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2012 – The year of living dangerously

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by Jim Quinn
of The Burning Platform
Posted on 8th January 2012 


“In retrospect, the spark might seem as ominous as a financial crash, as ordinary as a national election, or as trivial as a Tea Party. The catalyst will unfold according to a basic Crisis dynamic that underlies all of these scenarios: An initial spark will trigger a chain reaction of unyielding responses and further emergencies. The core elements of these scenarios (debt, civic decay, global disorder) will matter more than the details, which the catalyst will juxtapose and connect in some unknowable way. If foreign societies are also entering a Fourth Turning, this could accelerate the chain reaction. At home and abroad, these events will reflect the tearing of the civic fabric at points of extreme vulnerability –  problem areas where America will have neglected, denied, or delayed needed action.” – Strauss & Howe – The Fourth Turning – 1997

IN DECEMBER 2010 I WROTE AN ARTICLE CALLED Will 2012 Be as Critical as 1860?, THAT PONDERED WHAT MIGHT HAPPEN WITH THE 2012 presidential election and the possible scenarios that might play out based on that election. Well, 2012 has arrived and every blogger and mainstream media pundit is making their predictions for 2012. The benefit of delaying my predictions until the first week of 2012 is that I’ve been able to read the wise ponderings of Mike Shedlock, Jesse, Karl Denninger, and some other brilliant truth seeking analysts regarding what might happen during 2012. The passage above from Strauss & Howe was written fifteen years ago and captured the essence of what has happened since 2007 and what will drive all the events over the next decade. Predicting specific events is a futile human endeavour. The world is so complex and individual human beings so impulsive and driven by emotion, that the possible number of particular outcomes is almost infinite.

But, as Strauss and Howe point out, the core elements that created this Crisis and the reaction of generational cohorts to the implications of debt, civic decay and global disorder will drive all the events that will occur in 2012 and for as far as the eye can see. Linear thinkers in mega-corporations, mainstream media and Washington D.C. focus on retaining the status quo, their power and their wealth. They believe an economic recovery can be manufactured through monetary manipulation and Keynesian borrowing and spending. They are blind to the fact that history is cyclical, not linear. In order to have an understanding of what could happen in the coming year, it is essential to keep the big picture in focus. As we enter the fifth year of this twenty year Crisis period, there is absolutely no chance that 2012 will see an improvement in our economy, political atmosphere or world situation. Fourth Turnings never de-intensify. They exhaust themselves after years of chaos, conflict and turmoil. I can guarantee you that 2012 will see increased mayhem, riots, violent protests, recessions, bear markets, and a presidential election that will confound the establishment. All the episodes which will occur in 2012 will have at their core one of the three elements described by Strauss & Howe in 1997: Debt, Civic Decay, or Global Disorder.

Debt – On the Road to Serfdom

The world is awash in debt. Everyone is focused on the PIIGS with their debt to GDP ratios exceeding the Rogoff & Reinhart’s 90% point of no return. But, the supposedly fiscally responsible countries like Germany, France, U.K., and the U.S. have already breached the 90% level. Japan is off the charts, with debt exceeding 200% of GDP. These figures are just for the official government debt. If countries were required to report their debt like a corporation, their unfunded entitlement promises to future generations are four to six times more than their official government debt.

Any critical thinking person can look at the chart above and realize that creating more debt out of thin air to solve a debt problem is foolish, dangerous, and self serving to only bankers and politicians. The debt crisis took decades of terrible choices and bogus promises to produce. The world is now in the midst of a debt driven catastrophe. At best, the excessive levels of sovereign debt will slow economic growth to zero or below in 2012. At worst, interest rates will soar as counties attempt to rollover their debt and rolling defaults across Europe will plunge the continent into a depression. The largest banks in Europe are leveraged 40 to 1, therefore a 3% reduction in their capital will cause bankruptcy. Once you pass 90% debt to GDP, your fate is sealed.

