India Takes Another Step Forward With Nuclear Work

India continues to move forward with their nuclear program. In this instance, contracts are being awarded for construction of their 500 MW(e) Fast-Breeder nuclear power plant:

BHEL bags contract for 500 MW nuclear plant in TN

NEW DELHI: State-owned Bharat Heavy Electricals today announced it has bagged a contract for 500 MW nuclear power plant at Kalpakkam in Tamil Nadu, being set up by Bhartiya Nabhikiya Vidyut Nigam (BNVL).

"Under international competitive bidding, we have bagged a contract for the turbine generator and secondary side equipment for the first Prototype Fast Breeder Reactor of 500 MWe rating," BHEL said in a statement.

The unit is scheduled for commissioning during the 11th Five-Year Plan...

This is important on a number of fronts. First, India does not have a large quantity of uranium reserves. Most of their nuclear power program (and their weapons program for that matter) has been home-grown. This is another huge step. If the reactor can be built on-time and on-budget and if it operates successfully, the Indians will have moved into an elite group of nuclear-power nations who have proven they can build and run the types of plants that will be a critical part of nuclear power providers in the coming decades. And if they can incorporate this facility into their plans for a Thorium-cycle, then they will become the world leader in a type of fuel cycle that could provide vast amounts of electricity for centuries.

Breeders are important. Right now, the vast majority of nuclear power plants must "burn" uranium that has been enriched in the isotope U-235. The vast majority of natural uranium is the isotope U-238, with U-235 counting for ~ 0.7% in nature. I won't bore you with the physics, but click here for a discussion of they "why" behind it.

Obviously, relying on such a tiny fraction of a resource will limit its usefulness. Breeders take advantage of the fact that sometimes a neutron will strike an atom's nucleus and "stick" there instead of fissioning it. In the case of a breeder, either U-238 (remember, vastly abundant) or Th-232 is struck by a neutron and "captured". This creates U-239 which decays into Pu-239 or it creates Th-233, which decays (after an intermediate step) into U-233.

After running the "bred" material through an extensive (and expensive) reprocessing procedure, both U-233 and Pu-239 can then be used as fuel in reactors, just like U-235 is used today. Both Uranium-238 and Th-232 are widely available. India, while deficient in stocks of uranium, has enormous reserves of Thorium. This would allow India to fuel her nuclear program via indigenous fuels. It will also eventually allow them to export this technology to other countries who might prefer that type of reactor.

We shall see. The U.S. has built and run fast-breeder reactors before, but the last one was shut down by the brilliant minds in the Clinton Administration. The Clinch River Breeder Reactor project was killed in 1983 and the U.S. ceded this entire field of technology to foreigners. They can be tricky to operate, as the French and Japanese have found, but if civilization hopes to keep the lights on, these breeder reactors will be critical in the future (in more ways than one).

My personal favorite would be a molten-salt version, allowing for online reprocessing and the ability to offstream isotopes for medical and research use, but that is just me.

So how does this jive with my ongoing assumption that the West is about to run itself off a cliff and into a deep abyss of credit collapse, poverty and violence? I touched on the topic in Nuclear Power, 4GW and the Downturn in Social Mood and a few other topics labeled nuclear power and think that the short term future for nuclear power is unfortunately not as bright as I would hope.

But, if my assumptions prove even half-way correct, in the coming years there will probably be trade wars and a rise in piracy, both of which could affect world shipments of nuclear fuel. Countries that can produce their own fuel will have a leg up in energy security. I think a very important lesson is going to be learned in the U.S. - cheap electricity is not a birthright. Killing the breeder program because the electricity was too expensive during the energy glut of the 1980's might have made sense in a short-term, bottom-line way, but future generations will suffer for the lack of energy infrastructure, technology and trained personnel embodied by that type of thinking.

And, further down the road, some portions of the world will, hopefully, survive relatively intact. They will be the ones who keep their libraries, universities and industrial companies stocked with the technology and know-how that will be needed to power the rise from the ashes that will occur once the coming storm has passed.

Sustainable fuel cycles, such as fast-breeder programs will be a part of the energy base available to these new civilizations, barring a major breakthrough in physics. And the further that knowledge is spread, the more likely it can survive the Coming Chaos.

Another Page From the 4GW Ops Manual

Some day, when the definitive operations manual is written for 4GW conflict, this will probably be mentioned in the chapter on "Blowback Effects on State Systems of Control":

'Vatican air' passengers' holy water confiscated
by Malcom Moore, The Daily Telegraph

The passengers on board the Vatican’s first flight to Lourdes may have been pilgrims in search of spiritual healing, but they still had to obey anti-terrorism rules, it has emerged, after several of them had their holy water confiscated.

The Vatican’s new service, a Boeing 737 painted in yellow-and-white papal livery, took off from Rome’s Fiumicino airport on Monday, serving swordfish canapes to 148 pilgrims reclining on headrests stamped with the message: “I search for your face, oh Lord”.

While the outward journey was smooth, turbulence struck on the return when anti-terror rules were strictly applied by the French police. No bottles containing more than 100ml of liquid were allowed on board unless checked in, meaning passengers were forced give up the holy water they had just collected at Lourdes.

Many hoped to ferry the water back to sick relatives. Instead, dozens of plastic containers in the shape of the Madonna were left at security, while one man decided to drink all of his...

What have the forces trying to protect and shore up nation-state systems of security gained from this? Is anyone safer? And whatever marginal uptick in security they might have gained was completely overwhelmed by the loss in credibility in the eyes of the nation-state "customers" who were harassed by this idiotic ruling.

If I am an insurgent/gang member/tribal activist, etc. I am cackling with glee at this incident. I now have a new field of operations to open up. I can sell holy water in vials just larger than the arbitrary 100 mL limit. I can post my young members near Lourdes, selling it unofficially in 150 mL containers and have an "informant" call the airport. Just another level of aggravation for those following the nation-state rules and a little cash flow for my group.

