What is the PIC?
The Principle of Imminent Collapse states that, by circumstance or consequence, everything in our universe is on the verge of failure and all it takes is a nudge to bring it down. This principle extends upward and outward to the Universe and inward and downward to terrestrial and mundane examples of river pollution and celebrity personalities shooting their mouths off. That latter example also embodies the statement "give a man a long enough rope and he'll hang himself with it."
The Domino Model
The Undiscovered Lie (Another One)
Posted: October 25, 2011
The Principle of Imminent Collapse includes the ramifications of the Undiscovered Lie when it is ultimately discovered. Great men and women have fallen from positions of power and influence because of the dishonesty of their actions. They may have righteously gained that position of power and influence only to lose it. Others would never have amounted to anything unless they employed the Lie in the first place. The men and women of this nation's police departments are no less likely to fall to their Undiscovered Lies. Read More
Fukushima Daiichi Syndrome
Posted: March 25, 2011
The events unfolding in northern Japan in March 2011 have so many links to the Principle of Imminent Collapse that they are all difficult to count. Every Engineer knows that the there are Earth movements that result in sudden releases of pent-up energy that we call earthquakes. While it is not wise to place critical systems such as nuclear reactors on the fault zones of the earth’s crust, in Japan that is a near impossibility. As it turns out, the proximity to a tectonic fault is not the most critical factor in the placement of a nuclear power plant.
The factors that control the relative safety of a reactor are the human ones that pre-date any catastrophe that might befall such an installation. Previous discussions of the Principle of Imminent Collapse note Hubris as a major contributor to the magnitude of any collapse. When the utility companies decide that they want a nuclear plant and the politicians fall into line to support the plan, they create the beginnings of the Domino Effect where all the parties are aligned and maximum damage is able to occur because the opposition was marginalized. Soon Engineers are brought into the picture. Even the ones who initially might object to the placement and design of such a facility are ultimately replaced or are brought into line by assigning them to make a plan that CAN work. Read More
Loose Lips and The Principle of Imminent Collapse posted: Jan 19, 2011
Nature doesn't support the conditions that result in a domino effect because individual events over a long period of time serve to eliminate the interior dominoes that propagate the big collapse.
Man creates domino sets and waits for one to be knocked over then proclaims surprise and outrage when they fall. He may also deny that he ever knew that the dominoes were all setup to fall and that his words or actions were complicit in initiating the collapse.
When there is a multitude of people making statements against a subject, it is very difficult to isolate which one or ones were instrumental in initiating actions against that subject. Read More
No promises for the Middleclass posted: Dec 18, 2010
Millions of people came to America to seek their fortunes and to raise their families in a land where it was possible to have a better life and pass that existence on to their descendents. This was a land unlike any other in the history of the world. This was a land of opportunity where anyone (well almost anyone) could strive, work hard and accumulate assets that would see you through your latter years and maybe have some remaining at your end that your children could inherit.
Under royal subjugation one could only accrue landed wealth at the pleasure of the throne. This landed wealth is the greatest asset that can be passed from generation to generation. It is the one medium of wealth that can gain value beyond any reason if someone wants to obtain it for themselves and there is a system of laws that recognize ones rights to buy, hold and sell such property. Read More
Neither For or Against Oil Drilling posted: June 6, 2010
The April 20, 2010 failure of the Deepwater Horizon drillship has caused the greatest manmade ecologic disaster ever. Furthermore even 50 days after the Deepwater Horizon burned and sank, the oil still spewed from the damaged wellhead. The hundreds of thousands of barrels of oil that have fouled the waters of the Gulf of Mexico need not have happened if the rig, the seafloor systems and the pipe that is supposed to bring the oil to the surface had been designed with catastrophic failure remediation built in.
The resultant oil spill was not the result of a single failure. It was the result of deficient planning for the concatenated failures that many of the highly educated Engineers, and highly paid corporation decision-makers did not consider before the fateful day of April 20. There are too many highly detailed causes and effects, of who ordered what and when, who knew what and when to be able to pinpoint specific blame and liabilities at this time. The long term investigation into this debacle will ultimately generate a multi-thousand page report and spawn hundreds of hours of congressional showmanship, outrage and amplification. It has already created over a 300 hundred million Tweets, Facebook postings, blog entries, hours of talk-radio banter and this tome.
What the message here is, is that We The People, represented by our hired watchdogs and planners have allowed others to put us in peril of our life and limb because they do not understand the concept of the Principle of Imminent Collapse. Read More
Oil and Water and the Principle of Imminent Collapse posted: June 2, 2010
What you don't know about the Principle of Imminent Collapse will kill you. It will kill many people, animals and plant life on which we depend. One only ignores the Principle of Imminent Collapse at the peril of our lives.
The 2010 hurricane season is soon upon us and there is oil in that there water that will be spread over the land in a fashion never before seen. It is not a matter of if, but when the storm will come. There are 14 to 24 major storm events predicted by NOAA for this year. Hurricane intensity numbers of 2, 3, 4 and 5 will have a much lesser degree of importance than whether the storm track coincides with the oil-laden waters of the Gulf of Mexico and possibly the East coast of the US if the oil tracks around the southern tip of Florida.
