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"Trade-Off": A Study In Global Systemic Collapse

Tyler Durden's picture




 

And now a little something for everyone who consistently has a nagging feeling that at any second the world is one short flap of a butterfly's wings away from complete systemic disintegration: according to David Korowicz of FEASTA, and his most recent paper: 'Trade-Off: Financial System Supply-Chain Cross-Contagion: a study in global systemic collapse." that just may be the case.

Without further ado, we hand over the mic to the author:

This study considers the relationship between a global systemic banking, monetary and solvency crisis and its implications for the real-time flow of goods and services in the globalised economy. It outlines how contagion in the financial system could set off semi-autonomous contagion in supplychains globally, even where buyers and sellers are linked by solvency, sound money and bank intermediation. The cross-contagion between the financial system and trade/production networks is mutually reinforcing.

 

It is argued that in order to understand systemic risk in the globalised economy, account must be taken of how growing complexity (interconnectedness, interdependence and the speed of processes), the de-localisation of production and concentration within key pillars of the globalised economy have magnified global vulnerability and opened up the possibility of a rapid and large-scale collapse. ‘Collapse’ in this sense means the irreversible loss of socio-economic complexity which fundamentally transforms the nature of the economy. These crucial issues have not been recognised by policy-makers nor are they reflected in economic thinking or modelling.

 

As the globalised economy has become more complex and ever faster (for example, Just-in-Time logistics), the ability of the real economy to pick up and globally transmit supply-chain failure, and then contagion, has become greater and potentially more devastating in its impacts. In a more complex and interdependent economy, fewer failures are required to transmit cascading failure through socio-economic systems. In addition, we have normalised massive increases in the complex conditionality that underpins modern societies and our welfare. Thus we have problems seeing, never mind planning for such eventualities, while the risk of them occurring has increased significantly. The most powerful primary cause of such an event would be a large-scale financial shock initially centring on some of the most complex and trade central parts of the globalised economy.

 

The argument that a large-scale and globalised financial-banking-monetary crisis is likely arises from two sources. Firstly, from the outcome and management of credit over-expansion and global imbalances and the growing stresses in the Eurozone and global banking system. Secondly, from the manifest risk that we are at a peak in global oil production, and that affordable, real-time production will begin to decline in the next few years. In the latter case, the credit backing of fractional reserve banks, monetary systems and financial assets are fundamentally incompatible with energy constraints. It is argued that in the coming years there are multiple routes to a largescale breakdown in the global financial system, comprising systemic banking collapses, monetary system failure, credit and financial asset vaporization. This breakdown, however and whenever it comes, is likely to be fast and disorderly and could overwhelm society’s ability to respond.

 

We consider one scenario to give a practical dimension to understanding supply-chain contagion: a break-up of the Euro and an intertwined systemic banking crisis. Simple argument and modelling will point to the likelihood of a food security crisis within days in the directly affected countries and an initially exponential spread of production failures across the world beginning within a week. This  will reinforce and spread financial system contagion. It is also argued that the longer the crisis goes on, the greater the likelihood of its irreversibility. This could be in as little as three weeks. This study draws upon simple ideas drawn from ecology, systems dynamics, and the study of complex networks to frame the discussion of the globalised economy. Real-life events such as United Kingdom fuel blockades (2000) and the Japanese Tsunami (2011) are used to shed light on modern trade vulnerability.

Think of the attached 78-page paper as Nassim Taleb meets Edward Lorenz meets Malcom Gladwell meets Arthur Tansley meets Herman Muller meets Werner Heisenberg meets Hyman Minsky meets William Butler Yeats, and the resultant group spends all night drinking absinthe and smoking opium, while engaging in illegal debauchery in the 5th sub-basement of the Moulin Rouge circa 1890.

The final product is frightfully spot on and should be read by every person even remotely close to setting policy (which is why it won't be).

Another rather notable excerpt dealing with financial system supply-chain cross contagion:

Something sets off an interrelated Eurozone crisis and banking crisis, a Spanish default say, which spreads panic and fear across other vulnerable Eurozone countries. This sets off a Minsky moment when overleveraged speculators in the banking and shadow banking system are forced to unwind positions into a one-sided (sellers only) market. The financial system contagion passes a tipping point where governments and central banks start to lose control and panic drives a (positive feedback) deepening and widening of the impact globally. In our tropic model of the globalised economy, the banking and monetary system keystone hub comes out of its equilibrium range, crosses a tipping point, and is driven away by positive feedbacks to some new state.

 

This directly links to another keystone-hub, production flows. Failing banks, fears of currency re-issue, fears of further default, collapse in Letters of Credit, and growing panic directly quickly shut down trade in the most affected countries. As the week progresses factories close, communications are impaired, social stress and government panic increases. After a week almost all businesses are closed, there is a rising risk to critical infrastructure.

 

Almost immediately internal trade and imports stops in the most affected countries, and there is impairment in a growing number of other countries. Trade is impaired globally via a credit crunch. This undermines exports from some of the most trade-central countries, with some of the most efficient JIT dependencies in the world. This cuts inputs into the production and trade into countries that were initially weakly affected by direct financial contagion. Globally, the spread of trade contagion depends on complexity,  centrality, and inventory times and once a critical threshold is passed spreads exponentially until the effect is damped by a large-scale global production collapse (implying another keystone-hub, economies of scale is driven out of equilibrium).

 

Trade contagion and its implications feed back into financial system contagion, helping drive further disintegration. The interacting and mutually destabilising effects of keystone-hubs coming out of equilibrium destroy the equilibrium of the globalised economy initiating a systemic collapse.

 

Growing risk displacement in an increasingly vulnerable system is increasing the risk of system failure. Once the financial system contagion crosses a particular threshold the de-stabilisation of the globalised economy will be exceedingly difficult to arrest; this point may be in as little as ten days. Once a major system collapse occurs, scale, hysteresis, entropy, loss of critical functions, recursion failure, and resource diversion is likely to ensure that the features associated with the previous dynamic state of the globalised economy can never be recovered.

The above explains why the central planners of this world, all of them well-aware of the implications of what has just been said, will literally fight to the death to prevent the global system from reacquire its balanced natural state, which for 30 years they have been pushing further and further away from in other to perpetuate as long as possible, an unstable status quo, which has benefited a disproprtionately smaller number of systemic participants, and has lead the system far beyond its tipping point level. Sadly, the system will eventually regain balance: that is what nature dictates. When it does, a politically correct way of saying what happens it that "the previous dynamic state of the globalised economy can never be recovered" while a less PC framing would be "all hell will break loose."

The author continues:

We have outlined how the risk of a major shock arising from decades of credit expansion and imbalances is growing. We have also seen that we could expect a similar shock from the effects of peak oil on the economy. What unifies both is a catastrophic collapse arising from a loss of confidence in debt, and the solvency of banks and governments. What would be unique is the scale of the shock and its ability to strike at the heart of the world’s financial system. But the implications are not just within the financial and monetary system. They would immediately affect the trade in real goods and services. As our economies have become more complex, de-localised and high speed, the implications on supply-chains could be rapid and devastating.

 

There are three general points that are worth noting. Together they point to the likelihood that the crisis whenever it comes can be expected to be very large and society unprepared.

 

The first is temporal paralysis:

 

As financial and monetary systems become more unstable, the risks associated with doing anything significant to change or alter the course increase (see also the discussion of lock-in in the final section). In addition, the diversity of national actors, public opinion, institutional players and perceptions works against a coherent consensus on action. Therefore the temptation is to displace immediate risk by taking the minimal action to avert an imminent crisis. This increases systemic risk. Some steps in the evolving crisis might be handled, for example, a Greek default. However, each new iteration of the crisis is likely to be bigger and more complex than the one before, while the system is becomes ever less resilient.

 

A second issue is what might be called the reflexivity trap:

 

The actions taken to prevent a crisis, or preparations for dealing with the aftermath of a crisis, may help precipitate the crisis. Therefore to avoid precipitation, the preparation has to be low key and below the radar of the public and markets. This limits the extent and scope of preparation, increasing the risk of a chaotic and slow response.

 

The final point is about black swans & brittle systems:

 

The growing stress in our very complex globalised economy means it is much less resilient, see the discussion in section 3.1 and figure 2. Thus a small shock or an unpredictable event could set in train a chain of events that could push the globalised economy over a tipping point, and into a process of negative feedback and collapse.

 

One cannot predict how such a financial and monetary collapse will occur, or when. However, in this section we are considering a scenario, ideally one that in the light of what we know of the economic conditions sketched earlier seems at least reasonable. This scenario should be considered a warning, but also a more general guide to how supply-chain cross contagion might operate in any financial/ monetary collapse.

Everyone who is curious how the European endgame will (not may) plays out (especially all the bureaucrats at the ECB and the Bundesbank) should read what ensues. Because it is not pretty. Here is a snapshot:

Globally, monetary systems would become increasingly opaque. A lack of money, operational banks, currency re-issue, inflation and hyper-inflation expectations would become a reality in many advanced economies in and outside the Eurozone. Debt deflation would in its formal sense start to die-nobody would (even if they could) pay down debt, nor would there be any credit. Production would be increasingly shut down, while complex societies got a rapid lesson on the extent of system dependency.

 

The perception of continued socio-economic disintegration would alter behavioural responses such as trust radii and social discount rate.

