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Image | How To Prepare For War
How To Prepare For War
 PREVIEW
by Chris Martenson

Executive Summary

  • There's much you can do to reduce your risk in advance of the arrival of a:
    • Trade war
    • Energy war
    • Financial war
    • Cyber war
    • Grid-down sabotage
    • Shooting war
    • Nuclear war
  • The steps you should prioritze the most right now

If you have not yet read Part 1: Is It Time To Prepare For War? available free to all readers, please click here to read it first.

As a preamble, I need to note that I do not enjoy or derive any satisfaction from writing about or spending time on figuring out how to dodge the worst impacts of human behavior.  War sits right at the top of my ‘This is stupid’  list, as war represents the idea that all other attempts at being smart or diplomatic have already failed.  I'm sorry that I have to spend time writing this report, and I am sorry that you have to spend time considering it.  With that said, I feel I have no choice, and somebody has to take on this task.  With a heavy heart…

If the West (meaning the US and Europe) decides to further goad Russia, war may be inevitable. Sooner or later, Russia will have to switch from 'response' mode to 'reaction' mode.  I’ve previous detailed the reasons for this in previous reports here, here and here.

As (sadly) expected, things have only escalated over the past year, not de-escalated. The West has a serious bone to pick with Russia, yet nobody can really explain what it is or why the conflict exists. (As an aside, I think it’s just bruised neo-con egos over Syria, but it really doesn’t matter what the explanation is at this point.) So, here we are in la-la land.

The consequences of an escalated conflict between Russia and the US/West could range from a very minor skirmish fought over some relatively meaningless items of trade, to an attack on financial markets, all the way to an all-out nuclear exchange.

The question becomes: What, if anything, can we do to prepare?

Lots, as it turns out.

No matter where…

How To Prepare For War
 PREVIEW by Chris Martenson

Executive Summary

  • There's much you can do to reduce your risk in advance of the arrival of a:
    • Trade war
    • Energy war
    • Financial war
    • Cyber war
    • Grid-down sabotage
    • Shooting war
    • Nuclear war
  • The steps you should prioritze the most right now

If you have not yet read Part 1: Is It Time To Prepare For War? available free to all readers, please click here to read it first.

As a preamble, I need to note that I do not enjoy or derive any satisfaction from writing about or spending time on figuring out how to dodge the worst impacts of human behavior.  War sits right at the top of my ‘This is stupid’  list, as war represents the idea that all other attempts at being smart or diplomatic have already failed.  I'm sorry that I have to spend time writing this report, and I am sorry that you have to spend time considering it.  With that said, I feel I have no choice, and somebody has to take on this task.  With a heavy heart…

If the West (meaning the US and Europe) decides to further goad Russia, war may be inevitable. Sooner or later, Russia will have to switch from 'response' mode to 'reaction' mode.  I’ve previous detailed the reasons for this in previous reports here, here and here.

As (sadly) expected, things have only escalated over the past year, not de-escalated. The West has a serious bone to pick with Russia, yet nobody can really explain what it is or why the conflict exists. (As an aside, I think it’s just bruised neo-con egos over Syria, but it really doesn’t matter what the explanation is at this point.) So, here we are in la-la land.

The consequences of an escalated conflict between Russia and the US/West could range from a very minor skirmish fought over some relatively meaningless items of trade, to an attack on financial markets, all the way to an all-out nuclear exchange.

The question becomes: What, if anything, can we do to prepare?

Lots, as it turns out.

No matter where…

Image | Desperately Seeking Substance
Desperately Seeking Substance
 PREVIEW
by charleshughsmith

Executive Summary

  • As we increasingly revere the superficial, we increase our subconscious craving for substance
  • What the success of Breaking Bad tells us about our confidence in meritocracy
  • The hopelessness of achieving the sold "American Dream" has created a cultural social depression
  • Healthy, authentic social mores will be found in our own making of them, not the idiot box

If you have not yet read The Schizophrenia Tormenting Our Society & Economy available free to all readers, please click here to read it first.

In Part 1, we set the stage for an analysis of American TV as a reflection of the cultural schizophrenia created by a widening gap between the few at the top of the celebrity/wealth pyramid and everyone else. TV’s winner-take-all competitions reflect the normalization of our acceptance of a society that produces few winners and an abundance of losers, and of the partial redemption offered by temporary recognition or social-media popularity.

