The Audacity of the Inexperienced, the Untested, and the Immature

I seem to be the only non-Democrat that does not hold Obama personally responsible for the GOM Horizon blow-out. That does not mean that I do not expect the Government to find its footing in short order, just that unreasonable expectations about how quickly forces and efforts can be brought to bear is endemic in our society.

That said, the BALANCE of what the non-Democrats have to say about Obama is SPOT ON (I think this is one of the most important political analysis' I have read).

Barack Obama -- a man who was as unprepared to be president as any man in our lifetime -- has over the last 16 months shown that he is overmatched by events.

The fact that a first term U.S. Senator with absolutely NO OTHER life success was elected president can be expressed in no better terms than my own "The MTVization of Politics". (Just kidding! I think its catchy... but as for being the best? I await our regular commenters crack at this.) BHO was not a self made millionaire (spare me on the "book") BHO never ran so much as a popsicle stand), pulling himself up by the boot straps and in the process showing Americans how its done. No, he is a lawyer, and a very bright one by all accounts, but being a "Constitutional Scholar" is almost the most hysterical oxymoron ever. Heck, if that works, I am going to promote myself to "Energy Scholar" or "Financial Markets Scholar"! (Sounds better than "analyst", doncha think?)

There is a good reason why America cannot address its dooming social spending programs, deficits, and energy policies. America is made of its people! A people that have been conditioned by strange forces into believing that something can be had for nothing, hard-work and effort have no account, frugality and modesty are obsolete, and human life is not worthy of respect (our solution for all problems and inconveniences? Bullets, bombs, abortions, more and more brutal "Justice" - all promulgated without a SHRED of thought for the "unintended consequences" nor any sort of "cost/benefit" analysis). It is disgustingly impressive how effectively TPTB have triangulated the people into a hodge-podge of hot button issues, allowing the extremes on either side to rule in concert as the 2 headed, one party system we all know and don't love.

Who elected/voted for BHO? Let's be BRUTALLY frank in this discussion. Was it the small business owner? The self made middle class millionaire living in flyover land? The family MAN living in a traditional household? NAFC.

Goldman Sachs' management is overwhelmingly Democrat - they went for Obama. The inner City (arguably the least productive regarding tax payments and the most costly in benefits)? 99% for BHO. Pro-Abortionists? 99% for BHO. Young people that have not supported a family, met a payroll, or a mortgage (for any length of time)? Overwhelmingly for Obama.

Don't like my analysis? TS (That is a "Tough Situation"). This is the Blogsphere, where NOTHING is sacred and where no subject - no matter how inconvenient, politically incorrect, or just plain sh*tty cannot be discussed without fear of reprisal. I read about the scientist that was working on the GOM problem was fired by the Government for some very non-P.C. writings on his website - that incident completely disabused me of the notion that anything intelligent will be done by the Government on that problem.

There's the way it is, and then there's the way you THINK it ought to be. The GOM is only the latest in a series of inconsistencies that our ELECTORATE, through their elected officials, has FUBAR. We, as a people have simply GOT to stop blaming others - even our elected officials... after all we elected them - and start taking responsibility. Not that this is a likely outcome at this moment... it is far more likely that it will be forced on us, but at least we can discuss it.

Because:

It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so. - Mark Twain

Obama's presidency is done; you can put a fork in it. He and Jimmy Carter will live forever in the speech circuit/book writing limbo of the folks that voted for them. This not a happy moment. I never held out much hope for BHO on issues like the social programs, the deficit, Fannie Mae et al. After all, he is a Liberal Democrat, he won, and to the victor go the spoils. I did hope that he might take a stab at reeling in the "empire", shrinking our military occupation forces around the world, and insist that the OTHER nations provide for their own security. What a joke! BHO's 2 biggest voting blocks, Feminists/Abortionists and Americans of African descent have no interest in reigning in the social programs but professed to be anti-empire. I guess not.

You can't get a little bit pregnant. The wars are bankrupting our nation and KILLING people while the P.C. crowd freaks out about Rand Paul. Well, "Me thinks THE MAN doth protest too much"... THE MAN being the the elitists populating Goldman Sachs, the U.S. Treasury, The Fed, and the current administration... it amazes me how these elites have so successfully tatooed the the racist moniker on the Tea Party folks while perpetuating the subgugation of people the world over. You see its ok to BOMB non-combatants and murder women and children, just don't point out what an abject failure the social programs have been in assimilating the inner city.

The GOM disaster is just one in a long line of challenges that our political system will fail.

