The Search for the Crash of 2015

Plane-Crash The later it gets in the year, the more pointed become the questions: “So. Where’s your Crash of 2015, eh?” (Some of the questioners are Canadian.) Reminds me of a story. I was in a strange city, to meet a person very important to my future, and had been given directions to, let’s call it the Metropolis Building. “Huge building, right on Main Street, you can’t miss it.” I followed the directions, but could not find the building. Increasingly frantic as the appointed time drew near, I gave myself a time out, letting a granite wall alongside the sidewalk support me as I gathered my wits. I decided desperate measures were called for. “Excuse me, sir,” I asked a passerby, “Can you direct me to the Metropolis Building?” The reply was accompanied by a withering look. “You’re leaning on it.”

And that, dear interlocutor, is my answer to you. Look no further for the Crash of 2015; you’re standing in the rubble. And if you are going to disagree with me, based on the fact that CNBC and the Wall Street Journal have not yet described what you’re standing in as rubble, then let’s just agree that we reside on different planets, rely on different sources of information and part company.

If all you’re looking at is the stock market, you may be forgiven for clinging to the fact that the Dow Jones Industrial Average has not yet lost 10 per cent of its value in a single session — although it came damn close on August 24. Yet it is running about a thousand points below its highs for this year and along with all the other major indicators is on track (barring a last minute surge of irrational exuberance) to turn in a losing year for the first time in six.

Taken by itself, this could be called business as usual. But there are many other red warning lights flashing and klaxons sounding that tell us things in the markets are far from “usual.”  

  • The pace of mergers and acquisitions, an emergency substitute for actual profits and growth, is frenzied — the fastest since Just Before the Last Recession in 2007 (hereafter JBLR).
  • Similarly, stock buybacks –an artificial means of raising or maintaining dividends in hard times — are bigger and more frequent than JBLR.
  • Declines in corporate sales and earnings are worse, and have been for longer, than JBLR.
  • Junk bonds are crashing now, just like they did JBLR.
  • Corporate debt defaults have increased to a level not seen since JBLR, on debt that has doubled since then.
  • Money velocity — the rate at which dollars change hands in the economy — is the lowest ever recorded, including at the depths of the last recession.
  • Manufacturing in the US is contracting faster than JBLR.
  • Unsold goods are piling up in stores and warehouses at a rate not seen since JBLR.

All of which goes to show that the US stock market is charging along, not like a bull on a tear, but like Wile E. Coyote just off the edge of a cliff: his legs are still churning, but there’s nothing under them, and as soon as he looks down it will be all over but the splat.

In the larger world, the precursors that ushered us into the financial firestorm of 2007-08 and 09 are looming large again:

  • The crash of the stock markets in China and 26 other major countries means that virtually every trade and financial partner we have in the world is in trouble.
  • Global trade is freezing up. The movement of cargo by ship is at historic lows. Imports landing at America’s three busiest seaports during the height of the shipping season — September and October — were down by 10 per cent. Orders for new ships, rail cars and long-haul trucks are tanking everywhere.
  • Commodity prices as tracked by the Bloomberg Index are at a 16-year low, reflecting both the implosion of China’s overheated economy and the impoverishment of formerly middle-class consumers worldwide.

And then there is one factor not present JBLR, that threatens to make this round much worse: the tanking of the US oil industry. What was being touted as a revolution that would restore the country to energy independence has turned out to be just another Ponzi scheme that is unwinding with breathtaking consequences, adding to the financial carnage that is piling up bodies in all the marketplaces of the world.

Stop looking for the Crash of 2015. You’re standing in it.

