By Giordano Bruno
Neithercorp Press â€“ 3/31/2011
The phrase â€œBlack Swanâ€ is really making the rounds these last few months. Uttering the term a year ago would have earned you a collection of confused looks and a general attitude of disinterest. Now, people behave as if they had learned about economic shockwave events and the global domino effect when they were in kindergarten. The problem is that when this kind of terminology hits the mainstream, in most cases it comes prepackaged with dumbed down and diluted definitions which promote an inadequate, cartoonish understanding of the circumstances.
To be sure, most Americans are well aware that the worldâ€™s political and economic foundations are about as stable as fresh pudding under a heat lamp. The problem is that they are now being conditioned by the mainstream media to view the idea of collapse as â€œcinematicâ€; a kind of live action fantasy in which we all get to play the part of the audience, watching safely from the dark in our cushy theater seats with a bag of overpriced popcorn, Dolby surround sound, and a hot date to keep us company during the boring parts. Three years ago, even mentioning the idea of a breakdown in society or a financial catastrophe beyond a minor recession earned you the label of â€œdoom mongerâ€; a rather inept and naÃ¯ve attempt on the part of the MSM to silence any economic analysis that stepped outside the establishment Keynesian framework. Today, I turn around to look at a magazine stand at the airport and right in front of me is Newsweek openly declaring â€œApocalypse Nowâ€!
Is the mainstream finally catching up to the alternative media? No. The MSM is merely adopting pieces of our common language and twisting them to fit a more globalist friendly viewpoint. Because our readership is growing exponentially, and our traffic is skyrocketing while corporatized news sources are floundering, the MSM is losing its ability to obscure our fact based journalism with their over funded and highly sterilized adaptation of reality. So instead, they attempt to co-opt our particular vocabulary, and our news focus, while adding their own subtle spin and sensationalism. When people not familiar with the alternative media and the more in-depth information we provide talk about a â€œBlack Swan eventâ€, a depression, hyperinflation, etc., their concept of the implications of such disasters is far different than ours. They are living in the Disney version of financial and social Armageddon.
Of course, when the curtains raise, the previews are over, and the show begins, none of us will be lounging comfortably outside these calamities to simply watch. We will all be inexorably involved, whether we like it or not. So, carry on with the media war we must. Educating the masses on the ENTIRE story behind international events and their consequences continues to stand as a top priority, until that final straw caves the camelâ€™s back and disseminating the truth becomes a needless exercise in pointing out the horrifyingly obvious.
First, letâ€™s examine the veiled reverberations of recent â€œBlack Swanâ€ events, the wider view of the chain that ties them together, as well as what we should expect in the near future in the wake of their aftermathâ€¦
Fukushima Mon Amour
If I could choose only one tragedy to be categorized as a textbook example of a Black Swan, it is the earthquake and subsequent tsunami off the coast of northern Japan which led to the current and precarious meltdown of the nuclear reactors at Fukushima. Now, the immediate concerns of Western nations, especially citizens of the U.S., have automatically turned to the threat of radioactive fallout traveling across the Pacific. Unfortunately, radioactivity is the least of our troubles in the face of Japanese nuclear core exposure. Again, Japan is currently the number three economy in the world, and the effects of the Fukushima incident have contributed to the possibility of a full spectrum crisis.
First, we must always keep in mind that incidents in areas like Japan or the Middle East are NOT the direct cause of global economic or social turmoil; they are only trigger points for an avalanche that has been building for the past three to four years. If Fukushima had occurred in 2007, international markets would have easily absorbed the blow, but today, economies everywhere have been so weakened by the implosion of the banker created derivatives bubble and the inflationary fiat measures of private organizations like the Federal Reserve that they no longer have the capacity to shield themselves from unexpected catastrophes. Big banks have been playing a massive game of Jenga with the global economy, pulling one support after another until the whole construct begins to sway and tremble. One gust of wind, one tremor, one wrong move, and the whole thing comes crashing down. If you want to place blame for the chaos we are about to see in the aftermath of Fukushima, be sure to place it where it belongs; on the doorstep of corporate monstrosities like the Fed, Goldman Sachs, JP Morgan, HSBC, etc.
