If you’re feeling slapped around by ‘cognitive dissonance’ – loosely defined as the difference between what you’re being told about the economy and what you actually see going on in the world would around you, relax! The world really has bifurcated – an economic concept meaning (again loosely) split into to separate pseudo-realities that you see on TV.
One reality is that with the FDIC announcement of Guaranty Financial Group running onto the rocks, along with three others this week, the number of bank branches closed since IndyMac really got things going last year, is up to 3,610. Since this doesn’t count the ATM’s involved, nor does it count online banking use, a direct comparison the 1930’s Depression (1) and the Second Depression (SD) may be elusive.
As I stared at the most recent failing banks:
Guaranty Bank, Austin, TX
CapitalSouth Bank, Birmingham, AL
First Coweta Bank, Newnan, GA
ebank, Atlanta, GA
I was struck by the charts floating around on the new supposing that Colonial Bank’s failure & reorg last week might have been something of a spike.
On the other hand, is you are familiar with the work of Cesare Marchetti’s work at CERN (and more recently the International Institute for Applied Systems Analysis in Austria) he developed a really cool way of looking at data using ‘S’ curves. Let’s say you have an uneven growth set, like, oh, the stock market. You should be able to see an S-curve develop if you do a running summation of data points.
A good example of this approach can be found on page 2 of Marchetti’s 2005 paper “On Decarbonization: Historically and Perspectively“, the second chart down illustrates an S-curve application.
Don’t mean to run off into the weeds with this, but here’s the deal: Once you have a good sense of how S-curves can be found in summations of large events over time, there’s a particular way of looking at the present crisis in the financial sector of the U.S. which suggests that not only is the financial mess far from over, but that if Marchetti’s S-curve approach is followed, we could go so fare as to infer that another ramp-up of bank failures is upon us and will evidence itself over the next several months.
In the following chart, I have taken the first round of failures, and I have overlaid two S-curves which should give you some serious ’cause for pause’ – this particular view of the world suggests that we are just now entering a new – and potentially even more devastating portion of the financial crisis:
I am deeply in debt to Marchetti for this marvelous way or looking at data which seems to get little play in academia. Nevertheless, when there is particularly ‘noisy’ data, the S-curves approach can often act as a kind of Occam’s Razor able to cut through the bull sh*t of everyday media. Doesn’t always work, but it works often enough that it’s a useful tool in the truth-seeker’s quest to stay one step ahead of events.
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The concept that America has launched on a major S-curve of ‘money-printing’ should also become apparent when you apply this methodology to things like the cumulative growth of the nation’s money supply, or the cumulative Federal debt. Not that I should have to point out that “Obama to raise 10-year deficit to $9-trillion” but between period economic depressions, such as the period from the Roaring Twenties and the modern analog, the Internet / Dot-Com Bubble which popped in early 2000, there’s another S-curve waiting to be discovered by those brave enough to go looking for it.
Yet more S-curves can be found when one looks at the longer-term cumulative curves depicted in a study of oil production. These curves suggest, upon inspection, that yes, Peak Oil is real and although the world is not going to run out of energy this year, the current rates of consumption will become unsustainable at some juncture. Notice the headline that “Oil settles at 10-month high of economic optimism“?
In a sense, Depressions are good things. Oh, sure, they play havoc with the budget deficit and president O is finding out, but they do buy time for change and refocus families on relationships and what have you.
The collapse of housing has been horrific, no question about it, and the coming decline in real purchasing power of meager Social Security payments will be painful as well – they’re obviously not keeping up with real (e.g. non-hedonistically corrected) marketplace reality.
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Our slowdown in the West has also rippled over into Asia where “China can only create half of jobs needed this year” if it’s to hit an 8-percent growth rate. From an internal perspective, China is working on development of a middle class which would make it much more independent on the US and current export buyers. But, it can’t make that shift until it’s middle class is large enough to sustain it.
No doubt you’ve noticed that the Las Vegas jobless rate hit an all-time high of 13.1 percent and in California the rate is now at 11.9%. Knowing how S-curves work, and how economic cycles become evident with a diligent application of cumulative growth analysis, one can see that New York’s 9.6% unemployment is only a start. Much of the Empire state’s ‘empire’ has been in paper financial products and if you want to apply S-curves there, a case could be made that the demand for such products is completing and should go to stable and decline soon enough.
