Thursday, November 8, 2012

Madison Avenue Spin

Well the election is over and now all I keep hearing is the latest "Madison Avenue spin" for our 31 year long debt boom....."Fiscal Cliff".  I checked out "the trend" on Google Trends and, yep, the Sheeple are already regurgitating it like they even know what it means.  Look at this "up trend"

Source: Google Trends
Here's some other great "spin terms" with my interpretation:
-"Axis of Evil" - countries that we plan to control relating to securing oil reserves
-"War on Terror" - justification for invading oil producing nations
-"Operation Enduring Freedom" - Afghanistan, thank you for the landing strip
-"Operation Desert Storm" - cool name for our invasion of an oil producing nation
-"Operation Iraqi Freedom" - "Operation We Now Control Your Oil" or "Sorry France and Germany But Your Oil Contracts Are Now Null And Void"
-"Arab Spring" - the contraction of mass social mood (e.g. The mob is angry)
-"Quantitative Easing" - cool name for bankrupting our country
-"QE1" - ditto
-"QE2" - ditto
-"QE3" - ditto
-"Operation Twist" - QE4 was too predictable?
-"WMD" - remember when we called then "atomic bombs"??
 -"Flash Crash" - major alert that a "Black Swan" lies ahead

Tuesday, November 6, 2012

Election Day Reflection - 2012

Well I'm still trying to end my "random roving hiatus".  Just too much going on in my real world I guess.  Election Day is just too tempting to hold back.

My thoughts on the candidates.  I didn't vote for Obama in 2008 because I believed that he had zero experience to hold the most powerful position in the world.  Today I won't vote for him because "3 plus" years is still not enough real world experience especially considering the task at hand.  Mr. Romney probably has the best presidential resume that I've ever seen.  It has real world business experience, government experience, and significant experience relating to investment capital.  For the times at hand, this resume is a perfect fit.  In my mind, it was amazing to see his Bain Capital experience get attacked so strongly by The Left.  We need a venture capital mentality to sort through these financial rogue waves.  Here comes the "but".  But, Mr. Romney, if elected, would not do anything different from Obama and Bush.  The Bush and Obama presidencies in my mind have been identical. Their two main underlying themes have been "print money" and "occupy oil producing nations".  I don't see Mr. Romney doing anything different.  Continuing those two operations has massive negative consequences for our country.  Forty years of "excessive credit" has left us in quite a quandary.  Yes, forty years.  The Gipper opened up the "federal credit card" and every president has used it well.  We're now experiencing exponential growth of our debt which makes the current "man in charge" appear to be the most guilty.  The curve is only steepening and will continue to do so.  So, with that said, I'll say it again, it doesn't matter who the next president is.  The cycle will once again make it's selection.  "Fear and anger" are still the dominant emotions of the masses around the world.  It is my belief that fear and anger will benefit President Obama the most which will lead to a very narrow victory.  Many citizens still have some bad feelings about Bush and Cheney.  Fear will drive many to vote for Obama because he is a "known quantity".  Fear of what Romney might do is enough for some to vote Obama.  Yes, many are angry about the economy, but I don't think that most blame it on the current president.  They might even blame Bush and vote Democrat for that reason.

For the same reasons as stated below in my 2008 rant, I plan to vote for a third party candidate.  I'll either write in Ron Paul or vote Libertarian with Gary Johnson.  Now more than ever it is important to send a message that a third party is needed.  These two candidates spent $2 billion on their campaigns.  They were the only two invited to the debates.  We have a "machine" that's broken.  Both parties have exhausted their platforms.  Both parties spend all of their time and money trashing the other instead of fostering new ideas.  This election will be another stepping stone towards third party strength in 2016.  That's why my vote is not wasted. Change takes time.  Endorsing a bad system only exacerbates it.

The Republicans spent three years looking for a birth certificate instead of a candidate.  Once again, they've ended up with someone they don't care for.  How does that happen?  In 2008 they ended up with an old "washed up" politician and paired him with a numskull.  In this election, the party, controlled by the Evangelicals and the Fox News Mafia, ends up with a Mormon as candidate.  Fox News can't discuss this, but all of the "self proclaimed born agains" that I know believe that Mormonism is a cult.  Many of those individuals probably won't vote because of their religious belief dominating their decision.  That might be the deciding factor in the election.

To the Democrats, I once again say, "be careful what you wish for".  The past four years will be nothing compared to the next four.  That exponential curve is only steepening.  Massive inflation, especially of food and energy, will send the world into further chaos.  We've already seen this play out in "Phase I".  Like we always do, we gave this event a cute name for the media to spout and for the sheeple to regurgitate......the Arab Spring.  Of course, Fox News' interpretation of the event was that all of these countries want to be the United States.  "Phase II" will "up the ante".  In this next term, I believe that "fear and anger" will greatly escalate and the next president will pay dearly.  Calling him the "fall guy" might not even be a strong enough description.  The next vice president could very well be the next LBJ.

As in past years, I hope and pray for the best.  I go into this election day with continuing concerns that our populace is uninformed, disinterested, and in utter denial about the realities ahead.  Another large storm just devastated our shores and nobody was prepared.  They were too busy watching those millionaires on "Jersey Shore" versus preparing for a storm that was approaching the Jersey shore.  Good luck to all.  I hope that your boy wins and that you can endure the next four years with him.  Today might present a good opportunity to write on paper why you voted for your candidate.  It might make for interesting reading in the years ahead.

My post from election day 2008.  I've not changed my view on anything:
"The day has finally come. Two years and $2.5 billion later, we finally have out opportunity to cast our ballot. It seems that we've been in this process for ever! The experts predict that we will have a record turnout. Based on the timing in the economic cycle, that make a lot of sense. No matter the outcome, today proves to be historic.

Back in June at our annual beach trip, I predicted that Obama would win by 14%. That prediction was unanimously scoffed at and all stated that it will be a "photo finish" like Bush/Gore. My prediction then and now is that Obama will win by a landslide. I don't believe this because I think that he's the dominating candidate or necessarily the best candidate. I believe this because of the timing of the election with the economic cycle. As we entered the new millennium and the beginning of the "contraction" phase of the cycle, Bush took office. His approval ratings have consistently slid down to an all time low. In contractions, the mob becomes angry and fearful. Kings and presidents are thrown out of power during the contractions. The Republican party will suffer greatly during this election due to timing. The imperialistic occupation of Iraq has been cited as the explanation for the down trend in ratings, but ironically the conflict also aligns with the behavior "of the crowd" during the contraction phase.

The Obama landslide victory will reflect the significant shift in mass social mood from "happy and greedy" to "angry and fearful". The anger is focused on the Bush administration, yet the fear appears to be focused on the policies of a potential Obama administration. I believe that the anger will overpower the fear. When we're happy and greedy, we forgive a president for having sex with an intern in our country's White House. When we're happy and greedy, we typically re-elect the incumbent. John McCain is considered the incumbent. George Bush Sr. knows what happens when the tide shifts slightly off kilter. He still hasn't forgiven Greenspan for not printing more money to artificially stimulate the economy prior to his re-election bid. Greenspan made up for it during W's term.

