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Guest Post: The Circling Black Swans Of 2012
Submitted by Charles Hugh-Smith of OfTwoMinds.com
The Circling Black Swans of 2012 (January 2, 2012)
The Imperial hubris of America's Elites offers up a tempting target for black swans, as suppressing the sources of instability only increases the odds of disruptive instability.
Longtime correspondent (and Oregon resident) R.S.D. recently made this observation about black swans:
I notice that a number of predictors for 2012 never mention the flock of black swans that are currently circling in the murk before us. While I appreciate their anonymity, I was reminded of their presence last night about 10 PM while working in my shop. I had the door open to an almost Springlike night when I heard quite a flock of Canadian Geese passing over, heading north. In December!
Well said, R.S.D. For an example of the Status Quo's confidence that the odds of a financial or political black swan disrupting their Empire are essentially zero, let's turn to "conservative" pundit George Will, one of the Status Quo's leading proponents of bloviated smugness.
Mr. Will begins his syndicated New Year's column by hugging himself with Imperial self-satisfaction: America is a net exporter of energy products for the first time in 62 years!
The unwary consumer of Mr. Will's self-congratulatory prose (he has a corner office in the sprawling Ministry of Propaganda) might wrongly interpret this to mean that America is a net exporter of energy: it is not. The U.S. is a net importer of over 9 million barrels of oil a day.
How dependent are we on foreign oil? (U.S. Energy Information Administration)
The United States consumed 19.1 million barrels per day (MMbd) of petroleum products during 2010, making us the world's largest petroleum consumer. The United States was third in crude oil production at 5.5 MMbd. But crude oil alone does not constitute all U.S. petroleum supplies. Significant gains occur, because crude oil expands in the refining process, liquid fuel is captured in the processing of natural gas, and we have other sources of liquid fuel, including biofuels. These additional supplies totaled 4.2 MMbd in 2010.
In 2010 the United States imported 11.8 million barrels per day (MMbd) of crude oil and refined petroleum products. We also exported 2.3 MMbd of crude oil and petroleum products during 2010, so our net imports (imports minus exports) equaled 9.4 MMbd.
Apparently Mr. Will is incapable of performing either simple math or a basic web search to confirm the breezy implications of his carefully vague confidence in a future of never-ending, low-cost surplus energy.
If he'd performed five minutes of journalism instead of spewing propaganda, he might have stumbled upon this report, which suggests that U.S. dependence on imported energy will rise going forward: US Oil and Gas Import Dependence: Department of Energy Projections in 2011
Much propaganda has been issued over the years about the hundreds of years of supply of energy the U.S. possesses, but journalism is supposed to ferret out the current facts as its foundation rather than begin with self-satisfied pontification.
If we consult the facts, we find the storied Bakken oil/gas formation currently produces 445,000 barrels a day, certainly a substantial quantity of energy but a mere sliver of America's daily consumption of 19 million barrels a day. According to the EIA report Bakken formation oil and gas drilling activity mirrors development in the Barnett, Bakken production, which averaged just over 2 thousand bbl/d in 2000, averaged more than 260 thousand bbl/d in 2010. This rise in production is the result of hundreds of horizontal wells being drilled and brought online.
Is this new source of domestic energy welcome? Of course. Will it some day replace the 9 million barrels imported from elsewhere? A variety of sources suggest reaching 1 million BPD would be an extraordinary accomplishment, and that projecting the recent growth to millions of barrels a day is more fantasy than fact.
If we had to summarize the Status Quo's confidence that no black swans will threaten its control in 2012, we might begin with its faith that the system's self-regulation will resolve all systemic challenges. Just as the Status Quo has placed all its chips on a single bet--that "growth" from debt-based consumption can be resumed with vast public borrowing and saving the predatory financial sector--it also bases its confidence on the system's self-regulation.
If the banking sector is riddled with fraud and embezzlement, then some minor tweaking of regulation will solve all issues. If demand for debt has collapsed, then the solution is for the Federal Government to borrow 10% of GDP every year to compensate for the decline of private debt and spending.
The faith is that extending and pretending will magically restore the "growth" the Status Quo needs to support its ballooning debt. Extending and pretending offers up the compelling illusion that the system's broken self-regulation is up to the task of fixing systemic problems.
