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There's
a lot to be nervous about, even if you don't subscribe to the undercooked
Mayan apocalypse lore moving through the gut of the Internet like a Staphylococcus-infected tamale. The casual observer
might say that nothing seemed to give on the world scene in 2011 despite the
Fukushima meltdown, the Arab Spring uproars, the
train wreck of European finance, the disappearing act at MF Global, and the
assorted injuries done to the Kardashian brand by
the giant walking dildo Kris Humphries.
I
demur. On close examination, the industrial world underwent complete
zombification in 2011. Its member states and their institutions are now
lurching across the stage of history like so many walking dead. Whole
European nations are dead, their citizens squirming around the ruined bones
of failed speculative condo projects, housing estates, and luxury hotels like
botfly larvae. The USA lies in complete moral ruin despite the exertions of
ten thousand evangelical preachers in dusty back-road tilt-up chapels from
Texas to Carolina, several new museums of Creation Science, and the shining
example of former Senator Rick Santorum. Just look at how we behave, from the
cloakrooms of Congress to the piercing parlors of West Hollywood to the
7-Elevens of suburban Maryland: a nation of thieves, racketeers, reality TV
sluts, wannabe road warriors, light-fingered gangsta-boyz,
and crybabies living in an anomie-drenched decrepitating demolition derby
landscape of failure. When everybody is a zombie, whose brains are left to
eat? Echo answers.... On to the predictions for 2012 then.
The
biggest political shock awaiting us is the massive disruption of the major
party nominating conventions next summer, when thousands of angry citizens
descend on Tampa and Charlotte demanding a reality test. The parties will
attempt to go about their ritual business, ignoring the mischief outside the
convention centers, and both parties will make the mistake of siccing the cops on the protestors. The result will be a
much bigger mess than the one I personally witnessed on the streets of
Chicago, 1968, when the party hacks anointed the grinning sell-out Hubert
Humphrey to run against Ole Debbil Nixie. Just
before getting tear-gassed on Michigan Avenue that night, I saw some kid
hoisting a sign that depicted the nominee with a Hitler mustache over the
epithet: Mein Humph! It made my night, despite the subsequent retching in the
gutter.
The
two major parties are completely bankrupt zombie organizations and this
election may be their last stand - if they even survive the conventions.
Neither of them can come to grips with the reality-based issues of the day:
epochal financial and economic contraction, peak energy (and many other
resources), climate change, the absence of the rule of law in banking, and
generational grievance - or, perhaps more to the point, the manifestations of
these giant trends as presented in unemployment, debt slavery, foreclosure,
bankruptcy, homelessness, hunger, and X-million family tragedies. Both
parties can only promise the return to a bygone status quo that is largely
mythical.
President
Obama, the putative "progressive" - spokesman of the Ivy League,
Silicon Valley, Lower Manhattan, and all the other precincts where
"folks" imagine themselves to be advanced thinkers - can't even
wrap his mind around the simple fact that we will never be "energy
independent" if we think that means running 260 million cars and trucks,
no matter how many algae farms we pretend to invest in. Here is man who ought
to know better and either doesn't, or is lying about it. He has other
failures to answer for, too. Why, following the Citizens United
decision in the Supreme Court, did Mr. Obama not prompt his party to sponsor
federal legislation (or a constitutional amendment) that would redefine a
corporation as not identical in "personhood" to a human being? Why
does he still employ an Attorney General who has not started one prosecution
for financial misconduct amid a panorama of arrant swindling and fraud?
(Ditto: heads of the SEC, CFTC, etc.) And why did he not object loudly to the
provision in the latest defense appropriations bill that allows for the
capricious arrests and indefinite detention of anyone in the USA on suspicion
of "terrorism?" Does this graduate of Harvard Law remember what habeas
corpus means?
A
lot of voters projected on Mr. Obama some notion of supernatural brilliance -
our Hollywood fantasies are rife with wishes to be saved, and therefore
redeemed, by our former victims - but he turned out to have a pedestrian
mind. Could he possibly believe we have "a hundred years of natural
gas" in the ground? Or that we're in a position to ramp up another cycle
of industrial economic "growth?" Or that we can continue the web of
cruel rackets that passes for medical care in this country? When the
Democratic Party re-nominates Obama, it will be sealing its death warrant,
and it will be on its way to the same cosmic vacuum where the memory of the
Whigs lingers on.