Most concerning to me during this process, and mainly during the past six weeks, is the content of emails that I've received from my Republican friends. The fear mongering has been staggering. The most shocking have been those wrapping the election decision under the veil of Christianity. I believe that Jesus loves both candidates. The Republican party made the conscious decision to "go negative" instead of telling us why McCain was the right choice. During the Republican convention, all I heard were two things: "Vietnam POW" and "maverick".

The interesting question to ask on election day is: Should one vote for what they believe is best for themselves or for their country? For me personally, being a white upper middle class geologist in the petroleum industry, most would agree that I should vote Republican. The Republican Party states that they will keep my taxes low, keep illegal aliens from mowing my lawn, and they want to drill, drill, drill. Sounds like a simple decision. I actually believe that one should vote for what's best for the country as a whole. I firmly believe that one should assess the picture on a global scale. I also believe the "the chain is only as strong as the weakest link". If our "weakest link" gets weaker, it will affect all of us. So who is the best candidate for the country as a whole?

I don’t think it matters who the next president is. I know that 99% of you will disagree with this statement. I believe that he will be doomed by the economic cycle. The cycle is much greater than a president or a political party. The next president will time it horribly like Carter did, but much worse. He will be the fall guy. He will be worn down by the Middle East like LBJ was with Vietnam. Hopefully he won’t receive the fate of JFK. Yes, that sounds pessimistic, but history is very repetitive. Although Obama and Palin don’t have enough experience, especially for dealing with the rogue waves that lie ahead, I believe that both have great potential for a future moment in time. Obama has brought excitement and hope to the masses. I don’t ever recall seeing a 100,000 person rally for a presidential candidate. Palin has brought a freshness to the process and great hopes for future female candidates. McCain and Biden are career professional politicians and that’s not what the country needs. Bush’s term aligned with the “beginning of the end of the great expansion” and McCain can’t shake the Bush connection. I’m still trying to figure out if Obama is a Christian, Muslim, Arab, Kenyan, or terrorist?!?!

This morning I voted for Ron Paul as a "write in". I believe that our two parties are stuck in a state of significant paralysis. The rigidness and extreme perspectives are at a standoff. When this cycle finds a bottom in the coming years, it might be the opportunity for a third party to rise in power and stature. My vote can be easily cast as a wasted vote, but I truly believe that out of all of the candidates and through the entire process, Ron Paul was the only candidate that conveyed an honest and accurate understanding of the situation along with providing real, concrete solutions. He understands that a fiat system will ultimately come to a catastrophic ending. Someone in charge has to have a plan for this. Of course, I hope that I’m wrong. I’ve thoroughly enjoyed, and have been a full participant in theSupersize Me Era.

It's interesting to observe politics on the home front. My 14 year old son wants Obama, 12 year old daughter McCain, and my wife still was rooting for Hillary. How's that for diversity."

http://randomroving.blogspot.com/2008/11/election-day-reflection.html

Sunday, August 26, 2012

The Attack On Yellow Comes To An End

It took some time, but the cycle always wins.

"It will be interesting to see if the downward 'draft' of mass social mood takes down cycling champion, Lance Armstrong. Tiger might say that 'the draft' makes everyone vulnerable."
Random Roving, August 9, 2010


"'Enough is enough,' Lance Armstrong has declared, and another sports icon enters the gray. Not fully diminished, but not pristine, admired by some, radioactive to others. Spoils are expected to be scrubbed—seven yellow jerseys from the Tour de France, pulled from the wall—the memories muddy, but harder to erase.  I know who won those seven Tours, my teammates know who won those seven Tours, and everyone I competed against knows who won those seven Tours,' the 40-year-old cyclist said in a statement late Thursday, announcing he would not continue to battle doping allegations brought by the U.S. Anti-Doping Agency."

Monday, June 11, 2012

More Mega-Meltdown

"The megachurch and megamillionaire ministers might have seen 'the peak'". Hopefully they saved all of those millions from the book deals."
 
More challenges for the mega-millionaire ministers.  The stress of losing their millions must be causing them to get aggressive.
 
"Even before controversial megachurch pastor Creflo A. Dollar Jr. released a statement Friday denying he assaulted his 15-year-old daughter, the College Park minister's legion of supporters rushed to his defense. "It's just something that's been blown out of proportion," said Randi Garrett, a longtime member of Dollar's World Changers Church International. "Kids misconstrue things, and they take them out of context."  But Fayette County Sheriff's deputies say they found ample evidence to charge the prominent televangelist and author with simple battery, family violence and cruelty to children.  Dollar's 15-year-old daughter alleged her father grabbed her by the throat in the family's home on Sandy Creek Road in Fayette County, pushed her to the ground and then beat her with his shoe, according to the incident report. The Atlanta Journal-Constitution is not identifying the girl because she is a minor.  The lone witness to Friday morning's altercation, Dollar's 19-year-old daughter Alexandria, confirmed her sibling's account, telling deputies their father "put both hands around her sister's neck and choked her for about five seconds," the incident report said.  Alexandria Dollar said she then saw Dollar grab her little sister by the shoulders and slap her in the face. She says her sister tried to break free but was thrown to the ground, at which point Alexandria ran to get her mother, Taffi, whose arrival in the kitchen ended the fight, the incident report states.  Sheriff's spokesman Brent Rowan said the teen sustained "superficial injuries" to her neck."
Source: Atlanta Journal Constitution

Thursday, May 17, 2012

Chase's WMD's

My post have been infrequent of late, but this one is significant in my mind.  The most significant aspect is Chase's desire to "play it down" as a non-event.  Two billion dollars...non-event...really?

JPMorgan Chase's 'Jamie the Great': tap dancing with derivatives.  
"JPMorgan Chase CEO Jamie Dimon, the shining industry agitator against some of the tougher regulations on banks, has suddenly become the shining example of why still tougher regulations may be needed, writes Maureen Dowd.A nd it was. A $2 billion credit derivatives trading bungle that could mushroom to a $4 billion loss. The shining industry agitator against some of the tougher regulations on banks has suddenly become the shining example of why still tougher regulations may be needed.  But now the blunt 56-year-old New York City native who snowed Democrats in Washington with all his talk about not lumping in "good banks" with "bad banks" has fallen off his pedestal.  Talking even faster than usual, the tarnished silver-haired banker told shareholders that he couldn't justify the "self-inflicted" debacle. While the trade was "poorly vetted and poorly executed," he said it wouldn't make a dent in the "fortress balance sheet.""
Source: Seattle Times

"I don't know if it will happen in 2010, but I believe that one of the next 'too big to fails' will be JPM Chase. They hold more derivatives than any other company in the world. We've just seen the beginning of the derivative implosion. Remember, Warren called them 'weapons of mass destruction'."
Random Roving, January 1, 2010

