The Golden Rule of Technology

SUBHEAD: It's that "Technological Progress" is innovation doesn't solve problems, it creates them.

By Ugo Bardi in 21 December 2017 for Cassandra's Legacy -
(http://cassandralegacy.blogspot.co.uk/2017/12/the-golden-rule-of-technological.html)


Image above: a KnightsScope security robot patrols around San Francisco Society for the Prevention for Cruelty to Animals to deter homeless people. We guess they are not as valuable as stray dogs. From (https://realfarmacy.com/homeless-robot/).
As the homeless problem continues to surge in San Francisco, an animal advocacy and pet adoption clinic has taken the novel, if dystopian, approach of hiring an autonomous security robot unit to clear out vagrants.

The SPCA (the Society for the Prevention of Cruelty to Animals) deployed a K5 robot manufactured by Knightscope, a Silicon Valley-based robotics company, to help discourage homeless people from erecting tents on the sidewalks and streets near the clinic. Though it has reduced the number of encampments, the robot has drawn overwhelmingly negative reactions from city residents.

Resembling a Whovian Dalek, the K5 security robot moves at around three miles per hour and is equipped with four cameras and an array of lasers, thermal sensors, and GPS. It can be rented for $6 an hour as opposed to the $16/hr a security guard costs.
See that thing up there? It is an autonomous security robot, something that's becoming fashionable nowadays.

Obviously, for every problem, there has to be a technological solution. So, what could go wrong with the idea that the problem of homeless people can be solved by means of security robots? After all, they are not weaponized.... I mean, not yet.

There is something badly wrong with the way we approach what we call "problems" and our naive faith in technology becomes more and more pathetic. And now we are deploying security robots all over the world. Surely a "solution" but it is not so clear what the problem is.

The story of this silly robot made me think of a post that I published a few months ago where I stated what I called "the golden rule of technological innovation: "innovation doesn't solve problems, it creates them". And the more I think about that, the more I think it is true.

Decades of work in research and development taught me this:

Innovation does not solve problems, it creates them. 

Which I could call "the Golden Rule of Technological Innovation." There are so many cases of this law at work that it is hard for me to decide where I should start from. Just think of nuclear energy; do you understand what I mean?

So, I am always amazed at the naive faith of some people who think that more technology will solve the problems created by technology. It just doesn't work like that.

That doesn't mean that technological research is useless; not at all. R&D can normally generate small but useful improvements to existing processes, which is what it is meant to do. But when you deal with breakthroughs, well, it is another kettle of dynamite sticks; so to say.

Most claimed breakthroughs turn out to be scams (cold fusion is a good example) but not all of them. And that leads to the second rule of technological innovation:

Successful innovations are always highly disruptive

You probably know the story of the Polish cavalry charging against the German tanks during WWII. It never happened, but the phrase "fighting tanks with horses" is a good metaphor for what technological breakthroughs can do.

Some innovations impose themselves, literally, by marching over the dead bodies of their opponents.

Even without such extremes, when an innovation becomes a marker of social success, it can diffuse extremely fast. Do you remember the role of status symbol that cell phones played in the 1990s?

Cars are an especially good example of how social factors can affect and amplify the effects of innovation.

I discussed in a previous post on Cassandra's Legacy how cars became the prime marker of social status in the West with the 1950s, becoming the bloated and inefficient objects we know today. They had a remarkable effect on society, creating the gigantic suburbs of today's cities where life without a personal car is nearly impossible.

But the great wheel of technological innovation keeps turning and it is soon going to make individual cars as obsolete as it would be wearing coats made of home-tanned bear skins.

It is, again, the combination of technological innovation and socioeconomic factors creating a disruptive effect. For one thing, private car ownership is rapidly becoming too expensive for the poor.

At the same time, the combination of global positioning systems (GPS), smartphones, and autonomous driving technologies makes it possible a kind of "transportation on demand" or "transportation as a service" (TAAS) that was unthinkable just a decade ago.

Electric cars are especially suitable (although not critically necessary) for this kind of transportation.

In this scheme, all you need to do to get a transportation service is to push a button on your smartphone and the vehicle you requested will silently glide in front of you to take you wherever you want. (*)

The combination of these factors is likely to generate an unstoppable and disruptive social phenomenon. Owning a car will be increasing seen as passé, whereas using the latest TAAS gadgetry will be seen as cool.

People will scramble to get rid of their obsolete, clumsy, and unfashionable cars and TAAS will also play the role of social filter: with the ongoing trends of increasing social inequality, the poor will be able to use it only occasionally or not at all.

The rich, instead, will use it to show that they can and that they have access to credit. Some TAAS services will be exclusive, just as some hotels and resorts are. Some rich people may still own cars as a hobby, but that wouldn't change the trend.

Of course, all that is a vision of the future and the future is always difficult to predict.

But something that we can say about the future is that when changes occur, they occur fast. In this case, the end result of the development of individual TAAS will be the rapid collapse of the automotive industry as we know it: a much smaller number of vehicles will be needed and they won't need to be of the kind that the present autuomotive industry can produce. This phenomenon has been correctly described by "RethinkX," even though still within a paradigm of growth.

In practice, the transition is likely to be even more rapid and brutal than what the RethinkX team propose. For the automotive industry, there applies the metaphor of "fighting tanks with horses."

The demise of the automotive industry is an example of what I called the "Seneca Effect." When some technology or way of life becomes obsolete and unsustainable, it tends to collapse very fast.

Look at the data for the world production of motor vehicles, below (image from Wikipedia). We are getting close to producing a hundred million of them per year.

