The Strategic Planning Group

Sorry for the drought of posts.

I’ve been going a little crazy—but good crazy—prepping for the launch of my new site:

It’ll be a place where I’ll be analyzing black swan events.

The basic question we’ll be asking is, What happens if ______? [Fill in the blank with something the mainstream says is totally unlikely and indeed, impossible—but which just might come true.] 

What happens if China’s debt bubble blows up, and the country sinks into a revolution. What happens if the eurozone breaks down, and member states begin to leave the monetary union. What happens if the Federal government starts forcible conversion of retirement accounts into Treasury bonds.

These are some of the questions we’ll be discussing at the Strategic Planning Group, in the coming weeks. 

But it won’t just be a place to daydream about scary/cool possibilities—it’ll be a place where there’ll be practical, actionable ideas as to what to do during these potential crises. Ideas you can use. Members will not only get a précis of potential crises—they’ll also get clear indications of the tell-tale signs that the crisis is coming, and what to do to prepare, if and when the crisis hits.

Think of it as your own private contingency planning group—hence the name: The Strategic Planning Group. 

The site will be launching the week of May 6—I'll give you all a heads-up when it’s online. At the launch of the site, there’ll be two complete Scenarios: “Hyperinflation in America”, and something I’m calling “Exit America”. 

I’m very excited about “Exit America”. In this Scenario, I discuss what happens if the United States becomes unlivable.

What would happen if—because of environmental, social or economic reasons—it became impossible to remain in America. What would you do? How would you protect your family, and your assets? Where would you go? How would you get there?

In “Exit America”, we first analyze the various reasons that would make life in America intolerable, and then analyze the best places to move to—as well as how to get there. Hint: Most tropical islands don’t fit the bill. In “Exit America”, I’ll explain why. 

“Exit America”—like all the Scenarios at SPG—is a combination of written analysis and audio-visual material, as well as web-seminars and audience interaction: A full-spectrum learning unit. 

New Scenarios will appear every six weeks or so. Between each Scenario launch, SPG will present featured guests, Scenario updates, and live web discussions about relevant topics—content that will be exclusive to members.

Coach Wooden said, Confidence comes from being prepared. That’s the whole idea behind the Strategic Planning Group:

Being prepared. 

I think this is not only a cool project, but a worthwhile project as well—and I do hope that some of you, Dear Readers & Kind Fans, will join me in this exciting new adventure.

All the best,

GL

Shakedown Nation

True story: Harold & Maude are a forty-something couple with two teenaged kids. Both are educated, both work in IT, both are fairly sophisticated, financially speaking. 

The Road to Hell, by Paul Stevenson.

Back in 2003, they bought a vacation condo, in Mono County, California—you know, where Mammoth Lake and the Mammoth ski resort are located, right next to Yosemite National Park. They bought the condo in mid 2003, then flipped it later that same year—they closed escrow the first week of 2004, with every t crossed, with every i dotted. 

They went on with their lives: Work, vacations, kids, school, job, carpool—same-old-same-old, just like millions of other ordinary citizens. 

Then one day in March of this year, they get a letter—a pretty frightening letter, actually. 

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Max & Stacy: Guerrilla Fimmaking In Ireland

Max Keiser and Stacy Herbert were in Ireland recently—and did a little guerrilla filmmaking. I think it’s outstanding—and definitely worth watching.

I told Stacy so, and she wrote back:

[W]e totally did this on our own. Self-financed, shot and edited. I wanted to see if we could do it and we gave ourselves only 24 hours in Dublin as we wanted to see if we could do something akin to war reporting, just parachute into a city and get an impression of the battle lines from the actual people. So, from our hotel, we announced via twitter that we were in town and within half an hour about 15 people had showed up and another 30 within the hour. It was fun making, but I was very nervous waiting for the response . . . !

No need to be nervous—their little film is powerful and memorable, and not because it’s bombastic or over-the-top. On the contrary, their piece is low-key, low-to-the-ground—human.

I wish they’d do more of these.