Meanwhile,
the Republicans labor to convert themselves into the party of corn-pone
Nazism with all their unconcealed lust to push everybody around under the
plastic eagle rubrics of "Freedom" and "Liberty." Look at
the dismal lineup of morons, hypocrites, and religious fanatics arrayed for
the Iowa caucus: a doctor who is also a creationist!? A leveraged buyout
artist! A grifter fresh from K Street! A lady
Christian theocrat wholly owned by the "dominionist"
New Apostolic Reformation cult! A George W. Bush imitator showing symptoms of
early onset senility! The whole posse is preoccupied with things supernatural.
And being so dedicated to things unreal, they're the prime representatives of
the suburban clusterfuck, who will do anything to
keep that obsolete machine running, even if it means national suicide,
because they lack the brains to understand where history is taking us and
what the mandates of reality are shouting at us about the urgent need to
reorganize American life. They are also the vassals of corporate despotism -
where the Democrats are mere footservants. They masquerade as "job creators,"
but they promote the off-shoring of every activity that corporate America can
shed in its quest for ever-greater executive compensation. The lip-service
they pay to "freedom" is belied by their intent to control
everybody's personal life, commoditize the public interest, and sell out
their grandchildren's future for a few extra rounds of golf.
I
think this gang, too, will be sent packing by the mobs of 2012. I have a
nagging intimation that some third party candidate will emerge. The two
personalities I keep seeing in that role are Howard Dean and Michael
Bloomberg. Both of them are imperfect, but both of them are clear-headed and
action-oriented, and I have a feeling that both of them are stewing in the
background over the spectacle of idiocy, inertia, and dithering they see at
every political compass point. Maybe somebody else will crawl out of the
woodwork. I've said before in the weekly blog that
conditions could deteriorate so badly that a Pentagon general might
have to step into national leadership just to keep the grocery stores
supplied with basic rations - but that is an outcome in my personal asteroid
belt of probabilities.
Whatever
party ends up running things, and whomever fronts
it, is going to be in for a helluva wild ride. The
USA is diving into an economic depression that will make the 1930s look like
a Busby Berkeley production number. Compressive contraction will have its way
with us, whatever Ben Bernanke thinks. There will simply be less activity of
the kinds we're used to - Big Box shopping sprees, hamburger sales, theme
park visits, house closings, you name it - than our
hypertrophic system requires to keep its own destructive momentum going.
Instead, the whole thing will just topple over, inert, like a 99-cent
gyroscope giving into the forces of entropy. There will be a lot of
bewildered, angry, dispossessed people from sea to shining sea. Not a few of
them will "act out," that is, start breaking things, stealing
things, targeting easy prey, hurting bystanders, and even tangling with
police. Personally, I don't believe in the internment camp meme so popular
among the doomer paranoiacs, but surely a lot of
people will be cooling their heels in some slammer - while many other
miscreants will just get away with crimes against persons and property.
The
global banking system was on death-watch all through 2011. Somehow the
various doctors in the central banks and finance ministries were able to
muster enough accounting legerdemain to give the appearance of a system still
showing a pulse. But in a compressive debt deflation, there are only so many
accounting tricks you can pull off as money (and wealth) literally disappears down a cosmic worm-hole. In Europe, the process
has moved from the margins toward the center. The people of Greece, Portugal,
Ireland, Spain, Italy, Belgium will have less income, fewer government
services, lost wages and pensions, less comfort than they have had for a
couple of generations. Meanwhile, France is drowning in bad paper and the
German banks are choking on it. There is really only one plausible outcome
and that is default. The reckoning of the bondholders is at hand. Everybody
will get poorer simultaneously - and if not, there will be not just regime
change but civil war and revolution. The fantasy of a fiscal union in Europe
is impossible because it means two things: that Germany will have to issue
orders to everybody else; and that Germany would have to pick up the tab for
everybody else while telling them what to do. Both are intolerable and
implausible. Let's just think of the Euro experiment as an interesting side
effect of the peak energy era... now drawing to a close.