If the trend continues, during the next ten years we'll have produced a further billion of them. Can you really imagine that it would be possible? There is a Seneca Cliff waiting for the automotive industry.

See also:
Ea O Ka Aina: Robot guard "commits suicide 7/18/17
Ea O Ka Aina: Robot runs over young boy 7/13/16
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An Ending

SUBHEAD: Our farm, like many of our US farms and towns, is in the grip of an extended cold spell.

By Brian Miller on 31 December 2017 for Winged Elm Farm -
(http://www.wingedelmfarm.com/blog/2017/12/31/an-ending/)


Image above: Canton Minnesota Amish farm in winter snow. From (http://www.desertphotorestoration.com/gallery/v/farm/CantonMinn.jpg.html).

The initial thrill that comes with an ice storm and a loss of power faded a bit the morning the temperature bottomed out at 3 degrees.

Delores the sow had dragged the heater out of her water trough for the fifth time, the pond ice for the cattle and horse had to be broken every few hours, and a young ewe and her newborn had to be rescued after lambing in a far corner of the wind-blown sheep pasture and relocated to the shelter of a barn stall.

Still, the domestic pleasure of coming into a cozy house heated by a woodstove to sip a hot cup of tea is not to be dismissed.

Traditionally we built our houses to meet the demands of our climates, a grass hut if you lived on a tropical isle or a house with connected barn if you lived in New England. Older houses in Louisiana, when I was growing up, were typically built a couple of feet off the ground. It was a good model for a warm climate.

The open space underneath kept the house cooler in the warmer months (most of the year), and the elevation protected against the occasional flooding. Freezes, like the big one in 1940 my dad recalled, were rare.

And given that most plumbing was limited to the kitchen, freeze damage to the house was minimal.

Infrastructure was on my mind this past week here in East Tennessee. After a week of temperatures barely budging above freezing, we had an ice storm.

The storm caused our farm to lose power. Then the temperatures plummeted to low single digits. Thankfully, we had a generator to run the refrigerator, well pump and a few essential electrical circuits.

A Jotul woodstove helped keep the house a comfortable 60 degrees. Another generator at the barn kept a variety of water tanks heated for the sheep, chickens, goose, cattle and horse.

Today, our houses are designed to accommodate the additional “essentials” that just a generation ago were not needed nor even available.

The electricity to keep the modern house functioning is a relatively new concept in human culture. The boundary line of what is essential has shifted. Shelter, heat, food and water now share demand with internet, smartphone, cable TV and microwave.

Older forms of infrastructure had built-in resilience: barns carefully constructed to hold heat, with hay mows above to ease the feeding of livestock in poor weather; deep in-ground cisterns to provide fresh water for the farm; houses designed to facilitate warmth in the winter or coolness in the summer—smart, low-tech designs that we have pushed aside with the assumption that the power grid will now take care of us.

Over the years Cindy and I have discussed converting our farm to an off-the-grid power system. Each time, though, we found the costs to be prohibitive.

But this week, after a few days without power, as we scrambled to keep up with our needs, it occurred to me: off-the-grid is easy; it is our modern needs that are complicated, the prohibitive factor, the stumbling block, the real expense.

Those old houses in south Louisiana worked year in, year out because they had very little modern infrastructure to protect. Working under the house insulating each individual pipe before the ice storm, I was overwhelmed by how much plumbing is needed in our small house just to furnish us water on demand.

Hot and cold pipes to the kitchen and the two bathrooms, the hot water heater and the washer/dryer—a complexity of plumbing requiring protection from the elements, so that it might protect us from the elements.

Driving into town late in the week, I saw dozens of downed trees, limbs still balancing on utility lines, brush pushed to the edges of the road.

As I looked at the miles of power lines and telephone lines, our true vulnerability was evident. It was not the loss of electrical power that we feared but the loss of a certain status that comes with our modern life, a status of predictability.

Off-the-grid literature is typically geared towards finding ways around the commercial power source, yet retaining the modern conveniences. As we watered and fed our sheep, as lambs were born this week without regard to the temperature or the state of our utilities, I thought about the Amish.

While many of us were without power, were they concerned with an inability to update their Facebook pages, charge their cell phones, keep their freezers going, stay warm with their electric furnaces?

 Did they feel powerless? Somehow I doubt it.

The complexity of this modern life, the infrastructure that maintains it, is hardwired for disruption.

Our system and our expectations for what it must provide are such that losing power is a form of powerlessness. That in itself seems a form of slavery. Which is why there is, for me, always that bit of anarchic joy in an emergency, an unshackling from the system.

Though that uncertain joy is accompanied by relief when the master comes home and power is restored.
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Trump and Russian Bombshell

SUBHEAD: Bannon claims Don Jr. took Russians to his father after their meeting with Kushner and Manafort.

By Hayley Miller on 3 JAnuary 2018 for Huffington Post -
(https://www.huffingtonpost.com/entry/steve-bannon-trump-tower_us_5a4cde0be4b0b0e5a7a9fe93)


Image above: Trump Jr., Paul Manafort, Jared Kushner, conmen all. From (https://www.democracynow.org/images/headlines/12/37612/quarter_hd/H04_TrumpJr_Manafort_Kushner.jpg).

[IB Publisher's note: On one hand its obvious that Steve Bannon as a bone to pick with Donald Trump. But what he indicates about the real crime isn't talking to Russians but enabling and participating in systemic criminal money laundering is what the Mueller investigation is onto.]

The former White House strategist called the infamous Trump Tower meeting “treasonous,” according to a new book.

Steve Bannon suggested President Donald Trump was aware of Donald Trump Jr.’s meeting with Russian operatives at Trump Tower in June 2016 ― because he met with them that day, too, according to an explosive new book by acclaimed journalist Michael Wolff.