Hurricane Rita roared into the Gulf of Mexico and then skipped across the southern portion of Florida from the Gulf side to the Atlantic side. Read More
Swirl Theory posted: April 25, 2010
Ever wonder why it is that you never heard of something and then suddenly you hear and see several references to that very thing in the next few days? Do you ever not see an old friend for years and when someone mentions him/her you cross paths in the oddest location? Have you watched a movie and be impressed by an actor/actress who you never heard of and the next movie or two later, there he/she is again? Well there is Swirl Theory to explain what is going on.
The cause and effect relationship applies to events that are in direct proximity to each other. When one billiard ball strikes another the striking ball changes direction and speed. It imparts direction and speed to the target ball and it rolls away from its original position or changes its speed and direction if it too was already in motion. Sir Isaac Newton described this relationship with the equation Force=Mass times Acceleration (F=Ma) . This relationship between the two billiard balls is wholly predictable and replicable. What is less apparent is that two objects can pass near to each other and exhibit a cause and effect relationship. Read More
Eyjafjallajokull - Volcanoes and the Principle of Imminent Collapse posted: April 17, 2010
No the end of the world in not being heralded by the eruption of the Iceland volcano beneath the Eyjafjallajokull glacier. When the eruption started on March 20 in southern Iceland, it melted a sizable a hole in the ice causing localized flooding as the melt water rushed toward the sea. It also began to erupt massive quantities of ash that rose high into the atmosphere carried on the updrafts created by its own heat. As far as volcanic eruptions go, it was not such a big deal. The big deal was that we have come to rely on systems that depend on the absence of volcanic ash in the atmosphere.
Millions of people around the globe were scheduled to fly somewhere else on tens of thousands of flights. Some were going away on vacations or business trips that would have to be cancelled or postpones. At the very least they would have to try to make their trips via alternate mode of transport.
Many thousands of people were on their ways home. They were in unfamiliar cities in distant countries and would have an unplanned layover while the skies cleared. Some were halted in transit, stranded in airports waiting for the next leg in their trip. Read More
Baby Boomers Join Their Parents as Seniors posted: Aug 30, 2009
There are more than 39 million Americans aged 60 and older as of the 2000 Census report. Right behind them are 79 million baby-boomers born in the years ranging from 1946 until 1964. It will not be long before the youngest of that brood will also be senior citizens. That time period is now less than 20 years.
There will be a deficit of payers for the care we will all need. Read More
When Did It All Change? posted: Dec 14, 2008
This question is posted across several blogs because it applies to all the subjects of those blogs. It's All Tuna begs the answer to when did everything become Tuna and why? The Principle of Imminent Collapse has presented many examples of the principle in action, but why is it that we repeatedly fail to do anything about it? Is THAT another of the characteristics of the PIC? And the Vulnerable Geometry is only vulnerable because we construct it that way. Why?
This post seeks to elicit examples of when it all began and what evidence, albeit in retrospect, can be seen that has led us from the Before to the Now. An example of this question and answer is thus: People driving on the road today are so rude, ignorant and aggressive that they endanger everyone around them and sometimes commit murder over simple things. When did this start and what caused it to happen? Read More
Expecting Imminent Collapse to Solve Our Problems posted:
A great many people are expecting collapse. I know a few of them personally. If you are not one yourself, you undoubtedly know a few yourself anyway. There is a danger in expecting collapse to solve your problems. The Truth About Tobacco campaign says it quite succinctly: "you don't always die from tobacco."
As recently as September 1, 2008 President George W. Bush did get his wish and received a more than plausible reason to stay away from the RNC in Minneapolis-St. Paul. In this case he was relieved to have a major storm event in the Gulf of Mexico to watch from The Whitehouse rather than take a chance on flying to the Convention cities and be caught off guard once again by a tricky hurricane that everyone else could see coming for five days. Read More
Collapse Begins - the Principle of Imminent Collapse posted:
Better it is to be able to look forward to and see that a process of imminent collapse is in the works than to perennially look backwards to view its aftermath. What value is there in "I told you so" if it doesn't prompt the listener to be more circumspect the next time. When, then, does imminent collapse begin? What are some of the antecedent conditions that beg the Principle of Imminent Collapse to realize itself? Read More
Believing That What Happens to Others is Not Important posted: Nov 9, 2008
In America, we promote the individual as the most important unit in society, followed by the family, followed by society at large. Personal gains are treasured above all else. It takes acts of congress to force us to consider our neighbors, to make us clean up after ourselves, and to answer Man’s first question: Am I my brother’s keeper?
We need laws to force a man to support his offspring after he decides that the woman he loved was not really the Right One. We need laws that limit and codify the permissible amount of poison we can effluse in the rivers, belch into the air and dump upon the land.
Many industrial enterprises operated decades on the principle that their nasty waste products could be put in the river or buried on site and forgotten. These stockpiles of toxic substances didn’t go away when they “disappeared.” Some of them resurfaced at the Love Canal in New York State poisoning the lives of the residents there. Read More
Stovepipes and The Principle of Imminent Collapse posted: Nov 4, 2008
Paradigms of thinking and of actions can be characterized in several ways. In order for organizations to truly be organized, they need to communicate such that each department, division and office knows what is going on. We can call that making sure that the left hand knows what the right hand is doing. This is nothing new. All too often an organizational department is a compartment where it is isolated from the others and operates like it is the whole company.