 

Finally, financial system supply-chain cross-contagion is a re-enforcing negative feedback driving the globalised economy away from its stable state and into a new collapse one.

Granted the above is dubbed a worst-case outcome, but one which is inevitable unless authorities admit that it is a distinct possibility and actively prepare a contingency plan, which however in itself is somewhat self-defeating because as the Eurozone crisis has demonstrated the mere admission of reality is enough to propagate the system into a whole new level of unsustainability, and so on until the system cross a final threshold beyond which there is no salvageability. The author himself acknowledges this:

We do not like to think of ourselves as potentially irrational herd animals (that will be the Jones’s). We seek narrative frameworks that purport to explain our good fortune, ideally in ways that flatter. Reinhardt and Rogoff called it the This Time It's Different syndrome  as each age sought to deflect warnings by arguing we're smarter now, better organised, or living in a different world. Just as the sellers of an overpriced home will convince themselves that it was their interior decorating skills not an inflating bubble that got them the good deal.

 

Of course warnings may keep coming, and almost by definition, from the fringes. When assessing risks that challenge consensus, people are more likely to defer to authority, which generally sees itself as the representative of the consensus. Furthermore, as a species with strong attachments to group affirmation, being wrong in a consensus is often a safer option than being right but facing social shaming, or especially if found to be wrong later.

 

Far better to say: “Look, don't blame me, nobody saw this coming, even the experts got it wrong!”

 

But even if we can appreciate a warning, the inertia of the status quo generally ensures acting on such warnings is difficult. In general we chose the easiest path in the short-term, and the easiest path is the one we are familiar and adaptive with. We would rather put off a hard and high consequence decision now, even if it meant much higher consequences some time in the future. However, if each step on the path of least resistance is a step further from where we ideally should be, the risks associated with doing anything rise as the divergence is so much wider. Eventually one's bluff may be called, but not yet, and hopefully on somebody else’s watch.

 

The consensus can often be correct and the marginal voices may be deluded. The point for the risk manager is to try and step through cognitive and social blind-spots by first recognising them. This is particularly true if the risks (probability times impact) considered are very high.

 

Unfortunately, it is very clear that we have learned almost nothing general about risk management as a societal practice arising from the financial crisis. We have merely adopted a new consensus, with a questionable acknowledgement that we will not let this type of crisis happen again. However, the argument in this following report is that we are facing growing real-time, severe, civilisation transforming risks without any risk management.

Which brings us to the conclusion:

We are locked into an unimaginably complex predicament and a system of dependency whose future seems at growing risk. To avoid catastrophe we must prepare for failure.

 

We are entering a time of great challenge and uncertainty, when the systems, ideas and stories that framed our lives in one world are torn apart, but before new stories and dependencies have had time to evolve. Our challenge is to let go, and go forth.

 

Our immediate concern is crisis and shock planning. It should now be clear that this is far more extensive than merely focussing on the financial system. It includes how we might move forward if a reversion to current conditions proves impossible. That is we also need transition planning and preparation. Even while subject to lock-in and the reflexivity trap, this will be most effective if it works from bottom-up as well as top-down.

 

Finally, neither wealth nor geography is a protection. Our evolved co-dependencies mean that we are all in this together.

Everyone who wishes to know what will happen unless everyone is aware of what may happen, should read the attached paper.

Trade-Off: Financial System Supply-Chain Cross-Contagion: a study in global systemic collapse (pdf)

 

 

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Sat, 07/14/2012 - 23:05 | 2616736 Imminent Collapse
Imminent Collapse's picture

So, it's true. Just as we suspected.

Sat, 07/14/2012 - 23:09 | 2616742 q99x2
q99x2's picture

Nah, It would be true if the same guy didn't own everything and there were actually other people with more than a food stamp and piece of fire wood that had something left to lose.

Sat, 07/14/2012 - 23:15 | 2616744 nope-1004
nope-1004's picture

Since inception, banks created a system of slavery.  Everyone finances EVERYTHING.  Once the lending market became saturated in 2000, more slaves were needed, so lending standards were lowered and easier credit was made available to the walking dead.  The banks created this disaster, thinking that infinite compounding returns based on leverage and shadow loans can be made in a finite world.  Duh....

 

Sat, 07/14/2012 - 23:59 | 2616791 Dr Benway
Dr Benway's picture

I'm not sure if I agree that banking by definition is an evil scam and so forth. The way it works now, sure of course it is. But some sort of banking and finance system seems necessary to me, just not this squiddy crony klepto banking system we have now.

 

http://s1144.photobucket.com/albums/o489/_DrBenway/

Sun, 07/15/2012 - 00:19 | 2616816 FreedomGuy
FreedomGuy's picture

I agree with you DB. I think banks are the bartenders that keep serving up drinks to the drunks (governments). The drunks have police and guns by the way, too. They also set all the rules by which the bar runs so it is hard to piss them off. Without consequence. The deal is the bartender lets them run an infinite tab for fewer bad bar regulations.

Ther is nothing inherently wrong with banking. They play the crony-socialist game as it exists and to whatever advantage they can. So do all other industries.

Sun, 07/15/2012 - 00:20 | 2616823 Dr Benway
Dr Benway's picture

That's an excellent analogy! Reminds me of the Sopranos when Tony nearly eats that restaurant into the ground.

Sun, 07/15/2012 - 00:26 | 2616832 mcguire
mcguire's picture

it is incredibly naive to think that we are heading into system collapse "without managment"..  they have been planning... oh, have they been planning.   remember the missing $2 trilion announced by rumsfeld on the eve of 9/11??? FEMA????? continuity of goverment has been the shadow boom industry of the past decade.  

Sun, 07/15/2012 - 00:34 | 2616844 Dr Benway
Dr Benway's picture

Come on, do you really believe all these asshole bankers meet in a secret location wearing robes and performing rituals to Satan?

 

Or do you think they are just fools, gamblers who painted themselves into a corner after years of profligacy, regular people who just got perverted by greed?

 

I tend to lean toward the latter explanation.

Sun, 07/15/2012 - 00:40 | 2616854 mcguire
mcguire's picture

they did war games on this last year!!!  of course they are not fools... again, it is naive to think that this is not being managed.. http://www.theblaze.com/stories/unified-quest-2011-pentagon-war-games-u-...

 

Sun, 07/15/2012 - 01:57 | 2616916 Dr Benway
Dr Benway's picture

Well OK I guess I'll have to check that out.

 

It's funny though, everywhere else I'm considered the lunatic fringe, on Zero Hedge I'm a moderate.

Sun, 07/15/2012 - 02:07 | 2616923 putaipan
putaipan's picture

very good dr. benway mcguire.... now we are getting somewhere . as the fields of conspiranoia and deitrology are defined and come closer together- greed fear ignorance v.s. control omnipotence intelligence- we will have to decide which jubillee to choose from- theirs or ours. economic escatology indeed!

Sun, 07/15/2012 - 07:14 | 2617026 schismjism
schismjism's picture

Here is an interview with him on the topic... it's pretty good... well worth the listen...

 

http://fromalpha2omega.podomatic.com/player/web/2012-04-17T16_29_23-07_00

Sun, 07/15/2012 - 09:39 | 2617118 Comay Mierda
Comay Mierda's picture

this organization seems like a bullshit soros/rockefeller front

preaching about climate change and how we are all fucked unless we pay carbon taxes to these ass clowns (nevermind the climate-gate emails and the real research done by real scientists showing the Earth is cooling)

http://www.feasta.org/2012/07/13/climate-change-and-peak-oil-two-sides-of-the-same-coin/

they are so clever they even fooled ZHers. (is that saying much lately?)

Sun, 07/15/2012 - 10:13 | 2617149 economics9698
economics9698's picture

You ZH’ers get caught up in some banking bull shit sometimes.  Hang the central bankers; go back to gold and silver, 100% fractional reserve banking.  Life goes on.

Sun, 07/15/2012 - 11:24 | 2617262 mcguire
mcguire's picture

comay, i thought the same thing.. the impact of the article, however, stays the same.. it means that it goes from the 'independent analysis' category to the 'predictive programming' category... the 'scariness' of the article stays the same. 

one thing is for sure, it explains how such an obviously smart guy could "overlook" the existence of the massive 'continuity of government' efforts going on underneath the scenes here and around the globe.. 

as for ZH: the ZH thesis has never truely embraced the implications of all of the individual pieces of evidence it churns out on an hourly basis.. that is, the global conspiracy and where it is leading us.  the ZH thesis is this; corporate greed and the "wrongness" of keynsianism will lead to system collapse.  the global conspiracy thesis is this; global actors expect and are expediting system collapse, because it is only from chaos that the new world order can be built.. "ordo ab chao". 

Sun, 07/15/2012 - 11:39 | 2617279 Comay Mierda
Comay Mierda's picture

+666

Sun, 07/15/2012 - 11:45 | 2617292 cleverlemming
cleverlemming's picture

I counted 14 references to peak oil. The sky is falling!

Mon, 07/16/2012 - 19:48 | 2622256 dvfco
dvfco's picture

Great document. I read it from cover-to-cover.  However, it was very repetitive.  The writer of the abstract couldn't have done a better job in summarizing the thesis.  To me, the author is correct.  However, the most rural areas will not suffer in any way like the cities.  If you think the song, "Country Boy Can Survive" is a joke, thye're not kidding.  People growing up in the middle of nowhere aren't survivalists, but they sure as heck can surivive.  Their idea of a weekend of fun is hunting, fishing, cooking-out, camping-out, swimming, etc.  To every urbanite, that's their idea of hell.  I picture 30 year-old new-age yuppies trying to make hotel reservations out in the country when the crash does come.