Tuesday, April 3, 2012

Darkness At The Box Office

As I watched "Hunger Games" with my daughter, nephew, and brother-in-law last weekend, I couldn't help but think about the alignment of the dark theme of the movie with the contracting cycle that we're in.  It's so fascinating that a book about teens murdering each other in a game is required reading for class in some schools.  Yes, the storyline is interesting, but the darkness of the story and the dark imagery throughout the movie is telling.  I had the same revelation sitting through the first Twilight movie. Darkness reigns for sure.  First, "Harry Potter", then "Twilight" and now "Hunger Games".  If I remember correctly, there's not a ray of sunshine in any of the movies....both literally and figuratively.  Yes, "Hunger Games" presents a message about a potential future for our country.  Some could argue that the movie depicts the 1% and the 99% very well.  My fascination is more with the fact that these dark themes are the mega-movies of the current and past decade.  As I've mentioned many times, Robert Prechter with Elliott Wave International has done significant research regarding movie and music themes and how they align with mass social mood. It would be hard to argue after watching thirty minutes of the world news at night that the world isn't in a "dark" mood.  The chart below places each movie along my "mass social mood barometer", the Dow/Gold Ratio.  Interesting alignment of the mega-movie release dates and their place along the "Great Contraction" cycle.  The real concerning point is that we're a long ways from the bottom of the contraction. Many more dark films to watch I'm afraid.
The Mass Social Mood Barometer (Dow/Gold Ratio)

Sunday, April 1, 2012

The Cycle Continues On

"As this cycle continues downward, it will be important to know what you believe in. You will be challenged to stand up for what you believe in whatever that is. When you see the cowardly hooded white man on horseback heading down the road, what are you going to do about it?"
Random Roving, November 9, 2009

Thursday, March 22, 2012

Fuggeddabowdit

"We tell ourselves we’re in an economic recovery, meaning we expect to return to a prior economic state, namely, a turbo-charged “consumer” economy fueled by easy credit and cheap energy. Fuggeddabowdit. That part of our history is over. We’ve entered a contraction that will seem permanent until we reach an economic re-set point that comports with what the planet can actually provide for us. That re-set point is lower than we would like to imagine. Our reality-based assignment is the intelligent management of contraction. We don’t want this assignment. We’d prefer to think that things are still going in the other direction, the direction of more, more, more. But they’re not. Whether we like it or not, they’re going in the direction of less, less, less. Granted, this is not an easy thing to contend with, but it is the hand that circumstance has dealt us. Nobody else is to blame for it.”Jim Kunstler

Tuesday, March 20, 2012

The Federal Pez Dispenser

"Once Bennie fired up the printing presses, the government car companies decided to make subprime auto loans again and the Federal government started doling out student loans like a pez dispenser, all was well in the non-revolving consumer loan world. The debt outstanding has soared to $1.7 trillion, a full $90 billion above the pre-crash peak. So, after three and a half years of “austerity” and supposed deleveraging, consumer debt outstanding has fallen by 3%."James Quinn, "The Burning Platform"

Tuesday, March 13, 2012

Freudian Illusions

"Illusions commend themselves to us because they save us pain and allow us to enjoy pleasure instead. We must therefore accept it without complaint when they sometimes collide with a bit of reality against which they are dashed to pieces.” - Sigmund Freud

Monday, March 12, 2012

Crumbling Crystal

This forecast continues to play out right on schedule.  Does this sound like a church or a business?  "Hostile work environment"?
WWJD?
"Changes are planned at the landmark Crystal Cathedral after the founding Schuller family announced plans to leave the congregation.  The Rev. Bill Bennett assured congregants that Crystal Cathedral Ministries would hold services next Sunday.  'The congregation can basically stay where they wish to stay,' Bennett said.  He said the church would revert to what he called a more "traditional" style of service, with hymns and music. It is unknown who will take over as senior pastor. The church was sold to the Roman Catholic Diocese of Orange in February for $57.5 million, and the ministry has three years to find a new home.  Bennett's comments came after the senior pastor, Sheila Schuller Coleman, announced Sunday that she was leaving to start a new church.  'This is the last Sunday we will be worshiping in this building,' Schuller Coleman told congregants during an emotional 11 a.m. service in the 10,000-pane glass cathedral, designed by architect Phillip Johnson.  Schuller Coleman's announcement came one day after her parents, church founder Robert H. Schuller and his wife, Arvella Schuller, resigned from the Crystal Cathedral's board of directors, which oversees the ministry's trademark "Hour of Power" broadcast. The future of the show and the bankrupt Crystal Cathedral Ministries is unclear.  Schuller Coleman said she was leaving because of her family's "adversarial" relationship with the board. She pointed to the recent firings of her sister and brother-in-law, Jim Penner, who served as the executive producer of "Hour of Power" since 1999.  'My entire family has been experiencing a hostile work environment,'  said Schuller Coleman, who was temporarily removed as chief executive officer of the ministry last month.  The events immediately created a divide among congregants." Source: LA Times

"He said the church would revert to what he called a more "traditional" style of service, with hymns and music."

Religion will become smaller, "deeper", and more traditional.
Random Roving, January 1, 2010

The megachurch and megamillionaire ministers might have seen "the peak". Hopefully they saved all of those millions from the book deals. The trend toward more "traditional" might spark some old flames. Keep an eye out for increased religious conflict though."

Saturday, March 10, 2012

A Complex Array Of Paper Currencies

"The con game is impressive. They call debt money. The entire foundation of the current monetary system is a complex array of paper currencies backed by sovereign debt. The problem for its managers is that the sovereign debt is crumbling."Jim Willie

Entire article:
http://www.financialsense.com/contributors/jim-willie/handicapping-the-collapse

Tuesday, March 6, 2012

Evangelistic Contraction

"The North Carolina-based Billy Graham Evangelistic Association is laying off nearly 50 workers, or about 10 percent of its staff, as it shifts focus to its online ministry and other initiatives. Rhinehart says the workers losing their jobs are getting severance packages and career assistance.  About 55 workers were let go in 2009."Source: Washington Post

"The megachurch and megamillionaire ministers might have seen 'the peak'. Hopefully they saved all of those millions from the book deals."Random Roving, "Happy New Year 2010 is Here", January 1, 2010 

Article:
http://www.washingtonpost.com/national/on-faith/billy-graham-evangelistic-association-to-lay-off-nearly-50-workers-shifting-focus-to-internet/2012/03/01/gIQA5E4DkR_story.html

Sunday, March 4, 2012

Shock & Sacrifices

“In real life our species has such a modest ability to deal with distant outcomes or to defer gratification that a bad ending is probably inevitable. We need, it seems, the shock of a Pearl Harbor to really gear up and make sacrifices.”
Jeremy Grantham

Monday, January 30, 2012

Occupy Destruction

For a long time I noted that when the tear gas appeared we will have entered a new level of the contraction.  That occurred last year. Check.  With the recent events in Oakland by the Occupy Movement, I believe we've entered the next "tick down" with protestors causing destruction of property.

"Officials surveyed damage Sunday from a volatile Occupy protest that resulted in hundreds of arrests the day before and left the historic City Hall vandalized after demonstrators broke into the building, smashed display cases, cut electrical wires and burned an American flag.  Police placed the number of arrests at about 400 from Saturday's daylong protest — the most contentious since authorities dismantled the Occupy Oakland encampment late last year."
Source: The Chicago Tribune

Sunday, January 22, 2012

Energy Crunch

"A severe energy crunch is inevitable without a massive expansion of production and refining capacity. While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India. One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest. By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 MBD."
2010 Joint Operating Environment Report

Friday, January 20, 2012

False Storyline

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

Thursday, January 19, 2012

Hitting The Ceiling

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

Tuesday, January 17, 2012

The Big Picture

"Linear thinkers in mega-corporations, mainstream media and Washington D.C. focus on retaining the status quo, their power and their wealth. They believe an economic recovery can be manufactured through monetary manipulation and Keynesian borrowing and spending. They are blind to the fact that history is cyclical, not linear. In order to have an understanding of what could happen in the coming year, it is essential to keep the big picture in focus."
James Quinn

Sunday, January 15, 2012

Ignorance is Bliss

 “Most ignorance is vincible ignorance. We don’t know because we don’t want to know.”
Aldous Huxley

The Spark

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

Saturday, January 14, 2012

Mine vs Yours

Last night my daughter was telling me about a "Facebook war" regarding some video about Jesus and Religion.  I was amazed today to see it with over 10 million views.