“Those who remain unconvinced that rising debt levels pose a risk to growth should ask themselves why, historically, levels of debt of more than 90 percent of GDP are relatively rare and those exceeding 120 percent are extremely rare. Is it because generations of politicians failed to realize that they could have kept spending without risk? Or, more likely, is it because at some point, even advanced economies hit a ceiling where the pressure of rising borrowing costs forces policy makers to increase tax rates and cut government spending, sometimes precipitously, and sometimes in conjunction with inflation and financial repression (which is also a tax)?”Rogoff & Reinhart

The ECB doubling their balance sheet and funnelling trillions to European banks will not solve anything. The truth that no one wants to acknowledge is the standard of living for every person in Europe, the United States and Japan will decline. The choice is whether the decline happens rapidly by accepting debt default and restructuring or methodically through central bank created inflation that devours the wealth of the middle class. Debt default would result in rich bankers losing vast sums of wealth and politicians accepting the consequences of their false promises. Bankers and politicians will choose inflation. They believe they can control the levers of inflation, but they have proven to be incompetent, hubristic, and myopic. The European Union will not survive 2012 in its current form. Countries are already preparing for the dissolution. Politicians and bankers will lie and print until the day they pull the plug on the doomed Euro experiment.

The false storyline of debt being paid down in the United States continues to be propagated by the mainstream press and decried by Paul Krugman. The age of austerity storyline gets full play on a daily basis. Total credit market debt in 2000 was $27 trillion. It skyrocket to $42 trillion by 2005 as George Bush and Alan Greenspan encouraged delusional Americans to defeat terrorism by leasing SUVs and live the American dream by putting zero down on a $600,000 McMansion, financing it with a negative amortization no doc loan. Paul Krugman got his wish as a housing bubble replaced the dotcom bubble. Debt accumulation went into hyper-speed in 2006 and 2007 as Wall Street sharks conducted a fraudulent feeding frenzy by peddling their derivatives of mass destruction around the globe. By the end of 2007, total credit market debt reached $51 trillion.

In a world inhabited by sincere sane leaders, willing to level with the citizens and disposed to allow financial institutions that took world crushing risks to fail through an orderly bankruptcy process, debt would have been written off and a sharp short contraction would have occurred. The stockholders, bondholders and executives of the Wall Street banks would have taken the losses they deserved. Instead Wall Street used their undue influence, wealth and power to force their politician puppets to funnel $5 trillion to the bankers that created the crisis while dumping the debt on taxpayers and unborn generations. The Wall Street controlled Federal Reserve provided risk free funding and took toxic mortgage assets off their balance sheets. The result is total credit market debt higher today than it was at the peak of the financial crisis in March 2009.

Our leaders have done the exact opposite of what needed to be done to address this debt crisis. The country is adding $3.7 billion per day to the National Debt. With the debt at $15.2 trillion, we have now surpassed the 100% to GDP mark. The National Debt will be $16.5 trillion when the next president takes office in January 2013. Ben Bernanke has been able to keep short term interest rates near zero and the non-existent U.S. economic growth and European disaster has resulted in keeping long-term rates near record lows. Despite these historic low rates, interest on the National Debt totalled $454 billion in 2011, an all-time high. The effective interest rate was approximately 3%. If rates stay at current levels, interest will be between $400 and $500 billion in 2012. Each 1% increase in rates would cost American taxpayers an additional $150 billion. A rapid increase in rates to the 7% level would ratchet interest expense above $1 trillion and destroy the last remaining vestiges of Bernanke’s credibility. It can’t possibly happen in 2012. Right? The world has total confidence in pieces of paper being produced at a rate of $3.7 billion per day.

Confidence in Ben Bernanke, Barack Obama and the U.S. Congress is all that stands between continued stability and complete chaos. What could go wrong? Debt related issues that will likely rear their head in 2012 are as follows:

  • A debt saturated society cannot grow. As debt servicing grows by the day, the economy losses steam. The excessive and increasing debt levels will lead to a renewed recession in 2012 as clearly detailed by ECRI, John Hussman and Hoisington Investment Management.

