the 2020 crash

THE 2020 CRASH

No, you cannot time the collapse.  I’ve tried before and been rather embarrassed.  Not that my attempts were a waste of time-not by any measure.  Y2K prompted me to learn far more than I ever had previously about big picture vulnerabilities ( mostly thanks to the noble efforts of Gary North ).  I also prepped much better than ever before.  Fear of the housing bubble popping prompted by acquisition of land and the fire under my ass to move off grid.  And the fear of the next crash prompted near total Alpha Strategy levels of complete supply independence for five plus years.

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And, to enthusiastically toot my own horn, I did all of that while under the yoke of the ex-wife’s financial stranglehold and at times earning mere minimum wage ( but always, far below what most of you earned-in other words, ANYONE can so prep if motivated.  Unless you prep for Forever Happy Motoring and FLIR scope ownership ).  Yet, even knowing I’m an idiot and that I’m going to be sorry, I’m still going to call the next landmark economic collapse at 2020 ( with the understanding it has started this year but will be obvious next ).

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The last collapse COULD be argued as 2007 being the actual start of the process ( although, I claim 2005-more on that in a moment ), but sudden oil price spikes and other sudden shocks such as leading institutions bankrupting was probably when most folks pegged The Beginning Of The End as occurring.  You COULD say that this next collapse began the day the Fed started raising interest rates again after eight or nine years of near zero rate stimulus.  Which would make it 2015/2016.  But most folks didn’t notice a huge amount of change until now.

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And even then, the change is more instinctual than readily apparent.  Even so, I’ll just call the last crash as 2007/2008 and this one 2019/2020.  Note of course I have no crystal ball.  No one thing is causing this.  The coming food price hikes from Midwest flooding could be pretty bad, IF our trading partners restrict replacement grain exports.  Or, it could just be a repeat of, say, when ethanol caused sugar and meat prices to triple.  Bad, but more irritating than life threatening.  Ten days ago ( from when I publish this ) there was a big kerfuffle with China trade.

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It could be posturing and nothing happens.  Which has been what has been the norm.  Anymore, MOST times the talking head spits and sputters and then moves the Infamous Red Line back again ( big talk, sanctions if you buy Iranian oil, then quietly put another six months delay in enforcing that ).  It could be a repeat of the Great Depression of 1929 when global trade broke down.  Then, we had so much food we were destroying it.  Now, we do import some amount of food.  Russia exports more wheat than we do.

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We need trade for our oil, obviously.  Our “fracking miracle” STILL leaves us without enough oil if we do not import 2/5ths of it.  And that brings us to today’s breathless panic and ranting.  This countries first major oil fields supplied us with gushing surplus for a good solid forty years ( the average lifespan of a field if not over-exploited ).  After the crash from that winding down, we turned to Alaska, the Gulf of Mexico and, as far as the western economy as a whole, the North Sea.  Alas, that started winding down in just half the time ( 2005 global Peak Oil ).

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That oil bonanza was not only lower EROI oil, it was pumped too enthusiastically and only delivered an economically viable amount of oil for twenty years.  Saudi Arabia, at the time of Matthew Simmon’s writing near fifteen years ago, had already started seeing production drops from forty years of pumping AND overproduction.  They were already frantically pumping from everywhere else besides Ghawar, to keep up production.  That doesn’t mean they ran out.  It means they will drop drastically in production, more than likely, at their twenty year mark.  They will NOT bail us out this next time, is all I’m trying to convey.

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Mexico started seeing 6-9% declines a year after near a century of production, as did Venezuela ( in conventional crude, leaving tar as a poor substitute ).  Here is the dirty little secret of Fracking Oil.  It doesn’t pump at forty years.  It pumps for four.  After a bit over ten years of production, the frackers would see a 80% decline in each well if as a whole they were not frantically adding new ones all the time for an aggregate slight increase or at least plateau production.  That miracle could end at any time, especially given worsening economic conditions.

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The fracking industry as a whole NEVER made money.  Ever.  It is in the bankers interest to lose money on it, because ultimately energy IN allows the bankers to manipulate the economy successfully.  My point isn’t that as soon as the fracking oil runs out we crash.  More like, as soon as enough economic contraction bleeds money away from fracking, that entire 6 million barrels a day of supply is endangered.  And we are already seeing major economic contraction.  But even THAT isn’t the major problem.  Before the fracking fields crash in production, JUST the lack of fracking increases cause trouble.

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Remember that under our system, you cannot stop growing.  The spice must flow, by which I mean the interest payments must keep up with the constant increase in additional loans.  You cannot simply add more money into the system.  There must be SOME backing to that money.  It has been oil that feeds our economy.  Which means that JUST to keep up, oil must increase in supply.  When the oil supply fails to grow, that alone causes economic failure.  And while the fracking oil has increased massively in supply these many years, so has the amount of borrowing.

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That is where the weakness is currently.  So much money has been borrowed to paper over the old bad loans from 2008 on, it is becoming impossible to service those loans.  Especially when the growing legions of unemployed can no longer buy the company’s products.  Or, taxpayers can no longer support the loans the local governments took out to keep the lights on.  I’ll continue tomorrow.

( .Y. )

( today's related Amazon link click here )

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note: this was just a coincidence ( since I write one week ahead ), but yesterday I saw a video by "Truth Never Told" which says that global trade is down 30%.  Which is worse than 2008/2009.  Make of that what you will.
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note: how about a $115 manual leather stitching machine?  Churn out leather goods as fast as an Ornamental factory, or great for the apocalypse.  Video click here. 
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note: free for today books.  YA dystopia here 
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