It seems like a little thing, but the nation-state is about to come under tremendous pressure. The next decade will witness the bankruptcy of Welfare States across the globe. Will the nation-state system, with it's Nanny State ideology and intrusive programs be able to survive once the programs it runs become debased via cuts in services or through the acid of inflation?

And these security officers - they are just doing their job. But they'll be the ones to suffer direct consequences as these continuing intrusions into the lives of men and women mount up and, as social mood darkens further, a spark sets off civilian resistance in the so-called developed world.

Just one more straw. A tiny one at that. But looking at the camel, it is starting to sweat under the strain...

Incompetence

I strongly urge you to print off and read the following journal article. As the economic and military crises continue to unfold, the media and the citizens of the U.S. will be looking to their "leaders." I fear we may find them wanting...

Unskilled and Unaware of It: How Difficulties in Recognizing One's Own Incompetence Lead to Inflated Self-Assessments

Of course, after reading it, I now am walking around in a fog of doubt... Do I really have my act together, or am I totally clueless? I guess time will tell.

Rumbles From the Future

In Catastrophic Abundance, I talked a good bit about what I regard as a coming wave of "unique" living arrangements. The coming tidal wave of defaults is going to be so massive that the existing system is not going to be able to handle it very well.

This quote from the L.A. Times foreshadows a future unlike anything experienced in at least 7 decades. And foreclosures are still on an increase...

Blight moves in after foreclosures
By David Streitfeld, Los Angeles Times Staff Writer

...HSBC, a major lender that was carrying the biggest note on [a foreclosed] house, asked Leo Nordine, a real estate agent who specializes in foreclosures, to represent it for sale.

Nordine went to check out the property and realized that people were living there. He left them a polite letter on the kitchen counter. There was no response to that letter, nor to follow-ups that he mailed.

Neighbors, who asked that their names not be used because they were worried about their safety, said the occupants were a group of men apparently in their 20s and 30s. The men take the trash out every week, but that was the only good thing the neighbors had to say.Nordine said that HSBC was pursuing a formal eviction but that it would probably take many months. The HSBC manager in charge of the foreclosure didn't respond to questions...

Endgame: American Options In Iraq

Dr. George Friedman, one of the very bright minds behind Stratfor, issued an intelligence bulletin yesterday entitled Endgame: American Options in Iraq.

It kicks off with this:

The latest National Intelligence Estimate (NIE) summarizing the U.S. intelligence community's view of Iraq contains two critical findings: First, the Iraqi government is not jelling into an effective entity. Iraq's leaders, according to the NIE, neither can nor want to create an effective coalition government. Second, U.S. military operations under the surge have improved security in some areas, but on the whole have failed to change the underlying strategic situation. Both Sunni insurgents and Shiite militias remain armed, motivated and operational.

Since the Iraq insurgency began in 2003, the United States has had a clear strategic goal: to create a pro-American coalition government in Baghdad. The means for achieving this was the creation of a degree of security through the use of U.S. troops. In this more secure environment, then, a government would form, create its own security and military forces, with the aid of the United States, and prosecute the war with diminishing American support. This government would complete the defeat of the insurgents and would then govern Iraq democratically.

What the NIE is saying is that, more than four years after the war began, the strategic goal has not been achieved -- and there is little evidence that it will be achieved. Security has not increased significantly in Iraq, despite some localized improvement. In other words, the NIE is saying that the United States has failed and there is no strong evidence that it will succeed in the future.

I strongly recommend reading the report in its entirety. Stratfor has some sharp analysts and, in my opinion, they are very much in tune with the decision-making elites in D.C.

Dr. Friedman reviews three options for future U.S. conduct in Iraq: Stay the course, reduce troops levels in stages, or remove most/all troops immediately. He finds serious flaws in all three and proposes a "solution" that would involve re-defining the mission in Iraq.

He suggests that the new goal is to block Iranian ambitions to dominate Iraq, positing that Iran might even be able to conquer Iraq and even Saudi Arabia. I regard that as a very far-fetched scenario as Saudi Arabia could fund nuclear-armed Pakistan to aid its defense, Turkey would certainly jump into the fray, Syria might be persuaded to switch sides to prevent an Iranian hegemon in the region, etc. - Dr. Friedman, in my opinion, is being overly simplistic, probably just for the sake of space and to help make his point about U.S. options in the region.

This goal would be to basically have a major military presence in Kuwait while sprinkling the desolate wastes of southwestern Iraq with U.S. bases that would act as blocking forces for Iranian ambitions and basically cede the rest of Iraq to a chaotic, grinding 4GW endless war.

As Dr. Friedman points out:

This is not meant as a policy prescription. Rather, we see it as the likely evolution of U.S. strategic thinking on Iraq. Since negotiation is unlikely, and the three conventional options are each defective in their own way, we see this redeployment as a reasonable alternative that meets the basic requirements. It ends the war in Iraq in terms of casualties, it reduces the force, it contains Iran and it frees most of the force for other missions. Whether Bush or his successor is the decision-maker, we think this is where it must wind up.

And that is where I think the value of this report lies. Stratfor has generally had a good feel for where the Pentagon and Executive Branch folks have tried to steer the war over the years.

What bothers me is that this analysis ignores several factors. It leaves tens of thousands of troops exposed, with Saudi Arabia at their back and the chaos of "Iraq" before them. I does nothing to deter Iran in a strategic sense, other than to provide a defensive line against conventional Iranian attack on Saudi Arabia.

Since Iran would never conduct a conventional attack in Saudi Arabia (have you looked at the terrain and supply lines they would need on a map? Plus, there would be Sunni insurgents attacking Iranian trooops just as 4GW forces attack U.S. troops today. Iranian resupply via naval forces would be non-existent due to U.S. submarines, anti-ship missiles and Saudi coastal patrol boats) then those troops are not doing a damn thing. Any operation against the Saudis by Iran would be conducted via rebellion and insurgency operations. Some day U.S. planners are going to stop referencing World War II in their analyses. I fear that day is still in the far future.

