http://www.telegraph.co.uk/finance/financetopics/recession/7883931/Obscure-book-by-British-adviser-becomes-cult-hit-after-Warren-Buffett-tip.html

The Final Stages of Socio-Demo-Economic Climax (1975-2010)
-ES

1. Overcrowding and Resource Depletion

Economic Competition, Globalization, Decreasing Economies of Scale, Urbanization and Over Development. Human habitat collapse. Irretrievable loss of economic pedestal… topsoil, farmland, potable water, open spaces… stifling pollution, disappearing wealth and increasing poverty. The failure of the Means of Production (labor plus technology) to satisfy the requirements of the population, namely health and well being. ‘Pumping your own gas.’

2. Government Corruption

Corruption in Leadership fueled by growing economic claustrophobia. Formation of self-serving Alliances across government, banking and business. Global pacts. Governments cease functioning to promote the common good and transition into predatory self-serving entities. Loss of transparency.

3. Money Printing

Money supply increases (subverting the business cycle) to subsidize (superfluous) noncontributing employment (e.g. the dot.com, wage-labor ‘babysitting’ boom… begetting a multiplier effect of increased social squandering). Upward inflection in the inflation trend preserves the status quo (i.e. keeps the game going). The use of Debt to mask economic constriction… and underwrite a growing pool of disenfranchised, alienated masses. Top Line Mergers and Acquisitions (M&A) and Just-In-Time Supply Chains. Money transforming from a store of value (against future claims) into transitory entitlement (sovereign coupon or purchase stamp) with diminishing purchasing power. Prices moving higher from increasing demand, especially from developing countries, alongside tightening supply… managed through sovereign currency intermediation and closed-door brokering. (1995)

4. Cutthroat Competition

Bottom Line M&A (cost cutting), Inventory Controls and efficiency-related Job Cuts (employees donning multiple hats). Equity markets function as wealth distribution mechanisms (into the pockets of Insiders) instead of traditional financing sources for business development. Shortages leading to rising prices for ‘necessities’ (rents, utilities, lifestyle expectation) and for inelastics (gasoline, health care). Continuing inflation managed through monetary and fiscal stimulus. Realization by growing global contingent of the collapsing human habitat and game of musical chairs playing out for shrinking global wealth (free time, natural resources, recreational property, longevity). Having to work harder and longer just to keep up, ‘The Grind Treadmill’. The dawn of Power as currency to gain entry into closing economic door. (2000)

5. Hollowing of Yesterday’s Prosperity

Cheaper substitutes, smaller packaging… ratcheting latent inflation… passing along inferior, lower grade, low standard and poisonous goods (farmers dumping pesticide onto crops, overuse of chemical fertilizers, antibiotics and growth hormones), “babies born polluted”, cheap and dangerous foreign imports (Recalls), shoddy manufacturing and short-cutting. Starvation and malnutrition supplant Green Revolution in agriculture. Cascading Third World health care giving way to increasing disease (cancer clusters, Pandemic).

6. Deflation

Deflation ignites from splintering social strata and accelerating impoverishment as people rush to sell assets. The ‘Great Pawn Shop’ economy begins a feeding frenzy of lower prices. Real Estate collapses. Unemployment explodes (layoffs, furloughs, early retirement, extended work weeks). Dilapidation from years of misappropriation and neglect (crumbling roadways, bridges, urban blight). Infrastructure deterioration across productive industry (power grid failures, unsanitary hospital conditions… mold, viruses, bacteria… accidents from faulty workmanship). Production Segregation leads to an oversupply of price elastic goods and services (like frivolous technological distractions) and under supply of inelastics. Shuttering of Manufacturing and Commercial Facilities, and End of Expansion (Business, Residential, Public Works). End of construction boom, another (cyclical) leg of ‘employment-babysitting’ false-prosperity, further misallocating the social base and robbing critical finite raw materials. (2002)

7. Fracture and Fragmentation

Fracture between the wealthy micro-minority ‘winners’ and everyone else. Fragmentation into ranks of ‘like-minded’ companion groups (race, religion, social standing, geography). Renewed money printing and disbursement, no longer to underwrite the illusion of prosperity and full employment, but to maintain minimum lifestyle subsidy in order to maintain peace and preserve social order. Unbridled debt creation with no mind to repayment. Tax payer impoverishment and revolt. Seizing up in money velocity, hoarding. Money taking on new face. Transition from a Luxury economy into a Necessity economy. Nationalism. Socialism. Ever greater numbers roaming the economic fringe. Moving beyond ‘pumping your own gas’ into self-sufficiency pact.

8. Endemic Corruption

Mass awakening to the wealth musical chairs spawns corruption across all social participants, accepted as business-as-usual. Those not ‘getting with the program’ are cast into the pool of impoverished majority. Rise of (global) organized crime. Growing entrenched black-market distribution channels. Governments enacting stringent tax collection measures and budget cuts to squeeze remaining taxpayer solvency against budgets at the local level that are bankrupt. Geopolitical Risk.

9. Threshold Event (TE)

ANY of a nearly limitless number of exogenous shocks knocks the legs out from under the precarious global economic system, absent of flexibility or tolerance. When this happens… ‘the music finally comes to an end’. World banking system crash (2008-09) is harbinger of terminal constriction. Warning: Gulf Oil Spill deemed highly likely precipitating TE. (7/2010)

A precipitating event, natural or manmade ignites a series of infectious, snowballing calamities and conflicts that closes the door on global equity markets. Social Replacement Costs (‘rebuilding’) can no longer be absorbed by prevailing marketplace.

Update: The Gulf oil spill is a HUGE domino recently flipping, going to destroy vital indigenous industry and remove another card from under the US (food-chain) house of cards (with 41 million Americans on food stamps). Tourism collapse. Residential and commercial price collapse. Oil turns SE US quadrant toxic, refugee crisis. Real Estate price collapse, another straw on the back of the Zombie Bank (mortgage debt) Camel. Health crises and impending health care collapse.

10. Breakdown

A chain reaction of crises transfixes the financial system amidst production bottlenecks after decades of misappropriation and squandering disrupt the Means of Production amidst the overhang of population saturation. Lifestyle collapse. Money sheds skin and becomes wholly an entitlement coupon backed by whoever is at the government helm, with rocketing interest rates to instill transitory currency confidence. Inventory depletion. Shortages of goods and services compounded by fallout and disruption from conflict. Just-In-Time global supply chains go vacant. Decentralization and Territorialism. Rationing, Barter, Black Market economics.

Currency ceases to function as a store of value causing bank runs. Counter-party Risk. Homelessness. Government confiscation. In the absence of a stable currency then civil war between the Have’s and Have-Nots/Martial Law.

Wealth is ‘repriced’ according to the Production of Goods and Services (or lack thereof) in the diminishing, ultra-competitive landscape. Traditional Stores of Value… precious metals, diamonds, artwork, antiques… already decreasing in real terms as the global, social ‘top’ approaches the TE are replaced (interim?) by necessities and inelastics (like medicine), which become most highly valued new currency. Social restructuring (down-structuring) marks the end of Specialization, Cultural Diversity and Social Complexity. One quarter to one half of the planet population ceases to exist. End.