Saturday, February 27, 2010

Its a Cold, Cruel World...

As a follow up to my previous post "You Can't have it both Ways"... It is also a cold, cruel world...


IF... yes IF... guys and gals like me, Jimmy Kuntsler, Dmitri Orlov, Jeffrey Brown, Sharon Astyk, John Michael Greer, Robert Rapier, Gail Tverberg, Jay Hanson, Saif Lalani, Mike Shedlock and Web sites like LATOC, TheOilDrum, and EnergyBulletin, et al, are correct and we are in the beginning throws of energy decent... and that the painful contraction in the economy is at least partly due to this, as well as the end of credit expansion, and that this will continue over the next decade or 2 until we are essentially out of "common use" oil...


It makes no sense to extend unemployment benefits or the housing credit, or to enact another stimulus plan... people living in the West, particularly America and Europe need to accept what jobs there are - be they picking strawberries or shoveling snow; need to accept that they may need to live with roommates or family rather than by themselves in spacious and private homes or apartments; need to accept public transportation, walking, and car pooling, gardening, no health insurance etc... especially "health insurance". What would make you think that we can have free healthcare and free unlimited end of life care while going through the End of the Age of Oil? Does that make any sense whatsoever?

Many of the folks I mentioned have been publishing for years that this was in the cards. Yet when I read many their posts (not all are guilty... Orlov and the MS have no problem telling you you are going to be making some adjustments) and articles many continue to blame the (fill-in-the-blank) rather than tell their readers that, speaking in the Macro, we are all just better off getting used to the new environment. That would mean ending government programs that do nothing but delay the inevitable at GREAT expense. (Of course, if you are an unrepentant capitalist... just keep hustling your a$$ off.)

Because IT is HAPPENING!! The level of denial from the folks that predicted this IN THE FIRST PLACE is really quite astounding. Continuing to rail against the "rich" or the Republicans or Wall Street or greedy CEO's as we see the Liberal Media and the Left doing... is silly. They are going to get wiped out, too! Here's why: All that money that folks "owe"? They ain't paying it back! And guess who they "owe" that money to? The "rich". Well, the "rich" are no longer "rich" if everybody defaults on the bonds the "rich" own. The new "rich" will be folks that own different assets than today's "rich" own, though we might argue what they might be or how much would be necessary to be classified as rich.

The decline in Oil imports that the U.S. has experienced over the last 3 years, about 2.5 million bpd, AIN'T coming back. We have a serious problem in Nat Gas coming, and Oil imports are going to continue their inexorable decline. As a result, the economy is going to contract in "real terms". Period. There are going to be more people living in a home than has been the case in 40 or 50 years. Fewer people are going to have access to a car. More people are going to have to accept jobs that are not terribly rewarding, however you define that, and get over their resentments, and plenty of folks will have no job at all until they accept the new reality - which for many folks means taking whatever you can get.

Did I mention that sometime in the next year California is going to default and need a massive Federal bailout? And that Illinois and New York are right behind them?

These dots are right there for you to connect. It is my opinion that many big insiders, like Senators Bayh and Judd, are quitting and distancing themselves from the coming political conflagration. Actually, that's not correct... that is not an opinion, that is a fact - as was stated by both Senators when the announced their retirement.

No, you won't be able to tell which day "IT" happened. "IT" has already happened to millions of folks and many of them don't even know it. "IT" is here, and "IT" is going to grind its way through to each and every one of us. Fighting "IT" won't help any more than swimming away from a shipwreck a thousand miles from land... where you going, anyway?

If you have the resources this is the time to trade them for the things that will have value. If you don't have the resources, get used to the environment I mentioned above.

Friday, February 26, 2010

You Can't Have it Both Ways

"Mutually Exclusive Events and/or Outcomes" - any event or outcome that by definition precludes another event or outcome (this is my definition - if someone has a better one.... post in comments and I will edit).

There is a very good reason that our politics are failing us here in the U.S. and the West. Every single one of us (ok, that's an exaggeration) exploits the "sound bite" and ability to speak out of both sides of our mouths even when confronted with powerful facts contradicting our positions.

Allow me to point out some examples:

Peak Oil and Fossil Fuels -vs- Atmospheric Carbon Projections...

Well....... if we have limited Fossil Fuels (Carbon) to burn, then we cannot have unlimited Carbon entering the Atmosphere... now can we? Yet ALL, YES ALL, of the climate change projections assume unlimited supplies of Fossil Fuels to burn - meanwhile EVERY peak oil doom prognosticator (besides me) I can find on the web always seem to mention fossil fuel depletion and climate change as 2 sides of the same coin. There is simply no Universe in which that makes sense.

Peak Oil will happen, so will Peak Coal and Peak Gas... and they will happen LONG before the earth has 1000 ppm of Carbon in the atmosphere. It will happen LONG before the earth has 500 ppm of Carbon in the Atmosphere. We are already at 383 ppm. I am not a climate scientist, and I am not denying climate change is quite possible and probably not a desired outcome (to say the least). What I AM saying is that obfuscating any FACTS or TRUTH does not help the debate - yet that is EXACTLY what I see going on here (probably a good strategy to gain funding or grants).

Economic Growth -vs- Pay-As-You-Go Social Programs (Social Security & Medicare)...

Many on the Left have caught onto the idea that "Future Growth is Not Possible". As properly defined I firmly agree with them (more on that definition in a future post). Well that means the end of any and all government sponsored Ponzi schemes, doesn't it? Meanwhile certain groups decry the U.S. military from enforcing US$ hegemony while scooping money out of the Washington troff with both hands (and feet). You can't get a little bit pregnant.

Economic Solutions to make things "Fair" -vs- Resource Depletion...

There is not a Socialist/Left web site that does not blow out of one side of its mouth that the argument that the world's 6.5 Billion people can all live like American's with our current resource consumption is complete Bull Sh*t (and that is absolutely true)... and then goes on to argue that all of the poor need a middle class existence to be happy or to make life fair. We can't have it both ways. If the physical resources are not there, why do people make that argument? For political gain. If everybody had a personal jet, there would not be a drop of oil left on the planet. Jets are an extreme example. What would happen (don't worry, it CANNOT happen) if every family of 4 on earth lived in a 4000 square foot McMansion and drove a SUV? Same outcome, only worse. There wouldn't be a square meter of ground for growing food - it would all be covered by houses and parking lots.

In 100 years ALL of the world's oil will be gone... nothing we do now will change that outcome - the question is can we and should we use government agents with GUNS to make life more fair? I mean, there will always be a surplus of goose stepping jag offs willing to beat and shoot you at a particular government's behest, no questions asked. History is replete with examples. Is that really what we want?

What I am getting at is this:

Be careful what you ask for, you may just get it.


You can't have it both ways, and it is very, very non-constructive to pretend or argue that we can.

Thursday, February 25, 2010

300 days to California Bailout

This would be funny if it weren't so disgusting.

The great state of California, 8th wonder of the world and the eighth largest economy, will receive a bailout from the U.S. Federal Government on or about January 1, 2011. A little more than 300 days from now.

How did I arrive at that? Analysis is half art, half science, some luck, and some feel. But if you take the amount of state municipal bonds coming due this year, and add to this the amount of the state's deficit (which is very much understated), and you come up with a Federal Bailout.

Agh... but with the Mediterranean weather, doesn't California remind of say, Greece?

And the financially challenged Cals that think the state has "assets"? What assets? Real Estate? Where do they find these people.

Not the only Nut in the Bowl

Well, I finally have some good company. Its good not to be "the only nut in the bowl"

Dr. Marc Farber, one of Wall Street's best performing money managers and economists was speaking in Tokyo, telling the world's biggest and most powerful money managers to "buy gold and farmland". Sound familiar?:

The world’s most powerful investors have been advised to buy farmland, stock up on gold and prepare for a “dirty war” by Marc Faber, the notoriously bearish market pundit, who predicted the 1987 stock market crash.

The bleak warning of social and financial meltdown, delivered today in Tokyo at a gathering of 700 pension and sovereign wealth fund managers.
I needed some company. It has been getting lonely out here.


