Update On Our Theme Of Volatility, The Global Economy, Our Prior Post On Chaiten Atmospheric Energy Activity And The Recent Earthquakes In Chile

One of the major themes on this blog is that we are in a cycle of volatility. As part of that we have called more economic outcomes further in advance of them coming to pass than any blog, media source or economist I am aware of. (Even more outcomes we have talked about are still developing.) My point is the rest of this post isn't coming from some voodoo crackpot or Ouija board analysis. As part of that, people should learn to expand their mind to beyond what they read in the newspaper or learn in a history book. That includes learning to trust their inner self and their own intuitiveness of what is right and wrong, of what is true or not true.

As we have written numerous times, I believe there is ample anecdotal evidence that no distinction exists between the economic crisis we are now experiencing and much of the volatility we see in the world today. Two forms we have written of quite a few times are increased global strife and the volatility we see in nature. I have held off on talking about any detail behind these posts but I have had numerous posts highlighting volatility above and beyond economics. One is the Chilean Chaiten volcanic storms we posted on here eighteen months ago. The initial Chaiten eruption in early 2008 started within days of rally failure where the S&P 500 attempted to retake its all-time highs. From there the S&P started its decline into the eventual global economic collapse. Coincidence? Maybe. In our original post we noted natural energy disturbances possibly being associated with Chaiten's electrical storms and with tectonic activity in general. Now with recent tectonic activity in Chile, we see Chaiten sits atop the very plate borders involved in one of the most severe tectonic events on record. Are the atmospheric energy disturbances over Chaiten from 2008 related to today's tectonic events? In any event, the forces that shape our world, both from this planet and beyond, are far more than anything man could ever muster. The first Chilean earthquake actually shortened the day and tilted the earth's axis.

There is substantial reason to believe the world is not as it seems, and definitely not as humanity views it. That includes physical and metaphysical forces clearly not understood. Our inability to holistically determine and process the known and unknown interconnectedness of the world around us is is a major limitation of science in my estimation. And this lack of a holistic perspective perpetuates faulty educational programs and inaccurate conclusions both in and out of the realm of science. Which then in turn perpetuates even more inaccurate scientific conclusions across a wide area of study. In other words, a self-reinforcing dynamic of inaccurate conclusions that is likely leading many of our fundamental views of the universe further off track from ultimate truth. By conclusion, many of the generally held beliefs of much scientific theory are most likely either very incomplete or completely inaccurate. I don't care if that is the Big Bang theory, Natural Selection Theory, Global Warming (Not really a well-deserved position as a theory. More like a social movement interspersed with some rudimentary analysis not met with substantial scientific rigour.) or countless others theories of how the universe or our world really exists. So when media and political commenteurs come on television or in mainstream media print and attempt to marginalize scientific dissent through the same strong-arming tactics they use to run political parties, no one should listen. What particularly comes to mind are the true believers of human-induced global warming as an example - most of whom are broadcasters (mouth pieces for political idiots) or political idiots. Of course, that goes equally for the fear-pumping History Channel in their endless 2012 end-of-the-world fear campaign. These are just two examples.

The pursuit of truth is a wonderful ideal and without politic, group-think, ideology and ego, science is a most noble of human endeavors. But that doesn't mean any particular prevailing scientific theory void of these taints is based in incontrovertible truth. As we have said before, scientific theory is simply the limit of man's perceived knowledge at any given point in time. I don't take much of any scientific theory as proof of anything other than a plausible and hopefully rational observation in a best case analysis. One that will eventually be proven to be incomplete or even completely inaccurate. Yet we must always persevere and continue our quest for scientific truth and greater knowledge. A substantial part of that quest is to be open to completely new ideas and to merge seemingly completely disparate disciplines of science into more holistic views of the universe.

Humanity's base of irrefutable knowledge is very, very, very thin. Did I say very thin? (Wall Street's Frankenstein finance supposedly based on science is our most frequent reminder of this fact.) Yet today hubris defines science as our new god. And the true believers marginalize anyone with a modicum of sense or reason who may doubt their conclusions. Just as today's religious fanatics seek to attack those with differing views. Is there any difference between the two? Really? In our arrogance we often take theory for fact, have little respect for what we don't understand, for the world around us, for the enormity of the universe's impact on our existence or even intuitive or metaphysical perspectives often influenced by our unknown yet undeniable connection to an unknown universe. Scientific theory is continually portrayed as fact, often with a rabidly unreasoned fanaticism shared with religious zealots.

Our new, most popular scientist is Al Gore - a man who apparently has few reasoning skills given his countless outlandish scientific gaffes. What do you expect from someone who has no foundational experience in strong scientific principals and appears to have a limited intellectual inquisitiveness. Nor a healthy respect for intellectual or scientific debate but rather is interested only in furthering his ego-driven ideology. When have billions of people ever accurately anticipated the future of our planet re global warming? When has all of humanity been right? Especially when they have received most of that information from a bureaucrat with no understanding of rigorous scientific principals or the enormously unquantifiable gap between scientific theory and scientific fact. I think we call that ideology. Dogma. Brainwashing. This position is just as anti-science as the Luddite opinion of the anti-science religious fanatics and "conservative" (more accurately neoliberal) politically-motivated ideologues.

Volatility is a well-misunderstood phenomenon. One of the dynamics associated with volatility that is not well understood is its association with the creation of new paradigms. Put in simple terms, often volatility is accompanied by a change in trend. Something we have beaten like a drum on this blog. Something the status quo across a wide range of topics is completely oblivious to. So far.

