Timeline/Stages for Collapse of our Way of Life
My thoughts are you should watch the Matrix.
1 The continent was not largely devoid of human population but after the largest Holocaust in the history of the planet it certainly was.
2 On what evidence do you suppose we live in the best and freeest country in the world?
As I understand, the white settlers were awed by the divine providence provided to them in being able to take over nearly empty lands as european diseases cleared the path ahead of settlements. I expect that the land seemed very open, available and mostly free for the taking.
Leaver peoples with mostly ceremonial warfare dont seem to fare well against civilized warfare.
The U.S. cultural Meme is that we have the the best and most free society in the world. Whether it is true or not doent matter very much to the Meme. Memes beget beliefs and beliefs are hard to argue.
No argument here
On a practical note, I need to try and clarify for the Tea Partiers why “meaningful” government regulation is/was actually a good thing. Not that we will ever have that now, but proper rules and regs are required for any system that operates in the public realm. My perception is that Tea Partiers are completely anti-government which feeds right into the hands of the corporatocracy.
… The reason corporations lobby the government is to keep any meaningful regulations from being passed in the first place. It’s not as you suggest that that corporations dearly want the regulations and actively lobby for their creation. It’s that they fear honest politicians will pass regulations that will harm their profit-making, and they lobby to gut the regulations and make them meaningless. They did it with the health-care bill, they did it with financial reform. Every time there is a groundswell of support among the public for real reform and regulation of business, and there is a Congress that might pass such reform, the corporations spend millions of dollars a day to kill such reform (by weakening and watering down the legislation).
I think that since you are a libertarian, you probably oppose all government regulation of business. So you are trying to find a way to explain why government regulation of business does not work. The reason why it appears not to work in our present day is because the regulations that end up getting passed have been watered down by the corporations due to millions of dollars of lobbying money. We don’t even have real regulations of business. We have sham regulations. Both Congress and corporations are to blame. Congress because they take the money and write the regulations to benefit industry. Corporations because they work to kill any meaningful reform. If we had public financing of elections, Congress could pass meaningful regulations because they would not need the corporate money to run for re-election.
The answer is not to do away with all regulations of business. That would be worse than what we have now. The answer is to pass real regulations that protect the public interest over the interests of private corporations. I’m not holding my breath.
Your posts in general and that quotation specifically make this site worthwhile. There is much wisdom in that quotation, yet unseen by most. From the bottom of my heart thanks for the work that you do here.
Sunday, June 13, 2010Hey man did you see that
His body hit the street with such beautiful thud
I wonder what that dude was sayin
Or was he just lost in the flood
The LAT has an important story on Greece, starting off well, then unfortunately blathering into the pure propaganda of our Ponzi finance and mega-corporate elite. The story states:
Many Greeks say this generation is the first in decades that faces fewer jobs at lower pay, leading to a declining standard of living and less upward mobility than their parents enjoyed.
Even before the crisis came to a head this spring, economists estimated that about a quarter of this generation of Greeks was unemployed.
“Parents dream of their children becoming doctors or lawyers, so they made a lot of sacrifices for education,” said Paulina Lampsa, international secretary for the ruling Panhellenic Socialist Movement party. “Now they have a lot of degrees but no jobs.”
It’s a predicament that spans the continent, a quiet underside to the perception of stability and growth brought by the creation of the European Union. In Italy, unemployment among the young is comparable to that in Greece, and the figure in Spain tops 40%. Even Britain and Germany are logging significant struggles against a similar rising tide.The story then talks of protests against the IMF and the new austerity measures, but becomes complete drivel halfway through, blaming all Greece’s problems on….wait for it…the Commies — ho ho ho — sort of like the early ’90s when the Reps were still blaming all US problems on Jimmy Carter. The piece then advocates how the economic dog food now being sold to the Greeks by their financial masters is good for them, and hopefully, it will get them off their lazy Mediterranean asses.
The piece has a call for entrepreneurship, which is OK, we certainly need it, but it reminded me of Thomas Friedman’s inane piece in the NYT last week stating the same thing. Here’s the problem with a generation of “entrepreneurs”, the Western economy is more centralized than any point in history, and not by the Commies, but the corporate capitalists. In the US, when the six biggest banks and the Fortune 500 control the vast majority of the American economy, and the political process, thus codifying their control, there’s not a lot of entrepreneurial room, unless you want to go to jail.
The second problem with this notion of Generation Entrepreneur is the Western economy is not, nor does it need to grow at the rates it did in the past, the simple fact is it’s physically impossible. What a a new generation of entrepreneurs has to do is redistribute existing wealth, that is redesign our society not based on industrial growth, but on sustainable design. The easiest example of this is our energy system. In evolving from our current fossil fuel system, we’re not talking about adding to, or growing, we need to replace, which means the existing fossil fuel companies such as BP, Total, and Edison lose. Also understand, this is not simply a move from fuels but from established energy, transportation, and community practices and infrastructures, all of which have completely entrenched control of the political process.