Second, Japanâ€™s official debt to GDP ratio now stands at 225%, way above the limit usually attributed to a country on the verge of complete debt destruction. The cost of rebuilding the areas damaged by the tsunami alone is estimated at around $300 billion. My primary concern in light of Japanese instability, though, is the severe weakening of their export markets. Japan is almost entirely reliant on its export capacity to support its ailing economy, meaning they are dependent on other countries to continually purchase their goods. However, in 2008, Japanese exports were pummeled, and have not improved anywhere near levels reached previous to the credit collapse, at least according to initial numbers for 2010:
The earthquake and nuclear meltdown of 2011 have sealed Japanâ€™s fate. It could take ten, twenty, even thirty years for them to recuperate from this setback. Manufacturing in the Asian nation has already deteriorated at the fastest pace in nearly a decade:
Japanese food exports are being shunned by international markets for fear of radioactive contamination. Prime Minister Naoto Khan is now pleading with the WTO to urge its members to avoid curbing imports of Japanese goods, claiming that the government is on top of the Fukushima situation:
This hardly appears to be the case though. Reports of radioactive iodine 10,000 times safe levels in the water table below Fukushima have surfaced; reports which the Tokyo Electric Power Company is now vaguely stating â€œmay be incorrectâ€:
The secrecy surrounding Japanâ€™s nuclear meltdown is highly disconcerting and reminiscent of the Chernobyl incident in 1986, which the Soviet Union also refused to report honestly. Nearby cities were completely uninformed as to the true danger of the meltdown, and the international community was without a clue as to the extent of the radiation until Sweden, nearly seven hundred miles away, discovered radioactive particulates in its atmosphere. The problem with a containment breach in a nuclear plant is that it releases a steady stream of radioactive materials into the environment until the plant is finally buried under tons of concrete, lead, boric acid, and sand, as opposed to a nuclear weapon, which detonates, irradiating surrounding particles, which then dissipate after around two weeks. Fukushima, if left uncontained, could spew radioactivity for decades. The Japanese government does not seem to be providing forthright information about the real jeopardy involved.
Of course, if they were forthright, there would certainly be alarm amongst the citizenry, but even more so, a flight of investment dollars from Japanese industry and stocks. The only equity in Japan which seems to be attracting investment is the Yen itself, which skyrocketed against the U.S. dollar at the onset of the crisis:
The Yen has climbed steadily against the dollar since the early 1970â€™s, from 300 yen per dollar, to only 80 yen per dollar after Fukushima. I find it interesting that now, during times of financial uncertainty, global investors would rather pour their savings into the currency of a country that is about to be radioactive, rather than put their savings into the U.S. Greenback! What does that tell you about the level of trust the world currently has in our currency?
Being that Japan is a dedicated export economy, the higher the Yen goes, the more strenuous the exchange rate, and the less other countries will buy from them. G7 nations have since attempted to artificially knock down the rise of the Yen, but their efforts have yielded little success. The Yen still stands at around 83 per dollar. Hardly an improvement that will make Japanese exports more viable.
So, where is this all leadingâ€¦? High speed deflationary depression for Japan. But thatâ€™s not all! The ASEAN trading bloc, led by China and fueled by the rising Yuan, has been pushing Japan to join the fold for years. Japan has been less than receptive to the proposition for numerous cultural, political, and financial reasons. But now, with the complete downfall of the country underway, and their export capability crumbling, Japan may go begging to join ASEAN. Already, ASEAN is beginning to offer help in Japanâ€™s rebuilding process:
What does this mean for the U.S.? It means the Japanese will likely begin a progressive dump of their vast reserves of U.S. Treasuries and dollars, replacing them with Yuan bonds. Its means a severe devaluation of the dollar in the near future along with the possible end to its World Reserve Currency status. It means hyperinflation in America. This is the true nature of a Black Swan event. It is not a single incident, but a chain reaction that spreads like cancer through an economic system, leading to broader misfortune than anyone dared imagine.
Once Upon A Time In The Middle East
The effects of the revolutionary fervor in the land of OPEC are a bit more obvious than those caused by Japan, at least, for the most part. Crude oil is now climbing towards $107 per barrel at the publishing of this piece. World markets are swinging wildly like a cheap carnival ride. Political alliances (especially between the U.S. and its primary oil suppliers) are becoming strained. The dollarâ€™s peg to oil is now under threat. But this is really no surprise. As we have discussed in past articles, it is exactly what happened to the British Empire in the early 1950â€™s when it attempted to strong arm Middle Eastern governments and maintain the oil trade under the Pound Sterling. Eventually, the British became embroiled in Arab conflicts and revolts they could not possibly untangle, and their main debt holders (one of which was the United States) threatened to dump British Treasuries and the pound sterling as the world reserve currency. Sound familiarâ€¦.?
So now that America is repeating the blunders of the British (most likely by design), what can we expect from turmoil in the Middle East?
