Executive Summary: We Are Screwed

“Never make predictions, especially about the future,” baseball legend Casey Stengel once observed. Despite his admonition we make our guesses anyway, extrapolating our current moods and worldviews as far into the unknowable future as can be tolerated with straight faces by polite company. As such, optimists of America’s 21st century often see a rosy future of bunny rabbits and rainbows, where energy is unlimited, money is unnecessary, the world’s population is smaller, well-fed, educated, civilized and healthy, and future generations enjoy long lives of ease, comfort and wealth thanks to the extraordinary beneficent progress of science, medicine, technology and government.

Modern-day pessimists, on the other hand, foresee a future far more dismal than the crumbling present reality, teetering on the brink of anarchy and collapse and fraught with the vicious animal spirits arising from our reptilian brain stems as bipedal inhabitants of an over-populated planet violently compete for ever-scarcer resources and future generations are imperiled thanks to the extraordinary destructive progress of science, medicine, technology and government. Since pessimists merely are optimists with better information, and inasmuch as there is none so zealous as a convert, one can be forgiven the newfound realist zest of a former optimist whose eyes have opened to view the precipice at which we, as a nation and a species, now stand. Predicting major changes to a complex system, however, much less its collapse, is an exercise fraught with indescribable futility, subject as they are to sightings of Black Swans, that elusive species whose arrivals are unknowable and unpredictable, unlike the buzzards which still return every March 15th to Hinckley, Ohio.

For Black Swans are the harbingers of both good and evil, and, as such, are apt to make one’s future view of the world both amusingly irrelevant and dangerously outdated mere moments after their sighting. Undaunted, and with full foreknowledge of the hilarity with which some of these prognostications will be viewed after 2012, herewith I submit my forecast for the future.

Executive Summary

We are screwed.

Rationale

We have ruined our endgame. Our children are screwed. Their children and the posterity of humankind are screwed. Humans, as a species, have screwed up a really good gig on this planet and, at some point, some miserable centuries hence, likely will be evolutionarily selected, as were dinosaurs, to cease to exist. Other species will survive and thrive, however, if only bacteria dwelling far undersea or underground, and perhaps, in the four or five billion years before the eventual decomposition of our solar system’s star into a red giant engulfs the orbit of this planet, another form of conscious, self-aware, communicating, tool-using life will escape the evolutionary chains in which it now is entrapped. All of which will occur well-after 2012, but in the meantime, here’s what to expect between now and then:

Black Swan Alert

December 21, 2012, as every student of apocalypse knows is reset day of the current Mayan 5,125.36-year “long count” calendar, as well as culmination of a fifth long-count great cycle and beginning of a new great-great cycle of 25,626.8 years which roughly coincides with the earth’s axis-wobbling precession of equinoxes cycle. It also represents a point at which the sun will cross the elliptic plane of the galaxy at the same time all its planets are aligned behind it away from the galactic center and the day on which Thomas Friedman will realize, belatedly, everything he ever thought or said was wrong and dogs and cats will be living together and…

Well-before 12/21/12, however, an unknowable, unpredictable black swan – the tipping-point event – will occur, setting into motion a cascading chain of unstoppable events which leave humanity forever changed and slipping, eventually, into evolutionary obscurity, just one of many accidents of DNA which didn’t quite work out. These forecasts, these dark musings, focus more on the immediate aftermath of the tipping point event (TPE), and the longer-term repercussions for the United States and the world. As another commenter recently observed, two of the four horsemen of the apocalypse already appear to have been untethered: Demand Collapse, in the form of sharply reduced consumer spending, reduced debt levels and increased savings, and Systemic Failure, via the collapse of AIG.

In 2009, however, a strong case can be made that these seals only partially have been broken, as consumer demand is falling, but has not completely collapsed, and the systemic failure of AIG has been tempered by the unlimited amount of borrowed government/taxpayer funds which have been shoved into the gaping maw of the AIG transfer conduit, only to be parceled out among some of the nation’s, and world’s, largest unindicted co-conspirator institutions, whose own day of reckoning looms near. In the nearer term, clearly the current policy of the United States government, regardless which persons or political party officially are wielding power (or the oligarchs behind them), is to insure the grand game continues unmolested, that no financial bubble ever is popped and no economic reset button ever is pushed. The Treasury Department and the Federal Reserve, therefore, in coordinated fashion, have become, and will continue to be, the financial backstop and lenders of only resort, setting up the scenario which will culminate in the actual “financial Armageddon” of which we were warned, boy-who-cried-wolf-like last September, but in orders of magnitude far beyond the worst nightmares of even the most pessimistic among us.

This next year-to-three-plus-years represents the final “blow-off” stage of our financial evolution, from our meager origins on the slime-lined shores of metal coins to the sophisticated velocity of electronic money, mere electrons, circling the globe at the speed of light. And it will be to those ancient metal coins and a much larger, rounder, colder world (sorry, Tom Friedman), at some point in our bleaker future, to which we will return. Whether good-intentioned or ill – it’s immaterial - the U.S. government/Federal Reserve will be enabled to become the final Ponzi-finance bubble of humanity’s electronic era, and in doing so will again replicate the oft-repeated outcome of all paper (fiat) currencies.

