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Generational Dynamics Web Log for 25-Dec-2009
At the end of a dark year, Merry Christmas and Happy New Year to all

Web Log - December, 2009

At the end of a dark year, Merry Christmas and Happy New Year to all

It's been an incredible year, hasn't it?

In my own way, I lead a fairly ascetic life. During the day I develop computer software in the ancient language of C++, and in my remaining time I work on this web site. My obsession is nearly total. While I'm at work, writing C++ code, I have my headphones on, and I'm listening to the BBC or Bloomberg TV. At night, if I wake up at 4 am and can't get back to sleep, I turn on the BBC. At other times, I watch CNN, Fox News, CNBC, or MSNBC. I've also cut and pasted some 50,000 articles that I have filed on my hard disk. My obsession is a GOOD thing (I keep telling myself), because it makes me know everything that's going on in the world, and makes it possible to write all the articles I post on this web site.

This has been true for seven years, since I started this web site in 2002. Each day, or as often as I have time for, I look at the world through the prism of generational theory and write articles for this web site reporting on what I find.

But this year has been different from the previous six. The world went off the rails this year. I used to get up in the morning and wonder if I was crazy or the world was crazy, but that conundrum has been resolved at least partially. The question of whether I'm crazy is still open, but there's absolutely no doubt at all that the world has gone mad.

Let's take a look at some of the events of the last year:

The stock market surged this year, even though earnings kept falling. On what planet does that make any sense at all? Price/earnings ratios (also called "valuations") are close to 100, when anything above 16 is considered "expensive." And this year we saw the heavy use of P/E ratios based on phony so-called "operating earnings," but even those phony numbers are now around 30, which is also astronomically high.

The Copenhagen climate change conference was predictably a farce long before it started. Anyone with any sense at all could see that China would never agree to any binding limits. I said that, and other commentators said that. But you still had dozens of world leaders, including President Obama, go there and act like total idiots, come away with less than nothing, and then still declare it a success.

The loathsome spectacle in the U.S. Senate these last few days as they passed the health care bill is unspeakable.

Fraud and extortion, especially by people at financial institutions like Goldman Sachs, Citibank and Bank of America, have become standard operating procedure.

I've been expecting something like this for years, because the same thing happened after the 1929 crash, and I've written about it many times, but it's still a shock how pervasive it's become.

I frequently mention Yves Smith's Naked Capitalism blog, because her blog has become a kind of "ground zero" for describing many of the criminal activities going on in the financial world. Smith calls people like me (without actually acknowledging me or this web site) "alarmists," but she's now confirming all the things that she used to consider alarmist. She even refers to bankers as "banksters."

The fraud and extortion have made writing for this web site more difficult, because what's going on is so far from reality. If the P/E ratio index is around 18, as it has been in previous years, then I can talk about how it's been above the historical average of 14 since 1995, and by the Law of Mean Reversion will have to fall equally far below 14 for the same amount of time. But what can you say when the P/E ratio index is around 100? How can you say anything that anyone sane can relate to?

Many things that happened last year were crazy in another sense, because they're just "business as usual." Some other events of note in the last year: the Gaza war between Israel and Hamas; the escalation of the Afghanistan war and the increasing instability of Pakistan; and in the last few days, we're learning that U.S. forces are getting involved in the border war between Saudi Arabia versus the Iran-backed Houthis in Yemen. There's also been the climactic end to the Sri Lanka crisis civil war, and the growing riots and demonstrations in Iran.

There are tens of thousands of people who read this web site regularly, according to the web site logs. The logs also tell me that there are plenty of people from universities, government and businesses, though of course I have no idea who they are.

I still have to joke that this web site is like a porn site: there are a lot of people reading it, but almost no one wants to admit it. I'd love to get some feedback from academics or government officials, but apparently few of them want to admit associating with the gloomiest person in the world, who writes for the gloomiest web site in the world.

The Generational Dynamics forum has had mixed success. There isn't a great deal of traffic, although the discussion that occurs is very intelligent.

For me personally, the forum has actually been very successful. I try to answer most of the e-mail questions and comments that I receive from web site readers, but at the end of 2008 and the beginning of 2009, the volume of e-mail queries was getting out of hand, and I couldn't respond to all of them. Furthermore, many people were asking me the same questions, usually something along the lines of "How can I protect my assets?"

So I started referring people to the forum, especially the Financial Topics thread. That's been pretty successful, as the number of e-mail queries has leveled off and is under control again, even as the traffic to the web site has increased.