The former White House strategist was quoted by Wolff as saying there was “zero” chance Trump Jr. didn’t walk the Russian meeting attendees “up to his father’s office on the 26th floor.”

Wolff met with Bannon during the nine months he was granted far-reaching access to the West Wing and senior administration officials to write a tell-all book about the White House, Fire and Fury, set for release on Jan. 9.

The revelations appeared to contradict Trump’s repeated claims that he was unaware his eldest son, as well as his son-in-law Jared Kushner, had met with the Russians.

Bannon also dubbed the infamous Trump Tower meeting as “treasonous” and “bad shit,” according to Wolff. The far-right icon mocked Trump Jr. and Kushner for taking the meeting in hopes of acquiring dirt on Hillary Clinton, Trump’s political opponent in the 2016 presidential race, as first revealed by The New York Times in July.

“The three senior guys in the campaign thought it was a good idea to meet with a foreign government inside Trump Tower in the conference room on the 25th floor — with no lawyers,” Bannon told Wolff, according to The Guardian, which obtained a copy of the book.

“Even if you thought that this was not treasonous, or unpatriotic, or bad shit, and I happen to think it’s all of that, you should have called the FBI immediately,” he added.

Bannon predicted special counsel Robert Mueller’s investigation into possible collusion between Trump’s 2016 campaign and the Russian government will focus on money laundering.

“This is all about money laundering,” Bannon told Wolff. “Mueller chose [senior prosecutor Andrew] Weissmann first and he is a money-laundering guy. Their path to fucking Trump goes right through Paul Manafort, Don Jr and Jared Kushner … It’s as plain as a hair on your face.”

Bannon suggested Kushner’s business dealings with German financial juggernaut Deutsche Bank, which has loaned hundreds of millions of dollars to the Kushner family real estate business, would be problematic for the administration.

“The Kushner shit is greasy,” Bannon said. “They’re going to go right through that. They’re going to roll those two guys up and say play me or trade me.”

Four Trump associates have been indicted in connection to the probe, including former national security adviser Michael Flynn and former Trump campaign chairman Paul Manafort, who also attended the Trump Tower meeting. Manafort was indicted by a grand jury in October on charges of conspiracy and money laundering.

“They’re going to crack Don Junior like an egg on national TV,” he said, adding that the White House should reconsider its apparent lack of concern over the Mueller investigation. “They’re sitting on a beach trying to stop a Category Five.”
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Hold Dear the Lamp Light

SUBHEAD: Our lives when we were young, before the tides rose up and the power went out.

By Jay Ruben Dayrit on 13 December 2016 for Wired Magazine -
(https://www.wired.com/2016/12/jay-dayrit-hold-dear-the-lamp-light/)


Image above: Illustration for story by Kevin Tong. From original article.

The year Jojo and I started eighth grade, the power plant officially cut electricity to two hours a day. We’d already been through years of brownouts, of flickering lights, blinking monitors, older ag drones without artificial neural networks rebooting in their stations and randomly launching to spray the fields again or overfeed the chickens.

So when Public Works & Electric issued a message to all our devices telling us about its irregular hours of operation, no one was surprised. The message was full of obfuscating language, but anyone with a tide chart could spot the correlation.

Anyone driving down the causeway to the airport, past the power plant, could see through its chain-link fence the turbines standing silent, tense as raised shoulders; the grounds swamped in seawater, the ebbing tide dragging out an iridescent Rorschach of petroleum.

A year before, the garbage dump had had to be relocated, a comparatively easier undertaking, after disposable diapers and plastic bottles began washing ashore on what was left of Ant Atoll, which had already lost its status as the premier diving destination for the Chinese.

The imminent blackouts stirred little protest from a population accustomed to making do. Aging water pipes had given rise to improvised cisterns situated at the eaves of every house.

Unreliable supply chains necessitated that we all have competence in maintaining our equipment. Mother Necessity knows how to weld with a zip tie, patch with duct tape, and repurpose a soda can.

Our father took Jojo and me, along with a box of winged beans, bitter melon, and a dozen eggs, over to Bauer’s Hardware. He and Friedrich Bauer had been tennis buddies before the tractor accident. Back then the hospital was even less equipped to handle emergencies, and Friedrich died before he could be medevaced to Guam.

The produce was for Yessica, who had taken over the hardware store. In return, she discounted the Coleman lantern and three bags of charcoal, throwing in a 10-pack of Diamond Strike matches for free. She marveled at how tall Jojo and I had grown but confessed she still couldn’t tell us apart.

Our father placed his hand on my brother’s shoulder. “Joseph here is interested in civil engineering. Alejandro, medicine,” he said, as if we’d come up with these ideas on our own. “They’ll be going to Central Pacific next year.”

Yessica’s smile couldn’t mask the flutter of melancholy in her eyes. Friedrich had graduated from there. Anyone from Micronesia who went to Hawaii for school attended Central Pacific High School.

Its boarding program had gained a reputation for welcoming students from other islands like the Marshalls and Pingelap, lower-lying atolls that had all but disappeared.

When the Office of Insular Affairs renewed the Compact of Free Association for the second time, the penultimate wave of Micronesians arrived in Hawaii, seeking access to better education, jobs, and health care, especially for the blood-borne cancers and autoimmune disorders that were still persistent three generations after nuclear testing.

With that influx into Hawaii came a resurgence of housing and job discrimination, racial tension, and violence.

We’d heard that the faculty at Central Pacific encouraged empathy between Hawaiians and Micronesians, highlighting cultural commonalities like celestial navigation and traditional dances. But the fact that there wasn’t a lot of bullying, we knew, had more to do with safety in numbers.