First, crude prices are going to continue expanding. Not so much due to supply concerns (Libya, for instance, makes up only 2% of global oil production), but because of the escalating distrust of the U.S. and its interests in the region, leading to a likely decoupling of oil from the greenback. The Obama Administrationâ€™s response to this growing danger has been, interestingly, to focus not on the devaluation of the dollar, but instead, to distract us with more nonsensical supply side theories. The president (and I use that term loosely) has seen fit to present yet another model for â€œgreen alternativesâ€ which would supposedly diminish Americas dependence on foreign oil supplies. Unfortunately, this planâ€™s main drive is to cut oil importation to the U.S by one third over the next ten years while we are at the very onset of an energy crisis. Keep in mind that this plan does NOT include utilizing the extensive crude oil reserves discovered in Americaâ€™s northwest:
Absolutely brilliant! Letâ€™s cut our oil supply by a third while the dollar is in the midst of losing its reserve status and Obama fumbles about with biofuels that rely mainly on corn, a commodity which is also exploding in cost due to dollar devaluation, and requires more energy to refine than it eventually produces. Does anyone doubt anymore that this government is deliberately sabotaging our economy?! Holy Frijoles!
Chinaâ€™s move over the past two years to purchase more oil from Russia instead of the Middle East while dropping the dollar as a reserve currency in bilateral trade now seems almost clairvoyant, doesnâ€™t it?
As the destabilization of the Middle East spreads, the most volatile situation is not even necessarily that of oil and the dollar, but that of Syria. Due to its alliances and its tensions with Israel, Syria has become the keystone of the Middle East. Any disruption in Syria could lead to widespread war in the region, involving not just the U.S., but also Russia. Protests have begun to rage in the country, just as in the rest of the Arab nations, which has suddenly peaked the interest of the publication â€˜Foreign Policyâ€™; the official magazine of the Council on Foreign Relations, a well known globalist think tank. In a recent article, they called the state of affairs in Syria the â€œSyrian Time Bombâ€:
Foreign Policy covers the basics of the Syrian connection, but omits a very important factor; the revamped Russian naval base on the coast of Syria itself. I have written several articles over the past four years covering the possibility of a Syrian chain reaction. Here is a quote from one, published in June, 2010 to illustrate the potential for calamity that could unfold if Syria is invaded or even politically pressured by the U.S. or Israel:
This leads us to what may end up being the most important news of last year besides the â€œGreat Recessionâ€; a defense pact signed between Iran and Syria:
So, what elements are we dealing with here? We have a nuclear armed Israel itching to attack Iran. We have Iran engaged in a defense pact with Syria against Israel. We have Syria with Russian navy bases and weapons on its soil, and we have the U.S. rampaging through the Middle East encroaching on the borders of Pakistan and Yemen, essentially pissing off everyone. What we have is a Globalist made recipe for disaster, using the same ingredients they have used for the last several major wars.
There is little doubt, Syria is in the beginning stages of revolution at this very moment. The government has responded with the same murderous tactics that have been attributed to Gaddafi in Libya, including shooting down protesters using snipers (meaning soldiers were not firing in random panic, but deliberately picking targets and killing unarmed citizens in cold blood):
Will the U.S. or the UN respond to Syrian upheaval as they have in Libya? If they do, expect a powder keg reaction far more violent than we have yet seen, and also expect Russia to begin taking a much greater interest in the affairs of the Middle East. The hidden consequences of the Black Swan strike againâ€¦
Swan Lake, Or Swan Dive?
The flow of events from one into the other, melding and changing like the currents of a river, can become confusing, if not downright terrifying. The underlying rush of economies and political tensions is often obscured by disinformation, as well as the distracting nature of simultaneous cataclysms. What is created in the torrent of this global swell is a kind of â€˜factory of fearâ€™; a frenetic blast of winding grinding machinery swirling around us with menacing gears made of panic and dread. A step in the wrong direction, and we lose an arm or a leg. Black Swan incidents are not the source of this pandemonium. In fact, they sometimes shock the masses into clarity. They reveal the hidden landmines strewn about our financial and social landscape. They cause migrations of decline and surprisingly erratic reactions within a system, but also expose the fallacies inherent in that system as well. The key is to not allow fear to drive our response to the now unmistakable problems we face.
Whether we stand in defense against one adversity, or a thousand at once, is irrelevant. The bottom line is that we cannot lose focus, we cannot fail, and we cannot stop. There is no other choice but to move forward, and to prevail.
You can contact Giordano Bruno here: [email protected]
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