I feel badly for dupes on the Left. You folks were not bad people, and you actually believed you were doing or agitating for the right thing. You did not realize just how much the international credit markets were funding all of your pet programs, and now they are imploding.

I remember the aging hippies living in downtown Manhattan when I lived there in the 1980's and '90s. Yuppies were ascendent, and the social opportunities that made protesting so much fun - I mean, sex, drugs, rock n roll and college girls - were slipping away from the beard and tie-dye set (especially the former college girls... they found 7 figure Wall Street guys sooooo much more interesting than the Greenwich Village bad boyz... Who'd a thunk it). And they were PISSED. Still are. Well, I understand... it sucks to be them.

And now here we are, with Peak Credit and Peak Oil et al, and everything these folks believed in a and dedicated their lives to is proving to be a mirage.

Its going to be OK. This too, will pass. When the urge to mourn has gone, come on over, grab a shovel, and help your fellow man by "teaching him to fish". That will work better than "giving him a fish that somebody else bled for".

Boys & Girls Clubs, local YMCA's, Food Pantries, Good Will, etc... could really use your help. Step away from the computer and go get your hands dirty. This goes for those "family values" nose pickers, too.

Peak Oil and Peak Credit gave us Peak FOS. Hopefully, Peak FOS will contract in supply in line with Peal Oil and Peak Credit.


So much for the Natural Gas glut. Storage is 2.9% below last year and only .7% above the 5 year average. One hurricane, hot summer, or extended winter and this will be the hottest ticket in town. Given that we have 17% real unemployment and industry is still reeling (NG is a major industrial fuel), this is quite the development.


Read this article. When I was a young man I worked at day labor jobs during the summer and on weekends both during and after college for a while. At my best gig I made $50 per day digging trenches in the Florida sun for sprinkler systems at McMansions. I cut grass, painted, dug culverts, pumped gas... anything to earn a buck. And, perhaps because I was young, I was thrilled to have money in my pocket. I am embarrassed when I read articles like this: what do Americans expect? That a machine right out of the "Jetsons" can pick ripe tomatoes or blueberries without a bruise and beam them, Star Trek style, to the local grocery store? Don't like mind numbing work? Me neither. So I saved my dough, moved back home to New York after college, and eventually went into business with the money I saved (I worked for 2 of my older brother's trucking business for almost a year first, selling heating oil and gasoline door to door among a million other hats I wore on any given day. Working there was the business education of a lifetime, and I realize that not everyone is so fortunate. My brothers were much older, and were a great resource and inspiration over the years). What else does one do when you aren't qualified to do anything? I sold the business for what seemed at the time a decent payday (actually the business went bust, but the assets I had accumulated were very sellable - same thing as far as I was concerned). I asked myself, where do they pay unqualified people the most money? Hollywood and Wall Street. Well, I was already living in New York, so off to Wall Street I went. I figured, these guys are making 10X, 20X, what I am... and they ain't 10X smarter than me... (as a matter of fact, and IMHO, I couldn't think as slow as many of those folks if I were sleeping... but there WERE some REALLY smart guys there, too.)

The point is, not everybody gets everything they want all of the time. Some folks just have to start at the bottom digging sprinkler culverts and work their way up. No, life is NOT fair, and there is NO HOPE that any government program can make it fairer for all concerned. Fair is an abstract, and we all know about abstracts in the eye of the beholder...

Nope, the problem is "expectations". Those "expectations" are being fixed (crushed) right now.

Tuesday, February 23, 2010

The Great Ponzi Scheme, China, and Rock/Hard Place

I had a commenter, "Mayberry", on my last post tell me:

"You're not a "doomer"? You should be. The Ponzi scheme is collapsing."

Yes, Mayberry, the Ponzi scheme IS collapsing. All Ponzi, or Pyramid, schemes eventually collapse of their own weight. Anybody with even the SLIGHTEST grasp of simple mathematics knows with certainty that any fractional reserve banking system (like those in the West), ALL pay-as-you-go social programs (Medicare, Social Security) will eventually become sufficiently UNSUPPORTED by new entrants to continue. This is not mystery, and is not really up for debate (I guess you could debate it if you want to... people seem to debate much sillier stuff than this...).

The question is: WHEN?

To which I would answer: Right about NOW.

No, not exactly "now", or precisely "now", or sorta "now". The unwind is going on right now, even as we "debate".

What we SHOULD debate, what is WORTH debating... are the "unintended consequences", or in this case as the event itself is unwelcome and unintended perhaps just the plain consequences or outcomes.

(Remember that even if the financial system unwinds or contracts terribly (I think a foregone conclusion) that does not change by one single molecule the amount of the many resources these financial instruments were merely MARKERS for. It then follows that for some there will a great parting of the ways with their "assets", while for others opportunities to move up the food chain will crop up, even if overall society becomes less wealthy.)

Warren Buffet's partner of many decades, Charlie Munger (himself the quintessential curmudgeon) has been informing anybody who would listen that "The Death of Capitalism" is at hand for America. He is probably correct, as he defines "capitalism". (To my mind we have had two versions of "capitalism" here in America... large Corporate crony socialist/fascism and small business REAL capitalism. I must confess and disclose my politics: As a Republican/Conservative/Libertarian I view large corporations as the f*&^^%ing Anti-Christ, and small business as the last noble vestige of what was once, and I really think (or hope) will be once again, America. The Left controls and is fed and nurtured by Corporate America, the Right and Libertarians are fed and nurtured by small biz. This is not to say that the Dems and Repubs are not one big, disgusting incestuous family - they are - but the Left and Right are most certainly not, and that the money trail "doth proclaim" the previous assertion. And why shouldn't it be so? It was Corporate America's ability to withhold payroll taxes that funded the sinking ship that is the U.S. Government. As I have posted a zillion times before: The Left as we knew them are dead, and so is the Right. These groups will morph, IMHO, into Fascists and Libertarians - and, Lord, do I hope the Libertarians win.)

Crony Capitalism IS failing (if this were not true, what's up with the bailouts?). Many folks are going to get killed in the crossfire that will ensue. I always look at this through the eyes of a "little guy" - best thing I can do for all involved is not be one of the victims. As "Coal Guy" recently commented: "When this is all over, the houses will still be there and the people will live in them." How very, very poignant. This certainly will be the case - but the system of money creation based on lending against these "assets" as collateral? I rather think not.

Sooooooo..... what does the economy look like in this "brave new world"? Good f*&^%ing question! If we knew with any degree of certainty, we would not have to waste a moment's breath debating it, now would we? Hence the need for contingency planning, and hence the response in the "market place" (i.e., Costco selling emergency supplies... and I am not saying that it is the right response, or the right stuff, or the right whatever... only that the market is responding and that is a good thing). This is why I do not describe myself as a "Doomer". I fully intend to study and interpret my environment, and do it better than my competitors, in order to profit for myself and my partners. If I thought it was the end of the world... why would I bother? The real answer is that I do not believe that all of this is the end of the world FOR ME AND MINE, but I do think a great many people will skirt awfully close to the bleeding edge of the end. That's what happens when government "social programs" fail because of silly promises that simply cannot be kept. Does any rational person really think we would be in the mess we are in if it weren't for the fact that too many people have become utterly and hopelessly dependent on the Government for food, shelter, clothing (otherwise known as money) and with it a military budget large enough to enforce US$ hegemony in order to FUND THOSE *&^%^&!! programs!? And why is it that so many on the Left do not see that the military budget is there to do this for YOUR PROGRAMS?! Did any of these programs end the human misery they claimed they were going to do? NAFC. They did, however, blow a new "bubble" that now must be popped. Not all "bubbles" are asset "bubbles".

Monday, February 22, 2010

I am not a DOOMER! I repeat...

I am not a "Doomer"... I repeat: I am not a "DOOMER"!!

Just because I believe that Oil shocks are coming, the ability to expand credit in the West is over, the U.S. Government is insolvent, and we have too many people to feed when the next major crop failure hits a major producing nation (U.S., Argentina, and Brazil), that most debts, public and private will be defaulted on, and that the U.S. is likely to endure some kind of political implosion, etc... DOES NOT MAKE ME A DOOMER!!!

Actually, I am confident that I will prosper and my family will thrive through all of the above.