When businesses become too large, they begin to exhibit the Silo or Stovepipe Mentality. Read More
Sustainable Population posted: Nov 1, 2008
Like many students in the 1960's, my perspectives of the global picture was shaped in part by Paul Ehrlich's book, The Population Bomb, and its dire predictions of the near term consequences of not forcibly constraining world populations. While the premises and conclusions of his work were overly "enthusiastic" and did not bring about the demise of any civilization anywhere in the world in the 37 years since their publication, the conditions that he wrote about have been notched up to a higher level of potential failure.
Ehrlich's error was in not being able to predict technological advances which would make it possible for food production to increase at a rate greater than the rate of population growth. On the other hand, he also did not account for the aging of the populations that [then] currently produced all of the Manufactured, Mined and Farmed production of the world. Population economists have not been able to devise a projection method that accurately predicts population sizes over any long period of time. One can use simple curve-fitting to show what will probably happen over a few years, but economic, environmental, and political factors act to influence the actual growth rates in was that cannot, as yet, be modeled. Cohort-component methods look at the age and gender composition of the population in sub-areas to "better" predict the population growth, with only marginal improvements in the accuracy of the predictions. Read More
Drinking the Kool-Aid posted: Oct 26, 2008
Ever since Jim Jones convinced his Guyana commune followers to commit mass suicide in 1978, by drinking cyanide laced Kool-Aid, the reputation of the powdered drink mix has never been the same. It took a while for someone to use the phrase metaphorically, but writers and trendsetters are always coming up with catchy new idioms that become cliché with their over use. Drinking the Kool-Aid in the respect of following a political position is one of those uses. Meant to disparage the person who sees some good in a position that others may rabidly hold as a fundamental tenet of their own blind allegiance to a principle it tells more about the speaker than it does about the object of the statement.
Politics is not polar as some might suggest. We do speak of being Far Left or Left Leaning and Right Leaning and Far Right when we try to do the characterizations. Those who think in this manner make a fundamental judgment error that a position is an absolute and that the labels are points on the scale with nothing in between. The assumption is that a position is all good or all bad. This is a Western philosophical construct which is not mirrored in Eastern philosophy. Read More
The Domino Model Revisited posted: Oct 10, 2008
The theory of dominos is that the ratio of the thickness to the height of the tablet is such that it is inherently unstable when acted upon by a nudge. A single domino when nudged will topple and fall into a highly stable orientation from which only physical intervention will restore its vertical importance.
When the domino is isolated in space because there are no other dominos on the field or they are sufficiently distanced from it, there is no opportunity for interaction that places other dominos in jeopardy. A single domino falling over is of little consequence in the greater scheme of the entire field of dominos. Read More
Financial Dominos posted: Sept 30, 2008
With several collections of examples of the Principle of Imminent Collapse at work categorized into chapters and demystified, there are always so many more that can be used to show why it is that we must learn to recognize the imminence of the collapse to that we can alter our course of action and thereby the outcome.
The national disaster of the credit banks in the United States and the trading partners exemplifies the dangers of being too homogeneous in character. As stated in an earlier piece, too many Democrats or too many Republicans in the House is a dangerous thing. Too much government regulation is bad as well as too little. Both economic philosophies tamper with the harmonious operation of what should be natural balances. Read More
When Regulators are In Bed with Business posted: Sept 23, 2008
The Principle of Imminent Collapse invariably shows up when the people who are supposed to inspect and report deficiencies and non-compliance to laws fail in the performance of that public trust. It would be one thing if the failure was due to inexperience and not knowing what the outcomes would be, but all too often the failure is due to a tacit agreement that the regulation is only for show and that no actual interference will be manifest.
Rampant Capitalist Buying and Selling leads to the Principle of Imminent Collapse. When one allows free-market forces to run amuck free from oversight, regulation and rationality, a crash is unavoidable. The fallacy of Laissez-faire is that it assumes that corporations are peopled with only honest and earnest directors, managers and staff. It would be true if emotions did not interfere. The role of government oversight is to reign in the adrenaline and testosterone fueled frenzy that emerges as a corporate personality trait when the wild ride begins. Read More
Democracy and the Principle of Imminent Collapse posted: Sept 11, 2008
The existence of democracy itself is an improbable phenomenon in a heavily populated global civilization. Today a multitude of factions vie for recognition and participation in the global forum. Even the inventors of democracy, the Greeks and later the Romans, did not allow just anyone to cast his vote for or against a law or action of the state. Athens was full of Athenians who voted and a slave class of people who did not. One did not merely move to Athens or any of the other city-states and sign up as a voting citizen. Read More
Browns Ferry Nuclear Incident posted: Aug 17, 2008
March 22, 1975 was the first nuclear power plant incident to put the nation in peril. The Alabama power plant experienced a fire that disabled the core cooling systems and could have led to a boil-off of the cooling water and subsequent meltdown of the nuclear fuel.
