Transition Towns, Permaculture

I've been hovering about this subject for a long time, but Sharon Astyk has written a long and very good post on it and said very clearly a lot of what I've been thinking in a much fuzzier way. Now it may be that I'm part of self-selected group of semi-misanthropes who have managed to wall themselves off into a little world of their own. I'd be the first to admit there's some truth in that. But putting that aside I think Sharon is to be commended in facing up to some of the difficult key issues for those of us in the Preparing-For-Disaster game. Are we some sort of club for like-minded people? Do we have special insights — are we like a whole lot of Moses's leading our people to the promised land?

There are a lot of complicated issues going on here. Marginalised types (and an awful lot of us feel marginalised these days!) can have this strong urge for some Messianic role. We might feel we have some insight which can Save the World! And there is the natural human urge to congregate with the like-minded, which is so often associated with a subtle or not-so-subtle tendency to put down those outside our group. After all, we are the cool people with the deep knowledge! Often that is how people in groups tend to think and act. History is littered with examples of this sort of thing and somehow we never seem to learn the folly of it.

Sure, groups can be very powerful and get lots done. They can support their members in all kinds of real and pleasurable ways. The individual is weak and fallible. That is the way we are.

But I don't think we are going to find ourselves in a situation where any group will have a handle on what the best way forward is going to be. We may all have insights. If we can share them that's great. As for me, I regard myself as being someone who's looked up from what they were doing, seen the approaching danger, and shouted the Peak Oil equivalent of "fire" to everyone around me. Of course I'm caught up in wondering what the best response is for myself and my community, but having shouted "Fire" it's up to those who've listened to me to do what they think is best for them and respond as they see fit. I don't know enough to say what's best for anyone else. I have my ideas, but experience has taught me that ideas can come from anywhere or anyone.

Great post on "The Oil Drum"

Check this post out over at "The Oil Drum". It requires a certain amount of background knowledge to understand what these guys are on about, but Have We Reached an Inflection Point in Economics History?: “Indeflation” and Energy (awful title — the post is easier!) nails many things which we need to understand. They are

• It's over (meaning the debt-driven consumer economy)
• Frugal is the new meme, with all that implies for investment
• The cost of a barrel of oil is now close to the cost of production (no profit=no more oil)
• Governments at all levels and in all places still don't "get it" and wont in the medium term
• You're on your own, with respect to existing institutions

I'm in the process of setting up a forum with my friend Linda to get people together in my area who might have some ideas how we can work towards making where we live more attractive and survivable. I'm not smart enough to figure it all out myself, but if we start talking to one another about it (keeping the points outlined above in mind) we may shorten the time taken to work out whatever new arrangements we need.

Waiting on the beach

I feel as if we're sitting lazily on the beach, sipping daquiris, while over the horizon the tsunami is rushing silently towards us. The housing bubble has burst so we are told, and now happy-face types are walking among us talking of "green shoots". Consumer confidence is up — so what am I worried about? Steve Keen has a story from Barry Eichengreen & Kevin O'Rourke entitled "A Tale of Two Depressions" (read the original here) which shows some startling graphs comparing various financial indicators of the Great Depression with our current GFC. Here are a couple of samples: it's not a good look…
Gary North has an interesting take on this "green shoots" talk. He says what's the next bubble? and answers consumer confidence. In other words, don't be sucked in by happy talk. Don't get trapped in the next bubble. Heed the tsunami warnings!

Why are we not experiencing such a sharp decline in Australia compared to many other countries? My guess is it's due to our position in the supply chain. The first people to feel the heat are the retailers, then the importers, then the manufacturers, then the raw material suppliers. It takes a while for it to work its way through the system.

The Automatic Earth's list of assumptions

I don't like reposting other people's stuff generally, but this list from Stoneleigh is worth a glance. For Australia the emphasis will differ, but the fundamentals are the same. Also TAE reposts others' stuff endlessly (how do they get away with it?).

How will our situation in Australia differ? We are much more tribal and communal than the Americans. I think our publicly owned facilities (public transport, government services) will stagger on for much longer. Our leaders are seen as managers rather than elected kings, so we expect less from them. There are many other subtle but important differences which will change our diverse fates! But the overall fate of industrial society is written…

Stoneleigh: People have been asking how we see the future unfold. In case you wonder what we stand for, much of our view of what's to come can be found in the primers on the right-hand side bar [check their site]. Here is an additional brief summary (in no particular order and not meant to be exhaustive) of the ground we have consistently covered here at TAE over the last year and a half, and before that elsewhere.

1. Deflation is inevitable due to Ponzi dynamics (see From the Top of the Great Pyramid)
   
2. The collapse of credit will crash the money supply as credit is the vast majority of the effective money supply
   
3. Cash will be king for a long time
   
4. Printing one's way out of deflation is impossible as printing cannot keep pace with credit destruction (the net effect is contraction)
   
5. Debt will become a millstone around people's necks and bankruptcy will no longer be possible at some point
   
6. In the future the consequences of unpayable debt could include indentured servitude, debtor's prison or being drummed into the military
   
7. Early withdrawls from pension plans will be prevented and almost all pension plans will eventually default
   
8. We will see a systemic banking crisis that will result in bank runs and the loss of savings
   
9. Prices will fall across the board as purchasing power collapses
   
10. Real estate prices are likely to fall by at least 90% on average (with local variation)
    
11. The essentials will see relative price support as a much larger percentage of a much smaller money supply chases them
    