The essence of Talib's "black swan" insight is that instabilities that are written off by the Status Quo as "extremely low probability" become high-probability when low-level systemic instabilities are suppressed by extend and pretend and endless propaganda.
The Status Quo has suppressed instability with brute force and propaganda for four long years; while the Elites are patting themselves on the back and confidently predicting they can safely navigate 2012 with more extend and pretend, the odds are increasingly favoring the emergence of "unlikely" disruptions.
Mr. Will is supremely confident that whatever happens in 2012 will be a mere "pebble in the river of American history." In the darkness overhead, we can hear the beating of unseen wings that promise to make a mockery of the Status Quo's supreme Imperial hubris.
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WTF would they need LFTR facilities for... Didn't Leo spend a whole year here at ZH that they were up to their pointy heads in Solar panel factories?
We aren't doomed...we are just starting over.
anyone looking for a feel good story about bank of america? Those warm and fuzzy commercials about how they are there for the little guy trying to build a business?
http://www.latimes.com/business/la-fi-credit-cutoff-20120103,0,3538902.story
Let's concentrate on the chaos, and leave yesterday's labels behind.
In chaos, there are no "black swans."
Its like "name that tune". How any sentences does it take before I recognize Chuckles B. S.? Can I guess without clicking through?
Please please put the name of the author of the guest post before the jump so I don't have to click through. I'd almost rather click on one of the Alan Grayson ads than on one of Chuckles ramblings.
Circling Black Drains of 2012?
hey, gwar!
do you think bovine defecation counts as an energy export?
the ETFs and futures are doing solidly well!
no shit?
no bull!
We won't/can't know what the black swan is, e.g. Rumsfeld's "Unknown Unknowns." But you can know the consequences, especially in today's environment.
Sometime between 2012 and 2016 at the very latest, one of those black swans is going to be a detonation cap, shoved up the ass of the biggest debt bomb gray swan we've ever seen, sitting inside a figurative munitions depot consisting of the global ponzi fiat economy and the US government's massive overreaching empire both abroad and at home. When that "little" black swan detonates, we're going to see a chain reaction the likes of which have never been witnessed, and likely a massive power grab that is destined to fail because the scale and complexity of the current ponzi (regardless of financial of governmental) cannot be maintained.
I keep pondering why we're seeing crap like NDAA, SOPA, Protect IP, and now the Enemy Expatriation Act (lose your citizenship for 'supporting hostilities againse the United States,' presumably without a trial since that's so passe') and I truly think it's because at the higher levels of government, they know this collapse is coming and they're trying to use this level of police state insanity to hide and delay it, because that seems to be what the entire "plan" has been since 2008: delay, deny, deceive. They're looking for a cart blanche to do whatever they think it takes to preserve the status quo, when it can't be preserved.
We won't know the specifics, but using the USSR collapse as a model, states will likely openly reject federal government authority. My guess will be the final stage (lasting a couple months) will be triggered by either a revelation of truth so extreme and/or horrific it cannot be denied, ignored, or covered up, or that there is an action done by the federal government that is likewise undeniable, extreme or horrific at an astonishing scale. Whatever it is, it will be a black swan that completely undermines any semblance of federal legitimacy, triggering a (hopefully) peaceful politcal revolt at the state level where current federal authority is rejected. (Note that I am not implying that things are peaceful in the environment around this event, just that there's a sudden burst of sanity at the state level.)
The ugly time will be between the debt bomb being triggered and the rejection of federal authority. Basically, what we saw happen as Weimar Germany transitioned to its next government.
Whatever happens, I know we ain't seen nothin' yet.
Black swan?
Aretha Franklin [(69)] announces engagement
http://www.bbc.co.uk/news/entertainment-arts-16388029
Oh Jesus, man. That's disgusting even by my standards. Aretha's way too old for 69.
Black swans are so 2008
I never trust a man that dislike's the NFL and prefers baseball.
I never trust a sheeperson who parts with their money to celebrate grown men running around or throwing a ball to each other, otherwise known as "sports," no matter what form it takes.
But to each their own.
It's a legalized form of something to gamble on (whereby it takes several hours for you to lose all your money - instead of instantly)... Thus the lure...