The fire started when two electrical technicians were attempting to seal an air leak at a wall opening where the electrical control cabling that runs between the control room equipment and the Unit 1 and Unit 2 reactors. The test for leakage in the foam rubber insulation was to hold a lighted candle to the area and watch for the affects on the flame of any infiltrating air. They found some infiltrating air, but it sucked the flame into the opening igniting the foam insulation. Read More
Hubris and the Military posted: May 13, 2008
The Pentagon has decided to put its new tilt-rotor aircraft into military duty in Iraq against all sane reasons as to why they should not. First and foremost it is untested in actual combat. This is an invitation to the Principle of Imminent Collapse and if there are any crashes, they will show to the world that big expensive technologies will not prevail. Secondly, its deployment will beg the insurgency to pay special attention to America's newest and most sophisticated war machine.
This big hulking aircraft requires a lot of energy to lift it to an altitude where it can transition to horizontal flight. At least helicopters are nimble and relatively swift. They have been shot down quite easily by small arms fire from the ground. No such aircraft can withstand the barrage of hundreds of rounds. You can bet that the defense contractor that designed and built it never tested it against a dozen clips from a handful of AK-47 assault rifles.
By deploying this virgin aircraft in this most unconventional of wars we risk being handed our posteriors by a simple but tenacious foe. But then our current President has a habit of throwing all caution to the wind. The Principle of Imminent Collapse asserts that everything we experience is on the verge of collapse and all it takes is a nudge to make it fail. All too often we make that failure way too easy. Hubris is just one of those nudges.
Global Energy Demand posted: April 29, 2008
Most of what we have heard about the availability and price of oil since the Big Oil Shortage of the 1970's has revolved around production and the continual free flow of product from beneath the sands of the Middle East to the neighborhood pumps in the American suburbs and along the most rural stretch of Inter-state highway. As we stood in long lines and conspired to be able to get fuel on an even numbered day with an odd-numbered license plate, i.e. two vehicles between which one could exchange fuel, or illegally by swapping plates, it always remained that the supply was not in doubt. Only the delivery was the uncertainty. In those days, fuel was priced in the range of 25 to 30 Cents per gallon and we sucked it down at the rate of 8 to 10 miles per gallon through carburetors that dumped fuel down the throat of the engine and spewed a huge portion of the energy content into the air as exhaust.
In those days the US was the biggest consumer of petroleum fuels. Petroleum was so plentiful that we amply made everything imaginable out of the long carbon chain molecules. In 1968 Mr. Robinson confided to Dustin Hoffman, in the Graduate, that the one word to remember is "plastics. " Read More
Failure to Understand How Thing Really Work - The Principle of Imminent Collapse posted: April 21, 2008
Many of these situations cannot fully be divorced from the Natural Systems because many of these situations are predicated on Man's lack of understanding of how things work. By declaring forest fires evil, he must marshal his resources to fight this evil even to the point where he creates a new problem. The 100% suppression policy has created forests that perpetually are on the verge of collapse due to the accumulation of natural litter and small trees that are easily ignited and proceed to big burns of the grand older trees that last for weeks.
When we spread fertilizers and insecticides on our crop fields to enhance the quantity and quality of the yields, we get improvement on one side of the equation and degradation on the other. Read More
When Failure Is Not An Option - the Principle of Imminent Collapse posted: April 21, 2008
This declaration has two contexts. The one where is it a motivational motto for military men to take the hill and for football players to break through the defense and make the touchdown, it is a truly inspiring war cry. The phrase has a nobler genesis with Gene Franz, Mission Director for the Apollo moon missions in the 1960s after Jim Lovell issued his understated but
undying words, "Houston, we have a problem." But the other context leads to the Principle of Imminent Collapse. Where failure is declared to not be an option, there is and need to bury the truth about a manifest failure and to sequester the bearer of the bad news. In the Roman times, the messenger of bad news was killed, not because the recipient was angry, but because he did not want that bad news being leaked to the troops or enemy. The messenger might have become aware of the nature of his message and passed it along out of the chain of command that is essential in a military context. Read More
The Church's Rapture and the Principle of Imminent Collapse posted: April 13, 2008
The 88 Reasons Why Rosh-hash-ana 1988 Must Be The Time of The Church's Rapture, a book by Edgar C. Whisenant
In May 1988, my wife was handed a book by Edgar C. Whisenant that purported to analyze Biblical prophecies, the calendar and every scripture to determine that The Rapture would be on October 4, 1988, that WWIII was going to begin at 6:00PM on October 6, 1988. She passed the book to me and I read it with a fair amount of skepticism and humor. The author seemed quite earnest in his lengthy and scholarly presentation. I marveled at its timeliness, too - only months before the end. I told my wife that it was fortunate that we would be driving through the deserts of Arizona on vacation when the bombs began to fall and that maybe we would miss it altogether. I joked that we might report for our flight back to Georgia at the end of our trip and find the airport and all the people gone. I thought of the book Earth Abides by George R. Stewart in 1949 where Isherwood Williams emerges from the mountains after narrowly surviving a rattle snake bite to find all humans and most other animal species dead from some unknown virus. Read More
Honeybees and The Principle of Imminent Collapse posted: April 13, 2008
Bees all over the Earth have been buzzing around doing what they do for thousands of years. So what is it that they do? They build a hive. They make and tend their Queen. She produces all the eggs. The workers fly out into the sunlight and collect pollen on their legs. This pollen is converted into food for the hive members, the queen and all the larva that will continue the population of the hive. This food is quite tasty and sweet and we love it as Honey. The bees make lots of it. We collect it and they make more.
