Guest Post: The Financial Super-Storm of 2013

Tyler Durden's picture

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The next "Frankenstorm" to hit New York will be financial.

The destructive whirlwind that hits New York in 2013 will be a financial Frankenstorm.

Four years of glorious central-planning "extend and pretend" have enriched the political and financial Aristocracies, and imbued them with a bubble-era hubris that they have indeed gotten away with murder: the $6 trillion the Federal government borrowed over the past four years, the Fed's $2 trillion in fresh cash, the Fed's $16 trillion bailout of the banking sector and various perception management manipulations have righted the storm-tossed ship. All those with power in 2008 remain in power and all those with outsized wealth in 2008 still hold their outsized wealth.

The global tsunami of borrowed and printed money lifted the water-logged dinghies of the debt-serfs enough to give them hope of better times; meanwhile, their adjusted income has declined 8%: they are poorer while the neofeudal Aristocracy is much wealthier: same as it ever was, right?

Except the financial tides and winds have shifted, and the linearity of central planning is about to be disrupted by nonlinear, positive-feedback storms. Let's list a few of the major storms brewing:

1. Destabilization of the euro. I have covered the fundamentals many times here:

 

The European Model Is Also Doomed (February 7, 2009)

When Debt-Junkies Go Broke, So Do Mercantilist Pushers (March 1, 2010)

Why the Euro Might Devolve into Euro1 and Euro2 (March 2, 2010)

Why The European Union Is Doomed (March 28, 2011)

Why the Eurozone and the Euro Are Both Doomed (June 23, 2011)

Three More Reasons the Eurozone Is Doomed (September 22, 2011)

Yet Another Reason Why the Euro Is Doomed (October 17, 2011)

EU Leaders Throw Europe a Plutonium Life Preserver (October 27, 2011)

What's Lost With the Demise of the Euro? Only What Was Unsustainable (November 22, 2011)

A Crazy Idea That Might Just Work: Greece's New Currency, the U.S. Dollar (May 14, 2012)

The Tiresome Eurozone Soap Opera Has Entered Re-Runs (June 18, 2012)

Sorry, Bucko, Europe Is Still in a Death Spiral (July 2, 2012)

2. The U.S. dollar will rise significantly, crushing overseas corporate profits that have lofted the U.S. stock market ever higher. I have covered the many positive feedbacks that will continue pushing the dollar higher. Dollar goes up, stocks go down.

What's Hated Most May Be a Contrarian Buy (U.S. Dollar) (April 19, 2011)

About Those Permanently Rising Corporate Profits... (August 12, 2011)

Why the U.S. Dollar Is Not Going to Zero Anytime Soon (July 23, 2012)

What Will Benefit from Global Recession? The U.S. Dollar (October 9, 2012)

3. The "China Story" runs off the rails. We are feeling the first stiff breezes from China's tidal paradox: as it starts pushing its neighbors around, resuming its Imperial ambitions, it undermines the source of its wealth, its export machine.

China has placed an informal boycott on Japanese goods as a result of the Senkaku Island conflict, which by the way cannot be resolved in the current paradigm. China, Japan and the Senkaku Islands: The Roots of Conflict Go Back to 1274 (September 25, 2012)

China's newfound wealth was always more fragile than true believers in the "China Story" could fathom. China had what it took to go from rural backwater to global industrial power, but it lacks the necessary foundation to move beyond that stage. Once the Eurozone and U.S. economies gather downward momentum, the export machine's inefficiencies and malinvestments will catch up with it.

And once that happens, the real estate bubble's inefficiencies and malinvestments will catch up with it.

China: Ascendant Superpower Or Just Another Nation with Structural Problems? (April 24, 2009)

China and the U.S.: Dysfunctional Real Estate Bubble Twins (January 21, 2010)

The Myth of "Decoupling" and the Chinese Consumer (September 14, 2010)

Why China's Housing Bubble Is Unsustainable (September 16, 2010)

Why The Wheels Are Falling Off China's Boom (June 15, 2011)

There are structural dynamics in play that supercede any national policy.

Neofeudalism, neocolonalism, financialization, centralization and consumerism have all reached the stagnation-decline phase on the S-curve.

Neofeudalism and the Neocolonial-Financialization Model (May 24, 2012)

The Master Narrative Nobody Dares Admit: Centralization Has Failed (June 21, 2012)

Financialization's Self-Destruct Sequence (August 16, 2012)

Is Anybody Else Tired of Buying and Owning Stuff? (September 7, 2012)

When these financial storms arise and feed each other, Wall Street and New York will experience losses that will exceed the hurricane Sandy damage by an order of magnitude, for the Wall Street Status Quo will crumble under its own dead weight.

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vast-dom's picture

bloody hell this storm was supposed to be here Sept 2011. NO ONE the fuck knows when she'll blow. pull all the charts in the world and you just can't guage with this unprecendented central bank meddling.