You see, its great to be a nobody. I have no power to stop earthquakes, tidal waves, hurricanes, civil wars - heck, I can barely get my kids to bed on time - so I don't concern myself with things I have no control over. I do spend time thinking about how best to prosper, practicing the exercise of "enlightened self-interest", and the rest I spend enjoying my family and my hobbies. That my hobbies are good for the family, productive, and inexpensive interests like gardening, raising livestock, and woodworking rather than golf and tennis does not necessarily make me a "Doomer", though I won't deny that these pursuits won't hurt me in the least and might in fact be very beneficial to me and mine at some point in time...

Yes, I have a significant store of food, a serious water purifier, land, tools, seeds... So what? I have a family! I have life insurance, does that make me suicidal?

I love my life. THIS life. If you think that having a backup plan is "bad luck" or "negative thinking", or that it means that I think the world is coming to an end well, that's your business, and if you have faith that "Big Brother" will always provide, well, that's your business, too.

It just ain't my business.

But the surf is up, and I think I will head down to the beach and do a little skim boarding. I would go surfing, but a guy that is well known in the water sports community here in South Florida was killed by sharks a couple of weeks ago... and about 20 miles north of my surf spot, and I am not over it yet... call me a "Doomer" if you like, but I hate it when that happens... and I started some seeds in pots indoors and am working the slips on the sweet potatoes because spring comes early in Tennessee. My garden has had a 350 pound pig in it since last fall, and he has done an excellent job of tilling and fertilizing the ground. Of course, that does not mean I won't make sausage out of him... I will. Just as soon as I get there in the middle of March. There will always be another pig next year. One of the steers will go into the freezer in July; we will keep a side and give a side to the family that helps with the farm during the winter when we are not there. 100% grass fed beef. Every month, we have a big BBQ of goat grown on the farm. My home made chicken soup is a whole different level of home made... if you catch my drift. The excess roosters that we don't eat will go down to the church food pantry - poor folks never look a gift rooster in the mouth... and they ain't vegetarian... The kids will ride horses and I will fix the barn. Every night a glass of wine with dinner, and desert after. And when the garden comes in? My mother's tomato sauce & gravy recipe made from home-garden grown tomatoes, onions, peppers, & garlic (and some imported virgin olive oil), and my literally home grown sausage and meatballs will make you think they moved Little Italy to Lebanon, TN. One whiff of that and its a "smile on your face and a song in your heart"! Did I mention the goat cheese? Brings tears to my eyes!

But you can call me a "Doomer" if it makes you feel better. Then again, I think people that call people like "us", and I know there are a lot of "us" reading here, "Doomers" actually like eating McDonalds and can't understand what all of the fuss is about.

Go figure.

Libertariananimal (at) gmail

Saturday, February 20, 2010

Odds and Ends (again)

The big banks are back in print about "Peak Oil". Raymond James, Goldman "The Anti-Christ" Sachs, Barclays, Bank America et al are back on the beat.

Bank of America and Barclays Capital, two leading oil traders, have told clients to brace for crude above $100 (£64) a barrel by next year, before it pushes relentlessly higher over the decade. This is a stark contrast from recessions in the 1980s and 1990s, when it took years to work off excess drilling capacity built in the boom.

"Oil has the potential to flirt with $100 this year. We forecast an average price of $137 by 2015," said Amrita Sen, an oil expert at BarCap. The price has doubled to $78 in the last year.

"The groundwork for the next sustained step up in oil prices is now almost complete. Global spare capacity is likely to be reduced to low levels within a relatively short time. The global economic crisis has postponed, but not cancelled, a crunch which would otherwise be starting to bite now," said Barclays.
Their arguments are well presented in the article. Better late than never.


Soc Gen's boss is out saying the breakup of the European Union is inevitable, and of course its inevitable. Europe's generous social programs will bring them to ruin just as the U.S. social programs and military budget will bring us to wish we never heard of FDR (Europe did not have the U.S.'s entrenched underclass to contend with, so they grew one.)

The U.S. should not be so smug, either, about Europe's break up. "There, but for the grace of G-d, go I"; or us.


Ron Paul leads the pack in today's Republican straw poll. For those of you that have been reading me for awhile I was an early supporter of Congressman Paul last time around. Not that I think he has a shot at the nomination for 2012, but its nice to think about it...

Anyway, I got an email from a friend of mine with similar political leanings today:

A $50 Lesson

I recently asked my friends' little girl what she wanted to be when she grows up. She said she wanted to be President some day.

Both of her parents, liberal Democrats, were standing there, so I asked her, “If you were President what would be the first thing you would do?” 
 She replied, “I'd give food and houses to all the homeless people.” 
Her parents beamed with pride.

“Wow...what a worthy goal.” I told her, “But you don't have to wait until you're President to do that. You can come over to my house tomorrow and mow the lawn, pull weeds, and sweep my yard, and I'll pay you $50. Then I'll take you over to the grocery store where the homeless guy hangs out, and you can give him the $50 to use toward food and a new house.”

She thought that over for a few seconds, then she looked me straight in the eye and asked, “Why doesn't the homeless guy come over and do the work, and you can just pay him the $50?”

I said, “Welcome to the Republican Party.” 

Her parents still aren't speaking to me.

The Cheap Oil Free Lunch Extravaganza is going to come to a screeching halt in the near future. If you really want to help your fellow man, you will help him learn to provide for himself because he is really, really, really going to have to. Or else. Those stories in the media about "jacking the age" for social security and medicare benefits are not some figment of your imagination. Collapse of SS and Medicare does not mean 100% no more payments. Taking away 50% of the promised payments qualifies as collapse for me, and for the MORONS on the economic Left to claim that Social Security and Medicare was SAVED (HAHAHAHHA ROFL!!) by reneging on a contract made with people that have already PAID is just a TAD disingenuous...

In the mean time... Relax and enjoy! We've got crazy people flying planes into government buildings and nutty professors sending Anthrax to gain funding... both these guys killed themselves but felt the need to take a few innocents with them... At the base of their insane motivations are some pretty outrageous expectations, I would be willing to wager. This is no time to "rage against the machine". For myself I am going, as I always have, to pay my taxes on time, obey the law right down to things like the speed limit, and do my best not piss anybody off. People seem just a bit stressed at the moment... I wouldn't have wanted to get into a road rage incident with the "IRS pilot"... he probably wouldn't have thought too much about blowing somebody away on his way to the airport, if you catch my drift... It is nice to be nice!

Friday, February 19, 2010

US$ Carry Trade DONE

The US$ carry trade is about to get jacked. With the Fed draining liquidity and tightening, this is no time to be betting against the US$ relative to other currencies and many commodities.

It appears to me that the FED just blinked at the threat of the international bond market. It also appears that the administration is getting religion, too.

One can only hope.

This could get very painful for the American people, but it beats the h*ll out of a full scale collapse and anarchy. Still, I doubt this administration and this Congress as the Chutzpah for what needs to be done.

BTW, anybody who thinks the Fed tightened because they see inflation, or an uptick in economic output, is on powerful narcotics (though you will hear it, and often, by the cerebrally challenged nit-wits in the Media). The Fed raised the discount rate, and perhaps soon the Fed Funds rate IN ORDER TO SAVE THE MONEY MARKET SYSTEM. With rates at zero, money market funds were closing, falling like Iguanas in the recent Florida Freeze. Who the hell wants to manage TRILLIONS of $$$ only to lose 15 basis points per year because rates are ZERO? Not me. The Fed recognized, and rightly so, that a 25 bps hike will save the money markets, a desperately needed function in our system, while not really harming borrowing.

Simple like that.

My bet is, you won't be seeing any more hikes (other than the coming 25bps hike in the Fed Funds to compliment the hike in the Discount Rate) any time this year or next (or the year after).

The Balloons are Floating

In my last post I pointed out that SOMEONE is getting stories about raising the age for social security benefits out into the Main Stream Media.