Plus, the analysis ignores things like Peak Oil (why defend Saudi Arabia when they can't export more than Nigeria - and that day is coming) and the U.S. financial position - will we be able to afford the glittering armies of Empire when the whole credit mirage that is the basis for our economy is about to be umasked as illusion?

I think Dr. Friedman has a very good feel for what U.S. policymakers are thinking. And that is what scares me.

Action Items

No new action items at the moment. Keep your eyes peeled on the markets and glance over at the Iranian situation occasionally as well. If the markets crater, socionomic theory tells us that ramped up conflict will not be far behind. As for Iran, well, if we hit them, then we get to see whether my fears that this would be the end of the American Empire are founded or not.

Prechter Interview

If you have fifteen minutes or so, I strongly suggest you listen to this interview with Robert Prechter:

Robert Prechter Interview on Commodity Classics (Segment One)

Robert Prechter Interview on Commodity Classics (Segment Two)

I talk often about the mix between war, markets and "social mood" - and this is the guy who literally wrote the book on socionomics, which is a useful tool to analyzing the big stew of human emotions and interactions.

The interview gives you a feel for his perspective on the coming big moves in gold, stocks and markets in general, plus how he analyzes social mood and trends. Prechter is very up-front with the fact that he's been "early" calling the tops in markets and discusses the "why" behind much of his opinions and gives you great perspective on Elliott Wave Theory in practice.

The Calm Before the Storm?

Something big is looming on the horizon. I've said this before, but I believe it is closer than ever. For you traders out there, the high-level Elliott Wave pattern screams far side of a major top - and headed for a significant downtrend (a wave C down or wave 3 depending on the count). Now, frankly, I expect an up day and probably an up week in the stock markets, but at this point make no guarantees - the short term Elliott Wave patterns aren't as clear and I think we could see 13,550 or so before "it" hits. Whatever "it" is going to be - probably another credit dislocation.

And as I've said before, I am working on the hypothesis that markets express the greater social mood - and when they turn negative, we are going to see a new explosion of war and violence across the globe.

Other things are bugging me, especially this continuing flight of very skilled personnel from the Bush 43 administration. Bartlett has gone. Rove is out. Now Gonzales is gone - and I'd figured he'd be hanging on until the end, just for lack of better options for the administration. All are very loyal, long-time Bushistas.

Maybe I'm reading too much into it, but the whole "rat's fleeing a sinking ship" thing looks to be taking hold.

I'll have more soon, but I have to get caught up on some projects. In the meantime, I've found a few sites that could be good resources. If you have a printer and a lot of paper - there are some gems among the following links.

Action Items
Print off (as in hardcopy) whatever interests you among the emergency preparedness links provided. Good time to make sure your "oh shit" kit is in order as well with clean water, a little food and some cash on hand.

• Survival Library
• Construction of a Simplified Wood Gas Generator
• Are You Ready?

Cool Tool

I'm back. I have a few new topics to blog on in the coming week, but have a lot of catching up to do, so right now here's just a link to a cool web-based tool:

World Alert Map

For all your disaster tracking needs...

Back Soon...

I'll be offline for a few days while I'm off pursuing a potentially income-ehancing opportunity.

For those of you who enjoy following along with the finance markets - I strongly encourage you to sign up (for free, no credit card info needed or anything like that) for Elliott Wave International's "Free Week" for their intra-day market service, starting tomorrow. This is a professional service they normally charge big bucks for and you can see how they operated in real-time.

Plus, if I am correct, the next week should be interesting - either we'll see a big blowoff to the upside as folks assume the Fed has papered over all the problems in the credit markets, or we'll see a correction to the downside as the markets try to adjust to the new levels of perceived risk. Either way, should be fun to watch.

Also, keep the Iran situation in your sights. I still think that right now it is mostly a lot of grunting and howling between the current Alpha Male (the U.S.) and the local wannabe. That said, I've been wrong before. Plus, the ongoing indigestion in the credit markets bear watching as well.

Check out these sites until I return, probably Friday:

George Ure's Urbansurvival

Mish's Global Economic Analysis

Soob's blog (well worth your time)

Breaking News at Life After The Oil Crash

Keep your eyes open and your powder dry, my friends.

From Russia With Love...

One of the earliest posts here at FutureJacked dealt with the odd circumstances around the rad poisoning of Kremlin critic Alexander Litvinenko. The article, A Curious Death, was written for George Ure's UrbanSurvival and generated a bit of discussion with a few nuclear-informed colleagues.

I just wish I'd been able to cover this aspect of the case:

Litvinenko Poisoning Left Behind $6M Trail
from the AP

...The report identifies four previously unreported contamination sites, including seats and cushions at Hey Jo, a central London "gentleman's nightclub" popular with Russian businessmen. ...

Sounds like that is part of the story that needs some direct investigation.

What Will Monday Bring?

Here's a Monday from two decades ago. I doubt this Monday will compare, but the potential for panic is out there and a lot of folks who are leveraged to their eyeballs have had all weekend to think about it...

Being Prepared

Picture Credit: Mariana Bazo/Reuters

The unfolding tragedy in Peru is literally right out of the pages of Catastrophic Abundance, where one of the scenarios presented was a post-earthquake situation.

Just another reminder here, in addition to building up your very own networked tribe, have an emergency kit ready. If your situation allows it, and you live in an earthquake zone, have water a food stored somewhere that will be accessible post-tremors. Bad engineering is your enemy here, so a small frame building of some sort might be a good storage place - something that you can dig through with relative ease.

If you have a few extra dollars, consider helping the Red Cross out on this one...

Ha ha ha ha haaaaa!

This guy's funny:

Countrywide Upgraded As Analysts Say Lender Can Weather The Storm

...Although Lacoursiere warned that "sizable risks remain," he said Countrywide's use of its credit line gives the company breathing room. "As a result we think the possibility of a liquidity induced distressed sale [is] unlikely," the analyst wrote...

