http://www.globalresearch.ca/freedom-where-are-you-the-fed-and-the-ecb-have-taken-the-west-back-to-the-days-when-a-handful-of-aristocrats-owned-everything/5427052
Freedom, Where Are You? “The Fed and the ECB have taken the West back to the Days when a Handful of Aristocrats owned Everything”
Not in America or Europe
When the former Goldman Sachs executive who runs the European Central Bank (ECB) announced that he was going to print 720 billion euros annually with which to purchase bad debts from the politically connected big banks, the euro sank and the stock market and Swiss france shot up. As in the US, quantitative easing (QE) serves to enrich the already rich. It has no other purpose.
The well-heeled financial institutions that bought up the troubled sovereign debt of Greece, Italy, Portugal, and Spain at low prices will now sell the bonds to the ECB for high prices. And despite depression level unemployment in most of Europe and austerity imposed on citizens, the stock market rose in anticipation that much of the 60 billion new euros that will be created each month will find its way into equity prices. Liquidity fuels the stock market.
Where else can the money to go? Some will go into Swiss francs and some into gold while gold is still available, but for the most part the ECB is running the printing press in order to boost the wealth of the stock-owning One Percent. The Federal Reserve and the ECB have taken the West back to the days when a handful of aristocrats owned everything.
The stock markets are bubbles blown by central bank money creation. On the basis of traditional reasoning there is no sound reason to be in equities, and sound investors have avoided them.
But there is no return anywhere else, and as the central banks are run by the rich for the rich, sound reasoning has proved to be a mistake for the past six years. This shows that corruption can prevail for an indeterminable period over fundamentals.
As I demonstrated, conclusively, in my book, The Failure of Laissez Faire Capitalism, first Goldman Sachs deceived lenders into over-lending to the Greek government. Then Goldman Sachs former executives took over Greece’s financial affairs and forced austerity upon the population in order to prevent losses to the foreign lenders.
This established a new principle in Europe, one that the IMF has relentlessly applied to Latin American and Third World debtors. The principle is that when foreign lenders make mistakes and over-lend to foreign governments, loading them up with debt, the bankers’ mistakes are rectified by robbing the poor populations. Pensions, social services, and public employment are cut, valuable resources are sold off to foreigners for pennies on the dollar, and the government is forced to support US foreign policy. John Perkins’ Confessions of an Economic Hit Man describes the process perfectly. If you haven’t read Perkins book, you have little idea how corrupt and vicious the United States is. Indeed, Perkins shows that over-lending is intentional in order to set up the country for looting.
This is what Goldman Sachs did to Greece, intentionally or unintentionally.
It took the Greeks a long time to realize it. Apparently, 36.5 percent of the population was awoken by rising poverty, unemployment, and suicide rates. That figure, a little over one-third of the vote, was enough to put Syriza in power in the just concluded Greek election, throwing out the corrupt New Democracy party that has consistently sold out the Greek people to the foreign banks. Nevertheless, 27.7 percent of the Greeks, if the vote reporting is correct, voted for the party that has sacrificed the Greek people to the banksters. Even in Greece, a country accustomed to outpourings of people into the streets, a significant percentage of the population is sufficiently brainwashed to vote against their own interests.
Can Syriza do anything? It remains to be seen, but probably not. If the political party had received 55% or 65% or 75% of the vote, yes. But the largest vote at 36.5% does not show a unified country aware of its plight and its looting at the hands of rich banksters. The vote shows that a significant percentage of the Greek population supports foreign looting of Greece.
Moreover, Syriza is up against the heavies: the German and Netherlands banks who hold Greece’s loans and the governments that back the banks, the European Union which is using the sovereign debt crisis to destroy the sovereignty of the individual countries that comprise the European Union, Washington which backs EU sovereign power over the individual countries as it is easier to control one government than a couple of dozen.
Already the Western financial presstitutes are warning Syriza not to endanger its membership in the common currency by diverting from the austerity model imposed from abroad on Greek citizens with the complicity of New Democracy.
Apparently, there is a lack of formal means of exiting the EU and the euro, but nevertheless Greece can be threatened with being thrown out. Greece should welcome being thrown out.
Exiting the EU and the euro is the best thing that can happen to Greece. A country without its own currency is not a sovereign country. It is a vassal state of another power. A country without its own currency cannot finance its own needs. Although the UK is a member of the EU, the UK kept its own currency and is not subject to control by the ECB. A country without its own money is powerless. It is a non-entity.
If the US did not have its own dollar, the US would be of no consequence whatsoever on the world scene.
The EU and the euro were deception and trickery. Countries lost their sovereignty. So much for Western “self-rule,” “freedom,” “democracy,” all slogans without content. In the entire West there is nothing but the looting of people by the One Percent who control the governments.
In America, the looting does not rely on indebtedness, because the US dollar is the reserve currency and the US can print all the money needed in order to pay its bills and redeem its debt. In America the looting of labor has been through jobs offshoring.
American corporations discovered, and if they did not they were informed by Wall Street to move offshore or be taken over, that they could raise profits by moving their manufacturing operations abroad. The lower labor cost resulted in higher profits, higher share prices, huge managerial bonuses based on “performance,” and shareholder capital gains. Offshoring greatly increased the inequality in income and wealth in the US. Capital succeeded in looting labor.
The displaced well-paid manufacturing workers, if they were able to find replacement jobs, worked part-time minimum wage jobs at Walmart and Home Depot.
Economists, if they are entitled to the designation, such as Michael Porter and Matthew Slaughter, promised Americans that the fictional “New Economy” would produce better, higher-paying, and cleaner jobs for Americans than the “dirty fingernail” jobs that we were fortunate our corporations were moving offshore.
Years later, as I have proven conclusively, there is no sign of these “New Economy” jobs. What we have instead is a sharp decline in the labor force participation rate as the unemployed cannot find jobs. The replacement jobs for the manufacturing jobs are mainly part-time domestic service jobs.
People have to hold 2 or 3 of these jobs to make ends meet.
Now that this fact, once controversial believe it or not, has proven completely true, the same bought-and-paid-for spokespersons for robbing labor and destroying unions claim, without a shred of evidence, that the offshored jobs are coming home.
According to these propagandists, we now have what is called “reshoring.”
A “reshoring” propagandist claims that the growth of “reshoring” over the past four years is 1,775 percent, an 18 times increase. http://www.manufacturingnews.com/news/2015/A.T.Kearny-No-Data-Supporting-Reshoring-0112151.html
There is no sign whatsoever of these alleged “reshoring” jobs in the monthly BLS payroll jobs statistics.
What reshoring is all about is propaganda to counteract the belated realization that “free trade” agreements and job offshoring were not beneficial to the American economy or its work force, but were beneficial only to the super-rich.
Like people throughout history, the American people are being turned into serfs and slaves because the fools believe the lies that are fed to them. They sit in front of Fox News, CNN, and whatever. They read the New York Times. If you want to learn how badly Americans have been served by the so-called media, read Howard Zinn’s A People’s History of the United States and Oliver Stone and Peter Kuznick’s The Untold History of the United States.
The media helps the government, and the private interests that profit from their control of government, control the brainwashed public. We have to invade Afghanistan because a faction there fighting for political control of the country is protecting Osama bin Laden, whom the US accuses without any proof of embarrassing the mighty US with the 9/11 attack. We have to invade Iraq because Saddam has “weapons of mass destruction” that he surely has despite the reports to the contrary by the weapons inspectors. We have to overthrow Gaddafi because of a slate of lies that have best been forgotten. We have to overthrow Assad because he used chemical weapons even though all evidence is to the contrary. Russia is responsible for Ukraine problems, not because the US overthrew the elected democratic government but because Russia accepted a 97.6% vote of Crimeans to rejoin Russia where the province had resided for hundreds of years before a Ukrainian Soviet leader, Khrushchev, stuck Crimea into Ukraine, at the time a part of the Soviet Union along with Russia.
War, War, War, that is all Washington wants. It enriches the military/security complex, the largest component of the US GNP and the largest contributor, along with Wall Street and the Israel Lobby, to US political campaigns.
Anyone or any organization that offers truth to the lies is demonized. Last week the new chief of the US Broadcasting Board of Governors, Andrew Lack, listed the Russian TV Internet service Russia Today as the equivalent of Boko Haram and the Islamic State terrorist groups. This absurd accusation is a prelude to closing down RT in the US just as Washington’s puppet UK government closed down Iran’s Press TV.
In other words, Anglo-Americans are not permitted any different news than what is served to them by “their” governments.
That is the state of “freedom” in the West today.
Tuesday, January 27, 2015
SC126-1
http://www.globalresearch.ca/russia-in-the-cross-hairs-washingtons-threats-have-moved-into-the-realm-of-insanity/5427575
Russia In The Cross Hairs. Washington’s Threats have moved Into the Realm of Insanity
The New Chief of the US Broadcasting Board of Governors, Andrew Lack, has declared the Russian news service, RT, which broadcasts in multiple languages, to be a terrorist organization equivalent to Boko Haram and the Islamic State, and Standard and Poor’s just downgraded Russia’s credit rating to junk status.
Today RT International interviewed me about these insane developments.
In prior days when America was still a sane country, Lack’s charge would have led to him being laughed out of office. He would have had to resign and disappear from public life. Today in the make-believe world that Western propaganda has created, Lack’s statement is taken seriously. Yet another terrorist threat has been identified–RT. (Although both Boko Haram and the Islamic State employ terror, strictly speaking they are political organizations seeking to rule, not terror organizations, but this distinction would be over Lack’s head. Yes, I know. There is a good joke that could be made here about what Lack lacks. Appropriately named and all that.)
Nevertheless, whatever Lack might lack, I doubt he believes his nonsensical statement that RT is a terrorist organization. So what is his game?
The answer is that the Western presstitute media by becoming Ministries of Propaganda for Washington, have created large markets for RT, Press TV, and Al Jazeera. As more and more of the peoples of the world turn to these more honest news sources, Washington’s ability to fabricate self-serving explanations has declined.
RT in particular has a large Western audience. The contrast between RT’s truthful reporting and the lies spewed by US media is undermining Washington’s control of the explanation. This is no longer acceptable.
Lark has sent a message to RT. The message is: pull in your horns; stop reporting differently from our line; stop contesting the facts as Washington states them and the presstitutes report them; get on board or else.
In other words, the “free speech” that Washington and its EU, Canadian, and Australian puppet states tout means: free speech for Washington’s propaganda and lies, but not for any truth. Truth is terrorism, because truth is the major threat to Washington.
Washington would prefer to avoid the embarrassment of actually shutting down RT as its UK vassal did to Press TV. Washington simply wants to shut up RT. Lark’s message to RT is: self-censure.
In my opinion, RT already understates in its coverage and reporting as does Al Jazeera. Both news organizations understand that they cannot be too forthright, at least not too often or on too many occasions.
I have often wondered why the Russian government allows 20 percent of the Russian media to function as Washington’s fifth column inside Russia. I suspect the reason is that by tolerating Washington’s blatant propaganda inside Russia, the Russian government hopes that some factual news can be reported in the US via RT and other Russian news organizations.
These hopes, like other Russian hopes about the West, are likely to be disappointed in the end. If RT is closed down or assimilated into the Western presstitute media, nothing will be said about it, but if the Russian government closes down Washington’s agents, blatant liars all, in the Russian media, we will hear forever about the evil Russians suppressing “free speech.” Remember, the only allowable “free speech” is Washington’s propaganda.
Only time will tell whether RT decides to be closed down for telling the truth or whether it adds its voice to Washington’s propaganda.
The other item in the interview was the downgrading of Russian credit to junk status.
Standard and Poor’s downgrade is, without any doubt, a political act. It proves what we already know, and that is that the American rating firms are corrupt political operations. Remember the Investment Grade rating the American rating agencies gave to obvious subprime junk? These rating agencies are paid by Wall Street, and like Wall Street they serve the US government.
A look at the facts serves to establish the political nature of the ruling. Don’t expect the corrupt US financial press to look at the facts. But right now, we will look at the facts.
Indeed, we will put the facts in context with the US debt situation.
According to the debt clocks available online, the Russian national debt as a percentage of Russian GDP is 11 percent. The American national debt as a percentage of US GDP is 105 percent, about ten times higher. My coauthors, Dave Kranzler, John Williams, and I have shown that when measured correctly, the US debt as a percent of GDP is much higher than the official figure.
The Russian national debt per capita is $1,645. The US national debt per capita is
$56,952.
The size of Russia’s national debt is $235 billion, less than one quarter of a trillion. The size of the US national debt is $18 trillion, 76.6 times larger than the Russian debt.
Putting this in perspective: according to the debt clocks, US GDP is $17.3 trillion and Russian GDP is $2.1 trillion. So, US GDP is 8 times greater than Russian GDP, but US national debt is 76.6 times greater than Russia’s debt.
Clearly, it is the US credit rating that should have been downgraded to junk status. But this cannot happen. Any US credit rating agency that told the truth would be closed and prosecuted. It wouldn’t matter what the absurd charges are. The rating agencies would be guilty of being anti-american, terrorist organizations like RT, etc. and so on, and they know it. Never expect any truth from any Wall Street denizen. They lie for a living.
According to this site: [1] the US owes Russia as of January 2013 $162.9 billion. As the Russian national debt is $235 billion, 69 percent of the Russian national debt is covered by US debt obligations to Russia.
If this is a Russian Crisis, I am Alexander the Great.
As Russia has enough US dollar holdings to redeem its entire national debt and have a couple hundred billion dollars left, what is Russia’s problem?
One of Russia’s problems is its central bank. For the most part, Russian economists are the same neoliberal incompetents that exist in the Western world. The Russian economists are enamored of their contacts with the “superior” West and with the prestige that they image these contacts give them. As long as the Russian economists agree with the Western ones, they get invited to conferences abroad. These Russian economists are de facto American agents whether they realize it or not.
Currently, the Russian central bank is squandering the large Russian holdings of foreign reserves in support of the Western attack on the ruble. This is a fools’ game that no central bank should play. The Russian central bank should remember, or learn if it does not know, Soros’ attack on the Bank of England.
Russian foreign reserves should be used to retire the outstanding national debt, thus making Russia the only country in the world without a national debt. The remaining dollars should be dumped in coordinated actions with China to destroy the dollar, the power basis of American Imperialism.
Alternatively, the Russian government should announce that its reply to the economic warfare being conducted against Russia by the government in Washington and Wall Street rating agencies is default on its loans to Western creditors. Russia has nothing to lose as Russia is already cut off from Western credit by US sanctions. Russian default would cause consternation and crisis in the European banking system, which is exactly what Russia wants in order to break up Europe’s support of US sanctions.
In my opinion, the neoliberal economists who control Russian economic policy are a much greater threat to the sovereignty of Russia than economic sanctions and US missile bases. To survive Washington, Russia desperately needs people who are not romantic about the West.
To dramatize the situation, if President Putin will grant me Russian citizenship and allow me to appoint Michael Hudson and Nomi Prins as my deputies, I will take over the operation of the Russian central bank and put the West out of operation.
But that would require Russia taking risks associated with victory. The Atlanticist Integrationists inside the Russian government want victory for the West, not for Russia. A country imbued with treason inside the government itself has reduced chance against Washington, a determined player.
Another fifth column operating against Russia from within are the US and German funded NGOs. These American agents masquerade as “human rights organizations,” as “women’s rights organizations,” as “democracy organizations,” and whatever other cant titles that serve in a politically correct age and are unchallengeable.
Yet another threat to Russia comes from the percentage of the Russian youth who lust for the depraved culture of the West. Sexual license, pornography, drugs, self-absorption. These are the West’s cultural offerings. And, of course, killing Muslims.
If Russians want to kill people for the fun of it and to solidify US hegemony over themselves and the world, they should support “Atlanticist integration” and turn their backs on Russian nationalism. Why be Russian if you can be American serfs?
What better result for the American neoconservatives than to have Russia support Washington’s hegemony over the world? That is what the neoliberal Russian economists and the “European Integrationists” support. These Russians are willing to be American serfs in order to be part of the West and to be paid well for their treason.
As I was interviewed about these developments by RT, the news anchor kept trying to confront Washington’s charges with the facts. It is astonishing that the Russian journalists do not understand that facts have nothing to do with it. The Russian journalists, those independent of American bribes, think that facts matter in the disputes about Russian actions. They think that the assaults on civilians by the American supported Ukrainian Nazis is a fact. But, of course no such fact exists in the Western media. In the Western media the Russians, and only the Russians, are responsible for violence in Ukraine.
Washington’s story line is that it is the evil Putin’s intent on restoring the Soviet Empire that is the cause of the conflict. This media line in the West has no relationship to any facts.
In my opinion, Russia is in grave danger. Russians are relying on facts, and Washington is relying on propaganda. For Washington, facts are not relevant. Russian voices are small compared to Western voices.