You only need on thing to survive a crash - remember that EVERYTHING TASTES LIKE CHICKEN!

Sat, 07/21/2012 - 19:03 | 2639408 Lednbrass
Lednbrass's picture

In such a situation any yuppies heading out to the country should not even bother. They will have a tiny chance of survival where they are but none showing up in a strange area during tough times.

Sun, 07/15/2012 - 11:50 | 2617293 cleverlemming
cleverlemming's picture

oops, sorry

Sun, 07/15/2012 - 10:33 | 2617183 Jake88
Jake88's picture

it is completely fubar

Sun, 07/15/2012 - 11:56 | 2617339 The Big Ching-aso
The Big Ching-aso's picture

 

 

This is one hell of a camel.  2 ton straws one after another & it's still standing.

Sun, 07/15/2012 - 16:00 | 2618178 Michael
Michael's picture

Does this mean people in the USA are going to have to make shoes in our own country again? Oh the horror. The Horror.

Sun, 07/15/2012 - 21:20 | 2618986 Bringin It
Bringin It's picture

I have converted to flip-flops.

Sun, 07/15/2012 - 14:00 | 2617803 Nachdenken
Nachdenken's picture

"Greed fear ignorance vs. control omnipotence intelligence".  I should have known : intelligence is on the other side.

Sun, 07/15/2012 - 09:31 | 2617105 kraschenbern
kraschenbern's picture

Here's a thought.  Intelligent beings tend to be "self organizing".  Lots of possible organizations, cliques, cabals, secret societies...Every possibility becomes an actuality.   All systems seem to have the trait of self-perpetuation and striving for dominance.  We live in interesting times.  No further explanation is required.  Just pick a team to join (or not).

Bankers team in the lead at the moment.

Sun, 07/15/2012 - 11:31 | 2617271 mcguire
mcguire's picture

i used to believe in systems theory.. i stopped with niklas luhmann, thinking he had adequately explained a theory of everything, much in the terms you just described.  then came 9/11.  this proved to me something completely different, the existence of the 'occult agenda'..  the ugly fact is that the higher you go, all roads lead to luciferianism.  

http://www.mefeedia.com/watch/32463793

if you watch the above video and reorganize what you know about world history, systems theory makes less sence, and what the bible says makes more sense.  

Sun, 07/15/2012 - 11:14 | 2617246 JPM Hater001
JPM Hater001's picture

"everywhere else I'm considered the lunatic fringe, on Zero Hedge I'm a moderate."

Paraphrasing caddie shack-
Don't sell yourself short doc. You're quite the lunatic.

Sun, 07/15/2012 - 02:26 | 2616924 CompassionateFascist
CompassionateFascist's picture

  And now, let's cut through the complexity with a little parable. Around about 2006, I was sitting in my cab having a conversation with one of the company big wheels, a plankholder with 20% of the stock who drove occasionally because he enjoyed it. He was also a local real estate tycoon with c. 6 heavily mortgaged rental properties. I told him in so many words that the entire political economy was a debt-financed Ponzi scheme, and that housing prices were in a gigantic EZ-credit forced bubble. He said, "No, no. There are safeguards now. We could never have another Depression." This astute individual is now living in his mother's garage. As for me, I continue to invest in lead - .308 for my lovely M1A - because we are all about out of time. 45 days and counting to the IranWar. Then it all goes.

Sun, 07/15/2012 - 05:15 | 2616976 Vic Vinegar
Vic Vinegar's picture

Bullshit.  No way you had a cab ride and didn't bring up the Jews.

Sun, 07/15/2012 - 09:45 | 2617128 FEDbuster
FEDbuster's picture

Vic read it again, he was the cab driver talking with one of the Cab Co. owners.

Stocking up on .308 is a risk and counter party free investment.  Don't forget some food and a water filter, too.

Sun, 07/15/2012 - 14:26 | 2617310 cleverlemming
cleverlemming's picture

This started off like a Thomas Friedman anecdote.

 

So, he asked me, "why don't poor people want to work?" And that's when it struck me. The world is a giant tampon. Only flattened.

Sun, 07/15/2012 - 04:37 | 2616964 AUD
AUD's picture

The latter explanation is the correct one Dr Benway. What you need to understand is that it is the government which allows the gamblers to paint themselves into a corner, then gives them a pass out of their predicament with its monopoly over the monetary system.

It does it for the simple reason that the government has been bankrupt since at least 1918. It relies on the banking system to monetise its debt, since that is what banks do - monetise debt. If the present monetary system dies, so does the government. These people think they are gods, look at Kevin Rudd or Hillary Clinton in the US. Gods are immortal.

Re. your article, this Nicholas Bolton fellow, wasn't he the one who tried some pump & dump scam with a insolvent construction company a few years ago?

Sun, 07/15/2012 - 05:39 | 2616982 Dr Benway
Dr Benway's picture

Yes that's right, he got the board to greenmail him at other stockholders expense, by acquiring enough of an interest to assure mutual destruction.

 

The listed investment sector is in serious serious Minsky-moment level trouble so it's not surprising that dubious characters are drawn to it. The sector has been relying on issuing truckloads of shares to fund the ponzi, but it is getting harder to do so.

 

Also, it is questionable whether even ASIC, with its RainMan-esque levels of incompetence, can let this go on much further. The investment companies are paying dividends twice of what they earn, covering the difference with share issues, then bragging about their dividend yield. They have bought around 20% of each other to prop up share prices.

Sun, 07/15/2012 - 05:59 | 2616990 AUD
AUD's picture

The sector has been relying on issuing truckloads of shares to fund the ponzi, but it is getting harder to do so.

That sounds exactly like the junior gold mining sector on the ASX. I've wondered for a while now about all this 'mining boom' talk when many of these 'juniors' are trading well below their 2008 lows. They are shit companies, all talk & no gold, & no dividends, but still a real mining boom should see their share prices doing well.

Sun, 07/15/2012 - 06:28 | 2617000 Dr Benway
Dr Benway's picture

I am not so sure that people will be so easily enticed back into shares in the foreseeable future. On a gut level, I think people are wising up to the scam. To achieve a global ramp big enough to make shares seem attractive, they would have to do the mother of all QEs, and they don't dare do that, because what if they try it AND IT FAILS? Then they would be staring into the abyss.

Sun, 07/15/2012 - 06:40 | 2617007 AUD
AUD's picture

Maybe, but its the notion of a Boom! I'm getting at. A Boom! - note the word BOOM - is a credit phenomenon. There is next to no credit issuance in the junior mining sector, thus I find it difficult to believe their really is a Boom!

I know there is a Boom! in government credit but that's global, except for Greece.

Sun, 07/15/2012 - 06:29 | 2617001 AUD
AUD's picture

One other thing. If these companies are inflating their share prices by buying each other up, they must either have the 'cash' or be pledging their 'assets' to some bank as loan collateral.

The Minsky moment might not just be the listed investment sector. In fact, you'll find a pile of the same shit on the balance sheet of the RBA. Not that they would admit it, but the Minsky moment might go all the way to the top.

Sun, 07/15/2012 - 06:41 | 2617009 Dr Benway
Dr Benway's picture

Well the Minsky moment I was referring to is for the subset of LICs that trade at a premium to NTA.

These companies buy a bunch of listed shares as assets, then issue their own shares which they trick granny-type investors into buying. (Yes its a tawdry racket. Truly lame.) The LICs try to push their share price above NTA, because that means scamming the granny double and getting an immediate hit of free money.

But if they manage to push share prices above NTA, that means that they will have to pay more in dividends. The equation they are trying to settle is this:

* Pay higher dividend yield than the company's assets generate

* Have a higher share price than the company's net tangible assets

* Have a higher dividend yield growth rate than that of the company's assets

* Have a higher share price growth rate than that of the company's assets

So by pushing their share price far above their NTA, they are sowing the seed of their own destruction, because that means that the high amount of dividend will necessitate a high stock issuance which in turn will lead to an even higher dividend payment next time. This feedback loop would at some point be irreversible.

Sun, 07/15/2012 - 07:02 | 2617021 AUD
AUD's picture

Understood but if these shares are listed, then the LIC's must have a bank account with which to by these shares. They either have the 'cash' or they are borrowing it 'on margin'. If the latter is the case, the bank has exposure to the credit of the LIC, an IOU of some kind.

What's the IOU of the LIC worth? I'll let you in on something. The RBA was massively exposed to LIC type credit in 2008, though maybe not the institutions you are talking about. That's why the RBA needed a multi billion loan from the Fed.

The Ponzi scheme goes right to the top. Minsky Moment?

Sun, 07/15/2012 - 07:34 | 2617034 Dr Benway
Dr Benway's picture

Aha now I understand what you are saying. That is a truly terrifying thought. Maybe I was very naive in thinking they wouldn't ramp each other with margin. But it would explain a great deal if you're right.

 

And if all shares are propped up by similar antics, not just LICs, then we are of course facing not the third largest Ponzi in history but the financial apocalypse when it all pops. Which I guess was the theme of the article.

