The Great Recession Blog
by David Haggith
In the fall of 2015, I coined the term Epocalypse to describe and define the scale of economic collapse that we are headed into. I couldn’t think of a better term because it conveys connotations of “epoch” and “epic” with audible overtones of “collapse” while being a contraction for “economic collapse.” The storm that is now developing will be all of those things.
When I first used the term epocalypse, I quickly found other publications picking up on it and quoting my article as a reference to where they got the term, including Forbes Ukraine edition, which, after referencing my article, spun off their own cyrillic version of the word. The word started to take off globally because stock markets started to crash just as I said they would as soon as the Federal Reserve implemented its first interest-rate increase. The whole economy looked like it could slide into an abyss and people were grasping for a word big enough for the event they feared … but then … just as suddenly .. everything seemed to stabilize, and the word just as quickly lost popularity.
“Carmageddon” and “Retail Apocalypse” confirm “Epocalypse” as the right name for this event
I still think “Epocalypse” is the right word to describe the full event, which is now unfolding again … a bit behind schedule but every bit as big as I (and many others) have said it will be. It is happening again because it is inevitable; it’s baked into the recovery. You now see a number of publications using terms like “carmadeddon” and “retail apocalypse,” which I’ve also used in recent articles to describe parts of the economic collapse that is developing in real time around us. (See “Carmageddon Crashes into ‘the Recovery’ Right on Schedule — EXACTLY as Predicted Here” and “Retail Apocalypse Engulfs US Economy.”)
It’s the cascade of shutdowns that occur after the anchor stores close up shop that is the next wave that will be more devastating than the anchor stores themselves. The shuttering of anchor stores diminishes traffic creating collateral damage to surrounding businesses. Already restaurants have experienced their longest decline since the Great Recession, losing ground in year-on-year sales for sixteen consecutive months, falling another 1-3% in June. As anchor stores close and restaurants collapse, malls will become self-contained ghost towns.
Publications are using the term carmageddon because the distress in the auto industry is likely to become as bad as it did during the financial crisis when the United States’ major automakers faced possible bankruptcy if the Federal Reserve did not bail them out or buy them out. They are also using that term because the decline in the industry this time looks like it is going to be long-term. Customers have reached peak auto debt. People in aggregate aren’t going for the enticements to take on new debt to buy new overly expensive cars. They’re stretching their ownership out longer. Millennials are also less inclined to have cars as are aging baby boomers. At the same time, the Fed is not as likely to bail anyone out this time because they are in a mode of wanting to reduce their balance sheet, not add to it. So, people are seeing this as a major shift that the auto industry will have to wrestle with for years.
Publications are frequently using the term retail apocalypse now (even mainstream publications), in part because the change in retail is not just huge; it is PERMANENT. While retail sales overall are down because of the failing economy, retail sales are finished forever for a lot of brick-and-mortar retailers. (Yes, sales are up for Amazon; but they are still down overall because the increase to Amazon and other online sources doesn’t match the loss at brick-and-mortar stores.) They’re also using the term retail apocalypse because they are starting to recognize that the knock-on effect of so many brick-and-mortar stores closing is going to be massive with job losses far exceeding anything the highly automated Amazon will add in jobs. The collapse of anchor stores is going to put out other businesses around those stores and result in a lot of loan defaults in commercial real estate, too.
When you see numerous publications picking up terms like carmageddon and retail apocalypse just to name and define two parts of the economic crisis that is developing, then you know it takes an exceptionally big word like Epocalypse to define and describe the overall collapse we are now entering. I didn’t coin either carmageddon or retail apocalypse that I know of. I started seeing other publications use them at the same time I published articles using them. (Wolf Richter may have come out with carmageddon first, but I’m not sure.) When terms hit everywhere at once that says to me they are “pregnant ideas” by which I mean ideas so obvious and appropriate to the moment that they reproduce themselves everywhere at once — just start popping up. When new terms like that take off on their own like wildfire, that means a sudden awareness is coming upon people everywhere.
Why epocalypse now?
I do know I coined the term epocalypse for this particular use. (Just to be accurate: I researched the word before putting it into play and saw that it already had slight use to refer to an ecological apocalypse years ago but didn’t catch on for that use and was used in the form “E-Pocalypse!” as the name of an album by the band Kids In Glass Houses (technically an EP); but no one had ever used it to refer to an economic apocalypse, other than maybe as the title to a book, but I haven’t read the book in order to know how the author was using the word, and the book does not appear to have had any popularity, being now 13,000,000 in ranking on Amazon.)