“None of them stand out as the great savior,” Volcker said of the government proposals. Reforming Social Security is “doable,” he said, in part by “jacking up the retirement age” and changing the benefit calculation so that it won’t rise as fast for higher-income Americans as it does under existing law.
This is all merely a propaganda effort to soften the blow that is coming. Remember, Obama has appointed a "Bi-Partisan committee to study the deficit" or whatever its called. I hope they are all volunteers, cause this doesn't require any high priced analysis. The Military, Social Security, Medicare budgets will all have to be cut deeply, along with each and every other department. I mean, really, what exactly has the Department of Energy accomplished? ROFL!! And the USDA? HAHAHAHAHLOLOLOLOLO!!!

Sorry, that got away from me. Anyway, we are going to see plenty more articles about what this "bi-partisan" committee is going to recommend, long before they recommend it.

And its the right thing to do. This is going to happen anyway, might as well convince the American people that it was our idea to do the right thing. I have come to the conclusion that it is no coincidence (and that he was no "loose cannon") that Kansas City Fed President Hoenig came out the other day about the impending fiscal and monetary disaster facing the U.S. No, this is a well orchestrated public relations push.

If you are under the age of 55 or so and you were counting on Social Security benefits at 65, you better make other arrangements. And that is just a guess. Who knows? Maybe TPTB will do the right thing and make the change immediately, though I doubt it... the AARP set is awfully powerful and very broke. Of course, if the tax collection rate does not climb from the depths reached in 2009, this will all happen rather quickly irrespective of what AARP wants.

Thursday, February 18, 2010


"Meet the new boss, same as the old boss." The Who

The "new boss" is the international bond market, you know, the folks that finance everything we take for granted... they are coming, and they are pissed...

The first whispers of reality are making their way around the Main Stream Media.

Raising the Social Security retirement age to 70 is GOING TO HAPPEN - and then it will likely be raised to 72 or 73. The "new boss" demands it.

That is the equivalent of the end of Social Security, just in case anybody missed it... and it does not bode well for states like Florida and Arizona, to say the least.

The article mentions "paying more for Doctor visits and drugs". How quaint. What is really going to have to happen is that extending end of life illnesses will no longer be financed by the government's social programs. If you want an extra 6 months of life while so sick you can't enjoy a visit to the toilet, you are going to have to save and sacrifice during your working years and pay for it yourself. The "new boss" demands this, too.

Both of these things are going to happen, and worse, because of the political realities, TPTB won't do it to the people who deserve it - those NOW past 65 who are collecting FAR BEYOND their contributions. Nope, TPTB are going to jack the folks who paid the most, those born 1955 to 1970 or so. They don't have a choice, because "that's where the money is".

Social Security and Medicare will have the same names, but vastly different benefits and retirement ages. In other words, they will have for all intents and purposes defaulted on their promises.

This has to happen! (the "new boss" demands it) No point in a "we should do this, that, or the other thing", or "if only our scum bags were elected instead of their scum bags" debate. You need to provide for YOU. Self- reliance, self-provisioning, self-rescue, localism, Libertarianism... whatever you want to call it. You are in charge of your future. Nobody else.

People are not dumb. There might be "the insanity of crowds" but there is also some wisdom in crowds, too (for example, you can now buy MRE's, emergency heirloom seed collections, and other long term survival food at!). You need a long term view and plan.

For those of you that are going to gnash your teeth about the military budget... fear not, they are going to get their's, too. So are the government workers and their outrageous pension benefits. The money simply does not exist to pay for it all.

Oh, and by the way... did I mention you can get survival rations at Costco now?

Rich Man, Poor Man

As I have posted of late, I believe that we have entered the "beginning of the middle of the end". Some folks want to know "when?". When what?

Everything depends on where you are. Are you wealthy? Super wealthy? Affluent? Middle Class? or "Other"? (Let us use Morgan Stanley's definitions : Super wealthy = $30 million + net worth; wealthy = $3 million + net worth; affluent $500k - $3 million net worth; middle class $200k - $500k net worth. Ok, I took some liberties as they only define wealthy and super wealthy... since that does not describe most folks I had to throw in a few more definitions.)

You see, and I know this is just going to break some hearts... I think the problem is going to be for the Middle Class through Super Wealthy, and the wealthier you are, the harder this is going to be for you.

Let's start with the bottom of the ladder. If you are on government assistance you are in deep trouble. This includes old people utterly dependent on Social Security, folks on Disability, and Food Stamps... Good luck, and get moving making, as James H. Kuntsler is want to say, "other arrangements".

If you are already working poor, don't sweat it. Things really are not going to get that much worse for you, I hope. Worse, there is little to nothing you can do about it, speaking in the Macro sense. Food could cost more, housing could cost more, and you will make adjustments. You may not like them, but your life really won't change that much with the exception that any hope to move up the economic ladder will be in short supply. The Mad Scientist has told me some stories of his experience growing up in India - 9 people in a single room apartment, etc... Given the square footage of structures versus the population, that ain't gonna happen here. Of course in India, they do not need heat in most of the country in order to survive... I remember growing up on peanut butter and jelly sandwich lunches, spam and velveeta was a treat for breakfast with our eggs, spaghetti for dinner more often than not... and I thought we were rich. We were over crowded, but I did not know it - heck, I felt bad for my friends at school that had nobody to sleep with... they must have been very lonely, I thought...

Its all about expectations.

If you are middle class... lower your overhead and your expectations, you are about to enter the working poor. You do not have the resources to relocate, buy land, etc... so don't stress about what you don't have. Beer will still be cold, sex will still be fun, the surf will still roll in. Read Sharon Astyk's stuff on how to make adjustments where you are. The lady is a genius and can really, really turn a phrase... so at least she is pleasant to read.

Affluent? If you are at the bottom end... See middle class above. If you are a middle-class- millionaire... this is the time to reallocate your portfolio into arable land, equipment, debt free shelter, lower over head, and hard assets - from gold and silver to Oil and Ag futures. You have enough money to be a "prepper". That is, PREPARED. So this is the time to do so. If you are smart enough to have navigated the past 20 years and still managed to accumulate a million or two, then you are smart enough to buy a couple of books and put pen to paper on what is worth having and doing.

Wealthy and Super Wealthy? It is all about motivation, and lack of denial, for you folks. You have the resources, at this time, to do what needs to be done. My bet is that that will change very drastically in the near future. You folks are on the other side of the debt bomb. You "own" the bonds that nobody is going to pay on. I feel your pain, because I live on my dividends and interest. Blogging pays terribly, and the healthcare benefits are entirely psychological... I firmly believe that my dividends and interest payments are not going to be what they once were, if I may employ the use of understatement... and accordingly I have certain amount of bullion and farmland. I put my money where my mouth, or some other orifice, is.


When? When what? That's the problem. I don't know "when", exactly, and I don't know "what", exactly, and BOY would I be rich if I did! I do know that our political and financial leaders are panicked about our circumstances, I "know" our debt problem will go Ka-BOOM eventually, I "know" that Oil imports into the U.S. will cease eventually, I "know" that our banking system is insolvent, and I "know" that something else will happen, pick your "Black Swan" or boogey man, because that's the problem with Life - it is enigmatic at best. What is truly amazing is how great a run we have had in the post WWII era, but all things pass. Our system is straining on all sides; picking out the pin that pops the balloon, or gauging the rate of air flow out of said balloon is an effort in futility. The U.S. economy is very sick, and it needs to purge. The contents and volume of that purge are beyond my abilities.

No matter where you fall in the economic spectrum, I think everybody that is responsible should take a page from the Mormons. Search the web. Listen to what they have to say about preparation. Then make a decision.

Wednesday, February 17, 2010

Full Faith and Credit

I was recently chastised, and rightly so, by regular reader Donal Lang for my not very civil response to a reader's commentary.

I wrote to Donal:


After further reflection and a good night's sleep, I have decided to delete my offending commentary (while NOT deleting the comment that ignited my ire).

Nothing worse than hypocrisy... and while I complain about the lack of civility in political discourse nearly every post, you rightly pointed out my own lack of civility.

You point out that I am out of bounds in finding fault with this vegan for, well, being vegan... Not the case at all. Vegans that extend the view of the sanctity of life to animals in addition to mankind deserve our respect. Somehow, and I want to say this kindly and with great civility, I do not feel that way about vegans that wish to extend that view to animals but not to unborn children.

Of course, that does not mean I get a pass on the hypocrisy thing... and I hope I have done a better job in keeping with my own principals."

