Endgame, Endpoint…Endtimes? :: by Wilfred Hahn

A recent best-seller on the New York Time list is John Mauldin’s book, Endgame. While it certainly does not intone “end of world” hysteria, from what we can gather (we have only read overviews of the book), as the crackpot Harold Camping has again managed to achieve, the populist Mr. Mauldin does point out quite a number of trends that seem to be coming to an end.

Indeed, many long-running secular trends and developments are coming to an endpoint. We have written on many of these in recent decades, though they may not yet have been so popularly evident then. Certainly, the advent of the Global Financial Crisis (GFC) and five years of a residential real estate slump in the U.S. and elsewhere around the world have sharpened people’s senses to such perspectives.

Actually, the focus of this article is not to provide yet another list of “ends and trends” but to point to a significant shift that is occurring in the perspectives of policymakers and powerbrokers around the world. They have begun to think more pointedly and openly in terms of endpoints and endgames.

How so? The earth to them is now increasingly seen as a finite, crowded, under-resourced little planet. As such, the objective must be to secure natural resourcea … to hoard and stockpile them. Farmland and arable land must be staked and contracted to ensure long-term food security. No matter that such actions might drive up the prices of sustenance materials such as grains and energy.

In short, no longer is “open market” capitalism seen to be producing a bigger pie that can allow all of the world’s populace to share in a bigger piece. Rather, the dominant economic systems of mankind’s world are now sputtering — the Keynesian “endpoint” having been reached. The Keynesian policies of pump priming demand through heightened government spending—now culminating in massive budget deficits in the advanced-nation world—have become impotent and destructive (meaning the stimulative manipulations and deficit spending of governments have reached their effective limits).

Mankind’s money mirage of what is termed “gross domestic product (GDP) is failing to provide sufficient economic growth to preserve the solvency of an over-indebted world. Therefore, attitudes and strategies have changed. Gamesmanship and brinksmanship —in other words, endgames—become the necessary strategies in the eyes of geopolitical strategists and many investors. A culture of hoarding and predation comes to the fore. For some to prosper and advance; others must therefore bear the costs.

This shift to a rather carnivorous and desperate market behaviour ranks on the same level as the “laws of the jungle.” We excerpt a paragraph from the Global Spin of August 2009 (also published by this writer), which illustrates similar animal behaviour.

“The spadefoot frog makes its home in Australia. It is an explosively breeding, desert-dwelling amphibian. It may burrow underground for years, waiting for a seasonal rain or flood. However, when this “liquidity event” arrives, a period of frenzied mating ensues. Incredibly, in a space of as little as a month, its eggs advance through the tadpole stage to full metamorphosis. It needs to quickly reach adulthood before the pools of water again dry up. Fascinatingly, as the water puddles begin to get tepid, murky and shallow, the tadpoles grow teeth … 3 rows of them. They then start eating each other to accelerate the growth of the survivors. Eventually, the frog must go back underground in order to survive the next dry season. Sound a little like today’s capital markets?”

It only follows that such endgame “winner-take-all” strategies as noted in the commodity and money world, can only be pursued by a small minority. Countries such as Saudi Arabia and China have been buying or leasing vast tracts of agricultural land (mostly in Africa). Large (and small) financial institutions and private investors have been charging into commodity markets over recent years.

The problem, however, is this: Commodities such as food and metals (i.e. copper, aluminums, silver … etc.) are an extremely small asset class. Compared to the value of global financial securities (these valued perhaps as high as $200 trillion) commodities represent little more that a drop in the bucket. For example, consider that the entire consumption of wheat in the world (even at recently elevated prices) amounts to only perhaps $250 billion per annum, the equivalent to one-eighth of a percent of worldwide financial wealth.

Generally, commodities are materials that are consumed and not items of wealth to be hoarded. They are “flow items” and not “assets.” The point to realize, then, is that hoarding short-life commodities with the objective of profiting from their rise in price has an unfortunate and destructive side effect. It disadvantages those who can no longer afford their purchase for living needs.

Consider that for most people in the world, food purchases account to between 25 to 50% of a household’s budget. Comparatively, the average North American household spends only 10-11% of their budget on food. Therefore, when asset managers begin to hoard commodities or manipulate their price upward, it causes excruciating hardships for billions around the globe. In this late, great era of advanced globalization and financialization, virtually all commodities are priced uniformly around the globe and their price can be manipulated though various financial instruments..

We see here that, in their endgame actions, wealthy countries, investors and/or large financial institutions disadvantage the majority—namely those that are relatively poorer or already disadvantaged. Yet, it is an accepted tactic in the investment world.

Several prophetic Bible verses speak of similar behavioural traits and conditions as we see becoming dominant in the world wide today: We here reference just two. Firstly, James, the epistle writer, prophesies the following:

“Now listen, you rich people, weep and wail because of the misery that is coming upon you. Your wealth has rotted, and moths have eaten your clothes. Your gold and silver are corroded. Their corrosion will testify against you and eat your flesh like fire. You have hoarded wealth in the last days. Look! The wages you failed to pay the workmen who mowed your fields are crying out against you. The cries of the harvesters have reached the ears of the Lord Almighty. You have lived on earth in luxury and self-indulgence. You have fattened yourselves in the day of slaughter” (James 5:1-5).

Clearly outlined here is “hoarding” and a global condition where the rich prosper at the painful inconveniences of the masses. Finally, in Revelation is mentioned, that the cost of food will soar so high that it will require a full days wages for a subsistence level of calories. “Then I heard what sounded like a voice among the four living creatures, saying, “A quart of wheat for a day’s wages, and three quarts of barley for a day’s wages, and do not damage the oil and the wine!” (Revelation 6:6). We, of course, certainly cannot conclude what the cause of this condition of high food prices will be in that future Tribulation period. Nevertheless, it likely is not without significance that today we can already discern just how possible are such outcomes … and possibly very soon.