LCBMC: Long-Chain Business Model Collapse

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The coming month may be one that could go into the record books.  Kind of like 1720 did.  Or, as the Economic Fractalist tells us, 1807.

I like 1720, myself.

“The Bubble Act 1720 (6 Geo I, c 18), forbade the creation of joint-stock companies without royal charter, was promoted by the South Sea Company itself before its collapse.

In Great Britain, many investors were ruined by the share-price collapse, and as a result, the national economy reduced substantially. The founders of the scheme engaged in insider trading, by using their advance knowledge of the timings of national debt consolidations to make large profits from purchasing debt in advance. Huge bribes were given to politicians to support the Acts of Parliament necessary for the scheme.[5] Company money was used to deal in its own shares, and selected individuals purchasing shares were given cash loans backed by those same shares to spend on purchasing more shares. The expectation of profits from trade with South America was talked-up to encourage the public to purchase shares, but the bubble prices reached far beyond what the actual profits of the business (namely the slave trade) could justify….”

A Fractal Alternative View

To the Economic Fractalist’s credit, there is a case for 1807 which is when the U.S. Embargo Act came along – thus setting off what may be thought of as the U.S.’s first failed Trade War:

“Congress imposed the embargo in direct response to these events. President Thomas Jefferson acted with restraint, weighing public support for retaliation while recognizing that the United States was far weaker than Britain or France. He recommended that Congress respond with commercial warfare, a policy that appealed to Jefferson both for being experimental and for foreseeably harming his domestic political opponents more than his allies, whatever its effect on the European belligerents. Congress, controlled by the President’s allies, agreed, and the Act was signed into law on December 22, 1807.

The embargo failed totally.”

Of course, that failure took several years to cumulatively fail, but that’s because of the “wet noodle effects” in public policy.  IoW, you  do something, then discover that the linkages you thought were firm. are in reality quite sloppy.  Eventually, the noodle turns to mush from all the pushing.

The  Fractalist himself goes into more detail in the deeper-thinking (you’ll need both brain-cells for his) discussion  titled (yep, it’s a long one…): “ Validation of the Fractal Nature of the Global Asset-Debt Macroeconomic System: The Great Crash: 36/90/85 of 90 Days Fractally Self-similar to the US Hegemonic 1807 36/91/89 Year Fractal Series.”

We might have offered something a bit more  pedestrian  for a wider (OK, stupider) audience.  Like “Trade Wars Blow Shit Up – with numbers.”  But you get the idea.

Extensible Thinking Dept.

We mention these two landmark economic events for a reason:  Fractals are an alternative to fixed-length economic cycles. Strict longwave (Kondratiev/Kondratieff) cycle fans (like me) will admit that Bubbles have echoes.

The South Sea Bubble began blowing up in 1720.  Tack on a K-Wave cycle length of 52-years and that brings us to the Crowning screwup.  Losing what would later become Here (America) when (we) Colonists went rogue in 1776.  See how useful this stuff is?

The  Fractalist’s case, however, explains cycle-length variability.   Sometimes, they are one length, like 52-years, then another maybe it’s 93-years.

Which is where this morning’s topic – the LCBMC (long chain business models collapsing) – comes from.

Cursed with Complexity

Humans are not particularly well-suited for multi-variate thought. 

Oh, sure, you might catch the  occasional glimpse of fourth-dimensional thinking.  While reading  Tertium Organum (P.D. Ouspensky’s indispensable tomb).  But, for the most part, our visual cortex operates in one of two modes:  Peripheral (as in whole-field vision) and Foveal (focus on the center of the visual field).  Your mind is a projectionist, right?

Complexity – damn it to hell, anyway – doesn’t stop at the simply binary-state suitable for our little bicameral minds (*after Jayne).  Complexity has spawned the “Long Chain Business Model.”  Design here, build there, assemble over yonder, ship direct, online sales, tracking….ubiquity~ it’s everywhere.

We also live in a remarkable period where not  one, but two types of long-chains are under attack.

Chain One Type Collapse

With the Trump administration trying to “get harder on China over trade” (we need the money)  China – in reaction – is continuying to expland in order to preserve growth. 

Last week, for example,  ABC ran a piece “Trade, technology and security at risk in US-China feud.”

China is taking the U.S. tariff moves as an  affront so they are off selling arms like never before.  As in “Serbian purchase of missile defence system shows ties deepening with China.”

