Guest Post: 10 Factors In The Timing Of The Next Crisis

Tyler Durden's picture

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Here are ten possible factors in why it's so difficult to predict the timing of crisis/reset.

Doom-and-gloomers (myself included) have been wrong for four years. The financial markets continue higher, and the excesses of the status quo continue expanding with little ill effect (so far).

Why is it so difficult to predict the timing of the onset of crisis/collapse? The question is equally valid for both bears and bulls; how could all the boosters of housing be so wrong in 2008 when they asserted that "housing is not a bubble"?

I've assembled ten possible factors in why it's so difficult to predict when the next crisis/reset will occur:

1. Everyone in the status quo has a stake in its survival. Every one of us wants to get our social security, our disability, maintain the freedom of a personal vehicle, have access to clean water and all the other goodies, and those becoming (or maintaining) wealthy and powerful in the current system want to retain their wealth and power.

There are titanic forces that will bend whatever needs to be bent to keep their share of the swag flowing to them. This is just as true of the welfare recipient as it is the global corporation or politico. We shouldn't underestimate the power of this desire to maintain the status quo and bend perceptions to make that appear as if it is not just possible but inevitable.

Consider the housing bubble and bust. Look at the forces benefiting from the bubble: the 2/3 of all U.S. households that owned homes, the entire financial/mortgage/Wall Street investment bank complex, mortgage brokers, realtors, the media that profited from housing/mortgage-related adverts, and last but not least the government, which reaped huge gains in property and income taxes as a direct result of the bubble.

On the other side of the bubble: a handful of marginalized analysts and bloggers, virtually none of whom would profit from the bubble's implosion. Guess which side had the momentum to inflate the bubble for years after it became obvious that a vast credit/real estate bubble was already in place?

2. Self-referential systems with numerous feedbacks are inherently difficult to predict because the forces we extrapolate into the future are adapting under various selective pressures that feed back into each other. Innovations that seem small can trigger outsized consequences (for example, the web, fracking, etc.).

In this context, it's worth recalling an anecdote about Bertrand Russell. A young critic detailed a previous position Russell had taken and noted an inconsistency with his current position. Russell declared, "Young man, I changed my mind." We're allowed to do that as new dynamics emerge and what we extrapolated as critical turns out to be less critical than some other factor we dismissed as minor.

3. Systems feed on the herd instinct of humanity. Real estate was visibly in a bubble in 2004, at least in key markets, yet the bubble continued expanding for 3 more years as the herd drew in skeptics. Those of us who declared the bubble in 2004 were wrong for three long years. The dynamics of the herd overpowered rationality and prudence. Humans will thunder over the cliff just like other herding animals. Just keeping the ability to make independent judgments and sort data without ideological filters should be a key goal.

4. There is a body of sociological study that looks at how what we perceive as risks defines our ideological/sociological world view. Risk assessment by groupthink is very powerful: we are moved by what we perceive to threaten our world view. Hierarchical types see different risks than egalitarian types, for example. This line of analysis goes by the academic name of "cultural cognition of risk."

5. The status quo is a dynamic system with many players. As I have often noted, just for one example, the US military/national security state does not necessarily share the same world view and priorities as other chunks of the empire. Various conspiracy theories neatly tie up the entire system with a bow, but I don't think it's that static and simple. If it was, it would be easier to predict. If we look at systems with few feedbacks, i.e. the sort of systems dominated by small cliques of the sort that all conspiracy theories require, we find systems like the former USSR. It imploded because it lacked the intrinsic ability to reform/adapt for systemic reasons.

6. As a result of #1, alternative systems have very little leverage. Why bust our behinds getting a local farmer's market going when every supermarket is bulging with produce and products engineered to satisfy our reward centers? Everything is an uphill battle to reach the critical 4% threshold of influence in terms of establishing alternative systems. Our own personal resilience only goes so far, but getting people to invest in systems beyond themselves is difficult for any number of reasons, including active suppression by those benefiting from the status quo. The need for real alternatives just isn't strong enough to change world views.

These systems are still nascent. We're still feeling our way forward in revolutionary alternatives (such as "accredit yourself" as an alternative to $100K college degrees in theater studies).

7. Nobody fully understands these complex systems such as the reserve currency, even though the systems have been functioning for decades. If we add up certain dynamics, we would feel very confident in saying this system should not exist--it should implode right now. Yet it continues on year after year. It is not just being perverse--it's very difficult to understand these systems because of the self-referential feedbacks and the motivations of the players to keep it going by whatever means are at hand.

I have been looking at the USD reserve currency for years and am humbled to realize nobody really has a firm grasp of all its dynamics. (At least I haven't found any such source.) There are widely disparate descriptions of its mechanisms and costs/problems, none of which totally accounts for its continued resilience.