Here’s part i. After the jump, part ii:



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What’s Really Worrisome About Treasury Debt: Not Its Rating—Its Interest

So on Monday, Standard & Poor’s cut its ratings outlook for U.S. sovereign debt—and the markets had what can only be described as a tizzy. 

Stocks fell—commodities rose—I noticed things were off when my gold ticker shot up a full percentage point in under sixty seconds. Yikes! (Well, actually, as far as my own portfolio goes, it was more like, Yeay!)

“Not as sexy as a naked chick, I know, I know!”
The Fed Funds Rate, 2001–2011.
(click to enlarge)

Tons of people started scratching their heads, stroking their chins, and pompously wondering What It All Means.

Oh brother. Like Capt. Willard said: The bullshit piles up so fast, you need wings to stay above it. Most of the navel gazing was a waste of time—the lone discussion that I’d recommend was the New York Times’ “Room for Debate”, which more or less summed up smart-money thinking on the S&P announcement. (Paywall, but if you really want to read it, refresh the page, then stop the refresh before the page fully reloads.)

My own thinking is that the whole S&P announcement is meaningless—literally a non-event. 

What really matters is something people are starting to consider, as inflation begins to rise, and which the S&P announcement alludes to: The colossal interest payments on the U.S. fiscal debt. 

First, let’s put away the S&P nonsensical non-event: 

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A Break In Our Regularly Scheduled Programming: A True Story

This is a true story that happened to a friend of mine. I’ll let you guess which one is my friend:

“Excuse me!” said the driver to the pedestrian. “I promised to give a speech at 2pm—but I’m an hour late, and completely lost! Could you help me?”

Gratuitous picture of a gorgeous woman.
“It’s all about the SEO . . .”

“Sure,” said the pedestrian. “You’re 1.3 miles from the exact center of The City. Your exact latitude is 51.50 degrees north, longitude 0.11 degrees west.”

“You’re an engineer, aren’t you?” said the driver.

“Why, yes I am!” said the pedestrian, amazed. “How did you know?”

“Very simple,” said the driver. “Because everything you’ve told me is technically correct—but I’m still lost, I’m still late, and I can’t do anything with the information you’ve given me!”

The pedestrian looks at the driver. “You’re a politician, aren’t you,” he says with a shrewd look.

The driver perks up, thinking he’s been recognized. “Why, yes I am,” he says proudly. “How did you know?”

“Very simple,” says the pedestrian. “Because you don’t know where you are or where you’re going, you’ve made a promise you can’t keep, and you expect someone else to solve your problems. In fact, you’re in exactly the same situation you were in before you asked for my help—yet somehow, it’s now all my fault.”

Burning The Candle At Both Ends: Raising the Debt Ceiling, and Extending QE-2 Indefinitely

This coming May 16, the U.S. Federal government debt ceiling will be breached; that is, the national credit card—currently topped at $14,294,000,000,000—will be maxed out. (Yeah, I know: It’s one thing to read “$14 trillion” and quite another to see the actual number, written out with all those zeroes.)

It’s not like lighting farts . . .

Shortly thereafter, the Federal Reserve’s policy colloquially known as Quantitative Easing-2 (QE-2)—whereby the Fed created $600,000,000,000 of new money, and used it to purchase Treasury bonds—will end. 

These two issues seem to be miles apart—notice, seem to be. But they are as intimately related as yin and yang—Mickey and Minnie—Ritz crackers and cheese. 

Both policies aim to prop up the sliding U.S. economy, each of them coming at this effort from different directions—one from the demand side, one from the supply side. And the suspension of either policy will result in the exact same thing—government shutdown, and default on the U.S. sovereign debt.

Don’t believe me? Let’s look at them each in turn:

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Relying On The Gods From The Machinery: The Weird and Disturbing Teleological Approach to Discussing Macro-Economics

It’s funny how, in the middle of a street fight, you can come across a diamond.

“Please, O Great God of the Golden Calf!
Please don’t take away my 401(k)!”

Last Monday, Rick Ackerman wrote a fairly fatuous deflationary rant which caught my eye, obliging me to respond on Tuesday with a dissection of Ackerman’s . . . “argument”.

Actually, I didn’t so much dissect it as give it an autopsy—the thing was dead on arrival.