Sun, 07/15/2012 - 07:48 | 2617016 Dr Benway
Dr Benway's picture

edit

Mon, 07/16/2012 - 13:51 | 2620919 Diogenes
Diogenes's picture

Not necessarily. They can buy some shares, pledge them as collateral to borrow money, use the money to buy more shares, pledge the shares as collateral to borrow money, and so on to infinity or 100:1 leverage.

 

Mon, 07/16/2012 - 23:41 | 2623070 thriftymost
thriftymost's picture

You never saw Eyes Wide Shut?

Kubrick was nobody's fool.  That flick was not just entertainment.

Sun, 07/15/2012 - 06:38 | 2617008 Lord Koos
Lord Koos's picture

Just because management is saved does not mean they will have the wit to do anything besides a knee-jerk security lock down, which is a reaction, not a solution.

Sun, 07/15/2012 - 10:34 | 2617175 Vooter
Vooter's picture

I think it's even more incredibly naive to think that when the collapse comes, it's going to be "managed." LOL...you might as well just be saying, "Don't worry--everything will be fine," or (as the article mentions), "This time it's different." Your "managers"--no matter how much money they have or how big their armies are--bleed just like everyone else, and when the day finally comes that their fellow humans are pointing guns in their faces and not backing down, they'll run for the hills, just like other nefarious "planners" have run for the hills throughout human history....

Sun, 07/15/2012 - 21:27 | 2618998 Bringin It
Bringin It's picture

Who said "Never let a crisis go to waste."?

Sun, 07/15/2012 - 01:04 | 2616879 Mr. Fix
Mr. Fix's picture

Complete and  total self-reliance will probably be one's only means of survival.

 Certainly, small communities that work together will survive.

 People who depend on banks, will be doomed.

 People who depend on a government handout, will probably die.

 Many many people will die,

 those that go out of their way to fight back, will also die.

 I'm betting survivability of what is coming will come down to a combination

 of being virtually invisible,

 off the grid( which would collapse anyway,)

 and being able to survive on the fruits of one's own labor.

 A total collapse is just that.

 Survival of the fittest.

 Although you can't prepare for each and every possible scenario,

 you can certainly  prepare for the most obvious ones. 

Sun, 07/15/2012 - 01:14 | 2616896 El Tuco
El Tuco's picture

A couple of weeks ago I had read the story of someone who survived for a little more than a year surrounded by enemy during the Bosnian War.

If things ever got that bad here in the USA, well gold isn't gonna help anyone make it through.

He mentioned that the only way you could survive was to be part of a larger group. Food and Ammo were the only things that mattered. They would whore out their own women for food and ammo.

The only people that made it were the ones in large groups. Anyone who wasn't , no matter how well armed they were or how much food they had were basically killed for it.

 

Sun, 07/15/2012 - 01:31 | 2616904 Dr Benway
Dr Benway's picture

You wouldn't happen to have a link by any chance? Sounds like an interesting read.

Sun, 07/15/2012 - 02:01 | 2616918 Manthong
Manthong's picture

A bright spot in these gloomy scenarios is that there appears to be no deficit of whores.

Sun, 07/15/2012 - 09:51 | 2617130 FEDbuster
FEDbuster's picture

The difference will be the farmers will be getting some, instead of the Wall St. banksters.

Sun, 07/15/2012 - 02:15 | 2616926 Citxmech
Sun, 07/15/2012 - 02:19 | 2616929 Walter E Kurtz
Walter E Kurtz's picture

http://shtfschool.com/

Good articles from first hand experience.

Derp. Sorry for the double link.

Sun, 07/15/2012 - 04:06 | 2616960 Dr Benway
Dr Benway's picture

Cheers! Surviving one year of the apocalypse, pretty hardcore.

 

Here is an extended interview I also found, with some absolutely fascinating and surprising insights in what worked and what didn't.

 

http://www.tacticalintelligence.net/blog/shtf-survival-qa-a-first-hand-account.htm

Sun, 07/15/2012 - 09:22 | 2617097 Mad Mad Woman
Mad Mad Woman's picture

I found the article:  http://www.tacticalintelligence.net/blog/shtf-survival-qa-a-first-hand-account.htm

In fact this was talked about the other day here at ZH. I bookmarked it for reference in the near future.

Sun, 07/15/2012 - 15:16 | 2618052 Citxmech
Citxmech's picture

Salvador, the thing about the scenario where a roving hoard of 100s show up at your door is that you’re pretty much fucked.  If it’s that bad out there, you better have a hardened facility w/clear perimeter and the ability to hole-up for longer than the hoard can wait (see e.g.: “siege”).  This means the ability to access water for that time also. 

For a Hail Mary, the ability to direct accurate long-range firepower can be a game-changer in tough situations, however.  I recall a story where a U.S. Embassy was under siege in some African country by a huge mob.  A marine sniper popping the cranium of the lead asshole with the megaphone changed everyone’s mood however and the crowd dispersed. 

The level of defense needed is going to depend on how desperate everyone is, how mobile they are, and how resilient your neighbors/community is.

Sun, 07/15/2012 - 23:49 | 2619321 CompassionateFascist
CompassionateFascist's picture

This is why I favor the M1A over the AR: U can start changing the odds at extreme range, and maybe nail one or more of the lead instigators. If it gets to a more organized, Civil War type scenario - and I think it may eventually - then an ideal mix in, say, a 10-person militia unit might be 6 ARs + 4 M1As....or the equivalent. On behalf of the AR, killer chix - cf. Ann Barnhardt - can handle them effectively...prolly not the heavier/kickier M1A.  

Sun, 07/15/2012 - 09:08 | 2617086 jwoop66
jwoop66's picture

http://shtfschool.com/

Haven't joined, but the e-mails are interesting.

Sun, 07/15/2012 - 15:36 | 2618118 El Tuco
El Tuco's picture

Sorry for the late reply, it was a AMA on Reddit. I don't have the direct link to the post but you could try and search for it. Was one of the better ones....

Sun, 07/15/2012 - 15:07 | 2618015 debtor of last ...
debtor of last resort's picture

Well, 99% should do the job.

Sun, 07/15/2012 - 08:09 | 2617054 Withdrawn Sanction
Withdrawn Sanction's picture

A total collapse is just that.
 Survival of the fittest.
 Although you can't prepare for each and every possible scenario,
you can certainly prepare for the most obvious ones.

And so it is.  I often wonder though what's on the other side of a collapse? IOW, is it worth surviving through, esp if it entails murdering your fellow man, or the loss of many loved ones, or living a hand and mouth existence.  Maybe losing one's humanity IS worth it if it means survival.  But then again, maybe not.  And perhaps the other side does not involve these things.  Maybe a new golden era will dawn and that would be grand and worth preparing for and surviving through tg see.  Obviously, I dont know the outcome, but, as long as we're considering worst-cases it might be worth thinking all the way through.

I remember back in 1983 or 84 they showed a TV movie called "The Day After Tomorrow" (not the one about global ice age but a post-nuclear exchange world).  All my life, up to that point, in health class and social studies, and so on we had been inculcated w/duck and cover, first aid for radiation burns, how to forage for clean water, etc. etc. aimed at teaching us how to survive a post nuclear world.  All useful information until I watched the film.  Then it dawned on me like a lightning flash:  what's the point?  Wandering around in a radiated waste land, bumping into blind and starving people,  wondering if in the next minute someone would kill you over a slice of bread.  Who cares?  And w/that realization, the silent deep-down fear of years melted away.   The nuclear nightmare no longer held power of me or my imagination.

And so I return to the present essay on a post financial armageddon.  I make no judgments on anyone's decision here.  If you want to survive at all costs, good for you. And I certainly see the value if making preparations for temporary break downs in systems, or moderate to lengthy inconveniences because of mistakes or miscalculations.  However, as far as survival in a Hobbesian jungle is concerned, I think I'll take a pass.  Good luck to all--even to those who choose differently.

Sun, 07/15/2012 - 11:35 | 2617276 A Lunatic
A Lunatic's picture

So, to be clear, does this give us permission to cook and eat your liver in a worst case scenario?

Mon, 07/16/2012 - 05:04 | 2619535 FreedomGuy
FreedomGuy's picture

I heard somewhere it will go well with a nice chianti, lol!

Sun, 07/15/2012 - 13:34 | 2617705 Sabibaby
Sabibaby's picture

As is mentioned, geographical location and wealth will have no bearing on who the most fit are. We may be suprised to learn that those suffering under current day-to-day life may actually thrive on the other side while those doing well may be the ones suffering. I guess we won't know until we get there...

Sun, 07/15/2012 - 22:33 | 2619148 Think for yourself
Think for yourself's picture

I currently live in panama. Indigenous people here sometimes call each other "cockroach" as a term of endearment. Of course, never say that out loud, as a non-indigenous using that word is worse than a white man calling a black "nigger" with all the contempt he could pump into the word.

No electricity, no running water, survival agriculture and a couple chickens, and these people thrive in the middle of jungles where only dedicated and well-trained survivalists would have a chance. Once SHTF, all my nice systemic knowledge of most aspects of the known universe (even though not specialized, as a generalist I'm a walking encyclopedia) will not help me survive one week while these guys keep on chugging without even noticing.

Well, they might bitch a few days about having to go back to making their own flip flops instead of buying cheap chinese ones. That's about the extent of it.