Mr Lennon Hendrix's picture

Stocks are going to collapse!  Europe is going to collapse!  King Dollar!

'If A then B' fallacy, bitchez....

krispkritter's picture

Operation Sandy Condom; Sandy for our 1st Frankenstorm and it's abrasive quality and Condom because: "A condom allows for inflation, halts production, destroys the next generation, protects a bunch of pricks and gives you a sense of security whilst you are actually being fucked..."

(thanks to 'tocointhephrase' for that last)

Ham-bone's picture

Seems alongside all the problems listed would be a helpful couple of columns. 

1) what is the likely countermeasure (print, change FASB, CME margin hijinks, CB swap lines, etc.)?

2) who among the global PTB would be served by a collapse and how would they position themselves for said collapse (close to the printers, buy real assets, etc.)?

Myself and many ZH'ers have grown agnostic on a '13 collapse (collapse, period) which means it's far more likely than most of us believe

AldousHuxley's picture

#7 war against anyone who refuses trade their commodities in dollars

 

well boys and girls. you live in American Empire. Make no mistake where and why you are "richer" than others.

Half_A_Billion_Hollow_Points's picture

our empire's rapidly imploding.  It won't be a slow process.

 

The twin towers once looked mighty too. 

TruthInSunshine's picture

True wisdom says nothing about our near future is ascertainable given the incredible, historic amount of meddling in the markets by the (fiat) money/debt manufacturers.

If you bought, sold or held anything in the last 4 years, you could be right, wrong, happy, or sad, completely dependent on your exist, entrance or stay put point(s), which theoretically could have been the product of deliberative thought & analysis and the correct decision, but was far more likely to have been just a gamble, or shot in the dark.

Welcome to the age of infinite uncertainty, in a brave new world aka SSDD) whose intermediate fate is thought to be (but which actually is not) sponsored by full fractional reserve central bank meddling.

IT WAS the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way- in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.

 

 

El Viejo's picture

why do all trend charts look like the one above or this one:

http://www.thehorizonproject.com/earthquakes.cfm

 

TPTB_r_TBTF's picture

 

 

charts in our dimension are the inverse of timewave zero

Charts will revert back like you knew them before once we pass through.

john39's picture

in its early stages, World War II in Europe was referred to as the 'sitzkreig'... 

resurger's picture

No Gold is the King when TSHTF

watch how they will ramp this bitch up by closing today.

Jason T's picture

Martin Armstrong knows.. 2015-2017

Dr. Engali's picture

I like Martin , but I believe he is overly optimistic with that time frame.

seek's picture

They're really good at kicking cans. When I've done my own analysis using Fed/CBO/Comptroller numbers, I keep winding up with 2016-2018, so I don't think Martin is all wet.

Thing is, we also know that the situation is highly non-linear, and the interventions have made it more so. Black swan amplifier. If we don't have an trigger event, I think the collapse will happen organically around 2016-ish, but if there is, you could very well be right.

The right combination of the wrong events could make the whole thing blow up in just a few weeks.

anarchitect's picture

Martin is a numerologist.

Spitzer's picture

he is an inflationist one day and a deflationist the next.

kinda like hugh hendry

Uber Vandal's picture

While I do not like Kiyosaki, his book Rich Dad's Prophecy, published in 2004, mentions 2016 as when TSHF.

http://www.silvermonthly.com/rich-dads-prophecy-why-the-biggest-stock-ma...

When I read the book, I agreed with his premise, but not how to prepare for it.

 

Dr. Engali's picture

You're right nobody knows when it will blow, but it sure feels like its being held together with old duct tape and cracked superglue.

Skateboarder's picture

It always feels like it's right around the corner... until it actually is. Then we're all like "HOLY FUCK BATMAN, NO ONE SAW THAT COMING." But actually, we did.

odatruf's picture

My grandfather held his upper dentures together with black electrical tape for more than 30 years. True story.

GlobalCtzn's picture

Made me smile. I suspect your Grandfather was smarter and tougher than these clowns 'trying' to hold this house of cards together.

Gully Foyle's picture

vast-dom

If we aren't kept in a current state of fear, how will we be controlled?

If we aren't constantly reminded of bad news no one would come here.

Don't view it as a collapse so much as a remodel.

The Soviet Union was a test case.

Some of the bugs were worked out, some are still being worked out in Europe.

"
My time coming, any day, don't worry bout me, no
Been so long I felt this way, ain't in no hurry, no
Rainbows end down that highway where ocean breezes blow
My time coming, voices saying, they tell me where to go"

Skateboarder's picture

100+ years of public schooling, MSM, and big corporations has destroyed the sanctity of information. The moment we stopped valuing information as a collective asset and started handing ownership of information to individual entities is when all went down the shitter (and this happened a looong time ago before the New World... or even the Old World). But no one gives a fuck, do they, not even at the expense of the collapse of everything. Let's go win some patent cases in some rigged courts and circlejerk each other to QEternity.

aerojet's picture

I'd rather live now that 100 years ago.  1912, yikes. 