Maybe that crack baby at B of A should contact the CEO of Countrywide and see what he thinks of CFC stock. Better yet, I wonder if he is loading up on CFC stock. What do you think?

Yes, this post is another meandering between war, conflict and markets.

Out in suburbs across America, right now - that is where the angry militias and gangs of tomorrow are forming. The economic pressure is rising, the sense of pessimism about the future and the idea that all progress is futile is building. And the plutocrats trying to paper over this coming debacle are going to unleash a storm unlike anything ever seen on the North American continent.

Time to review the history of post-Tito Yugoslavia for a preview of the coming attractions...

Sell The Rallies!

Christmas has come early this year. The emotions fueling the rate cut by the U.S. Federal Reserve has sent stock markets skyrocketing.

Fed cuts discount rate

NEW YORK (CNNMoney.com) -- The Federal Reserve, reacting to concerns about the subprime lending crisis and the volatility in the financial markets that have resulted from it, announced Friday that it is cutting its so-called discount rate temporarily by a half percentage point, to 5.75 percent.

The discount rate is the rate the Federal Reserve banks across the country charge qualified lenders - mainly banks - for temporary loans. It is largely symbolic.

The central bank did not change its more closely watched federal funds rate, which affects rates that consumers pay on various types of loans. That rate remains at 5.25 percent.

Ahhh, but humans react strongly to symbols of all sorts. Saying it is "just" a symbol minimizes a very, very important aspect of human nature. Any solider who has charged into a hail of bullets to raise up the flag of his country or anyone who has been swayed at a political rally with the flags flying and the nonsense spewing over the speakers understands just how powerful symbols can be.

Of course, this particular symbol is like a hit of crack cocaine. It will feel very, very good for a very, very short period of time. One wonders what Monday will bring...

If you are still heavily invested in equities, you have been given the opportunity of a lifetime to exit the equity markets.

If you are worried, like me, about the the larger trend of anger, polarization and wide-spread, low-intensity conflict - and that markets, mood and the history of men are bound up inextricably - then this is a short reprieve on the rough and rugged road we are just beginning to tread. Enjoy the moment.

Iran WarWatch (Part Fourteen)

Well, let's see where we find ourselves. FutureJacked has been on the Iran WarWatch for several months now. It is increasingly difficult to parse things out, in my opinion.

On one hand, much of the loud rhetoric has seemed to just be a cover for the negotiations going on between U.S. and Iranian envoys over the Iraqi situation. This would seem to be a logical path to follow - lot's of loud talk and then some sort of "Nixon goes to China moment" where Bush 43 announces a grand bargain with Iran over Iraq and a variety of other issues.

On the other hand, we have a negative socionomic signal cropping up in the form of the unfolding credit crunch and dropping stock indices. Bush 43 also needs something to change the equation in the Middle East - and if he can't get it at the bargaining table, bombs might be an alternative. And the second the bombs begin to drop on Iran, it is my opinion that the country I love so much, the USA will have embarked on the endgame of her Empire.

A couple of stories have caught my eye and put me in this pessimistic frame of mind. First, comes this interview with former CIA chieftan, Jim Woolsey:

A few months my ass. I've covered that in Iran WarWatch (Part Eight). When a very intelligent man like Woolsey makes such a statement, then, in my opinion, he is pushing an agenda as part of a bigger agit-prop effort. My guess is that this is a low-key version of Secretary Rice's famous warning about Saddam's "Dub MD program" and how "...we don't what the smoking gun to be a mushroom cloud". There's something up.

Especially when you consider the other, much more public push against Iran:

Terrorist Label for Iran Guard Reflects U.S. Impatience with U.N.
by Helene Cooper, New York Times

WASHINGTON, Aug. 15 — In moving toward designating Iran's Islamic Revolutionary Guard Corps as a foreign terrorist organization, the Bush administration is adopting a more confrontational approach with Tehran, reflecting frustration with a stalled sanctions package at the United Nations Security Council, officials said Wednesday.

White House and State Department officials were debating when to make the formal designation — White House officials want to do so now, and the State Department wants to wait until various August recesses are over — but the administration was already adopting tougher talk toward Tehran...

If you aren't ready for the ramifications by now, well, do what you can. I am quickly being pursuaded that we may really hit Iran - and soon.

(UPDATE)

Here is another brick in this particular wall:

Iranians killed by U.S. troops in Iraq
from UPI

BAGHDAD, Aug. 16 (UPI) -- Three gunmen killed by U.S. troops in Iraq this week were members of Iran's elite Revolutionary Guards Corps, a U.S. military statement said in Baghdad. The U.S. Army statement said that in several anti-insurgency attacks this week, a total of nine gunmen were killed. However, in one raid in northeastern Baghdad targeting a leader of the Iranian Guards' foreign fighters known as Al-Quds, three of his aides were killed by U.S. forces, Kuwait's KUNA news agency reported. The unidentified leader was arrested on suspicion of supplying arms to Iraqi insurgents, the statement said.

The Liquidity Weapon

The Liquidity Weapon will prove to be far more destructive in the short term than the Water Weapon I mentioned yesterday.

As if there have not been enough warning bells going off around the globe that the system is headed for a crash, we get this summary of the earlier crisis that set the recent train of events in motion:

Banks 'set to call in a swathe of loans'
by Ambrose Evans-Pritchard

The United States faces a severe credit crunch as mounting losses on risky forms of debt catch up with the banks and force them to curb lending and call in existing loans, according to a report by Lombard Street Research.

The group said the fast-moving crisis at two Bear Stearns hedge funds had exposed the underlying rot in the US sub-prime mortgage market, and the vast nexus of collateralised debt obligations known as CDOs."Excess liquidity in the global system will be slashed," it said. "Banks' capital is about to be decimated, which will require calling in a swathe of loans. This is going to aggravate the US hard landing."...

You'll be hearing a lot about "liquidity" and "a credit crunch" over the next couple of months. By Thanksgiving, you'll be hearing about a global recession and property price collapse.

I hope you are ready.