So Much For the "Top Kill"

BP's "Top Kill" hasn't worked out as advertised.

I am not an engineer, I just play one in the "Blogsphere"...

Just kidding.

No, I am not an engineer... but I have contacts in the energy industry that are... and to a man the story was the same - the only possible solution for this situation is the relief well being drilled as we speak... and that will not be ready for at least another 60 to 70 days at a minimum. Problem is, that is not guaranteed to work, either.

So, we are back to my "What If" scenario. What if TPTB cannot get this thing shut in for months or years?

For the BP haters... this could have happened to any major Oil company. The engineers on site made a series of bad decisions - that's what people do on occasion, they make bad decisions. Cops shoot innocent bystanders (bang!), juries send men to prison for life only to find out 30 years later the DNA does not match (oops!), physicians misdiagnose and surgeons leave sponges and spoons inside patients bodies (ouch!), car accidents (crash!), Chernobyl (boom!), unwanted pregnancies (how'd that happen?), bad marriages (love is blind... and marriage is an eye opener).... people make mistakes.

Where this goes from here is anyone's guess.

Obama Speaking (Almost) Candidly about U.S. Oil situation

I received an email from a reader with this Link. Skip the first 49 minutes and listen from that point for just a few minutes. That is the President of the United States acknowledging "Peak Oil"... just not in those words.

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I am running out of love for the US$. The US$ has now gone vertical, as measured on the Dollar Index... assets that go vertical ALWAYS wind up like Wiyle E. Coyote (Super Genius)... they notice at some point that they missed the Road Runner and are standing on thin air.

10 year Treasury notes were one of my biggest positions (personally). No longer. I shortened the maturity's down to 1 to 3 years, and used some of the proceeds to reestablish positions in energy equities, which have been beaten to smitherines by the BP debacle. The risk is is that these companies really need to be discounted because they are environmental time bombs... I reserve the right to change my mind... but I think that U.S. energy companies in particular, and energy companies in general, are cheap (that does not mean that they could not get cheaper... I am NOTORIOUSLY early...) Some of these are trading back down near their March 2009 lows... here's your second chance... but only for "Risk" capital... if you don't have any of that, this is not for you. My bet is, this sector will look very cheap when we look back on it in a couple years.

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"A one-year delay on new deepwater projects stemming from the Gulf of Mexico well rupture could cut world oil supply by 500,000 barrels per day between 2013 to 2017, Bernstein Research said in a note to clients on Friday."

I will be happy to take the "Over" on that trade. It will be a lot more than 500k bpd and it will last a lot longer than 2017.

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Obama is taking a great deal of political heat for the Horizon blow out. It reminds me of the heat GWB took for Katrina. This is what our political beliefs and passions has been reduced to - "The Blame Game." It has to stop somewhere. I know a lot of folks that were and are FURIOUS at the Left and their media dogs for what they did to GWB over the Katrina story. "Two wrongs don't make 1 right". For the good of the country, it is time to stop this silliness. Obama did not cause or improperly handle the GOM leak. GWB did not cause or improperly handle the Katrina response. Sh*t, in fact, DOES HAPPEN.

Unless somebody has to be blamed so that someone else can benefit politically.

The End of Ultra-Deep Water Oil Production

The BP Horizon explosion and subsequent blowout in the Gulf of Mexico means the end of Ultra-Deep water Oil production - at least near the coasts of any of the industrialized, liberal democracies.

That is, to my mind, a given.

Now, what if TPTB - BP, The Coast Guard, the Military, the Federal Government et al - CANNOT shut the thing in? WHAT IF? I am not an environmental scientist, but it would seem to me that the GOM would be a biological dead-zone. It would also seem to me that the Oil industry (the ONLY industry in that region when you get right down to it... money comes into that industry and is then circulated through everybody else down wind) in that part of the country would take a significant hit along with all of the supporting cast around it.

(The level of economic ignorance displayed by the folks trying to take political advantage of this is fairly impressive. They began by publicly worrying about the fisherman and the restaurants... absent the oil industry there would be no fisherman nor restaurants as there would not be customer for thousands of miles for either group... the region would be as poor as Afghanistan... to say nothing of the fact that without the Oil production from the GOM the fuel for autos and transport fuel would be considerably less available for ALL of the U.S. It would be awfully cold this winter, too, as over 15% of U.S. Nat Gas production comes out of the Gulf.)