On the surface, such shows reflect our culture’s belief in merit as the arbiter of success: the “best” competitor wins fair and square.  But beneath this superficial elevation of meritocracy are a variety of questions about the critical role of judges (experts) and the rewards of recognition, however fleeting: if the public spotlight is inaccessible, attracting a large number of “likes” for “selfies” photos offers a consolation form of popularity.

That such adulation of celebrity and the gaze of others trigger the loss of an authentic self is never mentioned; asking why draws a blank, as that interpretation of celebrity simply doesn’t exist on the cultural stage.

Let’s continue our exploration of TV’s subtexts by examining the ground-breaking series, Breaking Bad.

The Many Subtexts of Breaking Bad

Let me start by stipulating I am no expert on the series Breaking Bad, or indeed, on any TV series; I am commenting not on the plots or characters per se but on the series’ subtexts.

Many have noted the implausibility of a schoolteacher in America not having health insurance (and also not qualifying for Medicaid), not to mention the premise (that a schoolteacher starts manufacturing one of the most destructive and addictive drugs on the planet, crystal meth, to pay for his cancer treatments).

James Howard Kunstler recently took note of…

Desperately Seeking Substance
 PREVIEW by charleshughsmith

Executive Summary

  • As we increasingly revere the superficial, we increase our subconscious craving for substance
  • What the success of Breaking Bad tells us about our confidence in meritocracy
  • The hopelessness of achieving the sold "American Dream" has created a cultural social depression
  • Healthy, authentic social mores will be found in our own making of them, not the idiot box

If you have not yet read The Schizophrenia Tormenting Our Society & Economy available free to all readers, please click here to read it first.

In Part 1, we set the stage for an analysis of American TV as a reflection of the cultural schizophrenia created by a widening gap between the few at the top of the celebrity/wealth pyramid and everyone else. TV’s winner-take-all competitions reflect the normalization of our acceptance of a society that produces few winners and an abundance of losers, and of the partial redemption offered by temporary recognition or social-media popularity.

On the surface, such shows reflect our culture’s belief in merit as the arbiter of success: the “best” competitor wins fair and square.  But beneath this superficial elevation of meritocracy are a variety of questions about the critical role of judges (experts) and the rewards of recognition, however fleeting: if the public spotlight is inaccessible, attracting a large number of “likes” for “selfies” photos offers a consolation form of popularity.

That such adulation of celebrity and the gaze of others trigger the loss of an authentic self is never mentioned; asking why draws a blank, as that interpretation of celebrity simply doesn’t exist on the cultural stage.

Let’s continue our exploration of TV’s subtexts by examining the ground-breaking series, Breaking Bad.

The Many Subtexts of Breaking Bad

Let me start by stipulating I am no expert on the series Breaking Bad, or indeed, on any TV series; I am commenting not on the plots or characters per se but on the series’ subtexts.

Many have noted the implausibility of a schoolteacher in America not having health insurance (and also not qualifying for Medicaid), not to mention the premise (that a schoolteacher starts manufacturing one of the most destructive and addictive drugs on the planet, crystal meth, to pay for his cancer treatments).

James Howard Kunstler recently took note of…

Image | Prepare For The Bear
Prepare For The Bear
 PREVIEW
by charleshughsmith

Executive Summary

  • The underappreciated impact of the Fed's current tapering
  • Get ready for corporate profits to start rolling over
  • Why record margin debt is such a big danger
  • The myth of de-leveraging
  • Why the data make a clear case the long Bull market is ending

If you have not yet read Is Part 1: Is This Decline The Real Deal? available free to all readers, please click here to read it first.

In Part 1, we looked extremes in valuations, sentiment, leverage and complacency, and how these make the Bull case for further advances in stock prices difficult to make without drawing this time it’s different parallels with previous asset bubble tops.

In this Part 2, we’ll look at how the fundamentals of the Bull case have been weakened or threatened, and determine whether indeed we are witnessing a key moment of direction-reversal in the markets.

The Federal Reserve’s Tapering of Quantitative Easing

Everyone who follows the financial news is aware that the Federal Reserve has tapered its unprecedented Quantitative Easing bond and mortgage buying program from $85 billion a month to $25 billion a month, and has made noises about ending the program entirely by October of this year.