"Religion: it will continue its slow progression back towards traditional.  Extreme religious behavior will continue to become more prevalent.  How we differ will become more important than how we are the same.  You say God, I say Alla or Yahweh."
Random Roving, January 1, 2012

"As this cycle continues downward, it will be important to know what you believe in. You will be challenged to stand up for what you believe in whatever that is."
Random Roving, November 6, 2009
 

Sunday, January 1, 2012

Happy New Year - 2012 Is Here

As I say every year, I love January 1. It’s a great day for reflection and for looking at the year ahead. 2011 was a humdinger. I would sum last year up across the world as the most chaotic year that I've witnessed in my adult lifetime. The late 60’s were more chaotic, but I was playing with blocks and legos. 2011 was a lighter year of blogging due to the burden of the day job. Late night blogging occurs when some amount of energy is left in the tank. This was an interesting year to sit back and observe and watch events play out in predictable fashion.

2012 will be historic on many levels.  Unfortunately, most will be of concern.  But, I'll open as I will close.  We are in transition to a better place.  The world will go through a massive global "cleansing" on all levels before we reach our destination.  After a cold winter, comes a beautiful spring with fresh new flowers.  Wear a coat to "stay warm" and you'll be fine.

 "I am succumbing to the dreaded blogger's disease, the undeniable urge to yell 'I told you so!'"
David Collum, Professor of Chemistry and Chemical Biology, Cornell University

This year I will present my 2011 post-analysis and 2012 predictions under broad “themes”.

BLOG THEME
I’ve enjoyed hearing people describe what this blog is about. I purposely chose the two words “random” and “roving” so I have free license to cover any topic.  Some have said "it's about gold or something", "it's about gloom and doom", and "it's about financial stuff I don't understand".  Well, not really. The main framework under which 90% of my posts fall under is the concept of "mass social mood" and the cyclicity of human behavior. I first heard the phrase “mass social mood” from Robert Prechter. His research organization, the Socionomics Institute, focuses on this theme and how world events align with mass social mood. Human beings, due to their mammalian design and the brain’s neocortex, tend to “herd” when making decisions. As Prechter says “happy people make financial markets go up versus financial markets go up and make people happy”. It’s counter intuitive. Our mood drives the financial markets. Markets do not control our mood. Mood cycles like a sine curve through time.  There's "ups and downs", expansions and contractions, and peace and conflict. 

"The essence of Prechter’s socionomic hypothesis is that fluctuations in social mood—waves of optimism and pessimism—are a natural result of human association and have consequences in social action. Social mood is not conscious, rational and objectively reactive but unconscious, non-rational and subjectively active. While people almost universally believe that the character of social events determines social mood, socionomics recognizes that the causality is the reverse: social mood determines the character of social activity. The causality of social mood is unidirectional; there is no feedback loop of events back to social mood. Events do stimulate brief emotional reactions, but they are transient and independent of social mood.  Some forums of activity are ideal for the immediate expression of social mood. The one in which the most detailed and pristine data exist is the stock market, where investors in the aggregate buy and sell stocks almost immediately to express changes in their mood. Other activities, such as the music people choose to hear and the clothes they choose to wear, might serve as equally good “sociometers” if accurate data were available.  Many actions taken in response to trends in social mood take time to manifest. For example, business people might decide, in expressing the social mood, to expand or contract operations. But it takes time to implement such plans, so changes in macroeconomic activity lag changes in the stock market. The same is true of political actions, which generally require a large consensus and thereby substantially lag social mood trends. This is why sociometers such as the stock market averages are leading indicators of macroeconomic trends and political actions."
http://www.robertprechter.com/socionomic-theory

These cycles are normal, natural, and repeatable.  It's been my interpretation of the data since May 2000, that one of the "greatest credit orgies" of all time ended in late 1999.  Late 1999 you say?  Yes, the "boiling frog syndrome" can lull us to sleep while we contract.

A few years ago, I read Strauss and Howe’s book, “The Fourth Turning”. The book, published in 1997, is the most important book that I’ve read in the last twenty years. So impacting, I sent it to twenty people for Christmas two years ago. It related the cycles of human history to twenty year generational cycles and archetypes. The rotation of generations creates distinct cycles and impacts the world events. It’s a fascinating and compelling read. The accuracy of the predictions made in 1997 are astounding.  Unfortunately, my gift recipients were too busy to read it.  It's hard to compete with American Idol, Swamp People, and The Kardashians.

CYCLICITY
After twenty-two years of research, I conclude that the best quantitative metric for defining cycles in the United States is the Dow Jones Gold Ratio. This ratio is calculated by dividing the Dow Jones Industrial Average by the price of one ounce of gold. This ratio clearly defines financial cycles and the impact of the creation of the Federal Reserve in 1913. Post creation of the Federal Reserve in 1913, the cycles swing up and down in more dramatic fashion.




Mass social mood aligns well with this ratio. In the expansion cycles, the mood of the masses is “happy and greedy”. Their couldn’t be a better example than the 90’s and the Tech/Dotcom boom. The Fed was printing money like crazy, companies were being created out of “thin air”, and everyone’s investment portfolio was on steroids.  Everyone was so giddy and rich that they didn't care that the U.S. president was having sex in the Oval Office with an intern!  More on that later.

Significant historical contraction cycles in the U.S. are the Great Depression and the Civil War. Note that 70 years elapsed between these two events. Seventy years after the start of the Great Depression puts us in the year 1999. Interesting!

I like to think of the Dow/Gold Ratio as a "mass social mood barometer".  This ratio peaked in July, 1999 at the highest number ever recorded (43.7). Most people would say that the financial cycle peaked in October 2008. Once again, the “boiling frog” phenomenon can be applied here. With the downturn in the ratio in late 1999, the mood quickly shifted to the contracting cycle moods of “fear and anger”. The first monumental “fear event” was Y2K. All machines were going to stop working and the world was going to fall into chaos. The technical issue was real. Old Cobol software programming only allowed “two zeros” for date fields, so when 2000 occurred, many software programs around the world would think it was 1900. Many Cobol programmers came out of retirement, consumed a lot of Mountain Dew, and coded many hours to save the day. Problem solved. The world didn’t end. But….the mass mood had clearly shifted to the new cycle themes of “fear and anger”.  The Y2Kers thought the world was going to end way before the Mayans predicted it would. The stock market cratered in 2000 and many individual's retirement plans were decimated. Most of the DotCom companies vanished as quickly as they appeared.  Clinton and Greenspan's massive fiscal printing press fueled the entire event. Since 2000, the market indices have basically made 0%. Yes, zero percent in 11 years. Once again, the “boiling frog” phenomenon applies. Slow change just doesn’t wake us up.  The "buy and holders" still rule despite the fact that the new cycle is a "market timers" paradise.  The goons on TV now call this "risk on, risk off"...whatever that means.