The lack of a Russian voice is due to Russia itself. Russia accepted living in a world controlled by US financial, legal, and telecommunication services. Living in this wold means that the only voice is Washington’s.
Why Russia agreed to this strategic disadvantage is a mystery. But as a result of this strategic mistake, Russia is at a disadvantage.
Considering the inroads that Washington has into the Russian government itself, the economically powerful oligarchs and state employees with Western connections, as well as into the Russian media and Russian youth, with the hundreds of American and German financed NGOs that can put Russians into the streets to protest any defense of Russia, Russia’s future as a sovereign country is in doubt.
The American neoconservatives are relentless. Their Russian opponent is weakened by the success inside Russia of Western cold war propaganda that portrays the US as the savior and future of mankind.
The darkness from Sauron America continues to spread over the world.
Russia In The Cross Hairs. Washington’s Threats have moved Into the Realm of Insanity
The New Chief of the US Broadcasting Board of Governors, Andrew Lack, has declared the Russian news service, RT, which broadcasts in multiple languages, to be a terrorist organization equivalent to Boko Haram and the Islamic State, and Standard and Poor’s just downgraded Russia’s credit rating to junk status.
Today RT International interviewed me about these insane developments.
In prior days when America was still a sane country, Lack’s charge would have led to him being laughed out of office. He would have had to resign and disappear from public life. Today in the make-believe world that Western propaganda has created, Lack’s statement is taken seriously. Yet another terrorist threat has been identified–RT. (Although both Boko Haram and the Islamic State employ terror, strictly speaking they are political organizations seeking to rule, not terror organizations, but this distinction would be over Lack’s head. Yes, I know. There is a good joke that could be made here about what Lack lacks. Appropriately named and all that.)
Nevertheless, whatever Lack might lack, I doubt he believes his nonsensical statement that RT is a terrorist organization. So what is his game?
The answer is that the Western presstitute media by becoming Ministries of Propaganda for Washington, have created large markets for RT, Press TV, and Al Jazeera. As more and more of the peoples of the world turn to these more honest news sources, Washington’s ability to fabricate self-serving explanations has declined.
RT in particular has a large Western audience. The contrast between RT’s truthful reporting and the lies spewed by US media is undermining Washington’s control of the explanation. This is no longer acceptable.
Lark has sent a message to RT. The message is: pull in your horns; stop reporting differently from our line; stop contesting the facts as Washington states them and the presstitutes report them; get on board or else.
In other words, the “free speech” that Washington and its EU, Canadian, and Australian puppet states tout means: free speech for Washington’s propaganda and lies, but not for any truth. Truth is terrorism, because truth is the major threat to Washington.
Washington would prefer to avoid the embarrassment of actually shutting down RT as its UK vassal did to Press TV. Washington simply wants to shut up RT. Lark’s message to RT is: self-censure.
In my opinion, RT already understates in its coverage and reporting as does Al Jazeera. Both news organizations understand that they cannot be too forthright, at least not too often or on too many occasions.
I have often wondered why the Russian government allows 20 percent of the Russian media to function as Washington’s fifth column inside Russia. I suspect the reason is that by tolerating Washington’s blatant propaganda inside Russia, the Russian government hopes that some factual news can be reported in the US via RT and other Russian news organizations.
These hopes, like other Russian hopes about the West, are likely to be disappointed in the end. If RT is closed down or assimilated into the Western presstitute media, nothing will be said about it, but if the Russian government closes down Washington’s agents, blatant liars all, in the Russian media, we will hear forever about the evil Russians suppressing “free speech.” Remember, the only allowable “free speech” is Washington’s propaganda.
Only time will tell whether RT decides to be closed down for telling the truth or whether it adds its voice to Washington’s propaganda.
The other item in the interview was the downgrading of Russian credit to junk status.
Standard and Poor’s downgrade is, without any doubt, a political act. It proves what we already know, and that is that the American rating firms are corrupt political operations. Remember the Investment Grade rating the American rating agencies gave to obvious subprime junk? These rating agencies are paid by Wall Street, and like Wall Street they serve the US government.
A look at the facts serves to establish the political nature of the ruling. Don’t expect the corrupt US financial press to look at the facts. But right now, we will look at the facts.
Indeed, we will put the facts in context with the US debt situation.
According to the debt clocks available online, the Russian national debt as a percentage of Russian GDP is 11 percent. The American national debt as a percentage of US GDP is 105 percent, about ten times higher. My coauthors, Dave Kranzler, John Williams, and I have shown that when measured correctly, the US debt as a percent of GDP is much higher than the official figure.
The Russian national debt per capita is $1,645. The US national debt per capita is
$56,952.
The size of Russia’s national debt is $235 billion, less than one quarter of a trillion. The size of the US national debt is $18 trillion, 76.6 times larger than the Russian debt.
Putting this in perspective: according to the debt clocks, US GDP is $17.3 trillion and Russian GDP is $2.1 trillion. So, US GDP is 8 times greater than Russian GDP, but US national debt is 76.6 times greater than Russia’s debt.
Clearly, it is the US credit rating that should have been downgraded to junk status. But this cannot happen. Any US credit rating agency that told the truth would be closed and prosecuted. It wouldn’t matter what the absurd charges are. The rating agencies would be guilty of being anti-american, terrorist organizations like RT, etc. and so on, and they know it. Never expect any truth from any Wall Street denizen. They lie for a living.
According to this site: [1] the US owes Russia as of January 2013 $162.9 billion. As the Russian national debt is $235 billion, 69 percent of the Russian national debt is covered by US debt obligations to Russia.
If this is a Russian Crisis, I am Alexander the Great.
As Russia has enough US dollar holdings to redeem its entire national debt and have a couple hundred billion dollars left, what is Russia’s problem?
One of Russia’s problems is its central bank. For the most part, Russian economists are the same neoliberal incompetents that exist in the Western world. The Russian economists are enamored of their contacts with the “superior” West and with the prestige that they image these contacts give them. As long as the Russian economists agree with the Western ones, they get invited to conferences abroad. These Russian economists are de facto American agents whether they realize it or not.
Currently, the Russian central bank is squandering the large Russian holdings of foreign reserves in support of the Western attack on the ruble. This is a fools’ game that no central bank should play. The Russian central bank should remember, or learn if it does not know, Soros’ attack on the Bank of England.
Russian foreign reserves should be used to retire the outstanding national debt, thus making Russia the only country in the world without a national debt. The remaining dollars should be dumped in coordinated actions with China to destroy the dollar, the power basis of American Imperialism.
Alternatively, the Russian government should announce that its reply to the economic warfare being conducted against Russia by the government in Washington and Wall Street rating agencies is default on its loans to Western creditors. Russia has nothing to lose as Russia is already cut off from Western credit by US sanctions. Russian default would cause consternation and crisis in the European banking system, which is exactly what Russia wants in order to break up Europe’s support of US sanctions.
In my opinion, the neoliberal economists who control Russian economic policy are a much greater threat to the sovereignty of Russia than economic sanctions and US missile bases. To survive Washington, Russia desperately needs people who are not romantic about the West.
To dramatize the situation, if President Putin will grant me Russian citizenship and allow me to appoint Michael Hudson and Nomi Prins as my deputies, I will take over the operation of the Russian central bank and put the West out of operation.
But that would require Russia taking risks associated with victory. The Atlanticist Integrationists inside the Russian government want victory for the West, not for Russia. A country imbued with treason inside the government itself has reduced chance against Washington, a determined player.
Another fifth column operating against Russia from within are the US and German funded NGOs. These American agents masquerade as “human rights organizations,” as “women’s rights organizations,” as “democracy organizations,” and whatever other cant titles that serve in a politically correct age and are unchallengeable.
Yet another threat to Russia comes from the percentage of the Russian youth who lust for the depraved culture of the West. Sexual license, pornography, drugs, self-absorption. These are the West’s cultural offerings. And, of course, killing Muslims.
If Russians want to kill people for the fun of it and to solidify US hegemony over themselves and the world, they should support “Atlanticist integration” and turn their backs on Russian nationalism. Why be Russian if you can be American serfs?
What better result for the American neoconservatives than to have Russia support Washington’s hegemony over the world? That is what the neoliberal Russian economists and the “European Integrationists” support. These Russians are willing to be American serfs in order to be part of the West and to be paid well for their treason.
As I was interviewed about these developments by RT, the news anchor kept trying to confront Washington’s charges with the facts. It is astonishing that the Russian journalists do not understand that facts have nothing to do with it. The Russian journalists, those independent of American bribes, think that facts matter in the disputes about Russian actions. They think that the assaults on civilians by the American supported Ukrainian Nazis is a fact. But, of course no such fact exists in the Western media. In the Western media the Russians, and only the Russians, are responsible for violence in Ukraine.
Washington’s story line is that it is the evil Putin’s intent on restoring the Soviet Empire that is the cause of the conflict. This media line in the West has no relationship to any facts.
In my opinion, Russia is in grave danger. Russians are relying on facts, and Washington is relying on propaganda. For Washington, facts are not relevant. Russian voices are small compared to Western voices.
The lack of a Russian voice is due to Russia itself. Russia accepted living in a world controlled by US financial, legal, and telecommunication services. Living in this wold means that the only voice is Washington’s.
Why Russia agreed to this strategic disadvantage is a mystery. But as a result of this strategic mistake, Russia is at a disadvantage.
Considering the inroads that Washington has into the Russian government itself, the economically powerful oligarchs and state employees with Western connections, as well as into the Russian media and Russian youth, with the hundreds of American and German financed NGOs that can put Russians into the streets to protest any defense of Russia, Russia’s future as a sovereign country is in doubt.
The American neoconservatives are relentless. Their Russian opponent is weakened by the success inside Russia of Western cold war propaganda that portrays the US as the savior and future of mankind.
The darkness from Sauron America continues to spread over the world.
Friday, January 23, 2015
SC125-15
http://www.dailyimpact.net/2015/01/21/the-crash-of-2015-day-21/
The Crash of 2015: Day 21 [Update: Day 22]
The economy of the United States and the world is on fire, and with the flames and smoke visible in any direction one cared to look, the President of the United States declared last night that the worst is over, “the shadow of crisis has passed,” and happy days are here again. In reality (a state that presidents and candidates for president never seem to visit) 2015 is shaping up to be one of the worst any of us have ever seen.
It’s a potent mix of flammable situations, from an unhinged stock market to a drought-ravaged West to the fiscal convulsions of China, Russia and Europe. But for us in America, the collapse of the bogus New American Oil Revolution is the fire that’s burning hottest and spreading fastest. This is how it’s likely to go:
First, drill rigs are being shut down and workers laid off, especially in the fracking plays; as unemployment rises and income declines, production will start to fall; as fracking-company stock prices tank, their junk bonds will become worthless and their leveraged loans will go into default, their money sources will dry up and fracking production will virtually halt; as similar problems beset the legacy oil business world wide, the entire edifice of energy junk bonds, derivatives, hedges, credit default swaps and rabbits’ feet will collapse and the stock market will crash. Welcome to The Great Recession: the Sequel.
So, how are the frackers doing on Day 21?
1. Laying down rigs, shedding people.
In October of last year, America had 1609 active oil rigs working. We’re down to 1366, and the last one-week decline was the largest since the last crash in 2008.
The giant provider of oilfield services Baker Hughes announced yesterday it will lay off 7,000 employees, or 11% of its staff. CEO Martin Craighead said “we are taking proactive steps to manage the business through these challenges.” Which translates from PR-Speak as “Run! Run for your lives!”
Another giant provider of oilfield services, Halliburton (which is about to acquire Baker Hughes) announced it will be laying people off but would not provide a number. Halliburton cut a thousand jobs in the last quarter of 2014.
And the world’s biggest provider of oilfield services, Schlumberger, announced a few days ago it will cut 9,000 jobs, 8% of its workforce, after reporting fourth-quarter 2014 profits that were just 18% of the profits they racked up in the same period of 2013.
North Dakota, responsible for nearly half the oil-fracking revolution in the United States, has been booming since development of its Bakken oil-shale formation hit stride in 2000. According to United Van Lines’ Annual National Movers Study, North Dakota now has the country’s fourth highest outbound migration rate.
2. Production Reduction
Those who are pumping oil have to keep pumping oil as long as they can. Simply stopping production and waiting for prices to rise is not an option because they are deeply in debt and mired in contract obligations. They may be only running in place, but if they stop running they vanish. So we won’t be seeing actual drops in production for a few months. But here’s how we know they’re coming.
The Bakken play in North Dakota is about 40% of the “new American oil revolution.” Its production has gone from 500 barrels per day in 2008 to just over a million barrels a day. They had to drill 6,000 wells to do that. The Achilles Heel of the fracking revolution is the hideous decline rate of fracked wells: production declines by about 90% in just three years. So if they drilled another 6,000 wells in the next three years (at an average cost per well of $8-$10 million) all they would do is keep production at a million barrels a day. And that’s assuming they found as many “sweet spots” in the next four years as they did in the last. And you can’t assume that. It’s also assuming they can find the cheap money — the junk bonds and junk stock and junk loans — that financed the first 6,000. And you can’t assume that.
To put it another way, if no new wells were drilled in the Bakken in 2015, by the end of the year its production would be about 550,000 barrels a day, or one half its current production.
3. To follow the money, you have to find it.
It was possible to satisfy the enormous appetite of the fracking industry for cash (see “decline rate”) as long as oil prices were high, money was cheap, and the Masters of the Universe were delirious about America achieving “energy independence” and becoming “number one in oil” again. The Masters are still delirious, but nothing else is true.
In the past, the oil companies either sold stock, issued bonds, or took out loans to stay on the drilling treadmill. How’s that working out for them? The Bloomberg index of North American oil producers finds that since last June, their value has declined by over half and their debt has increased by 85% — hardly a sustainable trajectory. Going public, up until last year a sure-fire way to cash in big and finance whatever the hell you wanted to do, is simply not an option in 2015. Not for anybody in the fracking oil business.
As for debt, interest rates on junk-rated energy bonds are over 10%, double what they were last June. Previously issued bonds are trading on the secondary market for dimes on the dollar. And more than 20 US exploration and production companies have used 60 per cent of their credit lines, according to Bloomberg.
A financial situation for frackers that could best be described as sour now will turn completely rancid in April (at the latest). That is the month that lenders conduct one of two annual reviews of the collateral they are holding for their lines of credit. Typically, the frackers turn to lenders only after exhausting the possibilities of issuing stock and junk bonds, so by the time they get to banks they need what are politely referred to as leveraged loans, or loans to a company that has all its assets locked up and is hemorrhaging cash. When the bankers review the cinders of the assets they accepted as “security,” there are going to be some cardiac arrests.
At that point the Crash of 2015, if it hasn’t already, will metastasize.
[UPDATE: DAY 22]
According to a story in Bloomberg News, which is not exactly one of your fringe Doomer news sources, not only oilfield service providers but oil drilling companies themselves are going to “begin to die” in the second quarter of 2015 as bigger and bigger dominoes fall toward a crash. The January 22 story begins:
Oil drillers will begin collapsing under the weight of lower crude prices during the second quarter and energy explorers who employ them will shortly follow, according to Conway Mackenzie Inc., the largest U.S. restructuring firm.
The Crash of 2015: Day 21 [Update: Day 22]
The economy of the United States and the world is on fire, and with the flames and smoke visible in any direction one cared to look, the President of the United States declared last night that the worst is over, “the shadow of crisis has passed,” and happy days are here again. In reality (a state that presidents and candidates for president never seem to visit) 2015 is shaping up to be one of the worst any of us have ever seen.
It’s a potent mix of flammable situations, from an unhinged stock market to a drought-ravaged West to the fiscal convulsions of China, Russia and Europe. But for us in America, the collapse of the bogus New American Oil Revolution is the fire that’s burning hottest and spreading fastest. This is how it’s likely to go:
First, drill rigs are being shut down and workers laid off, especially in the fracking plays; as unemployment rises and income declines, production will start to fall; as fracking-company stock prices tank, their junk bonds will become worthless and their leveraged loans will go into default, their money sources will dry up and fracking production will virtually halt; as similar problems beset the legacy oil business world wide, the entire edifice of energy junk bonds, derivatives, hedges, credit default swaps and rabbits’ feet will collapse and the stock market will crash. Welcome to The Great Recession: the Sequel.
So, how are the frackers doing on Day 21?
1. Laying down rigs, shedding people.
In October of last year, America had 1609 active oil rigs working. We’re down to 1366, and the last one-week decline was the largest since the last crash in 2008.
The giant provider of oilfield services Baker Hughes announced yesterday it will lay off 7,000 employees, or 11% of its staff. CEO Martin Craighead said “we are taking proactive steps to manage the business through these challenges.” Which translates from PR-Speak as “Run! Run for your lives!”