I think there was a kind of pregnancy to the idea of calling this economic collapse an “epocalyse,” too, because it started to spin off when the stock market started crashing last January; but then central banks started buying stocks directly to prop up the US market during the election year, which we now know for a fact,. That averted an immediate crash, which caused people to move away from their sudden adoption of the loaded term epocalypse — since maybe things were not going to turn all that bad after all. So, I backed off from using it some myself because I think things need to start looking that bad again to everyone for the word to find its cachet all over again.
Frankly, I’d secretly (now not so secretly) like to be the one who coined the term by which the entire world eventually starts to name the greatest economic collapse the world has ever seen — since warning of this economic collapse is my whole reason for writing this blog — so, I’m holding back a little until the word’s time has clearly come. I may have been premature in launching it; but, until last year, central banks had never purchased stocks directly in order to prop up entire markets. So, they managed to hold back the tide in a completely unexpected and novel way during an election year.
Central banks had purchased stock in things like failing banks to save them; but, as of last year, they started buying the most successful stocks out there, apparently to lead the market upward since no central banks need to ever make a profit and are not even supposed to be about making profits (though, of course, they are, despite their remonstrations). This was a whole new kind of intervention that came along with emergency meetings of the Federal Reserve (topic of the meetings never disclosed) and emergency meetings between the Fed chair and the president and VP last spring, all giving you a pretty big clue as to how bad the market collapse was really going to be last year.
So, that turned out be epocalypse not quite now.
That was then; this is now. We are seeing bits and pieces start to emerge that reveal how bad this economic collapse will become. (The “bits and pieces” are huge in themselves.) The collapse is showing up first in cars and retail closures, but housing also looks like it is getting ready to swing. There are signs that a top is in for the US stock market, with the Trump Rally now blown off and limping almost sideways.
Student loans, as noted in my last article, have also just begun their great collapse. The student loan problem that has been slowly building until just last month, has suddenly become something that actually is making it harder for Trump to come up with an economic stimulus plan that balances the budget because the goal post is moving away from him so quickly, due largely to the rapid rise in student loan defaults and (to a lesser degree) mortgage defaults. The annual deficit took a huge hike in June just because of government losses on the loans. This is why I said half a year ago that any stimulus plans from Trump will come too late to matter because political inertia to those changes would slow their start down to where the goals would begin to move away faster than the solutions can take effect.
The scale of the Epocalypse
Now that student loans, mortgages, retail stores and auto sales are all sliding at a speed that is causing serious troubles and notable concern, you can see what I have meant about how a collapse this big is a landslide that has many parts. And when each part is this big, think of the size of the whole movement.
This is an entire mountainside that you can see is cracking up and ready to slide. It may go in chunks, or it may go all at once. It’s looking more and more like many pieces are starting to move at the same time, which will be horrendous; but this is also, as I’ve said a number of times in the past, something with huge inertia. So, the initial movement is going to be slow, and certainly not ALL chunks will give way at once.
At first, movement was almost unnoticeable, but the cracks were obvious throughout the economy for anyone to see if they had their eyes open. And that is what this site has always been about — pointing out all the cracks and how they form a massive expanse of land that is getting ready to move and about monitoring the movement of those cracks to try to discern when it will all give way.
The when part is the harder part to predict, but most people don’t even see the easy part — the evident flaws throughout the economy. Even when you point the numerous cracks out to them, they deny the significance because they live in economic denial. They don’t want to see what is coming, and it is too big for them to believe. Now, however, it is noticeable to many, and its size is becoming apparent just in how people are naming its pieces.. Soon many of the parts will be slowly sliding downhill, and that is when you will see genuine panic set in with people starting to run (on the banks and in the markets).
That’s how big I’ve been saying this will be, and that is how big it is starting to show itself to be just in the scale of its parts now that you have student loans and home loans hitting the government deficit in a major way and auto sales and retail closures hitting the economy. We have only just begun to feel those movements, but many publications are now noticing them and giving them pretty grand names. That’s why I’ve marked summer as the point where the Epocalypse … again … starts to become widely recognizable and starts to break through denial.