Dow Gold Ratio - The Mass Social Mood Barometer
Well the events of 9/11 sure woke up America. This event put the contraction cycle into high gear. Fear transformed into massive xenophobia. Every muslim on the planet became a terrorist and enemy of the U.S. Dubya declared an entire region of the world “The Axis of Evil”. Now that’s some “lumping”.  Mexicans became our 2nd target.  Thanks for building our strip malls, our interstates, mowing our lawns, and raising our babies!  Time to go home.

There’s no better example of the mood than the U.S.’s Homeland Security terror threat rankings. Red, orange, yellow. I don’t even know the difference. But Americans now have color coding to define our fear level. Terror alert. Don’t leave your house.

It’s interesting that “fear” seems to be the leading mood while “anger” is just kicking in. The 2008 election had good examples of both. Anger drove the electorate to decide that “change” was what they wanted. They didn’t know exactly what change, but just change. Anybody but Dubya. The “fear” kicked in right before the election. Remember, “Obama is a Muslim”, “Obama is not a U.S. citizen”, and my favorite “Obama is the anti-Christ”. I received a “soccer mom” email just before the election with the “anti-Christ” pitch. The Fox News Mafia was working all angles.

With “fear and anger” comes military conflict. Afghanistan and Iraq are prime examples. 9/11 provided the “just cause” just as Pearl Harbor did. To get the masses on board for war, you need to get them punched in the face first. Mission accomplished. Under the fa├žade of searching for the “boogeyman” and “nukes”, we obtain control of a significant volume of oil reserves. The French and the Germans who had oil contracts with Saddam aren't so happy.

My historical analysis of the Dow Gold Ratio can be found here:
https://docs.google.com/viewer?a=v&pid=sites&srcid=ZGVmYXVsdGRvbWFpbnxyYW5kb21yb3Zpbmd8Z3g6M2I1MmI1YzRiZDcxNjNhYg

So with that "frame of reference" lets fast forward to 2011 and see what we find.

MASS SOCIAL MOOD
2011 was a very convincing year for educating others on the concept of “mass social mood”.

"It all began in one small Tunisia town with one despondent man, frustrated by lack of employment who set himself on fire and in turn set the whole Arab world ablaze with anger and hope. As the dominos fall throughout the Arab and northern African world, many of us wonder what is waiting on the other side. Will the people in these countries get the freedom and hope they desire?"
Source: Africana Online
Random Roving, January 31, 2011

The mind-controlling media now call the entire event "The Arab Spring".  I call if "mass social mood" and "The Great Contraction".   As the article snippet above states, it all started with one small spark....literally.  A man in Tunisia sets himself on fire in protest.  The protests cascade across northern Africa.  The Fox News Mafia claim that the youth want to be capitalistic Americans.  Those educated on cycles and mass social mood see something different.  Fear and anger gets a stronghold on the masses and they revolt.  The fever spreads to the U.S. and the Wisconsin capital is seized.  The "Occupy Movement" kicks off and spreads like wildfire.  Jimmy Kimmel interviews an "occupier" and asked what they are mad about and they don't have an answer.  They are just mad.  In other words, the mood cycle calls for "anger" so just be angry.  Figure out why later.  Riots and revolutions continue today across the globe. Russia appears to be the latest uprising.  Most comical to me was when the Greek police went on strike.  Who's going to protect the citizens?  Kinda like the New Orleans police during Katrina when they decided to become the looters.

"I believe that the 'sheeple' were awoken over the past fifteen months. It has become apparent to many that all of the pastures are not guaranteed to be 'green' forever. Linear thinking might be giving way to cyclical or chaotic thinking. STILL IN PROGRESS. It appears that the 'linears' are still in the majority while the cycle vibrates on."
Random Roving, January 1, 2011

When my favorite Republican called me one day to say that he took his son out of school to attend a Tea Party event, I told him "you won't be taking the boy once the tear gas arrives.".  Well it finally did.  Tear gas, pepper spray, and the tazers all appeared.  The now famous video of the policeman spraying the seated Berkley students with pepper spray is now a "sign of the times". 

"College campuses appear to be heating up worldwide.  Cutting off cell phones and internet access will really get these kids fired up! 'I want my MTV!'"
Random Roving, December 12, 2009
 
"Protests and riots will continue to increase across the world. The mob is getting angrier and angrier. College campuses will continue to 'heat up'". The younger generation is awaking to the fact that their parents squandered their future. 'Mom and dad, thanks for the debt burden!'"
Random Roving, January 1, 2010
 
Many Communists countries did just that. They disconnected the youths from their internet access.  In China during the Egypt revolt, they filtered all Google searches to where Egypt didn't show up. 

We love our sports here in the U.S. and the NFL and NBA threatened strike. On November 29, 2009, I made this prediction:
 
"In a downward trending mass social mood, it's very likely that labor strikes will become very popular again. We might even see a professional sports strike in the next few years. An angry mob loves a strike and a picket line. The cycle will likely bring unions back to strength as fear and anger "'drives the herd closer together'."
Random Roving, November 29, 2009
 
That prediction was made with the chart below under evaluation.  The chart would indicate that strikes are a "thing of the past".  Utilizing the Dow/Gold Ratio and understanding the trend of mass social mood, one can predict "types of events" that MIGHT occur.  Fear and anger present great environments for labor strikes.  The NFL and NBA proved this.  Prepare. Many more to come. Recently I predicted strikes around the world relating to transportation.  Why?  Literally, those types bring things to a halt.  The "occupiers" have already attempted to stop shipping.  Stay tuned.  It will escalate beyond pepper spray.
 
 
POLITICS
This was my prediction on January 1, 2010:
"Politics will get even uglier. The foundation for the new 3rd party is forming." 
Random Roving, January 1, 2010
 
Ugly really seems like too nice of a word.  Ron Paul's recent surge seems to support the 3rd party evolution.  I believe that Newt will take the Republican ticket and Paul will go independent since that is what he really is.  People call the Tea Party the new third party.  I call it the "I'm so embarassed to be a Republican" Party.  The Tea Party is a bunch of Republicans that said the same thing I said, "Is McCain and Palin the best you got??".  A new 3rd party will be something different.  It will be a blend of right and left.  It will be an alignment of sorts.  It won't be a new extreme, but a compromise led by calmer "heads".
 
Due to extreme anger of the mob, politicians are now targets.
"Obama has a bright future. I hope for his sake that he loses, because he will be the “fall guy” and historically during 'inflection points'” those presidents have been the recipients of bullets (Lincoln, McKinley, Kennedy, Reagan). The 'mob' has emerged and they’re seeking someone to lynch."
Random Roving, March 24, 2009
 
Gabby Gifford found this out the unfortunate way.  All politicians, especially the President, need to be on guard in the years ahead.

"Politicians ratings will continue to fall aligning with a continued decline in mass social mood. Incumbents beware."
Random Roving, January 1, 2010

The prediction above on 1/1/10 really hit stride in 2011.  Leaders across the world were overthrown in record numbers.  Most were "our bitches" funded by the American taxpayer for years. This phenomenon is perfectly aligned with the cycles mood of "fear and anger".  The chart below depicts the Dow Gold Ratio with historical reference points for when three of the leaders came into power and when they all fell in synchronous fashion.  They came into power during the expansion cycle and get ousted during the contraction.


