[Tanada]

Perhaps we should define what we mean by fast hard crash and slow soft crash.

Slow and soft means to me that TPTB are able to keep the majority of the non elites unaware through subsidies and soothing words. This keeps things stumbling along as the average Joe6P is looking forward to brighter days soon to appear on the horizon for him, his family and friends.

Fast and hard is what happened when Joe6P stops believing TPTB and starts acting to make a bad situation as good as possible for him, his family and his friends at the cost of larger relationships. When it becomes every clique for themselves things can get really ugly. They don't have to because cooperation still pays off better in the long run, but people have to recognize that fact and trust their larger community for it to be effective.

Rome did not fall in a day, and all that. The average citizen of Rome maintained faith in TPTB and kept plugging along making the best of it for a couple of centuries after the official fall of Rome, and the city was still lightly populated until the Renaissance when it again became a major city.

On the other hand the Mayan civilization appears to have fallen apart very quickly, the average person lost faith in TPTB who ran the Empire, a general get out of town attitude took over and they did the whole Atlas Shrugged plan where TPTB found out without the masses following orders they had no actual power. This is the Consent of the Governed model and is just as valid as the slow decline of Rome.

Rome is what I have been hoping for, Mayan is what I fear we are setting ourselves up for. People are losing faith in TPTB, at least in the USA. If that faith disappears then it can be over in a day.

[Pops]

2008 is the model for a fast crash. Aside from a massive meteor strike or whatever, the big credit freeze is the only thing I see causing overnight armageddon. Riots here and there, starvation and epidemics, even world wars (barring the Big One) are just interludes, a fast drop in oil supplies even doesn't make a big dent if the spinners can make folks keep the faith that BAU is just around the corner. In '08 credit disappeared because lenders lost that faith.

Maximizing one's own capital nowadays usually means using someone elses as much as possible, so without that short term credit lots of everyday business activities just stop. "Just in time" is an extension of that efficiency, long, fast supply lines rather than short deep ones saves on warehousing but requires continuous purchasing and transport to keep the gears grinding. If your working capital is actually working credit and your credit dries up, you quit working.

To be honest I'm not certain that we aren't still in the midst of the '08 fast crash. You know how that adrenaline rush makes time expand in your mind when you get scared? Private credit in fact may still be scared but governments, the 'lenders of last resort,' certainly aren't frozen. In fact the central banks are pumping for all they're worth. According to the World Debt Clock total debt at this moment is

$this->bbcode_second_pass_code('', '"Fifty Seven Trillion, Four Hundred and Seventy Five Billion, One Hundred and Seventy Eight Million, Six Hundred and Seventy Nine Thousand Six Hundred and Three US Dollars"')

And growing.

[Subjectivist]

$this->bbcode_second_pass_quote('Pops', '2')008 is the model for a fast crash. Aside from a massive meteor strike or whatever, the big credit freeze is the only thing I see causing overnight armageddon. Riots here and there, starvation and epidemics, even world wars (barring the Big One) are just interludes, a fast drop in oil supplies even doesn't make a big dent if the spinners can make folks keep the faith that BAU is just around the corner. In '08 credit disappeared because lenders lost that faith.

Maximizing one's own capital nowadays usually means using someone elses as much as possible, so without that short term credit lots of everyday business activities just stop. "Just in time" is an extension of that efficiency, long, fast supply lines rather than short deep ones saves on warehousing but requires continuous purchasing and transport to keep the gears grinding. If your working capital is actually working credit and your credit dries up, you quit working.

To be honest I'm not certain that we aren't still in the midst of the '08 fast crash. You know how that adrenaline rush makes time expand in your mind when you get scared? Private credit in fact may still be scared but governments, the 'lenders of last resort,' certainly aren't frozen. In fact the central banks are pumping for all they're worth. According to the World Debt Clock total debt at this moment is
$this->bbcode_second_pass_code('', '"Fifty Seven Trillion, Four Hundred and Seventy Five Billion, One Hundred and Seventy Eight Million, Six Hundred and Seventy Nine Thousand Six Hundred and Three US Dollars"')
And growing.

[Pops]

I don't know Sub, it looks like we're past the point of diminishing returns already. Although contrary to every Goldbug's rant since forever, it seems that at least the US can just keep printing. I'd chalk that up to the Great US Fracked Up Oil Boom as keeping the American Miracle alive.

The idea was easy money would spur growth but this from WSJ puts global debt to GDP at 313% or US$223 Trillion. The problem is global growth (aside from the pinstripe casino) ain't all that peachy, maybe 2% in the near term down from 4% - on it's way to you-know-where.



Of course projections are for better growth in 2014 but when have projections for the future not been for growth? To project growth may not make growth happen but to progect decline would surely be a self fulfilling prophecy.

If things were like the good old days of the last hundred years or so, high oil prices would lead to more production and then falling prices for energy would help fuel a boom in consumption and voila! instant growth! But that ain't happening, all the happy talk is about how much money the corp's are making by laying people off and cutting costs and the smart phone game of the moment but the global economy is grinding down.

The problem comes in when we aren't growing all that much anyway and then out of the blue (yeah right) more or less permanent oil production decline sets in (enough so that it can't be masked by tossing in imaginary oil like "refinery gain") then not only will energy price pressures really start to impact discretionary spending but the situation will be undeniable. At that point not only are some of those bills not gonna get paid but it will soon become clear they aren't ever gonna be paid. And there we are again in a credit crisis.

So really I think it's all about confidence and attitude. Do you think things are gonna get better or at least stay the same? Do you think Uncle Sugar can pay off that T-Bill or long bond or social security check? Do you think you'll keep your job? If the answer is yes then you borrow and spend and there is someone there to loan you money with one hand and take your payments with the other and life is good.

But if the answer is no, then all that stops and things begin grinding to a halt
.

[Subjectivist]

Sadly I see a lot more grinding and a lot less growing.