Welcome to the Happy New Year

Merry Christmas and Happy New year. I am going on my holiday vacation, but I will be back in plenty of time for the “year of Hell.”

This has been an interesting year. Here are the bookends to 2022 so far. “January 10—The first successful heart transplant from a pig to a human patient occurs in Baltimore, Maryland, United States.” Both the pig—obviously—and the man died. December 19, 2022: “Elon Musk polled Twitter on whether he should step down as CEO. Most voters said yes.” Musk pays $44 billion of his own money and then says he will step down as the boss if his customers want him to.

Another set of bookends. January 3, 2022 (Reuters): “Brent crude settled up $1.20 at $78.98 a barrel.” December 19, 2022 (Reuters): “Brent crude gained 76 cents to settle at $79.80 a barrel.”

You cannot ignore the cycles and you cannot fight them. The Philippines has a general cycle of typhoons from April to December. The peak of the typhoon season is July through October, when nearly 70 percent of all typhoons develop. The most severe typhoons usually occur in August and September.

That is the weather cycle that has been going on since forever. Notice the language: “average,” “general,” “nearly”, and “usually”. But the cycle is clear and consistent. On April 20, 2023, a total solar eclipse—the only one in 2023—will cross South/ East Asia, Australia, Indian Ocean, and Antarctica. A total solar eclipse will occur on Friday, May 20, 2050, across the extreme South/west Pacific Ocean. It is highly unlikely that I will live to see it, but it will happen. Cycles.

We entered a new economic/political cycle wave last March and this will change again next April to a fullthe blown Panic Cycle.

Christine Lagarde, President of the European Central Bank, said last month that a “mild recession” will not reduce inflation. If true, then it is an admission that inf lation was made by Covid lockdowns that disrupted the supply chain and unleashed shortages. Well, if not a “mild ” recession then she must mean a strong recession.

The ECB has forced banks to repay their loans, withdrawing 300 billion euros from the banking system in a desperate effort to stop inflation. That did not work. Euro Area inflation is 10.1 percent.

Here is the reality that western governments and central banks are faced with: Inflation or recession.

When you are buying eggs at a historically high price, up 78 percent in a year, and the payment on your home variable rate mortgage increased 25 percent while you are working a full-time and a part-time job, you might tend to panic. If you lose one of those jobs but your president tells you not to worry because gasoline is almost the same price as a year ago, you might tend to panic.

If you live in the EU and the average energy bill increased by 90 percent since October 2021, defending Ukraine from Russia that your government made sure you had to buy oil and natural gas from, you might tend to panic. December 16, 2022 (Euronews): “Thousands of protesters rallied against rising inflation and called for higher wages in several European cities. Backed by several unions, crowds of people marched in Brussels, London and across Italy and France.”

Bad government economic policies lead to political chaos, which leads to more bad government economic policies in order to hold onto power, which leads to economic chaos and eventually the start of a major Panic Cycle. Welcome to 2023.

Western governments thought that keeping people at home for a few months at most that then turned into a year and a half (in the US arguing politics and which identity-group was most oppressed on Socmed), would give them time to fix the economic problems. But spending billions to keep the peasants away from their torches and pitchforks and for electing the “correct leaders,” created a slingshot price inflation effect from the supply chain disruptions that apparently were a complete surprise.

Inflation or recession, or both. Welcome to the Year from Hell.