The summer before the 2008 election several of us were sipping wine beachside and discussing the upcoming election. I stated that Obama would win big.  I was quickly scoffed at with the unanimous response "it will be another Bush-Gore.".  I predicted Obama's victory, once again, utilizing the frame of reference of cycles and mass social mood.  An angry mob doesn't necessarily know what they want, but they do know what they DON'T want.  In 2008, they didn't want four more Dubya years.  Obama was the obvious anti-Bush.  Ironically, Obama's slogan was "hope and change".  The "change" part was right on.  As we all know now, the cycle hasn't changed at all.  More of the same except at higher levels.  Obama won purely because the mob wanted something very different.

In September 2010, I predicted Newt's rise.  Not because I'm a Newt fan, but because he fits the profile that the frightened Republicans will be seeking in late 2012 when it appears that the world is "on fire". 

"The fear factor is very powerful and effective.  Newt is starting to use it to emerge as the frontrunner for Team Red."
Random Roving, September 29, 2010

Newt, despite his Clinton-like personal life, presents a calm demeanor which will be very important in 2012.  Amongst the chaos appears a calm voice.  His most important aspect for Team Red is that he has a link back to the Republican-god, Ronald Reagan.  As the party scrambles to find someone qualified, Newt's resume' will suddenly seem perfect.  Iowa will be the first indicator.

THE STATE OF THE UNION
"I am patriotic. These days I like to draw the line between patriotism and nationalism. Patriotism is love of country. Nationalism is breast beating 'we are number one and kick your butt'." Peggy Noonan
Random Roving, June 23, 2009

The U.S. might currently resemble Rome or Britain at their peaks. Like the Patriots heading into a Superbowl at 18-0, sometimes overconfidence can be your worst enemy.  Peggy Noonan nailed it on nationalism.  We want everyone to be like us because we think that we're the best.  A contrarian could argue that, yes, you are the worlds leader in innovation and financials, but you also lead in crime, obesity, cancer, and anti-depressant consumption.  Morally, one really needs to question where we are as a country.  I would say close to the bottom.  Just turn the TV on at night.  We've made sluts like the Kardashians millionaires.  Paris and Lindsay aren't that far behind.  Our culture has become fascinated with jackasses.  We even made the creators of a show and movie called "Jackass" millionairies.  We've made total idiots from the "Jersey Shore" millionaires.  What will the anthropologists say about our culture when critiqued in 100 years?  I believe that the cycle once again comes into play.  At the peak we are at peak immorality.  At the peak, we hit a cultural low.

HUMAN EMOTION AND FRAME OF REFERENCES
Our emotion is really what separates us from the rest of the mammalian subclasses.  Over the past twelve years, I've found it incredibly challenging to discuss these beliefs, predictions, and theories with others.  Emotion always kicks in.  Terms like "pessimist" and "gloom and doom" always appear.  The "pessimist" one always gets me because I'm one of the most optimistic people I know.  An optimist sees reality and plans for it. Now that's positive thinking.  Denial is ignorant and destructive.  I think that's the normal emotional protective response for many.  Pretend it isn't happening.  "What I don't know can't hurt me" right? No, not really.  An unprepared future CAN hurt you....and your family.  The most important point I make to the "emotional" responder is that the world evolves through seasons on many levels.  Mass social mood cycles are seasonal.  Financial cycles are seasonal.  War cycles are seasonal.  Each season has it's purpose.  During the winter, stay warm and always remember that spring is in the future.  Enjoy summer, because the temperature will drop in the fall.  It's really simple.  You know what's coming. It's no surprise.  Yes, the ground hog might change a little over the years, but the seasonal change is inevitable.  Hurricane Katrina provided many microcosm examples for me.  One powerful one was that the citizens of New Orleans had many days of warning, but despite this, some decided to stay.  They knew the storm was coming. They knew the magnitude.  They were told exactly what to do.  Resources were provided to assist with their exit. But still, many stayed.  Lesson learned: heed the warning.  A storm is coming.  Protect yourself and your family.  Protect your most valuable possessions.  Board up the house and hope for the best.  The greatest thing about a storm is that it makes us focus on what is most important.  What is most important to you is what is in the car when you leave the house.  Nothing else matters.  So the question is, "what's in your car?".  Okay, now that we've defined that, take action to protect it. And ask yourself if you prayed more during the storm or before? Or five years before?

In "The Fourth Turning", Strauss and Howe define human thinking in three categories: linear, chaotic, and cyclical.  I believe that over the past 28 years, due to the great financial environment that we have lived in, most have been conditioned to think "linearly".  Example: My stock portfolio gained an average of 12% per year from 1988 to 1997 so it should do the same for the next ten years.  Those financial planners are great at this presentation.  Linear for sure.  What happened in the past can be extrapolated into the future.  See the sine curve below to understand the trappings of this thought process.  What's really fascinating is that at the "top" of the curve is where momentum of this belief is strongest. Like when my 70 year old mother called me in 1999 and said "what does this company Amazon do?".  A sell signal my friends.  When the elderly are inquiring about a DotCom stock, the party has ended.  Leave the bar before it catches fire.

The chaotic mode of thinking is that every event is random and unpredictable.  Basically, the world's events are all unrelated and just happen.  This one is usually difficult for the God believing.  But, in a year like 2011, many might say that things are chaotic.  Chaos is a great descriptor when the linear world vaporizes.

I've always struggled with why people are so reluctant to think cyclically.  We know that the Earth is very cyclical.  The calendar repeats every year. The seasons come and go every year.  The tide rises and falls.  I can predict the temperature in Arizona three years out with a 10 degree variance.  Am I a fortune teller?  No.  The weather is cyclical, so historical temperatures can be analyzed to make this prediction.  Very simple.  I believe that people resist the cyclical thought process because somehow it feels like progress is not being made.  If we keep repeating ourselves, are we really making progress?  In the 90's, I loved the mantra of "this time it's different", "it's a New Economy", and my favorite "the internet changes everything".  Really?

"History doesn't repeat itself but it sure does rhyme."
Mark Twain

"The Fourth Turning" brings an incredible "frame of reference" to history cycles.  The Romans called these cycles "saeculums" and they last 80-100 years.  Then the cycle repeats.  In "The Fourth Turning", the authors believe that the rotation of different generational archetypes create this repetitive sequence.  Through a very detailed dissertation, they make a very compelling thesis.  For me, this book and concept brought a context to historical data and cycles that I had already defined.  It also brought great insight into not only my generation, but my grandparents, parents, and kids.  It explains a lot.  One of the key points in the book is that these repetitive cycles have similar general themes and mass human behaviors.  None are quite the same, but they have very similar qualities.  The most enlightening is that the authors believe that if we gain awareness of where we are in the cycle, we can have impact on the outcome.  Yes, there is optimism!!