Another giant provider of oilfield services, Halliburton (which is about to acquire Baker Hughes) announced it will be laying people off but would not provide a number. Halliburton cut a thousand jobs in the last quarter of 2014.
And the world’s biggest provider of oilfield services, Schlumberger, announced a few days ago it will cut 9,000 jobs, 8% of its workforce, after reporting fourth-quarter 2014 profits that were just 18% of the profits they racked up in the same period of 2013.
North Dakota, responsible for nearly half the oil-fracking revolution in the United States, has been booming since development of its Bakken oil-shale formation hit stride in 2000. According to United Van Lines’ Annual National Movers Study, North Dakota now has the country’s fourth highest outbound migration rate.
2. Production Reduction
Those who are pumping oil have to keep pumping oil as long as they can. Simply stopping production and waiting for prices to rise is not an option because they are deeply in debt and mired in contract obligations. They may be only running in place, but if they stop running they vanish. So we won’t be seeing actual drops in production for a few months. But here’s how we know they’re coming.
The Bakken play in North Dakota is about 40% of the “new American oil revolution.” Its production has gone from 500 barrels per day in 2008 to just over a million barrels a day. They had to drill 6,000 wells to do that. The Achilles Heel of the fracking revolution is the hideous decline rate of fracked wells: production declines by about 90% in just three years. So if they drilled another 6,000 wells in the next three years (at an average cost per well of $8-$10 million) all they would do is keep production at a million barrels a day. And that’s assuming they found as many “sweet spots” in the next four years as they did in the last. And you can’t assume that. It’s also assuming they can find the cheap money — the junk bonds and junk stock and junk loans — that financed the first 6,000. And you can’t assume that.
To put it another way, if no new wells were drilled in the Bakken in 2015, by the end of the year its production would be about 550,000 barrels a day, or one half its current production.
3. To follow the money, you have to find it.
It was possible to satisfy the enormous appetite of the fracking industry for cash (see “decline rate”) as long as oil prices were high, money was cheap, and the Masters of the Universe were delirious about America achieving “energy independence” and becoming “number one in oil” again. The Masters are still delirious, but nothing else is true.
In the past, the oil companies either sold stock, issued bonds, or took out loans to stay on the drilling treadmill. How’s that working out for them? The Bloomberg index of North American oil producers finds that since last June, their value has declined by over half and their debt has increased by 85% — hardly a sustainable trajectory. Going public, up until last year a sure-fire way to cash in big and finance whatever the hell you wanted to do, is simply not an option in 2015. Not for anybody in the fracking oil business.
As for debt, interest rates on junk-rated energy bonds are over 10%, double what they were last June. Previously issued bonds are trading on the secondary market for dimes on the dollar. And more than 20 US exploration and production companies have used 60 per cent of their credit lines, according to Bloomberg.
A financial situation for frackers that could best be described as sour now will turn completely rancid in April (at the latest). That is the month that lenders conduct one of two annual reviews of the collateral they are holding for their lines of credit. Typically, the frackers turn to lenders only after exhausting the possibilities of issuing stock and junk bonds, so by the time they get to banks they need what are politely referred to as leveraged loans, or loans to a company that has all its assets locked up and is hemorrhaging cash. When the bankers review the cinders of the assets they accepted as “security,” there are going to be some cardiac arrests.
At that point the Crash of 2015, if it hasn’t already, will metastasize.
[UPDATE: DAY 22]
According to a story in Bloomberg News, which is not exactly one of your fringe Doomer news sources, not only oilfield service providers but oil drilling companies themselves are going to “begin to die” in the second quarter of 2015 as bigger and bigger dominoes fall toward a crash. The January 22 story begins:
Oil drillers will begin collapsing under the weight of lower crude prices during the second quarter and energy explorers who employ them will shortly follow, according to Conway Mackenzie Inc., the largest U.S. restructuring firm.
SC125-14
http://thearchdruidreport.blogspot.com/
The Mariner's Rule
One of the things my readers ask me most often, in response to this blog’s exploration of the ongoing decline and impending fall of modern industrial civilization, is what I suggest people ought to do about it all. It’s a valid question, and it deserves a serious answer.
Now of course not everyone who asks the question is interested in the answers I have to offer. A great many people, for example, are only interested in answers that will allow them to keep on enjoying the absurd extravagance that passed, not too long ago, for an ordinary lifestyle among the industrial world’s privileged classes, and is becoming just a little bit less ordinary with every year that slips by. To such people I have nothing to say. Those lifestyles were only possible because the world’s industrial nations burnt through half a billion years of stored sunlight in a few short centuries, and gave most of the benefits of that orgy of consumption to a relatively small fraction of their population; now that easily accessible reserves of fossil fuels are running short, the party’s over.
Yes, I’m quite aware that that’s a controversial statement. I field heated denunciations on a regular basis insisting that it just ain’t so, that solar energy or fission or perpetual motion or something will allow the industrial world’s privileged classes to have their planet and eat it too. Printer’s ink being unfashionable these days, a great many electrons have been inconvenienced on the internet to proclaim that this or that technology must surely allow the comfortable to remain comfortable, no matter what the laws of physics, geology, or economics have to say. Now of course the only alternative energy sources that have been able to stay in business even in a time of sky-high oil prices are those that can count on gargantuan government subsidies to pay their operating expenses; equally, the alternatives receive an even more gigantic “energy subsidy” from fossil fuels, which make them look much more economical than they otherwise would. Such reflections carry no weight with those whose sense of entitlement makes living with less unthinkable.
I’m glad to say that there are fair number of people who’ve gotten past that unproductive attitude, who have grasped the severity of the crisis of our time and are ready to accept unwelcome change in order to secure a livable future for our descendants. They want to know how we can pull modern civilization out of its current power dive and perpetuate it into the centuries ahead. I have no answers for them, either, because that’s not an option at this stage of the game; we’re long past the point at which decline and fall can be avoided, or even ameliorated on any large scale.
A decade ago, a team headed by Robert Hirsch and funded by the Department of Energy released a study outlining what would have to be done in order to transition away from fossil fuels before they transitioned away from us. What they found, to sketch out too briefly the findings of a long and carefully worded study, is that in order to avoid massive disruption, the transition would have to begin twenty years before conventional petroleum production reached its peak and began to decline. There’s a certain irony in the fact that 2005, the year this study was published, was also the year when conventional petroleum production peaked; the transition would thus have had to begin in 1985—right about the time, that is, that the Reagan administration in the US and its clones overseas were scrapping the promising steps toward just such a transition.
A transition that got under way in 2005, in other words, would have been too late, and given the political climate, it probably would have been too little as well. Even so, it would have been a much better outcome than the one we got, in which most of us have spent the last ten years insisting that we don’t have to worry about depleting oilfields because fracking was going to save us all. At this point, thirty years after the point at which we would have had to get started, it’s all very well to talk about some sort of grand transition to sustainability, but the time when such a thing would have been possible came and went decades ago. We could have chosen that path, but we didn’t, and insisting thirty years after the fact that we’ve changed our minds and want a different future than the one we chose isn’t likely to make any kind of difference that matters.
So what options does that leave? In the minds of a great many people, at least in the United States, the choice that apparently comes first to mind involves buying farmland in some isolated rural area and setting up a homestead in the traditional style. Many of the people who talk enthusiastically about this option, to be sure, have never grown anything more demanding than a potted petunia, know nothing about the complex and demanding arts of farming and livestock raising, and aren’t in anything like the sort of robust physical condition needed to handle the unremitting hard work of raising food without benefit of fossil fuels; thus it’s a safe guess that in most of these cases, heading out to the country is simply a comforting daydream that serves to distract attention from the increasingly bleak prospects so many people are facing in the age of unraveling upon us.
There’s a long history behind such daydreams. Since colonial times, the lure of the frontier has played a huge role in the American imagination, providing any number of colorful inkblots onto which fantasies of a better life could be projected. Those of my readers who are old enough to remember the aftermath of the Sixties counterculture, when a great many young people followed that dream to an assortment of hastily created rural communes, will also recall the head-on collision between middle-class fantasies of entitlement and the hard realities of rural subsistence farming that generally resulted. Some of the communes survived, though many more did not; that I know of, none of the surviving ones made it without a long and difficult period of readjustment in which romantic notions of easy living in the lap of nature got chucked in favor of a more realistic awareness of just how little in the way of goods and services a bunch of untrained ex-suburbanites can actually produce by their own labor.
In theory, that process of reassessment is still open. In practice, just at the moment, I’m far from sure it’s an option for anyone who’s not already traveled far along that road. The decline and fall of modern industrial civilization, it bears repeating, is not poised somewhere off in the indefinite future, waiting patiently for us to get ready for it before it puts in an appearance; it’s already happening at the usual pace, and the points I’ve raised in posts here over the last few weeks suggest that the downward slope is probably going to get a lot steeper in the near future. As the collapse of the fracking bubble ripples out through the financial sphere, most of us are going to be scrambling to adapt, and the chances of getting everything lined up in time to move to rural property, get the necessary equipment and supplies to start farming, and get past the worst of the learning curve before crunch time arrives are not good.
If you’re already on a rural farm, in other words, by all means pursue the strategy that put you there. If your plans to get the necessary property, equipment, and skills are well advanced at this point, you may still be able to make it, but you’d probably better get a move on. On the other hand, dear reader, if your rural retreat is still off there in the realm of daydreams and good intentions, it’s almost certainly too late to do much about it, and where you are right now is probably where you’ll be when the onrushing waves of crisis come surging up and break over your head.
That being the case, are there any options left other than hiding under the bed and hoping that the end will be relatively painless? As it happens, there are.
The point that has to be understood to make sense of those options is that in the real world, as distinct from Hollywood-style disaster fantasies, the end of a civilization follows the famous rule attributed to William Gibson: “The future is already here, it’s just not evenly distributed yet.” Put another way, the impacts of decline and fall aren’t uniform; they vary in intensity over space and time, and they impact particular systems of a falling civilization at different times and in different ways. If you’re in the wrong place at the wrong time, and depend on the wrong systems to support you, your chances aren’t good, but the places, times, and systems that take the brunt of the collapse aren’t random. To some extent, those can be anticipated, and some of them can also be avoided.
Here’s an obvious example. Right now, if your livelihood depends on the fracking industry, the tar sands industry, or any of the subsidiary industries that feed into those, your chances of getting through 2015 with your income intact are pretty minimal. People in those industries who got to witness earlier booms and busts know this, and a good many of them are paying off their debts, settling any unfinished business they might have, and making sure they can cover a tank of gas or a plane ticket to get back home when the bottom falls out. People in those industries who don’t have that experience to guide them, and are convinced that nothing bad can actually happen to them, are not doing these things, and are likely to end up in a world of hurt when their turn comes.
They’re not the only ones who would benefit right now from taking such steps. A very large part of the US banking and finance industry has been flying high on bloated profits from an assortment of fracking-related scams, ranging from junk bonds through derivatives to exotic financial fauna such as volumetric production payments. Now that the goose that laid the golden eggs is bobbing feet upwards in a pond of used fracking fluid, the good times are coming to a sudden stop, and that means sharply reduced income for those junior bankers, brokers, and salespeople who can keep their jobs, and even more sharply reduced prospects for those who don’t.
They’ve got plenty of company on the chopping block. The entire retail sector in the US is already in trouble, with big-box stores struggling for survival and shopping malls being abandoned, and the sharp economic downturn we can expect as the fracking bust unfolds will likely turn that decline into freefall, varying in intensity by region and a galaxy of other factors. Those who brace themselves for a hard landing now are a good deal more likely to make it than those who don’t, and those who have the chance to jump to something more stable now would be well advised to make the leap.
That’s one example; here’s another. I’ve written here in some detail about how anthropogenic climate change will wallop North America in the centuries ahead of us. One thing that’s been learned from the last few years of climate vagaries is that North America, at least, is shifting in exactly the way paleoclimatic data would suggest—more or less the same way it did during warm periods over the last ten or twenty million years. The short form is that the Southwest and mountain West are getting baked to a crackly crunch under savage droughts; the eastern Great Plains, Midwest, and most of the South are being hit by a wildly unstable climate, with bone-dry dry years alternating with exceptionally soggy wet ones; while the Appalachians and points eastward have been getting unsteady temperatures but reliable rainfall. Line up your choice of subsistence strategies next to those climate shifts, and if you still have the time and resources to relocate, you have some idea where to go.
All this presumes, of course, that what we’re facing has much more in common with the crises faced by other civilizations on their way to history’s compost heap than it does with the apocalyptic fantasies so often retailed these days as visions of the immediate future. I expect to field a flurry of claims that it just ain’t so, that everything I’ve just said is wasted breath because some vast and terrible whatsit will shortly descend on the whole world and squash us like bugs. I can utter that prediction with perfect confidence, because I’ve been fielding such claims over and over again since long before this blog got started. All the dates by which the world was surely going to end have rolled past without incident, and the inevitable cataclysms have pulled one no-show after another, but the shrill insistence that something of the sort really will happen this time around has shown no sign of letting up. Nor will it, since the unacceptable alternative consists of taking responsibility for doing something about the future.
Now of course I’ve already pointed out that there’s not much that can be done about the future on the largest scale. As the fracking bubble implodes, the global economy shudders, the climate destabilizes, and a dozen other measures of imminent crisis head toward the red zone on the gauge, it’s far too late in the day for much more than crisis management on a local and individual level. Even so, crisis management is a considerably more useful response than sitting on the sofa daydreaming about the grandiose project that’s certain to save us or the grandiose cataclysm that’s certain to annihilate us—though these latter options are admittedly much more comfortable in the short term.
What’s more, there’s no shortage of examples in relatively recent history to guide the sort of crisis management I have in mind. The tsunami of discontinuities that’s rolling toward us out of the deep waters of the future may be larger than the waves that hit the Western world with the coming of the First World War in 1914, the Great Depression in 1929, or the Second World War in 1939, but from the perspective of the individual, the difference isn’t as vast as it might seem. In fact, I’d encourage my readers to visit their local public libraries and pick up books about the lived experience of those earlier traumas. I’d also encourage those with elderly relatives who still remember the Second World War to sit down with them over a couple of cups of whatever beverage seems appropriate, and ask about what it was like on a day-by-day basis to watch their ordinary peacetime world unravel into chaos.
I’ve had the advantage of taking part in such conversations, and I’ve also done a great deal of reading about historical crises that have passed below the horizon of living memory. There are plenty of lessons to be gained from such sources, and one of the most important also used to be standard aboard sailing ships in the days before steam power. Sailors in those days had to go scrambling up the rigging at all hours and in all weathers to set, reef, or furl sails; it was not an easy job—imagine yourself up in the rigging of a tall ship in the middle of a howling storm at night, clinging to tarred ropes and slick wood and trying to get a mass of wet, heavy, wind-whipped canvas to behave, while below you the ship rolls from side to side and swings you out over a raging ocean and back again. If you slip and you’re lucky, you land on deck with a pretty good chance of breaking bones or worse; if you slip and you’re not lucky, you plunge straight down into churning black water and are never seen again.
The rule that sailors learned and followed in those days was simple: “One hand for yourself, one hand for the ship.” Every chore that had to be done up there in the rigging could be done by a gang of sailors who each lent one hand to the effort, so the other could cling for dear life to the nearest rope or ratline. Those tasks that couldn’t be done that way, such as hauling on ropes, took place down on the deck—the rigging was designed with that in mind. There were emergencies where that rule didn’t apply, and even with the rule in place there were sailors who fell from the rigging to their deaths, but as a general principle it worked tolerably well.
I’d like to propose that the same rule might be worth pursuing in the crisis of our age. In the years to come, a great many of us will face the same kind of scramble for survival that so many others faced in the catastrophes of the early 20th century. Some of us won’t make it, and some will have to face the ghastly choice between sheer survival and everything else they value in life. Not everyone, though, will land in one or the other of those categories, and many those who manage to stay out of them will have the chance to direct time and energy toward the broader picture.
Exactly what projects might fall into that latter category will differ from one person to another, for reasons that are irreducibly personal. I’m sure there are plenty of things that would motivate you to action in desperate times, dear reader, that would leave me cold, and of course the reverse is also true—and in times of crisis, of the kind we’re discussing, it’s personal factors of that sort that make the difference, not abstract considerations of the sort we might debate here. I’ll be discussing a few of the options in upcoming posts, but I’d also encourage readers of this blog to reflect on the question themselves: in the wreck of industrial civilization, what are you willing to make an effort to accomplish, to defend, or to preserve?