8. I tend to think John Michael Greer's concept of catabolic collapse is likely to be the most correct in terms of predicting future dynamics. Things keep following the same vectors for all the reasons stated above until something gives and they reset at a lower level of complexity/energy consumption. Everyone with a stake in the current system takes a hit to their desires but they still retain a meaningful share of the swag. Those who lose their share are too marginalized to threaten the majority who still gain by participating in the status quo.

This stairstep-down process can continue for quite some time, Rome being a pretty good example and various corporate/nation-state failures being more recent examples.

9. It is fairly self-evident that we are in an unprecedented era--just looking at energy, debt and the Internet is enough to reach that conclusion. This means the past is not a very reliable guide. As a result, many people look to behavioral models of economics to explain everything in terms of human emotions and cognitive deficiencies. This also has limits, as systems include forces that may originate in human psychology but psychology and cognitive flaws do not account for the system's full dynamics.

10. New models of doing things are emergent, but that is not a passive process. Some individuals actually have to make this happen by thinking things out, proposing systems, setting up a network of like-minded people, etc. etc. etc. My goal is to part of the process of building alternative structures at least conceptually so people who are completely wedded to the status quo have some alternative framework to grasp when the stairstep down finally breaches their confidence/faith that the system is eternally sustainable as-is.

This occurs when they discover the status quo has deemed them inconsequential enough that their share of the swag can be reduced with no negative consequences to those still at the trough.

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Dear Infinity's picture

Gold and silver looking good here. US Mint sold more gold eagles so far in '13 than all of '12, and premiums are rising on

Headbanger's picture

What part of  THE CRASH IS UPON US NOW don't we get here!??

max2205's picture

I can narrow it down for you Charles mark to market, welfare, and printing....

Truthseeker2's picture



  These guys are not very imaginative ... and they always do what works, no matter how many times they've used the same page in the playbook.  You can be sure it will look something like this: 


"The PRE-PLANNED Financial and Economic 9/11 of 2008"

Only this time, it will be MUCH worse!



kaiserhoff's picture

Charles point number 7 is crucial and deserves further development.  Plenty of the failures of Japan and Bernanke can be traced to externalities.  Inflation they thought would show up domesticly was exported to trading partners and the third world.  Only one of many examples.  The real world does not behave like the models these arrogant idiots have created.

muleskinner's picture

The poor man will die one day and regret every word he said.

wee-weed up's picture



Obama lied - healthcare died!

Democrats lied - healthcare died!

Spread the word!

wee-weed up's picture

Yep, the "junk & run" Lib cockroaches are infesting the site!

RiverRoad's picture

They are carefully watching all that cash on the sidelines.  When they see that it's in the will be over.  Then the game starts again.

knukles's picture

A couple of indica of the rot in today's WSJ, for example.
1.)  Article concerning the arming of guards at airport checkpoints.
The alarming part about the article is the underlying premise that there need be check points with armed guards.  Such is a symptom of the problem, that being The US's foreign policy.  The burden of which falls not upon those foreign "enemies" of the state, but rather the subjets of the state.  Which should not even be considered subjects.

2.)  Article and opinions concerning drone warfare.  One of which commiserates that the era of autonomous drones is immediately in front of us.  The article wishes that they be used in ethical and legal manners.
What the fuck?
To where have we gotten?
Does not anybody remember that the kill is wrong, a sin?
Why cannot policies be pursued needless of a perpetual war?

Just look at any media these days.

It is rotten beyond the pale.
It is devoid of ethics and morals
In the battle between good and evil, the latter is alive, well, growing, without need for food water or encouragement.
Man has failed mightily. 

Skateboarder's picture

Implement first, provide media justification later.

Homo Sapiens Sapiens, the wanker species.

NOTaREALmerican's picture

Re; Just look at any media these days.

Well,  is it worse than when "the media" started the Spanish American war.

The media, government, corporations, and any organization that has lots of power, has always been run by sociopathic assholes.  Who else could run organizations with lots of power, the nice people?

Abi Normal's picture

You mean the 4th Rail of Govt, freedom of the press?  You're jokeing right?  The Propaganda Machine rolls the Forward Soviet momentum, and so the masses will have to swallow hard?

The writing is on the wall my friends, and trillions of folly will be upon us very soon, the lies and deceit will be exposed, all hail:


RiverRoad's picture

We have met the terrorists and they are us, courtesy of the NSA.

Rusty Shorts's picture

America lost that War,..... no was The War of 1812.. don't hear much about that do ya??..

yofish's picture
the biggest difference between now and then is the speed of communication, otherwise, same-o same-o. And now, instead of being at some bar and getting all whooped up with your buddies, you can do it in the comfort of your home or during free play period at your place of incarceration. Otherwise, there is not a jot of difference. 
yofish's picture

"It is rotten beyond the pale.
It is devoid of ethics and morals
In the battle between good and evil, the latter is alive, well, growing, without need for food water or encouragement.
Man has failed mightily."

