New Year Cheer

There’s a lot of ruin in a global madhouse

2012 is a year that arrives pre-branded. It’s the last opportunity to end the world on schedule. By the end of December the window for apocalyptic profundity will have closed, and it’s back to the hazards of random, meaningless catastrophe.

Perhaps a prophetic consensus will have emerged by the fall, but right now the outlook is foggy at best. Trawling through the Web’s most excitable 2012 sites doesn’t bring anything very definite into focus. Once discussion advances beyond the fairly solid foundation of the Mayan long count, and the Fourth Age of Creation (lasting from August 11, 3114 BC, to December 21, AD 2012), things spin off into chaos with disconcerting rapidity.

Whether the earth is destined to plunge into a black hole is a matter of (at least limited) controversy, but the fact that just about every imaginable species of prospective calamity or transformation is being sucked into the 2012 prophetic vortex is easily confirmed by anybody with a web browser. Even the basic genre remains unsettled, with expectations veering wildly from celestial collisions, solar flares, and super-volcanoes, to spiritual awakenings, cosmic harmonizations, and countless varieties of Messianic fulfillment. According to the sober forecasters at 2012apocalypse.net: “The Mayans, Hopis, Egyptians, Kabbalists, Essenes, Qero elders of Peru, Navajo, Cherokee, Apache, Iroquois confederacy, Dogon Tribe, and Aborigines all believe in an ending to this Great 2012 Apocalyptic Cycle.” They missed out Mother Shipton, Nostradamus, Terence McKenna, Kalki Bagavan, and Web Bot, yet somehow the Cracked crew remain unconvinced.

As an aside, the best line UF has yet seen among the deniers (sorry, couldn’t resist that), is this deliciously self-undermining specimen from Ian O’Neill: “No one has ever predicted the future, and that isn’t about to change.”

In an increasingly desegregated cultural landscape, it’s not easy to separate out secular history and sensible opinion from the orgiastically gathering End Times festival, and – strangely enough – the world process isn’t doing much to oblige. Ritualistic predictions-for-the-year-ahead posts on politics and economics sites are practically indistinguishable from the 2012 Armageddon-is-here prophecies, although the sane side of prognostication is characterized by a greater uniformity of unrelenting bleakness: Comprehensive economic collapse, aggravated by administrative sclerosis, and accompanied by escalating international conflict / social disintegration, amidst the enraged screams of splintering civilizations (and a ‘Happy New Year’ to you, too.)

Goldbug Darryl Robert Schoon demonstrates some professional hedging, but he doesn’t even try to keep impending financial crisis from spilling out into cosmic immensities:

The ending of the Mayan calendar in 2012 is as misunderstood as the interplay between credit and debt and supply and demand; but the coincident collapse of the current economic paradigm and an arcane indicator of change should not be dismissed. … The current great wave [of rising prices] began in 1896. That it could crest and break in 2012 could be a coincidence. Or, it may not.

Science, technology, creative culture, and enterprise are likely to spring some upside surprises, but the degenerative horror of the world’s hegemonic Keynesian political economy – combined with increasingly irresponsible neoconservative democracy-mongering — has ominously synchronized itself with the darkest visions of the 2012 cults. A patently dysfunctional mode of socio-economic organization, based upon fake money, belligerent idiocracy, and electorally-enabled looting scams, is aggressively imposing itself – with an almost incomprehensible absence of self-reflection — upon a world that already has plenty of indigenous pathologies to contend with. The resulting New World Order, entirely predictably, is a lunatic asylum, and even its most functional components (such as Singapore and the Chinese SARs of Hong Kong and Macao) are networked into the collective delirium. When the Euro, Japanese Yen, and US Dollar collapse (probably in that order) the financial and geopolitical tsunami will wash over everybody. If that doesn’t happen in 2012, history has no sense of narrative climax at all.

On the ‘bright’ side – for all the can-kickers out there – the words of Adam Smith that have defined 2011 continue to resonate. “Young man, there’s a lot of ruin in a nation,” and even more in a global system. Perhaps the slow-motion disintegration of hegemonic neo-fascism Keynesian social democracy will spin itself out beyond the horizon of the Mayan calendar, which would really give us something to look forward to …

[Tomb]

Can’t kick the habit …

… but at least we can kick the can

“The economic catch phrase of the year has become ‘kicking the can down the road’, applied to all the problems that are not being solved, but are simply kicked further down the road. It’s an apt description, as it is exactly what’s happening.”