In thinking about that, I’d encourage my readers to consider the traumatic years of the early 20th century as a model for what’s approaching us. Those who were alive when the first great wave of dissolution hit in 1914 weren’t facing forty years of continuous cataclysm; as noted here repeatedly, collapse is a fractal process, and unfolds in real time as a sequence of crises of various kinds separated by intervals of relative calm in which some level of recovery is possible. It’s pretty clear that the first round of trouble here in the United States, at least, will be a major economic crisis; at some point not too far down the road, the yawning gap between our senile political class and the impoverished and disaffected masses promises the collapse of politics as usual and a descent into domestic insurgency or one of the other standard patterns by which former democracies destroy themselves; as already noted, there are plenty of other things bearing down on us—but after an interval, things will stabilize again.
Then it’ll be time to sort through the wreckage, see what’s been saved and what can be recovered, and go on from there. First, though, we have a troubled time to get through.
The Mariner's Rule
One of the things my readers ask me most often, in response to this blog’s exploration of the ongoing decline and impending fall of modern industrial civilization, is what I suggest people ought to do about it all. It’s a valid question, and it deserves a serious answer.
Now of course not everyone who asks the question is interested in the answers I have to offer. A great many people, for example, are only interested in answers that will allow them to keep on enjoying the absurd extravagance that passed, not too long ago, for an ordinary lifestyle among the industrial world’s privileged classes, and is becoming just a little bit less ordinary with every year that slips by. To such people I have nothing to say. Those lifestyles were only possible because the world’s industrial nations burnt through half a billion years of stored sunlight in a few short centuries, and gave most of the benefits of that orgy of consumption to a relatively small fraction of their population; now that easily accessible reserves of fossil fuels are running short, the party’s over.
Yes, I’m quite aware that that’s a controversial statement. I field heated denunciations on a regular basis insisting that it just ain’t so, that solar energy or fission or perpetual motion or something will allow the industrial world’s privileged classes to have their planet and eat it too. Printer’s ink being unfashionable these days, a great many electrons have been inconvenienced on the internet to proclaim that this or that technology must surely allow the comfortable to remain comfortable, no matter what the laws of physics, geology, or economics have to say. Now of course the only alternative energy sources that have been able to stay in business even in a time of sky-high oil prices are those that can count on gargantuan government subsidies to pay their operating expenses; equally, the alternatives receive an even more gigantic “energy subsidy” from fossil fuels, which make them look much more economical than they otherwise would. Such reflections carry no weight with those whose sense of entitlement makes living with less unthinkable.
I’m glad to say that there are fair number of people who’ve gotten past that unproductive attitude, who have grasped the severity of the crisis of our time and are ready to accept unwelcome change in order to secure a livable future for our descendants. They want to know how we can pull modern civilization out of its current power dive and perpetuate it into the centuries ahead. I have no answers for them, either, because that’s not an option at this stage of the game; we’re long past the point at which decline and fall can be avoided, or even ameliorated on any large scale.
A decade ago, a team headed by Robert Hirsch and funded by the Department of Energy released a study outlining what would have to be done in order to transition away from fossil fuels before they transitioned away from us. What they found, to sketch out too briefly the findings of a long and carefully worded study, is that in order to avoid massive disruption, the transition would have to begin twenty years before conventional petroleum production reached its peak and began to decline. There’s a certain irony in the fact that 2005, the year this study was published, was also the year when conventional petroleum production peaked; the transition would thus have had to begin in 1985—right about the time, that is, that the Reagan administration in the US and its clones overseas were scrapping the promising steps toward just such a transition.
A transition that got under way in 2005, in other words, would have been too late, and given the political climate, it probably would have been too little as well. Even so, it would have been a much better outcome than the one we got, in which most of us have spent the last ten years insisting that we don’t have to worry about depleting oilfields because fracking was going to save us all. At this point, thirty years after the point at which we would have had to get started, it’s all very well to talk about some sort of grand transition to sustainability, but the time when such a thing would have been possible came and went decades ago. We could have chosen that path, but we didn’t, and insisting thirty years after the fact that we’ve changed our minds and want a different future than the one we chose isn’t likely to make any kind of difference that matters.
So what options does that leave? In the minds of a great many people, at least in the United States, the choice that apparently comes first to mind involves buying farmland in some isolated rural area and setting up a homestead in the traditional style. Many of the people who talk enthusiastically about this option, to be sure, have never grown anything more demanding than a potted petunia, know nothing about the complex and demanding arts of farming and livestock raising, and aren’t in anything like the sort of robust physical condition needed to handle the unremitting hard work of raising food without benefit of fossil fuels; thus it’s a safe guess that in most of these cases, heading out to the country is simply a comforting daydream that serves to distract attention from the increasingly bleak prospects so many people are facing in the age of unraveling upon us.
There’s a long history behind such daydreams. Since colonial times, the lure of the frontier has played a huge role in the American imagination, providing any number of colorful inkblots onto which fantasies of a better life could be projected. Those of my readers who are old enough to remember the aftermath of the Sixties counterculture, when a great many young people followed that dream to an assortment of hastily created rural communes, will also recall the head-on collision between middle-class fantasies of entitlement and the hard realities of rural subsistence farming that generally resulted. Some of the communes survived, though many more did not; that I know of, none of the surviving ones made it without a long and difficult period of readjustment in which romantic notions of easy living in the lap of nature got chucked in favor of a more realistic awareness of just how little in the way of goods and services a bunch of untrained ex-suburbanites can actually produce by their own labor.
In theory, that process of reassessment is still open. In practice, just at the moment, I’m far from sure it’s an option for anyone who’s not already traveled far along that road. The decline and fall of modern industrial civilization, it bears repeating, is not poised somewhere off in the indefinite future, waiting patiently for us to get ready for it before it puts in an appearance; it’s already happening at the usual pace, and the points I’ve raised in posts here over the last few weeks suggest that the downward slope is probably going to get a lot steeper in the near future. As the collapse of the fracking bubble ripples out through the financial sphere, most of us are going to be scrambling to adapt, and the chances of getting everything lined up in time to move to rural property, get the necessary equipment and supplies to start farming, and get past the worst of the learning curve before crunch time arrives are not good.
If you’re already on a rural farm, in other words, by all means pursue the strategy that put you there. If your plans to get the necessary property, equipment, and skills are well advanced at this point, you may still be able to make it, but you’d probably better get a move on. On the other hand, dear reader, if your rural retreat is still off there in the realm of daydreams and good intentions, it’s almost certainly too late to do much about it, and where you are right now is probably where you’ll be when the onrushing waves of crisis come surging up and break over your head.
That being the case, are there any options left other than hiding under the bed and hoping that the end will be relatively painless? As it happens, there are.
The point that has to be understood to make sense of those options is that in the real world, as distinct from Hollywood-style disaster fantasies, the end of a civilization follows the famous rule attributed to William Gibson: “The future is already here, it’s just not evenly distributed yet.” Put another way, the impacts of decline and fall aren’t uniform; they vary in intensity over space and time, and they impact particular systems of a falling civilization at different times and in different ways. If you’re in the wrong place at the wrong time, and depend on the wrong systems to support you, your chances aren’t good, but the places, times, and systems that take the brunt of the collapse aren’t random. To some extent, those can be anticipated, and some of them can also be avoided.
Here’s an obvious example. Right now, if your livelihood depends on the fracking industry, the tar sands industry, or any of the subsidiary industries that feed into those, your chances of getting through 2015 with your income intact are pretty minimal. People in those industries who got to witness earlier booms and busts know this, and a good many of them are paying off their debts, settling any unfinished business they might have, and making sure they can cover a tank of gas or a plane ticket to get back home when the bottom falls out. People in those industries who don’t have that experience to guide them, and are convinced that nothing bad can actually happen to them, are not doing these things, and are likely to end up in a world of hurt when their turn comes.
They’re not the only ones who would benefit right now from taking such steps. A very large part of the US banking and finance industry has been flying high on bloated profits from an assortment of fracking-related scams, ranging from junk bonds through derivatives to exotic financial fauna such as volumetric production payments. Now that the goose that laid the golden eggs is bobbing feet upwards in a pond of used fracking fluid, the good times are coming to a sudden stop, and that means sharply reduced income for those junior bankers, brokers, and salespeople who can keep their jobs, and even more sharply reduced prospects for those who don’t.
They’ve got plenty of company on the chopping block. The entire retail sector in the US is already in trouble, with big-box stores struggling for survival and shopping malls being abandoned, and the sharp economic downturn we can expect as the fracking bust unfolds will likely turn that decline into freefall, varying in intensity by region and a galaxy of other factors. Those who brace themselves for a hard landing now are a good deal more likely to make it than those who don’t, and those who have the chance to jump to something more stable now would be well advised to make the leap.
That’s one example; here’s another. I’ve written here in some detail about how anthropogenic climate change will wallop North America in the centuries ahead of us. One thing that’s been learned from the last few years of climate vagaries is that North America, at least, is shifting in exactly the way paleoclimatic data would suggest—more or less the same way it did during warm periods over the last ten or twenty million years. The short form is that the Southwest and mountain West are getting baked to a crackly crunch under savage droughts; the eastern Great Plains, Midwest, and most of the South are being hit by a wildly unstable climate, with bone-dry dry years alternating with exceptionally soggy wet ones; while the Appalachians and points eastward have been getting unsteady temperatures but reliable rainfall. Line up your choice of subsistence strategies next to those climate shifts, and if you still have the time and resources to relocate, you have some idea where to go.
All this presumes, of course, that what we’re facing has much more in common with the crises faced by other civilizations on their way to history’s compost heap than it does with the apocalyptic fantasies so often retailed these days as visions of the immediate future. I expect to field a flurry of claims that it just ain’t so, that everything I’ve just said is wasted breath because some vast and terrible whatsit will shortly descend on the whole world and squash us like bugs. I can utter that prediction with perfect confidence, because I’ve been fielding such claims over and over again since long before this blog got started. All the dates by which the world was surely going to end have rolled past without incident, and the inevitable cataclysms have pulled one no-show after another, but the shrill insistence that something of the sort really will happen this time around has shown no sign of letting up. Nor will it, since the unacceptable alternative consists of taking responsibility for doing something about the future.
Now of course I’ve already pointed out that there’s not much that can be done about the future on the largest scale. As the fracking bubble implodes, the global economy shudders, the climate destabilizes, and a dozen other measures of imminent crisis head toward the red zone on the gauge, it’s far too late in the day for much more than crisis management on a local and individual level. Even so, crisis management is a considerably more useful response than sitting on the sofa daydreaming about the grandiose project that’s certain to save us or the grandiose cataclysm that’s certain to annihilate us—though these latter options are admittedly much more comfortable in the short term.
What’s more, there’s no shortage of examples in relatively recent history to guide the sort of crisis management I have in mind. The tsunami of discontinuities that’s rolling toward us out of the deep waters of the future may be larger than the waves that hit the Western world with the coming of the First World War in 1914, the Great Depression in 1929, or the Second World War in 1939, but from the perspective of the individual, the difference isn’t as vast as it might seem. In fact, I’d encourage my readers to visit their local public libraries and pick up books about the lived experience of those earlier traumas. I’d also encourage those with elderly relatives who still remember the Second World War to sit down with them over a couple of cups of whatever beverage seems appropriate, and ask about what it was like on a day-by-day basis to watch their ordinary peacetime world unravel into chaos.
I’ve had the advantage of taking part in such conversations, and I’ve also done a great deal of reading about historical crises that have passed below the horizon of living memory. There are plenty of lessons to be gained from such sources, and one of the most important also used to be standard aboard sailing ships in the days before steam power. Sailors in those days had to go scrambling up the rigging at all hours and in all weathers to set, reef, or furl sails; it was not an easy job—imagine yourself up in the rigging of a tall ship in the middle of a howling storm at night, clinging to tarred ropes and slick wood and trying to get a mass of wet, heavy, wind-whipped canvas to behave, while below you the ship rolls from side to side and swings you out over a raging ocean and back again. If you slip and you’re lucky, you land on deck with a pretty good chance of breaking bones or worse; if you slip and you’re not lucky, you plunge straight down into churning black water and are never seen again.
The rule that sailors learned and followed in those days was simple: “One hand for yourself, one hand for the ship.” Every chore that had to be done up there in the rigging could be done by a gang of sailors who each lent one hand to the effort, so the other could cling for dear life to the nearest rope or ratline. Those tasks that couldn’t be done that way, such as hauling on ropes, took place down on the deck—the rigging was designed with that in mind. There were emergencies where that rule didn’t apply, and even with the rule in place there were sailors who fell from the rigging to their deaths, but as a general principle it worked tolerably well.
I’d like to propose that the same rule might be worth pursuing in the crisis of our age. In the years to come, a great many of us will face the same kind of scramble for survival that so many others faced in the catastrophes of the early 20th century. Some of us won’t make it, and some will have to face the ghastly choice between sheer survival and everything else they value in life. Not everyone, though, will land in one or the other of those categories, and many those who manage to stay out of them will have the chance to direct time and energy toward the broader picture.
Exactly what projects might fall into that latter category will differ from one person to another, for reasons that are irreducibly personal. I’m sure there are plenty of things that would motivate you to action in desperate times, dear reader, that would leave me cold, and of course the reverse is also true—and in times of crisis, of the kind we’re discussing, it’s personal factors of that sort that make the difference, not abstract considerations of the sort we might debate here. I’ll be discussing a few of the options in upcoming posts, but I’d also encourage readers of this blog to reflect on the question themselves: in the wreck of industrial civilization, what are you willing to make an effort to accomplish, to defend, or to preserve?
In thinking about that, I’d encourage my readers to consider the traumatic years of the early 20th century as a model for what’s approaching us. Those who were alive when the first great wave of dissolution hit in 1914 weren’t facing forty years of continuous cataclysm; as noted here repeatedly, collapse is a fractal process, and unfolds in real time as a sequence of crises of various kinds separated by intervals of relative calm in which some level of recovery is possible. It’s pretty clear that the first round of trouble here in the United States, at least, will be a major economic crisis; at some point not too far down the road, the yawning gap between our senile political class and the impoverished and disaffected masses promises the collapse of politics as usual and a descent into domestic insurgency or one of the other standard patterns by which former democracies destroy themselves; as already noted, there are plenty of other things bearing down on us—but after an interval, things will stabilize again.
Then it’ll be time to sort through the wreckage, see what’s been saved and what can be recovered, and go on from there. First, though, we have a troubled time to get through.
Monday, January 19, 2015
SC125-13
http://www.informationclearinghouse.info/article40707.htm
From Neighborhood Cops to Robocops: The Changing Face of American Police
“Technological progress has merely provided us with more efficient means for going backwards.” ― Aldous Huxley, Ends and Means
January 15, 2015 "ICH" - If 2014 was the year of militarized police, armored tanks, and stop-and-frisk searches, 2015 may well be the year of technologized police, surveillance blimps and scan-and-frisk searches.
Just as we witnessed neighborhood cops being transformed into soldier cops, we’re about to see them shapeshift once again, this time into robocops, complete with robotic exoskeletons, super-vision contact lenses, computer-linked visors, and mind-reading helmets.
Similarly, just as military equipment created for the battlefield has been deployed on American soil against American citizens, we’re about to see military technology employed here at home in a manner sure to annihilate what’s left of our privacy and Fourth Amendment rights.
For instance, with the flick of a switch (and often without your even being aware of the interference), police can now shut down your cell phone, scan your body for “suspicious” items as you walk down the street, test the air in your car for alcohol vapors as you drive down the street, identify you at a glance and run a background check on you for outstanding warrants, piggyback on your surveillance devices to listen in on your conversations and “see” what you see on your private cameras, and track your car’s movements via a GPS-enabled dart.
That doesn’t even begin to scrape the surface of what’s coming down the pike, with law enforcement and military agencies boasting technologies so advanced as to render everything up until now mere child’s play.
Once these technologies, which used to belong exclusively to the realm of futuristic sci-fi films, have been unleashed on an unsuspecting American public, it will completely change the face of American policing and, in the process, transform the landscape of what we used to call our freedoms.
It doesn’t even matter that these technologies can be put to beneficial uses. As we’ve learned the hard way, once the government gets involved, it’s only a matter of time before the harm outweighs the benefits.
Imagine, if you will, self-guided “smart” bullets that can track their target as it moves, solar-powered airships that provide persistent wide-area surveillance and tracking of ground “targets,” a grenade launcher that can deliver 14 flash-bang grenade rounds, invisible tanks that can blend into their surroundings and masquerade as a snow bank or a soccer mom’s station wagon, and a guided mortar weapon that can target someone up to 12 miles away.
Or what about “less lethal weapons” such as the speech jammer gun, which can render a target tongue-tied; sticky foam guns, which shoot foam that hardens on contact, immobilizing the victim; and shock wave generators, which use the shockwaves from a controlled explosion to knock people over.
Now imagine trying to defend yourself against such devices, which are incapable of distinguishing between an enemy combatant and a civilian. For that matter, imagine attempting to defend yourself or your loved ones against police officers made superhuman thanks to technology that renders them bullet-proof, shatter-proof, all-seeing, all-knowing and all-powerful.
