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Prediction: Things Will Unravel Faster Than You Think

Friday, October 1, 2010, 3:26 PM
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Prediction: Things Will Unravel Faster Than You Think

Friday, October 1, 2010

Executive Summary

  • We do not live in a linear world
  • Complex systems are inherently unpredictable (sort of)
  • Accepting "what is"
  • Banking on perception
  • The dawning of awareness of Peak Oil, sovereign insolvency, & currency debasement
  • Hope alone is a terrible strategy
  • What you should do

Part I

If you have not yet read Part I of this report, please click here to read it first.

Part II

Banking On Perception

When it comes to markets riding on a flawed fundamental premise, perception is everything.  

Consider that in December of 2007, the world had plenty of food, but by February of 2008, we saw food riots and the international perception of food scarcity.  Almost nothing had changed with respect to the fundamental quantities of food stocks between December and February, and that's the point.

Or consider that one month Iceland was in fine shape and the next month desperately broke.  Ditto for Greece.  Again, there was nothing that had fundamentally changed from one month to the next, in terms of cash flows or debt levels, that would justify the size of the adjustments, but they happened nonetheless, and they happened quickly. 

 

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