My two daughters fly in the face of your assessment.  How old are you? Get out in the sunshine, turn off the teevee and for god's sakes quit spending too much time here where the curtains are ALWAYS drawn. I've noticed that people here make themselves sick by constantly being compelled to puke all over everything in a strange and silly game of being more dire than the guy before or after. I laugh out loud when someone uses the neologism 'sheeple' here because there are more lemmings on this site than I've ever encountered. As a matter of fact, the only reason I scan this board is for the entertainment value. I swear, I have read some of the most stupid and inane shit here over anywhere else, bat-shit crazy funny stuff.    Man has failed mightity? In your little battle zone, maybe. Back to my two amazing daughters; had I said that sentence to them they would have laughed and said, "Fuck you dad!" 
Kirk2NCC1701's picture

There is NO "Investment for all seasons".  Salesmen LIE, and will telly you exactly what you want to hear.

Emotional people make decisions with which they are "comfortable".  They tend to invest in their "pet investment", and are happy to listen to salesmen who affirm their beliefs and see them coming from a mile off.  Desperate people make desperate decisions, not shrewd ones.  Sometimes this includes the PM crowd, where some people treat PM with quasi religious reverence and buy more PM than they can afford.

Had some of us (myself included) chosen to invest more cash into non-PM assets in the last four years, we could have realized gains when PM did, and continued to realize them even after PM slid down (2 years ago).  Had we taken our PM profits of 2011 and invested them in stocks and Bitcoin, we would have been far, far better off.  Our portfolios would have been significantly larger and had far less volatility.  And volatility craps on you the most, just when you need to cash some in.  Per Murphy's Laws.

Like some others here, waiting for Doomsday arriving "next month" or "just around the corner", or "any day now" is getting old.  Eventually, sheer exhaustion and "D-Day Fatigue" sets in.  In spite of its well-known cheerleaders.  Perma-doom might be profitable for its purveyors, writers and blogsite owners, but does not pay our bills.

If we stop with our own "self-referential system" of perma-doom, and come out of our "Doomsday bunkers" for some fresh air and sunshine, we realize that the world is still spinning and life goes on.  Maybe we should also invest in "life":  plant some trees and food, and buy other assets and investments.

Recently, an affluent retired executive told me that one reason that our stock markets keep going up, is that they are diversified into stocks outside the US, where business and life goes on in spite of the Fed and Doomers.  There always have been and always will be good companies to invest in, if you know what you're doing and are willing to do your homework.

Sure you should have some PM (on hand), but treat it like an insurance policy, not a damn lottery ticket.  Notwithstanding the daily dose of an "imminent D-Day", it is still time to minimize risk by diversifying into stocks, micro-funding, rental property and cyber-currencies.  That way, you are far more likely to stay solvent longer, obsess less and sleep better than the one-trick pony (PM) investor.

Dugald's picture



So very well said, and oh so true........

FEDbuster's picture

Just make sure you have enough beans, bullets and bullion as a part of your diversified portfolios.

BoNeSxxx's picture

I can't tell you how much peace buying a small farm has given me...

Maybe some day I will get to live off it... maybe not... if nothing else, I find comfort that, in the end of days, I will be looking out over my peach orchard while Redtail Hawks circle high in the sky above vs. riots, violence, rot, and decay.

It ain't much but it's all I got.

BurningFuld's picture

The media sells it and you live the role

Mental wounds still screaming
Driving me insane
I'm going off the rails on a crazy train

Ozzy Ozbourne

kurzdump's picture

You pretty much nailed it.

I have read books written back in 80s. The authors were expecting the financial collapse "any day now". I followed some of them on discussion boards for quite a while. One of them died of cancer recently. All he did for last 30 years of his life was to warn people about an imminent collapse. He was reading countless books about money, history of mankind, socialism, capitalism, collapse. Now he is dead - still no collapse.

It could take another 10 years - even longer.

Dystopic novels might aswell become reality instead of a Doomsday happening...

centerline's picture


The trick I think will be more mental... at least for now.  Throwing off materialism and getting used to a lower standard of living.  Dealing with the rat race as it accelerates into mass confusion.

Trying to look as best as possible at the truth (seeking the truth per se) and arriving at unpleasant conclusions isn't negative as so many people want to call it.  Knowing that we are heading into a difficult period of time - and staying abreast of what is going on - is the best possible way to achieve happiness.  Yeah, it's simple to be happy in a materialistic world that is an expansionary phase with no real consequences.  Being happy in more challenging times is the real trick.