I've been working in tourism here. Nice job, legitimate livelyhood, but I dont see that industry holding up. I managed to save a minimum amount of wealth for survival; now I'm leaving that job to go work on an experimental high-output urban setting permaculture project. In this case urban setting is a 20 000 people town in the midst of a productive agricultural valley, so at least in case of collapse it's not food people will be fighting for. Then these sort of skills will be very useful to help communities be resilient.

Anyways. It's already late to get back to learning these basic skills if haven't done so yet (most SHTF planners already did), but if you didn't, get into it.

Sun, 07/15/2012 - 11:11 | 2617245 ChacoFunFact
ChacoFunFact's picture

"Survival of the fittest."

This is a pet peeve.  It is not the survival of the fittest that ensures the success of a species or variety of species!  Those who have success are those who are best adapted [to their environment]. 

When we use the phrase "survival of the fittest" it is not precise enough and allows for the usual misinterpretation as "the fastest", "the smartest", "the strongest", etc.

You can be really, really smart and still burn at the stake.

Sun, 07/15/2012 - 13:36 | 2617712 Sabibaby
Sabibaby's picture

exactly, you can be a bum living on the streets. Filthy and disease ridden but that may infact be what sets you apart to survive as compaired to the typical and clean first world individuals.

Sun, 07/15/2012 - 11:51 | 2617316 mkkby
mkkby's picture

@ Mr Fix:

This is really lazy and boring thinking.  You watched road warrior and decided it would really happen.  What a fucking joke.

What will happen is already happening, so we can all see it live and in person.  When systems collapse, they will be taken over by the socialist authorities.  If food systems stop, farms and grain stores will be nationalized and resources handed out via Fema or other agencies.  If energy flows stop they will be rationed. Call that your large group if you like.

Scary sounding articles like this are nothing new.  It's the same story of bail me out or everyone dies.  LET THE FUCKING BANKS DIE ONCE AND FOR ALL.  Society will adapt without going feral.  There will be winners and losers, but after the dust settles a better, more fair system will arise.  Maybe we'll even try capitalism for the first time.

Sun, 07/15/2012 - 13:48 | 2617760 Citxmech
Citxmech's picture

How well did that shit work during Katrina?  I vividly remember the Rodney King riots - the places that weren't sacked were the ones defended by Korean store owners who were armed to the fucking teeth.

Sometimes the Cavalry doesn't come.

Mon, 07/16/2012 - 05:02 | 2619534 gotobeating
gotobeating's picture

I was in LA for the King riots. Scary shit. But eventually, the cavalry did come.  And a lot of people got shot. It won't be pretty, but society won't devolve into a complete pile of shit. At least no until after the nukes....

 

Sun, 07/15/2012 - 11:57 | 2617307 HardAssets
HardAssets's picture

This has been thought about for a long time. A banking system for safekeeping of funds, where you paid them a small fee like a safe deposit box - - and other banks where it was understood that your money would be prudently loaned out for investment & return. The 'safekeeping' bank, would return your funds (100% backed commodity based money) on demand. Any bank that did not do so would immediately be shut down by authorities and the guilty individuals carted off to prison for fraud. (No b.s. 'corporate' cover for those committing crimes.) The 'loan banks' would require that depositers wait to have their money returned to them - - 30 days or whatever. People would place deposits in either type of bank based on their record of security and performance (in the case of the loan banks).

'Fractional reserve' fraud  would no longer be tolerated.

We'd then have a sound banking system - - - of course today's current big insider banksters and politicians would fight against this tooth-and-nail.

 

Sun, 07/15/2012 - 00:22 | 2616803 iDealMeat
iDealMeat's picture

hold on...

There will never be a global collapse......   

Yes, the Finance industry will collapse and try to claim armageddon.

Fact is.  Local, cash based business will chug along just fine.

We trade in: YOUR productivity.  Or your metal, down to nickels..

bring it..

 

Sun, 07/15/2012 - 00:28 | 2616834 mcguire
mcguire's picture

wrong!  just think about that no more gas tankers will come into your city, and go from there.. martial law in a week.

Sun, 07/15/2012 - 23:56 | 2619333 Liberty2012
Liberty2012's picture

People do adapt. Why should oil drilling stop just because the customary payment plan is gone?

If a sufficient number of capable people want civilization, we will have it. Thugs only win if we let them.

Regarding the Katrina comments, read Isaac's Storm about the Galveston hurricane. Chaos is temporary. It's what you create afterwards that counts.

Sun, 07/15/2012 - 00:29 | 2616838 Doña K
Doña K's picture

In a supply chain collapse, pity those stuck in inner cities and/or large cities. 

Sun, 07/15/2012 - 01:06 | 2616891 MeBizarro
MeBizarro's picture

Those too in isolated rural areas especially arid ones. 

Sun, 07/15/2012 - 03:23 | 2616951 Offthebeach
Offthebeach's picture

They are the already conditioned FSA reserves that will physically roam out to take what resources they and their elite masters need. Think Lenin/Stalin vs. Kulacks. These elite and the Free Shit Army( FSA )already do takings via tax codes and majority
"De-Mob-ocracy".

Sun, 07/15/2012 - 23:59 | 2619338 CompassionateFascist
CompassionateFascist's picture

The Kulaks had no weapons; only the Reds and their Jew enforcers were armed. This is not the situation in America today. And why Soros, Bloomberg, Schumer, Feinstein et al are so eager to take down the IInd Amendment. But they have mis-timed their globalist racket, and the Crisis is upon us while we are still armed...indeed, more so every day. Too bad for the ZOG. 

Sun, 07/15/2012 - 00:31 | 2616840 MsCreant
MsCreant's picture

Local resources are not nearly as cheap as the globally available ones. We will have much less, but I agree, we can make the choice to be satisfied with less. But I am clear, that IS the definition of global collapse. 

I say bring it, too. Fuck this fake propped up shit. Darwin knows the deal. This ain't sustainable, thus it will not be the path we evolve towards.

Sun, 07/15/2012 - 00:41 | 2616856 RockyRacoon
RockyRacoon's picture

Clearly, Missy.   All I have done is make sure my own surrounds are secure and that my ability to interact with those immediately around me is functional.  The rest can rot in hell.   That's what they think of us.  Turnabout is fair play.

Sun, 07/15/2012 - 09:30 | 2617106 Mad Mad Woman
Mad Mad Woman's picture

I've been saying bring it on for months now. I'm ready, or as ready as I will ever be. My partner and I have stocked up on different things and we're ready. All of our neighbors in our small development have guns and big dogs and we all watch out for each other as it is now. It will be more so when the time comes. We have several mechanics that can fix anything, and others with needed survival skills too. Some of our neighbors have their own weapons armory. We'll be safe. :-)

Sun, 07/15/2012 - 17:02 | 2618368 groundedkiwi
groundedkiwi's picture

Keep an eye out for those  overhead drones.

Sun, 07/15/2012 - 01:06 | 2616874 Yen Cross
Yen Cross's picture

 SWEET! I knew you had it in ya!  Pay no attention to Rocky.    He's a dumpster diver!

 

 UPDATE; global slowdown!   demand down. You can't force feed markets!  tarp1-3 /China rrr & rate cuts ( ghost cites)

 India in the shitter/ Brazil rate cuts / South Korea rate cuts ect....>

Wed, 07/18/2012 - 16:54 | 2629840 RockyRacoon
RockyRacoon's picture

Get used to it.  Dumpster diving will become the new normal.  Even rich folk are becoming familiar with pawn shops these days.   I just happen to be ahead of the curve.

Sun, 07/15/2012 - 12:05 | 2617380 HardAssets
HardAssets's picture

Maybe we'll have much less . . . or maybe not. At least of the things that matter. Compare ourselves with all our bullshit 'toys' and crap Made-In-China, to our forefathers. They had mental & physical toughness. They had their well earned pride. They had their independence and a helluva lot more Freedom.  Maybe we're not giving up a damned thing afterall.

Sun, 07/15/2012 - 08:11 | 2617003 TWSceptic
TWSceptic's picture

Not the (smaller) banks, but the semi-government institutions i.e. central banks lie at the source of it all, they are the offspring of a merger between state and evil corporate power. The product of a disguised fascists system.

 

The moment you realize banks exists in a free market and will also behave with the motivation of greed* you understand that not banks are the problem, but government itself.

 

*nothing wrong with greed BTW - it is the powerful engine that drives capitalism, but in a free market the gas is regulated by risk and other factors. Which is more often than not absent in a government controlled system.

Sun, 07/15/2012 - 08:52 | 2617048 SWRichmond
SWRichmond's picture

Peak credit drove peak oil.  After the credit collapse, oil will be cheap, but nobody will have any "credit-money-thingies" to buy it with.

From the paper: "...the credit backing of fractional reserve banks, monetary systems and financial assets are fundamentally incompatible with energy constraints."

This is entirely compatible with the simple fact that debt pulls demand forward in time.  Peak debt = peak oil.

Martenson, are you listening?

Sun, 07/15/2012 - 09:37 | 2617117 Mad Mad Woman
Mad Mad Woman's picture

Oil may be cheap after the collapse, but will your local gas station have it? I doubt it. Gasoline locations will be few and far between and will be heavily guarded. 99% of all gas stations are company owned. Do you think that they will sell the gas cheaply?  No way. That's why alternatives must come online and now.  Otherwise, Big Oil has got us by the nuts.