Observers see two primary consequences of the end of QE:

1.  Interest rates, no longer suppressed by Fed bond and mortgage buying, will likely tick higher from historic lows.

2.  The support for stocks and other risk assets provided by QE will end, removing a key prop under stocks.

It’s clear that interest rates—shown here by a commonly used proxy for interest rates, the 10-year Treasury bond yield—have hit bottom, and while they might bounce along the bottom for some time, they don’t have much room to decline even if “risk-off” buying of Treasuries pushes the T-bill yield lower.

In other words, even if Treasury yields fall as investors flee ‘risk-on” assets such as stocks for the safety of Treasuries, this doesn’t necessarily translate into…

Prepare For The Bear
 PREVIEW by charleshughsmith

Executive Summary

  • The underappreciated impact of the Fed's current tapering
  • Get ready for corporate profits to start rolling over
  • Why record margin debt is such a big danger
  • The myth of de-leveraging
  • Why the data make a clear case the long Bull market is ending

If you have not yet read Is Part 1: Is This Decline The Real Deal? available free to all readers, please click here to read it first.

In Part 1, we looked extremes in valuations, sentiment, leverage and complacency, and how these make the Bull case for further advances in stock prices difficult to make without drawing this time it’s different parallels with previous asset bubble tops.

In this Part 2, we’ll look at how the fundamentals of the Bull case have been weakened or threatened, and determine whether indeed we are witnessing a key moment of direction-reversal in the markets.

The Federal Reserve’s Tapering of Quantitative Easing

Everyone who follows the financial news is aware that the Federal Reserve has tapered its unprecedented Quantitative Easing bond and mortgage buying program from $85 billion a month to $25 billion a month, and has made noises about ending the program entirely by October of this year.

Observers see two primary consequences of the end of QE:

1.  Interest rates, no longer suppressed by Fed bond and mortgage buying, will likely tick higher from historic lows.

2.  The support for stocks and other risk assets provided by QE will end, removing a key prop under stocks.

It’s clear that interest rates—shown here by a commonly used proxy for interest rates, the 10-year Treasury bond yield—have hit bottom, and while they might bounce along the bottom for some time, they don’t have much room to decline even if “risk-off” buying of Treasuries pushes the T-bill yield lower.

In other words, even if Treasury yields fall as investors flee ‘risk-on” assets such as stocks for the safety of Treasuries, this doesn’t necessarily translate into…

Image | Humans Making Bad Choices Is Why I Garden
Humans Making Bad Choices Is Why I Garden
 PREVIEW
by Chris Martenson

As long as you're curious and read somewhat widely, if you're one of those readers who digs a bit further now and then, it's pretty much impossible to avoid the conclusion that humans are living unsustainably.

We're using up energy sources that took approximately 350 million years to accrete in a single 350-year-long orgy of consumption.
Humans Making Bad Choices Is Why I Garden
 PREVIEW by Chris Martenson

As long as you're curious and read somewhat widely, if you're one of those readers who digs a bit further now and then, it's pretty much impossible to avoid the conclusion that humans are living unsustainably.

We're using up energy sources that took approximately 350 million years to accrete in a single 350-year-long orgy of consumption.
Image | Reducing Your Risk To A Grid-Down Event
Reducing Your Risk To A Grid-Down Event
 PREVIEW
by Chris Martenson

Executive Summary

  • The most likely forms of cyber attack the national grid is vulnerable to
  • The evidence that shows malicious attacks on the US grid have been attempted multiple times
  • The low level of integrity in the current grid's defenses
  • A checklist of backup systems at the home level every concerned citizen should work to have in place

If you have not yet read Part 1: The Electrical Grid May Well Be The Next War's Battlefield available free to all readers, please click here to read it first.

Cyber Attacks, Hacking, and Malware

The other main threat we should concern ourselves with centers on the highly automated nature of the electricity grid combined with the human propensity for mischief. As with everything these days, computer-controlled devices are at the heart of the entire electrical generation and distribution system.

Again from the same Peak Prosperity member quoted earlier:

Combine this with the known vulnerabilities of the SCADA [Supervisory Control And Data Acquisition] systems controlling the power grid and you have the recipe for a real coordinated and manufactured disaster.