Bees have developed a symbiotic relationship with the plants that produce the pollen that bees take home for dinner. The plants which are rooted in one place for life cannot go out and about looking for genetic diversity to propagate their species. To overcome this handicap (not to be confused with a disability) the plants have developed some ingenious tactics in order to transmit their DNA from plant to plant across vast distances. Read More
A Fire in the Night - a lesson from the Principle of Imminent collapse posted: April 6, 2008
Date Line: April 6, 2008 Boston, MA
Two little girls died in a house fire that broke out in the wee hours of the morning. Acia Johnson, 14, and her sister Sophia Johnson, 3 had their bedroom on the third floor of their parents' South Boston home. Their address is unimportant unless you knew them. They are representative of hundreds of children each year. Somewhere around 3 AM the fire became apparent. It would have smoldered or burned in the walls for a lot longer than that.
The Principle of Imminent Collapse was at work. Read More
The Principle of Imminent Collapse - Connections posted:
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There was a time when everything ran at a slower pace. One year was essentially the same as the one that preceded it. Indeed, whole decades and even generations of families could rely on the sameness of existence over the years. Sons followed fathers in the family business. Daughters followed mothers into wedlock and motherhood. Custom and tradition persisted through ages.
Even though individual circumstances at the micro scale showed variations that made life different from generation to generation, on the larger scale, most everything remained the same. Change occurred on millennial and centurial basis. Horses, mules and oxen pulled plows for dozens of generations. That was the only way to plow a field. The endurance of a man and his sons limited the number of acres of crop that could be farmed each year. Distance was measured in days of ride on the back of a horse, in a wagon or a carriage. Men built or bought wagons that had a high probability of use by a grand or great grand son in their time. For the vast majority of offspring, there was only the prospects of replicating their parental roles, maybe next door, or maybe in the next village or hamlet. Only extremely talented or extremely lucky young people could make the transition into a urban environment where university might be their future.
In the centuries before the advent of steam power, the flow of change was exceedingly slow. The principles of self-sufficiency and family-centric industry formed the basis of wealth and prosperity. For example, clothing was something that could be made in the home. Furniture and work implements, made in the barn workshop. Trade between craftsmen and tradesmen involved the direct exchange of one quantity of labor for what was viewed as an equal quantity of another's labor. "I'll trade you a plow for a horse. You need a plow and I need a horse." Quantities of crops were exchanged for cabinetry and furnishings. The operative concept here is that the exchange took place locally, with immediacy and in real time. There was some temporal adjustments characterized by "I need a horse, that you have, to plow my fields to plant and harvest. I can only pay you after the harvest." Although that arrangement constituted credit and debt payment, it was incidental to the trade, not a part of the trade in and of itself.
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The Principle of Imminent Collapse - Connections posted:
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For many centuries the vast majority of labor was not exchanged for wages on a daily basis. The industrialization of labor that developed in conjunction with the mechanization of manufacture created a need for people who would exchange their labor for currency and coin. As the population grew, so did the need for men to work long hours at some repetitive task such as mining, smelting, cutting and sawing timbers, attending lathes and looms. The economic shift was toward the standard industrial processes that generated huge quantities of uniform product.
In large parts of the globe, the agrarian life remains the predominant activity for subsistence living. Currency and coin is not the essential medium of exchange that industrialized nations have come to rely upon. Although the people do subsist at a poverty level, they do subsist. They do so on only a few dollar-equivalents per year. But then they do not need to buy $100 footwear, logo sportswear, designer purses and $600 cosmetic kits. They don't get $50 haircuts and spa treatments. They don't buy Lexus and BMW. They don't have broadband Internet and cable TV bills.
They may not have the accoutrements of Western consumer culture, but neither does their government depend on them for hundreds of billions of dollars in taxes. They do not pay monthly cell-phone service bills and send hundreds of text messages to each other. No one is bleeding them for interest payments on installment contracts for automobiles, college educations, plasma televisions, or $200,000 houses. They may be poor and miserable but they are not economic slaves of people and corporations that derive their earnings from a few percentage points of the annual income. As long as the process continues to function, Americans are quite happy to be in the position of economic slave who is producing wealth for others by engaging in the consumption of comfortable things.
Americans earn a living and spend their money. They buy essential commodities and discretionary things that are either wholly essential or wholly unnecessary. The characterization of the purchase is unimportant as long as the purchase is made. What is most important is that in the aggregate a minimum amount of purchases are made annually by everyone together. That minimum level may or may not be supported by the total annual income generated by the 300 million people who are counted as US residents.
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The Principle of Imminent Collapse - Connections posted:
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Before the economy went global, America was the manufacturer, and the world was the market. American workers and businesses produced the goods and services and everyone else paid to get what we provided. For many years that was good for America. The other countries did not like that they were having to pay and pay and get nothing else in exchange for their wealth. American businesses created an environment of trade circumstances where they obtained a nation's raw resources and converted that dirt and rock into millions and billons of dollars.
In a move to appease the foreign populations who felt that America was enslaving them with debt and dependence on our production abilities, we started to migrate employment to them such that their standards of living increased and they were better able to purchase the things that they manufactured at such a low cost.