Throw in some of the alliances wrought from China’s Belt & Road Initiative (BRIC) and you see stories like “China sidelines Pakistan govt, manipulates law to acquire control over democratic, economic system: Report,” as well.

China is pressing several key economic buttons at the same time:

  • Their expansion continues to the West (relative to Beijing).
  • They will find alternatives to the U.S. market.
  • In the meantime, the U.S. dollar is beginning to wobble…
  • And that means “downscaling in America” which reinforces the decline in America global superpower claims.

We exported our jobs and now – as the job numbers later this week will show – recovery options are bleak.

The long-chain models are in trouble. 

In the manufacturing business model:  Design in Cupertino, CA, export to China to build, import to US to sell, and market via American media.  Too many risk exposures to count.

Rinse and repeat for all offshored products like televisions, appliances, many autos, batteries.   All in trouble thanks to the Tweeter-in-Chief.  (Dear Melania, can you hide his keybopard, please? thanks)

The longer the business model chain, the more “left-field” influences (like trade wars and tweets) can gum up the works.

Chain Type Two Collapse

As if the Trade War wasn’t a bad-enough botch (lessons from the Embargo Act of 1807 notwithstanding) along comes the modern Plague.

And with it, we see the domestic long-chain business models shuddering.  Who will go to restaurants?  Blam!  One-third of those jobs will disappear.

You see all the grounded airplanes?  Bound to crater real estate in Seattle when people figure out Boeing will have to lay off people.  Toss in wildly left-wing government in Seattle, and we can see a rerun of the 1972 “Will the last person to leave Seattle turn off the lights?” 

Might take a year – maybe three – to arrive, but there’s a damn 52-year K-Wave cycle coming due in the PNW in 2024.  Seattle has once-again laid down on the freeway.  Watch them get run over – again.

Will that impact Seattle businesses?  Sure!  It should be clear to any damn fool (I’ll volunteer to say it) that with commies on the Seattle City Council, Amazon will likely need to move key (read: taxable) operations to tax-friendlier locales.

Duh.  Commies don’t understand golden geese, very well.

America’s Downscaling to Come

We haven’t played this part of history perfectly.  Still, Elaine and I have “downscaled on our terms” rather than being caught-up in digital mob rule (DMR).

People taunted me for years “How can anyone take an “economist” seriously who lives in a trailer in the woods?”

That’s slowly changing.  Urban-dwellers – living under emergent communistic enclaves like Seattle – may come to appreciate a sustainable lifestyle, plenty of open spaces, and the accompanying tax-advantages of rural life.

No stadium?  Then no stadium taxes.  See how this works?  Public underwriting of sports (via cheap facilities) is just one example of electoral stupidity.  But we don’t have all day.

Be warned, though:  Stupidity is contagious and persistent.

Idiotic Distractions

While the grown-ups ponder things like “permanently disappearing jobs” and “downscaling” before the rest of America catches on, distractions continue.

The MSM continues eating up division, pandering glitter, and promoting pseudo-drama reduced to  lowest-common-denominator standards.  Result?  Media focus designed for immediacy values of persons having an IQ of 100, or less.  There are choices, but dumb is a habit many people can’t break.  Takes work.  Thinking.

The “OMG Factor” is  not how a strategic human consumes information.  Which is why  Peoplenomics Wednesday will be “Back to the Threat Board.”

Climate is NOT on it.  Impact of “free money” compounding?  Now Ure talking.

In the meantime, here’s what the knuckle-draggers are being served:

On one voice of the left, we read Trump’s to blame for everything: “PACs hit Trump for ‘police state,’ racism and Covid in ads targeting Black voters.”  He’s also responsible for the potholes on city streets, and your fan belt breaking, too.  Like, we’re so sure.

Still, playing the race card pays ad dividends which is why stories like “What Has Changed Since George Floyd?” make the rounds.  Clicks and cash, people.  Clicks and cash.

Off center stage, the U.S. rush (Bill Gates, et all) to build a CV-19 vaccine is likely to be eclipsed by foreign projects. 

As inferred in “Russia gears up for mass vaccination against coronavirus despite international skepticism” and “Russia Aims to Produce ‘Millions’ of Virus Doses by 2021.”  Of, course, in order to work, it may require several shots a year and we decline, thanks.

Notable: UK virus cuts are expanding: HSBC to speed up 35,000 job cuts as profits slump.  We’ll see similar cuts (and speed-ups) coming to America, too.