US researchers have identified 25 zero-day vulnerabilities in industrial control SCADA software from 20 suppliers that are used to control critical infrastructure systems. Attackers could exploit some of these vulnerabilities to gain control of electrical power and water systems, according to Wired.com.

Nine of these potential exploits have so far been reported to the suppliers concerned and the US Department of Homeland Security.

In theory, an intruder could exploit the vulnerabilities simply by breaching the wireless radio network over which the communication passes to the server.

Unlike the "heartbleed" zero-day bug that could be more or less addressed by software server patches, the SCADA systems are hardware boxes sitting out in the field. It's quite possible they are not upgradeable, or they were made by companies no longer in business, or whose programmers no longer support the system any more. "Uh, you want me to come up with a patch for THAT old system? Really? The guy who knew that code retired 10 years ago. I'm not even sure we have the source code anymore – or if it compiles – or if our build system can even compile for that CPU-type. And then we have to test it. We don't have any of those boxes to test it on anymore. And once tested, how exactly do we deploy this patch?"

If you've ever worked in a software organization, you'll know what I'm talking about.

No need to launch any supersonic missiles. If the US power grid is down, the US Navy won't be projecting power anywhere, since we'll be so busy trying to keep our people alive (and/or deploying what forces we have available into our own cities to prevent all those people who can't use their EBT cards anymore from tearing the place apart) to worry about what Russia is doing in their own backyard.

So – yes, asymmetric warfare. A coordinated cyber-assault supported with a kinetic attack on a select group of substations will…

Reducing Your Risk To A Grid-Down Event
 PREVIEW by Chris Martenson

Executive Summary

  • The most likely forms of cyber attack the national grid is vulnerable to
  • The evidence that shows malicious attacks on the US grid have been attempted multiple times
  • The low level of integrity in the current grid's defenses
  • A checklist of backup systems at the home level every concerned citizen should work to have in place

If you have not yet read Part 1: The Electrical Grid May Well Be The Next War's Battlefield available free to all readers, please click here to read it first.

Cyber Attacks, Hacking, and Malware

The other main threat we should concern ourselves with centers on the highly automated nature of the electricity grid combined with the human propensity for mischief. As with everything these days, computer-controlled devices are at the heart of the entire electrical generation and distribution system.

Again from the same Peak Prosperity member quoted earlier:

Combine this with the known vulnerabilities of the SCADA [Supervisory Control And Data Acquisition] systems controlling the power grid and you have the recipe for a real coordinated and manufactured disaster.

US researchers have identified 25 zero-day vulnerabilities in industrial control SCADA software from 20 suppliers that are used to control critical infrastructure systems. Attackers could exploit some of these vulnerabilities to gain control of electrical power and water systems, according to Wired.com.

Nine of these potential exploits have so far been reported to the suppliers concerned and the US Department of Homeland Security.

In theory, an intruder could exploit the vulnerabilities simply by breaching the wireless radio network over which the communication passes to the server.

Unlike the "heartbleed" zero-day bug that could be more or less addressed by software server patches, the SCADA systems are hardware boxes sitting out in the field. It's quite possible they are not upgradeable, or they were made by companies no longer in business, or whose programmers no longer support the system any more. "Uh, you want me to come up with a patch for THAT old system? Really? The guy who knew that code retired 10 years ago. I'm not even sure we have the source code anymore – or if it compiles – or if our build system can even compile for that CPU-type. And then we have to test it. We don't have any of those boxes to test it on anymore. And once tested, how exactly do we deploy this patch?"

If you've ever worked in a software organization, you'll know what I'm talking about.

No need to launch any supersonic missiles. If the US power grid is down, the US Navy won't be projecting power anywhere, since we'll be so busy trying to keep our people alive (and/or deploying what forces we have available into our own cities to prevent all those people who can't use their EBT cards anymore from tearing the place apart) to worry about what Russia is doing in their own backyard.