Let's apply this to our countless expectations for a change in trend across a wide array of topics we have discussed. Some examples of volatility-based topics and the macro dynamics surrounding volatility we have discussed are:

-We are not in an economic recovery from a recession but instead in a global economic meltdown which is still metastasizing

-Global finance is dead

-Globalization is dead

-Wall Street's domination over our economy could very well be ending. Forever.

-The dollar would rise from the dead

-The U.S. would reassert itself with an economy that could rival its comparative GDP advantage not seen in fifty years.

-The Federal Reserve could and should print a fair amount of money to ameliorate this crisis. That they haven't exposes them as not having the people's or community bank's interests at heart. They are a special interest organization perpetuating fraud.

-Globalization will be replaced by localization

-The stream of high-demand mindless MBAs in finance produced by mindless universities would eventually find little demand in the market.

-Emerging markets heretofore considered to be economic miracles would collapse

-The S&P has a downside target of 200-450 before this crisis has passed

-Value stocks are in a massive bubble and will lead a market fall

-Large cap stocks, once considered safe havens, will ultimately prove to be some of the riskiest investments

-Interest rates will rise because of risk not inflation

-We are in the biggest financial bubble the world has ever seen

-All global wealth created since 2000 could very well disappear

-The Washington bubble will pop and State's Rights will rise to challenge the destruction of Federalism by a national corporatocracy run amok

-Global peace would be replaced by the potential for strife

-Unprecedented global wealth would be replaced by economic collapse

-Detroit would be the only real estate in the world I would buy (Add Cleveland, Buffalo and a few others in there as well.)

- The true believers in this economic model, the most wealthy, will disproportionately be impacted by the unwinding this cycle.

-The commodities boom would be replaced by a commodities bust

-Volatility would return to financial markets as the horror of Wall Street's inventions failed

-China's economic miracle would be replaced by economic bust

-The economic unwindings this cycle will not only impact banks but people, countries, governments, etc.

-Our complete repudiation the mythology that the US has lost its way and cannot compete in a global economy as perpetuated by the psycho-babble coming out of the bullshit economy aka Wall Street idiots and its financial no-think savants. An utter lie of massive proportions completely believed by the top 5-10% of wage earners in America.

-Peak oil would be replaced by an oil bust

-The federal government's hegemony would be replaced by local-influence in the dynamic of self-rule

-Great global demand for food being replaced with the potential for great global famine

-Those countries perceived to be immune to this crisis with large currency surpluses would turn out to be the biggest crises (eg China, Russia, Germany, emerging markets)

-The two-party monopoly in American politics would come under attack

-The lobbyist bubble would collapse

-A private banking system perpetuates racism, a class system and limits economic opportunity for a democratic society. We need is a public banking system.

-Global warming will more than likely turn out to be global cooling (a few years ago we highlighted scientists with this view who recognized the incomplete nature of weather models.) thus refuting the entire argument for global warming. (Until Al Gore curve fits some new climate theory onto a selective group of new data.).........Right now based on history and the work of many paleoclimatologists far more brilliant that mathematically-challenged Ag Gore, I would say it is a near certainty that the future will in fact be global cooling.

..........and on and on and on. The breadth and disparity of our volatility-based posts has been quite substantial. Most of our posts have been discussed for years and yet the majority still aren't on anyone's radar today. They will be. When it's too late. Just as we would expect it to be given human nature, regurgitated group-think and herd behavior which marginalizes dissent.

Of course, I didn't take these positions simply to be a contrarian or because I believe we are in a cycle of volatility. They were based on some substantial understanding of science, the understanding of the limits of scientific theory, the clear understanding that most economists are not scientists and hence their opinions are generally without scientific merit, the use of reasoning over ideology and the application of my own economic models - models that are based on sound science.

So, here's something to ponder on this fine Tuesday. Is the recent Chilean tectonic activity (and many other clustered tectonic events in the last few weeks in Taiwan, Haiti, Turkey and Japan.) and the unknown forces associated with this activity foretelling an imminent change in economic trend? Is this dynamic similar to the Chaiten storms and initial eruption that were possibly foretelling of a change in trend at the peak of 2008's global economic boom? (Commodities and many financial markets actually didn't peak until mid-2008.) Are we now close to entering the next phase of this crisis driven by dynamics that aren't even acknowledged let alone understood on rudimentary levels? Dynamics which affect humanity as well as our planet?

Remember, as we have cited often, I believe we are in the eye of the economic storm. And that the back end of the storm will decimate those who have convinced themselves the crisis has passed just as happened with the temporary stabilization post 1929. As we have cited, most of those convinced the 1929 crisis had passed were, in fact bears leading up to the 1929 crisis. Bears who were eventually devastated by calling an end to that crisis. And as we have also remarked, most winners on big bets, be it hedge funds or entrepreneurs are one-hit wonders. In other words, they are unable to replicate their success - a strong supporting position which will likely decimate true believers in the status quo and many bears who have turned bullish.

I believe the hurricane is more than appropriate to describe this crisis given the spiral, some would say Fibonacci spiral, (defining the hurricane pattern) is one of the most common recurring patterns of nature and the universe. And just as we know the metastasizing energy of the hurricane is most powerful on the back end, so too we have witnessed this similar pattern in prior economic crises. Why wouldn't economic crises potentially have similar characteristics to patterns in nature? Especially that of a storm given we are indeed in an economic storm. Are economic crises in fact natural phenomenon? Of course, human nature and human activity could be completely disconnected from the universe and the world around us. Our behavior, including economic behavior, could be completely random and without impact from the universe. Ahem. Not.

I didn't put up the first Chaiten post or this post just for grins and giggles but we shall watch how global financial markets unfold together.

Regardless, the cycle of volatility continues.