Zombie Apocalypse

"The scary thing about multiple expansions is that they are reliably mean-reverting — if they run too far, the market always takes it back, sometimes with a vengeance."

   Every time we catch a malodorous whiff of this year’s US Presidential elections, we involuntarily shudder, because regardless of winners or losers, it recalls September 14, 1930, when German voters, abused by post-war sanctions and put upon by financial depression, went to the polls and handed 107 Reichstag seats to the National Socialist Party. It’s useful to notice that the Nazis did not win that — they came in second. It hardly mattered.

Does this history sound familiar?

Hitler began each speech in low, hesitating tones, gradually raising the pitch and volume of his voice then exploding in a climax of frenzied indignation. He combined this with carefully rehearsed hand gestures for maximum effect. He skillfully played on the emotions of the audience bringing the level of excitement higher and higher until the people wound up a wide-eyed, screaming, frenzied mass that surrendered to his will and looked upon him with pseudo-religious adoration.

Reporters compete for Trump's attention  AP Photo/EcanVucci

Hitler offered something to everyone: work to the unemployed; prosperity to failed business people; profits to industry; expansion to the Army; social harmony and an end of class distinctions to idealistic young students; and restoration of German glory to those in despair. He promised to bring order amid chaos; a feeling of unity to all and the chance to belong. He would make Germany strong again; end payment of war reparations to the Allies; tear up the treaty of Versailles; stamp out corruption; keep down Marxism; and deal harshly with the Jews.

It helps to plan ahead. That was the main advice we gave in our Post Petroleum Survival Guide and Cookbook in 2006 and Financial Collapse Survival Guide and Cookbook in 2012, and it still holds.

We did not imagine when we wrote those books that collapse would take as long coming as it has, but it is well underway now, just not evenly distributed. Zero Hedge reports:

While nobody here …  is saying that a crash is imminent (and there’s no law that says stocks cannot become even more expensive), we continue to maintain our bias against U.S. stocks. We will also take this end-of-summer moment to point out the yawning disconnect between fundamentals (of the U.S. economy and even corporate America) and their stocks. It really is a tale of two cities, one of mediocre fundamentals versus a meteoric rise in markets.

Which brings us back to the Shiller P/E. Much of the run-up over the past few years has been primarily about multiple expansions. And the scary thing about multiple expansions is that they are reliably mean-reverting—if they run too far, the market always takes it back, sometimes with a vengeance. And we are currently almost 70% too far.

Dmitry Orlov’s classic work The Five Stages of Collapse  gives a roadmap to what lies ahead:

Stage 1: Financial collapse. Faith in “business as usual” is lost.


Stage 2: Commercial collapse. Faith that “the market shall provide” is lost.


Stage 3: Political collapse. Faith that “the government will take care of you” is lost.


Stage 4: Social collapse. Faith that “your people will take care of you” is lost.


Stage 5: Cultural collapse. Faith in “the goodness of humanity” is lost.

What Orlov points out is that what is lost is not so much material resources, although those are inexorably diminishing, but confidence (“with faith-ness”) that affects everyone — quality of goods and services, roads and bridges, individual/household health, social well-being and sense of security. Prison and military budgets and recruitment swell to keep pressure off unemployment. Hate crimes escalate. Political correctness becomes State-dictated, tribe-enforced, thought police. The mass psychology is viral. The fear grows contagious and flows from a deeply-seated, existential angst.

Charles Hugh Smith points out:

General trends manifest in different ways in each community/region.  For example, the city and county of San Francisco is booming, with strong growth of population (866,000 residents), jobs, rents, housing valuations and tax revenues. Yet even as the city and county of San Francisco’s annual budget swells to an incomprehensible $9.6 billion—larger than the budgets of many U.S. state governments, and four times the annual budget of the city and county of Honolulu, with 998,000 residents—the homeless problem in San Francisco becomes ever more intractable, intrusive and disruptive, despite tens of millions of dollars devoted specifically to improving the options available to the homeless.

Living in an ecovillage in Tennessee its easy to get complacent. We can eat well from our garden and get most other needs from The Farm Store or our Amish and Mennonite neighbors within bicycle distance. We sit on a good water supply and recycle our own biowastes. After staying here a while, the need to ‘go to town’ diminishes, to maybe once every couple of weeks, then once in some months.

Despite the wacky plot-line in Shameless, Season 6, when Sherilyn Fenn’s character lures William H. Macy’s character back to her free-love, poppy growing "ecovillage," utopian living is very real, not inaccessible, but it's a choice few USAnians have made. There are more Chinese living in ecovillages than USAnians. More Senegalese. More Sinhalese. 

In the real world, not some HBO fantasy, ecovillages are built by earnest people, not welf government housing authorities, real estate developers or banks. Our ecovillage was something that took 40 years to build, with residents sacrificing to live on little more than $1 per day, per capita, for the first 10 or 15 years, in order to make land payments and pay taxes while building roads, water systems, clinics and schools.

