2012 - The impending apocalypse

Perun

Perun

His name struck fear into hearts of men
Staff member
Every once in a while you reach that point where you have to admit you were wrong, and even a guy like me can be very wrong at times. It doesn't hurt to admit that, it even does boost your pride at times, because admitting to a mistake technically makes you a better and stronger human being.

It is, however, a different thing to admit someone else was right. Simple logic dictates that if there are two parties disagreeing over something, at least one of them must be wrong. The assumption that comes naturally to people in that case is that the other party must necessarily be right. Such a dualistic interpretation of Truth has brought mankind into quite some trouble in the past.

So, when I admit that I was wrong, I do not mean to say that everybody else whom I disagreed with was right all along.

What am I talking about, anyway? What I want to say is that I was perhaps wrong in assuming the world won't end in 2012. But that doesn't mean that all this Maya-Rapture-Last Pope-Apocalypse stuff is going to be right. I'm just saying that we are entering a year that may once be remembered one of the greatest watersheds of modern history - for better or worse. Consider this:

2012 could be the year Germany lets the euro die
So we enter Year IV of the Long Slump, the cruellest yet though not the most acute.



There will be no Chinese credit explosion this time, no real help from post-bubble India or over-stretched Brazil.
It will be a global downturn on all fronts, aborting what remains of recovery even before industrial output in the OECD bloc has regained its pre-Lehman peak.
The second wave will hit with youth unemployment already at 45pc in Greece and 49pc in Spain; and with the US labour participation rate already at depression levels of 64pc.
We will hear more about Italy's Red Brigades, Greece's Sect of Revolutionaries, and America's militia groups, and how democracies respond. Proto-fascism in Hungary is our warning.
China's surgical soft-landing will slip control, like Fed tightening in 1929 and 2007, or Japan's squeeze in 1990. Once construction has run amok, bears will have their way.

Since the purpose of New Year predictions is to stick one's neck out, let me hazard that China will devalue the yuan in 2012. It will export yet more spare capacity into a deflationary world, until the West retaliates and starts to turn its back on globalisation. Capital outflows will accelerate. The idea that China can rescue anybody will seem quaint.
The strong yen has already pushed Japan back into deflation, and fresh recession. Public debt has reached one quadrillion yen, as noted acidly by Tokyo's R&I rating agency when it stripped Japan of its AAA rating last month. That is $12.8 trillion, or Italy plus Spain times four.
There is a graveyard full of Gaijin commentators who wrote off Japan too soon. Will the dam break this year at last, with tax covering less than half of spending, public debt at 237pc of GDP, ever fewer workers, and a state pension fund now selling government bonds? Perhaps. As R&I warns, Europe's woes have brought sovereign debt into very sharp focus.
America will look resilient for a few months. The payroll tax deal has averted a fiscal shock, but that is all. Money growth (M3) has sputtered out, and velocity is falling.
Politics on Capitol Hill will restrain Ben Bernanke from launching QE3 until the Tea Party can see the eye-whites of deflation. Six-month PCE inflation was 2.9pc in August, 2.4pc in September, 1.6pc in October, and 1.2pc in November. Not there yet. Prepare for a Wall Street squall first.
Whether the scare of early 2012 turns seriously ugly depends on the nerve of policy-makers. Shock absorbers are worn thin, but not exhausted.
Central banks have the means to prevent a 1930s outcome, even with rates at zero, if willing to deploy Fisher-Friedman monetary stimulus with conviction, buying assets from non-banks and targeting nominal GDP growth of 5pc. But policy defeatism is in the air, and Austro-liquidationists are winning the popular debate.
The second leg of our Kondratieff Winter comes at an awful moment for Euroland, just as the North-South split turns deadly.
The European Central Bank has guaranteed trouble by letting M3 money contract. Fiscal tightening into the downward slide will make matters worse. A credit crunch as banks shrink loan books by €1 trillion to meet capital ratios will do the rest. All policy levers are set on deep recession, and deep recession is what Europe will get.
Monetary union is too damaged to parry these blows. The ECB's Mario Draghi will cut interest rates to 0.5pc by February, just to keep pace with passive tightening. Half-hearted purchases of Italian and Spanish bonds will drift on, doing more harm than good. By reducing existing bond-holders to junior status, the ECB will ensure a slow exodus. Draghi knows this. His hands are tied.
The Bundesbank will wage guerrilla war against money printing through the pages of Die Welt and Handelsblatt, paralyzing the ECB's Council until Angela Merkel orders Jens Weidmann to desist.
By then it will be too late, deliberately so. Contraction will play havoc with budgets in Italy, Spain, Portugal, and France. Austerity alone will seem a Sisyphean task. Club Med leaders will not be able to command popular assent for such 1930s scorched-earth strategies.
Politics will fracture further, splintering to the hard Left and Right. The Front National's Marie Le Pen's will beat Maréchal Sarkozy into the French run-off invoking 'terroir' and the ancient franc. Escalating levels of coercion will be needed to uphold the Project, with EU commissars eating alone in the administered territories of Greece and Italy.
Far from protecting credit ratings, Europe's self-defeating policies will bring a blizzard of downgrades. France's AAA will go, obviously. So will Austria's as banking woes deepen in Hungary, Ukraine, and Croatia. Vigilantes will take a closer look at Holland's household debt, off the charts at 270pc of disposable income.
The shrinking AAA core will leave Germany propping up the EFSF bail-out fund, until the weight of contingent liabilities endangers Germany itself. That will concentrate minds.
France's President Hollande will "triangulate", playing the pan-Latin card to discomfit Berlin and force a policy change. Portugal's Troika sacrifices will prove as futile as Greek efforts before. Lisbon's second bail-out will come just as Greece graduates from riots to insurrection, and Italy's Silvio Berlusconi will try to snatch power again by whipping up fury against Tedeschi. Bundestag patience will snap at such disorder everywhere.
Germany will not be able to fudge EMU any longer. It must either immolate itself, accepting a debt union and internal inflation to save a currency it never wanted and doesn't love; or opt instead to uphold fiscal sovereignty and the essence of its own democracy, and let the Project die.
The shrewd, equivocating, ice-cold Chancellor will quietly oust arch-europhile Wolfgang Schauble and let the Project die, always pretending otherwise.
Just an idle hunch. Guten Rutsch.
Click to expand...