 

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24 Responses to The Search for the Crash of 2015

  1. colinc says:

    Your analysis and cornucopia of corroborating evidence, Mr. Lewis, is spot-on as is your wont. Nonetheless, “None are so blind as those who can/will not see.” Your best bet, of which I’m sure you’re well aware, is to ignore the “everything is awesome” crowd, regardless of the basis of their myopia and jubilation. I’ve said/written the following many times before and few have understood, “The problem is NOT too many people, it IS too many stupid people!” EVERYTHING else is a symptom. For clarification, “stupid” = ignorant + ill-informed + irrational (+ narcissistic). Of course, NO ONE will ever acknowledge their complicity or capacity(?) of any of those factors. My wife, with a Masters degree in Education, tells me I’m “brilliant”… I tell her “I’m an idiot.” As evidence for my previous assertion, I’ll merely ask, “How else can you explain the ‘election’ of utter fucking dimwits like L. Graham, M. McConnell, J. Inhofe, T. Cruz, J. Biden, C. Schumer, L. Gomert, R. Perry, J. Bush, G. W. Bush, S. Walker, R. Reagan, A. Shwartzenegger, ad infinitum?” Of course, the “simple” answer is that the elections, like the “markets,” are rigged. The more obvious answer, at least to me, is that the vast majority of the populace (at least those who actually vote if elections are not rigged) is fucking stupid beyond explanation. In my [now] deliberately limited discourse with the “general public,” I am quite convinced of the latter. Another query may further elucidate, “Why are so many people STILL working for G.Sachs, Citi, BofA, Exxon, HP, MicroSoft, Google, ANY “insurance” company, etc. when it has been clearly demonstrated that these entities SOLE reason for existence is to fuck-over as many people as possible?” There is NO “hope,” Obi-wan, the die is cast and there is no way out. Enjoy what you can, while you can, as all that will soon vanish FOREVER! And that’s a REALLY long time. Yet, another perspective, I’ve had too much vodka and all of the above is nonsense. YMMV.

  2. Ken says:

    I started following this blog because it was mentioned on the Archdruid Report. But I have now taken it off my RSS feed, because it demonstrates the lack of long-term vision that JMG talks about. I think Tom is a smart guy, so I’d like to leave just a short comment for him.

    I, too, was convinced something was going to happen to the markets in 2015. I was so sure of it that I put my money on shorting the Dow for about a month, before taking it off once I realized that something was going on behind the scenes. And like you, I can see that even though the stock market may continue to be manipulated for months or years to come, we are “standing in the rubble” in the sense of a ruined country. The facts are all around us: Republicans are selling off our public goods at bargain-basement prices, Wall Street is lying to us, ordinary workers are getting shafted and families are being torn apart.

    But why do you not mention, in this post, the single most revealing proof of collapse that came out in 2015: the abrupt rise in suicide among poor whites?

    Why, instead, did you devote a recent post to pure snark about Islam and Christianity, which has little to do with bracing for impact at all?

    If you want to know my guess at why this is, you can read the blog post “I Can Tolerate Anything Except The Outgroup” on another blog. It may be tough reading.

  3. Tom says:

    Sayonara Ken! Before you leave, try some tough reading here:

    Financial Markets Crashed, Including the Dollar. What Happened?
    http://www.globalresearch.ca/financial-markets-crashed-including-the-dollar-what-happened/5494296

    _______

    Look, it’s patently obvious at this point that the entirety of civilization was a bad idea from the start and that the Industrial Revolution just kicked it into high gear. Many writers, poets, artists, scientists and statesmen (remember when there were actual people who cared and were in politics to help?) have warned about everything from the pollution problem to the population problem to resource problems – all to no avail or falling on deaf ears. Why didn’t we heed their advice and start working on a way out of our dilemma? Because we CAN’T! We are behaving the same way as all other creatures from yeast to killer whales, but with our BIG BRAINS (a lethal mutation according to Ernst Mayr) we’ve gotten around all natural limits to our species. Unfortunately for us, mathematics can’t be bribed to work miracles – ie. you can’t have infinite growth on a finite planet! Even the vaunted ECONOMISTS couldn’t figure this out!