“Here’s what ECRI’s recession call really says: if you think this is a bad economy, you haven’t seen anything yet. And that has profound implications for both Main Street and Wall Street.” – ECRI 

At present, we observe agreement across a broad ensemble of models, even restricting data to indicators available since 1950 (broader data since 1970 imply virtual certainty of recession). The uniformity of recessionary evidence we observe today has never been seen except during or just prior to other historical recessions.-  John Hussman 

Negative economic growth will probably be registered in the U.S. during the fourth quarter of 2011, and in subsequent quarters in 2012. Though partially caused by monetary and fiscal actions and excessive indebtedness, this contraction has been further aggravated by three current cyclical developments: a) declining productivity, b) elevated inventory investment, and c) contracting real wage income. In summary, the case for an impending recession rests not only on cyclical precursors evident in productivity, real wages, and inventory investment, but also on the disfunctionality of monetary and fiscal policy. – Van Hoisington 

  • The onrushing recession will send housing down for the count. With 2.2 million homes already in the foreclosure process and another 13 million homes with negative or near negative equity, the recession will push more people over the edge. As foreclosures rise a self reinforcing loop will develop. Home prices will fall as banks dump houses at lower prices, pushing millions more into a negative equity position. Home prices will fall another 5% to 10% in 2012, with a couple years to go before bottoming.
  • The recession will result in companies laying off more workers. It won’t be as dramatic as 2008-2009 because companies have already shed 6 million jobs. The working age population will increase by 1.7 million, the number of people employed will go up by 1 million, but the official unemployment rate will drop to 7% as the BLS reveals that 10 million people decided to relax and leave the workforce. Surely I jest. The government manipulated unemployment rate will rise above 9%, while the real rate will surpass 25%.
  • The American people rationally increased their savings rate to 6.2% in the 2nd Quarter of 2009. When you are over-indebted and the country heads into recession, spending less and saving more is a sane option. Consumer expenditures accounted for 69% of GDP in 2007, prior to the economic collapse. The “recovery” of 2010-2011 has been driven by Ben’s zero interest rate policy, the resumption of easy credit peddling by the Wall Street banks, and consumers convinced that going further into hock to attain the American dream is rational. Consumer spending as a percentage of GDP has actually risen to 71% and the savings rate has plunged to 3.6%. The 20% drop in gas prices since April bottomed in December. This decline temporarily boosted consumer spending, but prices are on the rise again. With the State and local governments reducing spending, do the Wall Street Ivy League economists really believe consumers will increase their consumption to 73% of GDP and reduce their savings rate to 1%? If you open your local newspaper you will see the master plan. Car dealers are offering 0% financing with nothing down for 60 months. The GMAC/Ditech/Ally Bank zombie lives as subprime auto loans are back. The “strong” auto sales are a debt financed illusion. Ashley Furniture is offering 0% financing for 50 months with no payments through Wells Fargo Bank. When the Federal Reserve provides the Wall Street banks with 0% funding, banks are willing to take big risks knowing that Uncle Ben and the naive American taxpayer will be there to bail them out when it blows up again.
  • With recession a certainty as fiscal stimulus wears off, home prices fall, employment stagnates, and consumer spending grinds to a halt, what will happen to the stock market? The Wall Street shills paraded on CNBC and interviewed by the multi-millionaire talking head twits assure you that stocks are undervalued and the market will surely be up 10% to 15% by 2013. It’s a mortal lock, just as it has been for the last twelve years, with the S&P 500 at the same level as January 1999. The fact is the stock market drops 30% on average during a recession. The talking heads declare that corporate profits are at record levels and will continue higher. Not bloody likely. Corporate profit margins are at an all-time peak about 50% above their historical norms. Profits always revert to their mean. These profits are not sustainable as they were generated by firing millions of workers, zero interest rates for banks, fraudulent accounting by the banks, and trillions in handouts from the middle class taxpayers to corporate America.

In a true free market excess profits will draw more competitors and profits will fall due to competition. When corporate profits exceed the mean by such a large amount, you can conclude that crony capitalism has replaced the free market. Government bureaucrats have been picking the winners (Wall Street, War Industry, Big Media, Big Healthcare) and the American people are the losers. Corporate oligarchs prefer no competition so they can reap obscene risk free profits and reward themselves with king-like compensation. Mean reversion will eventually be a bitch. Real S&P earnings have reached the 2007 historic peak. To believe they will soar higher as we enter a recession takes the same kind of faith shown by Americans buying a $600,000 McMansion in Stockton with no money down in 2005. The result will be the same. Do you ever wonder how corporations are doing so well while the average American sinks further into debt, despair and poverty?

