Fourth Turning Has Arrived: Adios Western Ruling Class

EU elites promised a prosperous green future. This could be their undoing

What is embroiling Europe is deeper than a political crisis – it is approaching what can be called a crisis of legitimacy for the ruling elite. This can be thought of as a metaphysical event that precedes political upheaval, the latter being merely confirmation that such a crisis has taken place. Legitimacy is, of course, a rather nebulous concept, and it defies objective measurement.

Ruling classes throughout history have always advanced various claims about their own legitimacy, without which a stable political order is impossible. In tracing the contours of the current crisis, it’s important to establish what exactly the claims Europe's technocratic elite have put forth and how they are becoming increasingly difficult to believe.

Ostensibly, the EU’s ruling elite has staked out the green transition as its raison d’être. They claim to have the mandate, vision and competence to see it through and have set clear targets to measure their success.

It was a good run, but when you're destroying nuclear power plants and running 6 percent deficits to prop up your Potemkin economy and financial markets, the reaper is right around the corner.

Frozen Baizuo 2023 Edition

ZH: New England's Power Crisis Set To Return, Regulator Warns

New England's power grid could be several cold snaps away from the start of an energy crisis that reappears whenever temperatures dip because of the state's heavy reliance on natural gas generation, delayed/blocked expansion/upgrades to energy infrastructure, and lack of grid diversification.

Average temperatures across Massachusetts started to slope down in mid-August. Temperatures are between 55-60 degrees Freigheight, indicating the heating season could be just weeks away.

Another serious issue is the controversial US law, the Merchant Marine Act of 1920, more commonly known as the Jones Act. This law helps ensure the US merchant marine fleet remains busy by only allowing US vessels to transport goods from one domestic port to another, barring foreign vessels.

This means New England can't receive LNG shipments from the US Gulf because the US shipbuilders don't build LNG carriers. So LNG facilities in New England have to rely on foreign shipments -- adding to the complexity of the region's issues.

Bizarro Markets Again

The markets are nowhere near pricing in a world where 15% of Europe's GDP goes into energy payments. Think about how the world financial markets behaved in 2000 and 2008 when about 3 percent of GDP was lost. The effects are enormous because that 3 percent isn't spread evenly over the economy. Sectors such as manufacturing can see double-digit declines in sales and profits. Now think about 5 times as much spending being shifted. Think of it this way: imagine the US had to shut the entire healthcare sector. All the hospitals, biotech firms, Band-Aid manufacturers, doctor, nurses and administrators, it's all gone. Or consider federal spending is about 23 percent of US GDP. European consumer spending on non-necessities will fall to near zero.

There is a bullish case here: Europe blinks. The financial markets could easily rally 10 percent on that news. How that shakes out with oil prices and inflation would take time.

The bearish case is they don't blink. I'd wager almost none of this risk is priced in because it's extreme risk. Every multinational consumer company might see sales tumble towards zero if this plays out in the worst way possible. This would cause a Great Depression 2.0 because debt would default or the ECB prints enough such that the currency absorbs the losses. I have no idea where EURUSD could go in that scenario, but 50 cents is probably on the optimistic side.

Use Your Imagination

Draw your attention to the green line at $3.30 per pound on copper. This isn't a hard line, but notice how trips below this area have been violent.

Going back to 2017, there is heavy volume around the $3.25 area to the $2.50 area. This should be difficult for the market to slice through. Yet if there is a deflationary event, that's exactly what might happen.

My next target for QQQ is $260, that support line is right there in November 2022. A punch through to suck in the bears and trigger a squeeze might conclude the downside activity for 2022. That's only a 15 percent decline from here. I anticipate heavier selling in energy and commodities, for Apple to break down and for stocks such as Meta that are already near 52-week lows to suffer implosions. What I've mainly done is looked at the 52-week lows and then assumed it'll break by October or November, and purchased the most profitable puts for that scenario.

Expect a lot of chop. I will mostly accumulate short positions on rallies and may do limited trading.

The next phase for the bear is a transition from inflation to deflation, from worries about inflation to worries about recession. My sense is the market is being too cute with recession calls. I see investors who think the market won't go straight down. I think that's wrong. Markets front-run recessions.