Skateboarder's picture

The monkeys these days take every damn convenience for granted. I think it would have been a more fulfilling life without radio, TV, etc. Imagine having to play music in order to hear music.

BigJim's picture

If you'd been around back then you'd probably think like they did back then, too. So you'd have been a happy doughboy off for some sporting Hunshooting in Europe.

 

LouisDega's picture

Is that you Tom O'brien in da house?? Is this me?

Bay of Pigs's picture

Where does Smith think the USD will find support around the world? This kind of analysis is pure fucking lunacy.

He's been repeating this "strong doelarr" mantra for two years now.

akak's picture

To be fair, BoP, I suspect that rather than a "strong dollar", he means a less weak dollar --- less weak than its major fiat competitors, anyway.  But I agree, it is still bullshit.

vote_libertarian_party's picture

Sooooooo you're saying everything is fixed?

 

Well buy buy buy then.

resurger's picture

When the ship goes down, youd better be ready

Inthemix96's picture

Tyler,

Lets get this last two months of bullshit out of the way first.  Isreal has other plans for America long before 2013 pop up.

And if Robomany gets his arse on the seat, good fucking chance 2013 might be post-poned mate.

Sven Gali's picture

"When these financial storms arise and feed each other, Wall Street and New York will experience losses that will exceed the hurricane Sandy damage by an order of magnitude, for the Wall Street Status Quo will crumble under its own dead weight."

Yeah, but the Yankees should be better.  So, we got that going for us.....which is good.

LawsofPhysics's picture

So long as people accept paper promises in exchange for their labor, this can go on for a while.

When it does blow however, you better make damn sure that your labor is of real value or you have some other asset of real fucking value to offer in exchange.

Bring it motherfuckers, and fuck the paper-pushers and bernanke.

Gully Foyle's picture

LawsofPhysics

Value is relative and cultural. It reflects the society of the time.

Korzybski, the Semanticist, pointed out that anything of real value (RESCOURCES) has been bought up long ago by TPTB.

Labor has value. Skilled labor has more value.

But how does one put a price on their labor?

I just read some guy got pissed at telemarketers and told them his time was worth $16 per hour. He has taken some to court for payment.

Then again most of the world survives on less than a dollar a day.


LawsofPhysics's picture

Do you have a fucking point?  Nobody owns shit.  In a world where fraud is the status quo.

POSSESSION is the fucking law.  Be it immediate defensible possession, or possession by force.

Fuck semantic bullshit, if you don't possess fresh water, food, or fuel, you die.

Can the people of the earth become more efficient at survival?  Maybe.  

I guess we all get to find out now.

helping_friendly_book's picture

It all rolls into one and nothing comes for free,
There's nothing you can hold (own), for very long.
It seems like all this life was just a dream.

earnyermoney's picture

I take it you own productive acerage.

I've been thinking of moving cash to purchase farmland. Got any references on what to consider when purchasing land for crop production?

LawsofPhysics's picture

Yes, and you are about 20 years behind the curve.

odatruf's picture

You need less than you think and the best thing to understand is your growing region. Unless you want to supply crops for more people than just your family and close friends, even a 1/4 to half acre will produce a lot. You mentioned only crops, but if you want any livestock besides chickens, then you'll need more of course.

 

MrSteve's picture

Start reading. There were a lot of so-called counter-culture books written in the 1970s about going back to a simpler place and time.

If you are really serious, look up your state's county extension serivce. They help farmers and others. There is a ton of good stuff out there. I found a complete plan in Excel for a walnut farm:

www.agmrc.orgCommodities & ProductsNutsBlack Walnuts

First, you need to sober up to working 16 hour days and then you're ready to work the land. Grow something and share it. You'll find a lot of supporters pretty quickly that way.

Five Acres and Independence- see URL for $3 copies of it

http://www.alibris.com/booksearch?qwork=8380152

Finding and Buying Your Place in the Country- essential land buying info

-Essential Whole Earth Catalog

-Square Foot Gardening

 

Tango in the Blight's picture

I wish I had made a career in farming, carpenting or plumbing instead of business administration. :(

odatruf's picture

Unless you are already over 60, it isn't too late.

 

El Viejo's picture

I said the same thing about engineering in the manufacturing sector. Brother!

And I remember my father saying the same thing about the auto industry.

Truth is in this country it pays to have two careers. (or two divergent degrees)

RafterManFMJ's picture

I chose printing (money) and kicking (the can, down roads) working out well so far

bigrooster's picture

Why wish?  Just make it happen.  I have a business administration degree also.  Two years ago I bought a rental and remodled it myself.  I learned all of the construction, plumbing and electrical skills that I needed.  Then several months ago I bought 40 acres of farm/ranchland.  I grow a garden in my backyard and have four chickens.