I've posted this chart below a few times.  It's a great pictorial for placing a "You Are Here" arrow.  I place us in the "FEAR" phase.  The 2008 meltdown was a tremor signifying the "BULL TRAP" phase.  2000 was the "NEW PARIDIGM".  1987 was the "BEAR TRAP".  "GREED" and "DELUSION" were Bubba Clinton's 90's money printing orgy.  The Gipper orchestrated the "TAKE OFF" with "Morning In America" in 1982.  The "Federal Credit Card" was open for business.  Yes, the next phases don't sound really good, but remember what I said at the outset.  The "RETURN TO THE MEAN" is really where we want to be.  Balanced, spiritual, God-fearing, family oriented, caring about others, small, and simple are not bad things!  Getting unhooked from our "credit crack pipe" will be challenging.  Our "frame of reference" is horribly distorted.  Representing 4% of the worlds population and consuming 25% of its resources is not good, moral, sustainable, and is very problematic.

THE MAN IN THE MIRROR
As predicted, the "blame game" really hit new levels in 2011.  As I detailed in my October 2009 post, "Last Call For Alcohol", we are all part of the problem.  It's so easy, cowardly, and convenient to point the finger at somebody else.  We all drank on "50 cent beer night".  Now we're mad at all of the bartenders, especially the one still "pouring drinks".  When the "credit crack dealer" offered low interest rates, we jumped at the opportunity.  Zero percent car loan, "I'm in.".  Home equity line of credit..."I'm in.".  SUV to haul 8 kids to McDonalds for "supersized meals"....I'm in.  Travel everywhere on cheap airline rates..."I'm in".  Supersize.  "I'm definitely in".  Blame everyone but me...."I'm out.".  We all participated.  We all got "sucked in" with 9/11.  We all cheered when we dropped all of those bombs...USA USA USA.  One main thing I learned in college was that hangovers are directly proportional to the fun obtained the night before.  Now THAT is linear!  We can't have fun at the party and then blame the bartender.  From 1982-1999, we enjoyed one of the greatest "expansion cycles" in human history.  The hangover will be directly proportional.  We can postpone the inevitable and print more money to pretend it won't happen.  Throwing fuel on a fire does not make it go out.  It gets bigger.  In 2012, we will see continued "fires" across the planet.  I've used the "onion" metaphor in many posts to illustrate that the "outer layer" is the most exposed and gets hit first.  In our world, Sub-Saharan Africa is probably the most exposed do to their many issues.  Northern Africa "lit up" this year.  Europe is on fire.  The United States, maybe the "inner core" of the onion, is not exposed.  If the "onion" is thrown against the wall, all layers will be impacted.  The outer just has the first and most extreme damage.  Using this metaphor, one proactive approach is to observe what's going on in the "outer layers".  The arrogant American looks at North Africa and distances themselves with statements like "look, they want to be like us", "they deserve it for believing in that dictator for so many years", or "that could never happen here".  All are troubling mindsets.  What's most important is the theory of "relativity".  Not quite Einstein's version, but mine.  While Africa will likely be hit the hardest, the relative change in their misery might not be that much.  In contrast, the "American dream" when contracting could cause many "entitled" people to struggle.  By the way, I'm not talking about welfare recipients.  I'm talking about the "entitled" that believe they are due 10% annual stocks returns, 3% loan interest, a venti latte at Starbucks, a gas-guzzler, and freedom to roam the planet.  Yes, my greatest concern is for my generation.  We entered the working world in The Gipper's "morning in America".  Have we really had any challenges or suffering?  My question at every dinner party when these topics arise is this "How many people do you know that are out of work?  How many young men do you know personally that have come home from military service in a body bag?".  My answer, two unemployed and no sad funerals.  Our generation has grown in adulthood through historically record-setting financial times.  We "super-sized" on all levels.  How will we handle this "relative" change? I conclude, not as easy as the Sub-Saharan African.  We are an entitled populous and we like our lives.  Remember the linear thinking?  The cycle will be very problematic for this mindset.

COMMODITIES
I found it interesting when a good friend described this blog to be "about gold and stuff".  It made me realize how many posts I make about the commodity, gold.  Relating back to the Dow Gold Ratio, gold thrives during the contraction cycle.  During contractions we move back towards "real things".  As Ann Barnhardt so energetically described in this interview with Jim Puplava, real things are something that you can touch, see, and stand in front of and protect with a gun.
http://www.financialsense.com/financial-sense-newshour/guest-expert/2011/12/30/ann-barnhardt/the-futures-options-market-destroyed-by-the-mf-global-collapse

Unique description. They are not "paper promises". They are not obligations someone has to provide you with something.  They are not options on something real.  You can touch and hold it.  A barrel of oil.  A gold coin. You get the point. During contractions, we head back to reality.  Not a DotCom stock with a P/E of 400.

I embraced gold in 2000 after reading Jim Puplava's "Storm Series".  Even today, it's an amazing read.  I have tuned in to his weekly broadcast for twelve years.  Diverse guests and incredible non-political fact finding.
http://www.financialsense.com/financial-sense-newshour

Puplava's view of the market cycles and the commodity timing was very convincing.  I made my leap into gold coins and commodity ETF's after that.  It's been a great ride.  It's been amazing to watch my generation "fear" commodity investing because we've never seen a commodity cycle in our adult lifetime.  It is foreign to us.  "Buy and hold stocks" is all we know.  Those lame financial planners still speak this mantra.  Some are finally saying "yes, you need a little gold in your portfolio.  Maybe 1%".  Since 2000, gold has had an amazing run while stocks have made a couple percent in 11 years.


The "oil chess game" will continue to be interesting.  The U.S.'s approach of invading and occupying oil rich nations is problematic.  At some point, China and Russia will say "enough is enough".  Rising consumption and finite energy resources is a future train wreck.  Something has to give.  The Chinese will continue to negotiate energy deals across the planet.  The U.S. politicians will continue to battle each other and result in no energy plan.

Water will be a "challenged" resource in the future.  Major droughts will bring water to the forefront.  Water rights will be a major source of conflict.  Those "upstream" might use tactics to control supply to the "downstream".  Trouble will follow.  This could be country-to-country and U.S. state-to-state.


2012 Predictions
"Now, what about 2011?? I believe that my perspective has not waivered. The cycle continues on so these developments will only deepen and intensify. The worldwide manipulation of the financial system will have grave consequences. We've stolen from the next two generations and I'm not sure if they will ever forgive us. I see the "angry and fear" cycle heading up to the next level in preparation for a frightening 2012. The Mayan Calendar fear will make Y2K look miniscule. It's easy to stampede a herd. Just scare the leaders and the rest will follow. Also keep an eye on the continued toppling of cultural icons. Tiger Woods, Brett Favre, and John Edwards are just the beginning. We build them up during the "up cycle" and tear them down during the "down cycle". Will the cycling doping scandal take Lance Armstrong down? Will Hannah Montana take another bong hit?? The "live" CNN camera feed of the BP oil spill was very symbolic. The magnifying glasses are turned on to "high power". Celebrities, politicians, and corporate CEO's beware."
Random Roving, January 1, 2011


