The cover of today's The Economist (Britain's respected 170-year-old news weekly) shows a swirling black hole sucking in the words "Be Afraid." The insinuation is we're nearing an event horizon, the devastating boundary at the mouth of a black hole beyond which nothing can escape, not even light. The past few weeks have been full of such alarms.

It is important to note that this newsletter is not intended to be an alarmist bulletin. I am not a pessimist...but neither am I an optimist. A futurist cannot afford such biases. I am, and must always remain, a realist. Follow the trend lines where they are going, not where you want them to go. Straight up mathematics. No cooking the books. If the trend lines are headed in alarming directions, i.e., if reality itself is alarming, then so be it.

The reality--alarming or not--is that SOMETHING HAS CHANGED. These episodic newsletters are my attempt to document and explain the change.

Very little is playing by the rules, not the world system, modernity, mathematics, progress, or history. The old patterns appear broken. Trajectories are both weird and worrisome. The entire globe seems to be making it up as we go along.

We live in a special moment in history, for better or worse. History has jumped the tracks. Something's lurched. Everything is being shaken. Progress is behaving badly. The math is dysfunctional--it's not working right. Change is destabilizing. Volatility is disruptive. As a trends researcher for three decades, I've never seen it like this. And, quite frankly, neither has the world. To be sure, the world has witnessed almost continuous change and dysfunction--but never before with such levels of speed, suddenness, complexity, intensity, information, communication, media, money, mobility, technology, weaponry, and interconnectedness.

Following the last newsletter, a reader responded with comments that included, "Thank you for laying out and tying together the hard truth news recap of the year so far." I wrote back: "Actually, the newsletter was only about the month of August." Did you catch that? US earthquake of a kind not seen in 115 years; a hurricane behaving unlike any in 50 years; natural disasters setting a new record; dictator cornered after 42 years; London riots worst in 20 years; August market performance worst in 10 years; job number unchanged first time in 65 years; gold prices smashing all-time highs; Turkey and Israel breaking off 20-year-long cooperation; Egypt attempting to nix Israel peace accord after 32 years; unprecedented Palestinian appeal to UN for statehood; unprecedented Arab spring uprising. All in one month.

September finished in similar fashion--a large market loss capping a brutal week in a brutal month ending a brutal quarter. The third week saw the largest drop since Oct 2008, erasing $1 trillion from US equities. For the quarter, the DOW was down 10%, the worst third quarter performance since 2002. It is important to point out that the stock market is not the economy. But they are linked in obvious ways and right now both are twisting in the wind.

Thus The Economist "Be Afraid" cover. Most of the attention is focused on Europe where they are playing whack-a-mole but just can't seem to hit the critter squarely. The epicenter is still Greece, where increasingly dramatic efforts can't stop the hemorrhage. This led to some rather startling statements in the past couple of weeks.

Sept 21, Roger Altman, former deputy Treasury Secretary (in a Financial Times piece titled "America and Europe are on the verge of a disastrous recession"): "For the American and western European economies to decline again, when unemployment levels are already so high, would be disastrous. It would shock consumers, businesses and financial markets....Overall, we could be in for a repeat of the experience of 1937, when America fell back into recession after three years of recovery from the Great Depression."

Sept 29, financier George Soros (just for the record, I'm not a fan): "Financial markets are driving the world towards another Great Depression with incalculable political consequences. The authorities, particularly in Europe, have lost control of the situation."

Oct 4, Fed Chairman Ben Bernanke (in a glum congressional report): "The recovery is close to faltering."

Oct 6, Bank of England Governor Mervyn King (in a television interview): "This is undoubtedly the biggest financial crisis the world has ever faced and it has continued now for four years. I do not know when it will come to an end. What I do know is that in order for it to come to an end we have to find a way for imbalances to unwind, for the debts to be repaid and for the countries that need to repay debt to other countries to be able to export their way out of difficulty." (Critics of his policy says his actions will be a "Titanic" disaster for pensioners, savers, and workers approaching retirement.)