If only the US oil industry could operate like the nuke industry, and not have to clean up after itself. Sheesh they'd be turning on so many wells the US would get to 19mbpd in a couple of years. All the infrastructure is there but so many wells have to deal with state and Federal regs they shut off. Talking thousands and thousands of 100-300 bpd wells right out of the gate. Double Bakken.
So what is it with Americans subsidizing nuke plants that produce for 50 years but take millions of years to clean up.
When Ron Paul says he won't touch nuke power he means show me the numbers...and then shut em all down.
You don't have any idea whatsoever what Cap and Abandon means and how many regulations have to be followed and paid for just to C&A a well.
If it cost less to operate at 10 bpd than to Cap and Abandon, it would still operate. It doesn't, unless a private owner is getting up in the morning to drive out to HIS land and turn on the pumps to drain the overnight gravity seepage out and sell it.
You don't have more or less any data at all on this C&A matter.
BP's speciality :)
"I notice that a number of predictors for 2012 never mention the flock of black swans that are currently circling in the murk before us. While I appreciate their anonymity, I was reminded of their presence last night about 10 PM while working in my shop. I had the door open to an almost Springlike night when I heard quite a flock of Canadian Geese passing over, heading north. In December!"
Uhhhh, Mr. Hugh-Smith, there are no such things as "Canadian Geese". Ohhhhhh, you must've meant Canada Geese. Where are you from again??????????
Yes, like France toast, England muffins, Canada bacon, Italy olive oil, Germany beer, Poland sausage, Switzerland chocolate, Turkey delight, Sweden meatballs, Persia rugs, Siberia huskies, China porcelain, Mexico standoffs and Russia roulette.
Hey akak, you might have a point if Canada Geese WERE FROM CANADA!!!! I take it your skull and crossbones avatar doesn't include any migratory waterfowl hunting weapons, does it????????????
What, you don't have any geese up in Canada?
PS: My old Siberian husky was still a Siberian huskey even though he never got within 1000 miles of Siberia. And somehow, I have eaten a great deal of both French toast and English muffins, and yet never set foot in either France or England. And I guess we were all mixed-up when we used to make "Polish sausage" back in Detroit.
PS: Why is it that EVERYONE in the USA knows exactly what "Canadian Bacon" is --- but nobody from Canada does?
Cos it's called back bacon up here.
Do you know what a Texas Mickey is? Cos everyone up here does, but no one seems to know in Texas...
I can't say that I know either --- but I tend to shy away from anything having to do with Texas.
(Ron Paul excepted)
It's like that old saying: "Texas is a mess!"
Way too insightful for mere humor.
The faith is that extending and pretending will magically restore the "growth" the Status Quo needs to support its ballooning debt.
It's not "extend and pretend" and never was.
TPTB know their fiat currency ponzi scheme is approaching collapse. It's the end game. 3 years of ZIRP is the end game. Fed buying most govt debt is the end game. Ongoing bank bailouts is the end game.
It's not "extend and pretend". It's called "looting until it collapses".
TPTB know they've reached the end of their fiat USD currency ponzi scheme and it's approaching collapse. They know when it collapses America collapses with it.
They're looting everything they can before it collapses (and America collapses).
First by massive currency printing and bailouts, the easiest way of taking wealth out of Americans' pockets and giving it to insiders.
Second by direct confiscation of Americans' assets, MF Global being the first big test run. There will be more MF Globals, count on it.
Third by going after the really big prize, confiscating retirement accounts and pension funds. They'll have to declare national emergency and martial law to pull that one off ...and they will sooner or later. Iran could be it.
By that time USD will be nearly worthless and will lose WRC status. What's left of the American economy will collapse when gas jumps to $10 / gal, milk jumps to $9 / gal, bread jumps to $8 / loaf, etc.
America will collapse into anarchy. Infastructure will break down. Cities will be war zones.
TPTB know this is the end game for America. They're not extending and pretending hoping for a recovery. They're looting everything they can before it all collapses.
And no, Ron Paul wouldn't be able to stop it. A hundred Ron Pauls couldn't stop it.
oregon is in a drought, trade that if you can somehow.
http://www.wcc.nrcs.usda.gov/reports/UpdateReport.html;jsessionid=6E4AF1...
Don't let the black swans crap on ya
http://www.facebook.com/l.php?u=http%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv...