Here's a big quote from memmel, commenting on Gail The Actuary's post which I mentioned a day ago.
So I don't see the debt pyramid collapsing for purely financial reasons simply because collapse right now benefits no one I see it coming later and being forced because of high energy prices. How much later is tough I'd say 2011 at the earliest with a range of 2011-2012 it all depends on when energy prices start rising strongly again. As long as they are low the game will continue since people can trade increased energy usage for lower but still decent net profits.
As and example of the fact we probably won't collapse because of a pure collapse of the financial pyramid I'd argue that if it was going to happen it would have already happened if investors where going to demand high interest rates from the US because of fear of default we would be doing that now. Given that the financial system has chosen to allow the US government to print money at will we can assume they will continue to do so until it no longer does any good.
So at the end we I think will see a sort of Indian summer for the next few years even if oil prices rise since financial games will be able to offest rising fuel costs for a time. And as long as oil remains cheap I think the end game won't even start regardless of how many bad things happen in the financial world since we have accepted the Government backstopping everything. Thus with low oil prices I really don't see a end to the ability of the Government to keep things slumping along they could pull it off for at least a decade.
Memmel's writing can be a bit hard to follow, but his very clear thinking makes it worth the effort. Our big problem both as individuals and as business people (see my last post) is trying to work out what is really going to happen to the economy and when. It's worth reading all the comments on Gail's post (there are heaps!): memmel's come fairly far down the list.
One of the comments often heard when discussing the Peak Oil problem and the financial crisis is that human ingenuity will find a way out, and soon we'll all be able to continue again in the same old way once we sort out the current mess. I think this springs from a number of misconceptions about the situation we're in. They are (as I see it)
(a) We're not trying hard enough (people have become lazy/uneducated/selfish)
(b) Powerful interests/corporations are stopping the implementation of known solutions to the problem of oil shortages
and/or
(c) The sheer demand for solutions will produce them (science can produce an endless cornucopia of goodies given the will and the funding)
(d) Simple lack of understanding of the Peak Oil issue (by the majority of the population)
(e) Simple lack of understanding of economics (by nearly everyone)
Taking them in reverse order, (e) has arisen because the economic system is now fiendishly complicated, it has grown up on an ad hoc basis over centuries without ever being designed in the conventional sense but simply through the accretion of bits, and those charged with understanding it tend to wear ideological blinkers which prevent them from seeing it as it really is (see my post mentioning Glenn Stevens, Governor of the Reserve Bank of Australia..."I do not know anyone who predicted this course of events"). (d) is due to the scary, intractable nature of the problem (which stops the media and politicians talking about it), its lack of visibility in day-to-day existence and to similar intellectual issues which prevent economists from understanding economics. (c) is simply the casino mentality we've all grown up in, where life gets better because it simply does: that's been our experience all our lives! Why shouldn't it continue? And (b) is the fantasy of the powerless and uneducated. Which brings us to (a).
Like the mythical frog in the slowly heating pot of water, we don't seem to be fully aware of how much harder we are working these days to keep the industrial system functioning. Since the late sixties the amount of income a middle-class family has needed to get by has steadily risen. Way back then, any reasonably able bodied man could support a wife and several children while purchasing a house on a single wage. There may have only been a fraction of the consumer goods and food choices available which we have today, but the basics were fairly affordable. Now we are blinded by a Santa's sleigh full of of tricky toys, and every second person seems to be some kind of food aesthete, but even two young and well educated people will struggle financially to buy a house and while having a family. It's even worse in the USA where private health cover represents a massive burden for a normal middle-class family (see this excellent lecture by distinguished law scholar Elizabeth Warren who teaches contract law, bankruptcy, and commercial law at Harvard Law School).
Hours of work have become longer and longer, because the costs of maintaining the system are constantly rising. But most of us can't see any other way of doing it, and in any case it's all most of us have ever known. We're used to it. We're under the gun of obligations, expectations and massive debt burdens. And although we have more entertainment than ever, from cheap trips to Asia to addictive video games, from 8 Gig iPods to affordable BMWs, from twenty flavours of ice cream to unlimited internet porn, all this does is help distract and numb us to how trapped we've all become. And we have become very good at turning up and doing our bit. Our training is getting more effective, we're more disciplined as a work force, our productivity inches ever upward. Because it has too! But unfortunately externalities, in the form of Mother Nature, are going to impose themselves in a way which we will not be able to surmount. We are going to go bankrupt.
It takes unusual strength of mind to admit you've made a mistake, and that to continue on your current path will lead to inevitable disaster. It's easier to stay in denial, and that is is often the case for those of us who get in over our heads financially (particularly in business the first time it happens! The second time you can at least see it coming): we hope for a miracle to save us until the day the car is repossessed and the mortgagee auction sign goes up on the fence in front of our house. Whole civilisations are no different, and are even less likely to face the fact of unviability. So every thing is done to keep business as usual operating, to keep a smiley face on at all times, to paper over the cracks as they appear.
This is what the bailout of financial institutions world-wide is all about. The people carrying out these emergency measures know full well the risks they are taking and that they are laying up in store an even more dire disaster by avoiding one today, but they see no other alternative! And if they were suddenly to give up the game and walk away, they would be immediately replaced by someone else dedicated to keeping the show on the road no matter what! Because even the stupendously rich are trapped and are cracking under the strain.
We are going into a recession world-wide this year, and we will fret and worry about how we will get through it, but in the meantime governments in industrial nations everywhere, aware of the much graver danger we face (in a way which most of us are not), are fighting tooth and nail to avoid a far more dire financial calamity than a mere recession. They too are hoping for a miracle, even as the measures they are putting in place set the scene for a more complete crash down the road if there is no deus ex machina.
So how much time can their scrambling for bandaids buy us? That is something no-one can say for sure. Memmel's guess is from 3 to 10 years. I tend to agree with him, and while the looming recession will cut into our businesses profitability over the next months or years, I will be planning for the Big One, which will come because we will not be able to fight it off forever.
(For a brilliant, graphic and grim illustration of the last days of a doomed system, which shows how the dynamic plays out through the lives of individuals, watch Downfall)
Friday, January 9, 2009
Thursday, January 8, 2009
Taking care of business
As I indicated in an earlier post, my job at the moment is to think through the implications of what's happening financially in terms of our business, which is a small retail plant nursery in a country town with a population of about 1500. Small businesses are highly volatile at the best of times, and a sharp and prolonged downturn will quickly shake out the weak and probably a lot of the strong as well.