In our “news if you live there” file:  It’s summer, guess what happens in the left-coast mountains?  (Like you need help on this one, right?):  “Firefighters Struggle To Contain Blaze In Southern California.”

G20 Hyperinflation

Just another Monday.

We don’t see collapse of the global markets today.  Already the spendthrift Fed has jacked futures up another 86  107 points on the Dow.  Europe is up as well.

As we bemoaned last week:  Investing today has been evolving into a “choice of stock swindles” more than a “sound investment decision based on dividends (rent paid on your money).” 

Your only hope of making money in most stocks (“equities”) is to find someone dumber than you.

By the look of the early slog, that will continue to be easy again today.

Write when you get rich,orge@Ure.net

23 thoughts on “LCBMC: Long-Chain Business Model Collapse”

  1. yada yada yada .. tell us another one .. ussa ussa ussa .. must have been terrible for those poor folk living in the late 30s and early 40s .. it really is a disgraceful evil .. only change is the boss has got no moustache and orange combover now ..

    • Dr. Osterholm was on Joe Rogan back in March, I think which was a really great interview. I tried telling everyone about it back then when we thought the virus was going to as devastating to us, U.S., as it was to China and Italy. We got lucky …. relatively speaking.

  3. it’s the year of the “out of stock”/please don’t call store asking if something is “in stock”. i ordered a chest freezer from the “depot”,been waiting for 6 weeks. the store will not allow me to pick it up! it has to be delivered via a shipping company. how much is that eating at their “bottom dollar”?

  4. Still picking up pennies in front of moving steam rollers..

    – yeah I got a new mathematical model – better than Black Scholes for pricing Risk Assets – yeah yeah its called..

    -Arcania Mania, Elliot Smacktal Wave Theory – why its better than Buttcoin in figuring out direction of the Financial Markets ..play over and over and over AGAIN.

    Back to the Future – Which comes first – 30 THOU on the DOW, $100 – Silver, $10,000 GOLD, $100k Bitcoin, Satan/DarthSidious..

    Wie immer, Nein Bitcon Fur dich

  5. “2005 NIH Journal: “Chloroquine is a potent inhibitor of SARS coronavirus infection and spread””
    “The National Institutes of Health, the agency Dr. Tony Fauchi leads, published research in August of 2005 in their own Virology Journal. The title of the Report? “Chloroquine is a potent inhibitor of SARS coronavirus infection and spread.”
    “That means Fauci new in 2005 that Chloroquine could protect people from SARS CoV viruses, of which SARS CoV2 (the COVID-19 Coronavirus) is a close cousin.”

    ——————————-
    “Opinion: Fauci Knew About HCQ In 2005 – Nobody Needed To Die”
    “Dr. Anthony Fauci, whose “expert” advice to President Trump has resulted in the complete shutdown of the greatest economic engine in world history, has known since 2005 that chloroquine is an effective inhibitor of coronaviruses.”

    ——————————-
    We’re being scammed!
    —————
    Maintaining Vitamin D3 levels >40 ng/mL (75 nmol/L). {it should be noted that dark skinned people are more resistent to the effect of sunlight in the manufacture of D3 – it can take 4-5 times the length of time for them to create the same level of D3 as light skinned people, they should all take D3 supplementation}. Where are all of the mainstream doctors on this? The press blames ‘white privilege’ what a crock!
    —————
    CQ and HCQ is cheap at least before this started at 2 cents/pill.
    —————
    CQ and HCQ should be available over-the-counter with appropriate instructions for it’s use.
    —————
    Conflicts-of-interest abound in the ‘medical profession’ This must be cleaned up!

  6. George,
    Regarding: “The embargo failed totally.”
    So, you’re saying that the Farmbelt will never get off of welfare? And we offshored their markets to South America?
    Best, Mike

    • Mike, you really need to find a hobby. Governments have been subsidizing the cost of food production to the benefit of urban areas off and on for nearly all of history. You can subsidize it at the point of production, point of consumer purchase, or some place in between, we happen to do all of the above in the US. Food stamps amount to the same thing, and are essentially no different from the grain dole in ancient Rome, with regards to purpose and effect. If you think we should remove those subsidies, be my guest, but I want to know how you think people who live in cities are going to afford to eat when the cost of food goes up drastically. Could you PLEASE find a couple of brain cells to rub together when you post here?

