The Next Eurozone Crisis   (September 20, 2012)


Europe is currently basking in the temporary calm of official reassurances and half-measures. The calm won't last long.

Two of the more interesting dynamics at work in our world are geometric growth and stick-slip events. Geometric growth (or progression) is also known as exponential growth, where the initial phase accelerates into a steep rise--the famous "hockey stick." Exponential growth is unsustainable and either levels off or crashes.

Here is an example of exponential growth that has not yet crashed: bank assets:

Stick-slip events are of interest because the pressures that lead to sudden, unpredictable rupture are hidden from view. All appears well until the catastrophic break in the Status Quo. Earthquakes are one example: pressure along a fault zone builds to a point that stability becomes instability, and the tectonic plates suddenly slip into a new equilibrium.

Perhaps human crises progress along an exponential curve. I prepared this graphic to depict the progression of human crisis from denial and phony reforms to half-measures and official reassurances to the final phase of uncontrollable crisis and a crash to some new state of equilibrium:

The eurozone is currently in Phase II, basking in the temporary calm of official reassurances and half-measures. Notice that the crisis level, the pressures building beneath the surface, are significantly higher than the initial crisis phase.

In the third and final phase, pressure skyrockets as the time available to reach a new equilibrium is compressed. If we boil away the distracting propaganda and complexity, the European crisis is not one of dodgy debt; it is two interlocking crises:

1. An inherently unstable currency that the Powers That Be in Europe are attempting to stabilize by brute-force money-printing and public-relations artifice.

2. The European model of generous social welfare is breaking down for demographic and financial reasons that are independent of the euro currency crisis. Two workers cannot support one beneficiary, and no state or aggregate of states can borrow enough to mask this reality for long.

Financialization and the build-out of China provided Europe the illusion that the worker-to-retiree/beneficiary ratio could fall to 2-to-1 and be maintaned indefinitely. Now that the fast-growth phase of China's build-out has ended, and the disastrous consequences of financializing everything under the sun are apparent, the illusion has run aground on fiscal reality.

Expectations that have been raised to unrealistic levels for decades are now in the process of being adjusted down to reality, and everyone who felt entitled to promises that cannot be kept is angry, frustrated, disillusioned and seeking a scapegoat for processes that are running entirely independent of the leadership of the moment.

How long will this false calm of official reassurances last? Nobody knows, but if crises track an exponential curve like so many natural dynamics, the next phase of the Eurozone crisis will quickly reach escape velocity and accelerate beyond the reach of politicos and PR.


My apologies to email correspondents: I am under the weather and unable to maintain my usual workload.



Resistance, Revolution, Liberation: A Model for Positive Change (print $25)
(Kindle eBook $9.95)

Read the Introduction (2,600 words) and Chapter One (7,600 words) for free.

We are like passengers on the Titanic ten minutes after its fatal encounter with the iceberg: though our financial system seems unsinkable, its reliance on debt and financialization has already doomed it.

We cannot know when the Central State and financial system will destabilize, we only know they will destabilize. We cannot know which of the State’s fast-rising debts and obligations will be renounced; we only know they will be renounced in one fashion or another.

The process of the unsustainable collapsing and a new, more sustainable model emerging is called revolution.

Rather than being powerless, we hold the fundamental building blocks of power. We need neither permission nor political change to liberate ourselves. A powerless individual becomes powerful when he renounces the lies and complicity that enable the doomed Status Quo’s dominance.



If this recession strikes you as different from previous downturns, you might be interested in my book An Unconventional Guide to Investing in Troubled Times (print edition) or Kindle ebook format. You can read the ebook on any computer, smart phone, iPad, etc. Click here for links to Kindle apps and Chapter One. The solution in one word: Localism.


Readers forum: DailyJava.net.



Order Survival+: Structuring Prosperity for Yourself and the Nation (free bits) (Kindle) or Survival+ The Primer (Kindle) or Weblogs & New Media: Marketing in Crisis (free bits) (Kindle) or from your local bookseller.

Of Two Minds Kindle edition: Of Two Minds blog-Kindle





"This guy is THE leading visionary on reality. He routinely discusses things which no one else has talked about, yet, turn out to be quite relevant months later."
--Walt Howard, commenting about CHS on another blog.


NOTE: gifts/contributions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

  Thank you, Edward D. ($100), for your outrageously generous contribution to this site-- I am greatly honored by your support and readership.  




Or send him coins, stamps or quatloos via mail--please request P.O. Box address.

Subscribers ($5/mo) and contributors of $50 or more this year will receive a weekly email of exclusive (though not necessarily coherent) musings and amusings.

At readers' request, there is also a $10/month option.

What subscribers are saying about the Musings (Musings samples here):

The "unsubscribe" link is for when you find the usual drivel here insufferable.

 
 
Your readership is greatly appreciated with or without a donation.
For more on this subject and a wide array of other topics, please visit my weblog.

                                                           


All content, HTML coding, format design, design elements and images copyright © 2012 Charles Hugh Smith, All rights reserved in all media, unless otherwise credited or noted.

I would be honored if you linked this essay to your site, or printed a copy for your own use.

Terms of Service:
All content on this blog is provided by Trewe LLC for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information. These terms and conditions of use are subject to change at anytime and without notice.



                                                           


 





Making your Amazon purchases
through this Search Box helps
support oftwominds.com
at no cost to you:


Add oftwominds.com to your reader:




Music/Songs:

My Big Island Girl
Thrill the players to bits:
buy it via CD Baby or
amazon.com (99 cents)

Instrumentals by my friend
and mentor Coconut Charlie:

Crash Course
Secret Asian Man
Third Stone
Tonic Float

Survival+   blog  fiction/novels   articles  my hidden history   books/films   what's for dinner   home   email me