Action Items

1. Cash on hand. Get some. Put a few hundred dollars in a coffee can or something. Just in case. If the miracle fairy comes down and forgives every debt in the system, then you can take the cash out of the jar and go blow it at the poker table.
2. Network, network, network. Start expanding your circle of acquaintances. When TSHTF, a core group is going to be needed to help form the nucleus of your personal networked tribe.
3. Don't panic. Leave that to the amateurs who have ignored the obvious for far too long.

The Water Weapon

The art of using water supplies as a weapon against a town or city is being relearned in Iraq. Considering the poor state of U.S. infrastructure, makes on wonder if those same soldiers may some day be called upon to use the same tactics here in CONUS against some cranky locals...

Water Supplies Dwindle in Besieged Town
As US Seeks Mahdi Suspects, Husseiniya Residents Look to Militia for Protection

Water resources are dangerously scarce in an area just outside of Baghdad here US forces have enforced harsh curfew measures since last month.

In the town of Husseiniya, about nine miles north of Baghdad, local sources tell raqSlogger that residents are sufferring a lack of potable fresh water.

The area has been under American siege for weeks as US forces crack down on the ahdi Army militia. Entrance points have been barricaded by concrete blocks, esidents told IraqSlogger.

The Trigger Effect

This is a BBC documentary from the late 1970's (the last time Doom themes were big in the entertainment and scientific communities) called The Trigger Effect. Grab a cup of coffee, hit play and kick back. There's a lot to ponder in it.

Cities as Flashpoints for Violence

Another excellent article by John Robb. This one covers cities and their vulnerability to attack on the many "networks" that make them viable. Below is a snippet on how these 4GW groups use the violence they generate to help fund their activities:

The Coming Urban Terror
by John Robb

...The ongoing attacks on the systems that support Baghdad’s 5 million people illustrate the vulnerability of modern networks. Over the last four years, guerrilla assaults on electrical systems have reduced Baghdad’s power to an average of four or five hours a day. And the insurgents have been busily finding new ways to cut power: no longer do they make simple attacks on single transmission towers. Instead, they destroy multiple towers in series and remove the copper wire for resale to fund the operation; they ambush repair crews in order to slow repairs radically; they attack the natural gas and water pipelines that feed the power plants. In September 2004, one attack on an oil pipeline that fed a power plant quickly led to a cascade of power failures that blacked out electricity throughout Iraq...

Think a bit about the implications. Develop your own list of action items for this one. Like we covered in Catastrophic Abundance, having your scenario planning in place allows you to panic now and avoid the rush when these "asymmetric events" flare up.

The Big Socionomic Picture

When working out the post on Secret Societies, the underlying thought was that mass "mood" can swing so deeply into the irrational and violent that entire civilizations can fall, sacrificing the hard-won fruits of material and intellectual progress on the altars of dark and angry gods.

While researching mass movements, I ran across the following passage from Jacques Vallee's book The Invisible College. This book, from the 1970's, is an attempt to offer a "third way" when trying to explain the UFO phenomenon, avoiding "the nuts and bolts alien spaceships" theory and the "it's all a hoax and coincidence" theory alike. He was writing during the last period of major negative mood - the inflation and recessions of the 1970's, and his words are even more important in today's world, as what I believe is a great crisis approaches quickly:

Something happened in classical times that is very inadequately explained by historical theories. The suggestion that the same thing might be happening again should make us extremely interested in bringing every possible light to bear on this problem. What I am referring to is the collapse of ancient civilizations. beginning in the second century B.C. and continuing until the fall of the Roman Empire the intellectual elites of the Mediterranean world, raised in a spirit of scientific rationalism, were confronted and eventually defeated by an irrational element similar to that contained in modern appartitions of unexplained phenomena, an element that is dramatized in their summary rejection of our own science.

Commenting upon this parallel, Aime Michel suggests that we picture the following scene: Take on of the Alexandrine thinkers, a man like Ptolemaeus, thoroughly schooled in the rational methods of Archimedes, Euclid, and Aristotle. And imagine him reading the Apocalypse (or any of the numerous version that were then circulating). How would he react to sucha an experience? He would merely shrug, says Aime Michel: "It would never occur to him to place the slightest credence in such a compendium of what he must regard as insanities. Such a scene must have taken place thousands of times at the end of classical antiquity. And we know that every time there was the same rejection, the same shrugging, because we have no record of any ciritical examination of the doctrines, ideas, and claims of the counterculture that experessed itself through the Apocalypse. This counterculture was to absurd to retain the attention of a reader of Plato. A short time - a very short time - elapsed, the counterculture triumphed, and Plato was forgotten for a thousand years. Is that what is happening again?"

Indeed, is that what is going to happen? My best guess - a new "religion" will appear, based on a mish-mash of "ecological" doctrines that makes the human race a despoiler and bad guy, wrapped up with the anger and unknowns created by a declining supply of petroleum, post-Peak and enlivened by the fear and poverty left in the wake of the end of the great Credit Bubble.

This new religion's meme will infect millions of minds in the Coming Chaos, enforcing its policies at the barrel of a gun and the lights will begin to go out, all over the world...

Wonking Out on the Financial Trainwreck

Check out Doug Noland's Credit Bubble Bulletin, covering this last eventful week in the financial markets. Dense with figures and stories, it is a must-read for those of you who like your week-in-review to be comprehensive.

I hope your schedule is a light one on Monday. It could be an exciting day in the markets.

George Ure is asking the question that is on everyone's mind: Panic Next Week?

In spite of the headlines that the "Market Steadies" and "Stocks End Mixed after Raucous Week" my money is still on the downside going into next week. As I explained yesterday, the reason is the other shoe has yet to drop - when someone besides me (and a few executives in the banking world) gets wind of all the other places besides hedge funds where the 'toxic waste' that masquerades as investment grade paper has landed, it won't be pretty. You're not yet hearing about the write-downs in financial positions that will come as pension funds and college endowments are forced to "fess up" to their vastly overstated holdings..