If you want ideas about survival, I recomment watching that teevee show "Falling Skies". It's just started it's 2nd season. You can get lots of ideas from the series.

Sun, 07/15/2012 - 10:20 | 2617164 DutchR
DutchR's picture

Or go to modernsurvivalonline.com

They have a huge (downloadable) database.

Sun, 07/15/2012 - 12:20 | 2617416 HardAssets
HardAssets's picture

We just may be surprised what people come up with when push comes to shove.

Alcohol cars run off of corn or waste products ?  A new 'Stanley Steamer' ?  Much improved fuel mileage and oil exploration in the states ?

We've gotta get through the immeditate shock of a break down - - but human ingenuity goes to work when survival of you and your family is at stake. Playing a 'game' with high stakes produces creativity. Who knows, we may even dump the banksters and their fake 'money' and the lawyer/liar/politicians on their payroll.

 Hell, we may even quit wasting so much time watching useless garbage on t.v. !  (That's almost inconceivable for most people.)

Sun, 07/15/2012 - 12:53 | 2617553 Oh regional Indian
Oh regional Indian's picture

Or try this... 

 

/6666-beyond-carbon-beyond-time/

Sun, 07/15/2012 - 08:14 | 2617056 Freewheelin Franklin
Freewheelin Franklin's picture

Since inception, banks created a system of slavery.

I wouldn't say, "since inception". There was a time when banks were a tool for businesses. Now, businesses are a tool for banks.

Sun, 07/15/2012 - 11:45 | 2617288 Jack Burton
Jack Burton's picture

nope-1004, Yes a good summation!  Finite is a word the financial engineers have banished from their vocabulary, many others have as well.

The present banking and speculation systems are not going to survive much longer. Watching the entities of Governments and central banks struggle to maintain the system since 2008 has been amazing. Nothing is off the table!

Finance should be a service, a utility to good people and good companies. These entities are what can grow a real economy. We have traded in that system for casino gulag capitalism!

Sun, 07/15/2012 - 12:46 | 2617541 Stock Tips Inve...
Stock Tips Investment's picture

Individuals, companies and governments have generated this tremendous disaster. Everyone who spent somewhat more than your income, who prioritized consumption over savings (or investment). Governments with chronic deficits became addicted to debt. The companies want to grow faster than their means, borrowing beyond their means. People prioritized consumption versus savings. Having "stuff" became an obsession. When revenues were not enough to feed this monster, they resorted to borrowing, leading to unexpected limits. Banks were the instrument that made ??this disaster. With interest rates so low and the almost infinite capacity to borrow, banks lend out to individuals, companies and governments. The important thing was to "make a difference" and profitable operations. Much government. Little competition. Lack of capitalism. Today we begin to live the consequences of this disaster.

Sat, 07/14/2012 - 23:27 | 2616756 Big Slick
Big Slick's picture

Does this mean Ann Margret's NOT coming?

 

Sun, 07/15/2012 - 00:35 | 2616848 Ineverslice
Ineverslice's picture

"I know funny, sir...and you ain't it..."

Sun, 07/15/2012 - 10:02 | 2617138 ParkAveFlasher
ParkAveFlasher's picture

everybody hates me, joker

Sun, 07/15/2012 - 21:31 | 2619012 fourchan
fourchan's picture

lol

Sat, 07/14/2012 - 23:49 | 2616779 Mr. Fix
Mr. Fix's picture

I may be going out on a limb here,

but I suspect that the main reason there does not appear to be any risk management,

is that this total systemic collapse is being planned.

 These are not risks at all,

 they are well orchestrated means to demolish the current financial system.

 Of course after everything implodes, they may in fact try to maintain some air of plausible deniability,

 and even pronounce that nobody could have seen this coming.

 And what's worse than that, is that so many people will buy that as a explanation.

 The criminals are in charge now, and there is absolutely no one to bring them to justice.

 They are not worried about getting caught,

 they only seem to be concerned about the propaganda and spin.

Sun, 07/15/2012 - 00:19 | 2616821 knukles
knukles's picture

As many a past risk manager will attest, while there may be risk management tools (most of which range from not very good to useless) and risk managers (who by and large are not listened to by anybody inside the firms in which they operate but are trotted out to clients and regulators for large Tijuana pony shows) the senior management and those effecting the risk ignore the recommendations thereof for if they win, they get paid, if it goes to shit, the risk manager who has been totally isolated and told to fuck off, mind his own business and never been rewarded for this pile of shit, gets sold down the river.

Dig?

And then there are cocksuckers like the standard run of the mill equity manager who yanks his own crank on CNBS telling stories he'd told himself in his alcohol addled dreams that all's well, never mind, it's different this time, the markets are efficient, its already discounted, whateverthefuck...
Doesn't give a shit, anyhow because he thinks he's smarter than the average bear (LOL) ..... and go figure just how them track records stack up... which ain't favorable.

Like listening to Summers and Krugman on Yeekanomics
Or Falcone on hedge fund investing
Or oh neverthefuckmind

 

Sun, 07/15/2012 - 00:30 | 2616839 mcguire
mcguire's picture

i think Mr. Fix's point is that there is no risk because the man behind the curtain has planned it all.  if you are in the 1%, you are fucked.  you need to be in the 0.0001%.. 

Sun, 07/15/2012 - 00:48 | 2616862 Mr. Fix
Mr. Fix's picture

  That is exactly the point. Those at the very top, are planning a global destruction of all of the financial systems.

 Before all of this has concluded, they will try to gain total control over everything.

 I have serious doubts, that we will actually make it to the elections as a free and open society.

 Most of those freedoms have already evaporated,

 most people just haven't noticed yet.

 Depending on the outcome of the election,

 which is basically irrelevant,

 I think the odds of ever making it to Inauguration Day are slim to none.

 Obama plans on being the last president.

 even if he's just a puppet,

 it does not matter.

 Our freedoms have been sold down the river.

 I am absolutely stunned at how often I hear that we have a government with built in checks and balances.

 They have all been gone since 2008,

 and probably a lot longer than that.

 There is no more lawful authority on the planet. 

 the only way to resolve this kind of lawlessness,

 will instantly be deemed as lawless. 

Sun, 07/15/2012 - 05:05 | 2616974 financial apoca...
financial apocalyptic contagion's picture

After all I have read on this amazing comment threat Mr. Fix, Dr. Benway, Ser Mcguire,

I have to ask, Who is John Galt?

If the elites have planned this, I'm sure some messiah on our side who believes in freedom and personal liberties has prepared for this.

We need to find that group.

Sun, 07/15/2012 - 06:27 | 2616999 Dr. Sandi
Dr. Sandi's picture

If you don't know who John Galt is, you're already boned.

There are no sides, and no justice; it's just US.

Sun, 07/15/2012 - 09:39 | 2617121 TheSilverJournal
TheSilverJournal's picture

The financial collapse was planned at the creation of the Federal Reserve. FRN's are simply counterfeit gold and silver, which the real schemers knew all too well. A ponzi scheme backed and welcome by government because now the Fed could print the money for Congress to spend. The original schemers have long since been out of the picture and all that's left is power hungry fools that want to protect their ability to redistribute wealth.

When the counterfeit notes are found to be the worthless counterfeits that they are, much value will flow back into the real thing.

The financial collapse does not necessarily mean the breakdown of society. What it does mean is a stranding of those dependent on government. The political choice of living in chaos has yet to be made.

If freedom is chosen, the misery will be deep, but it will be quick and in a couple short years we could be much more prosperous than today.If government is chosen, the misery will be deeper and will last as long as government keeps the economy in chains. The most critical point will be after the bond bubble bursts and the dollar hyperinflates away, rendering the printing press worthless and the cries for government to "help" grow the loudest.

Sun, 07/15/2012 - 09:40 | 2617123 Mad Mad Woman
Mad Mad Woman's picture

Google John Galt.  And read everything that's available on him.

Mon, 07/16/2012 - 00:12 | 2619355 Liberty2012
Liberty2012's picture

We are John Galt.

The time for lamenting is about over. Its time to talk about what we will do.

Sun, 07/15/2012 - 06:01 | 2616987 i-dog
i-dog's picture

 

"Obama plans on being the last president"

Do not fall into the trap of thinking he has any say in his "role" within the "play". He was carefully trained from a young age to be the Manchurian Kandidate, the Trojan Horse. He is 3rd generation CIA - not some scrappy kid who fought his way to the top!

His charm, blatant lies and ethnicity got him elected into the top seat in order to pass the executive orders and pull the plug. It is "others" who have planned that he is to be the last president.

When the plug has been pulled, he will be subject to orders from the Global Politburo in exactly the same way that Putin, Yeltsin, Gorbachev, Kruschev, Stalin and many others have before him. Those puppets who don't continue to follow orders (because they begin to believe they have gained sufficient personal power and following to be able to do the "right thing", like Kennedy, or "go rogue", as in the case of Stalin) get assassinated and the next "face for the people" is put in place.

The timescales and ideology of those who have long planned this in the background span not just generations, but centuries! And it is not just a few families, but tens of thousands of willing adherents -- all beavering away at producing strategies, tactics, propaganda, regulations, training, actions and mutual support. Right at the very top are just a few families, but there are other families waiting to take their place at a moment's notice to continue the ideology. Luciferianism (rule by the "enlightened" few) is the ideology and global domination by that elite few has always been the objective.