There are a number of salient features of small business which need to be kept in mind. One is that small business people are generally hard workers and when things get tough, they tend to think the solution is to work even harder. The old adage of when you find yourself in a hole, the solution is not necessarily digging deeper should be on the wall of every small business person's office. And there is no better way to find out your weak points than to work for yourself, where every mistake you make rebounds to hit you in the face. undamped and unexcused by the presence of co-workers who can conspire with you in a normal work place to cover your tail or engage with you in mutual fantasies of victimhood and blaming others.
The easiest way for me to think about how we might survive the coming shakeout is to imagine a future beyond the immediate crisis. There will be small businesses in that future — in fact, there may well be very few large businesses which survive, but where human life exists so does small business. So what will these businesses doing, and how will they be doing it?
My guess is that the main changes will be in no particular order:
1. The end of highly leveraged finance and the types of business which need to carry a lot of debt
2. A retreat from franchising and from standardised centrally administered branding
3. A shortening and simplification of the supply chain with more localised sourcing of goods
4. A retreat from extreme specialisation
5. Less reliance on the complex, fragile business systems with short useful lives spawned by the IT revolution
6. Less reliance on outside specialists of all kinds
7. More stable work forces and more reliance on skills within the organisation: these two necessarily go together
8. More close co-operation between businesses in particular communities and less reliance and oversight from government above the local level
9. The disappearance of luxury goods and service businesses except from the larger urban centres
10. The radical shrinkage of small businesses such as financial advisors, travel agencies, vehicle dealerships of all kinds including recreational boating and recreational vehicles, computer repair and sales businesses, long distance trucking, businesses dependent on contracts to government or big business
11. A re-emergence of vanished businesses such as shoe makers and repairers, blacksmiths, seamstresses, local furniture makers and upholsterers, tinkers, potters and brewers
12. A changed security environment which will entail new ways of thinking about how to protect business assets. In some communities this will result in the emergence of standover men from local Mafias selling "insurance" but in more forward thinking places, traders will pre-empt this development by banding together and making their own private security arrangements, as the State is forced to contract from its traditional role because of shrinking tax revenues
This list is by no means exhaustive. If you are a small business person, what I've outlined here will give you a rough guide for thinking about your own strengths and vulnerabilities, and how you might bridge the gap between now and then.
As an initial step, think about your debt levels and general vulnerability to financial constriction. Do you have an informal line of credit which the bank could call in at any time, leaving you high and dry? Are your customers vulnerable to financial crises? Is your business essential or optional? Are your suppliers reliable or diverse enough for you to cope with interruptions? How long and vulnerable is the transport chain to your business or community? Are you dependent on government or big business for your work? Are you dependent on distant technicians and experts for your viability? Is fuel a major component of your enterprise? How close are you, geographically and logistically, to your market? What vital inputs or components sourced from elsewhere could make your business vulnerable should they become hard to get?
Then think about what your strengths might be and how you may take advantage of a retreat from big business and a general reduction of manufactured imports. Not to mention that people (in communities which have remained viable) will tend to shop more locally. Can you cultivate local suppliers? And remember that no matter how hard times are, people still need their entertainment and escape from their immediate circumstances (music and movies were HUGE in the Great Depression): their little luxuries and indulgences. Young people fall in love, get married and have babies. Food, clothing and shelter are always needed.
There are a number of salient features of small business which need to be kept in mind. One is that small business people are generally hard workers and when things get tough, they tend to think the solution is to work even harder. The old adage of when you find yourself in a hole, the solution is not necessarily digging deeper should be on the wall of every small business person's office. And there is no better way to find out your weak points than to work for yourself, where every mistake you make rebounds to hit you in the face. undamped and unexcused by the presence of co-workers who can conspire with you in a normal work place to cover your tail or engage with you in mutual fantasies of victimhood and blaming others.
The easiest way for me to think about how we might survive the coming shakeout is to imagine a future beyond the immediate crisis. There will be small businesses in that future — in fact, there may well be very few large businesses which survive, but where human life exists so does small business. So what will these businesses doing, and how will they be doing it?
My guess is that the main changes will be in no particular order:
1. The end of highly leveraged finance and the types of business which need to carry a lot of debt
2. A retreat from franchising and from standardised centrally administered branding
3. A shortening and simplification of the supply chain with more localised sourcing of goods
4. A retreat from extreme specialisation
5. Less reliance on the complex, fragile business systems with short useful lives spawned by the IT revolution
6. Less reliance on outside specialists of all kinds
7. More stable work forces and more reliance on skills within the organisation: these two necessarily go together
8. More close co-operation between businesses in particular communities and less reliance and oversight from government above the local level
9. The disappearance of luxury goods and service businesses except from the larger urban centres
10. The radical shrinkage of small businesses such as financial advisors, travel agencies, vehicle dealerships of all kinds including recreational boating and recreational vehicles, computer repair and sales businesses, long distance trucking, businesses dependent on contracts to government or big business
11. A re-emergence of vanished businesses such as shoe makers and repairers, blacksmiths, seamstresses, local furniture makers and upholsterers, tinkers, potters and brewers
12. A changed security environment which will entail new ways of thinking about how to protect business assets. In some communities this will result in the emergence of standover men from local Mafias selling "insurance" but in more forward thinking places, traders will pre-empt this development by banding together and making their own private security arrangements, as the State is forced to contract from its traditional role because of shrinking tax revenues
This list is by no means exhaustive. If you are a small business person, what I've outlined here will give you a rough guide for thinking about your own strengths and vulnerabilities, and how you might bridge the gap between now and then.
As an initial step, think about your debt levels and general vulnerability to financial constriction. Do you have an informal line of credit which the bank could call in at any time, leaving you high and dry? Are your customers vulnerable to financial crises? Is your business essential or optional? Are your suppliers reliable or diverse enough for you to cope with interruptions? How long and vulnerable is the transport chain to your business or community? Are you dependent on government or big business for your work? Are you dependent on distant technicians and experts for your viability? Is fuel a major component of your enterprise? How close are you, geographically and logistically, to your market? What vital inputs or components sourced from elsewhere could make your business vulnerable should they become hard to get?
Then think about what your strengths might be and how you may take advantage of a retreat from big business and a general reduction of manufactured imports. Not to mention that people (in communities which have remained viable) will tend to shop more locally. Can you cultivate local suppliers? And remember that no matter how hard times are, people still need their entertainment and escape from their immediate circumstances (music and movies were HUGE in the Great Depression): their little luxuries and indulgences. Young people fall in love, get married and have babies. Food, clothing and shelter are always needed.
Useful information sources: educate yourself!
An important new post from Gail the Actuary at The Oil Drum. It's a measured look at the outlook for 2009 concentrating on the financial fundamentals underlying our industrial economy. Lots of valuable comments after the main article as well.
Also worth a look if you want to understand the crisis in world finance, this series on Youtube of easy-to-understand lectures in digestible chunks by Sal of Khanacademy. It clearly shows why the financial system is so vulnerable to collapse at the moment.
Also worth a look if you want to understand the crisis in world finance, this series on Youtube of easy-to-understand lectures in digestible chunks by Sal of Khanacademy. It clearly shows why the financial system is so vulnerable to collapse at the moment.
Wednesday, January 7, 2009
We're happily floating along in our little bubble while somewhere else: kaboom! (for the moment at least)
It's a strange experience we're having here in The Lucky Country, as we ease our way into the New Year with a large proportion of us still on holidays. We traders in Foster have had a bumper Christmas season, the Main Street is crowded with carefree tourists and anyway it's hard to think about business when your body is in beach mode. Yet the news coming out of the USA and Europe is of The End Of The World As We Know It. It seems a jarring disjunction and perhaps it's understandable that many of us, including most of our leaders, simply cannot believe that It Can Happen Here.
What we are witnessing are the first stages of the collapse of our familiar, comfortable industrial civilisation, which most of us have been in since the cradle, and which we fondly expected to be in until our demise surrounded by sobbing, well-fed loved ones (if we haven't irritated them all too much in the meantime).
Dmitri Orlov, an individual who witnessed the fall of the Soviet Union and who has been predicting this current collapse for some years, has most clearly mapped its likely progression. He talks about the five stages of collapse. Stage one is financial collapse, which we can currently observe on television or in the newspapers. It seems abstract, hard to understand and distant from our day-to-day world. We idly wonder if financial types in dark suits will fling themselves from high places on city buildings, before we move on to the sports section and the weather.
This is what we have seen so far in Australia. Various high-fliers have come undone, while the distant and as yet invisible (to us) financial tsunami has sucked away the liquidity from our financial shores, disclosing various previously hidden bottom dwellers of unedifying appearance, as well as revealing the nakedness of those emperors of business who only a few months ago seemed to be clad in rainments of glory. Naturally not many of us feel too badly about all this and are experiencing, understandably although not particularly creditably, a certain schadenfreude.
Unfortunately Stage 1, Financial Collapse will be followed in due course by Stage 2, Commercial Collapse. Those born in Australia after 1975 are unlikely to remember going through anything like this, but us older folk have had a taste. As an adult, I experienced the recession of the early seventies, the late seventies, the early eighties and the late eighties/early nineties. To quote Dmitri Orlov, If Stage 1 collapse can be observed by watching television, observing Stage 2 might require a hike or a bicycle ride to the nearest population center. Suddenly one notices lots of empty shops, lots of cars with "For Sale" signs on them on the sides of major roads in the suburbs. Everyone upon whom the axe has not already fallen trembles with anxiety that they may be next. People become isolated by fear and insecurity. Just as the financial crisis can bring the mighty down, revealing unedifying ramifications within the ranks of the previously respectable, so among us regular folks crises bring to the surface our insecurities, relationship problems and the consequences of unwise or self-indulgent behaviours or investments.
There was a time when this downturn was visible on the distant horizon, and it was possible to prepare for it as far as one ever can. Very few of us did, which is regrettable but entirely understandable. For younger people, it was something outside their experience and us older folk often felt ourselves fenced in by prior investments, relationships and obligations. We have been through what can only be described as a kind of mass delusion, where even if we felt doubts about the direction everything was going in, our feeble voices were drowned out by those in the majority who believed the party would go on forever. This mass delusion has been at every level of our society, and even those who you would think should have known better have been sucked in.
The result of all this will undoubtedly be a radical loss of legitimacy for certain authorities and professions, particularly politicians, economists and business leaders. A dangerous tendency will be to see the hand of conspiracy where in fact there was mere incompetence. Perhaps one saving grace will be a sense of shared misfortune. It is the high fliers who've been hit hardest and earliest, and for the rest of us, we will be able to take comfort in the fact that much of what we are about to go through will not be possible to sheet home to mere personal failings. Our fate will be for better or worse a shared fate, and whatever we rebuild on the other side of the disaster will be a result of communal effort, and not a winner takes all game.
After Stage 2, Dmitri Orlov talks of Stage 3: Political collapse. Faith that "the government will take care of you" is lost. As official attempts to mitigate widespread loss of access to commercial sources of survival necessities fail to make a difference, the political establishment loses legitimacy and relevance. This is a very dangerous point to get to, and it's quite possible that the USA could get there quite quickly. It's difficult to imagine Australia going this far. But it's too early to say yet. Much depends on whether any of our political leaders can grasp what is really going on, because really poor leadership can bring it on. What could also bring us undone is really stupid expectations from the general public. A sense of entitlement coupled with an unrealistic world-view, an addiction to conspiracy theories and scapegoating and a violent and predatory outlook (the situation which has obtained in the USA under George W Bush) will guarantee poor leadership and a slide towards Stage 3.
The major problem is that we are not going to recover from this downturn in the same way we have in the past. Then the music slowed down but restarted some months or a year or so later with a similar tune. But this time, with the winding down of fossil fuel availability due to our rapid decline in local production and the extreme unlikelihood of us being able to run up even more foreign debt in order to import the oil we'd like, we are not going to re-emerge in the same world.
Stage 3 collapse is the situation we see in the Democratic Republic of Congo now, are likely to see in Zimbabwe soon and can look forward to for Pakistan. It may seem quite bizarre to imagine the USA going like this, but the fissures in society brought on by the destructive activities of the Bush administration, the level of political corruption at Federal and State levels, the absence in many parts of the country of effective and inclusive local communities, the racial divides and the fundamentalist and paranoid extremism of large sections of the population make an ominous mix. See John Robb's latest post for a view of how things may develop in the South-western USA.
Stage 4 and 5 of collapse are not yet relevant to our discussion and hopefully will never be. Our task is prevent collapse from moving beyond Stage 2 into Stage 3.
What we are witnessing are the first stages of the collapse of our familiar, comfortable industrial civilisation, which most of us have been in since the cradle, and which we fondly expected to be in until our demise surrounded by sobbing, well-fed loved ones (if we haven't irritated them all too much in the meantime).
Dmitri Orlov, an individual who witnessed the fall of the Soviet Union and who has been predicting this current collapse for some years, has most clearly mapped its likely progression. He talks about the five stages of collapse. Stage one is financial collapse, which we can currently observe on television or in the newspapers. It seems abstract, hard to understand and distant from our day-to-day world. We idly wonder if financial types in dark suits will fling themselves from high places on city buildings, before we move on to the sports section and the weather.
This is what we have seen so far in Australia. Various high-fliers have come undone, while the distant and as yet invisible (to us) financial tsunami has sucked away the liquidity from our financial shores, disclosing various previously hidden bottom dwellers of unedifying appearance, as well as revealing the nakedness of those emperors of business who only a few months ago seemed to be clad in rainments of glory. Naturally not many of us feel too badly about all this and are experiencing, understandably although not particularly creditably, a certain schadenfreude.
Unfortunately Stage 1, Financial Collapse will be followed in due course by Stage 2, Commercial Collapse. Those born in Australia after 1975 are unlikely to remember going through anything like this, but us older folk have had a taste. As an adult, I experienced the recession of the early seventies, the late seventies, the early eighties and the late eighties/early nineties. To quote Dmitri Orlov, If Stage 1 collapse can be observed by watching television, observing Stage 2 might require a hike or a bicycle ride to the nearest population center. Suddenly one notices lots of empty shops, lots of cars with "For Sale" signs on them on the sides of major roads in the suburbs. Everyone upon whom the axe has not already fallen trembles with anxiety that they may be next. People become isolated by fear and insecurity. Just as the financial crisis can bring the mighty down, revealing unedifying ramifications within the ranks of the previously respectable, so among us regular folks crises bring to the surface our insecurities, relationship problems and the consequences of unwise or self-indulgent behaviours or investments.
There was a time when this downturn was visible on the distant horizon, and it was possible to prepare for it as far as one ever can. Very few of us did, which is regrettable but entirely understandable. For younger people, it was something outside their experience and us older folk often felt ourselves fenced in by prior investments, relationships and obligations. We have been through what can only be described as a kind of mass delusion, where even if we felt doubts about the direction everything was going in, our feeble voices were drowned out by those in the majority who believed the party would go on forever. This mass delusion has been at every level of our society, and even those who you would think should have known better have been sucked in.
The result of all this will undoubtedly be a radical loss of legitimacy for certain authorities and professions, particularly politicians, economists and business leaders. A dangerous tendency will be to see the hand of conspiracy where in fact there was mere incompetence. Perhaps one saving grace will be a sense of shared misfortune. It is the high fliers who've been hit hardest and earliest, and for the rest of us, we will be able to take comfort in the fact that much of what we are about to go through will not be possible to sheet home to mere personal failings. Our fate will be for better or worse a shared fate, and whatever we rebuild on the other side of the disaster will be a result of communal effort, and not a winner takes all game.
After Stage 2, Dmitri Orlov talks of Stage 3: Political collapse. Faith that "the government will take care of you" is lost. As official attempts to mitigate widespread loss of access to commercial sources of survival necessities fail to make a difference, the political establishment loses legitimacy and relevance. This is a very dangerous point to get to, and it's quite possible that the USA could get there quite quickly. It's difficult to imagine Australia going this far. But it's too early to say yet. Much depends on whether any of our political leaders can grasp what is really going on, because really poor leadership can bring it on. What could also bring us undone is really stupid expectations from the general public. A sense of entitlement coupled with an unrealistic world-view, an addiction to conspiracy theories and scapegoating and a violent and predatory outlook (the situation which has obtained in the USA under George W Bush) will guarantee poor leadership and a slide towards Stage 3.
The major problem is that we are not going to recover from this downturn in the same way we have in the past. Then the music slowed down but restarted some months or a year or so later with a similar tune. But this time, with the winding down of fossil fuel availability due to our rapid decline in local production and the extreme unlikelihood of us being able to run up even more foreign debt in order to import the oil we'd like, we are not going to re-emerge in the same world.
Stage 3 collapse is the situation we see in the Democratic Republic of Congo now, are likely to see in Zimbabwe soon and can look forward to for Pakistan. It may seem quite bizarre to imagine the USA going like this, but the fissures in society brought on by the destructive activities of the Bush administration, the level of political corruption at Federal and State levels, the absence in many parts of the country of effective and inclusive local communities, the racial divides and the fundamentalist and paranoid extremism of large sections of the population make an ominous mix. See John Robb's latest post for a view of how things may develop in the South-western USA.
Stage 4 and 5 of collapse are not yet relevant to our discussion and hopefully will never be. Our task is prevent collapse from moving beyond Stage 2 into Stage 3.
Friday, January 2, 2009
2009 financial outlook
From Minyanville: While peak social mood helped propel the movement toward increasingly open social networking platforms and large scale interactions, the rush to disassociate from the crowd will inevitably manifest as a reduction in broad network exposure and a preference for close-knit, tighter communities. Beneficiaries of this movement will be families, small groups and, to an extent, neighborhoods.
Read the whole article.
Read the whole article.
Monday, December 29, 2008
Prediction: where only fools and angels dare to tread
I'm reading a wonderful book at the moment: "The Black Swan: the Impact of the Highly Improbable" by Nassim Nicholas Taleb. Lots of academics and bureaucrats hate him, and no wonder. Like one of my other heroes, John Kenneth Galbraith, he is an expert at pricking the pomposities of experts and other overpaid drones, especially those suffering from anxieties caused by their suppressed fear of their own basic fraudulence and incompetence.
Let me quote:
There are those people who produce forecasts uncritically. When asked why they forecast, they answer, "Well, that's what we're paid to do here."
My suggestion: get another job.
This suggestion is not too demanding: unless you are a slave, I assume you have some control over your job selection. Otherwise this becomes a problem of ethics, and a grave one at that. People who are trapped in their jobs who simply forecast because "that's my job", knowing pretty well their forecast is ineffectual, are not what I would call ethical. What they do is no different from repeating lies simply because "it's my job".
Anyone who causes harm by forecasting should be treated as either a fool or a liar. Some forecasters cause more damage to society than criminals. Please, don't drive a school bus blindfolded.
With this in mind, recall my recent comments about Glenn Stevens, Governor of the Reserve Bank of Australia. Is he a fool, or a liar? I invite you to judge. Remember that this man and others like him are presently controlling your destiny.
I wish I had read this book in 1980. It would have saved me a great deal of angst. In fact I spent some time trying to develop some sort of algorithm or model to help me forecast risks when building complicated scientific models in a business which I've been operating for many years, and which has on more than one occasion brought me badly undone. "The Black Swan" is about precisely these types of problems. Unfortunately the book was not published until 2007!
He talks about a very difficult subject but manages to give us some simple tools and concepts to help manage it. For me, one of his key ideas is the division of our world into two sections, which he names Mediocristan and Extremistan. Mediocristan is where most of us live: it's where you need to turn up and do a fair days work to get paid, and where rewards will always be modest but reasonably predictable. Extremistan is the country inhabited by the sorts of people you read about in magazines while waiting to see the doctor. The super-rich: Nicole Kidman, Donald Trump, Mick Jagger, Eddie McGuire. And a whole lot of other people who are less visible but no less extreme in their wealth or power. What he discusses are the characteristics of these two worlds and how they interpenetrate and interact with each other. Extremistan has the characteristic that there are many, many more losers than winners, but the winners may reap astronomical rewards.
