we provided a free open bar on some South Seas island, only for economists, arranged for their free airfare to attend the party, and just before midnight we set off a nuclear device from within the sparkly disco ball.
I know the media is full of morons too, but come on, these economists are rock star gods, never to be held to account? It shouldn't take much effort to publicly disembowel a few of the morons and feed their body parts to cats for our entertainment.
+1
Jim Sinclair’s Formula:
September 1, 2006
1. First interest rates rise affecting the drivers of the US economy, housing, but before that auto production goes from bull to a bear markets.
2. This impacts many other industries and the jobs report. An economy is either rising at a rising rate or business activity is falling at an increasing rate. That is economic law 101. There is no such thing in any market as a Plateau of Prosperity or Cinderella – Goldilocks situations.
3. We have witnessed the Dow rise on economic news indicating deceleration of activity. This continues until major corporations announced poor earnings, making the Dow fall faster than it rose, moving it deeply into the red.
4. The formula economically is inherent in #2 which is lower economic activity equals lower profits.
5. Lower profits leads to lower Federal Tax revenues.
6. Lower Federal tax revenues in the face of increased Federal spending causes geometric, not arithmetic, rises in the US Federal Budget deficit. This is also true for cities & States as it is for the Federal government.
7. The increased US Federal Budget deficit in the face of a US Trade Deficit increases the US Current Account Deficit.
8. The US Current Account Balance is the speedometer of the money exiting the US into world markets (deficit).
9. It is this deficit that must be met by incoming investment in the US in any form. It could be anything from businesses, equities to Treasury instruments. We are already seeing a fall off in the situation of developing nations carrying the spending habits of industrial nations; a contradiction in terms.
10. If the investment by non US entities fails to meet the exiting dollars by all means, then the US must turn within to finance the shortfall.
11. Assuming the US turns inside to finance all maturities, interest rates will rise with the long term rates moving fastest regardless of prevailing business conditions.
12. This will further contract business activity and start a downward spiral of unparalleled dimension because the size of US debt already issued is of unparalleled dimension.
Therefore as you get to #12 you are automatically right back at #1. This is an economic downward spiral.
http://jsmineset.com/jims-formula/
I am Chumbawamba.
Who gives a cr@p about deleveraging??...
This rocket is pointig DOW 36K.
BUY BUY BUY!!!
And when an important country becomes "Lehman Revisited" (Greece is small potatos)....
then SHORT the CR@P out of this PONZI World mastered by BUBBLAMERICA!!!
fire = money / wind = velocity
When the wind speed is low, the fire burns slowly and lowly and the forest gets a healthy refresher.
When the wind speed is high, the fire burns hot and fast and takes out the forest, leaving destruction in its wake.
money = fire / velocity = wind
I am Chumbawamba.
As long as we use paper (fiat) money, the human factor will be involved, and the human factor and math. equations don't mix very well. LOL
Great article!
CCCP
Debt is ultimately just a tool to pull demand forward, a key requisite of an instant gratification culture. The government, the central bank, the economists et al are just the devices to enable this axiom of present day "mankind".
As usual, the real enemy is just a mirror away.
Keep one foot in the black and know your escape routes.
America is trapped in a box canyon, and prevailing winds are moving uphill with increasing velocity. The fire is fast approaching. Note: Somehow America skipped inspection (too busy eating donuts for breakfast); got fire shelter?
+1 LOL
(It's surprising how apt that happens to be in today's economic climate.)
None of us is dumber than all of us.
The deleveraging started almost two years ago.
The silent hoarding will soon become deafening.
And after the conflagration and the land lies bare, comes a strong wind with endless rain. No one wants to be at the bottom of the mountain.
"BURN BABY BURN..."
who gives a crap about the past that will soon cease to exist?
there are better things to do today like plan and build for the coming tomorrow....
the only problem is where do we bury the stench emanating from the deluded fools circling in the vicinity of washington d.c. looking for their final free lunch ?
FREE AT LAST
Venting + Clarity of thought = A VERY entertaining read! As we drift down river, more and more of us hear a faint, but growing sound... Even Victoria Falls begins as a distant hiss and a faint vapor cloud. As for the authors analogy, I feel like one of those deer standing in a creek, watching the fire get closer, feeling the heat...
“The wavelike movement affecting the economic system, the recurrence of periods of boom which are followed by periods of depression [recession], is the unavoidable outcome of the attempts, repeated again and again, to lower the gross market interest by means of credit expansion. There is no means of avoiding the final collapse of the boom expansion brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of voluntary abandonment of further expansion, or later as a final and total catastrophe of the currency system involved.” Ludwig von Mises
Tee hee!
Time to burn this f#cker down!!
Yep, and when you attempt to tame/suppress the natural process the end result is far worse.
Great use of analogy...
And no doubt BB will be attempting to put the fire out with QE3 gasoline! ... the 'mother' of all QE's.
(Trillion dollar loans to the TBTF's and friends to support (purchase) real assets before the dollar and thus the same loans become worthless... )
White man build big fires and stand far away. Indians build small fires and stand close. Economists are hung up on the assumed necessity of growing economies and everyone happily goes along with it. Grow or die is the refrain. So we build the fire bigger and bigger, consuming our resources at faster rates, until the point is reached when their is no more fuel at hand. The inevitable endpoint has to be recognized. It never is which confounds me as a person who has spent some time studying the dynamics of natural populations. You know that useless science of biology. The concept of conservation needs to be embraced again. Better to have a slow controlled burn than a raging wild fire that scorches our hair and leaves our backsides cold, or worse trapped behind a wall of fire (great pic!).