There’s a final barrier to a Generation Entrepreneur, and by no means the least significant — debt, thus the control of the economy by our parasitical financial class. Here’s a chart that says it all(tx credit writedowns):“Morning in America” began the burying of the American economy under a mountain of debt, giving Wall Street unfettered control of the American economy, which they bled profusely for their own profit. Also take note, especially you so-called Keynesians, in the three decades preceding our three decades debt binge, the American economy grew faster with less debt. Wall Street’s financial innovations have been completely worthless for the real economy, though despicably profitable for them. We’re not going to change our economy until we release it from its debt shackles.
We’re not going to have a generation of entrepreneurs without a corresponding political economy reformation. A reformation that destroys Ponzi debt and takes power away from Wall Street, our mega-corporations, and DC. The thinking, technologies, and institutions that got us into this problem are of little use in getting us out. Instead of Generation Entrepreneur, we need Generation Citizen.
Some random items of interest:
- Global guerrilla oil disruption is heating up again (remember 2007’s $147 a barrel?). In Yemen, tribal guerrillas are blowing up pipelines. In Mexico, zetas are kidnapping Pemex workers. In Nigeria the amnesty program for MEND is proving a farce.
- The US security establishment is trying to cut a deal with Wikileaks. At risk: 260,000 secret State Department memos. Wikileaks is running an open source insurgency against nation-state and corporate security systems. It’s winning
- Local sheriff inside Arizona outgunned and outmanned by Mexican gangs. See video (more intel analysis):
Globalization creates interlocking fragility, while reducing volatility and giving the appearance of stability. In other words, it creates devastating Black Swans. We have never lived before under the threat of a global collapse. Financial institutions have been merging into a smaller number of very large banks. Almost all banks are interrelated. So the financial ecology is swelling into gigantic, incestuous, bureaucratic banks — when one fails, they all fall. The increased concentration among banks seems to have the effect of making financial crises less likely, but when they happen, they are more global in scale and hit us very hard. We have moved from a diversified ecology of small banks, with varied lending policies, to a more homogeneous framework of firms that all resemble one another. True, we now have fewer failures, but when they occur … I shiver at the thought.
Banks hire dull people and train them to be even more dull. If they look conservative, it’s only because their loans go bust on rare, very rare occasions. But … bankers are not conservative at all. They are just phenomenally skilled at self-deception by burying the possibility of a large, devastating loss under the rug.
The government-sponsored institution Fannie Mae (FNM), when I look at its risks, seems to be sitting on a barrel of dynamite, vulnerable to the slightest hiccup. But not to worry: their large staff of scientists deemed these events “unlikely.”
There is no way to gauge the effectiveness of their lending activity by observing it over a day, a week, a month, or … even a century!
[T]he real-estate collapse of the early 1990s … required a taxpayer-funded bailout of more than half a trillion dollars. The Federal Reserve bank protected them at our expense: when “conservative” bankers make proﬁts, they get the beneﬁts; when they are hurt, we pay the costs.
Once again, recall the story of banks hiding explosive risks in their portfolios. It is not a good idea to trust corporations with matters such as rare events because the performance of these executives is not observable on a short-term basis, and they will game the system by showing good performance so they can get their yearly bonus. The Achilles’ heel of capitalism is that if you make corporations compete, it is sometimes the one that is most exposed to the negative Black Swan that will appear to be the most ﬁt for survival.
As if we did not have enough problems, banks are now more vulnerable to the Black Swan and the ludic fallacy than ever before with “scientists” among their staff taking care of exposures. The giant ﬁrm J. P. Morgan (JPM) put the entire world at risk by introducing in the nineties RiskMetrics, a phony method aiming at managing people’s risks, causing the generalized use of the ludic fallacy, and bringing Dr. Johns into power in place of the skeptical Fat Tonys. (A related method called “Value-at-Risk,” which relies on the quantitative measurement of risk, has been spreading.)
Please, don’t drive a school bus blindfolded.
Owing to … a misunderstanding of the causal chains between policy and actions, we can easily trigger Black Swans, thanks to aggressive ignorance — like a child playing with a chemistry kit.
— Nassim Nicholas Taleb, The Black Swan: The Impact of the Highly Improbable
The new normal is abnormal and is bound to haunt investors for some time to come.
I am not referring to Pimco’s Mohamed El-Erian’s notion that world economic growth will be lower. I am referring to the new normal of disproportionate, high-impact, hard-to-predict rare events beyond the realm of “normal expectations in business, history, science and technology” that are occurring with startling frequency. (As Dr. Benoit Mandelbrot emphasized in his work, the distributions of systemic outcomes aren’t normal/Gaussian, but rather fat-tailed.)