Some professions may move from one world to the other. This is what happened to musicians when recording was invented: the majority of musicians lost their livelihood or it became very precarious, while the lucky few became incredibly rich.
But in a certain sense we inhabitants of the modern world are all inhabitants of Extremistan, with its huge rewards and equally huge risks. The present financial crisis comes precisely from this cause, and is the outcome of large numbers of people confusing one world for the other and believing it was possible to get something for nothing. That's what trading on the stock market is all about. That is why asset bubbles occur. That is the basis of gambling.
Anyway I recommend you read this book if what I've said so far intrigues you.
An interesting post by Dmitry Orlov after quite a long lull on his blog. I haven't been posting of late, mostly because I feel that my job is more or less done. I called it as I saw it, and, unfortunately, I seem to have called it correctly. The US is collapsing before our eyes. Stage 1 collapse is very advanced now; stages 2 and 3 are picking up momentum.
I have a similar sense that there will come a time when I feel no further purpose will be served by riffing on the same old themes. I had an interesting experience yesterday where a very young girl, perhaps seven or eight years old, came into our shop to look at our aquarium fish. She began talking about the financial situation in the US (I can't remember what triggered this!) and started by saying "the depression in America" and then corrected herself, "I mean it's only a recession now, but it might turn into a depression". I asked her where she had heard about all this and she said something vague about school. Some time later my former bookeeper came in and told me her bookeeping guru had said the coming downturn could last forty years.
When two unrelated people from such wildly different backgrounds have some grasp of what the situation facing us could entail, there's no need for me to use a megaphone. On the other hand the practicalities of how we're going to deal with all this are still of interest, and perhaps this blog may serve some function in that regard.
In fact my task for the next couple of weeks is to sit down and produce a new business plan for our nursery, something which we have to do if we're to face up to the reality of what's coming towards us. There is no guarantee I'll get it right but failure is guaranteed if I don't do it at all.
Finally, the conclusion of Jim Kuntsler's latest post:
The big theme for 2009 economically will be contraction. The end of the cheap energy era will announce itself as the end of conventional "growth" and the shrinking back of activity, wealth, and populations. Contraction will come as a great shock to a world of conventionally programmed economists. They will toil and sweat to account for it, and they will probably be wrong. Unfortunately, this contraction will do its work in unpleasant ways, driving down standards of living, shearing away hopes and expectations for a particular life of comfort, and introducing disorder to so many of the systems we have depended on for so long. People will starve, lose their homes, lose incomes and status, and lose the security of living in peaceful societies. It will become clear that the Long Emergency is underway.
My hope for the year, at least for my own society, is that we will transition away from being a nation of complacent, distracted, over-fed clowns, to become a purposeful and responsible people willing to put their shoulders to the wheel to get some things done. My motto for the new year: "no more crybabies!"
Read the whole thing if you haven't got time to read The Long Emergency. It's a lengthy and comprehensive examination which may seem excessively dire until you realise how accurate he's been so far.
Let me quote:
There are those people who produce forecasts uncritically. When asked why they forecast, they answer, "Well, that's what we're paid to do here."
My suggestion: get another job.
This suggestion is not too demanding: unless you are a slave, I assume you have some control over your job selection. Otherwise this becomes a problem of ethics, and a grave one at that. People who are trapped in their jobs who simply forecast because "that's my job", knowing pretty well their forecast is ineffectual, are not what I would call ethical. What they do is no different from repeating lies simply because "it's my job".
Anyone who causes harm by forecasting should be treated as either a fool or a liar. Some forecasters cause more damage to society than criminals. Please, don't drive a school bus blindfolded.
With this in mind, recall my recent comments about Glenn Stevens, Governor of the Reserve Bank of Australia. Is he a fool, or a liar? I invite you to judge. Remember that this man and others like him are presently controlling your destiny.
I wish I had read this book in 1980. It would have saved me a great deal of angst. In fact I spent some time trying to develop some sort of algorithm or model to help me forecast risks when building complicated scientific models in a business which I've been operating for many years, and which has on more than one occasion brought me badly undone. "The Black Swan" is about precisely these types of problems. Unfortunately the book was not published until 2007!
He talks about a very difficult subject but manages to give us some simple tools and concepts to help manage it. For me, one of his key ideas is the division of our world into two sections, which he names Mediocristan and Extremistan. Mediocristan is where most of us live: it's where you need to turn up and do a fair days work to get paid, and where rewards will always be modest but reasonably predictable. Extremistan is the country inhabited by the sorts of people you read about in magazines while waiting to see the doctor. The super-rich: Nicole Kidman, Donald Trump, Mick Jagger, Eddie McGuire. And a whole lot of other people who are less visible but no less extreme in their wealth or power. What he discusses are the characteristics of these two worlds and how they interpenetrate and interact with each other. Extremistan has the characteristic that there are many, many more losers than winners, but the winners may reap astronomical rewards.
Some professions may move from one world to the other. This is what happened to musicians when recording was invented: the majority of musicians lost their livelihood or it became very precarious, while the lucky few became incredibly rich.
But in a certain sense we inhabitants of the modern world are all inhabitants of Extremistan, with its huge rewards and equally huge risks. The present financial crisis comes precisely from this cause, and is the outcome of large numbers of people confusing one world for the other and believing it was possible to get something for nothing. That's what trading on the stock market is all about. That is why asset bubbles occur. That is the basis of gambling.
Anyway I recommend you read this book if what I've said so far intrigues you.
An interesting post by Dmitry Orlov after quite a long lull on his blog. I haven't been posting of late, mostly because I feel that my job is more or less done. I called it as I saw it, and, unfortunately, I seem to have called it correctly. The US is collapsing before our eyes. Stage 1 collapse is very advanced now; stages 2 and 3 are picking up momentum.
I have a similar sense that there will come a time when I feel no further purpose will be served by riffing on the same old themes. I had an interesting experience yesterday where a very young girl, perhaps seven or eight years old, came into our shop to look at our aquarium fish. She began talking about the financial situation in the US (I can't remember what triggered this!) and started by saying "the depression in America" and then corrected herself, "I mean it's only a recession now, but it might turn into a depression". I asked her where she had heard about all this and she said something vague about school. Some time later my former bookeeper came in and told me her bookeeping guru had said the coming downturn could last forty years.