Does rendering a government agent superhuman make them inhuman, as well, unable to relate to the mass of humanity they are sworn to protect and defend?
Pointing out that the clothes people wear can affect how they act, Salon magazine reporter Geordie Mcruer notes that “when clothing has symbolic meaning – such as a uniform that is worn only by a certain profession – it prepares the mind for the pursuit of goals that are consistent with the symbolic meaning of the clothing.”
Mcruer continues:
When we dress our police officers in camouflage before deploying them to a peaceful protest, the result will be police who think more like soldiers. This likely includes heightening their perception of physical threats, and increasing the likelihood that they react to those threats with violence. Simply put, dressing police up like soldiers potentially changes how they see a situation, changing protesters into enemy combatants, rather than what they are: civilians exercising their democratic rights…
When police wear soldiers’ clothing, and hold soldiers’ weapons, it primes them to think and act like soldiers. Furthermore, clothing that conceals their identity – such as the helmets, gas masks, goggles, body armor and riot shields that are now standard-issue for officers at peaceful protests – will increase the likelihood that officers react aggressively to the situation. As a result of the fact that they are also dressed like soldiers, they are more likely to interpret the situation as hostile and will more readily identify violence as the best solution.
While robocops are problematic enough, the problem we’re facing is so much greater than technology-enhanced domestic soldiers.
As I make clear in my book A Government of Wolves: The Emerging American Police State, we’re on the cusp of a major paradigm shift from fascism disguised as a democracy into a technocratic surveillance society in which there are no citizens, only targets. We’re all targets now, to be scanned, surveilled, tracked and treated like blips on a screen.
What’s taking place in Maryland right now is a perfect example of this shift. With Congress’ approval and generous funding (and without the consensus of area residents), the Army has just launched two massive, billion dollar surveillance airships into the skies over Baltimore, each airship three times the size of a Goodyear blimp, ostensibly to defend against cruise missile attacks. Government officials claim the surveillance blimps, which provide highly detailed radar imaging within a 340-mile radius, are not presently being used to track individuals or carry out surveillance against citizens, but it’s only a matter of time before that becomes par for the course.
In New York, police will soon start employing mobile scanners that allow them to scan people on the street in order to detect any hidden objects under their clothes, whether it be a gun, a knife or anything else that appears “suspicious.” The scanners will also let them carry out enhanced data collection in the field—fingerprints, iris scans, facial mapping—which will build the government’s biometric database that much faster. These scanners are a more mobile version of the low radiation X-ray vans used to scan the contents of passing cars.
Google Glass, being considered for use by officers, would allow police to access computer databases, as well as run background checks on and record anyone in their line of sight.
One program, funded by $160 million in asset forfeiture funds, would equip police officers and vehicles with biometric smartphones that can scan individuals’ fingerprints and cross check it against criminal databases. The devices will also contain real-time 911 data, warrant information from federal, state and city databases, photographs of missing persons, suspects, Crime Stoppers posters and other persons of interest, and the latest cache of information on terror suspects.
Stand-off lasers can detect alcohol vapors in a moving car. “If alcohol vapors are detected in the car, a message with a photo of the car including its license plate is sent to a police officer waiting down the road. Then, the police officer stops the car and checks for signs of alcohol using conventional tests.”
Ekin Patrol cameras, described as “the first truly intelligent patrol unit in the world,” can not only detect the speed of passing cars but can generate tickets instantaneously, recognize and store the license plates of stopped, moving or parked vehicles, measure traffic density and violation data and engage in facial recognition of drivers and passengers.
Collectively, all of these gizmos, gadgets and surveillance devices render us not just suspects in a surveillance state but also inmates in an electronic concentration camp. As journalist Lynn Stuart Parramore notes:
The Information Age … has turned out rather differently than many expected. Instead of information made available for us, the key feature seems to be information collected about us. Rather of granting us anonymity and privacy with which to explore a world of facts and data, our own data is relentlessly and continually collected and monitored. The wondrous things that were supposed to make our lives easier—mobile devices, gmail, Skype, GPS, and Facebook—have become tools to track us, for whatever purposes the trackers decide. We have been happily shopping for the bars to our own prisons, one product at a time.
Unfortunately, eager as we are for progress and ill-suited to consider the moral and spiritual ramifications of our planned obsolescence, we have yet to truly fathom what it means to live in an environment in which we are always on red alert, always under observation, and always having our actions measured, judged and found wanting under some law or other intrusive government regulation.
There are those who are not at all worried about this impending future, certain that they have nothing to hide. Rest assured, soon we will all have nowhere to hide from the prying eyes of a government bound and determined to not only know everything about us—where we go, what we do, what we say, what we read, what we keep in our pockets, how much money we have on us, how we spend that money, who we know, what we eat and drink, and where we are at any given moment—but prepared to use that information against us, whenever it becomes convenient and profitable to do so.
Making the case that we’re being transformed as citizens, neighbors and human beings, Parramore identifies six factors arising from a society in which surveillance becomes the norm: a shift in power dynamics, in which the “watcher” becomes all-seeing and all-powerful; an incentive to turn citizens into outlaws by criminalizing otherwise lawful activities; diminished citizenship; an environment of suspicion and paranoia; a divided society comprised of the watchers and the watched; and “a society of edgy, unhappy beings whose sense of themselves is chronically diminished.”
As Parramore rightly concludes, this is “not exactly a recipe for Utopia.”
From Neighborhood Cops to Robocops: The Changing Face of American Police
“Technological progress has merely provided us with more efficient means for going backwards.” ― Aldous Huxley, Ends and Means
January 15, 2015 "ICH" - If 2014 was the year of militarized police, armored tanks, and stop-and-frisk searches, 2015 may well be the year of technologized police, surveillance blimps and scan-and-frisk searches.
Just as we witnessed neighborhood cops being transformed into soldier cops, we’re about to see them shapeshift once again, this time into robocops, complete with robotic exoskeletons, super-vision contact lenses, computer-linked visors, and mind-reading helmets.
Similarly, just as military equipment created for the battlefield has been deployed on American soil against American citizens, we’re about to see military technology employed here at home in a manner sure to annihilate what’s left of our privacy and Fourth Amendment rights.
For instance, with the flick of a switch (and often without your even being aware of the interference), police can now shut down your cell phone, scan your body for “suspicious” items as you walk down the street, test the air in your car for alcohol vapors as you drive down the street, identify you at a glance and run a background check on you for outstanding warrants, piggyback on your surveillance devices to listen in on your conversations and “see” what you see on your private cameras, and track your car’s movements via a GPS-enabled dart.
That doesn’t even begin to scrape the surface of what’s coming down the pike, with law enforcement and military agencies boasting technologies so advanced as to render everything up until now mere child’s play.
Once these technologies, which used to belong exclusively to the realm of futuristic sci-fi films, have been unleashed on an unsuspecting American public, it will completely change the face of American policing and, in the process, transform the landscape of what we used to call our freedoms.
It doesn’t even matter that these technologies can be put to beneficial uses. As we’ve learned the hard way, once the government gets involved, it’s only a matter of time before the harm outweighs the benefits.
Imagine, if you will, self-guided “smart” bullets that can track their target as it moves, solar-powered airships that provide persistent wide-area surveillance and tracking of ground “targets,” a grenade launcher that can deliver 14 flash-bang grenade rounds, invisible tanks that can blend into their surroundings and masquerade as a snow bank or a soccer mom’s station wagon, and a guided mortar weapon that can target someone up to 12 miles away.
Or what about “less lethal weapons” such as the speech jammer gun, which can render a target tongue-tied; sticky foam guns, which shoot foam that hardens on contact, immobilizing the victim; and shock wave generators, which use the shockwaves from a controlled explosion to knock people over.
Now imagine trying to defend yourself against such devices, which are incapable of distinguishing between an enemy combatant and a civilian. For that matter, imagine attempting to defend yourself or your loved ones against police officers made superhuman thanks to technology that renders them bullet-proof, shatter-proof, all-seeing, all-knowing and all-powerful.
Does rendering a government agent superhuman make them inhuman, as well, unable to relate to the mass of humanity they are sworn to protect and defend?
Pointing out that the clothes people wear can affect how they act, Salon magazine reporter Geordie Mcruer notes that “when clothing has symbolic meaning – such as a uniform that is worn only by a certain profession – it prepares the mind for the pursuit of goals that are consistent with the symbolic meaning of the clothing.”
Mcruer continues:
When we dress our police officers in camouflage before deploying them to a peaceful protest, the result will be police who think more like soldiers. This likely includes heightening their perception of physical threats, and increasing the likelihood that they react to those threats with violence. Simply put, dressing police up like soldiers potentially changes how they see a situation, changing protesters into enemy combatants, rather than what they are: civilians exercising their democratic rights…
When police wear soldiers’ clothing, and hold soldiers’ weapons, it primes them to think and act like soldiers. Furthermore, clothing that conceals their identity – such as the helmets, gas masks, goggles, body armor and riot shields that are now standard-issue for officers at peaceful protests – will increase the likelihood that officers react aggressively to the situation. As a result of the fact that they are also dressed like soldiers, they are more likely to interpret the situation as hostile and will more readily identify violence as the best solution.
While robocops are problematic enough, the problem we’re facing is so much greater than technology-enhanced domestic soldiers.
As I make clear in my book A Government of Wolves: The Emerging American Police State, we’re on the cusp of a major paradigm shift from fascism disguised as a democracy into a technocratic surveillance society in which there are no citizens, only targets. We’re all targets now, to be scanned, surveilled, tracked and treated like blips on a screen.
What’s taking place in Maryland right now is a perfect example of this shift. With Congress’ approval and generous funding (and without the consensus of area residents), the Army has just launched two massive, billion dollar surveillance airships into the skies over Baltimore, each airship three times the size of a Goodyear blimp, ostensibly to defend against cruise missile attacks. Government officials claim the surveillance blimps, which provide highly detailed radar imaging within a 340-mile radius, are not presently being used to track individuals or carry out surveillance against citizens, but it’s only a matter of time before that becomes par for the course.
In New York, police will soon start employing mobile scanners that allow them to scan people on the street in order to detect any hidden objects under their clothes, whether it be a gun, a knife or anything else that appears “suspicious.” The scanners will also let them carry out enhanced data collection in the field—fingerprints, iris scans, facial mapping—which will build the government’s biometric database that much faster. These scanners are a more mobile version of the low radiation X-ray vans used to scan the contents of passing cars.
Google Glass, being considered for use by officers, would allow police to access computer databases, as well as run background checks on and record anyone in their line of sight.
One program, funded by $160 million in asset forfeiture funds, would equip police officers and vehicles with biometric smartphones that can scan individuals’ fingerprints and cross check it against criminal databases. The devices will also contain real-time 911 data, warrant information from federal, state and city databases, photographs of missing persons, suspects, Crime Stoppers posters and other persons of interest, and the latest cache of information on terror suspects.
Stand-off lasers can detect alcohol vapors in a moving car. “If alcohol vapors are detected in the car, a message with a photo of the car including its license plate is sent to a police officer waiting down the road. Then, the police officer stops the car and checks for signs of alcohol using conventional tests.”
Ekin Patrol cameras, described as “the first truly intelligent patrol unit in the world,” can not only detect the speed of passing cars but can generate tickets instantaneously, recognize and store the license plates of stopped, moving or parked vehicles, measure traffic density and violation data and engage in facial recognition of drivers and passengers.
Collectively, all of these gizmos, gadgets and surveillance devices render us not just suspects in a surveillance state but also inmates in an electronic concentration camp. As journalist Lynn Stuart Parramore notes:
The Information Age … has turned out rather differently than many expected. Instead of information made available for us, the key feature seems to be information collected about us. Rather of granting us anonymity and privacy with which to explore a world of facts and data, our own data is relentlessly and continually collected and monitored. The wondrous things that were supposed to make our lives easier—mobile devices, gmail, Skype, GPS, and Facebook—have become tools to track us, for whatever purposes the trackers decide. We have been happily shopping for the bars to our own prisons, one product at a time.
Unfortunately, eager as we are for progress and ill-suited to consider the moral and spiritual ramifications of our planned obsolescence, we have yet to truly fathom what it means to live in an environment in which we are always on red alert, always under observation, and always having our actions measured, judged and found wanting under some law or other intrusive government regulation.
There are those who are not at all worried about this impending future, certain that they have nothing to hide. Rest assured, soon we will all have nowhere to hide from the prying eyes of a government bound and determined to not only know everything about us—where we go, what we do, what we say, what we read, what we keep in our pockets, how much money we have on us, how we spend that money, who we know, what we eat and drink, and where we are at any given moment—but prepared to use that information against us, whenever it becomes convenient and profitable to do so.
Making the case that we’re being transformed as citizens, neighbors and human beings, Parramore identifies six factors arising from a society in which surveillance becomes the norm: a shift in power dynamics, in which the “watcher” becomes all-seeing and all-powerful; an incentive to turn citizens into outlaws by criminalizing otherwise lawful activities; diminished citizenship; an environment of suspicion and paranoia; a divided society comprised of the watchers and the watched; and “a society of edgy, unhappy beings whose sense of themselves is chronically diminished.”
As Parramore rightly concludes, this is “not exactly a recipe for Utopia.”
SC125-12
http://www.globalresearch.ca/ruin-is-our-future/5425131
Ruin Is Our Future
Neoconservatives arrayed in their Washington offices are congratulating themselves on their success in using the Charlie Hebdo affair to reunite Europe with Washington’s foreign policy. No more French votes with the Palestinians against the Washington-Israeli position.
No more growing European sympathy with the Palestinians.
No more growing European opposition to launching new wars in the Middle East.
No more calls from the French president to end the sanctions against Russia.
Do the neoconservatives also understand that they have united Europeans with the right-wing anti-immigration political parties? The wave of support for the Charlie Hebdo cartoonists is the wave of Marine Le Pen’s National Front, Nigel Farage’s UK Independence Party, and Germany’s PEGIDA sweeping over Europe. These parties are empowered by the anti-immigration fervor that was orchestrated in order to reunite Europeans with Washington and Israel.
Once again the arrogant and insolent neoconservatives have blundered. Charlie Hebdo’s empowerment of the anti-immigration parties has the potential to revolutionize European politics and destroy Washington’s empire. See my weekend interview with King World News for my thoughts on this potential game-changer.
The reports from the UK Daily Mail and from Zero Hedge that Russia has cut off natural gas deliveries to six European countries must be incorrect. These sources are credible and well-informed, but such a cut-off would have instantly produced political and financial turmoil of which there is no sign. Therefore, unless there is a news blackout, Russia’s action has been misunderstood.
We know something real has happened. Otherwise, EU energy official Maros Sefcovic would not be expressing such consternation. Although I am without any definite information, I believe I know what the real story is. Russia, tired of Ukraine’s theft of the natural gas that passes through the country on its way to delivery to Europe, has made a decision to route the gas to Turkey, thus bypassing Ukraine.
The Russian energy minister has confirmed this decision and added that if European countries wish to avail themselves of this gas supply, they must put in place the infrastructure or pipeline to bring the gas into their countries.
In other words, there is a potential for a cutoff in the future, but no cutoff at the present.
These two events–Charlie Hebdo and the Russian decision to cease delivering gas to Europe via Ukraine–should remind us that the potential for black swans, and unintended consequences of official decisions that can produce black swans, always exist. Not even the American “superpower” is immune from black swans.
There is as much circumstantial evidence that the CIA and French Intelligence are responsible for the Charlie Hebdo shootings as there is that the shootings were carried out by the two brothers whose ID was conveniently found in the alleged get-away car. As the French made certain that the brothers were killed before they could talk, we will never know what they had to say about the plot.
The only evidence we have that the brothers are guilty is the claim by the security forces. Every time I hear government claims without real evidence, I remember Saddam Hussein’s “weapons of mass destruction,” Assad’s “use of chemical weapons,” and Iran’s “nuclear weapons program.” If a US National Security Advisor can conjure up out of thin air “mushroom clouds over an American city,” Cherif and Said Kouachi can be turned into killers. After all, they are dead and cannot protest.
If this was, and we will never know for certain, a false flag attack, it achieved Washington’s goal of reuniting Europe under Washington and Israeli auspices. But this success has an unintended consequence. The unintended consequence is to unify Europe under the anti-immigration policy of the right-wing parties, thus empowering the leaders of those parties.
If this surmise is correct, Marie Le Pen and Nigel Farage will find their lives and/or reputations in danger as Washington will resist the rise of European governments that do not adhere to Washington’s line.
The consternation caused by Russia’s decision to relocate its gas delivery to Europe is proof that Russia holds many cards that Russia could play that would bring down the political and financial structures of the Western World.
China holds similar cards.
The two countries are not playing their cards, because they do not think that they need them. Instead, the two powers are withdrawing from the Western financial system that serves Western hegemony over the world. They are creating all of the economic institutions that they need in order to be completely independent of the West.