These
professional economists with their jabber about QEs and "financial
repression" and bond-term "twists" and debt-to-GDP ratios are
missing the point. The advanced industrial nations will not be re-jiggered
onto any "growth" runway. Rather, we're entering the rutted
wagon-road of de-industrializing and un-advancing. What awaits us in a
"time-out" from hyperbolic technological progress.
Forget about Ray Kurzweil's nanobot
nirvana. That is not in the cards. Instead, wrap your mind around life in an
economy organized around farming, with a much sparser distribution of big
urban centers, and far fewer people overall. Don't imagine for a moment that
your grandchildren will be zinging across the landscape in electric cars
sampling one theme park after another while "networking" with
"friends" on cyborg social networks implanted in their brain
jellies. Think of them grooming their mules in the summer twilight. Anyway,
you get the picture: everything that the finance ministries and treasuries
and central banks are affecting to do is mere shadow theater performed in
support of wishful thinking.
The
question, then, is what kind of hardship and disorder will attend our journey
out of the industrial era into post-technological age we are entering. Will
we just turn the world into a Michael Bay movie and blow everything up? Or
will we make some graceful descent and retain what is really best about the
human spirit?
2012
will be the year of internal strife in these "advanced" nations, of
people fighting over the table scraps of modernity among their own, in their
own backyards, a desperate sorting out of the remnants. I don't think we'll
see fighting between the European nations until the internal conflicts are
resolved and that will take a few years.
The
hot-spots for 2012 are very likely to be in the Middle East. You already know
that. What could be more obvious than the tinderbox character of that region?
Islamic extremism is poised to take over governments (and armies) in Egypt,
Syria, Libya, possibly Algeria, and probably Pakistan. Iran lost its mind
decades ago and seems determined to dominate the region by means of a
strategy that can only get it into trouble (and perhaps the whole world if it
goes really badly). Saber-rattling is one thing; making an actual move
something else. Block the Straits of Hormuz? Not if you don't want Teheran to
turn into an ashtray. That may happen anyway if Iran rattles a nuclear saber.
Germany, France, Britain, and Italy, all struggling with terrible problems at
home, would breathe a sigh of relief if the mullahs were chastened. The
chatter around the Web about an Israeli preemptive attack never ceases. But
it is a possibility.
Oh,
and don't forget Turkey. Formerly the "sick man" of Europe, Turkey
has become strangely resurgent, prompting some recollections that the Ottoman
Empire actually administered over much of the Middle East until 1914, and not
with complete incompetence, either. They just sort of imploded from empire
fatigue, which is not the worst way to go down, if history is taking you
there anyway. But empires come back, too, and what passes for Turkey today is
a polity that in one incarnation or another has been around since the ancient
Greek days, and was, for quite a long while, Rome Release 2.0.
Don't
be surprised if some hostilities break out between Turkey and Iran, since a
battleground named Iraq lies between them. Iraq is a basket-case despite an
immense reserve of oil under its sands, and having had the US military
babysit it for eight years. The last American combat units left Iraq this
fall, but there are still plenty of US soldiers there, maintaining our
garrisons and keeping an eye on things. The question is: can they control
what the Kurds do in the north, and whatever meddling Iran engages in around
the Basra oil region in the South? These American support troops remaining in
Iraq could find themselves looking like a ham-and-cheese sandwich between a lot of crusty mischief north-and-south. The Turks have
already had a dustup or two with Syria lately - Syria occupies a big wedge
between Turkey, Iraq and the Mediterranean Sea - and Turkey will take a dim
view of that nation falling into the hands of Islamic extremists if Assad
gets booted.
All
bets are off in Egypt. Anything can happen there.
