The possible coming collapse(s)

POSTED BY: SIGNYM
UPDATED: Friday, June 26, 2026 17:42
VIEWED: 5665
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6IXSTRINGJACK

Tuesday, December 27, 2022 7:13 PM

Pretty safe to say at this point that my prediction on NFTs was right too.

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Growing up in a Republic was nice... Shame we couldn't keep it.

SIGNYM

Saturday, December 31, 2022 12:41 AM

Quote:
oftwominds-Charles Hugh Smith
Wednesday, December 28, 2022
My One Prediction for 2023

The question that should be on our minds is: how are my household's buffers holding up?

Lists of predictions for the new year are reliably popular. Here's 10 predictions, there's 17 predictions, over here we have 23 and a half... let's strip it all down to one prediction: everyone's predictions will be wrong because 2023 isn't going to follow anyone's script.

There are several reasons for this. One is that the vast majority of predictions are based on historical comparisons to previous eras. If the current era is unique in its combination of dynamics and instability, previous pathways are not going to accurately predict what happens next.

Recency bias leads us astray. The past 50 years of relatively mild weather, the past 40 years of Bull Markets, the past 30 years of financialization and the supremacy of monetary policy--all of these offer a warm and fuzzy confidence that the future will be comfortingly similar to the recent past. This assumption works pretty well in stable eras but fails dismally in destabilizing, transitional eras.

Stability and instability are not evenly distributed, so every cherry-picked bias can be supported. You predict slow sales? Here's an empty shopping mall. See, I'm right! You predict a return to the good old days? Here's a crowded street fair. See, I'm right!

Those who happen to be living inside an island of coherence are inside a bubble that they mistakenly think encompasses the entire world. This is especially prevalent in the top 5% who shape the narratives that influence the rest of us. If real estate is sinking in their little corner of the world, they predict real estate will crash everywhere.

If everything's rosy in their protected enclave, they predict a mild recession and steady growth, blah blah blah.

Those living in a place that has lost its coherence and stability see the world differently. Systems are breaking down and when they are restored, they're not the same: they're less reliable, more expensive and prone to decay / decoherence.

This tracks the core-periphery model I often reference. Those in the still-coherent core cherry-pick evidence that all is well in the decohering periphery while those in the periphery expect the rot to spread quickly to the core.

It depends on how much is left in the buffers protecting core systems. As the diagram below illustrates, a system's ability to bounce back (restore stability and function) depends on the robustness of its buffers: how much labor, capital, expertise, spare parts, etc. can be rushed into service to repair damage and restore functionality.

The quality and quantity of these buffers are invisible to outsiders. When staffing has eroded and there's no one available to call up, when spare parts have been depleted, when budget constraints, corruption and managerial incompetence have stripped the system of expertise and the willingness to sacrifice, the system breaks down and cannot be restored because the means to do so are no longer available.

Outsiders clinging to recency bias are thus shocked when systems they assumed were rock-solid no longer function reliably. Insiders are amazed the duct-tape has held this long while outsiders are stunned to learn that student nurses are being passed off as certified nurses and the maintenance of critical systems has completely collapsed.

As I explained in How Things Fall Apart, The Blowback from Stripmining Labor for 45 Years Is Just Beginning and The "Let It Rot" Death Spiral, the competent are leaving in droves, leaving the ambitiously incompetent at the wheel while those keeping the whole mess glued together are burning out and retiring, quitting or downsizing to gigs with less pressure and more control of their work.

Systems that are still competently managed with ample buffers will maintain their coherence. The systems that are incompetently managed, riddled with corruption a

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THG

Saturday, December 31, 2022 1:07 AM

Poor Polish Russian Collaborator signym. She is forever predicting, praying for, Americas' downfall. Sorry to disappoint ya moron but America is the most stable major country at this point in time.

That, and watching you continually posting how well Russia is doing at this time, both militarily and economically shows you are clueless. Someone not to be taken seriously.