A few friends who were home for the summer had reassured Jojo and me we’d be OK, because we were Filipinos who sounded American. With our straight hair and lighter skin, we could pass. Still, we were told to learn how to block a punch.

Better yet, learn how to throw one. Jojo and I practiced in our bedroom, aiming for the shoulder, where the sleeves of our T-shirts concealed the bruises that might betray to our parents how we were preparing for high school.

After returning from the hardware store, Jojo and I helped our mother empty the refrigerator, defrost the freezer, and scrape the barbecue grill. She marinated all the meat in soy sauce, calamansi juice, and garlic.

Our father threw pork chops and steaks on the grill, but we all felt decadent eating so much red meat. And our mother worried about gout, to which Filipinos were predisposed. She rattled off the names of five of our uncles back in Pampanga as evidence.

So we gave the excess thawed meat to our neighbors. The house down the road was owned by the hospital and, over the years, was home to a string of American doctors offsetting their excessive student loans by practicing in underserved countries.

Dr. Westlake and Dr. Phan, two female residents who enjoyed throwing cocktail parties, happily accepted the food. Up the road, the McGuires, who were from New Zealand, insisted our generosity was too much. They eventually relented, because our mother refused to take no for an answer.

They had a son our age, Derek, whose company Jojo and I didn’t particularly enjoy. Whenever there was electricity, he’d run through the break in the gardenia hedge that separated our properties and challenge us to new games his parents let him download freely.

He knew our cross-platform visors were a generation older and glitchier, that invariably we’d lose. “I win, again!” Derek would cheer behind his visor.

Jojo and I would remove ours and exchange glances, consoled in knowing an only child needs to feel good about something.

Surely our parents found the rationed power supply inconvenient: driving to the fish market every day, cooking rice over an open flame, taking the clothes off the line so they wouldn’t reek of lighter fluid. But Jojo and I recall the blackouts fondly.

We remember our whole neighborhood, just a scattering of houses along a gravel road, smelling of barbecued chicken and fish. We remember eating grilled corn and eggplant with bagoong.

We remember Auntie Betina arriving for dinner with a Folger’s coffee can of chocolate ­chip cookies she’d somehow managed to bake in the brief window of electricity that day.

We remember pink sunsets stretching across the sky, families in their backyards, laughter carried by the breeze in the waning sunlight. We remember the Coleman lantern, how its mantle, little more than an ashen net the shape of an infant’s sock, cast a steady light against the back of the house. Our shadows, sharp as paper cutouts, slid across the wall as we helped ourselves to seconds.

We took leisurely family walks after dinner. “An evening constitutional,” as our father called it, evoking an era when people said things like that. No porch lights to mark our path, not even the bluish glow of our devices, which we stowed to conserve battery power while the networks were down. The moon illuminated the road well enough.

We stopped to talk to other people strolling after dinner, mostly Filipinos who lived in the neighborhood.

The men crossed their arms atop full bellies, discussing local politics and the precarious economy. The women gossiped about recent expats from the Philippines—who was single, who wasn’t but acted as if they were.

Back home, by the light of the Coleman, our father, who could not be bothered with fiction, read biographies. Our mother read pulpy detective novels. Since the blackouts, she and her friends had started a book exchange that quickly extended beyond the Filipinas to the Americans, the Australians, even the Japanese.

Jojo picked up The Serrano Trilogy again, which he’d attempted to read several times in the past but had always abandoned for his visor and its less challenging entertainment.

Never much of a reader myself, I opted to flip through National Geographic, unfolding maps of faraway places, studying borders that would have to be redrawn sooner than any of us expected.

Before our predicament was overshadowed by the mass evacuations of Shanghai, Amsterdam, and America’s coastal cities to higher ground; before the famine conflicts spilled over from Africa to the Middle East; before Micronesia’s depleted population eventually triggered its economic collapse and the expats, our parents included, retreated to inner regions of their own countries; before all those major catastrophes, we had the blackout years.

Now I hold dear the lamplight and the rustle of paper at our fingertips, our parents reading passages aloud, being together in the darkness.

That first year, Jojo and I came to believe we could easily live without electricity.

But we were children and our beliefs unrealistic, like the plan to relocate the power plant before it and everything else succumbed to the sea.
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What Could Go Wrong?

SUBHEAD: James Kunstler's predictions for the year 2018 don't paint a pretty picture for America.

By James Kunstler on 1 January 2018 for Kunstler.com -
(http://kunstler.com/clusterfuck-nation/forecast-2018-go-wrong/)


Image above: Detail of cover of the Saturday Evening Post at the end of 1917 with a New Year's baby ready for World War One. From (http://www.saturdayeveningpost.com/2014/12/31/art-entertainment/art-and-artists/new-years-babies.html).

Markets
If you take your cues from Consensus Trance Central — the cable news networks, The New York Times, WashPost, and HuffPo — Trump is all that ails this foundering empire. Well, Trump and Russia, since the Golden Golem of Greatness is in league with Vladimir Putin to loot the world, or something like that.

Since I believe that the financial system is at the heart of today’s meta-question (What Could Go Wrong?), it would be perhaps more to the point to ask: what has held this matrix of rackets together so long?

After all, rackets are characterized by pervasive lying and fraud, meaning their operations don’t add up. Things that don’t comport with reality are generally prone to failure so sooner or later they have to implode.

Financial markets have been surging supernaturally on “liquidity” since 2009 — and by “liquidity” I mean “money” (digital credit from thin air) supplied by the Federal Reserve, in rotation with the other sovereign central banks, BOE, ECB, BOJ, PBOC, from whence it pings ‘round the world, wherever the lure of the main chance sparkles.

