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Generational Dynamics Web Log for 30-Dec-2012
30-Dec-12 World View -- The 'Kick the Can Theory' and the Fiscal Cliff

Web Log - December, 2012

30-Dec-12 World View -- The 'Kick the Can Theory' and the Fiscal Cliff

H1N1 Swine Flu kills nine people in the West Bank

This morning's key headlines from GenerationalDynamics.com

Nasa's Mars Rover, Curiosity, takes a photo of itself
H1N1 Swine Flu kills nine people in the West Bank
The 'Kick the Can Theory' and the Fiscal Cliff
Fiscal cliff negotiations

Nasa's Mars Rover, Curiosity, takes a photo of itself

Curiosity Self-Portrait (NASA)

Curiosity Self-Portrait (NASA)

The spacecraft carrying the Mars Rover, Curiosity, was launched from Cape Canaveral on November 26, 2011. Curiosity landed on Mars on August 6, 2012, and it's been conducting science experiments since then, though rumors that life had been discovered on Mars turned out to be false. This is an actual picture of Curiosity on the Martian landscape on November 1. Curiosity's cameras are not able to take this shot, of course, so this picture is a composite of dozens of images that the cameras took, combined into a self self-portrait image. Nasa and Jet Propulsion Lab (PDF)

H1N1 Swine Flu kills nine people in the West Bank

There have been 187 recent recorded cases of H1N1 swine flu in the northern West Bank, and nine Palestinians have died. In 2009, an H1N1 epidemic erupted in Mexico and spread into a worldwide pandemic. "WHO declares a worldwide H1N1 'mild' swine flu pandemic" The pandemic died out by Spring 2010, after killing over 17,000 people world wide, and the World Health Organization has warned that there could be a resurgence at any time. AFP and Jerusalem Post

The 'Kick the Can Theory' and the Fiscal Cliff

Some time ago, I formulated the "Kick the Can Theory" which said that if you want to predict what the Europeans are going to do, especially with Greece, then just figure out what the minimum amount is that they can do to get past the current day's crisis without solving the underlying problems, which then continue to worsen. The crisis then returns in much worse form, a few weeks or months later.

The "Kick the Can Theory" has never failed. It has always correctly predicted what the Europeans were going to do. It's worthwhile looking at it a little more closely, so that we can apply it to the fiscal cliff negotiations currently going on in Washington.

The Kick the Can Theory turns out to be more complicated than you might think, because it runs in major cycles, with several steps within each cycle. Let's remember how the cycle worked with Greece:

Greece would be facing a crisis (e.g., bankruptcy by a date certain)
European leaders would have a "summit meeting" to do discuss options, and to settle on a bailout plan.
There would be bitter confrontations but the participants would lie to the press about them. Retiring Eurogroup chairman Jean-Claude Jüncker had the philosophy that "When it becomes serious, you have to lie."
There would be no agreement, and more summit meetings would be scheduled. The participants would lie to the press.
Finally there would be a summit meeting where a "nuclear option" would be revealed, and it would be announced that Greece's problems were solved once and for all, with only a few "details" still to be worked out. A new deadline would be announced to settle all the details.
This deadline would be missed, as would several subsequent deadlines, to decide on "details." The participants would lie to the press.
Summit meeting after summit meeting would fail to reach a decision, until two weeks before Greece had to make its next major bond payment.
At that point, there would be agreement to loan Greece just enough money to make the next bond payment. The underlying problems would not be solved. Everyone would lie to the press, saying that all problems had been solved.

We've had three or four cycles of the above steps. The cycle as a whole is can-kicking, but what's important to understand is that each step within the cycle is also a mini-can-kicking.

It's worth repeating that there was never a "final solution" for Greece because no solution exists. It's not that there were three or four really good solutions, and the participants simply could not agree on which wonderful solution to implement. It's that no solution exists, and all the participants can do is blame each other.

Fiscal cliff negotiations

The United States is barely at the beginning of this can-kicking process. There have only been a couple of "summit meetings" so far, barely enough to get anywhere at all. Everybody is lying to the press and blaming each other except that, as usual, the mainstream media is totally in the tank for President Obama, irrespective of anything else going on, and will always agree with whatever he says, even when it's totally incoherent.

As of this writing on Saturday evening, there appears to be a good chance of a "deal" that will raise tax on the "rich," which is what President Obama wants, and there will also probably be some spending increases, and an increase in the debt ceiling. Thus, any deal will actually make things worse, but President Obama and the mainstream media will declare it to be a major victory and stocks will rise.

Or, perhaps there won't be a mini-deal. Yesterday I heard analysts say that we may go over the "fiscal cliff," which will result in huge tax increases on everyone, but then agreement will be reached next week (because then the Republicans will be voting for a tax decrease rather than for a tax increase) ... or by January 14 ... or by January 21 ... or by March.

If a "final solution" cannot be reached now, then how stupid do you have to be to think that one will be found in March?

The Kick the Can Theory predicts that there will be multiple "summit meetings" and confrontations, that all parties will continue to lie to the press and blame each other, and that no agreement will be reached until just a few days before some real crisis. At that point, there will be some agreement on some part of the issue, just enough to delay the current crisis a few more weeks. The cycle will repeat over and over until we're at war. As in the case of Greece, no actual solution exists.

By the way, I haven't read anything about this, but I'm going to guess that a lot of Europeans are looking forward with glee to the Schadenfreude they're expecting to feel when America has to go through the same farcical process that they went through.

America is truly Greece now.

Bloomberg

(Comments: For reader comments, questions and discussion, see the 30-Dec-12 World View -- The 'Kick the Can Theory' and the Fiscal Cliff thread of the Generational Dynamics forum. Comments may be posted anonymously.) (30-Dec-2012) Permanent Link
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Generational Dynamics Web Log for 30-Dec-2012 30-Dec-12 World View -- The 'Kick the Can Theory' and the Fiscal Cliff

Nasa's Mars Rover, Curiosity, takes a photo of itself

H1N1 Swine Flu kills nine people in the West Bank

The 'Kick the Can Theory' and the Fiscal Cliff

Fiscal cliff negotiations

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Generational Dynamics Web Log for 30-Dec-2012
30-Dec-12 World View -- The 'Kick the Can Theory' and the Fiscal Cliff