Some formerly domestic jobs relocated to South America, Asia , Japan and the SE Asian peninsula. These nations increased their abilities to manufacture large quantities of products that Americans love to buy. They continued to grow their industries to meet our product demands. Tens of millions of their people joined the ranks of the waged labor force and started up the socio-economic ladder from an agrarian to an industrial society.
These workforces provided what we wanted and we obliged them by buying it. The problem, however, is that our collective incomes could not sustain the trade deficits that built up their economies. Americans spend over 120% of earnings by supplementing it with debt. This is not debt just to make a large purchase possible today rather than after saving for years to buy it. This debt is an ever increasing unpaid balance that must be regularly restructured in order to avert imminent collapse.
Periodically, millions of Americans would look to the value of their principle residence to collateralize a new mortgage balance that folded in their unpaid credit purchases. House prices were increasing annually and lenders were eager to take upfront fees to restructure the agreements for higher principles and sometimes higher interest rates.
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The Principle of Imminent Collapse - Connections posted:
The PIC - Connections
As long as the flow of money around the circle kept going, everything went alone well. The American population was not growing out of control and a manageable level of growth was maintained. The problem was that the economic wealth generated by the 300 million Americans needed to support the 300 million and billions of foreign people who have an increasing dependence on that economic wealth.
In conjunction with the global slowdown of economic activity that laid off about 2 million American workers in 2007-2008, there has been the layoff of 20 million Chinese workers who depended on exports to world markets, primarily the USA. Those Chinese, along with millions more Indians, Japanese, and SE Asians were living of the borrowed wealth of Americans. These areas built their economies as exporters to America. With China alone the US had a trade deficit in the hundreds of billions of dollars per year.
During the peak oil prices of $140 per barrel the US was sending $700 billion annually out of the country to OPEC countries and the others that are our energy suppliers. While we were feeding our addictions to oil and consumer electronics, they were becoming addicted to our dollars. Their workers were able to make formerly unimaginable incomes and enter the consumer marketplace. Their governments were able to fund their activities and progress on the transferred wealth from America.
One of the uses that the trade surpluses (surplus from their POV, deficits from ours) were put to was lent it to Americans so they could continue to buy the exports. This foreign wealth (formerly domestic wealth) fueled the US ability to borrow larger and larger principles to maintain the US buying habits. We did not have to increase taxes so much when foreign sources would buy our bonds and ultimately our mortgage debt making payment of the interest the only necessary expense.
US buying habits benefited the exporting nations and allowed them to industrialize their formerly agricultural economies. Similarly the OPEC nations built urban populations where only desert formerly existed. When the mortgage crises tipped the balance and the economic slowdown ensued, the massive export engines of China, Japan and SE Asia began to fail in collateral fashion. When the price of oil dropped from over $140 per barrel to under $40 per barrel, a lot of economic development in the supply nations ceased. Nations that were becoming rich on world oil demand, were converted into debtors who are trying to pay off their debts.
These debts were incurred to foster and facilitate the development of their economies. They are now faced with defaulting on those loans because the US is no longer buying as much of their exports at such high prices.
They, too, entered the game of borrowing against future earnings with the expectation that the game would forever stay in play. They assumed that price inflation would continue unabated indefinitely. Indeed, there are economic experts who proclaim that deflation was a natural impossibility. It could be created by fiscal policy, but it would not just happen. All parts of the world engaged in the giant pyramid marketing scheme that the Principle of Imminent Collapse knows must fail.
The lending and borrowing that took place in the US and around the world pumped up employment for people who otherwise would never have a regular job. People who formerly lived in villages and hamlets could move to where factories painted wooden toys with lead-based paint. They could assemble cell-phones and personal entertainment media file players. Every sort of truly non-essential device was manufactured and sold to an eager public who could not afford all that they buy. While the game was in play, they too benefited.
But all games have a time limit. It is just that we don't always know when the final whistle will be blown or by whom.
The game is Pyramid Builder. It goes like this. Capital is made available for the most worthy of projects by the most qualified of borrowers. It could be to buy inventory to resell. It could be operating funds to send boats out to sea to haul in a catch of Cod or Tuna. It may be to buy land and build a strip mall or business park. It may be for a home mortgage. Whatever the purpose is, it is most worthy. Only a few people and businesses qualify.
The lender sees the benefits of lending the money and generating a rate of return as income. More borrowers are needed. Additional idle capital and the funds from existing loans form the basis of the second tier of principle that is lend to the second tier of borrowers. These borrowers are highly qualified, have solid collateral and a high reliability of being able to repay the principle and interest. More idle capital is funneled into the lending machine along with the earnings from the first and second tier borrowers. A third tier is created.
A fourth tier comes about. And a fifth. Each time the new tier is created in must be bigger than the last because more and more idle capital is being attracted into the mill in order to generate the easy money that comes from the charging of interest on outstanding balances. Each time a new tier is created it is less worthy and less qualified because if they were better, they would have been at an upper tier. This is not to say that new highly qualified and worthy projects and borrowers do not arise and replace someone in a higher and smaller tier.
In order to facilitate everyone who wishes to put their capital to work in lending to someone, the demand for credit must be aggressively marketed. The real method for a credit card provider to make the billions of dollars that they do is to finally get the card holder to spend more than he can pay by the end of the month. In this way they begin to earn income at very high rates of 9.99% to 24.99% annually.