Risks of black swans, previously perceived to be small by corporations, investors, politicians and regulators, are now being reassessed, owing to (among other issues) globalization, tighter correlations, advancements in technology, the growing/excessive complexities of interlocking supply chains and derivatives, the acceptance of greater/extreme risk-taking (“the longer people make money by taking risk, the more imprudent they become,” the Minsky moment), the greater connectivity of increasingly more complex systems (see Paul Ormerod and Rich Colbaugh) and so forth.
A greater and more dynamic instability is the new normal. Witness some of these historical black swan events over the past decade:
- the September 11 attack on the World Trade Center;
- financial derivatives roil the world’s banking system and financial markets;
- the failure of Lehman Brothers and the sale/liquidation of Bear Stearns;
- BP’s (BP) Gulf oil spill; and
- the market’s flash crash (a 1,000-point drop in the DJIA on May 6, 2010).
Once a year, I produce a surprise list to introduce my own mini black swans. These are investment and business events that are outliers. I call them “probable improbables.”
We can no longer turn the clock back to a simpler time. We must play the hand we are dealt.
For years, investors have been blinded to the uncertainty and unaware of the broad effect of the rare, black swan event, but we now know that these black swans (which seem to be occurring with greater regularity) are not only growth-deflating but, more importantly, are valuation-deflating.
The world is interconnected, interlinked and increasingly complex. It faces numerous structural issues (e.g., extreme fiscal imbalances at the federal, state and local levels), with governments (here and abroad) not necessarily up to the task of dealing with the complexities. Given the “newness” of these and other challenges as well as the greater frequency of black swan events, P/E multiples are being pressured and should continue to contract as a comparison between today’s valuations to those of history can be expected to lose some of its significance and relevance.
Provocation of the Day: We Should Run From Afghanistan’s Mineral Wealth
— James Risen, The New York Times (full story here)
The United States cannot help Afghanistan exploit its newly discovered mineral resources without being corrupted by proximity to the vast riches they’re likely to bring. It is especially imprudent to assign a leadership role to the Pentagon, an institution shrouded in official secrecy, largely captured by special interests inside America’s military-industrial complex, and lacking any precedent to suggest it is capable of the task.
Nor is it particularly reassuring to imagine another branch of the American government working with corrupt Afghan officials to develop a mining industry in the country, especially since profitability is years away, which itself gives the United States a perverse incentive to extend our war in that nation.
Kevin Drum sums up these fears and others:
I have a very bad feeling about this. It could quickly turn into a toxic combination of stupendous wealth, superpower conflict, oligarchs run wild, entire new levels of corruption, and a trillion new reasons for the Taliban to fight even harder. And for the cynical among us, this line from Risen’s piece — “American and Afghan officials agreed to discuss the mineral discoveries at a difficult moment in the war in Afghanistan” — suggests that the Obama administration might be eagerly thinking about these discoveries as a shiny new reason to keep a military presence in Afghanistan forever. I can hardly wait to see what Bill Kristol thinks of this.
On the other hand, maybe it represents lots of new jobs, enough money to suck away the Taliban’s foot soldiers, and the stable income base Afghanistan needs to develop a modern infrastructure. I doubt it, but you never know.
Here’s an idea: rather than asking Americans to trod across this minefield in hopes of getting some of the treasure on the other side, let’s take a lesson from history, fully appreciate all the buried danger, and ask ourselves how we can best withdraw ourselves from the situation, sending someone else across the minefield in our stead. The United Nations? The World Bank? The China Mineral Corporation? Whoever it is, better that they suffer the consequences of this find than that we do.
Ironically it was, once again, the New York Times bearing the glad tidings that dusty old, worthless Afghanistan, riddled with graft, corruption and drugs, with a crackpot hoodlum at the helm is sitting on a gold mine (literally) and has been elevated, overnight to international “player” and coveted prize.
This revelation was timely, to say the least, since the increasingly shrill criticism of US efforts, both at home and abroad, has been that it is decidedly not worth it and that the Afghans are decades, if not centuries, away from being able to manage their own affairs – one of our ostensible objectives. Just when all was looking inescapably grim, the discovery of untold, untapped mineral wealth provided Afghanistan with a ticket to the 21st century – and a reason for the Pentagon to hang tough.
James Risen started his article for the Times with this breathless lead-in lest anyone miss the enormity (or the point) of his earth-shattering news:
“The United States has discovered nearly $1 trillion in untapped mineral deposits in Afghanistan, far beyond any previously known reserves and enough to fundamentally alter the Afghan economy and perhaps the Afghan war itself, according to senior American government officials.”