Let us all continue to strive to be more civil in our tone in discussions on this Blog - especially me!


Moving right along...

Kansas City Fed President Thomas Hoenig's comments, while breathtakingly honest, are very much like the shaving cream that cannot be stuffed back into the can. The US$ is backed by the full faith & credit of the U.S. Government - and now members of TPTB are not only OPENLY challenging our course, but are warning of dire consequences.

My bet is, Hoenig will be silenced (not like the James Bond way, but silenced none the less). If not, it is very likely that another well credentialed member of the financial establishment joins him, and then another and another... it would not take much to inspire a significant loss of confidence.

The Mad Scientist and I were speaking this morning (you can read his blog, the link is on the right), and he pointed out that the only support the US$ and the Treasury market were getting was coming from the PIGS - Portugal, Italy, Ireland, Greece, and Spain - if they go first, that likely buys the U.S. 9 to 18 months... or until California gets its bailout.

Because folks, the California bailout is coming. And that, to my mind is the beginning of the "middle of the end" (the beginning of the end came and went, depending on how you measure it, with the tech market blowup in 2000 or housing market blow up in 2006.

How this plays out is anybody's guess... but I gotta think that the world wide reaction to the last super power and world reserve currency going Ka BOOM is going to be tough to respond to.

Think about it. The U.S. spends $383 BILLION per year on interest on the debt. The debt is growing, and interest rates, at least on the short end of the curve, have no where to go but up. Too, the Treasury has front loaded the auctions on the short end, and will HAVE to move up the curve (issuing paper of greater duration) - where the borrowing costs are at least 100 to 200 basis points (1% to 2%) higher. Still with me? Good. That means with a U.S. estimated national debt of 14.5 TRILLION in 2010 that the interest costs on the national debt will likely rise to $525 billion next year - or nearly 4% of GDP (this is the only ratio that matters, the absolute number is irrelevant) - and rising exponentially (and we all know what that means).


Don't worry, be happy. There is nothing to be done on a macro basis about this given the political realities in the U.S. Get your own house in order, cause we are getting close to crunch time.

Libertariananimal (at) gmail

Tuesday, February 16, 2010

Kansas City Fed Chief, Senator Bayh

Kansas City Federal Reserve Bank President Thomas Hoenig is now the first Fed President to point out the obvious - that U.S. is on the brink of fiscal disaster. Regional Fed Presidents are loathe to speak so plainly - I wonder what the impetus for this confession truly is.

I don't know whether to applaud - or run for the hills. If this doesn't freak you right out of your shoes you are not paying attention.

Think about it. Senator Evan Bayh says the U.S. political system is irretrievable broken and in need of an electoral "shock" on the same day that a sitting Fed President says we are heading inexorably towards a financial disaster...

Let's sum it up: our leaders are now telling us that our political and fiscal constructs are on the brink of going Chernobyl. This is why I am so concerned that something really, really bad could happen at any time from 5 minutes from now out till the later part of this decade. If you are a family man (woman) with responsibilities - this would be a good time to avail yourself of some serious contingency planning.

How could it hurt?

These are true leaders. Bayh and Hoenig had the courage to warn the American people, and I a commend them.

Libertariananimal (at) gmail

Sallie Mae

There is a close second to Goldman Sachs in the run for the Ant-Christ... Sallie Mae.

Sallie Mae has enabled the explosion of over-charging at U.S. colleges and universities for a generation - but every dog has its day. There is no way these loans will be repaid - and there is no way that over 50% (and I am being VERY conservative in that estimate) of the private colleges and universities in the U.S. will be in existence 10 years from now.

Why would anyone pay $200k for a degree from an institution that absolutely, positively will NOT be here in the near future. Why are we paying for lectures that anybody can watch for free on YouTube? (Here is a link to the "most important lecture in the history of higher learning" - here is another link... why would we need to pay someone to repeat this live?) These institutions have fought the internet with everything they have... well, if they were to let the internet win that would mean the end of tenure, moca latte's, and co-ed's now, wouldn't it? It would also give away that fact that the emperor has NO CLOTHES.


Read the above link... I implore you. Don't this happen to your children. Don't pay $200k for something you can get for a free library card. If you have the money and want to indulge your kids, OK... but going into debt? You gotta have rocks in your head.

Saturday, February 13, 2010

Less Talk, More Walk

(This post has been subsequently amended since first posted)

Today's quote:

"The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt." - Cicero, 55 BC

This is my 814th post, and I am going to ramble a bit as this is coming on the fly...

I am feeling somewhat melancholy at what little I have accomplished of my motivations for writing this Blog. This Blog was never meant as a "public service message" as I do not believe that there are macro solutions to the issues facing the West, in particular, and the world in general. I originally wrote it for my partners, clients, family, friends and colleagues to be able to access my input when they wished, rather than me clogging up their email in-boxes (which I HATE myself so I did not want to do unto others...).

During my time here, I have had the pleasure of meeting (virtually) some rather intelligent and thoughtful people, and the displeasure of having to correspond with those that I simply refer to as FOS (i.e., pro-choice vegetarians, the quintessential example of FUBAR FOS... this is the intersection of the irresponsible meeting up with people so immature they have taken Disney films seriously and instilled human personalities into the rest of G-d's creatures). I look at Europe - Europe, which is about to come apart at the seams (and with its history of devolving into EXTREME warfare and violence) - and I remember all of the absolutely moronic commentary I have had to endure about how great their system is and all the U.S. has to do is become more like Europe's socialist a$$h*les and everything will be OK... and I am astounded at how far this has gone with so many smart people not getting it... and how few of the people that I know quite well, and that are reasonably well informed, have taken NO ACTION.

Let me give you an example: Under very few circumstances do I see the Western financial system surviving this decade in any manner in which any of us would recognize (and it might not take that long... that is just the outside of the timeline for me). NONE. ZIP. BUPKIS (I once called my good friend, attorney, and Rabbi and asked him what the yiddish word for BUPKIS was... only to find out BUPKIS is the yiddish word for BUPKIS). UGATZ. NADA... yet I see most of these well informed folks far more concerned about their 401k than their personal health and physical well being. Defies logic, but then again it kinda sorta doesn't. After all, food comes from the grocery store, and is traded for with MONEY. Same with water, shelter, clothing. And there you have it.

(There have been a couple of top-shelf posts coming out of the Archdruid report of late. I recommend the most recent posts very highly...kind of funny that a Republican, secular, libertarian, capitalist like myself finds himself, on a great many points, in agreement with a guy that describes himself as a "leader in the alternative spirituality movement"... which kinda/sorta leads me to believe we have a high probability of being correct if we view an outcome from very far away and different perspectives with a high degree of similarity.)

It is interesting that the Financial Markets seem not to care that the U.S. and European banking system is insolvent - and getting worse with each passing day. The U.S. has a fractional reserve banking system, and the system extends MOST (but not all) of its private credit against collateral - primarily REAL ESTATE. The banking system (shadow and proper) is carrying Trillions of assets on their books at face value - and that is such Bull Sh*t as it would be to deny gravity. Here is an example in real life:

I am renting a house in downtown Boca Raton where the mortgage on the property is $750,000 - yet the house would not sell for over $500,000. The owner loses money each and every month because the rent I pay does not cover the mortgage, taxes, and insurance. Recently, the roof went bad and we had a serious leak in our living room. Is it good business for the owner to spend $40,000 on a new roof when they are already upside down by $250,000 on the property and losing money by continuing to make the mortgage and collect rent? NAFC. I had to sue the owner in small claims court (I go to trial tuesday) to break my lease. So the bank is owed $750,000, the house MIGHT have been worth $500,000... but that was before $50,000 in water damage occurred due to deferring maintenance that is simply not economic. Did I mention the termite problem that has not been addressed? Or the mold from the leak? That's the problem with real estate... with a stock or a bond, if paid for it in full you can only lose 100% of your money, and in real estate you can lose much more than 100% (in theory). The bank could go after the owner, but the owner owns 12 other properties - and is upside on each and every one (remember, I am in Florida - ground zero for the real estate crash) of them... giving the owner a negative net worth of a cool couple million $$ - and counting.