George has a nasty habit of spotting those hard-to-see little IED's in life that tend to blindside most. It is always a great idea to pay attention to his analysis...

Adding Another Bright Mind to the Blogroll

When you get a chance, check out the inaugural post at The Wandering Expedition, entitled Predictionary. Chock full of insights. Well worth your time. It'll be added over on the blogroll under 'Random and Useful".

The Argentine Energy Sword

I wonder if Chile is regretting her anti-nuclear-power stance now?

Chile's Edelnor Studies Legal Options as Argentina Cuts Gas
By James Attwood

Aug. 10 (Bloomberg) -- Empresa Electrica del Norte Grande SA, which sells power to mines in northern Chile, is studying its legal and commercial options after Argentine authorities suspended natural-gas exports of three companies.

The effect of the halt of Argentine gas shipments on Edelnor, as the company is known, will depend on how it affects spot market prices, the Santiago-based company said in a regulatory filing today.

Argentina's energy department halted exports from Tecpetrol SA, Mobil Argentina SA and Compania General de Combustibles SA on the grounds they had issued incorrect information about their reserves, Edelnor said. The suspension will last for two years or until the companies comply with regulations.

Electricity prices in Chile have risen to records as producers are forced to generate power using more expensive diesel because Argentine gas restrictions and lower-than-normal rainfall in the country restrict hydro and thermal production.

Too bad Chile never invested in a supply of electricity that they controlled - nuclear power. France did it and no one can hold her hostage.

And note the Argentine reason for cutting off the gas - bad reserves data. Can we say, Peak Gas?

He Writes Like He Pitches. Sort of All Over the Place...

A quick post to the new readers out there on what we cover here at FutureJacked. You'll see posts on financial markets, socionomics, politics, the war in Iraq and Afghanistan, Peak Oil and anything else that takes my fancy.

We are trying to find patterns in the great stew of human events. Patterns that we can use to plan for the future, to think about topics in ways outside the mainstream so as not to be blind-sided by coming events. We live in a time of great flux, where the old post-World War II system is finally breaking down for good, to be replaced by...

That's just it. I don't know what comes next. All I can do is watch what is happening in "laboratories" such as Iraq or Mexico and see how the pressures of this new world create new structures for living, fighting, thriving and dying - knowing that what we see in those countries will be played out in the streets of more "developed" Westernized countries in the coming years. The "periphery" will export their new structures of global guerrillas, 4GW and breakdown to the "core" and the world of our fathers will finally perish.

It'll be up to us to build anew on the ashes.

The Infrastructure Weapon

The infrastructure from the dying age of optimism continues to decay. The expertise, the capital and the stable society needed to keep it all working efficiently continues to decline. We touched on this in a recent post on Mexico. Here's another example from the laboratory of Iraq:

Disaster looms as 'Saddam dam' struggles to hold back the Tigris
by Patrick Cockburn of The Independent

As world attention focuses on the daily slaughter in Iraq, a devastating disaster is impending in the north of the country, where the wall of a dam holding back the Tigris river north of Mosul city is in danger of imminent collapse.

"It could go at any minute," says a senior aid worker who has knowledge of the struggle by US and Iraqi engineers to save the dam. "The potential for disaster is very great."

If the dam does fail, a wall of water will sweep into Mosul, Iraq's third largest city with a population of 1.7 million, 20 miles to the south. Experts say the flood waters could destroy 70 per cent of Mosul and inflict heavy damage 190 miles downstream along the Tigris.

The dam was built between 1980 and 1984 and has long been known to be in a dangerous condition because of unstable bedrock. "The dam was constructed on a foundation of marls, soluble gypsum, anhydrite, and karstic limestone that are continuously dissolving," said specialists at the US embassy in a statement.
"The dissolution creates an increased risk for dam failure."

In fact the state of the two-mile long earthfill dam, which holds back some eight billion cubic metres of water in Iraq's largest reservoir, has recently been deteriorating at ever-increasing speed. According to one source, the chance of a total and immediate failure of the dam is now believed to be "reasonably high" at current water levels and "most certain" within the next few years.

The effort to prevent the collapse of the dam is overseen by the Iraqi Ministry of Water Resources. The US Army Corps of Engineers has made continual efforts to monitor the deterioration and undertake remedial action. But a US report, obtained separately from the embassy statement, says that "due to fundamental and irreversible flaws existing in the dam's foundation, the US Army Corps of Engineers believes that the safety of the Mosul Dam against a potential catastrophic failure cannot be guaranteed".

Oh dam... Just think what one motivated individual with an RPG could do?

I remember how bad things got along the Missouri and Mississippi Rivers during the Flood of '93. There was one jackass over on the Illinois side of the Mississippi that helped collapse one of the levees at the height of the flood by just removing a few sandbags. Not that there are any angry, motivated individuals in Free Iraq, I'm just saying that if there were, one might want to double and triple the guard around that dam.

Or not, considering how infiltrated Iraqi forces are...

Secret Societies and the Coming Chaos

In a transition from one era to another, there is an enormous shift in the “value” of certain skill sets, behavior patterns and geographical locations. If, as I believe, we are shifting from an era of Catastrophic Abundance – an era so overflowing with wealth, cheap energy and positive social mood that hundreds of years of social norms and accepted behaviors once necessary to a successful life dissolved under the deluge of abundance – to an era of negative social mood, scarce resources and wide-spread violence, then it pays to revisit what types of behavior patterns will aid us to survive and thrive in such a world.

Specifically, we will address the role of “Secret” or Fraternal Societies and their value to individuals who will be caught up in the Coming Chaos of the upcoming Grand Supercycle correction.

Today, the most common view of “Secret” Societies such as the Freemasons or other fraternal organizations such as the Eagles or the Elks is that they are harmless bunch of old guys who get together and either wear funny clothes and conduct funny rituals or maybe just sit around, drink and play cards, hiding from their wives. While there may be some truth to this for some organizations, many of these groups evolved to fill a real and pressing need over the centuries.