Source

Of course I know better than to believe everything the Telegraph says, but I still think this is an interesting snap shot of all the things troubling us at the moment and of what could go wrong.

So yeah, maybe the world won't explode in a meteorite catastrophy and we might not all melt in the wrath of God, but this might very well be the beginning of the end of the world as we know it. Here's hoping it won't go down in flames.


Thoughts?
 
Not sure on which part of the article I would elaborate first. My thirst thought is that this particular newspaper comes from a country with a Prime Minister who took the foolish step to not c0operate with new stricter EU rules, which are desperately needed. He certainly showed some responsibility for the continent (not!).

UK = anti Euro(pe) sentiment.

I agree we got a grim year ahead... But to me, living in Europe is still a piece of cake compared to living in Syria (where brave civilians march towards their death, to get a better society), in Nigeria (especially Christians get massacred every day now), or most other places in this Godforsaken world.
 
I'm not a doomsayer or a panic monger, but I agree that there is a lot of bleakness on the horizon. Here in western Canada we have been relatively insulated from the shitstorm that is affecting much of the rest of the planet, but ripples have been felt. I think that the end of the world as we know it isn't going to be a matter of apocolypse, but a morphing of the status quo that has existed since the end of WW2. As an old guy with no debt and a paid off mortgage, I anticipate perhaps working a few years longer than I would prefer before I can retire, but you young dudes just starting out are going to face a different and rockier road than I travelled, methinks. Who fucking knows what tomorrow is going to bring, but I am thankful for my personal circumstances, and empathetic to those who will be more affected by the turmoil.
 
My personal situation and outlook is similar to Taker's.
Things are not as good here is they were four or five years ago, but desperation is still a ways away for most British Columbians.
But I know we are somewhat sheltered out here on the Pacific Rim.
This board has a great cross-section of intelligent people from across the globe.
How bad is it out there?
 
That article is bullshit. Straight up bullshit. It starts with the headline and keeps on going with bad facts and bad information. The conclusion is not necessarily correct, either.
 
Forostar said:
Not sure on which part of the article I would elaborate first. My thirst thought is that this particular newspaper comes from a country with a Prime Minister who took the foolish step to not c0operate with new stricter EU rules, which are desperately needed. He certainly showed some responsibility for the continent (not!).

UK = anti Euro(pe) sentiment.

I agree we got a grim year ahead... But to me, living in Europe is still a piece of cake compared to living in Syria (where brave civilians march towards their death, to get a better society), in Nigeria (especially Christians get massacred every day now), or most other places in this Godforsaken world.
Click to expand...
The first thing I must say here is that we in the UK are predominantly anti-Big Government and as it is perceived that the EU is indeed a Big Government, it's not looked upon as a good thing.

Secondly, from what I understand, had Cameron co-operated with this stricter EU rule, London would have been heavily (and, possibly, disproportionately) penalised. He did what he thought was correct for the UK and I guess, only time will tell if he was right.

Thirdly, I agree on your last point. We can grumble all we like but we are so much better off than in so many other impoverished countries.
 
Naturally countries that make mistakes should be penalized. Abide by the rules.
Countries, economies depend on each other. When you are a member of the EU you can't always go your own way. If the UK wants to do that, I can't imagine that they're better off now.

Cameron wants rules for others but not for himself. I guess he's more busy with the next elections. So he's on the populist side if you ask me. Non-popular measurements don't fit in his picture.
 
Finally, I have the time to write this.

The author paints a very bleak, dismal picture of everything that can go wrong with our financial system, but it's simply wrong. He's wrong to suggest that the politics of the world will stop everything from being processed. It will slow some stuff down - especially in the United States.

But this is where the rest of the world gets to step in. Germany and France will figure this Euro thing out, and let's face it, they're the leaders. In 50 years, David Cameron will be seen as the man who let Europe walk on while the UK swam in a rut. And the Republicans refusing to let Congress move forward in DC will be seen much the same. The Eurocrisis is a microcosm of the global banking crisis, but it's not the end of anything.

It's certainly not the end of the EU.

We have a very strong parallel for the European Union's development - another Union. The United States's early development very closely parallels the slow unification of the EU, though one has significantly more history dividing it, and is therefore...slower. Go read up on wildcat banks. The US only ended this practice in a time of great crisis - the Civil War. This is the time for the EU to stabilize.

They probably won't do it with the UK. And the UK will probably find itself on the wrong side of history here. It's quite sad, really.

Anyway, these sorts of gloomy predictions are almost never met, and most economists are simply put, more optimistic than this. The world won't end. The Euro won't end. The EU won't end.

We're going to learn a little more about how the world works and move on.
 
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