Therefore, the Russian and Chinese governments reason, “Why be provocative and slap down the Western fools. They might resort to their nuclear weapons, and the entire world would be lost. Let’s just walk away while they encourage us to depart with their provocations.”
We can be thankful that Vladimir Putin and the leaders of the Chinese government are both intelligent and humane, unlike Western leaders.
Imagine, for example, the dire consequences for the West if Putin were to become personally involved as a result of the numerous affronts to both Russia and Putin himself. Putin can destroy NATO and the entire Western financial system whenever he wants. All he has to do is to announce that as NATO has declared economic war against Russia, Russia no longer sells energy to NATO members.
The NATO alliance would dissolve as Europe cannot survive without Russian energy supplies. Washington’s empire would end.
Putin realizes that the insolent neoconservatives would have to push the nuclear button in order to save face. Unlike Putin, their egos are on the line. Thus, Putin saves the world from nuclear war by not being provocative.
Now, imagine if the Chinese government were to lose its patience with Washington. To confront the “exceptional, indispensable, unipower” with the reality of its impotence, all China needs to do is to dump its massive dollar-denominated financial assets on the market, all at once, just as the Federal Reserve’s bullion bank agents dump massive uncovered gold contracts on the future’s market.
In order to avoid US financial collapse, the Federal Reserve would have to print massive amounts of new dollars with which to purchase the dumped Chinese holdings. As the Federal Reserve would protect US financial markets by purchasing the dumped Chinese holdings, the Chinese would lose nothing from the sale. It is the next step that is decisive. The Chinese government then dumps the massive holdings of dollars it has received from its selloff of dollar-dominated financial instruments.
Now what happens? The Fed can print dollars with which to purchase the dumped Chinese holdings, but the Fed cannot print foreign currencies with which to buy up the dumped dollars.
The massive supply of dollars dumped in the exchange market by China would have no takers. The dollar’s value would collapse. Washington could no longer pay its bills by printing money. Americans living in an import-dependent country, thanks to jobs offshoring, would be faced with high prices that would seriously erode their living standard. The United States would experience economic, social, and political instability.
Putting aside their brainwashing, their defensiveness and patriotic support of the regime in Washington, Americans need to ask themselves: How is it possible that the government of the United States, an alleged Superpower, is so unaware of its true vulnerabilities that Washington is capable of pushing two real powers until they have had enough and play the cards that they hold?
Americans need to understand that the only thing exceptional about the US is the ignorance of the population and the stupidity of the government.
What other country would let a handful of Wall Street crooks control its economic and foreign policy, run its central bank and Treasury, and subordinate citizens’ interests to the interests of the one percent’s pocketbook?
A population this insouciant is at the total mercy of Russia and China.
Yesterday there was a black swan event, an event that could yet unleash other black swan events
The Swiss central bank announced an end to its pegging of the Swiss franc to the euro and US dollar.
Three years ago flight from euros and dollars into Swiss francs pushed the exchange value of the franc so high that it threatened the existence of the Swiss export industries. Switzerland announced that any further inflows of foreign currencies into francs would be met by creating new francs to absorb the inflows so as not to drive up the exchange rate further. In other words, the Swiss pegged the franc.
Yesterday the Swiss central bank announced that the peg was off. The franc instantly rose in value. Stocks of Swiss export companies fell, and hedge funds wrongly positioned incurred major hits to their solvency.
Why did the Swiss remove the peg? It was not a costless action. It cost the central bank and Swiss export industries substantially.
The answer is that the EU attorney general ruled that it was permissible for the EU central bank to initiate Quantitative Easing–that is, the printing of new euros–in order to bail out the mistakes of the private bankers. This decision means that Switzerland expects to be confronted with massive flight from the euro and that the Swiss central bank is unwilling to print enough new Swiss francs to maintain the peg. The Swiss central bank believes that it would have to run the printing press so hard that the basis of the Swiss money supply would explode, far exceeding the GDP of Switzerland.
The money printing policy of the US, Japan, and apparently now the EU has forced other countries to inflate their own currencies in order to prevent the rise in the exchange value of their currencies that would curtail their ability to export and earn foreign currencies with which to pay for their imports. Thus Washington has forced the world into printing money.
The Swiss have backed out of this system. Will others follow, or will the rest of the world follow the Russians and Chinese governments into new monetary arrangements and simply turn their backs on the corrupt and irredeemable West?
The level of corruption and manipulation that characterizes US economic and foreign policy today was impossible in earlier times when Washington’s ambition was constrained by the Soviet Union. The greed for hegemonic power has made Washington the most corrupt government on earth.
The consequence of this corruption is ruin.
“Leadership passes into empire. Empire begets insolence. Insolence brings ruin.”
Ruin is America’s future.
Ruin Is Our Future
Neoconservatives arrayed in their Washington offices are congratulating themselves on their success in using the Charlie Hebdo affair to reunite Europe with Washington’s foreign policy. No more French votes with the Palestinians against the Washington-Israeli position.
No more growing European sympathy with the Palestinians.
No more growing European opposition to launching new wars in the Middle East.
No more calls from the French president to end the sanctions against Russia.
Do the neoconservatives also understand that they have united Europeans with the right-wing anti-immigration political parties? The wave of support for the Charlie Hebdo cartoonists is the wave of Marine Le Pen’s National Front, Nigel Farage’s UK Independence Party, and Germany’s PEGIDA sweeping over Europe. These parties are empowered by the anti-immigration fervor that was orchestrated in order to reunite Europeans with Washington and Israel.
Once again the arrogant and insolent neoconservatives have blundered. Charlie Hebdo’s empowerment of the anti-immigration parties has the potential to revolutionize European politics and destroy Washington’s empire. See my weekend interview with King World News for my thoughts on this potential game-changer.
The reports from the UK Daily Mail and from Zero Hedge that Russia has cut off natural gas deliveries to six European countries must be incorrect. These sources are credible and well-informed, but such a cut-off would have instantly produced political and financial turmoil of which there is no sign. Therefore, unless there is a news blackout, Russia’s action has been misunderstood.
We know something real has happened. Otherwise, EU energy official Maros Sefcovic would not be expressing such consternation. Although I am without any definite information, I believe I know what the real story is. Russia, tired of Ukraine’s theft of the natural gas that passes through the country on its way to delivery to Europe, has made a decision to route the gas to Turkey, thus bypassing Ukraine.
The Russian energy minister has confirmed this decision and added that if European countries wish to avail themselves of this gas supply, they must put in place the infrastructure or pipeline to bring the gas into their countries.
In other words, there is a potential for a cutoff in the future, but no cutoff at the present.
These two events–Charlie Hebdo and the Russian decision to cease delivering gas to Europe via Ukraine–should remind us that the potential for black swans, and unintended consequences of official decisions that can produce black swans, always exist. Not even the American “superpower” is immune from black swans.
There is as much circumstantial evidence that the CIA and French Intelligence are responsible for the Charlie Hebdo shootings as there is that the shootings were carried out by the two brothers whose ID was conveniently found in the alleged get-away car. As the French made certain that the brothers were killed before they could talk, we will never know what they had to say about the plot.
The only evidence we have that the brothers are guilty is the claim by the security forces. Every time I hear government claims without real evidence, I remember Saddam Hussein’s “weapons of mass destruction,” Assad’s “use of chemical weapons,” and Iran’s “nuclear weapons program.” If a US National Security Advisor can conjure up out of thin air “mushroom clouds over an American city,” Cherif and Said Kouachi can be turned into killers. After all, they are dead and cannot protest.
If this was, and we will never know for certain, a false flag attack, it achieved Washington’s goal of reuniting Europe under Washington and Israeli auspices. But this success has an unintended consequence. The unintended consequence is to unify Europe under the anti-immigration policy of the right-wing parties, thus empowering the leaders of those parties.
If this surmise is correct, Marie Le Pen and Nigel Farage will find their lives and/or reputations in danger as Washington will resist the rise of European governments that do not adhere to Washington’s line.
The consternation caused by Russia’s decision to relocate its gas delivery to Europe is proof that Russia holds many cards that Russia could play that would bring down the political and financial structures of the Western World.
China holds similar cards.
The two countries are not playing their cards, because they do not think that they need them. Instead, the two powers are withdrawing from the Western financial system that serves Western hegemony over the world. They are creating all of the economic institutions that they need in order to be completely independent of the West.
Therefore, the Russian and Chinese governments reason, “Why be provocative and slap down the Western fools. They might resort to their nuclear weapons, and the entire world would be lost. Let’s just walk away while they encourage us to depart with their provocations.”
We can be thankful that Vladimir Putin and the leaders of the Chinese government are both intelligent and humane, unlike Western leaders.
Imagine, for example, the dire consequences for the West if Putin were to become personally involved as a result of the numerous affronts to both Russia and Putin himself. Putin can destroy NATO and the entire Western financial system whenever he wants. All he has to do is to announce that as NATO has declared economic war against Russia, Russia no longer sells energy to NATO members.
The NATO alliance would dissolve as Europe cannot survive without Russian energy supplies. Washington’s empire would end.
Putin realizes that the insolent neoconservatives would have to push the nuclear button in order to save face. Unlike Putin, their egos are on the line. Thus, Putin saves the world from nuclear war by not being provocative.
Now, imagine if the Chinese government were to lose its patience with Washington. To confront the “exceptional, indispensable, unipower” with the reality of its impotence, all China needs to do is to dump its massive dollar-denominated financial assets on the market, all at once, just as the Federal Reserve’s bullion bank agents dump massive uncovered gold contracts on the future’s market.
In order to avoid US financial collapse, the Federal Reserve would have to print massive amounts of new dollars with which to purchase the dumped Chinese holdings. As the Federal Reserve would protect US financial markets by purchasing the dumped Chinese holdings, the Chinese would lose nothing from the sale. It is the next step that is decisive. The Chinese government then dumps the massive holdings of dollars it has received from its selloff of dollar-dominated financial instruments.
Now what happens? The Fed can print dollars with which to purchase the dumped Chinese holdings, but the Fed cannot print foreign currencies with which to buy up the dumped dollars.
The massive supply of dollars dumped in the exchange market by China would have no takers. The dollar’s value would collapse. Washington could no longer pay its bills by printing money. Americans living in an import-dependent country, thanks to jobs offshoring, would be faced with high prices that would seriously erode their living standard. The United States would experience economic, social, and political instability.
Putting aside their brainwashing, their defensiveness and patriotic support of the regime in Washington, Americans need to ask themselves: How is it possible that the government of the United States, an alleged Superpower, is so unaware of its true vulnerabilities that Washington is capable of pushing two real powers until they have had enough and play the cards that they hold?
Americans need to understand that the only thing exceptional about the US is the ignorance of the population and the stupidity of the government.
What other country would let a handful of Wall Street crooks control its economic and foreign policy, run its central bank and Treasury, and subordinate citizens’ interests to the interests of the one percent’s pocketbook?
A population this insouciant is at the total mercy of Russia and China.
Yesterday there was a black swan event, an event that could yet unleash other black swan events
The Swiss central bank announced an end to its pegging of the Swiss franc to the euro and US dollar.
Three years ago flight from euros and dollars into Swiss francs pushed the exchange value of the franc so high that it threatened the existence of the Swiss export industries. Switzerland announced that any further inflows of foreign currencies into francs would be met by creating new francs to absorb the inflows so as not to drive up the exchange rate further. In other words, the Swiss pegged the franc.
Yesterday the Swiss central bank announced that the peg was off. The franc instantly rose in value. Stocks of Swiss export companies fell, and hedge funds wrongly positioned incurred major hits to their solvency.
Why did the Swiss remove the peg? It was not a costless action. It cost the central bank and Swiss export industries substantially.
The answer is that the EU attorney general ruled that it was permissible for the EU central bank to initiate Quantitative Easing–that is, the printing of new euros–in order to bail out the mistakes of the private bankers. This decision means that Switzerland expects to be confronted with massive flight from the euro and that the Swiss central bank is unwilling to print enough new Swiss francs to maintain the peg. The Swiss central bank believes that it would have to run the printing press so hard that the basis of the Swiss money supply would explode, far exceeding the GDP of Switzerland.
The money printing policy of the US, Japan, and apparently now the EU has forced other countries to inflate their own currencies in order to prevent the rise in the exchange value of their currencies that would curtail their ability to export and earn foreign currencies with which to pay for their imports. Thus Washington has forced the world into printing money.
The Swiss have backed out of this system. Will others follow, or will the rest of the world follow the Russians and Chinese governments into new monetary arrangements and simply turn their backs on the corrupt and irredeemable West?
The level of corruption and manipulation that characterizes US economic and foreign policy today was impossible in earlier times when Washington’s ambition was constrained by the Soviet Union. The greed for hegemonic power has made Washington the most corrupt government on earth.
The consequence of this corruption is ruin.
“Leadership passes into empire. Empire begets insolence. Insolence brings ruin.”
Ruin is America’s future.
SC125-11
http://kunstler.com/clusterfuck-nation/a-solemn-pause/
A Solemn Pause
Events are moving faster than brains now. Isn’t it marvelous that gasoline at the pump is a buck cheaper than it was a year ago? A lot of short-sighted idiots are celebrating, unaware that the low oil price is destroying the capacity to deliver future oil at any price. The shale oil wells in North Dakota and Texas, the Tar Sand operations of Alberta, and the deep-water rigs here and abroad just don’t pencil-out economically at $45-a-barrel. So the shale oil wells that are up-and-running will produce for a year and there will be no new ones drilled when they peter out — which is at least 50 percent the first year and all gone after four years.
Anyway, the financial structure of the shale play was suicidal from the get-go. You finance the drilling and fracking with high-yield “junk bonds,” that is, money borrowed from “investors.” You drill like mad and you produce a lot of oil, but even at $105-a-barrel you can’t make profit, meaning you can’t really pay back the investors who loaned you all that money, a lot of it obtained via Too Big To Fail bank carry-trades, levered-up on ”margin,” which allowed said investors to pretend they were risking more money than they had. And then all those levered-up investments — i.e. bets — get hedged in a ghostly underworld of unregulated derivatives contracts that pretend to act as insurance against bad bets with funny money, but in reality can never pay out because the money is not there (and never was.) And then come the margin calls. Uh Oh….
In short, enjoy the $2.50-a-gallon fill-ups while you can, grasshoppers, because when the current crop of fast-depleting shale oil wells dries up, that will be all she wrote. When all those bonds held up on their skyhook derivative hedges go south, there will be no more financing available for the entire shale oil project. No more high-yield bonds will be issued because the previous issues defaulted. Very few new wells (if any) will be drilled. American oil production will not return to its secondary highs (after the 1970 all-time high) of 2014-15. The wish of American energy independence will be steaming over the horizon on the garbage barge of broken promises. And all, that, of course, is only one part of the story, because there is the social and political fallout to follow.
The table is set for the banquet of consequences. The next chapter in the oil story is more likely to be scarcity rather than just a boomerang back to higher prices. The tipping point for that will come with the inevitable destabilizing of Saudi Arabia, which I believe will happen this year when King Abdullah ibn Abdilaziz, 91, son of Ibn Saud, departs his intensive care throne for the glorious Jannah of virgins and feasts. Speaking of feasts, just imagine how the Islamic State (or ISIS) must be licking its chops at the prospect of sweeping over an Arabia no longer defined as Saudi! The Saudis are so spooked that they announced plans last week for a kind of super Berlin-type wall to be constructed along the northern border with Iraq. But that brings to mind a laughable Maginot Line scenario in which the masked invaders just make an end run around the darn thing. In any case, Saudi Arabia will already be disintegrating internally as competing clans and princes vie for control. And then, what will the US do? Rush in there shock-and-awe style? Bust up the joint? That’ll make things better, won’t it? (See American Sniper.)
Meanwhile, there will be plenty to contend with state-side. The next time there is a pratfall in the stock and bond markets and the TBTF banks — and there is sure to be — the rescue tricks are liable to be a whole lot more severe than the TARP, ZIRP, and QE hijinks of 2008-2015. Next time around, the federals are going to have to confiscate stuff, break promises, take away things, and rough some people up. The question is how much of this abuse will the public take? I take a certain comfort knowing how heavily armed America is. And not just the lunatic fringe. The thought of Hillary and Jeb out there beating the bushes for big money makes me laugh. They are so not going to happen. Just wait. For now, take this MLK holiday break to reflect on the fragility of our own country, and gird your loins for the week to come.
A Solemn Pause
Events are moving faster than brains now. Isn’t it marvelous that gasoline at the pump is a buck cheaper than it was a year ago? A lot of short-sighted idiots are celebrating, unaware that the low oil price is destroying the capacity to deliver future oil at any price. The shale oil wells in North Dakota and Texas, the Tar Sand operations of Alberta, and the deep-water rigs here and abroad just don’t pencil-out economically at $45-a-barrel. So the shale oil wells that are up-and-running will produce for a year and there will be no new ones drilled when they peter out — which is at least 50 percent the first year and all gone after four years.