Your posts in this thread are very accurate in all other respects. This is the end-game and only secession from the central powers by one or more well-armed (with M.A.D) and determined small states has any hope at all of defeating them - though the disintegration of the European Union prior to the shutdown of the US would be a major setback for them.

As you say at the end of your post:

"There is no more lawful authority on the planet.
The only way to resolve this kind of lawlessness,
will instantly be deemed as lawless."

This is why we cannot use the government and legal system that they have constructed. We must disengage from it and be prepared for them to attack any sheep leaving the fold -- hence the need for M.A.D. defense.

Sun, 07/15/2012 - 09:46 | 2617129 Mad Mad Woman
Mad Mad Woman's picture

i-dog, you sound a lot like my partner. She's been saying the almost the same exact thing you just said in your comment. I have come to believe that it is true, that he will be the last president. The Bohemian Grove people, the Bildabergers, and the group above them have been planning all this and they are soon ready to let the organized chaos begin. 

I like crossbows and sling shots, they are quiet weapons.

Sun, 07/15/2012 - 11:17 | 2617249 i-dog
i-dog's picture

Be thankful that at least you are awake now and have prepared accordingly! (Even if I/we are wrong, we are still in better shape than anyone else for now having our lives and finances in order and our eyes wide open to the corruption and incompetence of centralised federal governments).

It will hit most of the indebted "free shit" brigade like a Mack truck coming out of nowhere...leaving their heads buried in the sand and their bodies scattered elsewhere....

Sun, 07/15/2012 - 10:15 | 2617152 Ghordius
Ghordius's picture

I'm absolutely clueless about why you think this: "though the disintegration of the European Union prior to the shutdown of the US would be a major setback for them."

Anyway, isn't it a bit crude? "Shutting down" whole nations, "disintegrating" national relationships and treaties on purpose? For someone that has a multigenerational plan spanning centuries, I mean. Or is it to "rebuild" it in a new manner? As you can imagine from previous posts, I'm very skeptical of the faisibility of grand plans in this scale.

Sun, 07/15/2012 - 11:26 | 2617194 i-dog
i-dog's picture

We don't have long to wait to see who's right, Ghordie.

Either it is carefully planned, as I have been saying for nearly 2 years, and we find out within just a matter of 60-90 days from now, or it is just some intermittent "natural" hiccup, or part of a cycle, that will be solved by the Eurocrats -- as you keep trying to convince us -- in which case the slide on both sides of the Atlantic will drag on for years.

On an even shorter time scale than my long-standing prediction of Sept-Oct 2012 for the finale, the London Olympics also have the potential for some action/s of major symbolic significance (à la 9-11) within just a few weeks. I only came across the strong Zionist (ie. Vatican) connection to the Olympics in the past few days (see 2615250).

Mon, 07/16/2012 - 02:32 | 2618128 Ghordius
Ghordius's picture

<del>

Mon, 07/16/2012 - 07:55 | 2619647 Doña K
Doña K's picture

I think the Greeks should not send the Olympic flame as the Olympics are no longer amateur, or charge them an arm and a leg for it.

Sun, 07/15/2012 - 12:34 | 2617497 HardAssets
HardAssets's picture

"I'm very skeptical of the faisibility of grand plans in this scale."

Yes, the planners are freakin' crazy bastards. They think its actually gonna work, that human beings such as themselve can forecast and control the future.

One piece of advice for any such demented 'planners':

Shit happens

Sun, 07/15/2012 - 09:56 | 2617134 Nachdenken
Nachdenken's picture

Checks and Balances indeed.  For that one needs enforceable laws, laws based on volition, not coercion. What have we ?

Follow Germany - Rechtstaat, a State based on Laws - and see how the judiciary is put under pressure and will be "elected by Parliament" should the constitutional court put down the governments European/Euro contracts.  The executive aka bureaucracy survives and is a self-preserving entity.

Neither Europe nor the USA will collapse, they are already being changed from democratic nation states - however poor in practice - into command economies that will work to pay the wages and privileges of the hidden bureucracy.  That is the real core of power.  The focus on Bilderberg and Illumini or others is false.

Sun, 07/15/2012 - 00:26 | 2616830 FreedomGuy
FreedomGuy's picture

When I look at the charts, look at the interventions, look at the complete unwillingness to change, in fact doubling down of the genius planners....I often cannot sleep at night.

Most of my family and friends have this general sense that things are wrong but they are completely clueless as to why. After it goes wrong and collapses they are not likely to know what to do or who to follow, either. This is when the "strong man" promising solutions appears.

Sun, 07/15/2012 - 00:49 | 2616870 RockyRacoon
RockyRacoon's picture

I only stay on top of the machinations because I like to know the make and color of the truck that hit me.   I'm just funny that way... and just as dead.   But I do feel better knowing why.   I hate surprises.

Sun, 07/15/2012 - 06:05 | 2616991 i-dog
i-dog's picture

Well said. My sentiments exactly.

Sun, 07/15/2012 - 09:31 | 2617108 my puppy for prez
my puppy for prez's picture

That is exactly my modus operandi!  I can sleep like a baby at night while simultaneously knowing the most horrific of realities....it's the NOT knowing that keeps me up at night.  I think certain people are simply wired this way.  Others, not so much.  It certainly makes for interesting personal relationships.

I liken it to "The Gawker marries The Ostrich".

Sun, 07/15/2012 - 13:09 | 2617622 HardAssets
HardAssets's picture

I know what you mean.

I like to know what's up in order to have an overall feel for things. You never know when you might have to make a decision right Now - - - having an as accurate a map as possible may prevent some stumbling around in confusion or hesitation at a critical time.

I also like to know because I don't want to go along with someone else's game plan out of ignorance or because they fooled me. The results may (or may not) turn out the same . . . but at least I wasn't another 'sucker'.

Wed, 07/18/2012 - 16:57 | 2629850 RockyRacoon
RockyRacoon's picture

Knowing where you are going and why allows you to divert from running with the crowd because you just don't know what else to do.  Lemmings come to mind...

Sun, 07/15/2012 - 10:43 | 2617193 Monedas
Monedas's picture

Capitalism is a perpetual motion magic machine !   Socialism is a non sustainable suck fest !  Capitalism is the divine spark of life !   Socialism is death by bed sores ! You decide !         Monedas        1929         Comedy Jihad Absinthe And Hopium High 

Fri, 07/20/2012 - 09:21 | 2635597 Chicago_cranium
Chicago_cranium's picture

The word Collapse should not be used. The author needs to learn more about Complex Systems, these hardly ever collapse abruptly. Everyone is waiting for the moment of collapse, this will not happen. Complex Systems reorganize, and readjust to a new state of stability, a new reality, it is happening now, it is a dynamic system. Imagine a complex system like a Pyramid made from Sand, it is stable, it is weak however like the paper economy we have. If you perturb this system, by moving a spec of sand, the system you think may collapse to the ground, but this does not happen. The system has some merit still, it has strong columns somewhere, it will look for support, perhaps 10% below the previous peak of the pyramid. Collapse is gradual, it is not an event where all factors will lead to complete destruction. This can only happen in Forced Systems, such as in the case of war, nuclear disaster, etc. even with war, many parts of the system will survive.

Sat, 07/14/2012 - 23:16 | 2616746 loveyajimbo
loveyajimbo's picture

Well.......        shit.

Sat, 07/14/2012 - 23:17 | 2616747 A Lunatic
A Lunatic's picture

We have to collapse it to see what's in it........

Sat, 07/14/2012 - 23:25 | 2616754 TheFourthStooge-ing
TheFourthStooge-ing's picture

.

We have to collapse it to see what's in it........

Don't worry, the JIT supply chains will see to it that it doesn't just collapse, but splinters into millions of little pieces. JIT represents maximum efficiency, which means it also represents maximum fragility. It's a very frail system with zero resiliency.

All it will take is just a slight push at a critical point in the structure to cause a MGCCOD (Mogambo Global Cascading Clusterfuck Of Doom).

 

Sat, 07/14/2012 - 23:32 | 2616762 realtick
realtick's picture

Now THAT is funny.

Sat, 07/14/2012 - 23:54 | 2616785 Mr. Fix
Mr. Fix's picture

Yes, it is somewhat funny in somewhat of a demented way,

 but it is also a  completely true statement.

 This disaster in the making that is our current financial system,

 is being propped up by any and all means,

 both immoral and illegal,

 in many ways the only purpose of continuing this charade is to cover up the magnitude of the crimes that are being committed.

 Yes the system must collapse for us to find out what these crimes are.

 

Sun, 07/15/2012 - 00:05 | 2616805 Dr Benway
Dr Benway's picture

Well put indeed!

Sun, 07/15/2012 - 00:21 | 2616822 francis_sawyer
francis_sawyer's picture

To add to your thought, one of the things that has perplexed me is if a collapse is, in fact, being (or capable of being) planned... why all the delay histrionics?... I can only speculate with 3 conclusions (each more odd than the other):

1. The ones with their finger on the button are "occultist" types that are trying to adhere to pre-planned timeframes (think 'Nancy Reagan' & her astrologer crap)

2. Nobody thought things would get so untidy so fast & they're just busy now stocking up their personal lifeboats as they were woefully underprepared

3. They actually thought they could 'fool the masses' (as they have almost every time in history), but the 'internet age' has thrown a monkey into the wrench of the propaganda machine... IOW ~ they're truly perplexed & worried, this time, that the masses are seeing thru the ruse, & they haven't come up with any new forms of trickery... Thier trick bag is empty...