So – yes, asymmetric warfare. A coordinated cyber-assault supported with a kinetic attack on a select group of substations will…

Image | Diagnosing the Schizophrenia of our Society & Economy: Part 2
Diagnosing the Schizophrenia of our Society & Economy: Part 2
 PREVIEW
by charleshughsmith

Executive Summary B1 B2 B3 B4 If you have not yet read Diagnosing the Schizophrenia of our Society & Economy: Part 1, available free to all readers, please click here to read it first. In Part 1, we set the stage for an analysis of American TV as a reflection of the cultural schizophrenia created…
Diagnosing the Schizophrenia of our Society & Economy: Part 2
 PREVIEW by charleshughsmith

Executive Summary B1 B2 B3 B4 If you have not yet read Diagnosing the Schizophrenia of our Society & Economy: Part 1, available free to all readers, please click here to read it first. In Part 1, we set the stage for an analysis of American TV as a reflection of the cultural schizophrenia created…
Image | A Deadly Diet
A Deadly Diet
 PREVIEW
by Chris Martenson

One of the interesting things to emerge from my recent research into this area of nutritional health is the extent to which major food companies have been “on the ball” for decades now suppressing information on the awful health effects of some of their major products.

Sugar is the biggie.

I am old enough to remember the innumerable products that were sold as ‘low fat’…because that was the way to lose weight and be healthier.

There were low fat cookies, ice cream, sour cream, and cereal products.
A Deadly Diet
 PREVIEW by Chris Martenson

One of the interesting things to emerge from my recent research into this area of nutritional health is the extent to which major food companies have been “on the ball” for decades now suppressing information on the awful health effects of some of their major products.

Sugar is the biggie.

I am old enough to remember the innumerable products that were sold as ‘low fat’…because that was the way to lose weight and be healthier.

There were low fat cookies, ice cream, sour cream, and cereal products.
Image | The 10 Factors Destroying our Social Health
The 10 Factors Destroying our Social Health
 PREVIEW
by charleshughsmith

Executive Summary

  • The erosion of community is due to many factors
  • Understanding these factors enables us to begin combating them
  • The 10 reasons American social capital is declining
  • What it will take for a revival in social cooperation

If you have not yet read The Erosion of Community, available free to all readers, please click here to read it first.

In Part 1, we surveyed a number of explanations for the erosion of community, starting with the landmark 1950 book, The Lonely Crowd, and found that no one theory adequately accounted for the decline of social capital in America.

Here are ten other factors that could be factors in this long-term erosion:

1.  The explosion of choices in the mass media (mentioned by Robert Putnam and Kevin K.) now offers endless opportunities to form a protective bubble around oneself: if you only want to hear views that confirm your existing biases, it's now very easy to do so, and you don’t even need to go out into the real world to do so.

Since confirming our own beliefs is safe and comfortable, our collective reaction may be to avoid people who might disagree with us. Eventually, such isolated individuals “socializing” in self-selected groups online lose the ability to function productively in diverse groups of real people in a real community.

2.  The mobility demanded of labor.  The mobility of labor in America–that workers can pull up stakes and move to better job opportunities–is often lauded as the key to the U.S. economy's flexibility and resilience. This is no doubt true, but that mobility eviscerates community: if you move every 2-3 years (as required of military personnel, Corporate America managers and many others), what's the motivation for joining and contributing to local groups?…

The 10 Factors Destroying our Social Health
 PREVIEW by charleshughsmith

Executive Summary

  • The erosion of community is due to many factors
  • Understanding these factors enables us to begin combating them
  • The 10 reasons American social capital is declining
  • What it will take for a revival in social cooperation

If you have not yet read The Erosion of Community, available free to all readers, please click here to read it first.

In Part 1, we surveyed a number of explanations for the erosion of community, starting with the landmark 1950 book, The Lonely Crowd, and found that no one theory adequately accounted for the decline of social capital in America.

Here are ten other factors that could be factors in this long-term erosion:

1.  The explosion of choices in the mass media (mentioned by Robert Putnam and Kevin K.) now offers endless opportunities to form a protective bubble around oneself: if you only want to hear views that confirm your existing biases, it's now very easy to do so, and you don’t even need to go out into the real world to do so.

Since confirming our own beliefs is safe and comfortable, our collective reaction may be to avoid people who might disagree with us. Eventually, such isolated individuals “socializing” in self-selected groups online lose the ability to function productively in diverse groups of real people in a real community.