T

SIGNYM

Saturday, December 31, 2022 1:34 AM

Quote:
THUGR: Poor Polish Russian Colaberator signym. She is forever predicting, praying for, Americas' downfall. Sorry to disapoint ya moron but America is the most stable major country at this point in time.

That, and watching you continually posting how well Russia is doing at this time shows you are clueless.

THUGR, I think you miss my point completely. I'm not cheering for our collapse, I'm WARNING AGAINST IT.

There is NO SUCH THING AS TOO BIG TOO FAIL. History tells us that all empires, no matter how outwardly strong and geographically large, collapse. The Mayan, Aztec and Incan empires, Pharoanic Egypt, the Greek and Roman empires... closer to home and history, the British and Soviet empires... they all fell. Sometimes it was prolonged widespread drought or other natural catastophe. Sometimes external enemies. Sometimes overextension and internal corruption. Usually a combination of the above. Whatever it was, the empires that fell failed to notice and solve their existential problems in time.

We should be looking at history to inform us of the perils around us, not mindlessly cheerlead our self-styled invulnerability.

All empires are different, but they all end..

Here lies a fallen god.
His fall was not a small one.
We did but build his pedestal
A narrow and a tall one

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Pity would be no more,
If we did not MAKE someone poor - William Blake

SIGNYM

Saturday, December 31, 2022 2:19 AM

Various people have written about their experiences of collapse. Argentinians, Yugoslavians, and Russians specifically. With Argentina it was a currency collapse bc of unsupportable dollar-deniminated debt. Yugoslavia's collapse was bc of a regime-change bombing campaign. The USSR's collapse is harder to pinpoint but I think it was a series of political and economic mistakes over decades, principally thinking that it could buy the loyalty of it's member states by investing in them. (The Warsaw Pact nations were a net drain on Russia, not the other way around.) Followed by Gorbachev's naively thinking the west would be Russia's friend, instead of vultures picking at the corpse.

Since each one had a different cause it would be hard to draw lessons from them, but they all resulted in people scavenging through a devastated economy, sometimes combined with intense levels of danger (from factional fighting).

The USA has several points of critical weakness, but I think our biggest vulnerability is our petrodollar/reserve currency status. That allowed our elites to splash money around the world, buying everything from abroad, de-industrializing in favor of financialism (debt creation) bc that's where the biggest profits are.

And our petrodollar depends on our military. There is only one reason to trade oil in dollars: if you don't, we'll bomb the snot out of you. That was our deal with the Saudis, and that's why we destroyed Iraq and Libya and attempted to destroy Iran (and now, Russia).

The petrodollar is existential for us. In our current economic state, our empire can't survive without it.

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Pity would be no more,
If we did not MAKE someone poor - William Blake

THG

Saturday, December 31, 2022 4:09 AM

Quote:
Originally posted by SIGNYM:

Quote:
THUGR: Poor Polish Russian Collaborator signym. She is forever predicting, praying for, Americas' downfall. Sorry to disappoint ya moron but America is the most stable major country at this point in time.

That, and watching you continually posting how well Russia is doing at this time, both militarily and economically shows you are clueless. Someone not to be taken seriously.

THUGR, I think you miss my point completely. I'm not cheering for our collapse, I'm WARNING AGAINST IT.

Nope, don't think so. I want to thank you though. When you use my coffee emoticon in your posts, you are showing me it bugs the shit out of you. Good to know, because that's what I was going for comrade.

T

SIGNYM

Saturday, December 31, 2022 5:08 AM

Quote:
THUGR: Poor Polish Russian Collaborator signym. She is forever predicting, praying for, Americas' downfall. Sorry to disappoint ya moron but America is the most stable major country at this point in time.

That, and watching you continually posting how well Russia is doing at this time, both militarily and economically shows you are clueless. Someone not to be taken seriously.

SIGNY: THUGR, I think you miss my point completely. I'm not cheering for our collapse, I'm WARNING AGAINST IT.