That's the best I can come up with...

 

Sun, 07/15/2012 - 00:34 | 2616846 mcguire
mcguire's picture

i'll go with door #1.  it is the "occultist" type, but dont underestimate them because of this..  remember the patriot act was drafted /before/ 9/11.. just because they are 'occultists', it doesnt mean they are stupid or frivolous.. 

The greatest lie the Devil ever told was convincing humanity that he didn't exist"

Sun, 07/15/2012 - 00:47 | 2616865 SubjectivObject
SubjectivObject's picture

Sigh. 

For the Nth freaking time, the Devil does not exist. 

It's an allegory.

An allegory for the unregenerate mammalian emotions and other degenerate psychological shit that lives in each one of us. 

Sheesh.

Sun, 07/15/2012 - 00:52 | 2616875 RockyRacoon
RockyRacoon's picture

He was using it as a metaphor.  Get yer panties outta the wad.

Sun, 07/15/2012 - 02:27 | 2616935 putaipan
putaipan's picture

fuck the occult! big up the mystic! fuck the arcane! bring on the esoteric!~

Sun, 07/15/2012 - 13:40 | 2617720 HardAssets
HardAssets's picture

" Sigh.

For the Nth freaking time, the Devil does not exist.

It's an allegory."

Maybe . . . or maybe not.  Some worship 'psychology' & other religions, instead. They talk about 'the mind', 'society', or even down to 'atoms' and think these words describe something somehow more certain.

All I know . . . is that I don't know.  What we're doing now, what is going on now . . . 'Universe', 'Existence', etc . . . whatever it is.  Seems to be beyond human comprehension. Or maybe just my comprehension.

Back to easy things . . . like the collapse of the global economic system and whether it is accidental from out of greed, or purposeful as the result of a plan for global domination by a small group of men.

Sun, 07/15/2012 - 00:36 | 2616849 Mr. Fix
Mr. Fix's picture

I would propose a number 4:

 the banking elites, and even some of the sovereign governments, are in the process of looting the planet as we speak.

 Everything that has  intrinsic value is being bought at fire sale prices.

 It's becoming a self-perpetuating cycle right now, in that as people, businesses, and nations go bankrupt,

 the people printing the money are buying the assets,

 and for the most part, they are buying them with worthless paper.

 In the end, it is entirely possible that victory will go to the last printing press still standing.

  With this scam like this going, the powers that be don't have much interest in ending it to quickly.

 And then there is number 5:

 the powers that be need to consolidate absolute power over everyone before it is revealed that they stole everything.

 Otherwise,

 they probably would not live long enough to enjoy their ill gotten gains.

 It does seem to be going on a timetable.

 The end game is being played right now,

 massive amounts of wealth are steadily being transferred from West to East,

  the only risk management left is physical gold and silver

 in your own  possession.

 you must also be able to defend yourself.

 But not overtly,

 those with the lowest profile will survive.

Sun, 07/15/2012 - 03:46 | 2616957 Inthemix96
Inthemix96's picture

I agree with Mr Fix,

Thing is though, thanks to the wonderful invention of the interweb, mugs like me can see exactly what is going on and who caused it.  Now when this fucker comes down, it will be left to mugs like us to put the fucker back together again.

I will do as I can to help family, friends, neighbours, but I will not forget who caused our collective problems.

And should the chance occur as to have a little run in with one of fuckers, I will do as I can there as well.

To everyone on ZH, even robo, good luck, prepare accordingly.  Who knows, we may even get to meet each other one day?

Sun, 07/15/2012 - 06:31 | 2617004 Dr. Sandi
Dr. Sandi's picture

 

the banking elites, and even some of the sovereign governments, are in the process of looting the planet as we speak.

I just want to know one thing. Where the hell are they taking all the loot that they're grabbing from the planet?

  (No, not Uranus, but thanks for thinking of it)

Sun, 07/15/2012 - 16:21 | 2618248 groundedkiwi
groundedkiwi's picture

My theory is all the ATMs will stop working on Dec 21st and they will say the Mayans did it.

Sun, 07/15/2012 - 01:00 | 2616886 AetosAeros
AetosAeros's picture

Your on the right track as far as questioning what the hold up is on this very deliberate and very well thought out collapse. Finish the thought as if You represent the very small group that is looking to take the next step.... (and to borrow a comment above):

4) JITIRS- Just In Time Infrastructure Replacement System. In order for a true COG to work, there has to be a vacuum created globally, not just in the US. COG won't mean crap when all your allies and enemies see the guard at the door to the bank gasping and clawing at his own throat. That invites everyone in for a bank holiday, the kind where everone gets to withdraw without penalty.

 

What I am trying to say is this: If the system collapse is isolated to just a few countries, then those countries are going to be in a world of hurt because the ones who have any semblance of solidity and solidarity in their own borders are going to come out strong for many many years until the ones who have collapsed have managed to coalesce into a stronger system.  If they ever can.

 

So if your running the show, what do you need to do to insure that your replacement system is still able to dominate, and in the NWO path; totally control things? You need to build as many localized transition points around every area you plan on maintaining after the collapse. You need to insure that it is well staffed with enough people at all levels; agriculture, science, medical, techno, military, etc., and you need to make sure that these same persons have been given all the tools they need to direct the new minions to their new workstations of life that will have been preplanned.

As I see it, we've taken this long to collapse (1980's- Now) while strategic centers have been built, technology has caught up to the expected demands, primary transportation arteries requiring minimal repair or replacement have been built, medical centers with strict access built and staffed, and a plan on exactly how long it will take to a)reduce the global population by 60 Percent b)infiltrate and set up cells within countries who may not favor this replacement ideal c)establish clear lines of communication and boundaries for the primary players and 'leaders' of each area d)insure that wanton destruction is not only rampant, but directed and supported within those areas where the possiblity of isloted strenght might arise (think Iran, South Africa, Russia, China, Brazil); all put into place with contingencies.

It's what I would do if I was a complete control freak bent on making the world a better place for ONLY myself, my family, and my ideals; and I had more wealth and power at my fingertips than most medium sized countries. As always, its just a thought, but I got tired of looking around asking: Why would they do all these things knowing that it will kill many and destroy everything, are they heartless, have they lost their humanity, are they not seeing what we can all become?

And then started asking: Now why WOULD they do these things, unless they had a plan? What's the plan? How do they enact it? Who benefits? How do they maintain it? Shit, is there anyway I can stay safe and still take care of my family, friends, and future?

Only time will tell.... I'd suggest you all start stacking and storing. At the rate their going, I give it less than 7 years before it's a full on mess, but at least 16 months before more people start suiciding with a bullet to the back of the head and people start looking over their shoulder constantly to see if they are next.

Time for another drink, see ya.

Sun, 07/15/2012 - 02:55 | 2616944 CompassionateFascist
CompassionateFascist's picture

No. Way too much conspiracy, not enough chaos. Though I will admit to being impressed at the rate which certain Jewish members of the Oligarchy have been buying themselves private islands over the past few weeks.  

Sun, 07/15/2012 - 03:05 | 2616948 AetosAeros
AetosAeros's picture

Ever blow a claymore?

550 steel pellets of chaos ejected from 1 1/4lbs of C4 at high velocity, all flying around causing some pretty deadly shit for anything in their paths. Each pellet is isolated and independent of each other, even more so at the moment of impact which creates a multitude of paths based on equation, force, direction, etc. Pretty fucking chaotic in my opinion.

Conspiracy shills (not fact finders) would say that each pellet has absolutely nothing to do with the other and it's all just chaos because of some esoteric system design that no one understands and will only have us look at the proof while everything is still in flight and all energy has not stopped moving yet. Deer in the headlight effect to the maximum.

Me, I look for who the fuck squeezed the clacker, and work backwards to see what else is waiting to the left and right of this ambush.

Sun, 07/15/2012 - 03:31 | 2616954 Offthebeach
Offthebeach's picture

( From 'The Producers' by Mel Brooks.)

"Don't be stupid, be a Smarty. Come and join the New World Order Party!

Sat, 07/14/2012 - 23:18 | 2616749 bigkahuna
bigkahuna's picture

Chris Duane says it well in this video:

 

http://usawatchdog.com/one-on-one-with-chris-duane/#more-8404

 

 

Sat, 07/14/2012 - 23:22 | 2616752 rsnoble
rsnoble's picture

Long Fly Spray.

Sat, 07/14/2012 - 23:25 | 2616753 Spitzer
Spitzer's picture

global imbalances and the growing stresses in the Eurozone and global banking system. Secondly, from the manifest risk that we are at a peak in global oil production,

 

Euro hating peak oiler... Meh

Sun, 07/15/2012 - 00:38 | 2616851 MsCreant
MsCreant's picture

I have to respond to you to mark you down because of the quote SNAFU. I'll start by marking my own post down.

Bwa, ha, ha, ha, ha, ha, ha, ha!

Head fuck, I know. The only way to win is to not play.

If you don't like peak oil, can't you see that there is peak "other shit", that infinite growth is not sustainable?

Do NOT follow this link or you will be banned from the site!