The brilliant John Hussman captures the gist of an investor’s dilemma in his latest article:

“With 10-year Treasury yields below 2%, 30-year yields below 3%, corporate bond yields below 4%, and S&P 500 projected 10-year total returns below 5%, we presently have one of the worst menus of prospective return that long-term investors have ever faced. The outcome of this situation will not be surprisingly pleasant for any sustained period of time, but promises to be difficult, volatile, and unrewarding. The proper response is to accept risk in proportion to the compensation available for taking that risk. Presently, that compensation is very thin. This will change, and much better opportunities to accept risk will emerge. The key is for investors to avoid the allure of excessive short-term speculation in a market that promises – bends to its knees, stares straight into investors’ eyes, and promises – to treat them terribly over the long-term.”

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Warning: Extreme weather, imminent earthquake danger

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by Piers Corbyn

EXTREME WEATHER AND EARTHQUAKE DANGER IMMINENT around 23rd-27th March warns Piers Corbyn

The very active solar region which emerged from the SE limb of the sun on the morning of 21st March is crackling with dangerous activity including extreme UV radiation and up to 50Mev proton bursts and its appearance along with other active regions on the sun fits our WeatherAction.com long-range WARNING for significant weather extremes and earthquakes in the period around 23rd-27th March, issued during February.


Solar activity details: http://spaceweather.com/archive.php?month=03&day=21&year=2011&view=view (= http://bit.ly/h13CuA  use forward button to get to next day) and http://www.lmsal.com/solarsoft/latest_events/ 2nd graph down purple blip is 50Mev. The other levels are different colours. Notice 1Mev is staying high on 22nd also. Note the Spaceweather link already shows a solar wind stream from a coronal hole will hit Earth 23/24th March, the newly reported activity on the sun will lead to earth hits following that. Solar wind hit 527km/sec – that’s fast on 23rd March. Geomagnetic Activity – should increase in 23-27th periods – See http://www.swpc.noaa.gov/rt_plots/kp_3d.html

We warned of these dangers – with weather event detail for USA, West Europe, Australia, New Zealand and BanglaDesh in forecasts issued around the end of February and repeated on the posting “15/16…March THE DANGEROUS TIMES THE WORLD IS IN….”  http://bit.ly/enMFIy


Piers Corbyn says “The recent extreme Earthquake events in the world were preceded by extreme events on the sun – specifically X level solar flares and related proton bursts. It appears to us that it is always the case that extreme weather and earthquake events are preceded by extreme events on the sun and historically proton events which are usually associated with X flares are an especially reliable warning of extreme weather, storm formation and earthquake events.

We have no forecast of specifically where the earthquake events are most likely except to say that the Pacific “ring of fire” is very vulnerable and new serious earthquake events in Japan and /or the West USA are very possible. Some other researchers** have also been making warnings of earthquake events around the present period. My main risk periods are a bit later than theirs because although lunar tidal effects (such as ‘Supermoon’ 19th March) are important we find the solar hits are crucial determinants. **Links to these forecasts of others which include comments on possible regions are available via the link above – http://bit.ly/enMFIy


More Significant – Magnitude 6.0 or above shown in Red –LINK http://earthquake.usgs.gov/earthquakes/recenteqsww/Quakes/quakes_all.php On 22nd (Okay for investigation given approx timings especially of Earthquakes) M=6.1 mid-Atlantic ridge is interesting as well as 4 quakes in Japan bigger than M=6 with 2 of M=6.6 . There was only one of M 6.0 or above (it was 6.1 in Japan) in previous 4 days 18-21 Mar. M 6.5 or above is probably more than an aftershock. For comparison the devastating New Zealand Earthquake of 21st Feb 2011 was M=6.3 but rather near the surface

#thaiquake 13.55z24Mar M6.8 http://1.usa.gov/dOgl4I CONFIRMS PiersCorbyn’s LongRange Extreme Quake warning 23-27Mar http://bit.ly/hBHho1


“The weather events are expected in two waves ~23/24th and ~26/27th and extreme earthquake events risk is significantly enhanced all through this period 23-27th March but probably more enhanced later with high risk continuing a day or so after 27th.