Mortgage borrowers buy a house and finance the purchase price less any down payments. After five years, most home owners owe more to their mortgage holder than they paid for the house or condo. This occurs because of the refinancing and folding in unpaid consumer credit balances and cash out to buy that boat, add that bathroom, shingle that roof, and a whole host of other possibilities.
Each tier of borrowers is bigger in numbers, less capable of repaying, and closer to the tripping point where they will fall significantly behind on the cause of some otherwise insignificant factor. Factors such as the tripling of the price of gasoline cause both a direct impact on the household budget as well as an indirect one in the price of food, clothing and other regularly purchased items.
Mathematically, the pyramid is an unsustainable financial structure. Even with a power of 2 exponent, the growth of the participating population quickly overtakes the available participants. The numbers grow thusly, 1-2-4-8-16-32-64-128-256-512-1024-2048-4096. So if we are talking about 1,000,000 first tier participants, the 13th tier constitutes over 4 billion people and the 9th tier is just over half a billion. Such growth schemes rarely survive the first few tiers. In the instance of mortgage issuance, packaging and reselling the numbers fail very early on. Therefore, the collapse of banks and credit markets in 2008 was both knowable in advance and unavoidable without positive action to stop it.
Although few people like the current circumstances of the global economy, there are a lot of net positive outcomes to be had. In my book, It's All Tuna!, I posit that the economy doesn't care about how and for what money is spent, it only cares that the money is moving. Therefore the first actions of the US Congress was to act to provide liquidity in the credit markets so that people and businesses have the funds to move.
The economy being a non-conscious entity has no concern for how many people lose jobs, can't feed their families, get evicted from their homes, can't obtain health care and avoid disease. It has no concern for the cessation of farming and fishing that feeds tens of millions of people. It doesn't care that a hundred million retirement accounts lose half their value. While the music continued to play and the world circled the line of chairs, we all laughed and had a merry old time.
America may well be the epicenter of the quake that shook the world to its knees but it was only so effective because everyone was feeding on the wealth creating ability of the US economy and its ability to sustain a $1 trillion net trade deficit each year. Too bad it was partially funded with loans and investments by the very entities that were generating a trade surplus on our activity.
We must keep in mind that for every dollar that is lost in the mortgage meltdown and the concomitant stock market slump, someone else received that dollar or it was a make-a-believe dollar in the first place.
Soon-to-retire homeowners were happy to sell their house at an inflated price to a willing buyer who was backed by a willing lender. Those homeowners made their money by buying, holding then selling their residence. It did not matter to them that the buyer might not be able to fulfill his obligations to the willing lender. The purchase price of the houses are no longer touchable by the lenders who have gotten burned by defaults. Mr. and Mrs. American Retiree are in Florida living in a snowbird community with the proceeds of their house sale. There is the dark side of such house selling where the appraisers, the brokers and other conspire to inflate sales prices of specific dwellings and thereby artificially inflate the selling prices of neighboring houses. A few well placed frauds will enable a lot more legitimate sales prices because of the "neighbor effect" on home prices. Apparent wealth has been created by such manipulation of selling prices.
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The Principle of Imminent Collapse - Connections posted:
The PIC - Connections
That apparent wealth shows its true nature when one aggregates the appraised values and calls it the basis of an investment. This is make-a-believe money. If a investment seller shows what appears to be a real asset and goes about actually selling it to people and fund managers who believe the value to be real, it is make-a-believe wealth.
Mortgage lenders used a combination of legitimate accounting practices to make believe that they had an investment that was worth investing in. In make cases they used make-a-believe money that is created by the following approach. They lend $100,000 as a mortgage for 15 years at some interest rate. Typically, that mortgage will be worth $200,000 by the time all payments are made. That is a 100% return on the principle. Divide that by the 15 years and the annual return is 6.6%. The specific numbers vary seasonally and over time, but the concept remains the same.
After lending the $100,000 the lender can wait 15 years to get all his principle back along with his interest. Alternately he can sell shares of the investment to numerous buyers. He takes the original $100,000 and adds the make-a-believe interest total to get a value of $200,000. Now he sells the "assets" as shares for a total of $150,000. He has made an immediate $50,000 gain and the investors will get $50,000 if the mortgagee actually pays off the loan over the 15 years. If he defaults, the share buyer lose. If he pays off early, the share buyer loses. The way to minimize this affect is to bundle 1000 such mortgages so as to average down any specific repayment anomalies. In good times only a few mortgages go into default. But as we have seen in 2007-09 it is possible for the hollow investment schemes to collapse.
Although the share buyers may have lost hundreds of billions of dollars, share sellers walked away with much of the money. The homes of sellers on which mortgages were given, walked away with a lot of the money.
Although it was in 1991, the woman who sold her house to my wife and me made $100,000 gain and move to Florida to play golf until her body would give out and she would be destined to die suddenly or decompose slowly in nursing care. We were willing to pay her price and it was fair. That house peaked out at three times our purchase price in 18 years since. I could have removed all the free equity through a refinance plan while the value was peaking and created a lot of make-a-believe wealth. Fortunately I did not or it would be exceedingly difficult to sell it when I need to sell.