“The previously unknown deposits — including huge veins of iron, copper, cobalt, gold and critical industrial metals like lithium — are so big and include so many minerals that are essential to modern industry that Afghanistan could eventually be transformed into one of the most important mining centers in the world, the United States officials believe.”
One can almost hear cries of “Stop the Presses!” and Extra! Extra! Read all about it . . . except that some of it is “inaccurate if not downright fallacious. The United States did not “discover” the deposits — the Russians did; the $1 trillion dollar number is an educated guess, at best; and these are undeveloped resources in an undeveloped country so any actuaql impact on the Afghan economy probably won’t occur in our lifetime.
Blake Hounshell, of Foreign Policy, did some heavy-lifting to put the Pentagon’s Eureka! into perspective by plowing through the actual geological reports that provided source material for the Times article. According to Hounshell:
“The story goes on to outline Afghanistan’s apparently vast underground resources, which include large copper and iron reserves as well as hitherto undiscovered reserves of lithium and other rare minerals.”
“Read a little more carefully, though, and you realize that there’s less to this scoop than meets the eye. For one thing, the findings on which the story was based are online and have been since 2007, courtesy of the U.S. Geological Survey. More information is available on the Afghan mining ministry’s website, including areport by the British Geological Survey (and there’s more here). You can also take a look at the USGS’s documentation of the airborne part of the survey here, including the full set of aerial photographs.”
“Nowhere have I found that $1 trillion figure mentioned, which Risen suggests was generated by a Pentagon task force seeking to help the Afghan government develop its resources (looking at the chartaccompanying the article, though, it appears to be a straightforward tabulation of the total reserve figures for each mineral times current the current market price). According to Risen, that task force has begun prepping the mining ministry to start soliciting bids for mineral rights in the fall.”
As it turns out the original, original surveys were conducted by Russian occupation forces who obviously decided that neither the minerals nor Afghanistan were worth it, because they left the surveys with the Afghans who, distracted by other things, have been sitting on them for decades. Evidently, some Afghan under-secretary-of-something-or-other thought the Americans might take the bait and sure enough, the Americans came with their high-tech geological gizmos that measure the mineral veins and – if we are to believe Risen—spit out an appraisal real-time. Evidently the topic came up during Karzai’s most recent face-to-face with Sec. of State Hillary Clinton, in May; when Karzai delivered his own back-of-the-envelope valuation of the Afghan mineral deposits claiming that the value is more like $3 trillion. Whatever . . .
Risen admits that it could take years to develop a mining industry, but he also guesses that the potential is so great that officials and executives in the industry believe it could attract heavy investment even before mines are profitable, providing the possibility of jobs that could distract from generations of war.
Continuing on in the “Happy Days Are Here Again” vein, none other than Gen. David Petraeus weighed in with this:
“There is stunning potential here. There are a lot of ifs, of course, but I think potentially it is hugely significant.”
Risen goes on to speculate that:
“The value of the newly discovered mineral deposits dwarfs the size of Afghanistan’s existing war-bedraggled economy, which is based largely on opium production and narcotics trafficking as well as aid from the United States and other industrialized countries. Afghanistan’s gross domestic product is only about $12 billion.”
And cites Jalil Jumriany, an adviser to the Afghan minister of mines as stating that:
“This will become the backbone of the Afghan economy.”
The Pep Rally continues with similar comments like:
“The handful of American geologists who pored over the new data said the results were astonishing.”
And we all know how hard it is to “astonish” American geologists . . .
The Pentagon (probably with Human Terrain reports in hand) evidently leaked an internal memo to Risen that asserts that:
“ . . . Afghanistan could become ‘the ‘Saudi Arabia of lithium,’ a key raw material in the manufacture of batteries for laptops and Blackberries.”
Way to get those social media types on board . . .
Eventually, though, Risen has to get to the real point and the poor man can’t be over-subtle given the Empire’s low opinion of the average taxpayer’s mental acuity, so here’s the red meat:
“American and Afghan officials agreed to discuss the mineral discoveries at a difficult moment in the war in Afghanistan. The American-led offensive in Marja in southern Afghanistan has achieved only limited gains. Meanwhile, charges of corruption and favoritism continue to plague the Karzai government, and Mr. Karzai seems increasingly embittered toward the White House.”
“So the Obama administration is hungry for some positive news to come out of Afghanistan. Yet the American officials also recognize that the mineral discoveries will almost certainly have a double-edged impact.”
“Instead of bringing peace, the newfound mineral wealth could lead the Taliban to battle even more fiercely to regain control of the country.”
“Endless fights could erupt between the central government in Kabul and provincial and tribal leaders in mineral-rich districts.”
And who better to sort out such “endless fights” and safeguard the infant Afghan democracy? And who’s already on the job? Well, it might take a long time but, by golly, we have to keep this treasure chest out of the hands of the Taliban – or we’re toast.