Anyway, the financial structure of the shale play was suicidal from the get-go. You finance the drilling and fracking with high-yield “junk bonds,” that is, money borrowed from “investors.” You drill like mad and you produce a lot of oil, but even at $105-a-barrel you can’t make profit, meaning you can’t really pay back the investors who loaned you all that money, a lot of it obtained via Too Big To Fail bank carry-trades, levered-up on ”margin,” which allowed said investors to pretend they were risking more money than they had. And then all those levered-up investments — i.e. bets — get hedged in a ghostly underworld of unregulated derivatives contracts that pretend to act as insurance against bad bets with funny money, but in reality can never pay out because the money is not there (and never was.) And then come the margin calls. Uh Oh….
In short, enjoy the $2.50-a-gallon fill-ups while you can, grasshoppers, because when the current crop of fast-depleting shale oil wells dries up, that will be all she wrote. When all those bonds held up on their skyhook derivative hedges go south, there will be no more financing available for the entire shale oil project. No more high-yield bonds will be issued because the previous issues defaulted. Very few new wells (if any) will be drilled. American oil production will not return to its secondary highs (after the 1970 all-time high) of 2014-15. The wish of American energy independence will be steaming over the horizon on the garbage barge of broken promises. And all, that, of course, is only one part of the story, because there is the social and political fallout to follow.
The table is set for the banquet of consequences. The next chapter in the oil story is more likely to be scarcity rather than just a boomerang back to higher prices. The tipping point for that will come with the inevitable destabilizing of Saudi Arabia, which I believe will happen this year when King Abdullah ibn Abdilaziz, 91, son of Ibn Saud, departs his intensive care throne for the glorious Jannah of virgins and feasts. Speaking of feasts, just imagine how the Islamic State (or ISIS) must be licking its chops at the prospect of sweeping over an Arabia no longer defined as Saudi! The Saudis are so spooked that they announced plans last week for a kind of super Berlin-type wall to be constructed along the northern border with Iraq. But that brings to mind a laughable Maginot Line scenario in which the masked invaders just make an end run around the darn thing. In any case, Saudi Arabia will already be disintegrating internally as competing clans and princes vie for control. And then, what will the US do? Rush in there shock-and-awe style? Bust up the joint? That’ll make things better, won’t it? (See American Sniper.)
Meanwhile, there will be plenty to contend with state-side. The next time there is a pratfall in the stock and bond markets and the TBTF banks — and there is sure to be — the rescue tricks are liable to be a whole lot more severe than the TARP, ZIRP, and QE hijinks of 2008-2015. Next time around, the federals are going to have to confiscate stuff, break promises, take away things, and rough some people up. The question is how much of this abuse will the public take? I take a certain comfort knowing how heavily armed America is. And not just the lunatic fringe. The thought of Hillary and Jeb out there beating the bushes for big money makes me laugh. They are so not going to happen. Just wait. For now, take this MLK holiday break to reflect on the fragility of our own country, and gird your loins for the week to come.
Wednesday, January 14, 2015
SC125-10
http://thearchdruidreport.blogspot.com/
March of the Squirrels
Prediction is a difficult business at the best of times, but the difficulties seem to change from one era to another. Just now, at least for me, the biggest challenge is staying in front of the headlines. So far, the crash of 2015 is running precisely to spec. Smaller companies in the energy sector are being hammered by the plunging price of oil, while the banking industry insists that it’s not in trouble—those of my readers who recall identical expressions of misplaced confidence on the part of bankers in news stories just before the 2008 real estate crash will know just how seriously to take such claims.
The shiny new distractions disguised as energy breakthroughs I mentioned here two weeks ago have also started to show up. A glossy puff piece touting oceanic thermal energy conversion (OTEC), a white-elephant technology which was tested back in the 1970s and shown to be hopelessly uneconomical, shared space in the cornucopian end of the blogosphere over the last week with an equally disingenuous puff piece touting yet another rehash of nuclear fission as the answer to our energy woes. (Like every fission technology, of course, this one will be safe, clean, and affordable until someone actually tries to build it.)
No doubt there will shortly be other promoters scrambling for whatever government subsidies and private investment funds might be available for whatever revolutionary new energy breakthrough (ahem) will take the place of hydrofractured shales as America’s favorite reason to do nothing. I admit to a certain feeling of disappointment, though, in the sheer lack of imagination displayed so far in that competition. OTEC and molten-salt fission reactors were already being lauded as America’s energy salvation back when I was in high school: my junior year, I think it was, energy was the topic du jour for the local high school debate league, and we discussed those technologies at length. So did plenty of more qualified people, which is why both of them—and quite a few other superficially plausible technologies—never made it off the drawing board.
Something else came in for discussion that same year, and it’s a story with more than a little relevance to the current situation. A team from another school in the south Seattle suburbs had a brainstorm, did some frantic research right before a big debate tournament, and showed up with data claiming to prove that legions of squirrels running in squirrel cages, powering little generators, could produce America’s electricity. Since no one else happened to have thought of that gimmick, none of the other teams had evidence to refute them, and they swept the tournament. By the next tournament, of course, everyone else had crunched the numbers and proceeded to stomp the squirrel promoters, but for years to come the phrase “squirrel case” saw use in local debate circles as the standard term for a crackpot proposal backed with seemingly plausible data.
The OTEC plants and molten-salt reactors currently being hawked via the media are squirrel cases in exactly the same sense; they sound plausible as long as you don’t actually crunch the numbers and see whether they’re economically and thermodynamically viable. The same thing was true of the fracking bubble that’s messily imploding around us right now, not to mention the ethanol and biodiesel projects, the hydrogen economy, and the various other glittery excuses that have occupied so much useless space in the collective conversation of our time. So, it has to be said, do the more enthusiastic claims being made for renewable energy just now.
Don’t get me wrong, I’m a great fan of renewable energy. When extracting fossil carbon from the earth stops being economically viable—a point that may arrive a good deal sooner than many people expect—renewables are what we’ll have left, and the modest but real energy inputs that can be gotten from renewable sources when they don’t receive energy subsidies from fossil fuels could make things significantly better for our descendants. The fact remains that in the absence of subsidies from fossil fuels, renewables won’t support the absurdly extravagant energy consumption that props up what passes for an ordinary middle class lifestyle in the industrial world these days.
That’s the pterodactyl in the ointment, the awkward detail that most people even in the greenest of green circles don’t want to discuss. Force the issue into a conversation, and one of the more common responses you’ll get is the exasperated outburst “But there has to be something.” Now of course this simply isn’t true; no law of nature, no special providence, no parade of marching squirrels assures us that we can go ahead and use as much energy as we want in the serene assurance that more will always be waiting for us. It’s hard to think of a more absurd delusion, and the fact that a great many people making such claims insist on their superior rationality and pragmatism just adds icing to the cake.
Let’s go ahead and say it in so many words: there doesn’t have to be a replacement for fossil fuels. In point of fact, there’s good reason to think that no such replacement exists anywhere in the small corner of the universe accessible to us, and once fossil fuels are gone, the rest of human history will be spent in a world that doesn’t have the kind of lavish energy resources we’re used to having. Concentrations of energy, like all other natural resources, follow what’s known as the power law, the rule—applicable across an astonishingly broad spectrum of phenomena—that whatever’s ten times as concentrated is approximately ten times as rare. At the dawn of the industrial age, the reserves of fossil fuel in the Earth’s crust were the richest trove of stored energy on the planet, and of course fossil fuel extraction focused on the richest and most easily accessible prizes first, just as quickly as they could be found.
Those are gone now. Since 2005, when conventional petroleum production peaked worldwide, the industrial world has been engaged in what amounts to a frantic game of make-believe, pretending that scraping the bottom of the oil barrel proves that the barrel is still full. Every half-baked scheme for producing liquid fuels got flooded with as much cheap credit as its promoters could squander. Some of those—biodiesel and cellulosic ethanol come to mind—turned out to be money pits so abysmal that even a tide of freshly printed money couldn’t do much more than gurgle on the way down; others—above all, shale fracking and tar sand mining—were able to maintain a pretense of profitability for a while, with government subsidies, junk bonds, loans from clueless banks, and round after round of economic stimulus from central banks over much of the world serving to prop up industries that, in the final analysis, were never economically viable in the first place.
The collapse in the price of oil that began this June put paid to that era of make-believe. The causes of the oil crash are complex, but back of them all, I suggest, is a straightforward bit of economics that almost everyone’s been trying to avoid for a decade now. To maintain economic production at any given level, the global economy has to produce enough real wealth—not, please note, enough money, but enough actual goods and services—to cover resource extraction, the manufacture and replacement of the whole stock of nonfinancial capital goods, and whatever level of economic waste is considered socially and politically necessary. If the amount of real wealth needed to keep extracting resources at a given rate goes up steeply, the rest of the economy won’t escape the consequences: somewhere or other, something has to give.
The economic history of the last decade is precisely the story of what gave in what order, or to put it another way, how the industrial world threw everything in sight under the bus to keep liquid fuel production around its 2005 peak. Infrastructure was abandoned to malign neglect, the last of the industrial world’s factory jobs got offshored to Third World sweatshops, standards of living for most people dropped steadily—well, you can fill in the blanks as well as I can. Consumption remained relatively high only because central banks flooded the global economy with limitless cheap credit, while the US government filled the gap between soaring government expenditures and flat or shrinking tax receipts by the simple equivalent of having the Fed print enough money each month to cover the federal deficit. All these things were justified by the presupposition that the global economy was just going through a temporary rough patch, and normal growth would return any day now.
But normal growth has not returned. It’s not going to return, either, because it was only “normal” in an era when cheap abundant fossil fuels greased the wheels of every kind of economic activity. As I noted in a blog post here back in 2007, the inevitable consequence of soaring oil prices is what economists call demand destruction: less formally, the process by which people who can’t afford oil stop using it, bringing the price back down. Since what’s driving the price of oil up isn’t merely market factors, but the hard geological realities of depletion, not everyone who got forced out of the market when the price was high can get back into it when the price is low—gas at $2 a gallon doesn’t matter if your job scavenging abandoned houses doesn’t pay enough for you to cover the costs of a car, and let’s not even talk about how much longer the local government can afford to maintain streets in driveable condition.
Demand destruction sounds very abstract. In practice, though, it’s all too brutally concrete: a rising tide of job losses, business failures, slumping standards of living, cutbacks to every kind of government service at every level, and so on down the litany of decline that’s become part of everyday life in the industrial world over the last decade—leaving aside, that is, the privileged few who have been sheltered from those changes so far. Unless I miss my guess, we’re going to see those same changes shift into overdrive in the months and years ahead. The attempt to boost the world out of its deepening slump by flooding the planet with cheap credit has failed; the global economy is choking on a supersized meal of unpayable IOUs and failed investments; stock markets and other venues for the exchange of paper wealth are so thoroughly gimmicked that they’ve become completely detached from the real economy of goods and services, and the real economy is headed south in a hurry.
Those unwelcome realities are going to constrain any attempt by the readers of this blog to follow up on the proposal I made in last week’s post, and take constructive action in the face of the crisis that’s now upon us. The energy situation here in the US could have been helped substantially if conservation measures and homescale renewables had received any kind of significant support from the oh-so-allegedly-green Democratic party, back when it still had enough clout in Congress to matter; the economic situation would be nowhere near as dire if governments and central banks had bitten the bullet and dealt with the crisis of our time in 2008 or thereafter, rather than papering things over with economic policies that assumed that enough money could negate the laws of physics and geology. At this point, it’s much too late for any sort of collective action on either of those fronts—and of course the political will needed to do anything meaningful about either one went missing in action at the end of the 1970s and hasn’t been seen since.
Thus all of us will have to cope with a world in which the cost of energy suffers from drastic and economically devastating swings, and the sort of localized infrastructure that could cushion the impact of those swings wasn’t built in time. All of us will also have to cope with a global economy in disarray, in which bank failures, currency crises, credit shortages, and crisis measures imposed by government fiat will take the place of the familiar workings of a market economy. Those are baked into the cake at this point, and what individuals, families, and community groups will be able to do in the years ahead will be constrained by the limits those transformations impose.
Those of my readers who still have a steady income and a home they expect to be able to keep would still be well advised to doublecheck their insulation and weatherstripping, install solar water heating and other homescale renewable energy technologies, and turn the back lawn into a vegetable garden with room for a chicken coop, if by any chance they haven’t taken these sensible steps already. A great many of my readers don’t have such options, and at this point, it may be a long time before such options are readily available again. This is crunch time, folks; unless I’m very much mistaken, we’re on the brink of a historical inflection point like the ones in 1789 and 1914, one of the watersheds of time after which nothing will ever be the same again.
There’s still much that can be done in other spheres, and I’ll be discussing some of those things in upcoming posts. In terms of energy and the economy, though, I suspect that for a lot of us, the preparations we’re going to be able to make are the ones we’ve already made, and a great many people whose plans depend on having a stable income and its associated perks and privileges may find themselves scrambling for options when the unraveling of the economy leaves them without one. Those of my readers who have been putting off the big changes that might make them more secure in hard times may be facing the hard decision of making those changes now, in a hurry, or facing the crisis of our age in the location and situation they’re in right now. Those who’ve gone ahead and made the changes—well, you know as well as I do that it’s time to review your plans, doublecheck the details, batten down the hatches and get ready to weather the storm.
One of the entertainments to be expected as the year draws on and the crisis bears down on us all, though, is a profusion of squirrel cases of the sort discussed toward the beginning of this essay. It’s an interesting regularity of history that the closer to disaster a society in decline becomes, the more grandiose, triumphalist, and detached from the grubby realities its fantasies generally get. I’m thinking here of the essay on military affairs from the last years of the Roman world that’s crammed full of hopelessly unworkable war machines, and of the final, gargantuan round of Mayan pyramids built on the eve of the lowland classic collapse. The habit of doubling down in the face of self-induced catastrophe seems to be deeply engrained in the human psyche, and I don’t doubt for a moment that we’ll see some world-class examples of the phenomenon in the years immediately ahead.
That said, the squirrel cases mentioned earlier—the OTEC and molten-salt fission proposals—suffer from a disappointing lack of imagination. If our society is going to indulge in delusional daydreams as it topples over the edge of crisis, couldn’t we at least see some proposals that haven’t been rehashed since I was in high school? I can only think of one such daydream that has the hallucinatory quality our current circumstances deserve; yes, that would be the proposal, being made quite seriously in the future-oriented media just now, that we can solve all our energy problems by mining helium-3 on the Moon and ship it to Earth to fuel fusion power plants we have absolutely no idea how to build yet. As faith-based cheerleading for vaporware, which is of course what those claims are, they set a very high standard—but it’s a standard that will doubtless be reached and exceeded in due time...
March of the Squirrels
Prediction is a difficult business at the best of times, but the difficulties seem to change from one era to another. Just now, at least for me, the biggest challenge is staying in front of the headlines. So far, the crash of 2015 is running precisely to spec. Smaller companies in the energy sector are being hammered by the plunging price of oil, while the banking industry insists that it’s not in trouble—those of my readers who recall identical expressions of misplaced confidence on the part of bankers in news stories just before the 2008 real estate crash will know just how seriously to take such claims.
The shiny new distractions disguised as energy breakthroughs I mentioned here two weeks ago have also started to show up. A glossy puff piece touting oceanic thermal energy conversion (OTEC), a white-elephant technology which was tested back in the 1970s and shown to be hopelessly uneconomical, shared space in the cornucopian end of the blogosphere over the last week with an equally disingenuous puff piece touting yet another rehash of nuclear fission as the answer to our energy woes. (Like every fission technology, of course, this one will be safe, clean, and affordable until someone actually tries to build it.)
No doubt there will shortly be other promoters scrambling for whatever government subsidies and private investment funds might be available for whatever revolutionary new energy breakthrough (ahem) will take the place of hydrofractured shales as America’s favorite reason to do nothing. I admit to a certain feeling of disappointment, though, in the sheer lack of imagination displayed so far in that competition. OTEC and molten-salt fission reactors were already being lauded as America’s energy salvation back when I was in high school: my junior year, I think it was, energy was the topic du jour for the local high school debate league, and we discussed those technologies at length. So did plenty of more qualified people, which is why both of them—and quite a few other superficially plausible technologies—never made it off the drawing board.
Something else came in for discussion that same year, and it’s a story with more than a little relevance to the current situation. A team from another school in the south Seattle suburbs had a brainstorm, did some frantic research right before a big debate tournament, and showed up with data claiming to prove that legions of squirrels running in squirrel cages, powering little generators, could produce America’s electricity. Since no one else happened to have thought of that gimmick, none of the other teams had evidence to refute them, and they swept the tournament. By the next tournament, of course, everyone else had crunched the numbers and proceeded to stomp the squirrel promoters, but for years to come the phrase “squirrel case” saw use in local debate circles as the standard term for a crackpot proposal backed with seemingly plausible data.