What would it mean to have 7 to 10 million gallons pouring into the Gulf every month, month in and month out, for the next several (or many) years? What if "Top Kill, Siphons, Top Hat's, relief wells, bombs, etc..." don't work? They might... but what if they do not?

Aside from the ecological disaster the other unknown consequences are fairly staggering when you think about them. I won't bore you... you don't need my help to think some bad things up.

I never thought deep water drilling was a terribly good idea. The simple fact is that the ultimately recovered Oil from these sights really was never worth the price of admission... all in I don't think deep water would supply more than 10 years worth of current world Oil consumption. Any rational risk/reward or cost/benefit analysis would come up short on that one.

The question is what are the political ramifications of this. Forget watching the candidates and office holders beat each other over the head with this... what will the reaction be from the "consumer" and/or the "voter"? Will all of this be forgotten when gasoline is $8 per gallon? Even if the GOM is a giant dead zone that smells like northern New Jersey did when I was a kid? Really? (BTW... Jersey does not smell anything like it used to... but back in the 60's and 70's it was pretty bad...)

Whatever the political reaction from the crew currently in power (in both parties) you can be sure it will NOT be a call for any shared sacrifice or a rational energy policy.... it will be a call to affix blame (this is NOT this administrations fault, nor GWB's, or Clinton's... every one of us that drives a car or drinks bottled water is in on this caper).

This is a hard one to put one's mind around... I need to noodle this a bit longer.

Email

Received an email today from a reader.

MK said:

The US will probably push the age at which people receive social security benefits to 70 or later , that would take care of the so-called ponzi scheme. As far as Rand Paul is concerned, he is a crazy little punk and once people realize how deranged he is it will be over. People in Kentucky do not want to eliminate the Department of Agriculture. Yes, other government benefits will be cut as time passes because the money won't be there. when social security was first implemented in the 1930s, 65 was chosen as the age to receive benefits because most people didnt' live long past 65. But on the other had I don't think too many baby boomers are actually counting on government benefits to retire on.

My response:

Thank you for your email.

"So called Ponzi Scheme". It seems you are dismissing Social Security and Medicare as Ponzi Schemes while saying the cure for the Ponzi scheme is to STIFF the people that paid into the Ponzi Scheme by changing the rules by which you accepted their money.... Is that correct? If so, isn't that the definition of a Ponzi Scheme (no qualifying "so called" required)?

Of course the government is going to raise the age for the benefits! But not before confiscating the nearly $500k I have paid into the program during my working years (90% of my career I was self-employed and paid both employee and employer contributions) and distributing that money to people that did not pay in what they are taking out. What choice do they have? Lower the monthly cash payment or raise the age! Since we don't live forever... average age for a man is, what, 77.5? So they just stiffed me for 40%? That's not a "so called Ponzi scheme"... that's a JACK.

Rand Paul is a "crazy little punk"? And the people of Kentucky what? The man ran for the nomination against TPTB of the Republican party and WON. Get a grip. The man is the next junior Senator from Kentucky, and there will likely be 3 or 4 other Senator's raising their right hands next January that come from his political base.

As for Social Security and the average Life expectancy in 1935... Here is a link to the Wikipedia entry on what is commonly called "Social Security". Please read it! Your suppositions are ALL F&^%%ED UP! While it is true that Life expectancy at that time was lower than today, the percentage and the cap for the program have been moving steadily up to the point of crushing employment here in the U.S.!! The introduction of Medicare and health insurance in general did more to incite the explosion of health care costs than anything else that could have possibly been done. A doctor's fee for a non-complicated baby delivery in the year Medicare was enacted was about $35. Today it is about $4,000, over 100X while general inflation was 10X... Congratulations! Wanna see me do the same trick for college tuition and Sallie Mae? Home prices and Fannie Mae?

The fact of the matter is that the unintended consequences of ALL OF THESE PROGRAMS were a F&^*ing DISASTER for the U.S., and while the programs did benefit a small percentage of the population, they did so at the expense of everyone else while creating grossly outrageous expectations - expectations that will not be met under any circumstances. Worse, the moral hazard - not saving and providing for one's old age - created by the jag-offs that enacted all of these programs will find the jag-offs in question BLAMING the folks that resisted this drek in the first place!

Both the Left and the Right, the two-headed-single-party that has been ripping us off for several generations are TERRIFIED that they might lose their grip.

I ask you: Can Rand Paul be ANY WORSE than the jerks now running the train set? What have we got to lose??!!

Its A Cold, Cruel World (Compilation)

I compiled the "Its a Cold, Cruel World" series into a single essay. The originals were published during the first week of March, 2010 and are complete with links to my sources - this essay is published without those links.