Trillions wafted into the stock and bond markets, levitating them as a sort of stage-managed misdirection from the sickening spectacle of wobbling real stuff economies.

In 2017, The Dow Jones Industrial Average recorded an astounding 5,000 point year-on-year upzoom, with 12 months of gains and no loser months, and a string of 71 record highs.

America’s central bank, the Federal Reserve, acted as if pumping up the stock markets was the only thing that mattered.

The result was a Potemkin economy, a glittering Wall Street false-front with a landscape of “flyover” squalor and desolation behind.

The Fed now works at cross-purposes with itself by raising the Fed Funds rate a quarter-point every few months, and supposedly “shrinking” (ha!) their balance sheet — dumping bonds onto the market plus “retiring” termed out bonds, which allows the Fed to disappear the principal paid by the borrowers, namely the US Treasury, or the quasi-governmental werewolf called Freddie Mac (The Federal Home Loan Mortgage Corporation), which bundles all kinds of janky mortgages into giant bonds the Fed buys in order to artificially pump up the real estate market.

Did your eyes glaze over yet? That’s the great thing about finance: it’s bewildering, so that when shit goes wrong, nobody notices until its way too late.

What could go wrong with that program?

Well, if you dump billions of bonds on the market, you will change the supply-and-demand equation in the direction of too much supply, and interest rates will have to rise when there isn’t enough bid from the demand side — especially if the US Treasury is creating ever more new bonds to make up for ever-greater deficit spending at the same time the Fed dumps bonds into the market.

And if, for instance, the interest rate on the benchmark 10-year US Treasury bond goes up past 3.00 percent, well that may be all she wrote for the US government’s ability to service its monstrous debt.

And it may be tits up for the real estate sector, too, because mortgage rates will rise, and fewer people will buy houses.

The Fed’s latest actions boil down to a lame attempt to have some maneuvering room to once again lower interest rates and refill their balance sheet via a QE-4 orgy when the economy heads south in a way that even the US Bureau of Labor Statistics can’t obfuscate.

The ECB and the BOJ have already made noises about curtailing their vacuuming up of securities, so the liquidity rotation may end altogether. The new Tax Cuts and Jobs Act has at its centerpiece the lowering of corporate income tax from 35 to 21 percent.

The hidden agenda may be to hope this can act as a substitute for the dwindling central bank liquidity injections.

The tax cuts and other new gimmicks would increase the federal debt by at least $1 trillion over a ten year period (and, by unofficial estimates, probably much more) paving the road to national bankruptcy with good intentions.

But, of course, quite a few wise men in this culture have declared that deficits don’t matter. My own view is that they don’t matter until they do, and then you’re pretty screwed.

In the background of all this is an array of perilous real world events playing out that include especially potential conflict around North Korea and the Middle East. China’s banking system is a fun-house of scams and dodges that don’t add up anymore than ours do.

The whole wicked pottage of EU / Brexit issues simmers away, along with the EU’s fatal flaw of lacking any fiscal discipline among member nations, so government spending has no relation to sovereign borrowing. NATO’s aggressive military posturing on Russia’s borders is pointless, stupid, dishonest, and provocative.

Nobody knows what kind of gambit Crown Prince Mohammed bin Salman of Saudi Arabia will try next. Iran demands to be recognized as the regional hegemon.

And our dear exceptional nation, with its restless Deep State black box “assets,” is capable of all sorts of mischief at home and abroad.

Any of these things could shove American markets into criticality, as if they don’t have enough built-in fragility already.

Manipulation of the markets by the Fed and its water-carrying Too Big To Fail partners have deprived the markets of their chief function: price discovery, the ability to discern what things are really worth. Markets are therefore functionally useless and their uselessness is a giant hazard.

No society that depends on money can work for long if nobody knows the true value of things, including the value of money itself. The price of attempting to live in a culture of pervasive dishonesty is that a re-set is inevitable.

When it happens, it will be hugely destabilizing.

I expect the DJIA to move down sharply before the third quarter, rebound a little, and eventually bottom at 14,000 or lower by this time next year. I’ll call the S & P to settle in under 1,000.

The NASDAQ may be the weakest, since its FAANG members — Facebook , Amazon, Apple, Netflix, Google (aka Alphabet)— are among the most mis-valued stocks, and the most based on vaporous products and services.

Call NASDAQ to land at 2,700. Calling for a US dollar index (DXY) of 79 by December. Calling for gold $2,500 and silver $60 twelve months from now. There it is, like so much meat on the table.

Bitcoin and other cryptos have a superficial appeal as a wealth safe haven supposedly out-of-reach of avaricious governments — if you don’t consider everything else that’s wrong with it.

Yesterday, Dec 31, Australia’s biggest banks froze the accounts of Bitcoin investors. I think the safe haven idea will prove fallacious.

Governments are already finding ways to interfere, using taxation schemes and shutting down exchanges.

Bitcoin’s other claims on “moneyness” look bogus as well. It’s too unstable to be a medium of exchange, and too difficult to even access when need to sell, and you certainly can’t price anything in it as it shoots up and crashes every day.

Bitcoin went way up because people — or maybe just algorithms — saw it going way up, so they hitched a ride.

The rush to the exits will be brutal. Its final resting place will be zero, but perhaps not without a trip or two to nosebleed levels in 2018, especially as other markets wobble in the first half of the year. Bitcoin $50-K wouldn’t surprise me. But I’m not among the buyers. Enjoy the show.

