What Are the Odds that the 2020-2022 Olympics Will Be Cancelled?

In the modern era (1896-present), the Olympics have only been cancelled in wartime: 1916 (World War I), 1940 and 1944 (World War II). But world war is not the only circumstance that could derail the Olympics; a global crisis in energy, finance or geopolitics could send the risks and costs of the Olympics beyond the reach of most participants.

The key to understanding the odds of an Olympic cancellation is Liebig’s Law of the Minimum, which states states that “growth is controlled not by the total amount of resources available, but by the scarcest resource.”

As I have outlined elsewhere, the three resources that will become increasingly scarce globally going forward are:

1. Geopolitical stability

2. Energy abundance (i.e. abundant and affordable to the bottom 95%)

3. Financial/currency stability

A global scarcity of any of these three could sink the Olympics in 2020 and 2022. I’ve discussed the geopolitical, financial and resource risks in four recent posts:

The Odds of a Global Food Crisis Are Rising

The Deep State’s Catch-22

Here’s Why Wages Have Stagnated–and Will Continue to Stagnate

The Ultimate Long Game: Autarky and Resilience

The current confidence that everything will remain stable for years to come is based on a misleading extrapolation of current trends. Just because the global status quo has managed to maintain a facade or normalcy for the past eight years does not mean the New Normal (central banks pumping $180 billion a month into the global financial system to keep it afloat) is identical with the pre-crisis Old Normal.

Seneca’s Cliff offers a more accurate model of reality: everything stays the same until it doesn’t. The slide down is much faster and more abrupt than the steady advance to the cliff’s edge:

The reality is the status quo has been forced to increase its interventions just to maintain the steady-state facade of normalcy. This constant increase of resources being devoted to prop up an unsustainable system is not consequence-free; the effort generates unintended consequences and increases the systemic risks.

The status quo must then ramp up its interventions and manipulations to compensate for the strains and risks breaking through the carefully managed facade of normalcy.

War is not the only possible disruptor of the 2020-2022 Olympics. Geopolitical tensions could rise to the point that boycotts effectively gut the Olympics. Global disruptions of energy (severe shortages and soaring costs) could put the Olympics out of reach for many participants–and of course these two risks are connected. Energy shortages and geopolitical conflicts go hand in hand.

A funny thing happens in a severe currency crisis: 95% of the phantom wealth suddenly disappears. The value of fiat currencies is established by a number of factors, but the primary one is demand for the currency, which is tied to participants’ trust that the currency will retain its current value (or appreciate) going forward.

Once that trust is lost, the downward spiral creates panic selling.

In the current narrative, central banks can always “save the day” by printing money or opening the floodgates of unlimited credit. The problem won’t be a lack of currency or credit–the problem will be a scarcity of trustworthy collateral to back up the credit and currency. If the value of the collateral is impaired, the credit leveraged on the collateral will also be impaired.

In other words, a loss of faith in a currency cannot be reversed when faith in the central bank’s magical powers has also been lost. The dramatic decline in the purchasing power of Venezuela’s currency offers a modern-day example of what happens to phantom wealth in a currency crisis.

It’s tough to pay for an Olympics when 95% of your supposed “wealth” has vanished. To save face, the host nation may attempt a severely truncated Olympics with a few participants and mostly empty venues, but the reality will be visible to all: it would have been better to cancel the Olympics and avoid the embarrassment of a failed show crippled by scarcities.

What are the odds that the 2020-2022 Olympics will be cancelled (or completely distrupted)? A lot higher than most people think.

Of related interest:

Alice Friedemann: When The Trucks Stop Running

Stephanie Pomboy: A Grim Outlook for the Economy, Stocks

Jeffrey Snider: All Signs Point To Systemic Reset

My new book is #9 on Kindle short reads -> politics and social science: Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle ebook, $8.95 print edition)For more, please visit the book’s website.

Facebooktwittergoogle_plusredditpinterestlinkedinmail
This entry was posted in General and tagged , , . Bookmark the permalink.
  • Daniel Smith

    After being used as a political tool the Olympics are invalid and finished.

  • Charlie Primero

    I used to believe there was some natural limit to the amount of Inflation Tax bankers would impose on working people. http://en.wikipedia.org/wiki/Inflation_tax

    My 1993 university economics term thesis described how the then-current staggering U.S. National Debt-to-GDP ratio of 63% would inevitably cause an Argentina-style collapse of the U.S. economy within 6 years.

    I was wrong. Modern social engineering and computerized tax collection have effectively removed that limit.

    I still have all the physical gold I bought back then.

  • Once people figure out the Corporate racket just like the Bankster’s they will just be a footnote in history.

    Aug 13, 2016 Olympic angst in Rio favela

    During the Olympics opening ceremony, Brazil paid tribute to its favelas. At least 25% of the the population live in shanty towns.But not many are seeing the benefits of hosting the Games. Residents of the Mangueira favela watch fireworks explode over the Maracanã stadium during.

    https://youtu.be/gZpbo8XLJTA

  • Westcoastliberal

    Until and unless the radioactive situation at Fukushima can be solved, the government of Japan should halt the Tokyo games for the safety of the athletes and fans.

  • BDUB

    Considering 2020 is Tokyo, I’d say the odds of them being cancelled are pretty good. 2022 in Beijing..well, it depends on whether the house of cards comes down sooner rather than later.

  • DebL.

    Hope they are cancelled. Last time I saw a decent Olympics was in the 70s! Only interesting events are track & field (and since they banned Russia, the thing will be rigged anyway), and maybe gymnastics (also likely rigged..since when does the US have such awesome female gymnasts…Gabby Douglass has nothing on Nadia Comeneche of Romania. And the fine efforts by Team Great Britian are being snuffed out as “European Union”…because of Brexit I suppose! What a load of crap!

    2020 in Japan, eh? What with athletes getting sick on favela water, I can’t wait to see them get Fukushima’d! Screw the Olympics!

  • animalogic

    Some countries look to the future & try to avoid monetary shananegans. Russia, I believe, has the ruble backed by gold TWICE over.