When two unrelated people from such wildly different backgrounds have some grasp of what the situation facing us could entail, there's no need for me to use a megaphone. On the other hand the practicalities of how we're going to deal with all this are still of interest, and perhaps this blog may serve some function in that regard.
In fact my task for the next couple of weeks is to sit down and produce a new business plan for our nursery, something which we have to do if we're to face up to the reality of what's coming towards us. There is no guarantee I'll get it right but failure is guaranteed if I don't do it at all.
Finally, the conclusion of Jim Kuntsler's latest post:
The big theme for 2009 economically will be contraction. The end of the cheap energy era will announce itself as the end of conventional "growth" and the shrinking back of activity, wealth, and populations. Contraction will come as a great shock to a world of conventionally programmed economists. They will toil and sweat to account for it, and they will probably be wrong. Unfortunately, this contraction will do its work in unpleasant ways, driving down standards of living, shearing away hopes and expectations for a particular life of comfort, and introducing disorder to so many of the systems we have depended on for so long. People will starve, lose their homes, lose incomes and status, and lose the security of living in peaceful societies. It will become clear that the Long Emergency is underway.
My hope for the year, at least for my own society, is that we will transition away from being a nation of complacent, distracted, over-fed clowns, to become a purposeful and responsible people willing to put their shoulders to the wheel to get some things done. My motto for the new year: "no more crybabies!"
Read the whole thing if you haven't got time to read The Long Emergency. It's a lengthy and comprehensive examination which may seem excessively dire until you realise how accurate he's been so far.
Monday, December 15, 2008
Less balance, less nuance, just a fine old rant
From Amanda Kovattana, an aha! moment...The implications of this suddenly hit me. We are under contract to fleece the planet! The fractional reserve banking system is designed so that it must keep on giving out loans just to stay solvent, but there aren't enough resources in the world to be sold for all the money that needs to be paid back...
All over the planet, people are suddenly waking up to reality. We may or may not have seen it coming, but we know it has arrived. And the oddest people are starting to talk about it. Take Jeremy Clarkson, host of the BBC show Top Gear, here posted on Rob Windt's The Naked Mechanic...I was in Dublin last weekend, and had a very real sense I'd been invited to the last days of the Roman empire. As far as I could work out, everyone had a Rolls-Royce Phantom and a coat made from something that's now extinct...how could the Irish ever have generated the cash for so many trips to the hairdressers, so many lobsters and so many Rollers? And how, now, as they become the first country in Europe to go officially into recession, can they not see the financial meteorite coming? Why are they not all at home, singing mournful songs?
Read the whole article. It's a hoot in the inimitable Clarkson style.
It's a temptation — for me at least — to get angry at the blindness of those who should have known better, and who've led us into this mess. Or maybe they just shuffled along at the head of the crowd, walking backwards reading the polls. But what about Glenn Stevens, Governor of the Reserve Bank of Australia..."I do not know anyone who predicted this course of events"...oh for chrissakes, if some insignificant shitkicker like myself loading potting mix into cars for little old ladies in an obscure country town saw this coming years ago and you didn't, why the hell have my taxes been paying your wages, you turkey? If this is the standard of leadership and governance in this country, we are in serious, serious trouble folks. Because morons like this are now supposed to solve the problem which they didn't see coming.
At least in America, they were crooks and liars, real red blooded devils. Here in Australia they are, to quote Joseph Conrad, "flabby, weak-eyed devils"... bureaucratic place-holders, masters of the morning flight to Canberra, the etiolated white-shirted eunuchs of state. And the Head Eunuch is of course our Kevin. Another weak-eyed devil? Or will he astonish me and say something real? Oh yes I know, he's way up in the polls, beating the tripe out of rich boy Malcolm, but how much of the public's comfortable perception of him comes from his resemblance, as Philip Adams puts it, to a suburban dentist? Will he develop the sombre reserve needed to deal with what comes next? Or will he melt down in private or worse, spectacularly in public, when the complete disjunction between the reality we are facing and the bureaucratic fantasy world he inhabits becomes impossible for his focused-on-detail-and-process mind to deal with. I invite you all to send me your opinion.
All over the planet, people are suddenly waking up to reality. We may or may not have seen it coming, but we know it has arrived. And the oddest people are starting to talk about it. Take Jeremy Clarkson, host of the BBC show Top Gear, here posted on Rob Windt's The Naked Mechanic...I was in Dublin last weekend, and had a very real sense I'd been invited to the last days of the Roman empire. As far as I could work out, everyone had a Rolls-Royce Phantom and a coat made from something that's now extinct...how could the Irish ever have generated the cash for so many trips to the hairdressers, so many lobsters and so many Rollers? And how, now, as they become the first country in Europe to go officially into recession, can they not see the financial meteorite coming? Why are they not all at home, singing mournful songs?
Read the whole article. It's a hoot in the inimitable Clarkson style.
It's a temptation — for me at least — to get angry at the blindness of those who should have known better, and who've led us into this mess. Or maybe they just shuffled along at the head of the crowd, walking backwards reading the polls. But what about Glenn Stevens, Governor of the Reserve Bank of Australia..."I do not know anyone who predicted this course of events"...oh for chrissakes, if some insignificant shitkicker like myself loading potting mix into cars for little old ladies in an obscure country town saw this coming years ago and you didn't, why the hell have my taxes been paying your wages, you turkey? If this is the standard of leadership and governance in this country, we are in serious, serious trouble folks. Because morons like this are now supposed to solve the problem which they didn't see coming.
At least in America, they were crooks and liars, real red blooded devils. Here in Australia they are, to quote Joseph Conrad, "flabby, weak-eyed devils"... bureaucratic place-holders, masters of the morning flight to Canberra, the etiolated white-shirted eunuchs of state. And the Head Eunuch is of course our Kevin. Another weak-eyed devil? Or will he astonish me and say something real? Oh yes I know, he's way up in the polls, beating the tripe out of rich boy Malcolm, but how much of the public's comfortable perception of him comes from his resemblance, as Philip Adams puts it, to a suburban dentist? Will he develop the sombre reserve needed to deal with what comes next? Or will he melt down in private or worse, spectacularly in public, when the complete disjunction between the reality we are facing and the bureaucratic fantasy world he inhabits becomes impossible for his focused-on-detail-and-process mind to deal with. I invite you all to send me your opinion.
Friday, December 12, 2008
Opportunity
I had a meeting the other day with my friend Linda who has been asked by the local Shire Council to come up with some ideas to help address some of the intractable unemployment and poverty in several communities in our district. Now it occurs to me that in times of change, it's people with the least to lose who are often in the best position to try something new. Yes I know, those at the bottom of the heap often have major personal issues which prevent them functioning very well, and sometimes these dysfunctions become generational and are handed on as a culture of failure. How else can you explain how some parts of our district have been mired in poverty seemingly forever?