12. We are headed eventually for a bond market dislocation where nominal interest rates will shoot up into the double digits
    
13. Real interest rates will be even higher (the nominal rate minus negative inflation)
    
14. This will cause a tsunami of debt default which is highly deflationary
    
15. Government spending (all levels) will be slashed, with loss of entitlements and inability to maintain infrastructure
    
16. Finance rules will be changed at will and changes applied retroactively (eg short selling will be banned, loans will be called in at some point)
    
17. Centralized services (water, electricity, gas, education, garbage pick-up, snow-removal etc) will become unreliable and of much lower quality, or may be eliminated entirely
    
18. Suburbia is a trap due to its dependence on these services and cheap energy for transport
    
19. People with essentially no purchasing power will be living in a pay-as-you-go world
    
20. Modern healthcare will be largely unavailable and informal care will generally be very basic
    
21. Universities will go out of business as no one will be able to afford to attend
    
22. Cash hoarding will continue to reduce the velocity of money, amplifying the effect of deflation
    
23. The US dollar will continue to rise for quite a while on a flight to safety and as dollar-denominated debt deflates
    
24. Eventually the dollar will collapse, but that time is not now (and a falling dollar does not mean an expanding money supply, ie inflation)
    
25. Deflation and depression are mutually reinforcing in a positive feedback spiral, so both are likely to be protracted
    
26. There should be no lasting market bottom until at least the middle of the next decade, and even then the depression won't be over
    
27. Much capital will be revealed as having been converted to waste during the cheap energy/cheap credit years
    
28. Export markets will collapse with global trade and exporting countries will be hit very hard
    
29. Herding behaviour is the foundation of markets
    
30. The flip side of the manic optimism we saw in the bubble years will be persistent pessimism, risk aversion, anger, scapegoating, recrimination, violence and the election of dangerous populist extremists
    
31. A sense of common humanity will be lost as foreigners and those who are different are demonized
    
32. There will be war in the labour markets as unempoyment skyrockets and wages and benefits are slashed
    
33. We are headed for resource wars, which will result in much resource and infrastructure destruction
    
34. Energy prices are first affected by demand collapse, then supply collapse, so that prices first fall and then rise enormously
    
35. Ordinary people are unlikely to be able to afford oil products AT ALL within 5 years
    
36. Hard limits to capital and energy will greatly reduce socioeconomic complexity (see Tainter)
    
37. Political structures exist to concentrate wealth at the centre at the expense of the periphery, and this happens at all scales simultaneously
    
38. Taxation will rise substantially as the domestic population is squeezed in order for the elite to partially make up for the loss of the ability to pick the pockets of the whole world through globalization
    
39. Repressive political structures will arise, with much greater use of police state methods and a drastic reduction of freedom
    
40. The rule of law will replaced by the politics of the personal and an economy of favours (ie endemic corruption)

Dmitri's latest talk in Ireland

Another great post from Dmitri Orlov, who has a way of saying uncomfortable truths in an amusing way. So many quotable bits; here's a taste…

Economics is not directly lethal, and economists never get sent to jail for criminal negligence or gross incompetence even when their theories do fail. Finance is about the promises we make to each other, and to ourselves. And if the promises turn out to be unrealistic, then economics and finance turn out to be about the lies we tell each other. We want to continue believing these lies, because there is a certain loss of face if we don't, and the economists are there to help us. We continue to listen to economists because we love their lies. Yes, of course, the economy will recover later this year, maybe the next. Yes, as soon as the economy recovers, all these toxic assets will be valuable again. Yes, this is just a financial problem; we just need to shore up the financial system by injecting taxpayer funds. These are all lies, but they make us feel all right. They are lying, and we are buying every word of it.

And this…

I think it is very important to understand social inertia for the awesome force that it is. I have found that many people are almost genetically predisposed to not want to understand what I have been saying, and many others understand it on some level but refuse to act on it. When they are touched by collapse, they take it personally or see it as a matter of luck. They see those who prepare for collapse as eccentrics; some may even consider them to be dangerous subversives. This is especially likely to be the case for people in positions of power and authority, because they are not exactly cheered by the prospect of a future that has no place for them.

Just read the whole thing.

Power comes from ownership of the means of production!

A timely post from John Robb at Global Guerrillas. We in Australia are (as usual) a couple of years behind the US but the problem of the end of the current financial system is ours too. What do the middle-class do with their money if the consumer society is dead, and when the shonkieness which is destroying our current wealth generating strategy (investment-at-a-distance through complex and difficult-to-understand means) runs its course? The economy will collapse at some stage during the next couple of years and then rebuild. But it won't come back to what we had before.

In the end, wealth depends on control of the means of production — Karl Marx's key insight. In any society this is ultimately the case. What we need to do is look ahead to the new economy which will emerge over the next few years to replace the current one and invest wisely in it. Those who do will form the next dominant class — this is simply the way society works.

Our current system where we have only the vaguest notion of where our savings and superannuation funds are being deployed, by people we don't know who whatever their personal virtues may be, are governed by very short time lines and an outmoded economic model, is finished. That doesn't mean it will disappear overnight because institutional inertia and cultural inertia is huge. It will take down with it the present moneyed classes as well as the retirement funds of several generations. But the generations coming to maturity in the newly emergent economy in the second decade of the twenty-first century will have no loyalty to it.

Sunday funnies

Jon Stewart strikes again. So glad Holden is totally unconnected to all this!

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