  7. Seattle’s economy is no longer dependent upon Boeing – in fact, Boeing already moved its hq and some other mfg. out of state and it didn’t even register a blip. Today’s Seattle is high tech- the Amazons, the Google’s, and a plethora of others. Yes, Seattle, like every other major city have an impact on real estate values heading south. It just won’t be limited to Seattle.

    And let’s not forget that the City of Seattle is just that – that City of Seattle. What about all the surrounding areas – Bellevue, Redmond (you know – where the largest concentration of Microsoft lives), Issaquah. Add to that the many who are unable to afford to live in those suburbs and instead commute from Auburn, Tacoma, Puyallup, Marysville, Mt. Vernon. Don’t know when you were here last and had a chance to interact with people who live here (not just your readers), and you will see and hear that not everyone supports what the City of Seattle council is promoting and engaged in. We are not a bunch of mindless twits who follow whatever piper shows up.

    Yes, according to astrology, there is a economic collapse just down the road, starting about, oh February 2021 and going through 2024. But about fleeing the cities to the desolate parts of the country away from the cities – great if you can do it. Not everyone can due to jobs and financial and family responsibilities. Not everyone is medically healthy (meaning, needing quality medical facilities nearby), ‘retired’ with grown kids and no aging parents (YOU go move hours or days away and then try to deal with 94+yo parents who refuse to move out of their homes and have daily problems and issues but not enough to be ‘locked up’ in assisted living). Gotta be realistic here…. and that is something that I no longer read in your columns. I know, you will say – don’t read it then – but honestly, George, when I first started reading your words, back in oh, 1998 or so, you provided different views that could be adapted to everyday life. So, I guess I keep reading out of habit.

    • It’s still a great habit. Thing is, some of the world is catching up (on) as are you. But believe me, what I write is far radical thinking to most…

      • Oh hell yeah.

        I seem to remember a couple times UrbSurv reported on “street prices” , back in the day. Times keep changing and G’s writing changes with the times..eventually –

        Good to see Spirit/Spirituality/Qi written about on these pages – NEEDED BADLY right about now..what with Demons & Imperial Death Troopers/SF – running rampant – mucking up the whole “SHOW” – with more on the way..

        “sister bluebird flying high above.. https://youtu.be/s0p9SGPaRAc

    • AMEN ON THE ELDERLY PARENTS ISSUES !!!!!!!!!!!!!!! TIMES 1,000,000 !!!!!!!!!!!!!!!
      I got viciously repeatedly yelled at today & berated because my very elderly Father cannot remember the house number of his rental property & he thinks I am to blame! (You cannot own an even- & odd- numbered house side-by-side! One side of street is odd, other is even per any city! Yet I am threatened with “action” over HIS mistake).

  8. Well, I read G Lammert’s The Economic Fractalist’s post in answer to my question and appreciate the answer and clarification.

    The Economic Fractalist gives specific dates.

    AlI can say is we’ll see soon enough.

  9. “Oh, sure, you might catch the occasional glimpse of fourth-dimensional thinking. While reading Tertium Organum (P.D. Ouspensky’s indispensable tomb).”

    Were you suggesting we read his book (tome) or visit his burial site (tomb)? Inquiring minds want to know…

  10. College campuses in my area are going for these Bio Buttons:

    BioIntelliSense Introduces the BioButton™ for 90-days of Continuous Wireless Temperature and Vital Signs Monitoring on a Coin-Sized Disposable Medical Device

    “The introduction of the BioButton device, in combination with the BioMobile applications and enterprise triage dashboards, represents a significant advancement in making continuous medical-grade monitoring reliable, effortless and cost-effective,” said James Mault, MD, CEO of BioIntelliSense. “The convenience of the BioButton will support a range of clinical use cases for RPM reimbursement and mass market use to enable safe return to work or school.”

    https://www.prnewswire.com/news-releases/biointellisense-introduces-the-biobutton-for-90-days-of-continuous-wireless-temperature-and-vital-signs-monitoring-on-a-coin-sized-disposable-medical-device-301053694.html

  11. Oakland University requires students wear BioButton for COVID-19 tracking in order to live on campus

    With the fall semester just weeks away, Oakland University is announcing several new steps to keep students, staff, and faculty safe on campus, one of which is requiring residents wear a BioButton, which monitors vitals including temperature in real-time.

    https://www.fox2detroit.com/news/oakland-university-requires-students-wear-biobutton-for-covid-19-tracking-in-order-to-live-on-campus

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