The idea of the continuous and cyclic rise and fall of Civilisations was first penned by Ibn Khaldūn, as I posted about before, but there is perhaps no better illustration of this than ‘The Course of Empire,’ a series of five paintings done by Thomas Cole 500 years later in 1833-1836.

The Savage State

The Arcadian or Pastoral State

The Consummation of Empire

The Destruction of Empire

Desolation

http://www.marketwatch.com/story/the-rise-and-certain-fall-of-the-american-empire-2010-03-09?pagenumber=2

The world’s most powerful investors have been advised to buy farmland, stock up on gold and prepare for a “dirty war” by Marc Faber, the notoriously bearish market pundit, who predicted the 1987 stock market crash.

The bleak warning of social and financial meltdown was delivered today in Tokyo at a gathering of 700 pension and sovereign wealth fund managers.

…One of Dr Faber’s darker scenarios involves growing military tension between China and the United States over access to limited oil resources.

His investment advice, which was the first keynote speech of CLSA’s annual investment forum in Tokyo, included a suggestion that fund managers buy houses in the countryside because it was more likely that violence, biological attack and other acts of a “dirty war” would happen in cities.

He also said that they should consider holding part of their wealth in the form of precious metals “because they can be carried”.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article7035913.ece

We are a clever, ambitious species who for hundreds of thousands of years (or more depending on the model) lived off of current/recent solar flows. We eventually puzzled out how to access stored sunlight in the form of fossil fuels. The population and growth trajectory that ensued eventually latched on to a series of assumptions/rationales that would fuse into the system a belief that more is better and that there would be unlimited substitutes for finite natural resources like oil and water. The change from using solar flows to the energy gain contained in a barrel of crude oil was and still is, indistinguishable from magic in the larger scheme.

Eventually (1970s), some cracks in the assumptions underlying this model appeared. Real wages then peaked in the early 1970s and have been declining ever since. Globally, though the poorest people in the world earn more than they did a generation ago, the fact that over 2 billion people don’t have a toilet doesn’t really sound like an equitable global playing field. Oil peaked in the world’s largest oil producer (USA) in 1970. In 1971 we discontinued the gold window and the worlds economic system had no natural tether to real assets. Without such a monetary speedbump, debt skyrocketed over recent decades and became every bit as important driver of economic growth as cheap energy.

Continued..

In 2009, more cars were sold in China than in the United States, something most analysts did not expect to see before 2018 or 2020, said Mr. Yergin. If China continues at its current pace, he said, it will be consuming more oil than the United States by the end of the decade.
The United States consumes about 19 million barrels-per-day now. China consumes about 8. The difference is 11. Thanks to the slowdown in energy consumption, OPEC producers now hold an estimated (highly unlikely given decline rates and overstated reserves) six million barrels a day of spare capacity, equal to roughly 7 percent of current demand, much of it in Saudi Arabia alone.
Here’s the deal. Once we run through the current spare capacity, the oil supply then and for the rest of your life is essentially a Zero Sum Game. If China uses more, someone else must use less.

zero-sum describes a situation in which a participant’s gain or loss is exactly balanced by the losses or gains of the other participant(s). If the total gains of the participants are added up, and the total losses are subtracted, they will sum to zero.

Saudi Arabia is gradually reducing crude oil exports to the US as it is pushing deeper into China and other fast-growing Asian markets. Exports to the US fell to 837,000 b/d in November, the lowest level in 21 years.

Wall Street bonuses climbed 17% to $20.3 billion last year as stock and corporate bond markets rebounded strongly on the back of unprecedented monetary and fiscal stimuli from developed-world governments.

In 2008, the industry lost a record $42.6 billion.

Something is VERY wrong with this picture.

Instead of being punished for their considerable role in this crisis (and the next), and their part in destroying retirement funds and ruining millions of lives, wallstreet has been rewarded. The government handed them taxpayer money so they could make good on their bad bets rather than go under, and they turn around and give themselves record bonuses? This figure doesnt even count the money from shares handed out as bonuses.

Ghastly behavior as my grandmother would say.

Bank of America and Barclays Capital, two leading oil traders, have told clients to brace for crude above $100 (£64) a barrel by next year, before it pushes relentlessly higher over the decade.

