2. MANAGING ADVERSITY PART 1
THE DYNAMICS
AGENDA
• THE CLIMATIC CYCLES AND THEIR
IMPACT ON GLOBAL POLITICS.
• THE IMPORTANCE OF OCEAN CYCLES.
• LONG-TERM ECONOMIC CYCLES.
• DEBT AND ITS DESTRUCTION.
• THE CYCLES OF CONFLICT.
• THE PROBLEMS WITH ENERGY.
• GROUP WORK.
3. THE 178.8-YEAR SOLAR CYCLE
Thought to be generated by out-of-balance movements
within the solar system affecting sun’s output and
volcanic action
Four distinctive periods in the last millennium of
economic, social and political turmoil.
Cycle #24 likely start of a minimum due in early decades
of 21st Century and related seismic activity already with
us.
4.
5. WOLF MINIMUM - Early 14th century
European famine in 1317/8 caused malnutrition that
weakened immune systems prior to Black Death.
Civil wars in Britain and devastation on the continent –
Barbara Tuchman, A Distant Mirror.
Beneficial effect - emancipation of English serfs.
6. SPOROR MINIMUM – Around 1500
Critical period, discoveries, civil wars, innovations,
famines and raging inflation from Spanish gold.
Formation of House of Tudor after Wars of the Roses,
then to Elizabethan order. Reformation – individuals
emancipated from the church.
Innovation: printing press that drove Italian Renaissance
and Reformation.
Constantinople falls to Ottomans.
Emergence of the Elizabethan Age.
7. MAUNDER MINIMUM - 17TH century
Unusually cool for around 100 years, Thames regularly
frozen.
Period of civil wars, famines, assassinations and
rebellions around northern hemisphere.
Creation of English Constitution, union with Scotland
and development of Cape Cod and SA Cape colonies.
8. DALTON/SABINE MINIMUM - Late 18TH century
Napoleonic Wars fought during this period, Russia
unusually cool.
1812 Anglo v American War – solved nothing.
Set off Tambora, the biggest eruption for centuries.
Waterloo set the stage for sixty-year peace in Europe.
9. THE PRESENT
Minimum sunspots and high seismic activity matching
conditions similar to previous minima.
If the present resembles the past we can expect at least 25-
years of a cooler climate, high food prices, civil
disturbances rising to revolutions.
Monitor sunspots and seismicity.
10. PACIFIC DECADAL OSCILLATION
● PDO ~ 50 year cycle where the average Pacific surface
temperature (plotted since 1900) rises and falls in a
predictable pattern.
● Positive phases drive rain belts to the east and north in
beneficial El Niňo phase.
● Present negative phase since 2000 of PDO is to drive rain
belts south and west during La Niňa to cause major
problems with crop yields. Will last until around 2025.
11.
12. ATLANTIC MITIDECADAL OSCILLATION
AMO - A 70 year cycle where the average Atlantic surface
temperature (plotted since 1895) rises and falls in a
predictable pattern.
Main impact of positive AMO from 1995 is to drive rain
belts north in the Northern Hemisphere to leave north
Mediterranean, Middle East and SE of the US unusually dry
– contributory cause of riots in MENA.
Return to negative AMO c 2030.
13. ARCTIC OSCILLATION
When positive, winds flow around Arctic Circle.
When negative, winds flow south.
In 2010/1 warm Atlantic – low pressure.
Cold Arctic from Kamchatka, and other volcanoes
Grimsvőten (Iceland) and Cheveluch (Kamchatka) create
high pressure systems.
Icy winds flow south into great continents; will ensure
another early autumn and cold winter for around another
15 years.
14. PRESENT OSCILLATIONS
The present confluence of a negative PDO and positive
AMO represents a dangerous combination of difficult
growing conditions in north and east Mediterranean, the
Great Plans and SE of the US, China and Central Asia.
There will also be flooding in SE Asia.
Coupled with a new minimum and positive AMO, cold
winter likely in Northern Hemisphere
Browning Newsletter provides monthly reports on the three
Oscillations and their impact.
15. PRIMARY IMPACT OF CLIMATIC CYCLES
Historically, the main cycles could not have come at a more
difficult time associated with the economic downturn. Their
primary impact is likely to be on water availability and food
yields with associated political unrest in MENA.
Unfortunately this is likely to spread to highly populated
areas. We can expect:
A rapid rise in food price which, associated with the economic
downturn, leads to stagflation.
Continuing civil unrest from food shortages.
Civil disturbances up to revolutions.
16. ECONOMIC CYCLES
KONDRATIEFF CYCLE – 50 to 70-year cycle of boom
and bust.
Associated debt/GDP cycle.
JUGLAR CYCLE – 8-11 year cycle, also the business
cycle – see Part 4.
17.
18. KONDRATIEFF LONG-WAVE
Biblical Jubilee Cycle of fifty years – Leviticus 25.
Kondratieff’s work of 1928 used pig iron, textile, food
prices and interest rates going back to 1780 to derive a
pattern of around 45 to 60 years of boom and bust. He,
almost alone, predicted the Great Depression.
Pattern shown in diagram shows present
downwave/winter started in around 2000 and bottoms
when debt cycle exhausted c 2020.
19.
20. DEBT/GDP CYCLE IN US
K2 cycle peaked in 1875 at 156.4%, then fell.
K3 cycle in 1929 was 195%, peaked at 300% as GDP
declined 50% from 1928 to 1932 when ratio 200%; loss
of debt c $100bn – 10% less than GDP in 1929.
K3 ended in 1950 when ratio 130%
DEBT DESTRUCTION BEFORE RECOVERY
K4 now at c 400% but nearer 800% when off balance-
sheet items added.
Potential loss of debt ratio to 200% - >$30 tr haircut?
21. THE CREDIT CYCLE - MOST REMEDIES FAIL
The slight decline in the debt/GDP ratio is due to mortgage
delinquencies and deleveraging. This has been more than
compensated by the rise in federal and state debt and
unfunded liabilities.
If the present resembles the past, there will need to be a
debt liquidation in the US approaching twice the GDP of
around $30 tr – probably through hyperinflation - before
recovery possible.
This would end global fiat money.
Watch for signs of weakening currencies through further
QE and decline in GDP.
22. CYCLES OF CONFLICT
There have been many insurrections over water when
starving crowds have rampaged. This could happen
again:
o Peak of 178.8-year climatic cycle has generated civil wars and
revolutions; Cycle #24/5 likely to herald another minimum.
o La Niňa’s have caused water wars.
o Winters of Kondratieff have been related to civil wars and
internal strife.
Conclusion – Likely riots, civil disobedience up to civil
wars and revolutions: wars over water.
23. SECULAR ENERGY BALANCE
There is rising evidence that the main fields have reached
‘peak oil’ and now are declining and those coming on
stream are progressively being unable to meet rising global
demand except at high costs. Other factors:
Climatic shifts are impacting on demand.
Drought areas unable to continue high hydro power.
Coal for power generation and conversion to oil to fill the gaps, as
will LNG.
Shale oil and gas expensive to drill but abundant in U.S.
Major shift in government spending away from transfer payments
to research into cold fusion.
24. GROUP DISCUSSION OVER DYNAMICS
It would be very useful to hear how different nations – or
areas within states – have dealt with adversity. The agenda
might include:
Discussion of other inputs we should be aware of.
Prognosis for the US, Europe, the Middle and Far East.
What could be done to mitigate impact of dynamics.
Possibility of new political and economic alignments.