“There are already elements of fragility,” [Nouriel Roubini] said. “Everybody’s kicking the can down the road of too much public and private debt. The can is becoming heavier and heavier, and bigger on debt, and all these problems may come to a head by 2013 at the latest.”

“This week we turn from the crisis brewing in the U.S. to the one that is coming to a slow boil in Europe. We visit our old friends Greece and Ireland and ponder how this will end. It is all well and good to kick the can down the road, but what happens when you come to the end of the road?”

“Sovereign debt in Europe is on everyone’s mind. Three of the seventeen members of the Euro system are in trouble; Greece is a basket case. There is universal agreement that Greece is now illiquid and insolvent. The latest compromise is another temporary bandage. Our American idiom ‘kicking the can down the road’ fits perfectly.”

“An irreverant official at the International Monetary Fund recently installed a jarring ringtone on his mobile phone. It is the sound of cans being kicked down a road. That, alas, is what Europe’s politicians and the IMF look set to do with their latest rescue plan for Greece.”

“Kathleen Brooks, research director at Gain Capital wrote in a note yesterday: ‘There is a growing sense that a bespoke solution to Ireland’s crisis is only kicking the can of peripheral financial worms further down the street. Until there is a convincing automatic default mechanism for all eurozone members then we could see other debt flare ups over the medium-term.'”

“‘[Japan’s Government Pension Investment Fund] might secure 2 trillion yen by bank lending to finance part of the payout shortfall, the Nikkei said.’ This will have two effects, neither of which is positive for dealing with the funding problem. The first is that it will merely kick the can down the road which seems to be the standard response from Japan, Inc over the last two decades. The second is that it reduces the income – and thus the funds holdings – as they turn from earning interest on their investments to paying interest on these loans which rather has the effect of shortening the road down which they are kicking the can.”

“We live in a world profoundly addicted to debt-financed consumption. Today, many people, companies, and countries borrow with no evident intention to repay. When the debt comes due, they will replace it with new (and often larger) debt. Kick the can down the road, again and again. But inevitably the road ends abruptly with a wall, much like the ones at the end of a crash testing site.”

“Speaking to a room full of reporters at the National Press Club Thursday, Bernanke said that without an increase in the debt limit, the United States could potentially default on its debt, an outcome he referred to as ‘catastrophic.’ … ‘There’s only so far that we can kick the can down the road,’ he said in response to a question about the deficit.”

“Monetary reform never takes place because everyone wants to defer final judgment. Everyone wants to go to heaven, but nobody wants to die. Everyone wants a stable economy with growth. No one wants recession and increased bankruptcies to re-price capital goods. So, kick the can always results in another round of monetary inflation. The boom-bust cycles repeat. … This is continuity in the modern fiat money economy. The voters want it. The debtors want it. The banks want it. Businessmen want it. … The result: American prices as measured by the consumer price index have risen by a factor of 20 since the Federal Reserve System began operating in 1914. The dollar has depreciated by about 95%.”

“The voters want the government to guarantee them a safe retirement, Medicare benefits, and a stable dollar. But the government is already so far down the road to default that it can only play kick the can.”

“Dana Milbank of the Washington Post chides Democrats, Republicans and DC elites for ‘kicking the can‘ of deficits and debt to future generations. This is an inherent defect of all democracies. Elected politicians buy votes today and affix the burden on future generations.”

“It’s ridiculous that, as often as we get speeches about how we need to stop kicking the can down the road on the debt and the deficit, we get more can-kicking.”

“We’re going to keep kicking the can down the road for as long as we can see the road and the can ahead. Then all of a sudden – Oooops! No more road!”

[K]icking the can down the road won’t work: there is no more road.”

“There are an awful lot of Cans on this road and our leaders keep kicking them and kicking them. I can’t help the feeling that we are near the end of this road.”