There is risk of a major crash or prolonged bear market. It could be that everything going on is overblown, but there are indicators showing a recession as bad as 2008 and 2020 and 2000. My read is that the media has mesmerized the public. What is going on in Western societies is full blown insanity. I don't think people are mentally ill, but the crowd is functionally mentally ill. Transgenderism, green energy and war with Russia are all coming from the same mentally-damaged ideologies and narratives. It will eventually translate into financial markets. Like the severed genitals of a eunuch, Western economies have been "permanently" damaged. They are pretending at being wealthy the same way society pretends a eunuch is a woman. Getting Western economies back on track will require extremely high short-term costs in the form of higher wages, inflation, interest rates, welfare cuts and so on. Not getting back on track requires accepting a permanently lower standard of living. Factor in political risk when the public fully realizes the ruling class has purposefully impoverished the West. At some point, the West will realize what it has done and then good luck finding anyone to buy "stocks" at anywhere near current prices.

Many things can happen between now and the "moment of realization," yet the longer these policies are in force, the more likely this outcome will be. The GOPe is also in the process of blowing the midterm elections with a focus on already fading inflation, which will mean no shift in policy until 2025 at the earliest. Even if the GOP pulled off a Congressional sweep, the GOPe-dominated Senate is as insane as the Democrats on issues such as Taiwan and Ukraine. No one will stop the incineration of Western prosperity.

Climate Scam: Greens BTFO'd in 1-Minute

It's all fake folks. The whole damn thing, from ESG to the rest. The modern political world is built upon lies all the way down. The only thing to do is maybe let the scam go on a little longer to hijack it for nuclear power, which otherwise faces public resistance. Then once the nukes are being built, reveal it was all a scam. But oh by the way, we now have energy independence and enough power for the next century of development.

New Contrarian Indicator Drops

The Sounding Line: Another Sign of Excess Bearishness?

Good discussion at the link. I still think this is a big bear market and stock are overvalued, but destruction is a process. The potential for a straightline collapse exists if bad decisions keep piling up, but suprise surprise, the EU just declared that natural gas is green: EU parliament backs labelling gas and nuclear investments as 'green'

I take this as a sign that stupidity may be curtailed. Remember, hard times make hard men. All the woke horseshit that would get someone fired from a job, and all the bullshit green virtue signaling goes right out the window when people suddenly realize they like hot water and electricity. Once they realize the whole climate agenda is giant scam cooked up by communists and Wall Street, the whole thing will come crashing down. In any event, nuclear will be a the winner because we need massive power to fuel the economy of the future, and things like solar panels are mainly replacement, not something that will deliver 10x power supply.

Clown World Engages the Turbo Boosters

Reuters: Top producer Albemarle risks shutting German plant if EU declares lithium a hazard

Top lithium producer Albemarle Corp (ALB.N) may have to shut its Langelsheim plant in Germany if the metal used in electric vehicle batteries is declared a hazardous material by the European Union, its finance chief told Reuters.

Can't type much because I'm laughing too hard.

Baizuo Don't Get It: Green Swan Panic Edition

ZH: In Latest Flailing Attempt To Slow Soaring Energy Costs, Biden Invokes Defense Production Act To Push Green Agenda

On Monday, Biden invoked the Defense Production Act, targeting the country's solar production capacity and fuel cell production, among other forms of green energy.

The Baizuo/Green solution for destroying the energy sector is to more fully destroy the energy sector. They do not comprehend physics, economics or incentives. Their understanding of the economy approximates that of a small child's. There is zero conception of the unseen effects of policy, the second- and third-order implications of a policy. If the state subsidizes inefficient energy sources, capital will flow out of sustainable, efficient sources and into inefficient sources such as solar. Note I am not saying solar doesn't work, but that solar doesn't work at a subsidized price. What policies like this do is increase the long-term cost of energy. Instead of solving the problem, they're increasing it.

Update from the Market Ticker: This Is Why It Doesn't Work

Why would you pay 30 cents/kwh for power you can have for 10?