2018 is the year that fragilities in the shale oil industry challenge the narrative of the “miracle.” The industry hasn’t made a net red-cent since it ramped up ten years ago. It’s been running on debt, a lot of it junk financing (high-yield, high-risk, covenant-lite).

The producers have been fracking and pumping all-out for several years to maximize their cash flow to service their loans.

But these shale wells deplete by 80 percent on average after the first three years, and have to be replaced by expensive new wells, which require ever more debt financing.

The truth is that shale oil and other “unconventional” oils just don’t pencil out economically. Their success in recent years was part-and-parcel with the central bank credit flood.

As that credit flow gets choked down in 2018, oil companies will go out of business at an impressive rate. If the price of oil goes up to $80-a-barrel, as a result, it will be very damaging to what remains of the US economy of real stuff.

US Politics
Donald Trump survived in office a whole year. Imagine that! After the 2016 election, I figured that the top military brass would give him the bum’s rush inside of three months, in short a coup d’état. Their action actually has been much more subtle: they just ring-fenced him with generals.

Since he seems to regard them as his generals (“my generals”), then he’s apparently okay with that, like a boy in the nursery with his toy soldiers.

And apart from the fact that the constitution calls for civilian control of the military and not vice-versa, I’m okay with that… for now. He’s got chaperones, at least.

This is admittedly not the ideal disposition of American political power.

I did not vote for the Golden Golem, and I don’t esteem his abilities, but the incessant and rather hysterical attacks on his legitimacy, especially by members of Consensus Trance Central, display a mendacity out of George Orwell’s direst dreams.

I never believed in the ludicrous Russian collusion fantasy, and find it difficult to believe that the editors of The New York Times do.

So far, Special Counsel Robert Mueller has indicted two high-profile grifters (Manafort and Gates) on financial shenanigans involving business dealings in Russia dating from years before the 2016 election, plus one National Security Advisor (Michael Flynn) for speaking with the Russian Ambassador (who, exactly, are foreign ambassadors supposed to speak to if not government officials?

And otherwise what are they here for?), and one entry-level foreign policy wonk (George Papadopoulos) who never even met Trump.

I believe the grave and solemn Mueller is on a fishing expedition. Aficionados of DOJ tactics know that prosecutors can always fetch up the proverbial ham sandwich to indict, if there’s nothing else at hand.

Then there is the very troubling behavior of FBI employees (Peter Strzok, Lisa Page, Deputy FBI Director Andrew McCabe), plus some members of Obama’s inner circle (Susan Rice, Samantha powers) in the twilight months of his term.

And remember, Robert Mueller has been the erstwhile James Comey’s mentor and true-blue friend going way back. It just looks flat-out like a bunch of Deep State lifers are out to get the Golden Golem. The so-called “optics” are terrible.

Since crashing stock markets are liable to turn Trump into a mad bull, at the same time that Mueller will have to put up or shut up, I predict that long about the vernal equinox Mueller will come up with some Mickey Mouse charges against Trump, or his people, and be promptly fired by the president.

General Flynn and the baby foreign policy wonk will be pardoned, and perhaps others.

Probably not Manafort and his chum (though their prosecution might fail.) Democrats will go apeshit and batshit both, with talk of impeachment and constitutional crisis, but I don’t think any of that will stick.

Congress may have more to worry about with tanking markets and other symptoms of an incipient economic train wreck. The effort to dump Trump would aggravate the tanking markets.

It is also plausible after the disclosures of recent months that the Russian meddling investigation could blow back on Hillary, the Clinton Foundation, Clinton allies, and possibly even some of Obama’s people (maybe even the former president himself).

The evidence for Obama-era FBI involvement in the Christopher Steele file is already out there.

There is yet to be a satisfactory elucidation of the Loretta Lynch / Bill Clinton Phoenix tarmac meet-up, nor to the circumstances around HRC’s lost emails and private server, nor the Anthony Weiner laptop, nor to the Uranium One matter.

The casual observer sees much more circumstantial criminality in these matters so far than any Trump collusion-with-Russia hypothesis provides.

I venture to predict that ex-DNC Chair Debbie Wasserman-Schultz resigns her House seat in disgrace as the case of her Pakistani grifter IT aide, Imran Awan, moves into the courts.

Trump firing Mueller will drive his Dem-Prog adversaries to new heights of hysteria but their wrath may be so ineffectual that they will fall back on their stock-in-trade, ginning up more sexual panic.

This calls into question the pathetic state of the Democratic Party leadership. It’s so sclerotic these days that it makes the Whigs of 1856 look dynamic.

 They have no program for the compound emergencies the nation faces. The party machinery is in the hands of bought-and-paid-for errand boys, gender crybabies, and race hustlers.

Their allies at The New York Times and CNN look ever more ridiculous peddling daily paranoid fantasies and styling themselves as advocates for “the Resistance.”

Their cadres in the Ivy League outposts have turned into the most shamelessly illiberal gang of intellectual despots since Mao’s Red Guard roamed the earth.

I’m not persuaded that the Dems will necessarily stomp Trump’s Republicans in the 2018 congressional and state races, as seems to be widely assumed for the moment. I’ll predict, rather, that in 2018 we get the first stirrings of a new party forming to battle both tired old clubs.

Trump now “owns” the fate of the stock market and the economy it wags, having bragged on it all year. He and the Republicans will be blamed if it falls out of bed.

But my gut feeling is that the voters are even more sick of the Democrats and their victim-mongering. Their coffers are empty, despite jumping through every hoop that Wall Street held out for them. (Did all the money disappear into the maw of the Clinton Foundation?)

Finally, on a personal note, I blame them for driving a stake through Garrison’s Keillor’s heart with their reckless sexual witch-hunting, and I don’t forgive them for that, no matter how many tits he may have tried to touch backstage.