Can-kicking, rather than problem-solving, is the political method of dealing with big and small problems. Problems do not get solved so much as they get hidden. Political hoopla and self-congratulations accompany each can-kicking action. The spectacle and declaration of problem-solved is usually enough to satisfy the concerns of the public, the only consideration that matters for the political class.”

“Essentially, all we are doing is kicking the can down the road.”

“Two years ago in a speech to U.S. House Democrats, Microsoft CEO Steve Ballmer predicted that America was headed for ‘a fundamental economic reset.’ According to Ballmer, for 25 years our economy grew on unrealistically cheap debt. That is over. … Since Ballmer’s remarks, our national debt has continued to grow and now surpasses $14 trillion, President Obama and Congress are struggling with massive federal budget deficits, state and local governments are drowning in red ink, and protesters are massing at state capitols demonstrating against wage and benefit cuts. … Elected officials have no choice. They must trim spending and make some very difficult choices. As Gov. Chris Gregoire has repeatedly told state lawmakers, we have to make fundamental changes and do things much differently. We have to quit kicking the can down the road in hopes that somehow our problems will magically disappear.”

Can-Kicking toward the Double Dip”

“Same Kick, Same Road, Bigger Can

Can kicking continues for real estate and banks”

“In general, the capacity of large wealthy societies to allow festering problems to go un-addressed seems perennially underrated. I’ll be thirty next week and for as long as I can remember people have been talking about how the United States needs to address entitlement spending and trade imbalances. And as best I can tell, we do need to address those things. Presumably at some point something will happen. But in practice we’ve managed a great deal of can-kicking, seem to have more can-kicking in us, and actually the public and the political elite alike are quite averse to the kind of steps that would address these issues.”

“The House GOP is considering a vote to extend the debt ceiling through the end of 2012. This is kicking the can down the road …”

“‘The debt ceiling is supposed to be a mechanism to force Democrats and Republicans to come together and cut spending,’ Congressman Kingston said. ‘Instead, what does Congress do? We push the ceiling further and further up. Instead of moving the ceiling, we need to cut spending and quit kicking the can down the road for another Congress, another election and another generation.'”

“If history is any guide, there will be no problem raising the debt ceiling once again in 2011. And that’s what’s called kicking the can down the road. You don’t have to be a U.S. Republican (I’m neither) to care about U.S. debt levels. Any chimpanzee can see the problem (yes, even if the U.S. can just keep on printing its own money. That’s the problem).”

Kicking the can down the road by increasing debt limits is not a solution. It just allows Washington politicians to continue to feed their spending habits.”

“During the current state budget crisis we’ve heard a lot about ‘kicking the can down the road.’ … It didn’t have to be this way. Had the state accounted for its promises rather than kicking that can down the road, true costs would’ve been revealed, proper funding would have been required or no such promises would’ve been made, and discretionary programs would’ve been protected. But instead, politicians chose to kick the can, and down a very low road. … California has kicked that can into a $200-300 billion obligation that grows every year that it’s kicked down the road again.”

“The phrase ‘kick the can‘ refers to a specific form of procrastination: to delay making a decision regarding a problem that can be deferred but cannot be avoided indefinitely. With each kick of the can, the problem grows worse. The problem compounds. The resources required to solve it do not compound at an equally high rate. The can-to-foot ratio grows larger.”

“Maybe all of this can-kicking will produce the desired outcome. But the more likely scenario is that the U.S. government will continue to throw newly printed dollars bills at the problem until eventually something that looks like a lot like a recovery will appear. Shortly thereafter, the recovery will yield to something that looks a lot like debilitating hyperinflation.”

“Metaphorically things are getting just about as tedious as the downturn in the global economy. The operative ‘kicking the can down the road’ continues to proliferate, alarming[ly] so. A search on the Google (U.S.) News site on June 13, 2011, for this phrase listed 2,805 citations embedded in news texts during the previous week.”