THUGR: Nope, don't think so.

Why not? I've tried over and over again to describe how I think we can be stronger, smarter, more focused, more independent, and more patriotic than we are now. If I didn't think we must, and can, improve I wouldn't bother.

-----------
Pity would be no more,
If we did not MAKE someone poor - William Blake

SIGNYM

Saturday, December 31, 2022 5:58 AM

So?

Do you disagree with my goals?

-----------
Pity would be no more,
If we did not MAKE someone poor - William Blake

SIGNYM

Thursday, January 5, 2023 1:23 AM

Quote:
On The Cusp Of A Global Liquidity Crisis

Wednesday, Jan 04, 2023 - 11:21 AM

Authored by James Rickards via DailyReckoning.com,

Is there a financial calamity worse than a severe recession in early 2023? Unfortunately, the answer is “yes” and it’s coming quickly.

That greater calamity is a global liquidity crisis. Before considering the dynamics of a global liquidity crisis, it’s critical to distinguish between a liquidity crisis and a recession. A recession is part of the business cycle.

It’s characterized by higher unemployment, declining GDP growth, inventory liquidation, business failures, reduced discretionary spending by consumers, reduced business investment, higher savings rates (for those still employed), larger loan losses, and declining asset prices in stocks and real estate.

The length and depth of a recession can vary widely. And although recessions have certain common characteristics, they also have diverse causes. Sometimes the Federal Reserve blunders in monetary policy and holds interest rates too high for too long (that seems to be happening now).

Sometimes an external supply shock occurs which causes a recessionary reaction. This happened after the Arab Oil Embargo of 1973, which caused a severe recession from November 1973 to March 1975. Recessions can also arise when asset bubbles pop such as the stock market crash in 1929 or the bursting of a real estate bubble caused by the Savings & Loan crisis in 1990.

Whatever the cause, the course of a recession is somewhat standard. Eventually asset prices bottom, those with cash go shopping for bargains in stocks, inventory liquidations end, and consumers resume some discretionary spending. These tentative steps eventually lead to a recovery and new expansion often with help from fiscal policy.

Global financial crises are entirely different. They emerge suddenly and unexpectedly to most market participants, although there are always warning signs for those who know where to look. They usually become known to the public and regulators through the failure of a major institution, which could be a bank, hedge fund, money market fund or commodity trader.

While the initial failure makes headlines, the greater danger lies ahead in the form of contagion. Capital markets are densely connected. Banks lend to hedge funds. Hedge funds speculate in markets for stocks, bonds, currencies and commodities both directly and in derivative form.

Money market funds buy government debt. Banks guarantee some instruments held by those funds. Primary dealers (big banks) underwrite government debt issues but finance those activities in repo markets where the purchased securities are pledged for more cash to buy more securities in long chains of rehypothecated collateral.

You get the point. The linkages go on and on.

The Federal Reserve has printed $6 trillion as part of its monetary base (M0). But the total notional value of the derivatives of all banks in the world is estimated at $1 quadrillion. For those unfamiliar, $1 quadrillion = $1,000 trillion. This means the total value of derivatives is 167 times all of the money printed by the Fed.

And the Fed money supply is itself leveraged on a small sliver of only $60 billion of capital. So, the Fed’s balance sheet is leveraged 100-to-1, and the derivatives market is leveraged 167-to-1 to the Fed money supply, which means the derivatives market is leveraged 16,700-to-1 in terms of Fed capital.

Nervous yet?

Experts say, so what? These numbers are not new and have been even more stretched at certain times in the past. Simply because the financial system is highly leveraged and densely connected does not mean it’s ready to collapse. That’s true. Still, it does mean the system could collapse catastrophically and unexpectedly at any time. All it takes to collapse the system is a shock failure leading quickly to panic.

Margin calls are issued on losing position and immediate payment is demanded. Overnight repos are not rolled over. Overnight deposits ar

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