Executive Summary

• Downscaling complexity and increasing local sourcing through efficient net-energy means will be the hallmarks of the future
• Suburbia has three likely destinies, none mutually exclusive: slums, salvage, and ruins
• What elements to look for in sustainable town/city designs
• Why "managing contraction" will be society's main focus for a long time to come

If you have not yet read Part I: Why Our Current Way of Living Has No Future, available free to all readers, please click here to read it first.

Smaller, Closer, Simpler

First, circumstances imply that we have to downscale just about everything that supports civilized life – the size of enterprise (both private and public), the length of supply chains and distribution webs, the amount of capital expenditure, the complexity of organization. We’ll have to grow our food differently as industrial agri-business flounders on non-cheap oil. We’ll have to rethink transportation as commercial aviation withers and Happy Motoring enters its twilight. We’ll have to do commerce differently as the Wal-Mart model unravels. We’ll have to inhabit the terrain differently.

Second, as a consequence of the foregoing, we’ll see economies become much more local and regional again, as the current episode of globalism unwinds in the face of rancorous competition for increasingly scarce vital resources. Contrary to Tom Friedman of the New York Times, globalism is not a permanent fixture of the human condition; it was an episode of history. The world is getting less flat and more wide again.

Another is that... » Read more

In this week's Off the Cuff podcast, Chris and Adam discuss:

• Rough Seas Ahead
  • Chris issues a rare warning for a 40%+ correction in the stock market
• Happy Sequester!
  • What will its impact be?
• The Japan Mess
  • Looking more & more like it will be the first major country/currency to fail
• The "Affordable" Care Act
  • A misnomer if there ever was one
• The Barnburner at Rowe
  • This year's seminar is shaping up to be one for the ages

Executive Summary

• Intervention in the housing market by central planners is experiencing diminishing returns
• The four major trend reversals most likely to depress housing prices in the coming future
• The power deflationary force of reversion to (or perhaps below?) the mean
• Why demographics do not support rising prices

If you have not yet read Part I: The Unsafe Foundation of Our Housing 'Recovery', available free to all readers, please click here to read it first.

In Part I, we sketched out the larger context of the housing market: the dramatic rise of mortgage debt, the stagnation of income for 90% of households and the unprecedented scope of Central Planning intervention in the housing and mortgage markets.

In Part II, examine what will likely cause this nascent rise in housing prices to reverse, and to resume the decline Central Planning halted in 2009.

Intervention Has Only One Way to Go: Diminishing Returns

As noted in Part I, every Central Planning support of the mortgage and housing markets has already been pushed to the maximum, so there is nowhere left to go. Interest rates are already negative, over 90% of the mortgage market is backed by Federal agencies, the Fed has already pledged to buy trillions of dollars in mortgages, etc.

Four years of this massive intervention has stripped the mortgage and housing markets of the ability to price risk, capital, and assets. This has created a culture of supreme complacency, as participants have come to believe interest rates will stay near-zero for the foreseeable future and Central Planning intervention is permanent.

But nothing is permanent in life. And the current extremes of intervention and complacency have set the stage for some important reversals: » Read more

Executive Summary

• Japan is intentionally devaluing its currency through money printing. The recent boost in the Nikkei is simply the result of this flood of new money.
• Japan industry is now experiencing cost increases on two fronts: inflation of the money supply, and rising prices on the global market for commodities.
• Rising bond rates are all but guaranteed.
• Gold vs. the yen is surging and will pick up momentum from here
• The ten predictable events that will happen next, as the unavoidable Japan disaster unfolds

If you have not yet read Part I: The Arrival of Japan's Sunset available free to all readers, please click here to read it first.

In Part II we explain why Japan has unequivocally entered the terminal phase of its 20-year reflationary experiment.

Further “abundance” harvesting from this point forward will be difficult if not impossible.

Is the devaluation of the yen really the successful technology that will fool nature? We think not. The outcome will have spectacular implications for many global assets, ranging from real estate, to stock markets, to oil and gold.

Observers of Japan from this point forward should be sober about the threshold the country has now crossed. Japan has effectively said to the world: Go ahead, make my day. Sell our currency, give us inflation, and get out of our bonds.

Japan has indeed taken to heart the Krugman dictum, and committed to irresponsibility. » Read more