The
dangerous position of Israel vis-à-vis all these quarreling players is probably as bad as it has been in two generations. An
attack by a neighbor or getting caught in a crossfire
between neighbors would stimulate a lusty response, and perhaps World War
Three. As if the world needed this added aggravation. It makes my kishkas ache just to think about it. Sometimes I wonder
why the whole Israeli nation doesn't just pack up and move to Nebraska.
2012
is the year that China proves to be a mortal nation and rolls over with a
very bad case of the vapors. Their banking system is a sham. Their property
bubble is a fiasco. Their government has no formal legitimacy and will
install a new leadership group this year, while exports crash and mass
factory layoffs happen. There will be a lot of pissed off people in China,
and they may express themselves politically in ways that have seemed
unthinkable for decades. The aura of social control looms large in China, but
an aura is a light garment not recommended for stormy political weather. 2012
could be the year that China begins its journey into a "Balkanized"
collection of smaller autonomous parts, which is the big fat trendline for all the nations of the world, including the
USA.
It
is hard to think about the bizarre case of India, a nation with one foot in
the modern age and the other in a colorful hallucinatory dreamtime. Their
climate-change related problems are doing heavy damage to the food supply.
Their groundwater is almost gone. The troubles of the wobbling global economy
will take a lot pep out of their burgeoning tech and
manufacturing sectors. It wouldn't be surprising if these travails prompted
distracting hostilities with its failed-state neighbor, Pakistan. Pakistan, with
its inexhaustible supply of Islamic maniacs could easily start a rumble with
some crazy caper like the Mumbai hotel assault of two years ago, but this
time India would answer with a heavy cudgel, perhaps even a nuclear sortie
designed to neutralize Pakistan's dangerous toys at a stroke. And that would
be that. Like cleaning out an annoying neighborhood crack house. It's not a
very appetizing scenario, but what else can you do about failed states with
nuclear bombs?
Turning
to Japan....That sore beset kingdom is suffering all the blowback of modern
times at once: the Godzilla syndrome up in Fukushima; a demographic collapse;
an imminent bond crisis; the collapse of export market partners; and a long,
agonizing death spiral of its banks. I stick by a prediction I tendered back
in March, after the deadly tsunami: Japan will decisively opt for a return to
pre-industrial civilization. Why not? The rest of the world will be dragged
kicking and screaming to the same place. Let Japan get there first and enjoy
the advantage of the early adapter - back to an economy of local, hand-made
stuff, rigid social hierarchy, folkloric hijinks in
whispering bamboo groves, silk robes, and frequent time outs for the tea
ceremony.
Russia?
The big bear might have just sat out another decade and enjoyed its remaining
fossil fuel supply, but the temptation to project power is a demanding habit,
so they make all sorts of noises about watching Iran's back - though mutual
hatred abounds - and generally rushing into the power vacuum occupied by a US
with dwindling mojo. There were stirrings of political discontent just few
weeks ago, after the rigged early rounds of national elections, and who knows
where that will lead. Vlad Putin has held things
together there impressively after the meltdown of the 1990s, but apparently
the tranquil veneer is thin. Except for two big cities, the sprawling nation
is broke and decrepitating, with little to offer the world but oil and gas -
not an inconsiderable offering, but one with certain limits especially as
they drain their oil fields for export cash. The rule of law is also pretty
sketchy there. The government, as ever, is a kind of gangster affair, only
this time one that allows some people to get really rich, not just connected.
Their 70-year experiment with Marxian dogma has probably put them off
ideology for a few centuries to come, which means less money spent on prisons
for people with independent thoughts and more for call girls and home
furnishings. I imagine that Putin will maintain his grip through the year.
The Russians will appreciate relative order more when they see a few other
countries devolve into internal conflict.
I
don't see much action around South America this year. Some Americans are
already fleeing to Argentina. Perhaps they'll enjoy it, but there is always
the menace of property confiscation, and worse. Brazil will continue to
appear vibrant while it grows more population, shoving it toward eventual
ruin. They will see setbacks in the development of their deep-sea oil due to
an international shortage of investment capital.
