BLACK STORM

BLACK STORM – - THE UNFINISHED EMPIRE

Andrew McKillop

21 June 2011

WAITING FOR MIRACLES

World financial markets went into summer hibernation early this year: but their unfinished business is heating fast on the back burner. Brokers and operators, in summer operating mode, are only supposed to trim and adjust positions while awaiting new and powerful global events – which by market folklore only happen in September or October.

This year the summer out-time is different, it needs miracles.

The current European miracle is called Greece. The country in theory will sell enough national assets, squeeze enough consumers and businesses, rake in extra taxes and start getting ahead of its snowballing debt, at a frankly miraculous rate which has never been achieved anywhere else, ever. Miracles can happen, now and then, market operators want us to believe.

Since miracles have a way of not happening, it could be considered that Greece is lost. After that likely fact, we can ask if the euro money and the European economy are two more miracles that didnt happen. The surprise conclusion is the euro is probably a miracle that never happened. It was a miracle that was going to happen, but didnt. It was a short-run attempt at creating a money as unreal and artificial, as hollowed-out and virtualized as the US dollar and its miracle-based home economy, but inside Europe.

THE WIDER PLAN

The global economic and geopolitical scene could seem totally unrelated to internal dynamics playing out in the two unfinished empires of the USA and the regional bloc of Europe, facing two other unprepared and unfinished but powerful new rivals, China and India. The new Asian rivals could be imagined as able to take over the reins of global hegemony, drive the world forward and assure world peace, freedom and liberty.

This nice idea fights the same real world challenges as the Unfinished Empires. They cannot avoid rising exposure to sharp breaks and discontinuities from previously predictable or fixed trends. The types and weights of factors creating uncontrolled change have risen do high that no balanced global economic and geopolitical power system is possible, anytime soon.

Some change is cumulative and creates tipping points, but other change is stepwise and supposedly unpredictable, placing it in the Nostradamus category – before it happens – and the Official Wisdom category, after it happens. Also called a paradigm changer, sudden stepwise change is hard to apply to the supposed arrival of the Chinese-Indian global economic empire, but events like the Fukushima nuclear disaster clearly fit this category. The “safe nuclear” fantasy, despite Chernobyl, suddenly lost all credibility and imploded – mainly because the event was totally disastrous and happened under 24/7 media scrutiny in rich and overpopulated Japan. More important, the disaster mix contained plenty of cumulative factors, for example the venerable age of the stricken reactors.

Now and today we have the coming credibility crunch and implosion of the global economy, with fast collateral damage to society and culture. The seamless globalized economy and consumer confidence can implode as fast decades-long dictatorships in the Arab world, which until January 2011 were called so stable that only a Nostradamus would predict their rapid collapse.

The paradigm and model is simple. When exposed to a sudden break in the reality web supporting the global economy, it can implode overnight. Advanced signals will include both classic and new signs, for example stock market crashes and the overthrow of corrupt governments by street action. Greece again provides an example: its economy is now a bond traders’ gaming chip on global 24/7 high stake finance gaming tables, but in rapid meltdown which is not yet reflected by the unrealistic, often fake data and statistics coming out of the country.

The Greek economy is now semi-virtual/semi-real, able to go almost anywhere, mostly down. More important and since the start of 2011, Greece is a long way from an isolated example proving the global economy can muddle along and muddle through, despite all challenges, risks and threats. To date and due to the Arab revolt, we can strike at least another 5 countries off the list of “real economy” players.

They are now, or will be in convalescence, needing aid and hoping for recovery. All previous economic stress will intensify: unemployment, poverty, forced emigration. All these countries can easily re-plunge into social and political strife, strife and street protest and this is also perfectly possible for countries like Greece, Ireland, Spain and others. Our so-called leaders tell us the timeframe for any hypothetical recovery is unknown: tune in later.

AT THE HEART OF THE STORM

More surely and faster, the recovery method and process as applied to hyper-debt states in Europe, and by the USA on itself is dysfunctional. In older times it was called kill-or-cure horse medecine where recovery had to be miraculous, because it was so unexpected. The change paradigm therefore ratchets up by a notch: fake recovery and real damage to the economy stack up the probability of so-called surprise change, chipping out another cog from the global economy drive train. When enough of them are gone, the global economy is gone – and we will notice its absence.

The Black Storm is at the heart. We could jokingly say that during a Mayan-type Black Storm we wont notice the Black Swans taking off or landing in large numbers. Tail-end and supposedly low probability events, like the sudden “disappearance” of whole countries chipped out from the global economy web, or sudden collapse of economic sectors and asset classes are now commonplace. We have entered a new, altered and separate reality.

Unaware that we adjusted to it, we now take it as normal: “If its Wednesday, that must be Syria which bombs down and out of the world economy, today”. “Yemen drone attacks no longer to seem to have any effect – except drive the rage of ordinary people”. In both cases, the existence of these countries is now hypothetical. Maybe they exist, maybe they dont.

Tomorrow could easily bring us new candidates. This Black Storm process prepares a shift from cumulative, supposedly manageable change pressing up against tipping points and thresholds – to the stepwise overnight change paradigm. Whole blocs or groups of countries, or industries and activities could disappear or experience strange and unexpected mutation. All signs and telltale indicators say the process has started, now in Summer 2011.

COPYRIGHT AMK 2011