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posted on 14 December 2015

Rising Tides And Economyths

by Reverse Engineer, Doomstead Diner

Appeared originally at Doomstead Dinner 13 December 2015

Discuss this article at the Economics Table inside the Diner

"...and sinks everyone on shore."

OK, I added the coda to that cliche myself. LOL.

"A Rising Tide Lifts All Boats...."

After that Intro, you probably think this article is going to be about Climate Change, or maybe my Geotectonic Ocean Heat Transfer Theory. It's not. It's about Economics and Money, my central focus since I became aware of Collapse Dynamics in 2007-2008 with the collapse of the Investment Banks Bear Stearns and Lehman Brothers.

In some respects this article is also going to be a rehash of concepts I tried to clarify in The Money Valve 4 part Series around a year and a half ago or so now. For those of you who missed the series, the links are The Money Valve, The Money Valve II, The Money Valve III & The Money Valve IV,

"A Rising Tide Lifts All Boats" has nothing to do with Tsunamis, Earthquakes or even the position of the Moon as it circles the Earth. It's another one of those Economyths TM like Trickle Down Economics.

The aphorism "a rising tide lifts all boats" is associated with the idea that improvements in the general economy will benefit all participants in that economy, and that economic policy, particularly government economic policy, should therefore focus on the general macroeconomic environment first and foremost. The phrase is commonly attributed to John F Kennedy,[1] who used it in a 1963 speech to combat criticisms that a dam project he was inaugurating was a pork barrel project.[2][3] However the phrase has been used more commonly to defend tax cuts and other policies where the initial beneficiaries are high income earners.[4]

The notion here is that if you hand out money to the already rich, the new money and new prosperity will eventually work it's way down to the bottom end of the society and they will be better off too. Their Canoes will be higher up, even though they might not be as comfortable as the super yachts of the .01% who get dished out the money first.

Tide rises for this boat first

Tide is supposed to lift this boat also

Unfortunately, in reality in the world of Economics it doesn't work that way at all.

This Economyth has been long used by the Elite to justify their own wealth & privilege, and for a long time it was semi-believable also I mean, today even Poor People have Smart Phones! 20 years ago poor people did not have smart phones! Today even poor people in the FSoA have Used Cars! 100 years ago poor people did not have used cars!

The .1% have "Green" EVs like this

Poor people have nasty polluting ICE cars like these

But at least they have carz now! See? The rising tide really DID lift all boats!

Well no, not really, because while the tide was rising up above ground with the production of all those smart phonez and carz, below ground the tide of fossil fuel energy that enabled the production of all those toys was receding. The "trickle down" effect of poor folks getting used carz after the new car buyer worked for a while as the energy moved its way downhill, but the poor folks never got the newest latest greatest Tesla or whatever the hot item of the day was, at least with the big ticket items.

Meanwhile, outside of the Heart of Darkness in the 1st World countries, the lives of the poor folks DEFINITELY are not getting better, in fact the Rising Tide for them is making things a whole lot worse these days in quite a few towns, like Jakarta for instance.

Wading to school and work every day is NOT an improvement!

All over the 3rd World, the poor people are starting to get the picture that the rising tide for the 1st World countries is not going to lift them out of poverty, in fact it is making them poorer and worse off by the day here in many ways. Besides the climate and pollution problems endemic to these countries is the fact they are the first place the wars break out as western countries still seek to strip them of any resources still left there and as the locals fight over the scraps left over in brutal civil wars, useful to the Elite for ridding the planet of unecessary Useless Eaters.

Unfortunately for said Elite as well as all the poor and formerly middle class folks in Europe, these folks don't JUST stay in their home countries killing each other off, a decent percentage try to GTFO of Dodge and migrate into their home turf, where the rising tide is no longer helping their local poor people either. The used cars may still be available for them to buy, however they are not very useful when they don't have money to buy gas or jobs to drive the used car to either!

Spain hit Peak Oil consumption in 2007

Italy hit Peak Oil consumption a little earlier, around 2005-6

For all the PIIGS, peak was around 2005, wih the Big Slide downhill beginning in 2007

Are people who are already getting poorer by the day going to be very welcoming of a huge influx of even poorer people who will compete with them for the few part time jobs still left in the shrinking oil economy? OF COURSE NOT!

Normally reserved and politically correct Swedes morph into Arsonists

Meanwhile, the Elite class wants to mandate resettlement of "qualified" non-terrorist migrants, to any neighborhoods except the ones they live in. This idea of course floated as well as a lead balloon, so now the Elite are trying to buy off Turkey to fence them in over there. Anybody who thinks the Elite have a real "Plan" here has been drinking conspiracy theory Kool-Aid for too long, there is no plan. They are flying by the seat of their pants trying to do damage control while they get their Bunkers built in Argentina (Doug Casey), Panama (Bush Family Compound) and New Zealand (Steve Wozniak).