So, along with that ought to come an increasing number of bank failures as we move into fall and winter, attendant political crises and more fear-whipping talk of hyperinflation, while deflation persists in some sectors, leaving both Dr. Bernanke and president Obama in the unenviable position of that old statistics class joke: A statistician is someone who, when one foot is in a fire and one foot is frozen in a block of ice, says “on average I’m comfortable”.
The underlying dynamic is that the megabanks will be engaged in their own S-curve which one can see ramping up – acquiring smaller banks that have market share. The U.S. dollar hegemony should be failing over time, too, and in the process of transition to a global currency basket, we ought to see fits & starts there, too. I’d draw your attention to “BBVA which becomes the 15th biggest US bank in deposits after Guaranty purchase” says the WSJ online today.
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But enough of this seriousness! We live in a country which has been three card Monte’d into thinking that headlines like “Heather Locklear in talks to move back to ‘Melrose Place’; would reprise role from original show” and “Project Runway All-Stars: Daniel & Korto talk about their showdown”. are somehow important.
Besides, how can Ben Bernanke hope to compete with headlines like that when he gets up before his learned colleagues and says stuff like:
“History is full of examples in which the policy responses to financial crises have been slow and inadequate, often resulting ultimately in greater economic damage and increased fiscal costs. In this episode, by contrast, policymakers in the United States and around the globe responded with speed and force to arrest a rapidly deteriorating and dangerous situation.”
Oh? Not when I line up the S-curves. But time will decide who’s got the right call here and in the meantime, we live in a world where T&A, and Tinsel Town talk trumps economic reality.
So go have a weekend – and remember my advice: “Work harder for yourself than you do anyone else.” That’s the safest way I’ve found to get ahead, and stay ahead, in uncertain times. If you go to work Monday all rested and refreshed… you’re cheating yourself in the long run.
Be your own most demanding boss and see you Monday morning… More on self-organizing collectives for Peoplenomics subscribers on Sunday afternoon.
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Send comments to george@ure.net
The UrbanSurvival Mall:
Peoplenomics This Week:
Popcorn at the Train Wreck
Three items on the agenda this week. One is to address a reader who wondered how I could say something to the effect that ‘government was doing a pretty good job, all things considered’ when I also happen to think we’re in the midst of dropping into the depths of the second depression. Good question…I’ll see if I can explain. Secondly, there’s a 70+ slide PowerPoint that you can download as a PDF which was given to the East Texas self-organizing collective meting in Tyler, TX Saturday afternoon. Great fajitas and fellowship. And then, there’s the matter of what’s it’s gonna be as we are now in that August 16-22 window where something becomes a prequel to events to follow over the course of this fall. So grab some popcorn, we’ve got a front row section reserved for us at the economic train wreck.
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My commodity broker JB Slear and I have written a simple book to get you started on high density hydroponics. It’s an example of how someone with a little creativity, access to a few ‘dollar stores’ and willing to try out some new farming techniques can grow an amazing amount of produce sin a very small space – like even an apartment balcony (if it gets some sunlight). Sound interesting? It’s just $10 bucks here…
Maxa-Cookie Manager
No, when you tell your browser to ‘empty your cookies’ of web sites you’ve visited, it probably won’t get them all. Why? Because there is a whole class of ‘browser-independent’ cookies that will gobble up space on your hard drive, but more important is they will sneak out information about you without you being aware of it. Ever week I get emails like this one:
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Test drive it free by downloading it. To upgrade to full functionality will be $35 bucks. Is your privacy worth it?
Once you try it out, click the upgrade button (!) on the upper right hand side for the $35 unlock to get it to remove even those nasty and highly intrusive ‘non-browser specific’ cookies. Bonus: You computer may run faster. I’ve taken 1,000 34,759 cookies off my machine now. It’s just amazing.
Attn: Mac Drivers: MCM does support the Safari Browser, but that does not mean it is compatible with Mac OS. Maxa-Tools only support the Windows world….so far. Given Jens and the other engineers time…
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I’ve told you in the past to order my ebook “How to Live on $10,000 a year or less…” with the rationale that “We’re all going to live it shortly, anyway.“ Don’t know as you have looked lately, but the unemployment rate is up more than 3% since I wrote the first edition of that book and underpasses have never been more homely. Worth ordering? Just visit www.liveontenthousand.com or, click this little whizzie…
It’s an automatic download. It’s written in an information dense style: The whole thing runs about 65 pages, but it gives you a vision of how to not only live on the cheap, but also how to migrate up the economic foodchain if you have a little hustle left… Click here for the index and details.
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