Mao's Great Leap Forward and the green/neoliberal/globalist/Baizuo agenda of low/zero carbon emissions, electrification of transportation, alternative energy, etc. come from the same basic idea, that planning and central control is possible and works. Mao didn't intend to kill tens of millions of people with his plans, Mao was saner, but Mao had more power. We aren't well into a multi-dozen millions death count because the current ruling class lacks the power of Mao. If they are able to disarm Americans and defeat Russia and China diplomatically or militarily, we might yet see a body count that runs well into the triple-digits (on top of WW3 body count if it comes to that).

What It Means to be Green

This is peak Green policy. Many people were tricked by science, business and government. Tell your friends to stop being useful idiots. There is no pure or true green policy. This was the plan all along.

The Lockdowns are Central Planning

Independent: Return of ‘work from home’ plan to save fuel in event of crisis caused by Ukraine war (Archive link)

People will be ordered to work from home in the event of a major fuel crisis sparked by the war in Ukraine, under secret Government emergency plans.

The Irish Independent has learned confidential details of an emergency planning exercise held 10 days ago between all the major state agencies and the Government.

...Delegates were given a scenario of a 20pc diesel supply deficit in September and a 35pc drop in supply in December. The third and most extreme scenario proposed for February 2023, is where gas and oil supplies cannot meet the demand for electricity generation or farmers preparing to cut silage.

The Irish Independent can reveal that in the event of a national fuel crisis, emergency contingency measures discussed at the high-level meeting include:

:: All non-essential workers will be ordered to work from home

:: A limit will be placed on all non-essential car travel

:: A strict limit on the amount of fuel motorists can buy at any one time

:: The implementation of an immediate and strict reduction in the speed limit on motorways.

The plan also includes the introduction of an emergency scheme whereby motorists with an odd number at the end of their car registration will only be allowed to drive or refuel on alternate days.

The market can instantly solve the problem of high fuel costs because people will ration it themselves. High prices, unfortunately, are the best cure for high prices sometimes.

Socialism aka scientific socialism aka communist are all forms of the Fatal Conceit (PDF link).

The Fatal Conceit

The book attempts to conclusively refute all forms of Socialism by demonstrating that socialist theories are not only logically incorrect but that the premises they use to form their arguments are incorrect as well. To Hayek, the birth of civilization is due to the start of societal traditions placing importance on private property leading to expansion, trade, and eventually the modern capitalist system, also known as the extended order.[1] Hayek argues that this demonstrates a key flaw within socialist thought, which holds that only that which is purposefully designed can be most-efficient. Moreover, statist ("socialist" is Hayek's terminology) economies cannot be efficient because of the dispersed knowledge required in a modern economy. Additionally, since modern civilization and all of its customs and traditions naturally led to the current order and are needed for its continuance, any fundamental change to the system that tries to control it is doomed to fail since it would be impossible or unsustainable in modern civilization. Price signals are the only means of enabling each economic decision maker to communicate tacit knowledge or dispersed knowledge to each other, in order to solve the economic calculation problem.

Below the entry on The Fatal Conceit has "see also Dunning-Kruger"

In 2011, David Dunning wrote about his observations that people with substantial, measurable deficits in their knowledge or expertise lack the ability to recognize those deficits and, therefore, despite potentially making error after error, tend to think they are performing competently when they are not: "In short, those who are incompetent, for lack of a better term, should have little insight into their incompetence—an assertion that has come to be known as the Dunning–Kruger effect".

Every socialist suffers from this, from those who want government run healthcare to those who think they can lockdown an economy, to those trying to solve problems caused by government policies of inflation and central planning with more inflation and central planning, to the communist governments that tried planning all aspects of the economy. It's one giant Dunning-Kruger all the way down. Socialism fails, along with other forms of centralization, from it's underlying assumption: that planning is possible, let alone superior to the market. The market here meaning, the individual freely choosing how to spend their money and not some euphemism for corporate control, itself a form of central planning once it becomes too large and begins behaving like, or merging with, government.