All the same, I also know how those of us whose lives generally run smoothly tend to get stuck in our rut and can find a changed reality difficult to accept, let alone coming up with responses to take advantage of it. That's natural — we humans are innately conservative. Those of us who do experience major disjunctions in our lives often are often disabled by them for some time, sometimes permanently. But sometimes we learn things we never expected, and humility can be one lesson. We learn how even the most confident and seemingly solid personality can crumble, and we get some inkling of how well those who perhaps we have looked down on in the past deal with things day to day which we might find overwhelming even for a brief period.
This is why I am wary of the habit of seeing society being divided into winners and losers, or victims and perpetrators. Life deals us a hand of cards and we must play them as best we can. Which is my roundabout way of coming to the point: opportunity is most present in times of change or threat. And those most open to opportunity are those not imprisoned by their prior investments, be it social, financial or mental. So I see this initiative by the Council as a great opportunity to kick-start some new thinking about our local economy, at a time when big change is coming for us all whether we are ready or not.
Now as a battled-scarred small business person of long standing, I'm under no illusions as to the success rate of innovative ideas, especially in a time of flux and possibly with participants with little prior experience. So my idea is that ideas and talk are cheap and provide the seed stock if you like, general skills are universally useful, and specific projects should involve more of a journey of discovery and learning than any dependency for measurable success on a definite final outcome. If ideas are planted, what does it matter if they take some time to mature and sprout? And if the skills needed to carry them out have already been learned, away we go.
What ideas do I have in mind for projects? For a start I think every town should have a community garden, for all kinds of reasons. First, food is going to get more expensive and many if not most of us will get used to the idea of growing at least some of our own. Second, for people suffering some degree of social isolation, working on their own plot in a community garden is a very healthy and helpful thing. Thirdly, you get top quality fresh produce. And fourthly, you do it in an environment where help and advice is close at hand.
Linda and I thought metal and wood-working skills are always good things to learn. And it occurred to me that traditional boat-building is a great one for a number of reasons. First, it teaches a high degree of wood-working skill. Second, the materials, wood, nails and a bit of other metal and paint are relatively cheap. Third, anyone can do it. And finally you get something at the end which is beautiful, useful and marketable. And while we've had a great excursion into building boats with all sorts of exotic, high-tech high-performance materials, boats built in the traditional way will almost certainly come back as the most common type in the future when we become more dependent on local resources for manufacture. It's also relevant that one of the target communities for the Council's scheme is Port Welshpool, where as a kid I remember on several occasions visiting Charley Norling with my Dad, when Charley was building a new fishing boat for himself next to his house.
Linda and I discussed lots of similar things, and I'm sure all of you could contribute quite a few more ideas (please do!). I will keep posting any new information (and your suggestions) about this scheme as it comes to hand.
All the same, I also know how those of us whose lives generally run smoothly tend to get stuck in our rut and can find a changed reality difficult to accept, let alone coming up with responses to take advantage of it. That's natural — we humans are innately conservative. Those of us who do experience major disjunctions in our lives often are often disabled by them for some time, sometimes permanently. But sometimes we learn things we never expected, and humility can be one lesson. We learn how even the most confident and seemingly solid personality can crumble, and we get some inkling of how well those who perhaps we have looked down on in the past deal with things day to day which we might find overwhelming even for a brief period.
This is why I am wary of the habit of seeing society being divided into winners and losers, or victims and perpetrators. Life deals us a hand of cards and we must play them as best we can. Which is my roundabout way of coming to the point: opportunity is most present in times of change or threat. And those most open to opportunity are those not imprisoned by their prior investments, be it social, financial or mental. So I see this initiative by the Council as a great opportunity to kick-start some new thinking about our local economy, at a time when big change is coming for us all whether we are ready or not.
Now as a battled-scarred small business person of long standing, I'm under no illusions as to the success rate of innovative ideas, especially in a time of flux and possibly with participants with little prior experience. So my idea is that ideas and talk are cheap and provide the seed stock if you like, general skills are universally useful, and specific projects should involve more of a journey of discovery and learning than any dependency for measurable success on a definite final outcome. If ideas are planted, what does it matter if they take some time to mature and sprout? And if the skills needed to carry them out have already been learned, away we go.
What ideas do I have in mind for projects? For a start I think every town should have a community garden, for all kinds of reasons. First, food is going to get more expensive and many if not most of us will get used to the idea of growing at least some of our own. Second, for people suffering some degree of social isolation, working on their own plot in a community garden is a very healthy and helpful thing. Thirdly, you get top quality fresh produce. And fourthly, you do it in an environment where help and advice is close at hand.
Linda and I thought metal and wood-working skills are always good things to learn. And it occurred to me that traditional boat-building is a great one for a number of reasons. First, it teaches a high degree of wood-working skill. Second, the materials, wood, nails and a bit of other metal and paint are relatively cheap. Third, anyone can do it. And finally you get something at the end which is beautiful, useful and marketable. And while we've had a great excursion into building boats with all sorts of exotic, high-tech high-performance materials, boats built in the traditional way will almost certainly come back as the most common type in the future when we become more dependent on local resources for manufacture. It's also relevant that one of the target communities for the Council's scheme is Port Welshpool, where as a kid I remember on several occasions visiting Charley Norling with my Dad, when Charley was building a new fishing boat for himself next to his house.
Linda and I discussed lots of similar things, and I'm sure all of you could contribute quite a few more ideas (please do!). I will keep posting any new information (and your suggestions) about this scheme as it comes to hand.
Thursday, December 4, 2008
Lots of parallel events
Sharon Astyk has a disturbing post on the use of credit cards in the US: "McDonalds is now the second-largest merchant vendor on credit cards - that is, people are now buying their Big Macs on plastic - in part because they don’t have the cash. Credit card balances have risen enormously in the last few weeks, as people attempt to keep going through the holidays".
And this: Commodity Online: The man who predicted the 1987 stock market crash and the fall of the Soviet Union is now forecasting revolution in America, food riots and tax rebellions - all within four years, while cautioning that putting food on the table will be a more pressing concern than buying Christmas gifts by 2012.
Gerald Celente, the CEO of Trends Research Institute, is renowned for his accuracy in predicting future world and economic events, which will send a chill down your spine considering what he told Fox News this week.
Celente says that by 2012 America will become an undeveloped nation, that there will be a revolution marked by food riots, squatter rebellions, tax revolts and job marches, and that holidays will be more about obtaining food, not gifts.