    So here we are at the end of our fabulous run of ease and comfort due to greed and wealth imbalance (globally, nationally and locally), along with the aforementioned other “difficulties.” By the coming year people here in the promised land will begin to see through the fog of daily distraction (jobs, tv, “our little lives” etc.) that this entire century has been an illusion and that it’s beginning to dissipate like fog, leaving behind the real facts and a new set of circumstances, none of them fun or pretty.

    Once we let the genie of CLIMATE CHANGE out of the bottle, like Pandora’s Box, we’re finding that we can’t stop it or change the fact that we’re having real problems now – flooding, super storms, long term droughts, local aberrant weather, ON TOP OF volcanic upticks, more earthquakes and a dying ocean, disease, etc. Food is becoming ever harder to grow (soil depletion among a vast host of other problems), fish for, raise, process and distribute. This will become abundantly clear all too soon.

    These ARE the good ol’ days. Enjoy what you can while you can.

    Thanks to Mr. Lewis’ accurate essay and colinc’s comment above for the inspiration for my comment.

    • SomeoneInAsia says:

      I wouldn’t say that ‘the entirety of civilization was a bad idea from the start’. The Amish and the people of Bhutan, as far as I can tell, have been able to lead civilized and materially satisfactory lives without overburdening their resource base. But for the rest of what you say I largely agree.

      • Tom says:

        i don’t know about the people of Bhutan, but the Amish all use work-arounds to make money here in PA – they buy gas-burning vehicles and hire drivers to chauffeur them around to their jobs of roofing, renovation, etc. and they have cell phones (that they use in sheds separate from their houses) – they’re also land barons and have turned my son’s street of single family homes into apartments with many more people (to make more money) with no concern for the community, so though they don’t acknowledge it, they’re as greedy as the next person. They’ve been known to be big on puppy-mills, and generally have no regard for animals (because of the whole Bible directive of dominating nature and bending it to our will and all . . .). They also grow GM corn and tobacco. i’ll leave it at that.

        • SomeoneInAsia says:

          If what you’ve said about the Amish is true, them admittedly they constitute a poor example. But I’m sure there still would have to be at least a few examples of civilizations that WORK — meaning they won’t lead to the sorry state of affairs we all face today.

          You can be difficult about it and require that any civilization be rejected as an utter failure as long as you can find the SLIGHTEST flaw in it. Then indeed ALL civilizations would be a lost cause. But I’d say that it would amount to saying that HOMO SAPIENS is a lost cause. Which I’d consider extreme.

          Well, to each his own.

          • Daniel Reich says:

            Civilization requires division of labor. Division of labor requires agriculture. Agriculture, whether organic or conventional is the most destructive human occupation. It destroys forests, habitat for non-human animals, soil and disrupts the natural cycles required for a healthy planet. Unless your a hunter/gatherer, you are doing harm to MOTHER EARTH.

  4. gerold says:

    Excellent analysis, Tom!

    And, as much as I agree with reader Colinc that stupidity is responsible for so many people overlooking the obvious there’s also the problem that it is happening so gradually that it’s not easy to notice the slow changes. There isn’t even a word that covers this. Gradualism and incrementalism have all been co-opted for other subjects.

    It’s a funny thing about us humans. We resist sudden change but we’re very flexible in accommodating gradual change much like the frog in boiling water.

  5. Becky says:

    Oh, man, you have blown my image of the Amish. Is there nothing left? Diogenes was right. I agree with Richard Manning. The human race went wrong with agriculture – it’s been inequality, exploitation of fellow humans, slash, burn, and use up nature ever since. The earth is large, humans took over 10,000 years to make it nearly uninhabitable for our species.

    • SomeoneInAsia says:

      ***The human race went wrong with agriculture – it’s been inequality, exploitation of fellow humans, slash, burn, and use up nature ever since.***

      I’d say it need not have been so. It all depends on how people choose to organize their societies. We can choose to share our resources justly and equitably and draw upon our resources with wisdom, or we can choose to compete for the goodies on the table in the good old tradition of Hobbes and Darwin. Just as I can choose right now whether to talk to you in a civil manner or to cast vitriol at you (and get banned from this blog).