The wise man knows there is no more efficient allocator than the market. The wise man knows that, in the case of say education or healthcare or housing, that even seemingly simple interventions such as subsidies for the poor can have wildly destructive effects on the economy. See the current U.S. healthcare system which has been tinkered with by government for the past 80 years. There are many economic problems in society, but most of these fall into the category of nature (the lazy are poor) or law. They are either "permanent" problems or can be solved without any ideology. 

The fatal conceit isn't limited to socialist ideology, even if nearly all socialists are planners at heart. It doesn't necessarily have to be socialist in outcome, but the term "scientific socialism" exists for a reason. It can begin with the idea that the "wise" or "learned" can control the economy. When this idea takes hold in a democracy it creates a Dunning-Kruger feedback loop where the dumbest voters think that someone can plan the economy and vote for people who are dumb enough to try. Society spirals down through various levels of Hell on Earth as this feedback loop feeds on itself.

The key word being science. "Trust the science." The CCP often uses the term scientific socialism, not to describe socialism as much as their "scientific" approach to managing the economy. Now they are running covid tests on Alaskan king crabs being cooked in restaurants...(unfortunately I didn't grab the video I saw on Twitter, but that link goes to an India Today report that reports on China doing covid tests on cray fish...) Point being, if you can recognize the insanity of testing crabs being fried or boiled for covid-19, then you can eventually recognize that this is "socialism" and "trust the science" all the way down. The fatal conceit begins the moment one believes they can control nature. Hundreds of millions of people were killed directly and indirectly by socialists in the 20th Century who were trying to do the equivalent of covid tests on boiling lobsters. Their plans are insane or doomed to fail from the start.

We can contain most inflation. We can make housing more affordable. We can raise wages. We can eliminate energy and food shortages. We can make healthcare more affordable and widely available. We can do many things, but none of these will be accomplished with "science" or "socialism" or "corporatism" or any people who think they can plan society beyond the broadly general sense of things like tax policy. Should government fund itself with sales tax, income tax, property tax, tariffs or capital gains tax? All? One? In what proportion? This decision alone has massive impact on society. There are arguments for and against all of them. What's going on today is not government policy in this broad general sense, but a government trying to micromanage the economy right down to restricting the movement of people, restricting their healthcare options and restricting their speech online, the latter two often farmed out to corporations...

Almost all the Greens are planners, the entire climate hoax is like the covid hoax, taking a small problem and using it as justification for the takeover of the global economy. Our crisis is not caused by covid or the climate, it is caused by people who lie about the size of these problems and use that lie to justify their own power, and the increase of that power to the point where a totalitarian government can shut off your car, your healthcare, your job, your Twitter account.

We got lucky, I think, by the covid collapse revealing the plans of the Greens. It's all the same people, the same class of planners. They wanted to do exactly what happened in 2020, but they planned on doing more slowly and making it appear more natural. That they're out there celebrating high inflation, energy and food shortages finally knocked their masks off. 

Who's Ready for $14 per Gallon Gasoline?

FJB Green Swan: Gas Prices Explode to New All-Time High

Gas prices are 20 cents away from rising 100 percent this year, and the year is not half over. Since gas prices went up 20 cents in the past 5 hours, a doubling in gas prices could happen as soon as later today! (Don't think it will but wouldn't bet on it.)

Greens Celebrate Skyrocketing Food Prices and Shortages

All planned. First the psyop, psychologically breaking down resistance to insanely destructive policies. Now we're in the rollout phase. Enjoy the collapse everyone!

This Isn't a Black Swan, It's the Green Swan

The BIS has unintentionally meme'd itself for us. We aren't suffering a Black Swan collapse because this has all been planned. It's the Green Swan. The panoply of policies designed to collapse industrial civilization and bring the developed nations to heel, most importantly the rowdy American middle class that still refuses to learn its place in this world.

BIS (PDF): Central banking and financial stability in the age of climate change

Green Swan 2022: Cutting off diesel and food supply to the world, will begin on May 31.

Create an entire movement based on the idea that bad weather would destroy the world, and then systematically destroy the world as you predicted, by implementing "solutions" to the "problem." The #GreenSwan in a nutshell.