[Tomb]

Perfect Storm

Weather forecasts for winter 2012 are getting wilder all the time

Even before receiving the Hollywood treatment, the year 2012 was shaping up to be a uniquely potent ‘harmonic convergence’ of end times enthusiasm. Initially condensed out of the Mayan calendar, the 2012 countdown was soon fizzed into a heady cocktail by speculative interpretations of the Yijing, Aquarian ‘New Age’ paganism, Ufology, and mushroom mysticism. Once critical mass was achieved, the 2012 became a gathering point for free-floating Jewish, Christian, and Islamic eschatological expectations (coming or return of the Messiah, advent of the Antichrist, Armageddon, Rapture, emergence of the Twelfth Imam from occultation, and others). Just about anything cosmically imaginable is now firmly expected – by somebody – to arrive in late December, 2012.

Secular eschatology also has its dogs in the fight. From reciprocally insulated enclaves of the Internet, apocalyptic strains of Marxism (and libertarianism) joyfully anticipated the imminent collapse of the global economy, fully confident that its downfall would usher in a post-capitalist social order (or untrammeled free-market societies). The boldest proponents of impending Technological Singularity prepared to welcome superhuman artificial intelligence (when Skynet would already be five years overdue). Radical environmentalists, neo-Malthusians, ‘Peak Oil’ resource-crunchers, and Clash of Civilizations theorists also contributed substantially to the atmosphere of impending crisis. Irrespective of Anthropogenic Global Warming, everything was heating up fast.

This climate proved highly receptive to the prophetic ideas of William Strauss and Neil Howe, where it found a fresh and evocative self-description. Beginning with their book Generations (1992), Strauss & Howe sought to explain the rhythm of history through the pattern of generations, as they succeeded each other in four-phase cycles. Their cyclic unit or ‘saeculum’ lasts 80-100 years and consists of generational ‘seasons’ or ‘turnings’, each characterized by a distinctive archetype. The Fourth Turning, starting early in the new millennium, is ‘winter’ and ‘crisis’. They remark: “Today’s older Americans recognize this as the mood of the Great Depression and World War II, but a similar mood has been present in all the other great gates of our history, from the Civil War and Revolution back into colonial and English history.”

Jim Quinn’s discussion of the Fourth Turning at Zero Hedge anticipates the winter storms: “Based upon a review of the foreseeable issues confronting our society it is clear to me that a worse financial implosion will strike before the 2012 presidential election. It may be triggered by a debt ceiling confrontation, the ending of QE2, a panic out of the USD, hyperinflation, a surge in oil prices, or some combination of these possibilities. The ensuing collapse of the stock and bond markets will remove the last vestiges of trust in the existing financial system and the government bureaucrats who have taken taxpayer dollars and funneled them to these Wall Street oligarchs.”

More ominously still, Quinn concludes: “History has taught us that Fourth Turnings end in all out war. The outcome of wars is always in doubt. …It may be 150 years since Walt Whitman foresaw the imminent march of armies, visions of unborn deeds, and a sweeping away of the old order, but history has brought us right back to where we started. Immense challenges and threats await our nation. Will we face them with the courage and fortitude of our forefathers? Or will we shrink from our responsibility to future unborn generations? The drumbeat of history grows louder. Our rendezvous with destiny beckons.”

Stormy enough yet? If not, there’s the harsh weather of Kondratiev winter rolling in too.

Nikolai Kondratiev’s ‘long waves’ fluctuate at roughly twice the frequency of Strauss & Howe saecula (lasting roughly 40-60 years from ‘spring’ to ‘winter’). Originally discovered through empirical investigation of price movements, Kondratiev waves have stimulated a remarkable range of economic-historical theories. Joseph Schumpeter interpreted the cycle as a process of techno-economic innovation, in which capital was creatively revolutionized and destroyed through depreciation, whilst Hyman Minsky attributed it to a rhythm of financial speculation (in which stability fostered over-confidence, excess, and crisis with cyclic regularity).

The discovery of the ‘long wave’ seemed to coincide with its disappearance – at the hands of macroeconomic management (Keynesian counter-cyclical policy). Unsurprisingly, the crisis of Keynesianism under present conditions of ‘debt saturation’ has re-animated long wave discussion. At his Kondratiev-inspired Tipping Points blog, Gordon T. Long forecasts a savage winter, marked by rapid progression from financial through economic to political crisis, culminating in a (US dollar) ‘currency collapse’ in 2012.

Wrap up warmly.

[Tomb]