      We humans are supposed to have the power of CHOICE. To forfeit it would be to lower ourselves down to the level of yeast. And it’s because large numbers of us refused to exercise this ability to choose — or to choose with wisdom — that we’re all now heading for the giant shithole ahead… Sigh…

      • colinc says:

        I’d say it need not have been so…
        We humans are supposed to have the power of CHOICE. To forfeit it would be to lower ourselves down to the level of yeast. And it’s because large numbers of us refused to exercise this ability to choose — or to choose with wisdom — that we’re all now heading for the giant shithole ahead.

        First, I MUST say, that is a supremely astute and civil comment! Kudos to you and I largely concur with your perspective. However, as I see it, there’s the rub. Part of that, I think, is due in large part by the limiting of choices, whether by circumstance, ignorance (lack of awareness), or other outside factors. This leads to the question, How does one become cognizant of all possible choices for ANY given situation? Furthermore, how can one recognize the subset of probable choices (of “benefit” to them or to others) from their list of possible choices? Moreover, of all the potentially probable choices, how does one determine which may be the “wisest?” It should be obvious to most(?) that the choices available to most anyone are dependent on knowledge and awareness at the very least. Yet, for many, those two capacities are “lacking” for one reason or another. It’s a conundrum wrapped in an enigma wrapped in an obfuscated perspective. Madison Avenue spin-doctors tell everyone “Ford is the BEST,” “Chevy is the BEST,” “Mercedes is the BEST,” etc. ad infinitum. This pizza or that pizza or the other one is “the BEST.” This brand, that brand or another brand is “the BEST.” They ALL can not be “the BEST,” can they? Who (and by extension, how many) made the choice to follow the “teachings” of E. Bernays? Were those “wise” choices and, if so, in what way? At this stage, there is no alternative and there is only ONE possible outcome. Humans MAY not go extinct, though my Bayesian algorithms indicate a high probability, but whoever does survive the coming bottleneck are certainly NOT going to consider themselves “lucky.”

        • SomeoneInAsia says:

          Thank you for your kind words on my immediately preceding post. After going through your post, I’d say that while certain kinds of choices — such as which car or pizza is ‘best’ (as if there can be a non-subjective standard regarding that) — might indeed warrant a grasp of all the relevant facts, there are certain other kinds of choices which don’t, such as whether to be frugal or wasteful, good or evil, etc. This second category of choices doesn’t rest on the need for a wide knowledge of various special facts. It rests on your basic convictions. You cannot mix up the two very different types of choices. And it’s the second type I’m talking about in my earlier post.

          Plato committed a similar error in his Meno. In speaking of ‘virtue’ as ‘the ability to desire good things and to acquire them’, he proceeded to argue that a thief should then be considered a virtuous person since he can desire and acquire good things, such as that million-dollar diamond ring in that shop window. I’d say Plato failed to distinguish between two kinds of good things: (1) things like nice cars, delicious pizza, diamond rings etc, and (2) things like being kind, being honest, being hardworking etc. You can’t mix up (1) and (2). And once you don’t, his argument no longer works.

          Of course, after you have chosen to be kind, frugal, hardworking etc, there’s still what I presume you would call the ‘rub’, as in how we are to act in our daily lives in order to be true to our choice to be kind etc. By donating to this charity organization, am I really helping the poor? (It may turn out my money is all siphoned instead into the pockets of a few greedy a**holes.) By using less paper, less water, less petrol, less whatever in my daily life, am I really helping to save the earth? (It turns out this is not sufficient; we also need to abandon the ideology of indefinite growth altogether, plus limit our numbers.) Well, I’d say that such choices are still to be considered on a different footing. They’re ‘how to‘ choices. They’re knowledge-based choices. (Please don’t get me wrong, I’m not saying knowledge isn’t important.) They come after you choose to be kind, frugal etc.