2.  The mobility demanded of labor.  The mobility of labor in America–that workers can pull up stakes and move to better job opportunities–is often lauded as the key to the U.S. economy's flexibility and resilience. This is no doubt true, but that mobility eviscerates community: if you move every 2-3 years (as required of military personnel, Corporate America managers and many others), what's the motivation for joining and contributing to local groups?…

Image | Why Your Own Plan Better Be Different
Why Your Own Plan Better Be Different
 PREVIEW
by Chris Martenson

Executive Summary

  • Why the insolvency hole the U.S. is in may be much deeper than appreciated.
  • Current 'best case' assumptions show us doubling the size of our economy TWICE over the next 75 years. Why that's just not achievable.
  • Why the above assumptions get even worse when the energy story is taken into account.
  • Why action at the individual level is your best bet now.

If you have not yet read Part I: "Endless Growth" Is the Plan & There's No Plan B available free to all readers, please click here to read it first.

A Big Hole

When the Treasury Department estimates that the U.S. has a ~$65 trillion NPV (Net Present Value) shortfall in its main accounts, it's saying that using its assumptions, the U.S. government would need to have $65 trillion – today – in an account, earning a stated rate of interest, in order to be solvent.

Since the U.S. government don't have that have that kind of scratch, it's insolvent. 

But the real picture is likely worse. The Fed calculates the NPV shortfall to be closer to $100 trillion. And if you believe Lawrence Kotlikoff's math, the figure is closer to $200 trillion. Either way – $65 trillion, $100 trillion, or $200 trillion – the sum cannot be paid.

So it won't be.

And the real trouble is that all of these numbers make the same implicit assumption: The future will more or less resemble the past. That is, some form of future growth – exponential future growth – of the economy is at the heart of every single calculation.

But we might question that, because somewhere between here and there, economic growth will have to come to an end. Or at least a pronounced deceleration. Why? Quite simply, because the earth is finite.

Now, we might comfort ourselves with the belief that our future date with hard limits is lifetimes away. But when we do, we shortchange ourselves (if we're wrong) and our progeny (if we're right). After all, the time to make an adjustment is when the resources and energy exist to make that change.

And that's now. Or, really, decades ago…

Why Your Own Plan Better Be Different
 PREVIEW by Chris Martenson

Executive Summary

  • Why the insolvency hole the U.S. is in may be much deeper than appreciated.
  • Current 'best case' assumptions show us doubling the size of our economy TWICE over the next 75 years. Why that's just not achievable.
  • Why the above assumptions get even worse when the energy story is taken into account.
  • Why action at the individual level is your best bet now.

If you have not yet read Part I: "Endless Growth" Is the Plan & There's No Plan B available free to all readers, please click here to read it first.

A Big Hole

When the Treasury Department estimates that the U.S. has a ~$65 trillion NPV (Net Present Value) shortfall in its main accounts, it's saying that using its assumptions, the U.S. government would need to have $65 trillion – today – in an account, earning a stated rate of interest, in order to be solvent.

Since the U.S. government don't have that have that kind of scratch, it's insolvent. 

But the real picture is likely worse. The Fed calculates the NPV shortfall to be closer to $100 trillion. And if you believe Lawrence Kotlikoff's math, the figure is closer to $200 trillion. Either way – $65 trillion, $100 trillion, or $200 trillion – the sum cannot be paid.

So it won't be.

And the real trouble is that all of these numbers make the same implicit assumption: The future will more or less resemble the past. That is, some form of future growth – exponential future growth – of the economy is at the heart of every single calculation.

But we might question that, because somewhere between here and there, economic growth will have to come to an end. Or at least a pronounced deceleration. Why? Quite simply, because the earth is finite.

Now, we might comfort ourselves with the belief that our future date with hard limits is lifetimes away. But when we do, we shortchange ourselves (if we're wrong) and our progeny (if we're right). After all, the time to make an adjustment is when the resources and energy exist to make that change.

And that's now. Or, really, decades ago…

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 Prep Now for the Coming Winter Challenges
I’ve been doing a lot of thinking about the needs and sustainability of our family. We have six young children, our oldest just turned 12 and our youngest just turned 3 months old. I love the considerations that the article had above and thought I would add a few things that I have considered for our situation. My...
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The Grow Network

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