Without further ado....

Its a Cold, Cruel World

"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.

And...

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

IF/THEN:

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...

THEN...

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 of their posts (not all are guilty... Orlov and the MS have no problem telling 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.

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, simply are not 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 sinking ship 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.

It is a cold, cruel world. And as it turns out, "Peak Credit" (the term coined by Mike Shedlock) is likely as big a problem in the West as "Peak Oil", and likely will be for another few years... we shall see just how correct folks like Me, Jeffrey Brown, Saif Lalani, Ken Deffeys et al have been with our export/import models soon enough - by the end of 2011, I should think.

Right now, while the "financial system" has been stabilized, it certainly has not been fixed. I am going to speak of the U.S. economy, for the most part, and its effects on the American people and the ROW. This is going to be a brutal, politically incorrect assessment of where the U.S. finds itself, and what the U.S. is going to be like post purge - because that's what's up, the U.S. is about to purge: major gastro-intestinal distress with a release coming from both ends.

How did we get here? Glad you asked. Sooooo.... here comes MY definition:

We got here because "WE" wanted to reconcile an unfair and unjust world with the fair and just G-d that our people were purported to believe in, but Who just seemed to be falling down on the job (otherwise why play G-D?). After all, as George Carlin famously quipped:

G-d is all knowing, all powerful, all seeing, and all wise... he just can't handle money. He always needs money!

Just kidding.

Anyway, since life was not fair, and we all agree that it is not, and we wanted to show what kind of society we were... the nice folks in the FDR administration came up with what we now know as Social Security et al (by et al I mean all of the myriad state and federal transfer payment programs). From the Wikipedia Social Security site:

U.S. Social Security is a social insurance program funded through dedicated payroll taxes called Federal Insurance Contributions Act (FICA). Tax deposits are formally entrusted to[3] the Federal Old-Age and Survivors Insurance Trust Fund, the Federal Disability Insurance Trust Fund, the Federal Hospital Insurance Trust Fund, or the Federal Supplementary Medical Insurance Trust Fund. The main part of the program is sometimes abbreviated OASDI (Old Age, Survivors, and Disability Insurance) or RSDI (Retirement, Survivors, and Disability Insurance). When initially signed into law by President Franklin D. Roosevelt in 1935 as part of his New Deal, the term Social Security covered unemployment insurance as well. The term, in everyday speech, is used to refer only to the benefits for retirement, disability, survivorship, and death, which are the four main benefits provided by traditional private-sector pension plans. In 2004 the U.S. Social Security system paid out almost $500 billion in benefits.[4] By dollars paid, the U.S. Social Security program is the largest government program in the world and the single greatest expenditure in the federal budget, with 20.8% for social security, compared to 20.5% for discretionary defense and 20.1% for Medicare/Medicaid.[5] Social Security is currently the largest social insurance program in the U.S., constituting 37% of government expenditure and 7% of the gross domestic product[6] and is currently estimated to keep roughly 40% of all Americans age 65 or older out of poverty.

You can read the above link yourself, you don't need me. You can see the years where the coverage was expanded, and the steady increase in the tax rate, and the expansion into healthcare in 1965, and the many adjustments to the system thereafter...

Now, superimpose the timeline in the above link over the Oil production and export/import timeline for the U.S. In 1935, the year Social Security was enacted, the U.S. was the world's largest exporter of Petroleum. In 30 years, 1965, when Medicare was enacted, the U.S. was only 5 YEARS from the peak of its production, and within an additional 35 years, imports of Oil into the U.S. were DOUBLE domestic production. In other words, in a time span LESS THAN A HUMAN LIFE Social Security went from enactment to insolvency and the U.S. went from the world's largest Oil exporter to largest Oil importer. When Social Security was enacted in 1935, the presumption was that the U.S. would be able to expand its Oil production forever - and that presumption has turned out to be quite wrong. There was also the presumption that Social Security benefits, and later Healthcare (Medicare) could continue growing at 2X or 3X the rate inflation or GDP - and that presumption has turned out quite wrong.

So here we are, its 2010 and Medicare and Social Security, 2 programs growing exponentially and that have entered their terminal apogee at the extreme NE quadrant of a quadratic table:

This is the graphical representation of "e". Conceptually, anything growing exponentially will grow to infinity, or have the slope of the line go vertical. Since Medicare and Social Security cannot GO vertical... well, we all know what has to happen.

BUT!!!

