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 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.
13 comments:
I agree that the time for getting on board with the new, shrinking economy reality is NOW. People best be letting go of the blame game if the latter is keeping them from making the necessary adjustments in their lives.
That said, was there anyone in particular of the writers you mentioned that seem to be spending so much time as of late, blaming the CEOs et al?
I do admit that I've pretty much limited my recent reading of that author set to you and Sharon with an occasional peek at Jimmy Kunstler's blog as I personally think I've arrived at the point in which personal action is required as opposed to more reading. At this late point, studying more essays about things such as the Export Land Model etc. (with all due respect to Jeff Brown) seems dangerously academic now.
There are many wild cards when predicting how the next 30 years will play out (China, alternative fuels, etc.) But one that I haven't seen discussed much is the baby boomers -- the 79 million U.S. people born between '46 and '64 who started turning 62 in 2008. They impacted the U.S. in the 70s when they started joining the workforce. It is logical to assume that their retirement will have an equally dominant effect.
So what do retirees need? Obviously higher social security and medical care costs. But their consumption of other stuff goes down as they age, so much so that advertisers don't even bother to try to "sell" them on new products. Their consumption of natural gas for heat goes down as many move south. They drive less (gasoline) and consume less (diesel for delivering products). And this nation is not alone. There are a dozen large countries with substantial elderly populations (Japan, Italy, etc.) who face the same thing. And without the OECD's consumption, the "Asian tigers" can't earn as much, and so their plans for "a car and an air conditioner" for everyone collapses. No exports = less energy burned = no revenue.
This is a "cross your fingers" moment. Worldwide old age may just be our savior. Reduced consumption and the corresponding reduction in energy use may just get a us thru .. maybe.
My parents and grandparents both "consume" more than my wife and I do, basically because they have the money to do so.
Although some "move south" many elderly stay where they are at--the majority certainly do no move to AZ or FL. PA for example last I heard had the 2nd biggest elderly population in the country, not sure if thats still true, but that was only a few years ago. It's certainly not warmer in PA.
A lot of the older people I know, go out to eat fairly often, a hobby basically. Although I agree with Bur that in some respects the older folks consume 'some' things in less quantities, I see my father's older yuppie neighborhood full of baby boomers who consume crazy amounts and they are quite used to this type of lifestyle.
Old age being a savior really makes no sense--IF older folks drive less, which I'm not so sure about that and consume less energy which I doubt highly as being factual (old people seem cold alot and if they can have high heating bills etc). It only takes health problems in large numbers to quickly cost millions to Medicare/medicaid and any 'savings' from them being older to be moot.
Reduced consumption will take place but it will be the working poor and middle class folks who will be reducing consumption--and this again based on our economic models adds to the snowball effect of decreased consumption--reduced macroeconomic money making--and then we have more state budgets failing, federal money decreasing.
With our economic model based on interest, economic growth, how does less consumption help out economically? Jobs are tied to all this overconsumption, we don't have a steady state economy.
Addressing reality at the individual level is all fine and dandy but if not done by the power brokers and those that truly influence policy/society, its not going to matter much, we got a TARP package when the majority of the country was against it, and if the powers that be want to provide more stimulus they will--and the people will wait around ready to complain, but do nothing beyond that, at least until--unless things get very very bad and overcomes escapism/fantasy.
Don't mistake the inability to be cavalier about the loss of health care and safety nets to translate into the belief that these things won't happen. I think they will but it is really hard for me to let go of the hope that we can slide into decline with as little pain as possible. It feels to me as though a lot of us grew up having made a deal with life. We agreed to do the right thing. We went to work every day, paid our bills, saved money and took good care of our kids. We volunteered at schools and churches and in our communities. We voted the way we thought best. We went to Viet Nam and donated blood and meant it we pledged alligiance. We expected, in return, that we wouldn't see people die from everyday illnesses. We expected not to see real hunger in our streets and we expected our children to look forward to a life. We thought that our grandkids could get jobs. We believed that TPTB would not send our children to die without a good reason. We were screwed. We all know it now but it is a real challenge to let go of optimism. I want to believe that the medicine that keeps my daughter alive will be there for her and I can't embrace a world where that will not happen as it means she will die. I write about preparedness but I would rather write kids books and poetry. This isn't who I am by nature but by necessity and I don't like it one bit.
Maybe Massachusetts will need a bailout too. This from this morning's Boston Globe's front page:
"Elizabeth Debski spent eight years as Everett’s city planner, before losing her job in 2006 when a newly elected mayor installed his own team.
"But Debski did not leave City Hall empty-handed. In addition to her pension, Debski, at 42, walked away with city-subsidized health care insurance for life. If she lives into her 80s, as actuarial charts predict, taxpayers could pay more than $1 million in all for her family’s health care benefits.
"That’s not to say Debski manipulated the system. She simply took what she was owed under a municipal health care system whose generous benefits and colossal inefficiencies are crippling cities and towns across Massachusetts."
Much more at: http://www.boston.com/news/health/articles/2010/02/28/runaway_health_costs_are_rocking_municipal_budgets/
Eight years on the job and she gets health care FOR LIFE.
If only government could be counted on to last that long.
This suits quite fine:
"The Disappearance of the Natural Gas Glut"
http://www.financialsense.com/editorials/powers/2010/0224.html
Kathy:
I feel you.
Please keep in mind that I said "health insurance" - I did not say the end of "healthcare".
From my perspective (and I am sure to get some really nasty emails and comments from the true believers when I say this), our healthcare system was doomed with the advent of Medicare in 1965, and cursed thereafter by the tort bar.
