Scientists have almost universally discredited Mayan doomsday scenarios which predict the end the world will come on December 21, 2012, but just as with religions like Christianity and Islam, the Mayan prophecy has become more about faith than science. The credibility of the evidence has been overlooked in favor of mysticism, and Hollywood has even lent credence to the prophecy by making big budget movies such as 2012. Television shows about disaster condos made to protect believers from any fallout and doomsday preppers now garner their fare share of the airwaves. It is hard for many of us to believe, but there is a sect of people in this world that believe in the Mayan Doomsday scenario, and they very well might make some substance of it.
Let me explain. The global economic system today is built completely on confidence. Companies trade on the stock market with an average price to earnings ratio of 14. In other words, if you buy an average company on the NYSE today, you will get your money back in 14 years. Since money doubles every 7 years on average, the stock market has essentially become the largest ponzi scheme known to man. Think about it this way, would you buy a McDonalds today if you wouldn’t get your money back for another 14 years? The answer is obviously no, but we buy because we think other people will buy it for a higher price later. Many say that these companies are valued based on growth prospects rather than earnings, but 14 times is the average, not just the P/E ratio for high growth companies. In fact, companies with high growth prospects can trade with P/E multiples of 70 times or higher. Governments operate in much the same way. They continue to borrow money on the assumption that the population will grow and provide larger amounts of future revenue to fund retirements, medicare, and social security. Unfortunately, countries can’t grow indefinitely, and in many Western countries the population growth is either stagnant, or not growing enough to cover the shortfall. This is in part why governments around the world are facing sovereign debt crises. The point is that governments and markets are based on faith and confidence and if something can shake that confidence, even a little bit, the whole deck of cards can come crashing down.
That brings us back to the prophecy. On the surface of it the prophecy seems highly improbable at best and ridiculous at worst, but that is irrelevant if it causes enough believers to cash out some stock, waste some money, or sell some government bonds. If they do, they could theoretically shake confidence, which could increase governments’ borrowing costs, and trigger a snowball effect in which a government default appears more likely, which leads to investors demanding higher interest rates, which makes it even more likely the government will default, which makes people question the credibility of other nations debt, which causes them to demand higher interest rates and so and… Essentially, because the stock market and government ponzi schemes will be nearing the tail end of their cycles at almost the exact time that the Mayan prophecy is predicted to take place, it may well lend superficial credibility to the theory, which could increase the number of and zeal of the followers and shake enough confidence to become the straw that breaks the camels back and brings down this house of cards.