There is no one culprit in the economic collapse of 2008-09. We are all part of the problem and we are all part of the solution. There have been innocent failures and there have been frauds perpetrated over decades by unscrupulous financiers that only have been uncovered by the collapse of the system. There has been government promulgated mortgage lending policies that worked for a while but which eroded the foundation of the system and softened the beams of the building. Each fraud and policy by itself was insignificant to cause system failure, but all as an aggregate, they were. That is what the Principle of Imminent Collapse warns us about.
The true disaster of the global recession economy will impact the larger less industrial nations in particular, China. China was speeding along toward urbanization and an industrial economy. They were building at a frenetic pace to keep up with population growth. The loss of export revenues has all but shut down that building pace. The government still has a surplus of funds to afford that building of urban environments, but there is little commerce to support such a lifestyle. They who were expecting to be urban dwelling employees will now be relegated to the agrarian lifestyle for as long as the recessionary trends persist. The hopes pinned on the younger generation to provide support for elderly parents is being undercut. Funds borrowed from relatives and neighbors to educate the one child of the family was their retirement plan in a country that has little in the way of government provided retirement income.
Many people, such as myself, in the US are hard hit in the retirement accounts. Many of us will recover. We will not starve or freeze in the dark. But worldwide including the US there are millions of people who were already at the margin and will be on the outside of the circle of drawn wagons that protect those on the inside. It is for those populations that bailouts and stimuli are necessary or they will starve and freeze in the coming darkness.
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The Undiscovered Lie Leads to the Principle of Imminent Collapse posted: April 6, 2008
The undiscovered lie leads to Imminent Collapse. There are countless books and screenplays that rely upon the premise of the undiscovered lie to setup the circumstances for the fall of the protagonist. It is the identity of the illegitimate child who comes home to claim the rightful inheritance. It is the body concealed in the crawlspace or under the gazebo in the garden. It is the embezzled millions that polite society believes was inherited or earned in a well conceived investment strategy. It is the covered up homicide, accidental or otherwise, that only a few frat brothers know about.
The guilty party may rise, especially if he or she rises, to a place of prominence that is beyond all reproach. She may marry the wealth of a prominent family after being a call girl in some obscure city, only to find that someone who comes back into her life was a former patron. He may be a pillar of the community only to have been the person who fled the fire fight and left comrades to die in his absence. He may have been the Lieutenant in the National Guard who found his family connections could mask his absence from duty at a time that his nation was fighting an unpopular war.
(or heard your parents say) the following statements?
How many times have you said...
(or heard your parents say) the following statements? posted: April 4, 2008
Humans have the tendency to hold stressful things in until they are no longer able to contain their reaction. The level of stress continues to build, while to outward appearances everything remains calm until...
a. I'm at my wit's end.
b. I'm at the end of my rope.
c. If I hear you arguing with your sister (brother) just one more time, I think I'll explode.
d. You have me so upset I think I'm having a nervous breakdown.
e. I feel like I'm forever treading water...
f. He seemed okay, then just went off the deep end.
g. She suddenly went ballistic.
h. He went postal.
i. I was just talking with him the other day, and now he's gone.
j. I could have told him that that temper of his was going to do him in.
k. You are going to be the death of me, yet.
l. I always knew that something wasn't quite right about him, but I couldn't put my finger on it.
m. Ever since he was a child, we all suspected that there was something different about him. I guess now we know.
n. ...and on
o. ...and on
p. ad naseum
These and similar statements have been said with slight variations millions of times by people about to experience the Principle of Imminent Collapse first hand or who were observing a collapse in the making. The husband of a friend of my mother used to tell his wife and friends that one day he was going to Baltimore. For years it was an unexplained utterance that begged no explanation. He would some day go to Baltimore, just like some people say what they will do when they retire, or finish school, or attain some goal or status in life. One of these days I'm going to go to Baltimore. Read More
Underestimating the Rate of Collapse posted: April 4, 2008
The purpose of writing on the topic of the Principle of Imminent Collapse is not to depress the reader or to sensationalize a political position. The purpose is to make intelligent educated people aware of the dangers that lay in wait for us if we do not make a plan and implement the plan for what we will do when the nudge happens.
Scientists employed by the government either directly as staff or indirectly as grant recipients are subject to "editing" that makes their reports more concise and acceptable. In fact, a lot of the editing is censorship and repression of information that the governing Administration does not want to have circulated with its name on it. Therefore, lawyers rewrite essential environmental reports to make sure that the interests of the government and business community are preserved and not threatened by "irresponsible" claims of overzealous scientists.
The danger that arises from not taking seriously those "irresponsible" claims is that nature has a way of making every dire prognostication pale by comparison to actual events. The December 26, 2004 tsunami in the Indian Ocean was far greater than anyone imagined would happen. Read More
How The PIC was first articulated posted: April 4, 2008
While sitting in the warm living room of my sister and brother-in-law's Gloucester, Mass home at Christmas, discussing how the world seems to be forever at the point of catastrophe, I first postulated the Principle of Imminent Collapse. After describing to her what it was, she said that it sounds like every morning getting the twins ready and out the door for school and again when they arrived back home and toss the house after she had finally gotten everything in order. One example lead to the next and the endless progression of associations had begun. My brother-in-law, who ironically has dyslexia, said that I should put this all in a book.
What is The PIC?
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