This sort of thing is happening all over the country in residential property and is actually much worse in commercial property. There is no hope of rewinding the tape. Given this environment how in heaven's name does the banking system expand the money supply (remember, ours is a fractional reserve system)? Did I mention that consumer credit other than mortgages has contracted every month for the past 12 months?

It is also sort of interesting that Peak Oil came about right about the same time that Peak Credit came about. Many think that this was not a coincidence - and of course it WAS a coincidence. That one aggravated the other, or that the later has lessened the impact of the former just doesn't tie them together as being necessary to the other - but it really, really, really, doesn't help that they showed up together.

And its not just Oil... the world is running up into all sorts of resource limitations... and the next time some jag-off economist tries to tell you otherwise tell him to "go fish". Literally. The oceans have been fished out (I am a fanatic water man - spearfishing, diving, surfing, fishing... I moved to Florida to indulge my passion...what I see disturbs me to no end... but what the heck are you gonna do? People gotta eat.), mankind has killed nearly every food fish longer than a yard in length and now the vast oceans, covering 70% of the earth, cannot support mankind (if that is not a marker for the end of population expansion, I don't know what is). This is happening to farm land, copper extraction, Oil production, blah blah blah. But the "smartest" guys I know, self-made millionaires all, sweat the value of the old 401k, but do not have a contingency plan to feed their family if (when) this outcome comes to pass and gunks up the system.

The Peak Oil "Doomers" have been disappointed that the world did not come to an end as yet. They should have "faith", if you want to call it that. Those folks will probably get their wish, though not on the time line they envision, nor in the manner they had presumed (and many of them will have done nothing about it besides read "doomer porn"). When the financial system was unwinding 18 months ago, my partner the Mad Scientist and I were caught flat footed... we thought the US$ would sh*t-the-bed against commodities (inflation) when in fact the opposite was occurring. In our moment of panic as we reversed course and took some big hits, the Mad Scientist quietly said to me: "Well, we thought the world would end by Fire... and it turns out to be Ice". It was a transcending moment, to say the least. I tucked my tail between my legs and joined the deflationist camp (as I always say, "when I am wrong, I am gone"). Not that I will remain in this camp forever... but here I sit at the moment, and probably for a while longer - but as I said... not forever. One day (soon), the Debt-Time-Bomb will GO KA-BOOM!! And what that means for a society that believes its food comes from the grocery store and is traded for with paper MONEY... cannot be expressed in words. For a society where more than half of the Nitrogen atoms in the our bodies comes from the Haber-Bosch method of crop fertilization... Cannot be expressed using a Haiti documentary... For a society that thinks HEAT comes from the thermostat on the wall...

You see, we have this Baby Boomer Tidal Wave that is about to come ashore, at just the moment that all of the Oil will CEASE coming ashore and the banks have ceased to lend and the money supply shrivels like Michael Jackson's nose. Who is going to buy the stocks, bonds, and McMansions that all of the baby boomers will want to sell to fund their retirement? And just who is going to be working and paying into the Social Security and Medicare Trust Funds (ROFL!!!) to fund those insolvent programs? How is the U.S. going to feed, house, fund, and medic the 60 million or so retired and aging boomers that are likely to be alive and drawing (out of 79 million born) in less than 10 years (not to mention 50 million food stamp recipients, 10 million disability goldbricks, etc...? It ain't gonna happen. So what becomes of these people? You know what's going to happen. I know what's going to happen. The president knows what is going to happen. The Chinese knows what is going to happen. The Blogsphere knows what is going to happen...

Nature is going to happen. And not just to the Old Folks. Nature happens to all of us.

As John Michael Greer mentions ever so succinctly in his "Archdruid Report":

Exactly how things will play out in the months and years to come is anybody’s guess. One of the consequences of America’s descent into Third World status, though, is that a great many of us may have scant leisure to contemplate global and national issues amid the struggle to keep food on the table and a roof over our heads.
While you have the luxury of time and resources, this would be a good time to put that to use.

Inflation vs deflation

ALL CURRENCIES ARE GOING TO ZERO!! ZERO!! This is going to happen, and there is no power on earth that can stop it. From here on in, its all about TRADING. Buy and hold of currency (savers) will absolutely bring you to ruin. RUIN. The multi-millionaire living and working in New York City working in the banking industry is going to be poverty stricken at some point in the not too distant future. The multi-millionaire cattleman farmer in Missouri with 1,000 acres of un-mortgaged pasture land with 400 cow/calf pairs has a good shot to be KING. Precious metals can get cheaper from here. IF, and its a big IF, I am going to add significantly to my holdings. I am going to purchase farm land within close proximity of small eastern cities where it rains. I am going to liquidate my Treasuries over the next year and reallocate to hard assets. Deflation NEEDS to run its course, and it could take a year or 2. Somewhere in there one needs to make a stand.

My sense is that the Western world will NOT end by "Fire"... it is going to slowly freeze by "Ice". Notice I say "West"? Tribes in Papua New Guinea won't notice a thing... but the average citizen living in the West? Oh, boy... There is no difference between Greece and the U.S. The Keynesian Morons on the Left have convinced everybody that their constituents can have the FREE LUNCH you've heard tell about. Now, the rubber is about to meet the road, and the Socialist West's silly programs, including the U.S., are about to go Chernobyl. In my life I have paid a FORTUNE into the SS and Medicare system, and I will receive back .1 X said FORTUNE in real value... multiply this by the millions that have been ripped off in this Leftist Ponzi scheme... that's a lot if unhappy people... who knows what the consequences of that are?

When deflation runs its coarse and the US$ goes off to that big Mushroom Cloud in the sky... what will the price Oil, food, et al be in real terms? Ouch... but BIG opportunities here.

Finally, through my last 814 posts I have tried to quantify the "rate of change", because I believed that to be the most important dynamic in this 4 dimensional equation. I have gone back and forth over that to the point where I have decided that I simply cannot add value in analyzing that issue any longer. I no longer think the "rate of change" matters much. We are going to wind up in the same spot irrespective of the ROC, IMHO, and it will be soon enough that it really won't matter. The very few that through luck or skill are able to pinpoint inflection points AND act on them will likely be the first masters of the new era. Of course, being the capitalist pig that I am, I am going to give it a go... but I am not going to rely on that. This is no time to be "working without a net".

libertariananimal (at) gmail

Tuesday, February 9, 2010

Channeling Abe Lincoln

Today's quote:

"You cannot help the poor by destroying the rich.
You cannot strengthen the weak by weakening the strong.
You cannot bring about prosperity by discouraging thrift.
You cannot lift the wage earner up by pulling the wage payer down.
You cannot further the brotherhood of man by inciting class hatred.
You cannot build character and courage by taking away men's initiative and independence.
You cannot help men permanently by doing for them, what they could and should do for themselves."

— Abraham Lincoln

He would have been excoriated in the modern day media as an elitist and racist bastard.


Here's some interesting info I received in an email today from a reader. It SEEMS the facts are in order... if anyone disputes them please comment accordingly...

Interesting Info:

City, State, with % of People Below the Poverty Level

1. Detroit , MI 32.5%
2. Buffalo , NY 29.9%
3. Cincinnati , OH 27.8%
4. Cleveland , OH 27.0%
5. Miami , FL 26.9%
6. St.. Louis , MO 26.8%
7. El Paso , TX 26.4%
8. Milwaukee , WI 26.2%
9. Philadelphia , PA 25.1%
10. Newark , NJ 24.2%

U.S. Census Bureau, 2006 American Community Survey, August 2007 What do the top ten cities (over 250,000) with the highest poverty rate all have in common?

Detroit , MI (1st on the poverty rate list) hasn't elected a Republican mayor since 1961;
Buffalo , NY (2nd) hasn't elected one since 1954;
Cincinnati , OH - (3rd)...since 1984;
Cleveland , OH - (4th).....since 1989;
Miami , FL - (5th) has never had a Republican mayor;
St. Louis , MO - (6th)....since 1949;
El Paso , TX - (7th) has never had a Republican mayor;
Milwaukee , WI - (8th)....since 1908;
Philadelphia , PA - (9th)...since 1952;
Newark , NJ - (10th).....since 1907.

