There are rumors floating around the beltway that the credit crisis was intentionally triggered by gigantic short sales that were orchestrated in London and Dubai, and Iranian President Mahmoud Ahmadinejad declared "that 'the American empire' is nearing collapse and should end its military involvement in other countries."
At the same time, as reported in the Unknowncountry.com Newsletter and on Unknowncountry.com, the 3rd Infantry Division's 1st Brigade Combat Team will be deployed to the US mainland beginning on October 1 for 12 months. The brigade will have the most advanced nonlethal weapons in the army's arsenal. It is trained in crowd control and how to deal with massive terror assaults, such as nuclear attacks.
I have to tell you, I am concerned that things are coming apart in major, indeed fundamental ways, and I would not be in the least surprised to see that the financial collapse is followed by a massive terror attack, probably involving a nuclear weapon.
In January, I have a book coming out called Critical Mass which deals with nuclear terrorism. To write it, I studied the realities of nuclear nonproliferation carefully, and there is little question in my mind but that weapons-grade nuclear materials or even actual bombs, are hidden away in the west right now.
In my book, a nuclear weapon is detonated first over a large American city, then over a European one, whereupon a shadowy terrorist group demands that the world convert to Islam. And the world is caught like a rat in a trap, because nobody knows if there are more bombs hidden in other cities.
Obviously, an extreme scenario, but we are living in extraordinary times, and frankly, I don't think it's beyond possibility, not at all. The more I learned about the realities of nuclear nonproliferation, the more I came to understand that it's a very hard thing to achieve--so much so that it may be impossible. To make matters worse, very little was spent on hardening US borders against nuclear smuggling. Incredibly, our most vulnerable entry point, which is the Port of Los Angeles, was not fitted with detection equipment until last year. That is to say, the government waited six years before actually deploying some sort of protection in the port that controls 70% of American trade.
We are facing an economic disaster on a scale never before seen in human history, involving a massive increase in our national debt BEFORE the jobless situation turns into a rout, as it will. During the Great Depression, the government had an ace in the hole: it could safely print money. That is not the case now. In other words, there is no net this time, not with the fantastic deficit we are running.
Congress is in a no-win situation. The bailout will fail because it will cause the dollar to collapse. But if there is no bailout, the entire credit system will fail. This will mean that there will be no money to borrow to buy a car, certainly not a house, or even to finance business inventories or things like cash flows.
If there is no bailout, very quickly, and by that I mean over the next few months, the economy will grind to a halt. I believe that many banks--quite possibly most of them--may fail. If there is a bailout, that won't happen, at least, not for a while, but with a collapsed dollar the economy of the entire world is going into a tailspin which will take years to put right.
Meantime, virtually every country on earth will experience severe economic disruption, on a scale that has not only not been seen since the Depression, but that has never before been seen.
So there must and will be a bailout. But the reason one is needed at all goes back to my September 10 journal entry: the abandonment of the Sherman Anti-Trust Act has allowed companies to get too big--that is to say, too big to fail. This means that huge corporations always now have a safety net--us, the taxpayers.
To me, this feels like a gigantic scam, but, in reality, nobody expected these entities to fail. Now that this has happened, though, we need leadership that will enforce Sherman and compel a lot of these gigantic entities to break up. This way, we really will have a free market. Six or ten giant companies do not constitute a free market. That's corporate socialism, and we are seeing the result: the only thing that can now save the situation is a huge dose of state socialism.
The economic situation is bad, obviously, and terrorism is a danger, but, incredibly, our overall situation gets worse, and this has to do with climate. Recently on Unknowncountry, we ran a story about starving polar bears. They are starving because the arctic summer has been too warm because of global warming. But there is another concealed problem that is far more serious even than their suffering. It is that massive quantities of methane gas are being released by melting arctic permafrost. Methane is a far more powerful greenhouse gas than carbon dioxide, and the result of this release is going to be dramatically higher temperatures next year and the year after, with the result that even more outgassing will take place.
Temperatures are going to literally shoot up worldwide during this period, very much as they did 11,000 years ago just prior to the period geologists call the Younger Dryas. The ice age had ended, and warming had begun. But massive quantities of methane were trapped in the world's permafrost, and it flooded the atmosphere, so temperatures shot up to about where they are today.
Then the trapped methane ran out, and the atmosphere was suddenly clear of it. Temperatures plummeted, and, as German scientists have recently discovered and Art Bell and I predicted in Superstorm, the climate went from warm to cold in a single season.
All of this is going to happen again, and in the context of the worst economic crisis we have ever known, not to mention the possibility of terror attacks of extraordinary power.
Let me give you a timeline.
First, the most likely time for a terror attack is this October. It hits us just as the economy is collapsing, and disrupts the presidential election. If it strikes Washington, the country takes the worst blow it has ever taken in its history. As there is no continuity of government plan in effect that takes the possibility of the sudden disappearance of Washington into account, it is literally anybody's guess what might happen next.
At the same time, bailout or no bailout, over the next eight weeks we will see extraordinary changes in financial markets and in our lives. Without a bailout, we will see credit dry up and banks fail. With one, we will see the dollar collapse.
In terms of the environment, it is likely that scientists will announce sometime this fall that methane outgassing has taken place over the summer at unprecedented levels. We will begin to see its effects next winter. The wild card here is the sun. If it remains quiescent, there will be fewer coronal mass ejections and therefore less heat reaching earth's atmosphere. (How the sun affects our weather is controversial, but there is general agreement that it gets warmer during solar maxima.) At present, the solar wind is probably as low as it has ever been, so the sun could help us here.
I think that there is a very real risk of terrorism and social upheaval right now, or those troops would not have been deployed to the U.S.
It could be--in fact, it's probable--that the bailout will be approved by congress in some form this weekend. If that happens, the stock markets will respond explosively next week and gold will plummet.
If so, it would be a good time to put cash into the yellow stuff, it seems to me. But I'm no investment adviser, so don't take my word for it.
NOTE: This Journal entry, previously published on our old site, will have any links removed.