Here are my 2012 predictions:
  • The dominant moods of fear and anger will reach the next level.  Anger at politicians, Wall Street, police, and corporations will increase dramatically.  It will be interesting to watch how the populace will turn on the police at the protests.  Like in the 60's/70's they'll be called "pigs" again as the mob seeks someone to be mad at. Fear will hit a high near the end of the year when the "sheeple" get swept up in "Mayan calendar mania".  The chaos around the world might resemble Armageddon, but as we now know, it's just the season of "winter".  Who knows what the "crazies" might do on December 21.  The Mayans were amazing astronomers and understood cycles very well.  2012 for the ending of a long term cycle and the beginning of a new one might be very fitting.  The ending of a cycle isn't the end of the world, it's just an inflection point where change is more rapid than normal.  Despite Obama's slogan "hope and change", people actually don't like change.  Mammals herd and like consistency.  It will be one of many interesting observation moments in 2012.
  • Military conflict: It will continue on in the existing areas, re-ignite in historic areas, and start somewhere where we don't expect it.  The U.S. citizens started to fragment in 2011 on the pro-war issue.  Anti-military sentiment is gaining steam.  Afghanistan and Iraq has worn everyone out, especially our troops who have done multiple tours.  Post-tour suicide is at record levels.  When will the citizens turn against the soldiers when they return home like in the 60's?  Not quite yet.
  • Newt barely wins the election beating a new Democrat candidate and independent Ron Paul.  What happened to Obama?  Unfortunately, "the man" will do his thing and remove him from the race.  Ron Paul will solidify the concept of a third party for 2016 when things are really "in the tank".
  • Extremism will continue on many fronts.  Confirm your beliefs, because they will be challenged. The mammals herd, so if you are different, that might be an issue.
  • Protests and Revolutions: both will continue to escalate.  Americans will be shocked when we have our first "Kent State-like" event in the U.S.  Our short memories will go into shock.  The international revolutions will continue to cascade across the globe. Like in Egypt and Libya, afterwards the revolters will have to contemplate "what now".  Chaos might not seem as good compared to the structure and consistency of a dictatorship and communism.
  • European Union: some default and get kicked out. Some threaten departure.  The "One World Order" folks believe that we're heading to one currency.  I argue the opposite.  During contractions we herd with those like us.  The EU will implode in the coming years.  2011 revealed many weak points.  The European countries never stopped loving their own currencies.  Currency wars will be one source point for wild financial market swings.  Everyone is in competition to debase their currency.  Inflate away the debt is the current theory.
  • Xenophobia will continue.  The anti-Muslim sentiment will reach higher levels.  Everyone will seek someone to blame for their challenges.  Tie in a little religion and you have quite a "powder keg".  As the Great Contraction continues, Mexicans will keep heading home.  Once complete, all will realize that our "money printing" was like a magnetic force pulling legals and illegals into our country.  Without them, who would have built all of those strip malls, houses, and interstate widening projects?  Who would have done our lawn while we were at the office day trading DotCom stocks?  Who would have watched our babies while we were at the birthday lunches at Tommy Bahamas?  Who would have cleaned the 10 toilets in our McMansion?
  • Default: countries, cities, municipalities, companies, organizations, and individuals will choose the route of defaulting on their debt.  U.S. homeowners will choose the "walk on the mortgage" option. Many will stay in their "free house" until forced to leave.  Now that's entitlement!
  • Financial markets will be majorly chaotic and overall contracting. Many "flash crashes".  Tremors and tremors before the Big Quake.  Bernanke and Geitner will be ousted at some point and blamed for more than they should be. Greenspan escaped just in time.
  • Commodities still run wild spiking up and down.  Gold will continue to shine.
  • Oil skyrockets not due to "true" demand, but due to geopolitical situations.  Iran threatened the Strait of Hormuz last week.  Look out.  U.S. citizens will remain in denial that it's a consumption issue, not a supply issue. Peak Oil conversations will broaden with new participants taking part in the discussion.  Shale oil will make the discussion even more confusing.
  • Religion: it will continue its slow progression back towards traditional.  Extreme religious behavior will continue to become more prevalent.  How we differ will become more important than how we are the same.  You say God, I say Alla or Yahweh.  Herding mammals like their own.  Mega-church millionaire ministers will start to see there empires contract just as they expanded in the "Super Size Me Era".  Church closings might start to resemble retail closings.  The mega-church may have spread "too thin" with all of the franchise locations.  Powerful religious leaders could be at risk.  Secure the "pope-mobile".  I've stated before that I believe Northern Ireland to be an important area to watch. Christian vs Christian violence, in my mind, is outrageously hypocritical.  If this long term conflict heats up again, it will signal something important.  A new level will have been reached.
  • Bad guys: I'll continue to state that the future bad guys won't be male Muslim youth like the Fox News Mafia want us to believe.  Like the crazy guy who shot Rep. Gab Gifford or the lunatic that murdered all of the children in Norway, it will be a white male.  I still state that a big event will be done in the "name of God".  Religion will be intertwined.  Somehow some nut will proclaim that he was trying to save us all from ourselves.  Yes, that is needed, but by a drastically different approach.
  • Politics: retire before it's too late.  Incumbents will be decimated in 2012 elections.  The entire "Super Size Me Era" will fall in your lap as blame.  Sorry, but the timing "is what it is".
  • Banks: Bank of America and Chase will have major issues.  I exited both last Friday.  Default and government takeover will be the norm. 
  • Derivatives: Remember the "Oracle of Omaha" called them "weapons of mass destruction".  Derivatives are "bets" and there is always a loser on one side.  They are also options where only a minor amount of capital is committed, but controls a much larger amount of capital.  The mortgage crisis was about derivatives.  I posted many years ago that derivatives will be the "root cause" of the major financial meltdown.  One writer called them "the 600 TRILLION dollar time bomb".  When these "go south", it is rapid.  It will be a monumental "domino effect".  No one really even knows what they are. Derivatives. Credit default swaps. Collateralized debt obligation. What does it all mean? When it goes down, everyone will say "how did this happen?".
  • Saints upset the Packers in the NFC championship and defeat the Patriots in the Superbowl.
  • LSU beats Bama by 14 to become national champs for the third time in the Superdome in one decade.
  • Tebow mania will be shortlived.  Tim Tebow will not be an NFL starter by the midpoint of next season.  Great guy. Great story, but it won't last.
GOOD NEWS
I promised some didn't I?  That was just exhausting!
The most significant good news is that we're evolving back to a better way of life.  Families will move back geographically closer together.  Materialism won't be our main focus.  Living a more simple, meaningful life will.  Bigger won't be better.  Balanced will.  Fast will become slower.  We might notice a few things that we missed when travelling at 100 mph.  Our religious beliefs will become deeper and eventually we will evolve back to core beliefs that will drive different behavior.  The "prosperity gospel" will transition back to The Gospels.  Smaller retirement accounts will be challenging, but smaller waistlines will offset the difference.  U.S. children will slowly evolve from obese/sedentary/diabetic to leaders in worldwide science and math scores.  We will return to higher moral standards.  Television will slowly evolve back to respectable content.  Maybe "Leave It To Beaver", "The Brady Bunch", and "The Cosbys" will make a comeback.

Will 2012 be "the bottom"?  Unfortunately, I don't think so.  I believe that 2016 will present a financial market bottom and that the markets will bounce sideways until 2025.  That's when the growth cycle will start again.  The sign will be when the masses hate equities and are obsessed with precious metals and CD's.  The chart below depicts the slow recovery of the Great Depression.  The 1929 crash was only the start.  A continual downward spiral followed.  The quotes from the president and their timeliness are amazing.


My same recommendations from the past years:
-Take care of what is important first
-Prepare for all scenarios
-Think for yourself
-Read a lot from diverse sources
-Be aware of who's Kool-Aid you're drinking
-Turn off the TV
-Enjoy life
-Pray a lot!