December 24, 2008

Apocalypse Today-- Is Seeing Believing?

One thing the crash of 1929 did was to reveal serious flaws in the US financial equities markets, and the risks inherent in a loosely regulated market. It took a lot of bank failures, lost fortunes, and ten lost years of harsh reality therapy for the lessons to be learned and regulatory measures to be implemented.
Today, amid the ongoing unraveling of the global economic system, lessons are again being learned. Not 'new lessons' necessarily, but old lessons being re-learned... because they were so easily forgotten by the next generation following the children of the Great Depression.

Those lessons always have to do with the fundamental emotions of equity markets: fear and greed. So far, the emphasis this time is on greed. This meltdown is about the death of trust. It goes almost without saying that the financial world operates implicitly on trust, even after you sign all those pieces of officious looking paper, glanced over voluminous 'prospectuses,' plowed thru offering memoranda, and what not, in the end, the whole set of transactions is based on fundamental trust that 'money' (such as it is) will be transferred as promised, that 'equities' (whatever that means) will indeed by delivered, that a dollar is really a dollar, and ultimately, that something of value is traded for something of equivalent value. All those assumptions are being tossed rudely aside in the chaos that is the memorable hallmark of the closing two months of 2008. We used to think that, when all else fails, we can trust the banks with our money. Oops! Guess again. Certainly, the brokerage houses and investment banks have blown that illusion in a big (as in billion) way, and the ripples are reverberating amongst the commercial banks. Stories that 'bailout money' has been used to provide ('indirectly' the institutions indignantly retort) bonuses to the executives who presided over the destruction have done nothing to restore any scrap of public confidence in these ivory towers.

With the still (as of this writing) unfolding saga of the Bernard Madoff mega-Ponzi scheme-- one that operated in broad daylight for over ten years-- the final vestiges of trust are being shredded before our eyes. Trust is a precious commodity; once squandered, it takes a long time to restore it to former levels. That is probably the main reason why this depression will take a longer time to resolve than even some of the pessimists believe. Madoff didn't just rip off 'little guys' with paltry sums of mere thousands of dollars to invest. No, his hubris scorned such small fry, and made the price of entry into his scheme hundreds of thousands of dollars. Consequently, he burned a lot of once comfortable investors and in one blow, reduced them to near-paupers. You can be sure that the lesson will not be lost on, not just those victims, but on anyone with any available money looking for a place to invest. Being Jewish was no protection from being ripped off by Madoff, as all were fair game to his greed. You can't even find a firm figure for the amount of money bilked by this con-man; so far, estimates begin at $50 billion... and go 'up' from there. Add the Madoff surprise to the earlier revelations on the brokerages and banks and insurance companies, and you've got a full-blown crisis of confidence on your hands; one that will take years (possibly a generation) to live down.

That's becoming the hallmark of this economic catastrophe of 2008-2009-- the revelation of rottenness thru-out the corpus of US and global finances. That's what makes this 'apocalyptic times:' the uncovering of corruption buried deep within the institutions we counted on to 'make the world go round.' Let's be clear: the economic system is linked intimately with the political system in a symbiotic manner. The politicians make the rules that are supposed to govern the economy, which in turn generates wealth that makes the politicians look as if they performed well... and is too often used to line their pockets and encourage more favorable regulations. It's a vicious cycle that can only end in a karmic train wreck. The currently imploding cycle was kept going long beyond the date it ought to have come off the rails. The 'contrarians' and mavericks have been calling this crash to take place over the last five years or so. They knew it was coming, but weren't able to factor in the unknown of behind the scenes players who were keeping the party going out of pure self-interest of the elite.

You might think that, good, now the rich are getting cut down to size, too. But no; the really rich always look out for themselves first, and have all kinds of assets and resources at their disposal so that they will hardly notice a depression. Those executives who got their bonuses for sitting on their hands while the system collapsed have used them to buy condos in Panama, and figure if he heat gets uncomfortable on Wall St., they wouldn't mind soaking up some tropical sun. As for those who set up the whole debacle from hidden offices, they are watching the dominoes tumble, clickety-clack, around the world; then waiting for the weeping, wailing, and gnashing of teeth to issue from the masses of the newly miserable. The great, American middle class, in particular, will be in a state of panicky agitation as they see their dreams destroyed, their once-wastrel way of life now a memory. The Powers that Be know full well that this group will represent trouble... unless plans are in place to defuse them before they explode. And what's the time-tested manner of defusing befuddled populations? Of course, it's to find a handy scapegoat-- generally, some sub-group of society that is not popular to begin with, and to whom the blame can be attached with little chance of successful refutation. In the long-term past, ruling elites have pointed the finger of blame at Christians, Jews, heretics, immigrants, blacks, 'Orientals,' Communists, terrorists, and others (depending on where the trouble erupts). There never is a problem finding a suitable scapegoat on whom to dump blame for national troubles.

Oh, and the other time-honored method of solving a depression, as we know, is to start a really big war. Given that the US is currently embroiled in at least two substantial wars, and the economy has already been on a war footing for six years, it's hard to see how the 'big war' option could be used today. However, we've all heard the drums beating against Iran for several years; and after the South Ossetia dust-up in August, '08, the specter of renewed conflict with Russia has again materialized. And there are the Washington hawks who fear the military build-up of China, and would like to 'pre-empt' a confrontation with their creditors (which would solve two problems, in their distorted minds). So, you can see that there is no lack of possibilities for the Armageddon alternative. However, don't lose any sleep over these speculations, is my advice; after all, there are yet others who claim that Planet X will swoop in close enough to knock the Earth axis-over-teakettle and send society back to the stone age.