Addicts have no idea about graphs, and slopes, and exponential functions... they only know that they need their fix - the government check in the mail, cheap oil to drive 40 miles each way to work, credit cards to assuage depression brought on by long commutes, expanding waste lines and boring love lives... by consuming sh*t we don't need and forcing us to work at jobs we hate to continue to do so, not to mention to pay off those student loans... and, boy! Was the Government ever successful at addicting millions of people to years and years of idle time funded by the demographic tail end of that graph...

So, here we are... with demographic time bombs going off all around us... otherwise known as California, Illinois, New York, the Federal Budget.... and crazy people educated well enough to know better insisting that the above sloped line is NOT true - pay no attention to that man behind the curtain! - none of us has any responsibility at all because all we have to do is tax the "rich"! AND mock people living in fly-over-land because they had the inability to see the simple logic that the elites know better...

Now the time has come... soon the check WON'T be in the mail... because the international bond market won't let Uncle Sam get to the post office (they're broke, too)... Soon... lunch won't be free, love won't be free (whoever said "free love" clearly had never been married and divorced), and healthcare certainly won't be free...

Americans will be forced to save money and live within their means! Can you believe THAT? We will actually question taking on 200k in debt for aLiberal Arts education! We will pack lunches, cook dinner at home, buy things second-hand, wear hand-me-downs, work until we die, and pay for our own mistakes with our own money. The first generation going through this won't like it one little bit, but those that come after won't know any other way. Some people will still get rich, and others will not. Some people will be good looking, while most will be as plain as Abe Lincoln. Some will live long, while others die young. We WILL get over the idea of trying to legislate LUCK away. Luck will always happen to a few, and not to the rest and we will give up trying to make life fair by hiring government thugs. People who call themselves "Liberals" or "Humanitarians" won't be much of either unless they can do it with their own money, but they won't have much money so that won't be an issue.

Old people that have no family and that have been relying on the government are in for an incredible experience - and not a positive one. Most recent college grads will be fortunate to find menial work having nothing to do with their training for pay that will leave them living on top of each other Manhattan style - but with none of the benefits of living in Manhattan. Each and every one of us will be forced to actually produce something/perform a service or go hungry. On a happy note, divorce lawyers will starve to death, along with Feminism…

The Great Recession and the Great Deflation are going to be bigger than Peak Oil for the near future, and they are going to humble Great and Small alike.

You see, the 17% "real unemployment" is not "real unemployment", either. To make accurate comparisons as Oil and energy become less and less available on a per capita basis is the real issue. (Here's something to think about... Oil consumption in kilocalorie terms per person, or per capita, in the U.S. is down about 5 or 6 % since 2005... more people, and less kilocalories....) we as a society have to start telling ourselves THE TRUTH. The 40 million folks over the age of 65 should not be excluded from the employment calculations because they sure as h*ll did not pay into the system what they are extracting (otherwise, we would have a surplus, right?), and they sure as h*ll are not producing members of society.

Same goes with young adults. People in college are an enormous consumption drag on our output. The entire college population that is not working should also be counted into the employment numbers.

There are a few other groups - prisoners, the disabled, welfare and food stamp recipients that are not employed et al, and when you add seniors and college students et al... the remaining producers and tax payers simply cannot support the government services these groups require by NOT WORKING! (Yes, you can argue that education is an investment, and in a large minority that is true... so we will have to discount for that portion - while once again subtracting for the 23 to 30 year olds that live on their parent's couch playing video games.) The non-working spouses of folks making a good living and NOT taking care of the home unassisted (those with domestic help and nannies) must also be added this number.

Unfortunately, and I want to say this gingerly and with respect… we would need to calculate all military personnel as well.

ALL, that's right, ALL of these folks are consuming from the tax pool or disposable earnings pool that the tax payers are paying into, and there are simply too many people drawing from the pool and not enough people paying into the pool... now add to this equation the fact that Oil subsidizes the efforts of those paying into the pool and reduces the requests from those drawing from the pool.

Up until this point we have had the international bond market to fund this absurd cluster f***, particularly China and Japan, but now it appears that they are choking on the paper, and the Federal Reserve has had to step in and monetize the debt. The good news, if you want to call it that, is that the deflation in non government debt has outpaced the printing presses, and will for some time to come. Still, the Administration is NOT making noises about "jacking the social security retirement age" just for the fun of it. They got some guys there (Volker) that can count, too.