What should be pretty clear here by now is that with the "Rising Tide", the Elite are trying to keep their yachts floating by sinking everybody else's canoes and fishing boats. This process of making 99% of the population incrementally poorer while making 1% of the population incrementally richer has been working for a while, since the 1970s really but accelerating since the collapse of Bear Stearns and Lehman Bros. in 2008. In the Slow Boiling Frog paradigm, the average J6P didn't really notice this for the first 30 years or so of the downhill slide, but in the last decade it has become VERY apparent, and nowadays EVERYBODY KNOWS.

The tide rolled in from the Tsunami around 1750 with the invention of the Steam Engine accessing the thermodynamic energy of coal, but it really accelerated at the beginning of the 20th century acessing liquid fossil fuels with the invention of the Internal Combustion Engine. That made the automobiles and the airplanes possible, without it the Wright Brothers would never have got off the ground at Kitty Hawk.

As with Porsche, "there is no substitute".

While electric power in rechargeable batteries might run a few cars, it won't run airplanes. Creating enough biofuels to burn energy flying around at anywhere near the pace we currently use it would take all the arable land on earth, there would be nothing left to eat! Airplanes, even the Gulfstream V Private Jets the Elite use to commute to conferences like COP21 are not long for this world, but to keep them flying as long as they can, the fuel has to be triaged off from the Useless Eaters and funneled ino their jet engines, by whatever means necessary. If it takes bombing them back to the Stone Age, that is what will be done until it is no longer possible to do so, for one reason or the other.

It is not just about how much might still be left underground, it is about the economics of trying to yank it up and those economics are failing big time now. In just this last week, not 1, but 2 hedge funds gated redemptions on the vast quantites of junk bonds issued out over the last decade to extractors of oil to keep the Happy Motoring lifestyle going just a little bit longer in the Heart of Darkness of the portion of the 1st World countries still solvent, which shrinks by the day, in real time you can watch it happening. The Frog is not boiling so slow here you can't notice it, at least not if you are not already brain dead for one reason or the other.

What has already hit the poor folks in the 3rd World, what is hitting the Poor and Middle Cass of the 1st World as we speak is going to hit the Elite as well, in fact that also is going on as we speak here. In just the last couple of days, two Hedge Funds gated redemptions from their investors.

Yesterday, in the aftermath of the shocking news that the Third Avenue Focused Credit Fund was liquidating and had gated investors due to its "illiquid" portfolio, we had one simple prediction:

"What this means is that now that the dreaded "gates" are back, investors in all other junk bond-focused hedge funds, fearing they too will be gated, will rush to pull what funds they can and submit redemption requests, in the process potentially unleashing a liquidity - and liquidation - scramble within the hedge fund community, which will first impact bonds and then, if the liquidity demands continue, equities as well."

We had to wait just over 24 hours to be proven correct, because moments ago Dow Jones reported that the $1.3 billion Manhattan-based Stone Lion Capital, a distress-focused hedge fund, has just suspended redemptions after "substantial requests."

If you are in the least bit familiar with the Collapse of Bear Stearns and Lehman, you should know by now that a collapse of firms this size with this large an investment portfolio does not stop with them. They have counterparties to every trade, and when they try to liquidate en masse it forces the price discovery that is hidden until the day comes that everyone runs for the Fire Exit.


It does look as of this weekend that the next run is commencing. This time, it is not clear that the CBs have a big enough Bazooka to provide the liquidity and soak up the losses of all the Pigmen Gamblers out there betting with Other People's Money.

This is the correlary to Margaret Thatcher's criticism of Socialism, which is that sooner or later you run out of Other People's Money to spend on Social Welfare Programs.

The problem with Capitalism of course is that eventually you run out of Other People's Money to Gamble with. You can only fake this for so long by issuing out Irredeemable Debt, eventually EVERYBODY KNOWS that it is a scam. When they do wake up to this, they are mighty pissed off too! Cue the Gullotines and Lynch Mobs.

So what is the outcome of this? MORE MAYHEM! There is a Snowball's Chance in Hell that "World Leaders" could come together to find a solution, even if there was another solution beside a lot of DEAD PEOPLE. All you as an individual can do on the Grand Scale is to try to distance yourself as much as possible from the mayhem, but this is of course quite difficult to do considering industrial civilization has infected just about all locations on Earth right now, and even if you are close personal friends with Richard Branson, you have a 100% chance of dieing if you try to escape Earth on one of his Rocket Ships. They won't even make it to Mars, much less do interstellar travel for the next century at least, and probably not FOREVER.


Seeing as you are stuck here on Earth here in the first half of the 21st Century, you might as well enjoy the show, because this one is gonna be the Mother of all Shitstorms. It's going to be the Greatest Bonfire of Paper Wealth in all of Recorded History, and the Crash & Burn of the first and only truly Global Civilization of Homo Industrialus on the Roller Coaster Ride Down from Population Overshoot to Population Undershoot.

Break out the Popcorn.

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