The last giant bubble shall burst on that day – not in 2009, but within four years – when:

· We will have bailed out, rescued, backstopped, guaranteed and thrown money at every major business, corporation, industry, state, city, bank, insurance company, automaker, retailer, airline, factory, shopping mall, commercial real estate company, pension fund, mutual fund, money market fund and a good portion of the population, ballooning our national debt to incredible, historic, bubblicious proportions, mostly via funds borrowed from international creditors.

· Under this illusion, we will have returned to some semblance of pre-2007 “life as we knew it,” albeit with new, improved price-deflated consumer goods, but also a renewal of free-flowing credit for consumers and businesses and cities and states and a restored, growing (if illusionary) economy.

· Just when things are looking up and Obama is running for re-election, with a prevalent, growing perception of hope and a “big bullet” dodged, the TPE occurs (unexpectedly, of course), say, yet another derivatives bomb (hey, there’s a quadrillion of ‘em…) which threatens the extinction of yet another too-big-too-fail financial institution. This time, however, the “financial Armageddon” cry-wolf ploy fails to engage our international patrons, as they previously have read about John Law and know the movie’s ending (like “Titanic:” it sinks every time).

· America, belatedly, will realize we have gone “a bailout too far,” which will end as badly for the Allies as did the movie “A Bridge Too Far.” (Note: by definition, the Black Swan TPE will NOT be a derivatives eruption, because that is already a “known unknown.” The Black Swan TPE will be a Monty-Python-esque “And Now For Something Completely Different” occurrence, which may, in fact, detonate a derivatives bomb. As such, it shall be henceforth, for the purposes of this commentary, be referred to as “the Black Swan TPE Which Cannot Be Named,” or BSTPEWCBN.)

· America’s international creditors, including “friendlies” like Japan, Britain, Canada, Brazil, and others, immediately and en masse, become unwilling to lend the United States, at any rate of return or rate of interest, save the pledging of U.S. gold reserves and/or deeding over of real, physical assets. The “Full Faith and Credit of the United States” overnight becomes regarded as some sort of ironic joke.

· Our international suppliers of energy, on which we foolishly still are dependent for two-thirds of our minimum daily requirement, no longer will accept our paper IOUs, again only gold or the deeds to other real, physical assets.

· The U.S. dollar no longer is accepted for any form of payment outside the country, much less is deemed the world’s reserve currency. In its place, a hastily arranged basket of other currencies is created to isolate the financial damage to the U.S.

· U.S. dollar-denominated global trade and commerce grind to an abrupt halt, ships at sea stop, divert or return to ports of embarkation (if headed to the U.S.), pending delivery of goods to alternate buyers or arrangement of payment in forms which are not the U.S. dollar.

· Resolutions are introduced to the United Nations to require the United States to stand down its military everywhere in the world, in recognition of our new status as a banana republic with nuclear arms. The U.S. naturally vetoes this resolution in Security Council. U.N. member representatives approve a measure to immediately relocate U.N. headquarters to Switzerland.

· After the failed U.N. resolution, our overseas armed forces are ordered by host countries to immediately vacate their garrisons or face forcible ejection, including troops based in active theaters of conflict.

· Post-Katrina-New-Orleans-like, widespread hoarding of cash, food, water, medicines, alcohol, batteries, candles, fuel, arms and ammunition occurs within hours of the BSTPEWCBN, rapidly escalating into regional episodes of violent theft, robbery, burglary and looting which overwhelms local law enforcement.

· Our remaining domestic armed forces and national guard units are ordered into U.S. streets, with authorized use of deadly force, to support local and state law enforcement in quelling protest, looting and violence, to enforce 24-hour curfews and, for the third time in our nation’s history, to enforce martial law. Armed forces and local law enforcement conduct house-to-house weapons sweeps, under the auspices of local force majeure ordinances (in violation of the Second Amendment and Fourth Amendments), and based on NCIS gun-purchase records and state concealed-carry permits, as applicable.

· In short, we transform ourselves from unilateral superpower to international pariah in a matter of a few weeks. Martial law, curfews and restricted movement and travel remains in place for months as essential services and commerce are allowed to recommence under strict rules and regulations.

Then what? The process begins anew under an entirely different reality, an entirely different set of criteria, but the process remains the same: Denial, Anger, Bargaining, Depression, Acceptance.
Denial will evaporate rapidly at a pace which coincides with full establishment of the new world order, and Anger, having flourished briefly and violently on our streets and in our neighborhoods, will be severely, perhaps painfully, curtailed in a previously unimagined militarized manner. There will be no Bargaining, for there is nothing left to bargain for, or to bargain with. What was, was, and what now is, is, and for the first time in the post-WWII era, possibly longer, the United States of America no longer will call the shots in the assemblage of nations. Depression, arising from a lifestyle lost, and Acceptance, of a new, much lower, standard of living, will be the most difficult segments to live through.

But muddle through we must. As always, younger children will adapt most easily and most quickly to our reduced means and living arrangements. They will , however, grow weary of the endless stories of how wonderful and amazing American life used to be, as told to them by their aging Baby Boomer, Generation X and Generation Y elders.

Now my head hurts…time for some scotch, which I will sorely miss, someday.