Wednesday, October 31, 2012

The Financial Super-Storm of 2013

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


Four years of glorious central-planning "extend and pretend" have enriched the political and financial Aristocracies, and imbued them with a bubble-era hubris that they have indeed gotten away with murder: the $6 trillion the Federal government borrowed over the past four years, the Fed's $2 trillion in fresh cash, the Fed's $16 trillion bailout of the banking sector and various perception management manipulations have righted the storm-tossed ship. All those with power in 2008 remain in power and all those with outsized wealth in 2008 still hold their outsized wealth.
The global tsunami of borrowed and printed money lifted the water-logged dinghies of the debt-serfs enough to give them hope of better times; meanwhile, their adjusted income has declined 8%: they are poorer while the neofeudal Aristocracy is much wealthier: same as it ever was, right?

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

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


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


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

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

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

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


There are structural dynamics in play that supercede any national policy.
Neofeudalism, neocolonalism, financialization, centralization and consumerism have all reached the stagnation-decline phase on the S-curve.

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



Resistance, Revolution, Liberation: A Model for Positive Change (print $25)
(Kindle eBook $9.95)

We are like passengers on the Titanic ten minutes after its fatal encounter with the iceberg: though our financial system seems unsinkable, its reliance on debt and financialization has already doomed it.We cannot know when the Central State and financial system will destabilize, we only know they will destabilize. We cannot know which of the State’s fast-rising debts and obligations will be renounced; we only know they will be renounced in one fashion or another.
The process of the unsustainable collapsing and a new, more sustainable model emerging is called revolution.
Rather than being powerless, we hold the fundamental building blocks of power. We need neither permission nor political change to liberate ourselves. A powerless individual becomes powerful when he renounces the lies and complicity that enable the doomed Status Quo’s dominance.

Thank you, Michael S. ($25), for yet another magnificently generous contribution to this site--I am greatly honored by your steadfast support and readership.


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