In the past hundred years or so of Catastrophic Abundance, we’ve lost sight of the fact that the Welfare State and vast wealth most of us in the Western World take for granted is a very new development. For most of history, if you became sick, you relied on the care of friends and family. If you were injured, you needed others to help tend your crops or see to your shop. If you had no friends, family or a group there to help you – then suffering, ruin or starvation was your fate.

In addition, it’s only been in the last two hundred years or so (again, coincidently with the cheap availability of energy resources?) that what we call “freedom of religion” has become an operating principle of most governments. For thousands of years before that – you believed in the god that your ruler told you to believe in. If you didn’t, you were a heretic and subject to the many penalties that went along with that evil state of being. Obviously, there have been free-thinkers all throughout history who challenged the dogma of the day. Most learned early to keep quiet or circulate their views only through a select group of trustworthy associates.

So what does any of this have to do with the Coming Chaos? Well, let’s review a few trends that are building in severity every day:

• The coming bankruptcy of the U.S. Welfare State
• Peak Oil
• A house mortgage collapse that threatens the market value of many Americans’ houses
• A trend away from positive social mood to a wave of negative emotion that will saturate every institution in modern life, polarizing ethnic, political and religious debates – and possibly leading to wide-scale violence

Now, let’s postulate the very real possibility that either bankruptcy or hyperinflation wipes out or at least reduces government payments to the old and infirm in the next five to ten years in the U.S. Restrictions on movement due to gasoline shortages or high prices will radically localize most communities – no more zipping off to a city four hours away for a quick vacation or visit. No more hour-long commutes, or the big salaries that go with those jobs at the end of those commutes.

Let’s also postulate that human societies begin to move back towards the norm in history – despotic control over the masses through local warlords and religious leaders. It will initially be part of “emergency measures” or some sort of move to “remove enemy propaganda from the site of our children” or some such.

Now, in that hardened and polarized world, it is my opinion that being a member of a fraternal organization will pay you very big dividends.

These types of groups allow you to meet a variety of people in your community in a relaxed setting of shared values. You get the opportunity to broaden your network. You gain access to new lines of information. You’ll be presented with opportunities to help others when they suffer the coming slings and arrows of outrageous fortune. And… you get to plug into a network that can help you when you are the one on the receiving end.

In addition to strictly material benefits – for those of you with a spiritual or philosophic bent, such groups might become a safe haven for you to puzzle out your theories of the universe and conduct any “heretical” activities. For example, your community could pass a number of laws forcing everyone to belong to one or just a few protestant sects of Christianity. For those Catholics who want to perform the Spiritual Exercises of Loyola may have to go underground, meeting secretly, sharing their experiences, etc.

You may laugh at the thought of having to go back underground for such things, but remember – that has been the rule, not the exception, in history. Spiritual practices have motivated men and women throughout history. This yearning will be just as strong during the Coming Chaos, if not stronger. The material benefits of belonging to an elite group, hidden from the world, might also be the difference between hardship and ruin, hunger and starvation – a difference you don’t want to find out about first hand.

Secret societies may have to move back into the shadows, but in that movement, they may regain their power and hold on human motivation.

Action Items

1. Research the Wobblies and their activities, especially how they would move into an area to organize
2. Research the Oddfellows and their goals
3. Research the Rosicrucians and their methods and philosophy
4. Read Born in Blood by John J. Robinson and reflect on his research and conclusions

Samurai and Sex Camps

Pardon me while I shamelessly steal the title and text for this post from a recent interview that was posted over at the Socionomics Institute. These guys must have fun at their job.

Click on the link below to download a .mp3 file or click here to go to their Conversations Page and listen to it streaming.

Samurai’s and Sex Camps – What’s Going on in Japan and Russia?

A lot of negative mood, that’s for sure. In Japan the samurai warriors of the past and kamikaze pilots of World War II are being glorified. Russia is instituting sex camps for teenagers and has claimed the North Pole for the Fatherland. How does negative social mood affect demographics, which then impacts society in numerous strange ways? Socionomics offers some insights.

A Quote to Live By

Still very swamped at work, but I will get a post up soon. In the meantime, I give you a quote to live by - something that will serve you well in a post-Catastrophic Abundance era:

"A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects."

- Lazarus Long, from Robert Heinlein's Time Enough for Love

The Reverse Multiplier Effect

As you can tell from a few of the ads over on the right side of this blog, I am a big fan of Elliott Wave International. They've been both accurate and frustratingly ahead of the game at times with their calls for tops in the DJIA.

When they are accurate (such as calling the big reversal in late February TO THE DAY - I had MNX puts ready and waiting - thanks again EWI) they can be scary, when they are not, there is still much to learn from their analysis that you can apply when the top is finally in. I don't know if we are there yet or if the DJIA has one more short-squeeze blowoff left in it, but the hour is late and we need to be thinking about the consequences of a credit collapse.

Here's something to ponder over your coffee this morning. I was rereading Prechter's Conquer the Crash last night and came across a paragraph in Chapter 11 that is well worth comitting to memory:

...If borrowers begin paying back enough of their debt relative to the amount of new loans issued, or if borrowers default on enough of their loans, or if the economy cannot support the aggregate cost of interest payments and the promise to return principal, or if enough banks and investors become sufficiently reluctant to lend, the "multiplier effect" will go into reverse. Total credit will contract, so bank deposits will contract, so the supply of money will contract, all with the same degree of leverage with which they were intially expanded. The immense reverse credit leverage of zero-reserve (actually negative-reserve) banking, then, is the primary fuel for a deflationary crash...

Robert Prechter, Conquer the Crash, page 111

That was my emphasis placed in that first sentence and I added the link on the "multiplier effect".

The banking system in the U.S. has never been so vulnerable and so complacent. Maybe Cramer wasn't just looking for ratings when he melted down on Friday. Maybe he really has been talking to a lot of his banker friends...

Buy This Tribe

We interrupt the ongoing freakout over U.S. financial markets to bring you a possible snapshot of a worst-case future...