The sad fact is that there is not shred of difference between the Republicans and the Democrats any more regarding their fiscal rectitude. Cheap energy showed up in earnest in the American economy in the second decade of the 20th Century, and our political sensibilities were destroyed (with a great deal of help from Haber-Bosch). This was no particular entity/political party's fault or genius any more than Plague showing up in a city's port during the dark ages was G-d expressing his displeasure with church attendance - its just phenomena.

Still, doing the same thing over and over and over again....

Saturday, February 6, 2010

The End of "Growth"

I am bearish on most equities. Not much of a secret around here. The equity market in the U.S. is pricing in future "growth", and there is no "growth" to be had.

When you see conditions where stocks are priced at 20X or 30X or 50X earnings, that stock market believes that earnings growth, and eventually top line growth, will be commensurate.

I see little chance of this (growth). Ergo, buying stocks as investments that do not pay, and do not have a history of increasing, dividends is a fools errand. In most cases I would prefer corporate bonds to corporate stocks. I do like big dividend payers, but WHEN you buy them, and at what price, obviously matters a great deal.

The most likely course of events here is continued deflation followed by currency disaster and U.S. sovereign debt default. If I knew exactly when (and if I were correct in the first place) these events would play out... the Russian mob would be looking to kidnap me, so I guess its ok that I do not.

The Silver/Gold ratio is back to 70. Not sure what it means, but I think I will be buying a little Silver here at some point. In fact, I have sold out of the money puts for our Hedge Fund - more than that, I cannot say in this forum. I am not going to "back up the truck", because I still fear some kind of dislocation that will bring sellers to the market looking to raise money for margin calls. A long Silver/short Gold strategy might make sense for sophisticated traders... and it might not. My sense is I will put a trade like that on at some point, but have not as yet.

It is my sense that we are about 25% through the U.S. Oil import crisis give or take. This phenomena will not be linear, so there will be flat periods and accelerated periods, but by 2020, it will mostly be done with, and the next 10 years will be among the most interesting decades of the past couple of centuries.

It will be interesting to see how population is distributed in the U.S. Over the past 50 years, the U.S. population migrated to the major cities, as has been the case in much of the world. Each country, though, has different reasons for this phenomena. In the U.S., financial services grew from less than 4% of GDP after WWII (and was roughly 5% in the mid 1970's) to over 23% of GDP in 2007 (as a percentage of earnings in the S & P 500, the percentage was somewhat higher... in some years financial services earnings totaled nearly 50% of the S & P 500's earnings). This work was in the cities, not in the country side, and we built the office towers, dry cleaners, and restaurants et al, in the cities to support the burgeoning industry's work force.

Now that process has come to an end, and is in fact in reverse. It is rather bizarre that 23% of the nation's GDP came from moving bytes around on a computer screen... and this does not take into account the industry's legal, accounting, and technology support cast... unto themselves no small percentage of GDP... Remember these bytes are merely ownership interest in the world's finite: Ranching, Agriculture, Fisheries, Forests, Minerals, Energy, and Water assets. You can increase the number of bytes. The amount of those underlying assets? Not so much.

(Somewhere along the line it seems that we expected that 100% of the work force would work moving bytes around a screen and we would "off shore" everything else... )

For better or worse, the financial services industry over the next decade or 2 will revert to 4 or 5% of GDP, down from 23%. That means a lot of things... like 80% of the office space that was built to house these workers will no longer be needed, and 20% of that is already empty. There are many more impacts and outcomes on the way... this is the very definition of "no growth" - and that's if we are lucky. In a mature economy there is a great deal less to do. "Maintenance" is very much different from "Growth", and this is very hard to manage politically. For instance, let us say the new, no growth economy requires .97X automobiles, not 1.00X. Overly simplified, either we pay each worker less, or we fire a certain number of workers, or the industry goes bankrupt. Of course, the first 2 are politically unacceptable, and so we go for option 3... sound vaguely familiar? What if its 3%, or 5% or (gasp!) 12% less per year, every year?

This is what is going on all over the economy. Our governments, local, state, and federal, budgeted growth in perpetuity. Government unions were fantastic marketers during the good years, pulling at the heartstrings of populace, most whom have never heard of the mathematical concept "e", and were able to negotiate tremendous pay and retirement packages for school teachers, police, fire, et al, based on never ending growth. Then the growth stopped, as it must must by mathematical necessity, and here we are- with the "have nots" struggling and suffering to pay the pension and healthcare benefits of the "haves". Welcome to Oil and Water, or socialism mixed with capitalism.

Given the lunacy of the political extremes, there is no hope for a rational, negotiated outcome. It then follows that debating and inserting macro solutions will fail. This makes a great deal of sense of what we are seeing in government at every level. Government is in the business of making macro adjustments and solutions, and I as I just laid out macro solutions won't work under ANY circumstance. This is why your "Hope and Change" has turned out to be more of the "Same old Sh*t" - and it is not anyone's or any political party's fault.

"It is what it is".

Libertariananimal (at) gmail

Friday, February 5, 2010

Anger in the Heartland

There's a lot of anger out there in the Heartland. Folks are p*ssed off.

Why so angry?

Does it matter?

Our systems have bullied people and the media/internet/political outlets (including bloggers like me) seems to have whipped up and played into this anger.

Gerald Celente has a great line that goes something like: "When people lose everything, they lose it". Real or imagined insults and injuries matters not. The 1960's Civil Rights movement was the blowoff of pent up anger. To read the comments on my site and the sites of other bloggers it would seem to me that we could be approaching that kind of level of anger now.

Anger is a spectrum of emotion. People have an intense sense of fairness. When that sense is violated they act. When that sense is reached by a critical mass of people, those actions can be volatile.

I read with interest James Howard Kuntsler's stuff among others in the Peak Oil Blogsphere, and I am somewhat disappointed at the condescending position taken in regards to religious, working class, gun totting, nose picking folks residing in fly-over-land (non-coastal elites). These people are angry for a reason, whether rightly or wrongly is up for debate... but I think it is suicidal for our society to continue to ignore this anger. There are millions and millions of these folks.

After WWI the allies brutally repressed and gouged Germany resulting in an anger that cost the lives of 60 million or so people in WWII.

"When people lose everything, they lose it". Indeed.


You mean a sitting president told Americans to act prudently and make "sacrifices" for their children's future? That they should accept some responsibility? Somebody alert the media! Well, somebody did.

Am I the only normal person left?


Social Security payments versus receipts went negative. Well, we all knew it was going to happen... only our government was saying it wouldn't happen for another 15 years or so...

"Opps! Our Bad" said the government.

I can just see the hordes of rioting seniors now...

Medicare is in FAR WORSE SHAPE than Social Security.


Those two social program baskets cases (not Medicare and Social Security... the OTHER 2), Fannie Mae and Freddie Mac, rescued from the edge of darkness last years, are about to go Chernobyl. This would be amusing if it wasn't so frightening...

The crazies do the wildest things, like S.S., Medicare, Fannie & Freddie, and then excoriate the free market for not working! What a scream!

Only now we have 10's and 10's of millions of taught-to-be-helpless people just as the wheels are coming off.

We are beyond solutions for these past mistakes. G-d is going to have to sort all of this out.


Given the above, what would be the outcome of some other external shock?

Thursday, February 4, 2010

Rather an Interesting Coincidence

On occasion, I read John Michael Greer's excellent blog "The Archdruid Report".

I find the coincidence that we both used a chess analogy in our February 3 posts - the title of his post is "Endgame".

I recommend his post highly. Greer possesses a fantastic mind, and his prose is infinitely better than my sleep deprived posts of late (2 kids in diapers).

I wrote this article for another blog in June of 2009, and I republish this as a precursor for some posts coming in the near future:

"Revisiting Self-Sufficiency"

I try to approach this in a very practical way, and to report back that way, too.

So... if you really want to be "self-sufficient"...

Well, you can't be 100% self-sufficient, and you don't need to be. Youcan produce most of your own, food, but not all of it, and you don't need to - and you can do it and still have a life and a job.

