[R-G] [BillTottenWeblog] People Get Ready

[Bill Totten]

Clusterfuck Nation

by Jim Kunstler

Comment on current events by the author of
The Long Emergency (Atlantic Monthly Press, 2005)

www.kunstler.com (December 08 2008)


In the twilight of the Bush days, in the twilight of the twilight
season, a consensus has formed that we are headed into a long, dark
passage leading we know not where. Even CNBC's Lawrence Kudlow has been
reduced to searching for stray "mustard seeds" of hope on hands and
knees in a bleak and tortured financial landscape. Half the enterprises
in the land are lined up for some kind of relief bailout and a blizzard
of pink slips has cut economic visibility to zero.

The broad American public voted for "change" but they thought that meant
a "changing of the guard". Out with the feckless Bush; in with the
charismatic Obama ... and may this American life now continue just as it
ever was. The change actually coming will be much more than they
bargained for, namely our transition from a wealthy society to a
hardship society. The sharp break is a product of our years-long failure
to reckon with the energy realities of our time. We're still confused
about that, but it's hard, otherwise, to ignore the massive
disappearance of capital, asset values, livelihoods, domiciles,
comforts, and necessities.

The price of oil is suddenly down to an astounding $40-odd per barrel.
Those of us studying the Peak Oil story have said that the "bumpy
plateau" years of peak production would be expressed in tremendous price
volatility, and for exactly the reasons now evident - that the
high-price phase would mangle advanced economies, that they would fall
back in paralysis, then respond anew to oil price collapses by
straggling up again, only to be crushed again when a resumption in
demand for oil drove the price back up.

What was not so generally anticipated was the wholesale destruction of
global finance in the first phase of this period. This has now occurred
so comprehensively that we know the banking business will never be the
same again. It has also accelerated other plot-lines in the story. One
affects the global oil industry itself: a lack of capital to go forward
with the new oil projects that were designed to mitigate the present
depletions in old oil fields. The result of this quandary is as likely
to be oil shortages in 2009 as much as an extremely sharp snap-back in
oil prices. The oil markets themselves are changing in the face of
financial disruption. Between pirates lurking off the Horn of Africa,
and a shortage in letters-of-credit that enable the shipping of anything
for delivery between nations, the allocation system is impaired. This
affects poorer nations the most, and when they don't get their oil
shipments, conditions in these nations get worse. People lose incomes.
Ethnic strife ramps up. All this will make it harder to move oil from
the places where it is produced to the importing countries.

So much artificially-generated pixel "money" is being pumped into the
system now that it will eventually overtake the quantity of capital
currently vanishing in the form of exposed securities swindles,
unwinding bad debt, and imploded worthless counter-party contracts. The
pixel money will express itself as super or hyper inflation, lagging
from six to eighteen months from the time it was actually introduced in
the form of bailouts. For the moment, money is moving into the presumed
safety of US Treasury paper. Personally, the safety of this is not
something I would presume. But in the current deflationary stage its
hard to find any other place to park cash, and when asset values are
crashing everywhere, cash is king. Gold is physically unavailable in the
form that non-millionaires usually buy it in, ounce and half-ounce coins.

President-elect Obama has announced his intention to kick off a massive
"stimulation" program when he hits the White House "running" in January.
Early indications are that it will be directed at things like highway
repair. If so, we will be investing long-term in infrastructure that we
probably won't be using the same way in ten years. But I doubt there is
any way around it. The American public can't conceive of living any
other way except in a car-centered society. Anyway, some parts of our
highway-bridge-and-tunnel system are already so decrepit that they pose
a menace right now, and the clamor to direct "stimulation" there is
already very strong - backed by all the fraternities of engineers.

Stimulus aimed at perpetuating mass motoring will be a tragic waste of
our dwindling resources. We'd be better off aiming it at fixing the
railroads (especially electrifying them), refitting our harbors with
piers and warehouses in preparation to move more stuff by boats, and in
repairing the electric grid. Unfortunately, our tendency will be to try
to rescue the totemic touchstones of everyday life, things familiar and
comfortable, regardless of whether they have a future or not.

The ominous forces gathering out there will defeat these efforts and
everyday life will reorganize itself some other way consistent with the
single greatest trend: the force of contraction. Every sign we see is
pointing in that direction, from the inability of the earth's ecology to
support more human beings, to the dwindling of mineral and energy
resources, to the destruction of farmland, to mischief in the climate.
We just don't know how badly things will fall apart in the meantime, or
how kind (or cruelly) people will act in the process.

Mr Obama would be most successful if he could persuade the public how
much more severe the required changes are than they currently realize,
and inspire them to get with program of retrofitting American life to
comply with these realities.
_____

My new novel of the post-oil future, World Made By Hand, is available at
all booksellers.

http://jameshowardkunstler.typepad.com/clusterfuck_nation/2008/12/people-get-ready.html


TO POST A COMMENT, OR TO READ COMMENTS POSTED BY OTHERS, please click
on the word "comment" highlighted at the end of the version of this
essay posted at http://billtotten.blogspot.com/