If they are right, (and based on simple mathematics they are) we can kiss goodbye to any recovery until things get really bad again, at which point the price will most likely drop again, and the talking heads will start talking about green shoots again, and the price will rise again.

Rinse and repeat.

Really who knows what will happen, but some or all of this future is hard to rule out as a likely possibility.

This chart pisses me off too much to say anything, so I will point you to ES where I found it, who sums it up extremely well..

Ibn Khaldūn (1332-1406 C.E.) –  was a North African polymath — an astronomer, economist, historian, Islamic scholar, Islamic theologian, hafiz, jurist, lawyer, mathematician, military strategist, nutritionist, philosopher, social scientist and statesman (!!!!!!!) —born in North Africa in present-day Tunisia. He retreated into the desert in 1375 and emerged four years later having written one of the most important ever studies of the workings of history.

This volume, commonly known as Muqaddimah or ‘Prolegomena’, became a masterpiece in literature on philosophy of history and sociology. The chief concern of this monumental work was to identify psychological, economic, environmental and social facts that contribute to the advancement of human civilization and the currents of history. In this context, he analysed the dynamics of group relationships and showed how group-feelings, al-’Asabiyya, give rise to the ascent of a new civilisation and political power and how, later on, its diffusion into a more general civilization invites the advent of a still new ‘Asabiyya in its pristine form. He identified an almost rhythmic repetition of rise and fall in human civilization, and analysed factors contributing to it.

Ibn Khaldun’s writings seem particularly relevant today after reading this:
Endgame

I’ve mentioned more than once in these essays the foreshortening effect that textbook history can have on our understanding of the historical events going on around us. The stark chronologies most of us get fed in school can make it hard to remember that even the most drastic social changes happen over time, amid the fabric of everyday life and a flurry of events that can seem more important at the time.

The twilight years of Rome offer a good object lesson; so many people were convinced that the Second Coming might occur at any moment that the collapse of classical civilization went almost unnoticed; only a tiny handful of writers from those years show any recognition that something out of the ordinary was happening at all.

Reflections of this sort have been much on my mind lately, and there’s a reason for that. Scattered among the statistical noise that makes up most of today’s news are data points that suggest to me that business as usual is quietly coming to an end around us, launching us into a new world for which very few of us have made any preparations at all.

Which trigger will ignite the Great Depression II?

1. Federal Budget Deficit Bomb. The Bush/Cheney wars pushed America deep into a debt hole. Federal debt limit was just raised almost 100% with Obama’s 2010 budget, to $14.3 trillion vs. $7.8 trillion in 2005. The Congressional Budget Office predicts future deficits around 4% through 2020. Get it? America’s debt at 84% of GDP will soon pass that toxic 90% trigger point.

2. U.S. Foreign Trade Bomb. Monthly deficits actually dropped from $50 billion per month to roughly $35 billion. But the total continues climbing as $400 billion is added each year. Foreigners now own $2.5 trillion of America, with China holding over $1.3 trillion in Treasury debt.

3. Weakening U.S. Dollar as Foreign Reserve Currency Bomb. Fear China and other currencies will replace dollar as main foreign reserves. The dollar’s fallen: The main index measuring dollar strength has gone from 120 at the Clinton-to-Bush handoff to below 80 today.

4. Cheap Money Bomb: Credit Ratings Down, Rates Up. Economists at S&P, Fitch and Moody’s were totally co-conspirators of Fat Cat Bankers, misleading investors before meltdown: Soon, debt up, ratings down, interest rates soar.

5. Global Real Estate Bomb. Dubai Tower, new “world’s tallest building” is empty. BusinessWeek warns that China’s housing collapse could be worse than America’s. Plus the U.S. commercial real estate bubble is now $1.7 trillion, a “ticking time bomb” bloating 25% of bank balance sheets.

6. Peak Oil and the Population Bomb. China and India each need 500 new cities. The United Nations estimates world population exploding 50% from 6 billion to 9 billion by 2050: Three billion more humans demanding more automobiles, exhausting more resources to feed their version of the gas-guzzling “America Dream.”

Full article here, lot of interesting comments from people too….