Got to roll with the punches and adapt.  



yofish's picture

In the 70's I was Dr. doom. Bet the farm on silver. All through the period of raising my children I used my silver mania as a teaching tool to show them that not only was their father an idiot, but that one can loose themselves from maniacal thinking. And hey! In the end it worked out, so was I rescued from ignominy. That it only took 40 years is wonderful because I will never place so much on what 'I think' will happen ever again.  @ 65, I don't have another two score in me. Take it from an old prepper, you'ns that burn with that flame will learn some things but I believe, for the most part, you are wasting valuable time.

Abi Normal's picture

Timing? We don't have to show you no stinking timing? Give us your gold gringo...

Dr. Bonzo's picture

Sharp and timely article Charles. Candor is like a breath of fresh air in the fetid shithouse that the markets have become.


Good showing.

yofish's picture

I like this Smith fellow and thank ZH for turning me on to him.

fonzannoon's picture

The economic collapse guy is gonna be so pissed when he reads this.

This is his territory! His Territory!

Took Red Pill's picture

Michael Snyder and his lists!

Skateboarder's picture

10 Reasons Why Lists Give You Lisps:

Shizzmoney's picture

A year before POTUS election time.  A stock shock has happened around every POTUS election cycle since the USD got off the gold standard.  Part of it is manipulated (housing crisis), part of it is natural (i.e. people want to know what their tax rates will be).

Bonds will be the bubble this time.  Shit starts to unwind in 2014.  Shitty economy confirms said troubles, depite the market not caring toward a bull run of 18-20k DJIA. 

Then, around 2015, the market finally starts to dive and reality kicks in....just in time for elections where the corportocracy can corrupt the voting masses to fix a short term problem with *their* long term (awful) soultion.

Then the fun begins.



Took Red Pill's picture

especially with a lame duck president. Look what happened right before W left office.

RiverRoad's picture

The Fed decides who our next POTUS will be and they wash the dirty linen prior to.

HardlyZero's picture

Reality.  I have this vision now of Yellen and Clinton in the same room standing next to each other, running the Western world in 2016 (in <3 years !)

Now my one mind just casually bifurcated into two.

Its like a scene from the Shining, scary after Halloween.

max2205's picture

Throw in Pelosi and you've got a hat trick

Skateboarder's picture

That's like the manliest trivmvirate I can think of.

RiverRoad's picture

They only let the women in to clean up.  Gives you an idea what kind of a mess we're in.

Burticus's picture

Hitlery Rotten and Ole' Yeller - aaaarrgghh!!!  HZ, that's too hideously obscene for even ZH!  It would signal not only the next crisis, but the end of western civilization.

IndyPat's picture

# 10 should read...

10 days left to National Power Grid Down "Drill"
This is a test. This is only a test.
Hope everyone has a flash light and a decades worth of Duracells....among other things.
Watch for dark colored aquatic birds spreading their wings in earnest...and hedge accordingly

SMG's picture

No offense, but after years of these "rumors", like mass arrests, 2012, etc. They never pan out on schedule, and are just used to panic people and discredit anyone who repeats them.

Some bad things are going to happen soon: economic collapse... war...,but you'll never know exactly when.

But having lots of batteries probably isn't a bad idea.

IndyPat's picture

Sounds like you enjoy a good drill.
No pun intended.

knukles's picture

Who said anything about a collapse, the End of Days, feasts and famine?
It is pure fact that each major social disturbance has been accompanied by a "drill" 'exercise" whatever or the like.
And given governments predilection to fuckups, cockups, screwups, glitches, disturbances, etc...
What does anybody in their right mind think is gonna happen?

Why do people now, as a rule hold more cash, water, food, batteries...
That's a fact, Jack!



fighter's picture

The question remains to what extent is this scripted vs chaotic bumbling?

And if they're trying to script it but are bumbling that's still bumbling, whereas scripted bumbling is still scripted?

Also, is it less scary to think this is scripted than the powers that be really have lost control? I'm open to helpful remarks, preferably related in philosophical rhetoric of two and half millenia ago (the last time we asked these questions +/- 500 years)

centerline's picture

Multiple factions full of egomaniac sociopaths trying to script thier own NWO or rock star living and bumbling.  Some more than others.  Surrounded by ever increasing numbers of people trying to scam the systems as the ever increasing cancerous hand of government chokes the life out of the global economy in a vain attempt to prevent its own demise.  Sums up to total fucking chaos.


klockwerks's picture

You would be amazed how many people do not know that there is a grid test coming. You mention it and you get the typical blank stare. Until I mentioned it to a couple of people I could not find 1 person that knew that this wonderful test was going to happen. I mean, what could go wrong? Oh well, we will see but I have been prepared for the last 5 years and for the reason that everyone on this site would understand