People who visit us today see the sculpted roads, water towers, handsome horses, pro disk golf course, and large solar arrays and might mistake it for some kind of trendy, master-planned gated community gridded down onto a chunk of rolling Tennessee real estate. It is easy to not grasp that it was all higgledypiggledy cobbled together (or cobbed together) bit by bit, on the sweat of longhaired hippies in patched bibtops and homespun, one bent nail in oak plank at a time.

On those occasions we do go out further than easily-biked distance, we cross into what Jan Lundberg calls The Paved Precincts of Amerika. Our heart swells with compassion for its victims — not the skinny street urchins of Mumbai but the ever-increasingly obese mall-crawlers and cubicle rats making payments on outsized land-yachts and rat infested rental housing, popping prescription pills and swilling tasteless beer or high-fructose corn syrup beverages from a plastic cup while starving the dog to pay the cable bill. Welcome to the Teflon Trump Country.

Last year James Howard Kunstler told Chris Martenson:

The hidden (or ignored) truth of this quandary expresses itself inevitably in the degenerate culture of the day, the freak show of pornified criminal avarice that the USA has become. It only shows how demoralizing our recent history has been that the collective national attention is focused on such vulgar stupidities as twerking, or the Kanye-Kardashian porno romance, the doings of the Duck Dynasty, and the partying wolves of Wall Street.

Duck Dynasty lends its star power to the Republican Convention

By slow increments since about the time John F. Kennedy was shot in the head, we’ve become a land where anything goes and nothing matters. The political blame for that can be distributed equally between Boomer progressives (e.g., inventors of political correctness) and the knuckle-dragging “free-market” conservatives (e.g., money is free speech). The catch is, some things do matter, for instance whether the human race can continue to be civilized in some fashion when the techno-industrial orgy draws to a close.

Last week Kunstler opined:

Idiocy and mendacity are a bad combo in the affairs of nations, especially in elections. The present case in the USA displays both qualities to near-perfection: on one side, a boorish pseudo-savior in zero command of ideas; on the other side, a wannabe racketeer-in-chief in full command of her instinctive deceit. Trump offers incoherent rhetoric in opposition to the current dismal order of things; Clinton offers empty, pandering rhetoric in defense of that order. Both represent an epic national drive toward political suicide.

The idiocy and mendacity extend to the broad voting public and the discredited elites pretending to run the life of the nation. The American public has never been this badly educated and more distracted by manufactured trivia. They know next to nothing. Even college seniors can’t name the Secretary of State or find Switzerland on a map. They don’t know in what century the Civil War took place. They couldn’t tell you whether a hypotenuse is an animal, a vegetable, or a mineral. Their right to vote is a danger to themselves.

Cognitive recognition of the average USAnian towards the plight of a Syrian refugee in a Calais cul-de-sac or a Greenlander having to relocate their ancestral village to firmer ground is virtually nil, but in many ways they are closer in plight than they know. Each are only one culture shock away from personal extinction.

It is difficult for us to conceive how rural Walmart shoppers pushing carts through parking deserts under the hot summer sun would cope with the sudden loss of A/C, never mind whatever they might have backing their debit cards.

The Farm may be antifragile in a multitude of ways, but like a small nation that discovers oil or gold and is ill-equipped to defend itself, we are as likely to experience the Zombie Apocalypse as any urbanite suddenly discovering that her corner store had only a 3-day supply of food and it was gone last evening, along with her power and water. 

And if you think financial collapse or peak everything makes you more irritable, just wait until you see what 10 or 20 degree warmer overnight temperatures do.

So, do we begin making lances and training horses and riders in cavalry maneuvers? Unlikely.

More likely we will do the unthinkable and welcome the zombies in, give them a hot bath and square meal, a cot to sleep on, a health check and some meaningful work in the garden. There are limits to that kind of generosity, as we learned the hard way in the past, but in a crisis, making yourself indispensable is really your best defense.  The rural South is no place to try to exchange gunfire with an angry mob.

Umair Haque writes:

At the personal level, the end of the world is already here. This is the first generation in modern history that’s going to suffer worse living standards than their parents.

The question is: how much worse? Very badly worse. With stagnant incomes, no savings, this generation will never retire, vacation, advance, enjoy, or own. Their relationships, health, and productivity will suffer as a result. The quality of their lives is going to be long, bleak, and pointless. Worked to the grave to make a dwindling number of dynasties wealthy, largely by serving them hand and foot, not really enhancing human life.

That’s not healthy, because it’s neither freedom, possibility, nor prosperity. It is a bad trade for humanity. And in that sense the end of the world of liberal capitalism, followed by the void of institutional chaos and disorder, is likely to be an ugly and grim time Unless. You and I make it a better one. Now you know the problems. The path. The story of the future. And because you know it, you can change it.

Or at least learn to feed yourself.