Elsewhere on This Planet
Economic savant and international man-of-mystery James Rickards says that Trump and his generals are going to whap North Korea upside its big chunky head soon after the winter Olympics are concluded in South Korea on February 25.

But as Trump averred in the election campaign, he is not inclined to state in advance exactly what we might do in a military situation. Maybe the rumor is true that we have interesting new weapons capable of turning Little Rocket Man into a Post Toastie without harming the mass of innocent North Koreans.

I’d have to give 50 percent odds that whatever we do in Korea turns out to be an epic illustration of Murphy’s Law, since our track record in foreign military adventures since VJ day in 1945 is pretty scant in the “win” column. The Balkan War, maybe… Bush One’s Gulf War sort of… Grenada (for Godsake)… what else…?

Kim Jung-un may not be able yet to deliver an atomic blast to Rodeo Drive, but he can likely lob one into Tokyo on a five minute flight path. Look at the map. The Japanese must be nervous about it.

They were once a world-class military power, in case you don’t remember the banzai era. Prime Minister Shinzo Abe wants to revise Japan’s pacifist constitution — engineered by US advisors during the post-war occupation — to allow for a robust military.

I wouldn’t be surprised if something lethal jumps out of a lacquered black bento box in the direction of Pyongyang around the same time the US goes for that whap upside NK’s head.

And there’s Seoul, of course, less than 20 miles from the DMZ and within range of a supposedly huge array of North Korean heavy artillery.

The theory is we have a slim window of opportunity to deal with this rascal before he equips himself to do some major mischief in the world.

I don’t believe this is just a bunch of shuck-and-jive cooked up by the arms merchants and their friends. It’s real and existential and very messy. Something is going to happen there.

China has a pretty firm mutual defense treaty with North Korea, and perhaps reason to want to keep the regime up-and-running as a buffer zone. But do they really want to jump feet first into World War Three defending Kim?

I guess we’ll find out. In the meantime, China’s president Xi Jinping has got enough on his plate trying to safely land the high-flying, but wobbling, debt-saturated Chinese economy.

Odds are that it’s going to be a rough landing. In which case, maybe war is the answer, as a way of distracting the Chinese public’s attention. But what sort of war? Cyber-sabotage? EMP blackouts? Good old-fashioned mutual nuclear destruction? Grinding old-school land campaigns?

Naval battles?

It’s a dangerous game and Xi does not look like a risk junkie — more like prudent ole Uncle Xi. So I’ll predict that whatever blows on the Korean Peninsula, China will try to stay out of it, even if it makes faces and jumps up and down a bit.

Russia can only benefit from steering clear of war, though its recent offer to act as an intermediary between Kim and Trump was a smart move. (Maybe they remember how Teddy Roosevelt negotiated a peace settlement in the Russo-Japanese War of 1907.) They have little to lose and prestige to gain.

Despite what you hear about the unholy thuggery of Vladimir Putin, it seems to me that what he wants most of all for his country is to attain the condition of a politically and economically normal nation — after the 75-year-long misadventure with communism.

I suspect Putin and others in Russia would have liked the country to become more fully Europeanized in tone and style than it has been allowed to be, with NATO playing war games on Russia’s border, and US monkeyshines in Ukraine, and sanctions against it for really no good reason.

So, Russia has been shoved back into its cubbyhole as a nation not quite of Europe, with sinister Byzantine overtones and ancient exotic Mongol influences.

This quasi-isolation has some benefits for Russia, for one, the imperative to develop businesses and industries for import-replacement, that is, for becoming more self-sufficient. Russia has a lot to work worth, with the world’s highest oil production, lots of ores and minerals, untold hydropower, and endless timber.

It can make its own stuff, and Russian citizens are free to try starting businesses. The country may even benefit from climate change with expanded croplands. Russia is already approaching food self-sufficiency after the long catastrophe of soviet farm collectivization.

Meanwhile, Europe desperately needs Russia’s oil and natural gas, so they must know that using NATO troops and armor to make threats is a hollow gesture. Notice that Russia is stockpiling gold reserves, where the USA is just selling the stuff off. (China is stockpiling, too. Like mad.)

When other currencies implode, there is reason to believe the world will be introduced to a gold-backed Ruble and Yuan, “money” backed by money.

They’ll be able to buy stuff they need. Will we? Will a gold-backed currency shove aside the US dollar as world reserve currency? The precursor to that will be China’s effort to establish oil trade in its Yuan.

Europe has stumbled along economically for several years on Mario Draghi’s promise to “do whatever it takes” to keep the EU’s member nations from falling into the black hole of debt deflation, namely, buying every bond that the sovereign governments and corporations issue.

That kept the game going, but the structural imbalances in EU banking are now so extreme that it is hard to see a way out besides an EU crackup.

The Merkel-led immigration-and-refugee policy looked like a bad bet from the get-go and is liable to get worse when the whatever-it-takes liquidity dries up and the EU member countries fall into recession (or depression) and there’s no more money to pay for all those refugee settlement centers and the social services that have been provided.

There won’t be enough gainful employment for Germans, Belgians, Frenchmen, and Swedes, let alone for immigrants and refugees.

I’ll predict that starting in 2018 we’ll see efforts to ramp up deportations of these newcomers. Racist?

That will be the knee-jerk hue-and-cry. But the epithet is losing its punch as the effects of Merkel’s open door policy are felt on-the-ground in the obvious hostility, xenophobia, and aggression, displayed by Islamic settlers.