A continuing cold snap across parts of Europe over the weekend and into Monday caused the deaths of more than 40 people in Romania, Bulgaria and Poland. It’s a cold spell that also stretched across much of Germany, leaving people here shivering as temperatures plunged as low as -15 degrees Celsius (5 degrees Fahrenheit) early on Monday morning.

This January has been colder than usual in Germany — at least 1.5 degrees Celsius lower than average according to the German Weather Service (DWD). Sunshine has also been unusually sparse. Although winter has already passed the half-way mark, Germans have enjoyed only 40 percent of the sunlight that is normal for January.

Germany’s cold spell, however, has been minor compared to temperatures being experienced in Eastern Europe. A government spokesperson in Bucharest reported that ice cold temperatures of -34 degrees Celsius caused the deaths of 11 people in Romania in just 24 hours, with a total of 22 deaths registered in the last five days as a result of the cold.

More here…

The economy aint looking so hot either, although one country in the EU did grow it’s economy last year, the only one to do so in fact, and the Eurozone winner is….. Poland!

Hey, all of that borrowed money has to go somewhere right? Not fair that it ALL goes to the banks. Finally some change you can believe in!

Let nobody say American manufacturing is dead.

Blimey, the speed of this is quite astounding when you watch it animated, especially considering the actual unemployment/underemployed numbers are supposedly more than double those in this animation. I wish it were otherwise, but Europe seems to be doing just as badly.

Dissatisfaction with his lot seems to be the characteristic of man in all ages and climates. So far, however, from being an evil, as at first might be supposed, it has been the great civiliser of our race; and has tended, more than any thing else, to raise us above the condition of the brutes. But the same discontent which has been the source of all improvement, has been the parent of no small progeny of follies and absurdities; to trace these latter is our present object.

- Charles Mackay,1841

I can’t recomend this book highly enough.
It provides a powerful insight into the nature of man, which is as similar today as it was in 1841.

“Of all the offspring of Time, Error is the most ancient, and is so old and familiar an acquaintance, that Truth, when discovered, comes upon most of us like an intruder, and meets the intruder’s welcome.”

Talking of the madness of crowds, are people starting to see the madness in the Global warming hysteria?

As the debate continues about global warming, the month of December was the 14th coldest in 115 years in the United States… and some scientists insist the earth is entering a cooling trend.

* Wind chills brought temperatures in the Dakotas to 50 degrees below zero, while record cold in parts of Florida is damaging some of the orange crops, and South Carolina called an early end to shrimping season.

* Parts of Canada have seen actual temperatures of 30 below zero… And freezing temperatures and record snowfalls are pounding parts of Asia and Europe too.

* Britain has experienced the worst snowfalls in half a century.

* In India – it’s estimated at least 100 people have died due to the cold temperatures… with dozens more killed in Bangladesh.

* In China and South Korea, heavy snow and unusually cold weather have brought chaos to travelers – blocking roads and trains, canceling flights. After one recent blizzard in Beijing – officials had more than 300-thousand people clearing the streets.

Meanwhile some of the world’s top climate scientists suggest this winter is only the start of a worldwide trend toward cooler weather, which could last for 20 to 30 years. They base their predictions on changes in water temperatures in the oceans.

The scientists say much of the global warming in the last century was actually caused by these oceanic cycles when they were in a “warm mode”… as opposed to the current “cold mode.” They suggest there will be cooler summers ahead too. Continued…

At this point it is appropriate to say, it is not about if the climate is cooling or warming, it is about the fact that we have NO control over the climate one way or another. Warming, however, is undoubtedly more favourable for man than cooling.

December was the worst month for US unemployment since the Great Recession began.
The labour force contracted by 661,000. This did not show up in the headline jobless rate because so many Americans dropped out of the system. The broad U6 category of unemployment rose to 17.3pc. That is the one that matters.

Wall Street rallied. Bulls hope that weak jobs data will postpone monetary tightening: a silver lining in every catastrophe, or perhaps a further exhibit of market infantilism.

Realtytrac says defaults and repossessions have been running at over 300,000 a month since February. One million American families lost their homes in the fourth quarter. Moody’s Economy.com expects another 2.4m homes to go this year.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/6962632/America-slides-deeper-into-depression-as-Wall-Street-revels.html

Photo from Diets on the way to get his coffee this morning in NYC.