Of course, these pools of tax dollars for social programs have the perverse effect of creating more and more dependent people, another exponential function to calculate (in Dr. Bartlett's famous speech he speaks of a local politician that says he grasps the "e" function, but does not believe that it applies on the local level... to which Dr. Bartlett amusingly replies: "Oh, great. We have a local politician that believes that the laws of Mathematics do not apply in Boulder County, Colorado... worse, he has a degree from this (Univ. of Col. Boulder) institution... how embarrassing!") Certain members of the political establishment can see clearly that Americans are addicted to Oil, but CANNOT seem to see that American's are addicted to unfunded and teetering "social programs" (free money).

In the end, "It's a Cold, Cruel World" and the world will make the adjustments for us because as I have said a GAZILLION times before: There is no macro solution to any of this. The mass of folks believing in, and addicted to (and hence unable to provide for themselves) these entitlements is just too f*&^%ing large to be overcome (thank you, FDR) politically. You can see this in the price of Gold, Oil, the employment situation et al...

Speaking of employment... all of the absurd regulatory overreach (as well as the not so absurd) will come apart in the near future. Sexual harassment policies, discrimination policies, government worker's unions, etc... were all creations of the age of cheap and abundant energy, along with a long list of social and political "isms". Feminism? Gone. Liberalism? Say good night, Gracie. The NAACP? Gay Rights? Who cares? We won't have any money to fund any of this stuff. In a resource constrained world nobody is going to care who you are sleeping with (especially if it simply cannot result in a pregnancy) or what you are angry about.

Liberal economic policies have blown their constituent's belief systems out of the water. By increasing the number of people receiving government assistance, whether it be for rent, heat, food, healthcare, etc... doesn't matter. The fact is that the exponential function applies to liberal economic policies the same way it applies to human populations or weeds in a building lot - if the number of "tax receivers", (those receiving NET government assistance - which means plenty of "tax payers" are really "net tax receivers") continues to rise steadily then by definition anyone with a calculator can apply the exponential function, determine when the slope goes vertical and the system fails. Pretty simple, really. EXCEPT... we are talking politics. The same folks that grasp ERoEI (Energy Returned on Energy Invested) go f*@&^ing deaf, dumb, and blind when "e" is applied to any of their core beliefs.

But the "Cold, Cruel World" doesn't give a good fart WHAT you believe. In fact, the only reason we are even having this debate is that these belief systems have caused the outcome that mathematics predicted with certainty would come to pass.

I read a lot of the writings from folks on the other side of the aisle around the blogsphere. Kuntsler has some amusing commentary about complexity in his most recent post, not all of it very consistent. I watch in fascination as MILLIONS of folks on the Left support a 2,000 page healthcare bill that recasts one of the largest and most complex systems in the history of mankind... EVEN THOUGH THEY HAVE NOT READ IT! Is that hysterical?!

I watched in morbid fascination the debate on going to War in Iraq. A nation that had just witnessed, and was appropriately appalled by the murder of 3,000 non-combatants on 9/11/01 was supporting the idea of dropping half-ton bombs on population centers!!

Sometimes I think I am the only normal person left.

Think of the "Green Revolution". Did it alleviate world hunger as promised? Of course not. Did it encourage an explosion of population (think Haiti) that only increases the number of people starving? I leave that to you.

Did the social programs in the U.S. alleviate the suffering they were charged with? Or did they only increase the number of people that will endure tremendous suffering in the future? If you answered no to the first question and yes to the second...

I want to emphasize a point I made earlier: Energy in general, and Oil in particular has MAGNIFIED, or LEVERAGED the ability of the productive members of our society to produce enough goods and services to have supported the non-productive. Please think about that. How "productive" will these people be in a world of declining energy availability? How would it be possible to confiscate enough of their production to satisfy the demands, given the fact that we are running enormous deficits to fund this cluster f***, of all of the "tax receivers"?

Tell me how that can be done.

Today's quote:

"You know the difference between a terrorist and a do-gooder? You can negotiate with a terrorist." - Unknown. Brilliant, but unknown...

When I spoke of the "elderly", I want to clarify by saying the "Future Elderly". Those already old have enjoyed the greatest transfer of wealth in the history of mankind. For those 60 and under? They got taken in the greatest bamboozle ever conceived of by mankind.

Some have turned to free clinics. It’s just one indication that the health care crisis is really an economic crisis. And for the boomers it’s only going to get tougher, according to Harvard financial historian Niall Ferguson.

“If they’ve done their homework, then they’ll be afraid,” he said. “Very afraid.”

Ferguson says it won’t be easy to care for a generation with ailing bodies and many more years to live.

