What might cause a major disaster? - The Daily Reckoning
The Daily Reckoning by Bill Bonner
On This Day - 13 August 2014
What might cause a major disaster? A  A  A

Ouzilly, France

Dear Diary,

The weather has turned bad. It is rainy and cold, with the temperature below 60 degrees this morning. Our thoughts turn gloomy...we give the cat some extra food.

"It seems to be happening all over the whole world," said a friend. "The climate is changing. Here in this part of France, it used to be reliably sunny and warm in the summertime. Now, you never know what you'll get."

Some people believe the 'global warming' hypothesis. Others are convinced that the globe is cooling.

"Yes, that is what is really going on," says an old friend. "The earth's climate has little to do with carbon emissions. They are just a drop of water in the ocean, from a climatic point of view. What really matters is the sun. I'm greatly simplifying, but when the sun's radiant heat is strong, the earth warms. When it is weak, the earth cools. We've been in a warm period. Now, we're entering a weak period. It's not global warming you have to worry about; it's global cooling. And it will be a catastrophe much greater than the financial catastrophe caused by Janet Yellen and the Fed."

Today, south of the Loire River, in the summer of 2014, it looks like he may be right. So, we turn away from the looming manmade disaster caused by the feds...to the looming natural disaster caused by the sun. And to disasters generally.

--- Advertisement ---
Stock Market's "Hidden Treasures"...

Did you know that there are some stocks which have consistently delivered double and even triple returns over the years for a select group of investors?

We like to call them "The Hidden Treasures of the stock market".

And these "Hidden Treasures" have already delivered returns like 100% in 1 year 8 months, 177% in 2 years, 288% in 2 years and 5 months and so on...

Today, we'd like you to know more about such stocks as well!

Click here to get full information on these "Hidden Treasures"...

As long time readers know, we are connoisseurs of disaster. Just as some people have a palette for wine...we have a keen nose for disaster. Yes, we are the Robert Parker of catastrophe. We have sampled hundreds of varieties. We roll them around in our brain and pick out the subtle differences. We remember the little nuances. And we can smell one coming a mile away.

Will the weather cause a major disaster? Maybe. But what interests us most is the following thought:

    There are an infinite number of known unknowns and unknown unknowns - any one of which could cause a disaster.

    In many ways, we are more vulnerable to a disaster than at any time in human history.
What might cause a major disaster? Weather... war...disease...famine - the horsemen of the Apocalypse are still very much with us. But now they I-phones in their hands.

Imagine a few years of colder-than-usual summers in the Northern Hemisphere...and droughts in Australia and South America, the only substantial food producers in south of the equator. This could easily reduce current food output by 10%. Stocks would quickly be drawn down to the point there was nothing left. What would people eat? And here we turn our attention to the obvious: there are many more people around than there used to be.

The last major disaster occurred in France in 1940. The Germans invaded, routed the French Army and there was complete chaos all through the country. Everyone who could took to the roads, heading south, to escape the invading army.

It was a political and military disaster. It was a social upheaval. But it did not cause millions of civilian deaths. Because 70% of the French still lived on farms; they had a 'safety net' that worked. There were no extensive government welfare programs; people were still used to looking out for themselves. They stocked wheat and potatoes. They knew how to grow a garden... and even if they lived in a city, they usually had close relatives on a farm not far away. For thousands of years, they had grown accustomed to protecting themselves from famine. Cows, sheep, horses - all could be turned into dinner. In extremis, so could pets, rats, and pigeons. The French still recalled the siege of Paris in 1870, when restaurants served up rat, cat and dog, as well as animals from the zoo. Cotelettes de chien aux petits pois (dog ribs with peas) was a favorite.

But today, in France as in America, most people live in vast urbanized conglomerates. They have only a few days of food in stock. And to get more, they depend on a sprawling, complex and delicate system of 'just in time' shelf stocking. This, of course, depends on a number of things...any one of which could render the whole system inoperable. First, there must be enough food produced to feed the world's population. There are 7 billion people on planet Earth today...that's twice as many as there were in 1940. And the world's output of food is just enough to feed them. In the simplest accounting, should food output decline by 10%, as many as 70 million people could starve. Nor is the food where people need it. It is not on small farms spread throughout the countryside. It is on large farms...often a continent away from the people who will eat it. Fuel is vital. And as Gary North showed in the run up to the Y2K non disaster, the transport system is regulated and controlled by computers, which are vulnerable to their own disasters. Experts say a large electromagnetic pulse could fry the switches, shutting down electricity and electronic communications for as long as 6 months.

Fourteen years ago, Dr. North calculated that such a shut-down could leave millions dead. But this could be a much bigger disaster today. A breakdown in the internet...or in the computer systems that operate credit cards and ATMs...would leave 320 million un-medicated Americans wandering around in cold, dark malls...unable to communicate or to do business with one another...with no way to get money or to spend it. Remember, our money system today is no longer based on either coins or paper money. It is a system of credit that depends on electronic transactions to keep track of who owes what to whom. If the electronic system goes down...so does the economy. Then, our 'safety net' institutions will fail, too. In America today there are approximately 100 million people who depend on handouts from the government, including those on Social Security. Those handouts are almost all delivered electronically. Many of these people typically have no savings, no supplies of food or medicine, no gardens, no fuel. In a matter of hours, they will be desperate.

And of course...there is the money itself. As we recently saw in Zimbabwe, when money loses its value the whole economy falls apart. Workers do not bus for nothing. Producers do not produce. Truckers do not truck. The shelves at WalMart, so recently groaning under the weight of products from all over the world, suddenly are stripped bare.

That is when we'll be glad we have so many fat pets!

Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.

The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

Get The Daily Reckoning directly
in your mail box.
Just enter your e-mail address » 

Read our Privacy Policy and Terms Of Use.

Equitymaster requests your view! Post a comment on "What might cause a major disaster?". Click here!


Recent Articles:
Trump Takes a Beating
August 18, 2017
Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.
Which Gods Will Bring Down the US Empire?
August 17, 2017
Mr Trump is in the White House and the gods are in their heavens; what's not to like?
Will They Haul Off Trump's Statue, Too?
August 16, 2017
All across the country, the old gods become devils. New, gluten-free gods take their places...
Farm Loan Waivers: Why Bad Economics Makes for Good Politics
August 14, 2017
It is because the negative effects of the waivers aren't clearly visible.