          I’d also assert that, generally speaking our primary, initial choice to be kind, frugal etc would still lead to much good in many situations without any need for any special knowledge. A child is about to fall into a deep pit. I quickly reach out and pull him to safety. Does this require detailed knowledge of how smart the child is, how deep or wide the pit is, etc? No. Or reconsider the earlier example of using less of everything. True, it’s not sufficient for saving the earth. But it’s still necessary. I may not be knowledgeable about the fact that it’s not sufficient, but what I do would still be right and commendable, no?

          This brings us to the crux of the matter. What is the nature of the choice made by us — or those among us who could have made a difference — regarding the issues of geopolitics, population, pollution, resources etc? Was it a choice regarding (1) how to be kind, frugal etc? Or was it a choice regarding (2) WHETHER to be kind, frugal etc in the very first place? I think the answer is obvious. It’s (2). It’s not that we chose to be kind, frugal etc and after that made all the wrong choices regarding how to be kind, frugal etc. No, it’s that we chose to be greedy and evil. (Well, that’s the choice made by those among us who could have made a difference.)

          And the consequences are now plain for all of us to see.

          My two cents. Take or leave them.

          • colinc says:

            First my apology for not being more prompt with this reply AND for my simplistic and, as you correctly note, totally subjective examples. Nonetheless, I have been thinking about it and 1) I find your example of the child and the pit equally simplistic, no disrespect or offense intended (I generally find your comments quite astute) and 2) I really don’t think this discussion can continue in any meaningful way without first probing the questions “What is morality,” “What is virtue,” “What is frugal and what is wasteful?” Again, no offense intended, but I think these concepts are not just vague and ephemeral but also conditional and subjective to the circumstances in which they may be considered. Moreover, this is certainly NOT the time or the place for such a discussion. I am not being evasive or dismissive and will gladly(?) discuss these issues further “elsewhere.” I invited you to email me once, long ago, and even posted my address. However, at this juncture, if you are inclined to write and Mr. Lewis is agreeable, I’m sure you can get my address from him. Regardless, I wish you, Mr. Lewis, all the commentators and those you all care about a safe and “happy” holiday season. Personally, I loathe this time of year as I find it only exemplary of penultimate hypocrisy.

      • MargfromTassie says:

        I don’t think it was Darwin’s ‘tradition’ about the survival of the fittest. He was merely describing the truth of what he observed out there in nature. He was a kindly man, who loved animals and was a devoted father. He was also disillusioned about the idea of a ‘loving God/ Creator’ because of the cruelty and suffering he saw in much of nature. He wasn’t talking about human beings.
        However it seems that much of what he said does apply to human society. In particular, those people who’ve been the most driven and greedy seem to have risen to the top in our present world. The only difference is, that in their ignorance and lack of appreciation for the natural world and the environment, they shall bring themselves down along with everyone else.

    • Daniel Reich says:

      Spot on .

  6. Michael F. Kastre says:

    I am the first to agree that you can’t survive if you binge with limited resources if you change nothing or if nature doesn’t change it for you. That said, life is not all gloom and doom. For one thing, the planet tends to heal itself, think famines and plagues. In addition, although some folks don’t or won’t believe it, technology–the very thing many curse for the ominous advancement of humankind–can and does solve problems (but admittedly can cause others…).

    Nobody knows the future with any certainty–not me or anyone else. And, we should not pretend otherwise. It is not a certainty that even the most reasoned predictions come to pass. Perhaps a little less glee at the challenging period we now find ourselves in is in order. Instead maybe we should be expecting the best while preparing for the worst.