Before we get to the 'climax' of this tragi-comedy, there will be plenty of further disclosures. Perhaps 2009 will be the year of revelations, especially in the realms of economics and politics. After each new financial jolt makes the headlines, the savvy commentators keep saying that there are more shocks to come. Some of them will be the logical and unavoidable consequences of scams and failures that have already been discovered. (E.g. the derivatives bubble is yet to explode, as it must, given the failures in the underlying equities vehicles, and the as yet unknown extent of Madoff's tentacles). Even to a financial neophyte like me, it is obvious that the US dollar must face inevitable devaluation as the currency is being thrown at business failures like confetti at an Italian wedding. 2009 may be the year that the chickens come home, and inflation will ravage the shrinking incomes of Americans lucky enough to be working. When a system as complex and convoluted as the global economy starts to unravel, all kinds of curious and unexpected things can happen. One of them, is that the great mainstream act like a stampede of lemmings, ready to plunge over whatever cliff of fate awaits their mass rush for the exits. That always happens, we know. Another thing, is that the rats start to turn on one another... to invoke yet another animal metaphor (which seems appropriate, in any case). Some insiders who were fellow plotters and benefactors of illegal &/or unethical practices, ensconced in the towering matrixes of the financial capitals, will come to their senses, or have crises of conscience-- especially as they perceive the authorities bearing down on them-- and will decide to bargain for lower or nil penalties by turning in their confreres. We've also seen that sort of thing happen before; but this time, I think it will get quite chaotic, as fingers start to point in all directions. It should be quite a spectacle for those who are removed from the fray and watching from the sidelines.

Another, unfortunate concomitant of financial Armageddon will be 'untimely deaths.' As in the Great Depression, there will be many, especially among those who enjoyed the good life, who will be unable to cope with diminished circumstances, and who will chose to end their life. A new, modern, and sick aspect to some suicides will be cases where the despondent person will first murder one or (likely) more other persons whom he viewed as contributing to his financial demise. So, amid the gloom, you might want to put some money in the funeral industry, likely to be one of the rare, growth niches. Sadder still, there will be cases of death under mysterious circumstances... which, on deeper investigation (if such ever occurs) would reveal that the victim held information that could have led to criminal charges against other persons. Many of these suspicious deaths will be passed off as suicides, especially when the potential culprit is a person of high rank in the corporate boardrooms. We've already seen such dubious deaths occur in the wake of the US presidential election campaign; you can anticipate more of these, as the economic meltdown proceeds apace. We, this generation that has known nothing but growth and excess, are soon to learn that economic depressions can be very depressing indeed.

You see, that's the thing about apocalyptic times-- they reveal the true nature of reality, stripping away the illusions that define existence for so many of us. And those who do not even comprehend that they live in a world of illusion are the most deluded of all. That's why the 'end times' are characterized as an apocalypse (from the Greek 'apocalypsis', "lifting of the veil"); before the final end, the hidden things are uncovered, and especially, things hidden by the privileged few are revealed to the majority. You can think of it as an airing of dirty laundry, because a lot of what is being exposed is very ugly indeed. We are witnessing the unmasking of the ultimate conspiracy against humankind. What is this conspiracy all about, anyway? So many people--especially in the 'developed West'-- do not know that the world we have inherited is not getting better, or more advanced, with the passing of time. We are not, really, making progress in defeating crime, or poverty, or intolerance... despite a myriad of rules, agencies, and bureaucrats installed over the years of awareness of these issues. While many people of good faith toil assiduously as missionaries in all the fields of human need, there are others, much more powerful, working equally diligently, in the shadows, for the opposite ends. They are using immense wealth, usually stolen from the masses, to promote poverty and ignorance; using crime to increase their bulging coffers of money; using their communications media to keep us in ignorance and confusion, and worse, to dull our moral sense of ethical rectitude. Many readers will still find this information unbelievable, in denial of increasing evidence in its support. To those I say: the only reason you cannot see this fact, is because you don't want to see it. And there are good reasons why anyone would not want to see it; but that does not make it right. What I say to those agnostics is to allow yourself to imagine that the information you are being fed by your media and your governments is incomplete and biased to create a certain mind-set in the hearers. Then, if you can imagine it, put it to the test, and start trying to verify some of the official statements provided to you every hour of every day from the talking box. If you are at all objective in this assignment, you will soon see that everything I've stated here is true, and that our reality is constantly being fabricated for us to certain ends that are not obvious at first glance.

The Fall of 2001 marked a major apocalyptic event for humankind, in the realm of politics. Now, the autumn of 2008 has provided another inescapable display of human foible and hubris, this time in the financial sphere. In both cases, the events unfolded in the public spotlight. There is little dispute about what happened; the big sticking point is who made it happen. The majority-- at least among the comfortable Westerners again-- cling to the theory that both crises occurred because of the character and actions of a few 'bad people,' and/or a few incompetent people. If only it were so simple. What a growing number of awakening souls are claiming is that 9-11 and 11-08 were not just accidents of history, examples of folly; NO-- they were premeditated, pre-organized super-crises designed to generate 'shock and awe' in the collective psyche of humankind. These events are game-plays to move the perpetrators towards their goal of world domination, or 'New World Order.' You can continue in blissful ignorance of this disturbing notion until, one day, you wake up in a nightmare world you don't recognize. Or, you can start to take these warnings seriously, consider them carefully, and awake from your self-delusions. These Apocalyptic times will continue to make their inconvenient revelations... whether you can accept them or not.

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