Still, I would like the forum to be more useful to people, and if there's anything I can do (such as rearranging topics or categories, or something like that), I would be happy to do so. Feel free to write to me with suggestions, or post them in the forum itself.

I would like to simply wish everyone a Merry Christmas and Happy New Year, but it's not that simple. I'm a believer in trends, and the trend for the world is to become increasingly dysfunctional in the seven years since I started this web site.

There's something really dark going on. The stock market surge, the Copenhagen summit, the health care bill -- none of these things makes any sense at all. The investors, journalists and politicians whose behavior is responsible for these things are not that stupid. They may act like idiots, but they aren't idiots.

Sherlock Holmes said, "When you have eliminated the impossible, whatever remains, however improbable, must be the truth."

So these people are acting like idiots, but the "impossible" is that they actually ARE idiots. So we can eliminate that. Therefore, they must be acting like idiots on purpose, knowing the consequences, but having some venal personal motives. What are those motives? Usually money and political power, accompanied by total contempt for the people they're screwing.

There are actually plenty of examples of this.

I'll start with a couple of examples from China. Chinese food producers poisoned millions of Chinese children by bulking up their food products with melamine, to give the appearance of greater protein content. Chinese real estate firms are continuing to build empty cities and empty skyscrapers, creating a real estate bubble that's doing enormous harm to ordinary Chinese citizens.

In America and Europe, we have supposedly reputable companies like Priceline, Orbitz, FTD, 1-800-Flowers, Pizza Hut, and Continental Airlines scamming their customers online and making billions of dollars doing it.

And of course the entire financial disaster was perpetrated by people defrauding other people for their own gain. In particular, the "toxic assets" were being created and sold by people who, by 2006-2007, knew that they were toxic, but redoubled their efforts to sell them before the party ended. Today, banks like Citibank and Bank of America are still extorting their own customers by charging phony fees and 30% interest rates, in order to pay themselves million dollar bonuses.

Why is all of this happening? I know that one of the least popular things I can talk about on this web site is "The nihilism and self-destructiveness of Generation X," but with Gen-Xers increasingly in control of government and business organizations, there's really no other direction to go in.

Most people in every generation, including Gen-Xers, are decent, hard-working people, but what we have today are a small group of cynical Gen-Xers who really ARE nihilistic, and who have the skills to drive out the hard-working people. This is "the bad driving out the good."

The mechanism for doing this became clear from the hacked climate change e-mail messages that were revealed prior to the Copenhagen conference. In a word, these e-mail messages show that climate change science is junk science. And even if the polar icecaps ARE melting, these e-mail messages still show that climate change science is junk science. But instead of acknowledging that it's junk science, all the politicians, journalists and "scientists" acted like idiots, and went to Copenhagen, where the whole scene collapsed into farce.

But what's most interesting, and deserves a lot more study, is that the hacked e-mails showed how climate change advocates used the peer review process to systematically exclude anyone with dissenting views. The advocates were skillful in gaining control of climate research journals and then making sure that skeptics were ignored and never acknowledged. And if a skeptic published his research elsewhere, then the advocates would say that the research wasn't "peer reviewed."

That shows one way that "the bad drives out the good" in climate change.

In financial institutions, anyone who wants to conduct business honestly is fired, driven out, or threatened. Last June, Yves Smith described exactly how middle level employees are effectively able to extort management into continuing fraudulent activities and getting themselves overpaid.

The disintegration of the Copenhagen climate change conference is interesting, because it's a microcosm of what's happening in the world. The nihilism and self-destructiveness of these Gen-Xers in power is threatening the entire world with the same kind of disintegration, through worse financial crises and world war.

But other than that, Dear Readers, let me wish you a Merry Christmas and a Happy New Year. And I hope that this web site is helping you to prepare for what's coming. If it does, then it's serving its purpose.

Let's close this essay with a little Christmas music.

I wrote about the song "Have yourself a merry little Christmas" last year. I think I like this song because it fits my mood as the gloomiest person in the world.

Here's the video of Judy Garland singing this song in the 1944 movie "Meet Me in St. Louis":

Merry Christmas and Happy New Year, everyone, and thank you for your support in the last year.

(Comments: For reader comments, questions and discussion, see the Merry Christmas and Happy New Year 2010 thread of the Generational Dynamics forum.) (25-Dec-2009) Permanent Link
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Generational Dynamics Web Log for 25-Dec-2009 At the end of a dark year, Merry Christmas and Happy New Year to all

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Generational Dynamics Web Log for 25-Dec-2009
At the end of a dark year, Merry Christmas and Happy New Year to all