Mexico's
fortunes depend on its oil industry, Pemex, which faces remorseless
depletion. Revenue from oil production and (dwindling) exports can't hope to
keep up with continuing population growth (and ever more poverty). These
trends suggest a continued loss of control for the central government and
more territorial fighting among the drug gangs and other criminal mafias. As
long as all those loose heads roll on the south side of the Rio Grande the US
will just tut-tut off to the side. But if the gangs get bold and start
venturing cross border to make mischief we will make like Woodrow Wilson did
and send the regular army down to spank them. It would be a satisfying
diversion for that portion of the US demographic that enjoys Ultimate
Fighting on TV, though it won't get them their job back at the Pontiac plant.
The
global oil picture is not so reassuring. The fragility of our supply is
simply unnoticed by commuters enjoying Lady Gaga on their iPods. Meanwhile,
our politicians retail fantasies of endless domestic reserves, which is total
horse shit. Global exports are in remorseless decline, apart from
geopolitical fissures and strains that could just paralyze allocation cold.
If a hot war breaks out in the Middle East, you'll see the American
supermarket shelves empty in three days. Won't that be fun.
Note, too: the manias over shale oil and shale gas will reveal themselves as
just more bubbles in a long cavalcade of bubbles, and both will begin to
founder on a shortage of investment capital. The shale plays will prove to
have been a national self-esteem-building program, not any part of an energy
policy.
The
abiding question as we turn the corner into the New Year is: how come Jon
Corzine is still at large? (Not to mention Angelo Mozilo,
plus the entire executive floor of Goldman Sachs, and about 5000 other
assorted Wall Street grifters still on the loose.)
There is plenty of dire talk that the collapse of MF Global, and the
shenanigans around its demise involving the evaporation of segregated
accounts, has gravely and permanently damaged the entire investment industry,
but especially the commodities funds, who can no longer depend on the Chicago
Mercantile Exchange to honestly clear trades and regulate behavior. The whole
affair, and the thundering silence from the oval office, makes Barack Obama
seem not just inept but somehow complicit in the looting of America. As if he
needs another mark of discredit in his record of consistent fumbling. There
are signs that a lot of people who still have something resembling money
invested in various funds will go to cash in the weeks ahead, including
under-the-mattress style. The distrust and paranoia is palpable now, with the
frenzies of Yuletide bygone for another year. After all, why trust banks,
especially the TBTF monsters. Such a mass move could take the starch even out
of highly manipulated equity markets.
Nemesis
may have her day, though. Jamie Dimon might have
just gone a swindle too far for the fates to ignore him another year. JP
Morgan looks to be in a peck of trouble for its role in the confiscation of
MF Global accounts, not to mention its hijinks in the precious metals
markets. The impudence of these rascals! In a nation when all sorts of people
are murdered every day for little more reason than being in the wrong place
at the wrong time, is it not a wonder that some poor swindled Grampa with nothing left to live for has not tossed a
Molotov cocktail through the window of a Wall Street watering hole known to
be frequented by banking poobahs? Perhaps this sort
of action awaits us in 2012.
Longtime
readers of this blog know how much I love predicting the Dow Jones Industrial
Average to crash down to 4000 every year. I never disappoint - though I am
often disappointed. In 2011, the SP index managed the delightful trick of
finishing a fraction below its previous January kickoff. The stock markets
have churned in range-bound purgatory for a decade while the price of a jar
of pickles has multiplied four-fold. Applying the calculus, and given the
pickle-DOW differential, I'd say my call was actually pretty good. In any
case, this year I change the tune slightly: I predict the DJIA will go to
4000, with the catch that the number is only a way-station to 1000, which it
will hit in 2014. We may be short of snow here in the Northeastern US -
thanks to La Nina - yet not short of confidence that the mills of the Gods
grind slowly, but grind exceedingly fine.
Finally,
look for the publication of my next book round July 2012, a non-fiction work
titled Too Much Magic: Wishful Thinking, Technology and the Fate of the
Nation... from The Atlantic Monthly Press. In a week, I begin work on World
Made By Hand 3.
Good
luck to you in 2012, and report any suspicious characters adorned with
ear-plugs, quetzel feathers, and carrying obsidian
knives to your nearest office of Homeland Security.
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