“The long range predicted weather events in the double period 23-27th March include:
– Snow deluges / cold blasts in N/ NE Britain & NW Europe
– USA A double whammy of major snow & blizzards (esp 25-27th) Great Lakes & West thereof; Tornadoes in South
– Australia Tropical Cyclone formation likely East of Queensland and Tornado possible New Zealand (North Island) prob 23/24th. Tornado formation risk is high in Bangladesh 26/27th

FULL DETAILS of these forecasts for the whole of March are available via http://bit.ly/dNhlNo . New subscribers now (late March) also will get access to the April forecasts when available at the end of March at no further charge.


USA 23rd March (as on twitter) MORE confirmation of W-Action 23-24th March  warnings. WeatherChannel: “242 severe reports as of 8:30pm EDT, most in a day since February 28th”. The reports were of large hail, damaging winds, tornado developments etc in various parts

N/NE Britain & West Europe 23rd March. Short range forecast maps show cold plunge starting and devloping over next few days in W Europe and N/NE Britain http://www.westwind.ch/?link=ukmb,http://www.wetterzentrale.de/pics/,.gif,bracka,brack0,brack0a,brack1,brack1a,brack2,brack2a,brack3,brack4 Note: S / SW parts and  Ireland will be warmer

Jim Berkland: Major California earthquake predicted for March 19th – 26th

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from politicsandfinance.blogspot.com
Originally posted March 16, 2011


For an enlarged image of the map (left), click on: http://www.seismic.ca.gov/pub/shaking_18x23.pdf


Neil Cavuto interview with former USGS geologist Jim Berkland who claims a 75% success rate in earthquake prediction:

Watching Fox in order to stay current on the nuclear events unfolding in Japan, I listened to a Cavuto interview with Jim Berkland. Berkland is known as the man who predicted the World Series earthquake four days before it hit back in 1989. He is now predicting a major seismic event to occur in California sometime between the dates of the 19th and 26th of this month.

Eccentric? Maybe! But while past performance is no guarantee of future results, his is a voice that should be taken somewhat seriously.

Jim Berkland in his own words

“… Mainstream scientists generally try to debunk various aspects of my earthquake predictions or to ridicule me personally, with epithets such as crackpot or clown. My response is to question their own records in earthquake prediction, and to point out that the main action of a stream is not near the center, but closer to the edge. Near the fringes, with eddies and cross-currents, erosion and deposition are more effective, sometimes leading to changes in the course of the stream. Conformity does not lead to invention. Scientific progress is not achieved by majority vote. Following my pilgrimage to Gizeh [Egypt] with John Anthony West, I discovered the meaning of life: To seek your purpose and strive to achieve it. Anything less is a waste of existence. I am fortunate to have found that my purpose is to de-mystify earthquakes for the public so that meaningful preparations take the place of fatalistic attitudes, that often prove fatal.

The experts of High Science state that earthquake prediction is currently a scientific impossibility. I maintain that the topic is too important to leave to the experts and I continue to do the impossible with a better than 75% batting average, which is more than 300% greater than chance…”

Cavuto/Berkland interview excerpt from Fox video (above)

BERKLAND: Well, if it was, one in the northwest, in the Cascadia Trench, like we had in 1700, that would be a nine magnitude quake. I’m not predicting that. But I’m saying we just had a massive fish kill. Maybe a million fish died in Redondo Beach. They had a massive fish sweep in Mexico. We just had a bunch of whales come in close to San Diego.

CAVUTO: What does that presage? When you have events like that, what does that generally mean? What’s going on in the waters?

BERKLAND: Changes – changes in the magnetic field that often precede larger earthquakes. Most animals have the mineral magnetite in their bodies, including people. But it enables homing pigeons to get home. Just before big quakes, they often can’t get home. There is the delay factor. So we look for those kinds of things.

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