The defeat of ISIS on the Middle East battlefields in 2017 suggests that they will be ramping up terror operations to Europe. European nationalism movements will grow in 2018 and gain intellectual respectability as the defense of European culture is taken seriously.

Middle European states such as Hungary and Poland have not given in on the EU’s demand to accept immigrants and refugees from Islamic lands. Their example will be followed. Politicians in the rest of Europe will consider the “Just Say No” option.

The United Kingdom enters 2018 especially vulnerable to economic travail. The estimated cost of Brexit at tens of billions of pounds sterling, and the potential loss of business, especially banking, is one mighty headwind.

The other, less talked about, is the dwindling of the UK’s oil and gas reserves. The equation is simple: fewer energy inputs equals lower economic activity.

The only way around that is the popular central bank strategy of recent years: money-printing and accounting fraud. You can’t base an economy on that, and the truth will become painfully self-evident this new year in Great Britain.

Suddenly this last week of 2017, anti-regime demonstrations are busting out all over Iran. They are said to be protests over poor economic performance and the regime’s squandering of resources sponsoring mischief in other lands (Yemen, Syria, Lebanon, etc).

Folks are getting killed in the streets. The Revolutionary Guard — the zealots who took our diplomatic personnel hostage in 1979 — have promised to squash the protest. Many Iranians must be good and goddam sick of mullahs and ayatollahs running the joint.

Otherwise, it’s beginning to look like Crown Prince Mohammed bin Salman (MBS) of Saudi Arabia (KSA) would like to rumble with Iran to beat back their influence outside their borders in the region.

Iran has had plenty of opportunity to play with its military hardware in recent decades: in the Iran-Iraq War, arming Hezbollah to battle Israel, in support of Bashar al-Assad’s government in Syria, and lately in Yemen’s civil war.

KSA, on the other hand, has been buying jet planes and bombs from the US for decades, with nary a chance to put them to use. MBS seems eager to test-drive this schwag.

A real dust-up between the principals would put a lot of the world’s oil supply at risk if oil tanker shipping in the Persian Gulf were interrupted. China and Japan would bear the brunt, but the whole world would feel it.

Kicking the clerics out of government in Iran might tone down the unnecessary religious hostilities between Sunni and Shiites that has played such a big part in the creation of failed states throughout the Middle East and North Africa (MENA). Iran has plenty of economic problems inside its own borders.

The disarray in other areas of the vast MENA region will continue in 2018, whether regime change in Iran happens or not. Iraq, Libya, Somalia, Sudan are permanently failed states, with Egypt ever on the verge. Syria will stabilize as a much smaller economy, propped up by payments from Russia for hosting naval and air bases there.

This part of the world has suffered ruinous population overshoot in the industrial age, especially the states that produced oil. The desert ecology can’t support all these people as the industry falters and shrinks. Even as the situation worsens, the swollen populations will generate more children. When they can no longer decant themselves into Europe, the real misery starts.

You may have forgotten there is a place called South America. Its many nations have been in a pleasant political coma for a decade or so, except Venezuela, which is in cardiac arrest, organ failure, and brain death. There will be a bloody revolution there this year, and Venezuela’s oil industry will be crippled, adding to the world’s oil supply problems.

The Closing of the American Mind
2017 was a spectacular year for intellectual collapse among the political Left, but especially for its subsidiaries on campus.

The trauma of Donald Trump’s election victory put this faction into a fugue state in which no opportunity for coercion and persecution of imagined enemies could be missed.

The victim-oppressor politics spawned by the critical-theory-for-lunch-bunch has produced an ideology in which “inclusion” means segregated dorms, racially separate graduation ceremonies, and (at Harvard) closing down age-old men’s and women’s voluntary social associations. And “diversity” means as long as you express the exactly same ideas we do.

The presidents, deans, and faculty of colleges around the country have turned into the most obdurate enemies of free thought since the Spanish Inquisition, a gang of cowards and villains who disgrace the meaning and purpose of higher Ed.

Highlights of the year in Social Justice Warrior Land include the violence around Charles Murray’s lecture at Middlebury, the Antifa riots at UC Berkeley, the “Day of Absence” ritual at Evergreen U in Washington State where white people were banished from campus, and the Lindsey Shepherd star chamber tribunal at Laurier University in Toronto (I know, that’s outside the USA). I


n all of these cases, college presidents, deans, and faculty acted contemptibly, supporting coercion, persecution, antipathy to due process of law, the willful betrayal of common decency, and a folio of shockingly stupid ideas — such as the proposition from the chair of the Purdue University Engineering Department (one Donna Riley) that academic rigor is a symptom of “white male heterosexual privilege.”

As it happens, higher education is approaching its own state of implosion, since college has become, most of all, a money-grubbing racket tuned to the flow of exorbitant student loans for exorbitant college costs.

Higher Ed’s fate is tied to the financial sector, especially the bond market, since college loans are lately being bundled into janky bonds just like the NINJA mortgages of 2007 were.

The entire US college industry has been in a hypertrophic blow-off for decades, and the gross expansion of facilities, programs, and costs has developedan inverse relationship to the value of a college education. I predict that a shocking number of small four-year colleges will go out of business this year. Students who had not completed their degree requirements will just be shit out of luck.

Concluding Thoughts
2018 will be a tumultuous year of shake-outs and loss. The watchword for the year should be “lean.” Individuals will be shoved into leaner modes of living. Companies will suffer despite the new lower tax. Financial rewards will be lean. Nations will have to seriously start planning to get by on less, to downscale, and jettison programs that don’t jibe with the mandates of reality.

2018 is the year that the world comes un-stuck from the past ten years of pretending that it’s possible to get something for nothing. For 2018, it’s full speed ahead into the long emergency.

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