I am not saying that these quoted statements and reports are correct, only that they are striking. Something, it appears, has changed. Drama is the new normal.

Europe has been problematic for years, particularly Portugal, Italy, Ireland, Greece and Spain (crudely referred to as the PIIGS). Greece, being the most profligate spender, dug the deepest hole. In the olden days, it would probably just default and restructure--painful but not unheard of. These, however, are not the olden days. Greece is now a part of the eurozone, an economic and monetary union of 17 European Union (EU) member states who all use the euro for currency (the entire EU has 27 members).

The Great Recession and its lingering aftermath have exposed the countries with the worst economic problems. As Warren Buffett famously said, "Until the tide goes out, you don't know who is swimming naked." That would be Greece. A troubling question now arose: How much shared responsibility do other EU countries have for extricating their neighbors from the consequences of bad fiscal behavior? This eurozone stuff was so new, it was a question without a precedent. No one had the answer. So they threw some money at Athens and promised a bit more. It was enough to kick the can down the road but not enough to solve the problem. The situation grew worse and worse....

In early September, the president of the European Central Bank warned Europe's finance ministers how grave the global crisis was. The euro area, he said, was currently its epicenter and the consequences could be much worse than anything seen so far. At the same meeting, Timothy Geithner expressed his alarm over the "catastrophic risk" of cascading sovereign default.

Germany, the largest and wealthiest country, is in no mood to hand over their hard earned money. They work long hours, the storyline goes, while the Greeks lie in the sun. With her reluctant willingness to support the Greek bailout, German chancellor Angela Merkel has probably lost her next election.

All the euro area countries are involved now, like it or not. Eurozone growth for next year will be a virtual standstill, while Goldman Sachs predicts both Germany and France will slip back into recession.

In other related news (remember, everything is "related")

• The US, for the third time in six months, had a threatened shutdown of the federal government, this time over the issue of appropriating more funds for disaster relief without first stipulating where the money would come from.
• Health care costs increased 9% this year. All the Republican presidential candidates say they will repeal the Obama HC plan.
• President Obama's disapproval rating is 52%, Congress's disapproval rating is 82%, and both parties are equally despised.
• Metals--gold, silver, copper, zinc--experienced some of the biggest moves in a decade. Gold dropped from a high of $1900 to $1600 and now sits around $1650. On Sept 23, at one point it was down an astounding $127 an ounce.
• The U.S. unemployment rate languishes stubbornly at 9.1%, essentially unchanged for six months.
• Italy's credit rating was cut three levels by Moody's for the first time in almost two decades (1993). This follows S&P's downgrade Sept 20.
• The BRIC nations (Brazil, Russia, India, and China, the four major emerging economies), cannot be counted on to bail out the world this time around. China and Brazil are slowing. Regarding Russia, if you took away gas, oil, and nuclear weapons, all you'd have left would be Vodka and Siberia.
• Russian prime minister Vladimir Putin will run again for President, swapping jobs with President Medvedev. He left the presidency in 2008 after his term limit was up. If elected--a foregone conclusion--he will be eligible to serve until 2024. As a consequence, mother Russia will suffer an undermining of democracy, an entrenchment of corruption, and a reversal of reforms.
• Egypt could go bankrupt within six months, claims Mohammed el-Baradei, the former head of the International Atomic Energy Agency (IAEA), due to the flight of foreign money out of the country, the severe decrease in tourism, and poor leadership.

Our Response:

• Always remember there is a double narrative, the unseen being more real than the seen.
• "Wake up and strengthen the things that remain."
• Paul wrote that our afflictions are "light and momentary." We would do well to understand the depth of this teaching.
• "Worry does not empty tomorrow of its problems, it only empties today of its strength."
• International studies consistently show that the desire for material acquisition always functions as a happiness suppressant. If this is an age of fewer things, balance it out with deeper relationships.
• "Discontent doth dislocate and unjoint the soul, it pulls off the wheels. Discontent is a fretting humour which dries the brains, wastes the spirits, corrodes and eats out the comfort of life." (Thomas Watson, ~1855)