And if that isn’t compelling enough for you, there’s more, the really, REALLYscary part:
“American officials fear resource-hungry China will try to dominate the development of Afghanistan’s mineral wealth, which could upset the United States, given its heavy investment in the region. After winning the bid for its Aynak copper mine in Logar Province, China clearly wants more, American officials said.”
There’s even something for the “Greenies:
“Another complication is that because Afghanistan has never had much heavy industry before, it has little or no history of environmental protection either. The big question is, ‘can this be developed in a responsible way, in a way that is environmentally and socially responsible?’”
That’s rich . . .
* * *
Despite the “Breaking News” feel to all of this, there is a background story that is somewhat less sensational. In January, 2010 the Wall Street Journal carried a somewhat different story on the Afghan Gold Rush from Matthew Rosenberg of their London bureau:
“Afghanistan plans to delay awarding concessions for a major iron ore deposit and sizeable oil and gas reserves as part of a broader effort to stamp out corruption, the country’s finance minister said.”
“Of particular concern, said Finance Minister Omar Zakhilwal in an interview Tuesday, is a major iron ore deposit in central Afghanistan that last year attracted bids from smaller Chinese and Indian companies. “We’ve put a hold onto the bidding process; it will have to be re-bid,” he said.”
“Putting the Afghan economy in order is one of the major issues to be addressed at a conference Thursday in London on Afghanistan’s future. Foreign ministers from 56 countries along with representatives from the United Nations and other international organizations involved in stabilizing Afghanistan are to attend, and European diplomats have in recent days said they are keen to hear Mr. Zakhilwal’s economic plans for the coming years.”
“Mining could be a major economic contributor. But the Mines Ministry has long been considered among Afghanistan’s most corrupt government departments, and Western officials have repeatedly expressed reservations about the Afghan government awarding concessions for the country’s major mineral deposits, fearful that corrupt officials would hand contracts to bidders who pay the biggest bribes — not who are best suited to actually do the work.”
“Mr. Zakhilwal said those concerns are shared by many inside the Afghan government, too. ‘I was among those who have been opposed to opening up new bids,’ he said. ‘It was not just the issue of corruption – but that is a real issue. We also need to do a review of how contracts are awarded, what lessons we’ve learned, what kind of transparency is needed to make the next best step.’”
“Still, he said there was no evidence of corruption in the awarding of the one major concession given out in recent years, a copper mine being set up by two Chinese firms, China Metallurgical Group andJiangxi Copper Group.”
“That project attracted bids from all over the world, and there have been persistent reports of bribes being paid to secure it. Mr. Zakhilwal termed those reports “rumors” and held up the deal – under which the companies agreed to build schools, clinics, markets, mosques and a power plant — as a model for how Afghanistan could award future concessions.”
Memo to Pentagon: it would appear that the Afghans think that they are in charge of the Mother Lode. It would also appear that the Chinese are actively buying up development rights in Afghanistan and, so far, no mushroom clouds. So, if you want to stay in Afghanistan forever that’s your business, just find somebody else to pay for it.
Almost without even knowing it, each of us has come to rely on a globalized industrial system for our daily survival – think of the origins of all your food, energy, water, transportation, shelter, clothes – how many of these elements in your life did you directly contribute your efforts towards producing? How much of this required oil to produce, manufacture and ship?
What few of us have realized as we went along, is that our entire economic, food, transportation, and life-supporting systems are built upon the availability of very low-cost energy inputs. We’ve pretty much always paid under 3 bucks for a gallon of gas (think less than a quart of milk), and we’ve launched ourselves and a host of labor saving devices down the superhighway.
We have grown accustomed to this over the last few decades. America now consumes approx. 20 million barrels of liquid fuel per day, and uses more than a quarter of the worlds fossil fuels to maintain our lifestyle – that’s 840,000,000 gallons per day. Just for the USA! Together the world uses over 86 million barrels of oil per day (times that number by 42 gallons per barrel and see our daily usage of this stuff to drive this enormous machine we depend upon for everything from macaroni and cheese to christmas ornaments). Global demand for oil is projected to rise to 118 million barrels per day within 5 years – this increased demand, driven mostly by a high-demand for personal-use vehicles and food production in developing countries, is predicted to outpace supply in 2015, unless there is major economic stagnation.
The concept of peak oil is not that the world is running out of oil tomorrow…what peak oil is saying is, as the rest of the world comes online (think powering cars and electric turbines, heating homes, factory farms for food, fresh water pumping, waste processing, electricity for internet server cities), the spikes and energy supply deficits begin to create price feedback in the marketplace. Costs go up. Add to this the associated costs necessary to get at the remaining energy reserves and to keep up with demand (think the costs of long-term wars, deepwater drilling, coal mine disasters, insurance costs, municipal bonds and financial investment instruments, government regulations, the energy grid and infrastructure for delivery), the inevitable shocks to the system will cause the energy markets to fluxuate and rise (think oil, coal for electric, gas for heating) .