"We're going to see the end of the retail Christmas....we're going to see a fundamental shift take place....putting food on the table is going to be more important that putting gifts under the Christmas tree," said Celente, adding that the situation would be "worse than the great depression". Read the rest of the article.
What is going on? Could any of this happen here, and how could it happen so quickly anyway? Consider the many parallel events which point to the unraveling of the world we have so laboriously built up over the past six decades. Piracy: critical points of the world's shipping routes are vulnerable and this is pushing up the price of shipping and slowing it down. Oil production will fall next year and is unlikely to rise in response to future demand for intractable technical and financial reasons. Terrorism: the Mumbai attacks are unfortunately the shape of things to come in crowded world with huge numbers of alienated young men and women, whose lack of connectedness and community makes them easy prey for movements which promise immediate power and significance through violence. And it only requires a tiny, statistically insignificant number with cheap and easily available weapons and well-known tactics to bring a city to its knees.
Couple this with the financial crisis and you have a perfect storm of events which are to say the very least, adverse to any further extension of our current system. How much energy we waste on trying to save the irrevocably doomed depends mainly on us: our ability to face the facts and let go of those unproductive activities and turn our focus to those which will better suit the new situations which are rapidly coming up over the horizon.
It also depends on the quality of our leadership. A lot of hope is being invested in Obama, and while he is to a huge extent hemmed in by the legacies of the system of which he will soon be President, his demeanor as leader will matter at least as much as his acts. As for our own Prime Minister, the most generous assessment I can make of him is that he means well. But to me, most of his actions smack of folly: trying to stimulate spending when overspending has been the cause of the current crisis, clinging to the absurd notion that we along with the armed forces of other nations can impose a political system on the Afghans, when that country has been the graveyard of countless imperial dreams. Rudds Blairite/Bushite dream of "Western" liberal democracy being exported to the rest of the world at the point of a gun died in Iraq but he doesn't seen to have noticed. In any case, the money to run these schemes to "improve" the lives of those with browner skins and different shaped noses will soon no longer be available.
His mistake is thinking he can act as the Chief Executive Officer of the country when what we need is a leader with the vision of a Churchill or Roosevelt, someone with a sense of the great tragedy which is unfolding around us.
Well, there's not much we can do about that now. Best to get on with doing what we can and need to do.
And this: Commodity Online: The man who predicted the 1987 stock market crash and the fall of the Soviet Union is now forecasting revolution in America, food riots and tax rebellions - all within four years, while cautioning that putting food on the table will be a more pressing concern than buying Christmas gifts by 2012.
Gerald Celente, the CEO of Trends Research Institute, is renowned for his accuracy in predicting future world and economic events, which will send a chill down your spine considering what he told Fox News this week.
Celente says that by 2012 America will become an undeveloped nation, that there will be a revolution marked by food riots, squatter rebellions, tax revolts and job marches, and that holidays will be more about obtaining food, not gifts.
"We're going to see the end of the retail Christmas....we're going to see a fundamental shift take place....putting food on the table is going to be more important that putting gifts under the Christmas tree," said Celente, adding that the situation would be "worse than the great depression". Read the rest of the article.
What is going on? Could any of this happen here, and how could it happen so quickly anyway? Consider the many parallel events which point to the unraveling of the world we have so laboriously built up over the past six decades. Piracy: critical points of the world's shipping routes are vulnerable and this is pushing up the price of shipping and slowing it down. Oil production will fall next year and is unlikely to rise in response to future demand for intractable technical and financial reasons. Terrorism: the Mumbai attacks are unfortunately the shape of things to come in crowded world with huge numbers of alienated young men and women, whose lack of connectedness and community makes them easy prey for movements which promise immediate power and significance through violence. And it only requires a tiny, statistically insignificant number with cheap and easily available weapons and well-known tactics to bring a city to its knees.
Couple this with the financial crisis and you have a perfect storm of events which are to say the very least, adverse to any further extension of our current system. How much energy we waste on trying to save the irrevocably doomed depends mainly on us: our ability to face the facts and let go of those unproductive activities and turn our focus to those which will better suit the new situations which are rapidly coming up over the horizon.
It also depends on the quality of our leadership. A lot of hope is being invested in Obama, and while he is to a huge extent hemmed in by the legacies of the system of which he will soon be President, his demeanor as leader will matter at least as much as his acts. As for our own Prime Minister, the most generous assessment I can make of him is that he means well. But to me, most of his actions smack of folly: trying to stimulate spending when overspending has been the cause of the current crisis, clinging to the absurd notion that we along with the armed forces of other nations can impose a political system on the Afghans, when that country has been the graveyard of countless imperial dreams. Rudds Blairite/Bushite dream of "Western" liberal democracy being exported to the rest of the world at the point of a gun died in Iraq but he doesn't seen to have noticed. In any case, the money to run these schemes to "improve" the lives of those with browner skins and different shaped noses will soon no longer be available.
His mistake is thinking he can act as the Chief Executive Officer of the country when what we need is a leader with the vision of a Churchill or Roosevelt, someone with a sense of the great tragedy which is unfolding around us.
Well, there's not much we can do about that now. Best to get on with doing what we can and need to do.
Monday, December 1, 2008
It's happened...we're past Peak, courtesy of the credit crisis
Gail the Actuary (Gail Tverberg) has made a post on the Oil Drum which lists many oil and gas projects which will now not go ahead due to credit availability problems. From now on it is highly unlikely there will be increases in world total liquid fuel production year on year. While demand is undoubtedly falling due to the onset of the world-wide recession, if there is any increase in demand in the future it will not be possible to meet it from here on out. So now we are post Peak Oil.
The implications of this, coupled with the precipitous decline in manufacturing both here and elsewhere due to the financial crisis, are profound. Whatever economy and society we rebuild in the years ahead will begin to diverge radically from the one we've all been used to for the past sixty years. This will not stop our leaders and many of us from trying to resuscitate the drowning body of industrial civilisation, but such efforts will almost certainly be wasted.
There are arguments for ameliorating the distress of those most affected by the changes coming down the line, but how do you subsidise the pending insolvency of the majority of the population in an industrial civilisation?
The implications of this, coupled with the precipitous decline in manufacturing both here and elsewhere due to the financial crisis, are profound. Whatever economy and society we rebuild in the years ahead will begin to diverge radically from the one we've all been used to for the past sixty years. This will not stop our leaders and many of us from trying to resuscitate the drowning body of industrial civilisation, but such efforts will almost certainly be wasted.
There are arguments for ameliorating the distress of those most affected by the changes coming down the line, but how do you subsidise the pending insolvency of the majority of the population in an industrial civilisation?
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