“The baby boomers have set us on a path towards a massive fiscal crisis,” he said. “Which is going to hit as the baby boomers retire.”

The recession, though devastating, will pass. But rising health care costs as boomers age may bring lasting harm to this generation’s financial well-being. By the time all boomers are 65, the senior population will have grown from 40 million now to about 72 million. Who will pay their medical bills?

“This thing is going to blow up,” said Ferguson, “because A: The number of retirees is about to zoom upwards just the way the number of teenagers once zoomed upwards in the ’50s, ’60s and ’70s; and B: Because the costs of these systems are completely out of control.”

The strain that the burden of caring for aging boomers will put on the health care system could overwhelm the economy.

If current trends continue, in 20 years almost a third of everything we spend on goods and services will be spent on medical care.

“The cost of health care for the elderly has been explosive,” said Ferguson. “And that is the crisis which seems to be the really big crisis lying ahead of us. We simply don’t have an answer as a society to the problem of a very large number of relatively unhealthy people who live into their 80s.”

And so it goes and will go and go and go until the mushroom cloud climbs over the horizon, blowing up what had been a noble experiment because a bunch of do-gooders really thought they could change the Facts of Life, or that there would never be an unintended consequence to their do-gooding, or that as long as you meant well its ok if you bring down the world's great Liberal Democracy...

Great nations are destroyed from within... by sloth, greed, unrestrained extravagance, arrogance, pride, boastfulness... of their people. They are not destroyed by their enemies nor by the frugal, modest, reasonable, and rational. Our foolhardy attempt to remove personal responsibility from the lives of our citizens and its celebration in our sh*t-for-brains media and pop culture has led us to this sorry state of affairs.

Doubt this? Let me ask you a few questions:

Was our society harmed by:

People starting businesses and employing people?

People saving their money and living within their means?

Parents providing for their children and making sacrifices to provide for themselves?

Not a shot.

Our society has come to this unhappy place because of the unholy alliance between a political elite that sold out the people mentioned above, pandering to those that did not or would not and expanding their numbers with the confiscated resources of the productive portion of society to the point that our financial system is unraveling.

I am sure to get ridiculous anecdotal data points about Ken Lay and Enron... or whoever. I could reply that Bernie Madoff was one of the New York Liberal elite's biggest financial contributors. But this is unimportant. All of us under the age of 60 have already been ripped off, the proceeds of the Ponzi scheme have already been distributed by the political elites, and there is no way to get it back - but the expectations remain.

"And therein lies the rub..."

The Guys With the Pens

"History is written by the victors" - Winston Churchill

The Folks with the Pens, the MSM, have been doing their best to stop the revolution within the Republican Party. The MSM, and their Leftist masters are TERRIFIED that the two-headed, one party system could come undone... and they simply cannot have that. For all of its blather, the Right has been just as complicit in this Cluster F**k as the Left.

Rand Paul IS a political novice. He does say the very things that let the MSM and our oppressors in the two-headed single party running the joint take his comments out of context and lambaste him for those with a 15 second attention span. You see, there are enough of the 15 second folks to undue almost any national candidate...

Note to MSM and the two-headed monster: Rand Paul is going to COAST into the U.S. Senate, this time with a cadre of like-minded Libertarians. My bet is these guys are not buyable by the same folks that bought and paid for the f***ing morons we currently are stuck with... and that is what is freaking TPTB right out of their skin.

Libertarians ARE NOT anarchists! We recognize that the government provides the very services that makes society inhabitable - law and order, defense, and property rights. Much of the rest of it is merely political payola. Of course, that is NOT how the folks benefitting from such government largess and waste and extortion are going to see it. That's why this is going to be such a nasty fight.

If you are a Libertarian, now is our moment. This election, and the 2012 presidential election, likely represent one of the last chances to make some good decisions before the International Bond Market makes them for us. This must occur not only at the national level, but at the state and local level as well. For better or worse, our best shot is INSIDE the Republican house. They lost their way and the apparatus is there for the taking. The Democrats are nothing but Socialist/Fascists in sheep's clothing - hiding behind their idea of Libertarianism: Abortion Rights. They have done an amazing job of duping their supporters; of course, so has the Right and the Mainstream Republicans. I look forward to kicking sand over both of their discorporate remains... if you Grok.