These costs flow through the entire economy, and costs of all goods and services rise, because our products and food production has been outsourced globally by a handfull multinational companies (think 1 company growing and shipping strawberries from mexico, blueberries in chile, apples from new zealand, sugar in the phillipines, rice from vietnam, wheat from africa, chickens from china). Control over vast systems requires centralized consolidation of power, so in many cases, entire nations are growing a specific variety of a crop for a global marketplace. For these food products, there are 5 major food processors (think of all the chicken, beef, pigs, grains for bread, corn, soy products, sugar) who process these materials globally – this means that even if you have a slice of bread from vons and a slice of pizza from dominos, it’s likely that one company, cargill, grew and processed the flour used in both of those products – this is the essence of globalization and consolidation of wealth. There are 3 major players that provide seed for the majority of the worlds food (think monsanto & dupont which dominate over 60% of the worlds seed sales).
As costs rise and investment or development falters in these highly complex global systems, the inevitable breakdown and collapse result, because the current scale cannot be maintained with the economic strains on the system (think trillion dollar bailouts, mergers, corporate failures and bankruptcies). The result is the system for processing and transportation of our basic needs breaks down – maybe not overnight, but slowly, piece by piece. The deepwater rig is an example of the cascading effect of any one of these complex issues. A breakdown in any area of any of these systems can result in temporary or permanent supply issues along any part of the process.
These systems, where the entire vertical aspect of production and delivery are consolidated to benefit the wealthy few, are highly unstable.
There is a point at which costs rise and the industrial society that we built on cheap fuel ceases to be profitable at this scale (think about the expense of operations and logistics optimized and scaled globally to function profitably and “efficiency” – think entire industries – airlines, automobiles, imports, food production, real estate, transportation). So peak oil is as much an economic issue as it is about energy supplies. The two are inextricably bound together. This is why peak oil is important – the real issues happen long before the oil supply has been depleted – the mere disruption of the energy supply is enough to cause major stresses on the system, which can impact other areas in unknown and unforeseeable ways.
Solving these complex problems requires a systems level of thinking that most of us have not had the pattern language pointed out to us – the marketplace needs you to be a consumer in order to get the best return on the trillions of dollars invested in these industrial systems (think highways, gas stations, refineries, global shipping, the energy grid, fresh water systems, advertising, neighborhoods, shopping malls, waste processing, airports, etc).
All of these global systems are strained and in decline (think current global debt defaults and fiat currency collapse as well as the technical limitations and costs of energy extraction due to resource depletion). Because of the interconnectedness of the globalized system, the relocalization of all things necessary to sustain life and maintain our communities needs to happen. Most important of these is the relocalization of food production so that as much food as possible comes from within the shortest possible distance.
This is what is known as the new food economy – people connecting with people locally and investing a percentage of your money and time towards the production of essential elements for living. As the breakdown of these huge global systems progress, all other essential life-sustaining needs will have to be met close to home because there will not be enough energy at the right price to either grow crops using the current scale and methods, or to produce other critical goods and transport them across great distances. Currently, ten calories of hydrocarbon energy are required to grow every calorie of food consumed in the industrialized world. The writing is on the walls…
The only way to mitigate the effects of these key issues facing humanity is through permaculture and petro-chemical-free agriculture and in developing the skill sets needed to support local communities (think neighborhood gardens, microbanks, csa’s, farmers markets, healing centers, local transportation). This must be undertaken by neighborhoods and communities rather than increasingly ineffective and dysfunctional national and regional governments. This is the call of our entire generation.
The twentieth century has seen a rapid twenty-fold increase in the use of fossil fuels. The deepwater horizon incident helps us to recognize these truths, and to see the real evidence of breakdown at many different levels in the larger global economic and political systems. We must open our eyes and see exactly what is happening – the easily picked energy fruit is gone, and we are left pushing the edges of human technology and scale as we reach further and further to maintain this lifestyle based on waste and greed. The vast complexity and scale of the deepwater horizon drilling operation is no different from the complexity of our global food systems and it’s dependence on toxic pesticides and genetically-modified seeds. The deepwater disaster is a window into how quickly these types of complex systems can breakdown, and just how essential it is to create and support local alternatives…..
The utter failure of our current systems, whether energy and food production, finance, healthcare, or the war machine, creates a stench that permeates our lives in every corner. Our quality of life is threatened at every turn, whether it’s trying to keep oneself employed, keep a home that’s lost substantial value, keep healthcare while being ripped off, or seeing the death, destruction and waste from U.S. incursions in Iraq, Afganistan and wherever else “our leaders” choose to attack. Our planet is ruled by money, and its concentration among a handful of elites has left the rest of us impoverished.