    I will turn 70 soon and it is my firm belief that if my health holds we will be having these same discussions in ten or twenty years. Maybe I am just a wild eyed optimist, but I am worrying about the future as fast as I can and it seems to have made no difference one way or the other. My parents survived a depression, droughts, the dust bowl, and other significant catastrophes. At the time many thought the world was coming to an end, my parents did not. Perhaps that is where in get my optimism. Just my thoughts.

    One thing I can predict with certainty is that I will keep enjoying Tom’s thought provoking take on things.

  7. Rob Rhodes says:

    One might add the lowest labor force participation rate in 38 years. I don’t entirely disagree with colinc but I think even stupid is a symptom. I think the underlying problem is that we are in ecological overshoot, and as the human population rocketed from sustainable to 7 billion natural selection was bound to be less vigorous on all accounts including intelligence.

  8. The boat isn’t sunk if you can still see its poop.

  9. Bill Hicks says:

    Another symptom of the crash that should be glaringly obvious is the success of the Trump campaign. For the first time in American history, the potential nominee of a major party is running an openly fascistic campaign, and is having success by doubling down on the hatred with each expression of outrage among the chattering classes. Writing Trump’s supporters off as merely racists and Islamophobes is extremely dangerous and shows an ignorance of history. Large numbers of people don’t turn towards such extremism when they are feeling economically secure and confident about the their financial futures.

    And while Trump himself may be indeed be a charlatan and an opportunist, he is blazing a path that will sure to be followed by others as the economy continues to worsen. The real question for the 2016 campaign is whether the illusion of prosperity can be maintained for another 11 months to allow Hillary to squeeze in and give us for more years of sellout Obamaism before the roof really caves in politically circa 2020.

  10. SomeoneInAsia says:

    To Daniel Reich (re: your post on what civilization requires etc):

    First, it’s not clear to me if division of labor requires agriculture. Second, I’d say whether agriculture is destructive of the natural world can depend on several factors. It can depend on whether we watch our numbers (as in how many of us there are). It can depend on whether we allow the soil to ‘recover’ through adopting the right practices. It can depend on whether we plant a wide diversity of crops. It can depend on all these and many more other things. Ancient Egypt and premodern China were two major civilizations which both practised agriculture, and both lasted more than three thousand years; their eventual collapse was not due to the collapse of their ecosystems, but to foreign aggression.

    • MargfromTassie says:

      Someone in Asia,
      Yes, you’re right about “foreign aggression”. There is the example of the Australian Aborigines, the world’s longest continually enduring culture. There was no agriculture, they were hunter gatherers. They controlled their fertility so that the whole population of the isolated continent of Australia was no more than a million people. They did have some impact on the natural environment of course but never to the extent that life became unsustainable. In fact their whole culture revolved around an intimate understanding and respect for nature. Their way of life survived for between 40,000 – 50,000 years, until ‘foreign aggression’ by the British occurred after the ‘discovery’ of Australia by Captain James Cook.

  11. JJGrey says:

    China and Egypt went through repeated periodic famines and various other upheavals, they both were made into part of more aggressively growing empires during Western Europe’s age of colonization.
    Sustainable growth means population control – something very few modern countries do. Western Civilization actually has a declining native born population over the past 20 years or so- likely due to the best thing ever for population control; namely the education of women and empowerment of same (the pill helps less than education according to several studies IIRC). Unfortunately those same ‘western civilization’ countries not only allow but are actively encouraging immigration without getting those immigrants to culturally integrate/merge with them. This is probably due to the need for economic “growth” for the moneyed interests (you cant pay a compounding interest debt if every ‘dollar’ is borrowed into interest without some form of debt.) Thus these countries will eventually demographically return to population growth if they do not convert their immigrants culture.
    Having an aggressively advancing technological base *and* a sustainable infrastructure with controlled population growth is something I cant recall a successful historical example of. Please educate me if I am wrong. But that is what we as a species specifically need globally to avoid future extinction on this planet- or to leave the planet and make use of space resources – but that has its own significant hurdles.