All of the items I have listed below are going to happen irrespective of what you or I want. Its time to do this of our OWN volition rather than at the point of a sword:

1. End the "War on Drugs" at the state and federal level.
2. End the extortion of money from the private sector to fund the lavish pension system of the public employees.
3. Cut military spending and bring home the troops.
4. Cut benefits of Social Security, Medicare, and eliminate most of the Federal Agencies (what have they done for us?). Reduce head count in government at all levels "by any means necessary".
5. Cut the budgets for Law Enforcement, Fire, and Public Safety at the state and local level. It is axiomatic that we all want life to be perfect; it is time to do a cost/benefit analysis of what we are paying for and what we are getting... including all of the unintended consequences. This includes our embarrassment of a legal system.
6. Enact Laws to reduce lobbyist influence.
7. Accept less regulation in most instances, not more.
8. Address the energy issue! Its the 800 pound Gorilla in the room!

Not to worry. I am not delusional. None of these things will come to pass until we are in a Greece-like crisis. The good news, I guess, is that that is not really that far off - and then all of the above, plus a whole lot more, WILL come to pass.

As I said. If you are a Libertarian, now is our time. If you are not... not to worry, you soon will be.

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The biggest contributor to the tidal wave of change we are experiencing is the slow motion train wreck that is the American Energy Crisis. That the above is, in my opinion, ineluctable is supported by the fact that the U.S. has an annual budget deficit of 12% of GDP. If I throw in the State and Local budget deficits for this year that number rises to nearly 16% (give or take). Now consider that the the U.S. experienced "economic growth" of 3%... that means in the absence of deficit spending we would be looking at contraction of 13%? Yes, that's what it means... which would make the Great Depression look like a prom data - a prom date that gave us WWII and those lovely, goose stepping, lovers of humanity, Hitler & Co.

Well, U.S. Oil imports, with the possible exception of Canada (and it won't be much) are coming to an end this decade. No, ifs, ands, or buts. 9 million + bpd of Oil... POOF! Gone!

From Jeffrey Brown's comments on my previous post:

Some Simple Net Export Math

The simplistic Export Land Model (ELM) assumes an oil exporting country that hits peak production and then declines at 5%/year, with a 2.5% rate of increase in consumption, with consumption equal to 50% of production at peak production rate.

Instead of projecting net export volumes (and instead of discussing two exponential functions), an alternative, and simpler, way of portraying net export declines is to simply plot consumption as a percentage of production. When this number hits 100%, by definition the exporter transitions from net exporter status to net importer status.

In any case, at final peak Export Land was consuming 50% of production. At the end of year three, they were consuming 63% of production. Consumption, as a percentage of production, increased at 8%/year. So, 10 years after the peak, if we extrapolate the trend, they would be consuming 111% of production (the model shows them going to zero net oil exports in 9 years).

In 2005, Saudi Arabia consumed 18% of production. In 2008, they consumed 22% of production (EIA). Extrapolated out for 25 years (from 2005), in 2030, they would be consuming 104% of production (Sam Foucher’s modeling shows them approaching zero net oil exports between 2030 and 2035).

And of course, this presumably would work for ELM 2.0 (the observed tendency for developing countries like China & India, i.e., “Chindia,” to outbid developed countries for declining net oil exports).

Chindia’s combined net oil imports, as a percentage of (2005) top five net oil exports went from 19% in 2005 to 27% in 2008, a 12%/year rate of increase. Extrapolated out for 14 years (from 2005), to 2019, Chindia’s combined net imports would be 102% of (2005) top five net oil exports, i.e., 102% of combined net oil exports from Saudi Arabia, Russia, Norway, Iran and the UAE. If we take Sam's best case for the (2005) top five net oil exports, and if we extrapolate Chindi'a current rate of increase in net oil imports, we get the same answer (Chindia approaching 100% of top five net oil exports around 2018).

The rate of decline for U.S. Oil imports has been roughly .7% PER MONTH for about 4 years now, and that rate will likely accelerate for a few years in the middle of the bell chart to over 1.0% per month. THIS, along with the U.S. total debt picture, is why the economy is where it is - we are are only in year 4 of a 15 year process to ZERO IMPORTS OF OIL.

Look, I really feel for the people that are having their belief systems shattered like an 8 year old told by his older brother that Santa wasn't the guy leaving the toys under the tree - it sucks to be them. I fully understand that many of these people will die out before recognizing that their belief system was a farce... That has been going on since we crawled out of the primordial soup. For the most part, these people only matter because there are SO MANY of them, not because they are individually "people of consequence" (People of consequence GOT that way by not deluding themselves for very long...). But Nature bat's last. And Nature says: "No more U.S. Oil imports within a decade or so".