This is not a new phenomenon. Historically there has always been a large class of paupers. The ‘great experiment’ of the United States did create a middle class, unprecedented in its size and scope from previous cultures. As Howard Zinn described, this middle class became ‘the guards’, protecting the wealthy elites from the rebellions of the impoverished and working poor. What’s changed recently is that this very middle class is now threatened by the rampant greed of the elite class.
The decisions of those with and in power have neglected the communities and environments they exist within for too long. The brutal disregard for the common good is evidenced by just about every global corporation, especially if they’re directly involved with energy, food, money, healthcare, media or war.
The dramatic case-in-point right now is oil gushing out of a 21″ hole in the ocean floor 50 miles from New Orleans. The absolute greed of BP was such that it blinded them from using procedures that could have easily prevented this disaster and protected the company’s fortunes, now at risk as their stock value plummets. But the damage is [being] done, and we’ll be dealing with it for a generation, at the least. And our Earth is now the poorer for all the richness of the gulf ecosystem that is lost.
But is this unmitigated disaster unique? Can we look at our world and say, like Kentucky Senatorial Candidate Rand Paul, “accidents happen” as though that’s the end of the story? Pick a problem area – global warming, violence and terrorism, crime, starvation, frankenfoods, community decline, etc. Pick a continent – deforestation, pollution, habitat loss, species extinction, soil depletion, unbridled corporate growth, etc. Pick a people – Asians, Indonisians, Europeans, Africans, Native, African and Euro Americans, etc – we’re all under duress.
Our world has been dominated by Industrial Capitalism for over two hundred years. As Industrialism has morphed into globalism, it’s flaws and failures have become similarly scaled. Government, the supposed bastion of defense against the worst excesses of corporations, is instead a bribed and willing accomplice to such bloated industry. Do not Haliburton, General Dynamics and the company formerly known as Blackwater whisper policy requests to the U.S. Government? Do they not demand more drones, more guns, more killing to keep themselves in luxury? Is there any other reason we go to war when police action would be far more effective in fighting the current straw man, ‘terrorists’? Blatant greed with utter disregard for citizens and ecologies is their operating system. There is no other explanation for the state of our world today.
These are long-standing institutions and their attitudes, policies and behaviors will not be willingly changed. Notwithstanding, the elitists, their culture and their methodology are quickly becoming dinosaurs, not yet aware of the sea change going on in our culture.
The Walmarts, the ExxonMobils, the General Electrics, the Haliburtons – they and their ilk must change or die. BP has created the tipping point with the horrific decision-making that led to the gulf gusher, and the equally horrific decisions in responding to this gusher. This situation will not blow over like so many ‘accidents’ in the past. This is too big, too many lives are effected, and the damage to the gulf ecosystem is too enormous. Unless BP does a quick 180degree turn away from their attitude and approach so far, they will bankrupt.
…Unless we begin quickly to a move away from fossil fuel dependence to a different energy regime and a radical lifestyle and societal change, the transition to a post-petroleum world could be devastating for Americans and people throughout the world. Food, the basis of all life, will be at the forefront of this upheaval.
….The increase in globalized food production, which has come at the expense of local production, is possible only for as long as cheap energy supplies can subsidize the transportation of goods across long distances.
In 2002, the U.S. food system consumed 17 percent of the country’s total fossil fuel use (Eshel & Martin 2). The availability of seemingly unending fossil fuel resources has led to the highly unsustainable situation whereby “the U.S. food system consumes ten times more energy than it produces in food energy” (Pfeiffer 4). Much of the food system’s heavy dependence on fossil fuels stems from the capitalist structure under which it operates. United States government policies have also encouraged the expansion of large corporate farms and farm specialization by subsidizing over production and the export of goods to international markets. Although large specialized farm owners benefit from economies of scale, they must in turn increase their use of synthetic chemical inputs and petroleum fueled farm machinery, creating a serious dependence on fossil fuels. The use of synthetic fertilizers accounts for 20 percent of energy use on American farms (Brown 34), and annually one billion pounds of pesticides are applied to farms across the nation (Pimentel 463). The dramatic increase in urbanization over the past century, coupled with a move away from mixed farming systems in favor of concentrated animal feeding operations (CAFOs) has deprived farms of natural sources of fertilizer and resulted in the massive expansion of commercial fertilizer use (Pimentel 464). The capitalist system encourages the food system’s unhealthy reliance on fossil fuels because as long as oil is cheap and plentiful, large profits can be made by ensuring the system remains unsustainable.