Then on Wednesday, Ackerman started Round 2 of our little street fight, with a post titled “Here’s Why Hyperinflationist Lira Is Wrong”.

Well . . . how could I put it: Ackerman’s Monday piece at least had an argument—an invalid, unsound argument, as I think I pretty much showed. But at least Ackerman pretended to some semblance of rationality.

However, Ackerman’s Wednesday piece? Boy, where to begin—

—and here’s where I discovered my diamond:

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Talk About A Big Gap In Logic!—Slicing Up Rick Ackerman

So Rick Ackerman posted a piece that I spotted on Zero Hedge—which surprised the hell out of me. Either Tyler and his gang of merry pranksters are losing their nerve about the downward trajectory they think the U.S. economy and monetary policy is headed in—or they ran the piece for shits and giggles.

“Nothing personal, buddy, you’re just dinner.”

Ackerman’s piece said, in effect, that dollar hyperinflation was impossible. His post was titled “Big Gap in Logic Weakens Hyperinflation Argument”.

I’ve got a rep for being a hyperinflationist—which isn’t exactly true: I’m a dollar hyperinflationist, but a euro deflationist. A friend called me an economic agnostic, which is pretty accurate (and kinda cool, actually): I look at the data, look at the political realities influencing macro-economics, look at the arguments, then make up my mind, regardless of what the various sects of the religion known as Economics deem orthodox.

I suppose my heterodoxy comes from my education: I was trained in philosophy, with emphasis in epistemology (theories of knowledge), Hegel’s political philosophy, and formal logic. That background makes you not want to join a crowd—any crowd. And it makes you willing to question even your most prized assumptions.

So when Ackerman said he had proof positive that hyperinflation in America was impossible—that he had, as he claimed, found a “big gap in logic”—I was like, “Cool: Show me.”

So Ackerman . . . well, he tries. In his piece, he writes:

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Mainstream Media Watch: Better Late Than Never?—“60 Minutes”, and Six Months Late

My readers know that I go through phases: I get interested in stuff—chase it down—devour it—then move on.

Back in October of last year—following Yves Smith’s lead—I got interested in The Mortgage Mess, and wrote several pieces about the whole fiasco:

• The Coming Middle-Class Anarchy (10/7/10)

• The Second Leg Down of America’s Death Spiral (10/12/10) (This was the piece I wrote which was plagiarized repeatedly—and rather embarrassingly, for some.)

• This Is What Brian and Ilsa Said To Their Bank: “Show Me The Note, Motherfucker!” (10/18/10)

• Mulligan Mortgages—The Banks’ Only Way Out (10/21/10)

And now—finally!—the mainstream media is catching up. Here’s last night’s clip from 60 Minutes:

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The Causes of The Mess We’re In

Right now, we’re in that weird in-between time of financial crises: The Global Financial Crisis of 2008 is behind us, while the next global crisis is not here yet—but it’s on its way.

“But I just wanted a pony!”

We can feel how it’s on its way. Most everyone plugged into the macro-economic zeitgeist can tell you that bad juju is most definitely in the post—just that nobody yet knows (or is sure) what shape the next crisis will take.

Lots of people have been pointing to the various signs of the coming crisis: A U.S. Federal government deficit that’s over 12% of GDP, to be repeated in fiscal years 2012, ’13, ’14 and possibly ’15, if not surpassed; abnormal rises in commodity prices; European disintegration; a Federal Reserve that is printing money like there’s no tomorrow; the largest bond fund in the world—PIMCO—exiting Treasuries (that’s like Baskin & Robbins exiting chocolate); a complete inability of the political leadership class to do anything about the fiscal mess of the United States, at the Federal, State and local levels.

But though everybody points to the signs of the coming crisis, no one can yet make out its true shape. I’ve posited that it’ll be hyperinflationary, while other very clever people have claimed it’ll be deflationary.

However, these different interpretations about the coming crisis are interpretations of what’s coming up in the future.

As we sit here waiting for the next Apocalypse, let’s forget about tomorrow and instead consider the past. Let’s ask ourselves the obvious question:

What got us here?

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