White man build big fire--stand way back, burn on one side freeze on other. Indian build small fire--stand over, stay warm.
White man build big fires and stand far away. Indians build small fires and stand close.
Except in Moosonee during bug season!
good article. Thank you.
You....my friend have your act together...
So let's take a guess as to how this will end....
I smell 20 to 30 lost years....
The main reason being the failure to make necessary structural changes with regards to the taxation model....
One way to view this is as a simple cost plus equation...
f(x) = tax + actual costs + equity + income
There is not one policy change or murmur that would make the above equation more positive....
All govt. policy mentions to date ....turn the equation far more negative....and furthermore the data is flawed in the sense that the %1.2 Trillion + on the FR books is more like .2 $ Trillion ...if that....
Thus just like Japan...there is no construct to build from....the base is fake....
My friends...the US goes nowhere but down as the equation gets more negative....
And must go down with real valuations before it can move up....
The current polycake fools want fake props and populist ice cream....
There is nobody home or willing to do the tough stuff....
Just padded babycake people....
I say get em out...and get somebody that will pull the trigger....
Not sure why everyone believes that this situation is like Japan. Japan has been going through a structural shift from a growth oriented export economy to a more or less stable steady-state economy for the last couple of decades now, and will likely continue to do so for the next decade as the oldest segment of their population dies off and their age distribution starts to renormalize back towards a more cylindrical or even youth oriented distribution, one working hard to become energy self-reliant and localized.
The Japanese have experienced overpopulation and population collapses before, have gone the empire route only to have it collapse, and have been witness to venal bankers and incompetent politicians, will do so again, and will move on.
The US, on the other hand, has had only one period of major economic collapse (the 1930s), one period of extreme divisionist politics 150 years ago, and has, for the most part, been an export economy for the last two hundred years. Since 1700 there has been a socio-economic crisis about once every eighty years or so - 1770s, 1850s, and 1930s and we are on the precipice of the next one (2010s). These tend to play out over a period of 16-20 years, and usually result in a profound realignment of the political and social order.
Your wildfire analogy is actually pretty apt here. Naturally occuring fires tend to be cyclical - after the conflagration has gone through, it typically puts a lot of ash and nutrients into the soil, but it takes a while for external species to establish enough of a foothold to form ecological systems. At a certain point, you may have smaller brush-fires that tend to prune back excessive growth - cyclical recessions, where supply gets ahead of demand. Yet over time you get more build-up of risky growth (whether in trees or investments) and you start walking a Markov chain. There is typically a period of meta-stability near the end of that period as you get rapid growth (often finance driven and mistaken for prosperity), until eventually you get a collapse. The economic collapse occurs first, the socio-political collapse occurs about a decade later.
Once the smoke clears, the economy that we'll end up will be more of a steady state economy, distributed, generalized electrical rather than petroleum based, and much more oriented towards sustainability than growth. While salaries may stay even or fall slightly, large investment-based fortunes will decline dramatically, resulting in a renormalization of income distribution. However, there's going to be a lot of conflict between now and then.
Taking the forest fire analogy further.
The lighter fluid in this fire is credit.
This lighter fluid has started to burn out. Consumer credit has fallen, while total savings has increased.
The amount of fuel on the ground has actually increased, just been replaced with a different type: total debt is up, government debt has more than replaced the drop in consumer credit.
This new type of fuel is more explosive and combustible, "nitroglycerine" in Bill Gross' terms
The result is the potential for a larger, more explosive forest fire: a currency crises is worse than a banking crises.
Grow...or die. There is no steady-state over the long term.
Everything in nature is cyclical. There is no such thing as growth.
Grow or die will kill the planet. No where to turn. Inflate or die or just simply die. The endgame.
Very entertaining article.
As noted, we are past the point from which recovery is possible.
The empire burns.
Let me know when you see fire: http://www.youtube.com/watch?v=hT-po-tmJRc
WATCH THIS VIDEO; "isolated pockets of fire"..."then we will knock these flames down." Firefighters know best......
Wow. He must get paid by the word.
He can compress the most words into the simplest idea -- to paraphrase Abraham Lincoln
A fair point. ;-))
As you might notice, this was a "venting". I've become increasingly frustrated at the stupidly qualified statements by the "experts" that utterly refuse to recognize the very obvious facts before them.
We have a live action video of the shooter, discharging the firearm, spewing the victim's brains all over the sidewalk; and the reporters still insist on qualifying their statements with, "...the alleged shooter."
I greatly enjoyed the vent, thank you!
Nicely and effectively stated. Even a (bright) child can understand what you're saying. Even economists! But can they heed it? Not most, I fear. Just the intellectually honest ones.
-AnonymousZero
The world is the tinderbox, and all that's burning so far is a little bit of straw under the wood chips.
Wait till them big ole logs reach flashover in , oh , say about 1.5 years.
Watch out for that backdraft!
-MB
The fire is crowning; spotting is occuring far beyond the line; PULL OUT ALL UNITS! COPY.