Farming itself is the least profitable and least energy intensive segment of the entire economy of agriculture. Of the roughly 2,000 liters of oil required per year to feed each American (Pimentel 459), only one-fifth of that energy is actually used for agriculture, with the rest going toward transport, processing, packaging, marketing, and food preparation and storage (Brown 35). The transformation of farm products into consumer commodities, along with the provision of farm inputs, are the biggest moneymakers in the American food system, and not surprisingly, the sectors dominated by large agrifood corporations. Farmers operating under the capitalist system must sell their products on the open market, which usually means selling to the large transnational corporations that dominate the market. Similarly, there are a handful of large companies that produce the fossil fuel-dependent farm inputs purchased by American farmers. Today, farming only accounts for 10 percent of the total food dollar, while 25 percent pays for farm inputs and 65 percent for transportation, processing and marketing (Lewontin 95). A century ago, the value added by farming was closer to 40 percent of the food dollar and most farm inputs were produced by the farmers themselves by using draft animal power, storing seeds, and using animal manure for fertilizer (Lewontin 95).
The dramatic rise in monocultures and the increasingly globalized scale of agricultural production have essentially destroyed the localized food infrastructure in the United States. For example, in 1870 almost all the apples consumed in Iowa were produced locally, but a little over a century later that number had dropped to 15 percent (Pfeiffer 25). In the United States today, less than five percent of food is locally produced (Pfeiffer 68), and so our food travels an average of 1,500 miles before being consumed (Pimentel 467). The transportation of food from farm gate to dinner plate constitutes 14 percent of the energy used in the entire food system (Brown 35). Transporting a head of lettuce from California to New York City by refrigerated truck requires 4,140 kcal of fuel per head of lettuce, while actually growing the head of lettuce consumes only 750 kcal of fossil energy (Pimentel 467-8). Given that 90 percent of global transportation is fueled by oil or oil by-products (Heinberg 4), declining oil supplies will most likely impede the transportation of produce internationally, and even across the United States. Fresh produce imports from the Southern Hemisphere will likely be one of the first casualties of rising fuel prices. Ultimately, higher transportation costs will be reflected in the price of goods, placing many of the items we enjoy today out of the reach of a majority of people. On the surface, the United States might appear to be food secure, but a cutoff in transportation would lead to serious local shortages of food and other goods.
Although the knowledge needed to transition to localized, sustainable agriculture exists, the current structure of power relations and resource control in the United States prevents the widespread move away from fossil fuel based agriculture. Those in positions of power within the United States government and in agribusiness have no interest in altering a system from which they greatly benefit. Without a change in the status quo, however, small local and sustainable producers will have a difficult time competing against the fossil fuel subsidized overproduction of agribusiness which finds its way into our grocery stores.
…The fact of the matter is that the present agricultural system cannot be maintained for much longer. Decreasing oil production and rising oil prices will effectively bankrupt the American agri-food system. Without petroleum and all of its benefits, there will be little choice but to revert to a system of local, organic production and consumption.
The Geopolitics of Hoarding: Biofuels and Resource Scarcity
Posted by Mackinnon Lawrence on 6/08/10
In an era of increasing food, energy, land, and water insecurity, nations are increasingly turning to hoarding. Sitting at the nexus of all four, biofuels are playing a complex role in geopolitics.
Biofuels — whether grown domestically or abroad — sit at the nexus of not only food and energy, but also land and water. As all four become more scarce, developed and developing nations alike are hoarding more and more.
Combined with hoarding, biofuels can hasten land, water, and food scarcity, but the situation is far more complex than the current debate over issues like indirect land use change suggest.
Writing for the UK’s Financial Times in February 2010, Gedeon Rachman described the UK’s increasing reliance on securing food as well as energy security as, “No mere national eccentricity.”
On the contrary, he writes:
[T]he fact that even the free-trading British are worrying about food and energy supplies is indicative of a much broader global trend. Across the world, the major powers are moving to secure access to energy, food and, in some cases, water. Faith in a trade-based system of globalisation – in which nations can always buy what they need on the open, world markets – is giving ground to an effort by individual nations to secure supplies. Like survivalists, hoarding tinned food in the basement, individual nations are preparing for the worst.
The evidence is in the pudding. Increasing oil prices and fears over peak oil are driving a global push for renewable energy. Take China as an example, which is sending state-owned oil companies abroad where they are engaging in ferocious bidding wars with western energy companies as they go after access to the same oil and gas fields, particularly in Africa. Middle Eastern investors, in particular the Saudis and the Gulf Arabs, have been leasing huge tracts of land in East Africa, in an effort to grow food that is reserved for their own nations. In the US, domestic ethanol production has led to disruptions in the global food markets. In Europe, supporters of the protectionist Common Agricultural Policy are freshly emboldened.
The new global paranoia over food and energy security is driven by four factors, explains Rachman:
- The environment
These factors are not going away, and in fact, are likely to become increasingly acute over time as the world’s resources become increasingly scarce.