Once the healthcare industry caught a whiff of that pile of money, health insurance as we know it was born. And with the big money that came from outrageous and superfluous tests and fees that would naturally arise in an environment of ZERO checks and balances that a free market would have provided... the tort bar was sure to follow. And what a system it was for Doctors and Lawyers!
The cost of healthcare as a percentage of GDP, of disposable income, or any other measure outpaced the rate of inflation by 2x and 3x and 4x in some years. Those reading here are familiar with the "exponential function". Anything growing at a consistent rate will eventually reach infinity, for all practical purpose, and since that is not possible on our finite planet we can say with certainty what the outcome will be.
We will still have healthcare LONG after Medicare defaults (and that is a CERTAINTY)... and it will become VASTLY cheaper. What we won't have are some of the heroic efforts to extend life at ANY cost.
We will have to accept real incentives to maintain our OWN health, and we will have to accept that if we want care we will have to save and pay for it ourselves - and to negotiate the price of the care in an open and free market. This is coming irrespective of what we might want.
I sincerely hope and wish that your daughter will continue to receive the medication that maintains her.
I have described the predicament facing governments in developed countries as the Grand Prix of Debt--where various governments are racing each other to the edge of the fiscal cliff, which would be the point at which governments can't finance all of their deficit spending (at least without massive central bank monetization).
Jonathan Swift had a solution to all these difficulties as early as 1729 in his essay, A Modest Proposal.
"”I have been assured by a very knowing American of my acquaintance in London, that a young healthy child well nursed is at a year old a most delicious, nourishing, and wholesome food, whether stewed, roasted, baked, or boiled ...”
They can probably also be ground up to make biodiesel too.
Now, can we talk about organic gardening.
Cheers
We may know the World's about to change, but it's bizarre how many people just seem oblivious to the news. I'm not sure if they are ignorant of anything beyond football and beer and ready-meals, or if they're in denial.
All I know is if I ask any group of people at a lecture, students or business people, if they understand Peak Oil the general answer is a blank stare and complete ignorance.
And I still get strange looks when I say that property prices will continue to fall - hard. I still get the "but houses are always a good investment, aren't they".
Scary!
An item from Drudge follows about the continuing contraction in the MSM. It's no wonder that they don't like to talk about Peak Oil.
"REPORT: ABCNEWS plans to close all of its physical bureaus except Washington; Halve the number of its correspondents... Developing..."
Link:
http://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/02/abc-news-to-cut-half-its-domestic-correspondents-shut-down-all-bureaus-except-washington.html
Also, from Drudge, an update on the "Grand Prix of Debt Race."
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7338857/Dont-go-wobbly-on-us-now-Ben-Bernanke.html
Don't go wobbly on us now, Ben Bernanke
AMBROSE EVANS-PRITCHARD
"Barack Obama's home state of Illinois is near the point of fiscal disintegration. "The state is in utter crisis," said Representative Suzie Bassi. "We are next to bankruptcy. We have a $13bn hole in a $28bn budget." The state has been paying bills with unfunded vouchers since October. A fifth of buses have stopped. Libraries, owed $400m (£263m), are closing one day a week. Schools are owed $725m. Unable to pay teachers, they are preparing mass lay-offs. "It's a catastrophe", said the Schools Superintedent. In Alexander County, the sheriff's patrol cars have been repossessed; three-quarters of his officers are laid off; the local prison has refused to take county inmates until debts are paid.
Florida, Arizona, Michigan, New Jersey, Pennsylvania and New York are all facing crises. California has cut teachers salaries by 5pc, and imposed a 5pc levy on pension fees. The Economic Policy Institute says states face a shortfall of $156bn in fiscal 2010. Most are banned by law from running deficits, so they must retrench. Washington has provided $68bn in federal aid, but that depletes the Obama stimulus package.
This is not to pick on America. Belt-tightening is the oppressive fact of 2010-2012 for half the world."
While I live in Illinois and am concerned about being the 2nd or 3rd worst state, fiscally-speaking (CA being the worst), we aren't a communist country. 90% of the IL state budget goes to: Education (universities mostly), medical services (Medicaid), human services (often more Medicaid) and pensions. Most of this funding is tied to getting matching Federal funding.
But note the things I didn't mention ... water, sewer, electricity, supermarkets, snow plows, media, parks, transit, etc. Our lives here do NOT depend on state funding -- most of us anyway. Most of the universities and services for the disabled have been shorted of funding for years, and they are still surviving. Seen any disabled tossed on the streets? University of Illinios is still taking applications, and everyone wants to go there.
And for those who don't know half of the story: our state income tax rate is 3%, one of the lowest in the country (NY is what, 8%+?) Did you further know that government pensions and "401ks" in IL aren't taxed at all?
In this bankrupt state, my parents who live here are going to FL for a month for laughs, and a couple of my retired co-workers vacation in AZ six month out of the year.
So I guess I should ask -- let Illinois go bankrupt. For most people, it won't matter.
The burning question in my mind is what will us poor working stiffs have to pay out before balance is restored?
How many teachers, government employees etc will we have to finance through easy retirement pensions, health care etc while the rest of our infrastructure falls apart.
How many police officers, firemen, soldiers, laborers etc will be laid off so their salaries can go to fill these pension budget gaps?
How many more large A$$ed clerks from the department of what-have-you will be able to retire at 55 with full salary benefits that we pay for?
How long will the working poor pay for these things?
We could have a gradual and mostly painless reduction except these leeches on the public money won't stop sucking without a fight I think.
Post a Comment