Well, if there was ever a feeble hope for a Iraq that might emerge as a united, or at least federalized, entity as a bulwark against Iran, that hope is gone.

As usual John Robb has presented it succinctly in his new post, Tribal Security Contractors.

A Technical Readjustment

Just a little history lesson.

You may laugh when they talk about $15 billion in losses. Before you laugh too hard, plug that number into the Fed's CPI calcuator here.

This is not meant to imply that I think we are going to see a good ol' fashioned washout just yet, but a little perspective never hurts...

Cramer Melts Down

You've probably already seen it, but just in case, here is Jim Cramer completely losing it on the subject of Bear Stearns, et al - please note how touching his concern is for his fellow Wall Street Ballers losing their jobs. It's just "creative destruction at work" when a factory worker in Ohio gets whacked, but it's personal when an investment banker in New York is about to lose his job...

Cramer Melts Down

Nope, emotion doesn't matter. Finance is governed by strict profit-loss calcuations and cold analysis. Really.

Note the time on the clip - 1:46 p.m. Now look at this chart of the DJIA and note the time of the market break:

Wow. Going to be a lonnnngggg weekend for the finance quants in New York and Chicago. Good luck sorting this one out, boys.

Homework Assignment

I'm still cooking up a big post on an aspect of not just surviving hard, chaotic times, but mechanisms to thrive, as it were. It's half-baked at the moment and I'm swamped with a project, so we'll save it for either the weekend or Monday.

Until then, here's your homework assignment:

Let's assume that the credit crunch in the house mortgage sector continues to intensify. Let's assume that current trends continue (big builders continuing to build in the face a massive glut of inventory already out there, prices continuing to remain high relative to historical trends, etc.) and we wind up with the inevitable jobs crash in construction and real estate-related professions.

While you are out and about look over your community and start tallying up the number of businesses (title companies, real estate law firms, lawn care companies, construction, etc.) that rely on growth in house sales and in appreciation of those house prices. Take out the notebook you used when doing the exercises from Catastrophic Abundance and add this analysis on the end. Now game out a scenario where cash flow and employment in those businesses collapses to half of what it is at the present time.

What will that mean for your community? For your own job? For your relatives and neighbors?

How would you prepare for something like that?

Go a step further and apply a Peak Oil, megapolitical and socionomics perspective to this niche and see what you come up with.

Or not. Go have a beer or three. Believe everything that Larry Kudlow says. Ignore the developing situation in the credit markets. Relax. Nothing bad ever happens.

"Another way to lose control is to ignore something when you should address it." - Jim Evans

Something to Chew On

Insanely busy at the moment, so here is another example of how mood is a huge factor in markets -

Cold feet becoming the factor
Fear of risk sending investors into retreat
by Dan Seymour, AP

NEW YORK— The widening fallout in the U.S. mortgage industry has reminded investors of a risk they had forgotten: the fear of risk itself. As unpaid mortgages and bankrupt lenders bring the weakest segments of the mortgage industry to its knees, investors have begun dumping debt and other investments that would seem to have nothing to do with home loans.

Corporations are paying higher interest rates on their bonds, some private-equity firms are having trouble raising money to close big purchases, and the stock market has lost 7 percent of its value in less than two weeks — all mainly because of an exodus from risk...

The Face of a Networked Tribe (Part Three)

In Part One and Part Two, I presented a couple of scenarios on reacting to asymmetric events. Here in Part Three, let's try to game out how someone with a lot of capital to deploy would plan in advance for a disruption caused by Peak Oil, a major market crash and ensuing Depression, etc.

Face Number Three - Billionaire With A Vision

Richard made his billion in the 1990's by betting heavy on tech stocks and selling out two software companies to Microsoft and Yahoo. Not being the Kool-Aid drinking kind, he then loaded up on NASDAQ puts in early 2000 and made an absolute killing on the way down. Nervous about real estate values and corporate bonds, the bulk of his wealth is in US treasuries at the moment. He is not earning much return, but he can sleep at night.

Richard is already very concerned about the derivativies situation in the hedge fund world and then he discovers Matt Savinar's site - Life After the Oil Crash - and really gets religion on the end of the fossil fuel era and what that means to civilization.

He first asks - what does that mean to the abstract representations of wealth he calls money and bonds? It probably means they are not a stable store of value.

And then he asks a more important question - what about a much more important form of wealth - that social wealth known as a stable civil society ruled (for the most part) by laws that are accepted and obeyed by most of the population? What is to prevent a change in mood leading to laws allowing for the confiscation of his "wealth" or the seizure of his property?

Maybe he should buy his own town...

The Midwest (flyover country to you East and West Coast types) is littered with small towns, usually ag-based, that are dying out. Many of them contain homes with fantastic architecture and the remains of what were once vibrant downtowns. Some have locations that were excellent in the pre-fossil fuel era - such as river port towns like Glasgow, Missouri. They are usually in the middle of excellent farm country and away from major cities.

Richard could gather up a group of like-minded folks and basically move in and buy up a town for pennies on the dollar. He could inject capital, begin building up an organic farming infrastructure, complete with small metal-working or stone-working shops, a farmers market, etc. He could sponsor the local 4H, bring in folks to present on sustainable living, Peak Oil, etc.

His friends and family could do the same. The key would be to integrate into town life, not move in and wall themselves off. They need the community as these will be their "peers" on any jury and the folks who man the Sherriff's department, the county boards, etc. Money can only get you so far in a tight-nit community.

The key would be to get a good portion of his paper wealth into tangible goods, property, etc.

It is not a guarantee that laws on a state or federal level won't be passed to dispossess or tax away his wealth (they will) - but by having a firm basis in a legal entity like a town or county, he can try and avoid the worst of the confiscatory policies coming our way. Plus, he can contribute to a positive action in the face of a coming avalanche of market turmoil and political chaos.

Action Items

I don't have a billion bucks to play with, but if I did, I'd move to Glasgow, MO, or someplace like it, and start building up a base to retreat to if the worst does come to pass.