The first misconception is that you can garden your way to self-sufficiency... egh! wrong, thanks for playing! You can grow most of your own vegetables - growing spinich, brocolli, peppers, lettuce, tomatoes, potatoes, kale, carrots, etc... sufficient for a family of 4 or 5 is no big deal (preserving it all IS a big deal). Of course, if you tried to subsist off just this you would be dead or pretty sickly pretty soon (if you either have to earn money or farm full time that is... I guess sedentary couch potatoes could get by with just veggies, though their teeth and bones would certainly miss dairy in their diet). That produce is easy for a kitchen garden to produce.

Corn, potatoes, and beans in sufficient quantities to sustain your family is going to take a bit more work. Actually, a lot more, but still doable.

I get nasty emails from vegetarians on a semi regular basis lately. I always point out to them that they kill more animals with their consumption of fossil fuels than I do by feeding my family, but never mind hard facts - we are talking sensitivities here.

You see, I am a card carrying member of PETA... no not that PETA, the other one: People Eating Tasty Animals (and their milk and eggs, and using their manure for fertilizer). Animal protein is an absolute necessity in agrarian cultures with little fossil fuel inputs (try getting Omega-3 in your diet without animal fat), and as I TRY to do everything with as little fossil fuel input as possible (just look at my pictures... does it look like I cut the grass very often? NAFC.) they are necessay here, as well.

(I wonder if vegetarians consider the road kill from truck and trains carrying their grains and vegetables to them, or killed by climate change and pollution caused by operating farm and transport equiment, producing chemical fertilizers, pesticides used on the crops (bugs are animals, too), animals killed by farm equipment (rabbits, birds, snakes, toads, etc... call those fields home), I could go on and on but a "true beleiver" Vegan would not have read it anyway. Am I the only one to notice that, well, let me rephrase... I have NEVER met a vegan that was not pro-abortion. How's that for being STUNNINGLY full of sh*t?)

If you were looking for politically correct self sufficiency, you came to the wrong blog.

But I digress...

Organic Farms need animals for fertilizer and food - simple like that. Not want, should-have-if-possible, or ONLY for the manure (what would you do with all of the excess bulls, billy goats, roosters, and Boar hogs? They would quickly destroy your home and fields, eat every blade of grass, and injure and kill your children (think I exagerate? Leave your children in a field with a bunch of Bulls and Boar Hogs for an afternoon, let me know what you find when you come back), etc...

Let me repeat: Organic farming means animals for traction, for food, and for fertilizer. No animals, no organic farming - and no organic farming means continued factory farming and long distance food transportation, and that means climate change, pollution, etc...

It takes time, effort, and practice to be self-sufficent. You cannot learn it on the web. You could still be a doctor, lawyer, or indian chief - whatever it is you do for a living - and still produce most of your own food at home (if you live in the country or the burbs, that is). You don't need a lawn whatsoever. Every inch around your home can grow something edible. Fruit trees and berry bushes instead of ornamentals. Grapes instead of fences or hedges. Raised beds instead of a front yard. Housing 20 chickens and 2 dairy goats instead of a dog and a cat will give you eggs and milk rather than hookworm and dirty kitty litter, and the chickens and goats have a much better carbon foot print... it ain't even close. (I have a dog and barn cats... but they are working animals).

You would have to have the cooperation of your wife - good luck - and your family. Why do I say "wife" and not "spouse"? Because, there will be damn few single women, or men, moving to the country to start a self sufficient homestead, and even fewer single mothers. Nope, the demographics say it will be married people with children, with Dad providing and mom feeding the family and raising and educating the children - who'd a thunk it?! (Nothing is absolute. We have some lovely gay women neighbors (they describe themselves as "bull dykes" among other things... I love people that can laugh at themselves) running a self sufficient farm, and they are a hoot!)

So why'd I say "good luck"? I live half the year in Boca Raton, FL, where the poor people have a million dollar net worth, and the rich quite a bit more than that, and I should know - I manage their money! I hear their concerns like a priest in the confessional. Any of those guys even TRYS to move his family to a small holding homestead or ditch the landscaping for a productive garden, or try's to downsize the familY'y consumption... and it is off to divorce court for his troubles (I truly wish the "Real" American Housewife were more like Sharon Astyk but that that just ain't the case - America is fascinated by the Reality Show "The Real Housewives of Wherever" precisely because it is, in fact, REALITY). Sorry, but "family law" has left the successful "king of his castle" nothing more than a neutered figurehead, a laboring eunich that, if he so much as steps out of line, will lose his home and life's savings in addition to the family jewels he lost to the marriage/divorce industrial complex by marrying without a prenup agreement. What is the point of marriage in a society that promotes divorce?

(I am sure to get some winning emails and comments with that. Funny thing about the "truth", it gets people's piss hot. If I were to speak untruths, no one would care because we all know they simply were not true.)

There is good news, though. The Great Recession AND Peak Oil, in addition to making people poorer and requiring them to be more self sufficient, is going to demolish the marriage/divorce industrial complex. People (men - I mean, come on, have you ever heard of "GROOM" Magazine?) are already:

  1. Putting off marriage

  2. Not getting married, ever (over 40% of American children are born out of wedlock)

  3. Those that do marry are Engaging a pre-nuptual agreement more often to level the playing field

These were the unintended consequences (along with our SKY HIGH divorce rate and destroyed families) of Gloria Steinem, et al, and their Feminist revolution (one whose putative benefits went to 30 to 50 year old women AND THEN SPLIT WITH THEIR LAWYERS at the direct expense of 0 to 20 year old women (girls) and men (boys). The Great Recession is going to remove the incentive to divorce that was an unintended consequence in the 1960's and 1970's revisions of family law here in the U.S. People are going to NEED their family in a world without Medicare, Social Security, and Food Stamps.

Back to Organic Farming... So what does the previous couple of paragraphs diatribe have to do with Small Holding, Homestead, Organic Farming, whatever...?

There was a reason they were called "Family Farms"!!! Family, as in a husband and wife and their children. Not that that is necessarily what a family has to look like, but it was themost successful model for the building blocks of "community" for Millenia prior to the industrial age.

In an agrarian society do you know what women without husbands DO FOR A LIVING?? I'll give you 2 1/2 guesses, and a hint: It is one of the oldest, if not the oldest, professions around. If Peak Oil means we are going back to an agrarian system and the collapse of industrial society - why is it verbotten to discuss ALL likely outcomes.

Don't like the political commentary with your victory gardens and dairy goats? My apologies, but it was politics that got us into the mess we are in, politics that writes the nation's laws (including family law) and it is the analysis of those political errors that might lead the way out of it. Besides, this is my blog.

Yours for a better world (by starving out divorce lawyers)

libertariananimal at gmail (d0t) com

Wednesday, February 3, 2010

You can't get a little bit Pregnant

American foreign policy combined with our current social, monetary, and fiscal programs are putting our nation in a very challenging national security conundrum.

The very wars that the U.S. is fighting to "protect our freedoms" are part and parcel to the very thing that can bring the U.S. low. I have no doubt that the strategy in Iraq and Afghanistan is to surround and control Oil deposits in Iran and Iraq. As my regular readers know, I am a recovering chess fanatic. In chess you have an opening, a middle game, and an end game. If Korea and Viet Nam showed us anything, it is that our policy makers have little concept of middle game, and NO CONCEPT for an end game.

What is the ultimate outcome for Iran and Iraq oil? Answer: In less than 20 years these nations will not be able to export ANY OIL as their domestic consumption will consume ALL of their production. The U.S. is risking the demolition of its currency, and with it a debt default, among other very, very unpleasant outcomes... in order to kick the (Oil) can down the road a couple of years.

This is the very definition of insanity.

And while the loss of lives, treasure, and moral mandate that the U.S. will suffer as a result of prosecuting these inexcusable wars, these will only be a contributing factor in the coming political disaster. You see, the U.S. will "win" these wars, whatever that means, but will lose ALL because of the debt created by the Wars, Medicare, Social Security Medicaid, Disability, Farm Subsidies, et al...

There will be a day of reckoning, there will be an "End Game", and there is nothing to be done for it because our policies and political phenomena have created a huge class of the delusional or just plain FOS (the perfect example? Pro-Choice Vegetarians. These knuckleheads race to save dogs in Haiti and then back again to help hack an unborn baby to death. These people represent the worst mankind has to offer, yet are firm in their delusions of superior intellect).