The OTEC plants and molten-salt reactors currently being hawked via the media are squirrel cases in exactly the same sense; they sound plausible as long as you don’t actually crunch the numbers and see whether they’re economically and thermodynamically viable. The same thing was true of the fracking bubble that’s messily imploding around us right now, not to mention the ethanol and biodiesel projects, the hydrogen economy, and the various other glittery excuses that have occupied so much useless space in the collective conversation of our time. So, it has to be said, do the more enthusiastic claims being made for renewable energy just now.
Don’t get me wrong, I’m a great fan of renewable energy. When extracting fossil carbon from the earth stops being economically viable—a point that may arrive a good deal sooner than many people expect—renewables are what we’ll have left, and the modest but real energy inputs that can be gotten from renewable sources when they don’t receive energy subsidies from fossil fuels could make things significantly better for our descendants. The fact remains that in the absence of subsidies from fossil fuels, renewables won’t support the absurdly extravagant energy consumption that props up what passes for an ordinary middle class lifestyle in the industrial world these days.
That’s the pterodactyl in the ointment, the awkward detail that most people even in the greenest of green circles don’t want to discuss. Force the issue into a conversation, and one of the more common responses you’ll get is the exasperated outburst “But there has to be something.” Now of course this simply isn’t true; no law of nature, no special providence, no parade of marching squirrels assures us that we can go ahead and use as much energy as we want in the serene assurance that more will always be waiting for us. It’s hard to think of a more absurd delusion, and the fact that a great many people making such claims insist on their superior rationality and pragmatism just adds icing to the cake.
Let’s go ahead and say it in so many words: there doesn’t have to be a replacement for fossil fuels. In point of fact, there’s good reason to think that no such replacement exists anywhere in the small corner of the universe accessible to us, and once fossil fuels are gone, the rest of human history will be spent in a world that doesn’t have the kind of lavish energy resources we’re used to having. Concentrations of energy, like all other natural resources, follow what’s known as the power law, the rule—applicable across an astonishingly broad spectrum of phenomena—that whatever’s ten times as concentrated is approximately ten times as rare. At the dawn of the industrial age, the reserves of fossil fuel in the Earth’s crust were the richest trove of stored energy on the planet, and of course fossil fuel extraction focused on the richest and most easily accessible prizes first, just as quickly as they could be found.
Those are gone now. Since 2005, when conventional petroleum production peaked worldwide, the industrial world has been engaged in what amounts to a frantic game of make-believe, pretending that scraping the bottom of the oil barrel proves that the barrel is still full. Every half-baked scheme for producing liquid fuels got flooded with as much cheap credit as its promoters could squander. Some of those—biodiesel and cellulosic ethanol come to mind—turned out to be money pits so abysmal that even a tide of freshly printed money couldn’t do much more than gurgle on the way down; others—above all, shale fracking and tar sand mining—were able to maintain a pretense of profitability for a while, with government subsidies, junk bonds, loans from clueless banks, and round after round of economic stimulus from central banks over much of the world serving to prop up industries that, in the final analysis, were never economically viable in the first place.
The collapse in the price of oil that began this June put paid to that era of make-believe. The causes of the oil crash are complex, but back of them all, I suggest, is a straightforward bit of economics that almost everyone’s been trying to avoid for a decade now. To maintain economic production at any given level, the global economy has to produce enough real wealth—not, please note, enough money, but enough actual goods and services—to cover resource extraction, the manufacture and replacement of the whole stock of nonfinancial capital goods, and whatever level of economic waste is considered socially and politically necessary. If the amount of real wealth needed to keep extracting resources at a given rate goes up steeply, the rest of the economy won’t escape the consequences: somewhere or other, something has to give.
The economic history of the last decade is precisely the story of what gave in what order, or to put it another way, how the industrial world threw everything in sight under the bus to keep liquid fuel production around its 2005 peak. Infrastructure was abandoned to malign neglect, the last of the industrial world’s factory jobs got offshored to Third World sweatshops, standards of living for most people dropped steadily—well, you can fill in the blanks as well as I can. Consumption remained relatively high only because central banks flooded the global economy with limitless cheap credit, while the US government filled the gap between soaring government expenditures and flat or shrinking tax receipts by the simple equivalent of having the Fed print enough money each month to cover the federal deficit. All these things were justified by the presupposition that the global economy was just going through a temporary rough patch, and normal growth would return any day now.
But normal growth has not returned. It’s not going to return, either, because it was only “normal” in an era when cheap abundant fossil fuels greased the wheels of every kind of economic activity. As I noted in a blog post here back in 2007, the inevitable consequence of soaring oil prices is what economists call demand destruction: less formally, the process by which people who can’t afford oil stop using it, bringing the price back down. Since what’s driving the price of oil up isn’t merely market factors, but the hard geological realities of depletion, not everyone who got forced out of the market when the price was high can get back into it when the price is low—gas at $2 a gallon doesn’t matter if your job scavenging abandoned houses doesn’t pay enough for you to cover the costs of a car, and let’s not even talk about how much longer the local government can afford to maintain streets in driveable condition.
Demand destruction sounds very abstract. In practice, though, it’s all too brutally concrete: a rising tide of job losses, business failures, slumping standards of living, cutbacks to every kind of government service at every level, and so on down the litany of decline that’s become part of everyday life in the industrial world over the last decade—leaving aside, that is, the privileged few who have been sheltered from those changes so far. Unless I miss my guess, we’re going to see those same changes shift into overdrive in the months and years ahead. The attempt to boost the world out of its deepening slump by flooding the planet with cheap credit has failed; the global economy is choking on a supersized meal of unpayable IOUs and failed investments; stock markets and other venues for the exchange of paper wealth are so thoroughly gimmicked that they’ve become completely detached from the real economy of goods and services, and the real economy is headed south in a hurry.
Those unwelcome realities are going to constrain any attempt by the readers of this blog to follow up on the proposal I made in last week’s post, and take constructive action in the face of the crisis that’s now upon us. The energy situation here in the US could have been helped substantially if conservation measures and homescale renewables had received any kind of significant support from the oh-so-allegedly-green Democratic party, back when it still had enough clout in Congress to matter; the economic situation would be nowhere near as dire if governments and central banks had bitten the bullet and dealt with the crisis of our time in 2008 or thereafter, rather than papering things over with economic policies that assumed that enough money could negate the laws of physics and geology. At this point, it’s much too late for any sort of collective action on either of those fronts—and of course the political will needed to do anything meaningful about either one went missing in action at the end of the 1970s and hasn’t been seen since.
Thus all of us will have to cope with a world in which the cost of energy suffers from drastic and economically devastating swings, and the sort of localized infrastructure that could cushion the impact of those swings wasn’t built in time. All of us will also have to cope with a global economy in disarray, in which bank failures, currency crises, credit shortages, and crisis measures imposed by government fiat will take the place of the familiar workings of a market economy. Those are baked into the cake at this point, and what individuals, families, and community groups will be able to do in the years ahead will be constrained by the limits those transformations impose.
Those of my readers who still have a steady income and a home they expect to be able to keep would still be well advised to doublecheck their insulation and weatherstripping, install solar water heating and other homescale renewable energy technologies, and turn the back lawn into a vegetable garden with room for a chicken coop, if by any chance they haven’t taken these sensible steps already. A great many of my readers don’t have such options, and at this point, it may be a long time before such options are readily available again. This is crunch time, folks; unless I’m very much mistaken, we’re on the brink of a historical inflection point like the ones in 1789 and 1914, one of the watersheds of time after which nothing will ever be the same again.
There’s still much that can be done in other spheres, and I’ll be discussing some of those things in upcoming posts. In terms of energy and the economy, though, I suspect that for a lot of us, the preparations we’re going to be able to make are the ones we’ve already made, and a great many people whose plans depend on having a stable income and its associated perks and privileges may find themselves scrambling for options when the unraveling of the economy leaves them without one. Those of my readers who have been putting off the big changes that might make them more secure in hard times may be facing the hard decision of making those changes now, in a hurry, or facing the crisis of our age in the location and situation they’re in right now. Those who’ve gone ahead and made the changes—well, you know as well as I do that it’s time to review your plans, doublecheck the details, batten down the hatches and get ready to weather the storm.
One of the entertainments to be expected as the year draws on and the crisis bears down on us all, though, is a profusion of squirrel cases of the sort discussed toward the beginning of this essay. It’s an interesting regularity of history that the closer to disaster a society in decline becomes, the more grandiose, triumphalist, and detached from the grubby realities its fantasies generally get. I’m thinking here of the essay on military affairs from the last years of the Roman world that’s crammed full of hopelessly unworkable war machines, and of the final, gargantuan round of Mayan pyramids built on the eve of the lowland classic collapse. The habit of doubling down in the face of self-induced catastrophe seems to be deeply engrained in the human psyche, and I don’t doubt for a moment that we’ll see some world-class examples of the phenomenon in the years immediately ahead.
That said, the squirrel cases mentioned earlier—the OTEC and molten-salt fission proposals—suffer from a disappointing lack of imagination. If our society is going to indulge in delusional daydreams as it topples over the edge of crisis, couldn’t we at least see some proposals that haven’t been rehashed since I was in high school? I can only think of one such daydream that has the hallucinatory quality our current circumstances deserve; yes, that would be the proposal, being made quite seriously in the future-oriented media just now, that we can solve all our energy problems by mining helium-3 on the Moon and ship it to Earth to fuel fusion power plants we have absolutely no idea how to build yet. As faith-based cheerleading for vaporware, which is of course what those claims are, they set a very high standard—but it’s a standard that will doubtless be reached and exceeded in due time...
SC125-9
http://theeconomiccollapseblog.com/archives/boom-goes-dynamite-crashing-price-oil-going-rip-global-economy-shreds
Boom Goes The Dynamite: The Crashing Price Of Oil Is Going To Rip The Global Economy To Shreds
If you were waiting for a “black swan event” to come along and devastate the global economy, you don’t have to wait any longer. As I write this, the price of U.S. oil is sitting at $45.76 a barrel. It has fallen by more than 60 dollars a barrel since June. There is only one other time in history when we have seen anything like this happen before. That was in 2008, just prior to the worst financial crisis since the Great Depression. But following the financial crisis of 2008, the price of oil rebounded fairly rapidly. As you will see below, there are very strong reasons to believe that it will not happen this time. And the longer the price of oil stays this low, the worse our problems are going to get. At a price of less than $50 a barrel, it is just a matter of time before we see a huge wave of energy company bankruptcies, massive job losses, a junk bond crash followed by a stock market crash, and a crisis in commodity derivatives unlike anything that we have ever seen before. So let’s hope that a very unlikely miracle happens and the price of oil rebounds substantially in the months ahead. Because if not, the price of oil is going to absolutely rip the global economy to shreds.
What amazes me is that there are still many economic “experts” in the mainstream media that are proclaiming that the collapse in the price of oil is going to be a good thing for the U.S. economy.
The only precedent that we can compare the current crash to is the oil price collapse of 2008. You can see both crashes on the chart below…
Price Of Oil Since 2006
If rapidly falling oil prices are good economic news, that collapse should have pushed the U.S. economy into overdrive.
But that didn’t happen, did it? Instead, we plunged into the deepest recession that we have seen since the Great Depression.
And unless there is a miracle rebound in the price of oil now, we are going to experience something similar this time.
Already, we are seeing oil rigs shut down at a staggering pace. The following is from Bloomberg…
U.S. oil drillers laid down the most rigs in the fourth quarter since 2009. And things are about to get much worse.
The rig count fell by 93 in the three months through Dec. 26, and lost another 17 last week, Baker Hughes Inc. data show. About 200 more will be idled over the next quarter as U.S. oil explorers make good on their promises to curb spending, according to Moody’s Corp.
But that was just the beginning of the carnage. 61 more oil rigs shut down last week alone, and hundreds more are being projected to shut down in the months ahead.
For those that cannot connect the dots, that is going to translate into the loss of large numbers of good paying jobs. Just check out what is happening in Texas…
A few days ago, Helmerich & Payne, announced that it would idle 50 more drilling rigs in February, after having already idled 11 rigs. Each rig accounts for about 100 jobs. This will cut its shale drilling activities by 20%. The other two large drillers, Nabors Industries and Patterson-UTI Energy are on a similar program. All three combined are “likely to cut approximately 15,000 jobs out of the 50,000 people they currently employ,” said Oilpro Managing Director Joseph Triepke.
Unfortunately, this crisis will not just be localized to states such as Texas. There are tens of thousands of small and mid-size firms that will be affected. The following is from a recent CNBC report…
More than 20,000 small and midsize firms drive the “hydrocarbon revolution” in the U.S. that has helped the oil and gas industry thrive in recent years, and they produce more than 75 percent of the nation’s oil and gas output, according to the Manhattan Institute for Policy Research’s February 2014 Power & Growth Initiative Report. The Manhattan Institute is a conservative think tank in New York City.
A sustained decline in prices could lead to layoffs at these firms, say experts. “The energy industry has been one of the job-growth areas leading us out of the recession,” said Chad Mabry, a Houston-based analyst in the energy and natural resources research department of boutique investment bank MLV & Co. in New York City. “In 2015, that changes in this price environment,” he said. “We’re probably going to see some job losses on a fairy significant scale if this keeps up.”
If the price of oil makes a major comeback, the carnage will ultimately not be that bad.
But if it stays at this level or keeps going down for an extended period of time, it is inevitable that a whole bunch of those firms will go bankrupt and their debt will go bad.
That would mean a junk bond crash unlike anything that Wall Street has ever experienced.
And as I have written about previously, a stock market crash almost always follows a junk bond crash.
These are things that happened during the last financial crisis and that are repeating again right in front of our eyes.
Another thing that happened in 2008 that is happening again is a crash in industrial commodity prices.
At this point, industrial commodity prices have hit a 12 year low. I am talking about industrial commodities such as copper, iron ore, steel and aluminum. This is a huge sign that global economic activity is slowing down and that big trouble is on the way.
So what is driving this? The following excerpt from a recent Zero Hedge article gives us a clue…
Globally there are over $9 trillion worth of borrowed US Dollars in the financial system. When you borrow in US Dollars, you are effectively SHORTING the US Dollar.
Which means that when the US Dollar rallies, your returns implode regardless of where you invested the borrowed money (another currency, stocks, oil, infrastructure projects, derivatives).
Take a look at commodities. Globally, there are over $22 TRILLION worth of derivatives trades involving commodities. ALL of these were at risk of blowing up if the US Dollar rallied.
Unfortunately, starting in mid-2014, it did in a big way.
This move in the US Dollar imploded those derivatives trades. If you want an explanation for why commodities are crashing (aside from the fact the global economy is slowing) this is it.
Once again, much of this could be avoided if the price of oil starts going back up substantially.
Unfortunately, that does not appear likely. In fact, many of the big banks are projecting that it could go even lower…
Goldman Sachs, CitiGroup, Societe General and Commerzbank are among the latest investment banks to reduce crude oil price estimates, and without production cuts, there appears to be more room for lower prices.
“We’re going to keep on going lower,” says industry analyst Brian Milne of energy manager Schneider Electric. “Even with fresher new lows, there’s still more downside.”
OPEC could stabilize global oil prices with a single announcement, but so far OPEC has refused to do this. Many believe that the OPEC countries actually want the price of oil to fall for competitive reasons…
Representatives of Saudi Arabia, the United Arab Emirates and Kuwait stressed a dozen times in the past six weeks that the group won’t curb output to halt the biggest drop in crude since 2008. Qatar’s estimate for the global oversupply is among the biggest of any producing country. These countries actually want — and are achieving — further price declines as part of an attempt to hasten cutbacks by U.S. shale drillers, according to Barclays Plc and Commerzbank AG.
The oil producing countries in the Middle East seem to be settling in for the long haul. In fact, one prominent Saudi prince made headlines all over the world this week when he said that “I’m sure we’re never going to see $100 anymore.”
Never is a very strong word.
Could there be such a massive worldwide oil glut going on right now that the price of oil will never get that high again?
Well, without a doubt there is a huge amount of unsold oil floating around out there at the moment.
It has gotten so bad that some big trading companies are actually hiring supertankers to store large quantities of unsold crude oil at sea…
Some of the world’s largest oil traders have this week hired supertankers to store crude at sea, marking a milestone in the build-up of the global glut.
Trading firms including Vitol, Trafiguraand energy major Shell have all booked crude tankers for up to 12 months, freight brokers and shipping sources told Reuters.
They said the flurry of long-term bookings was unusual and suggested traders could use the vessels to store excess crude at sea until prices rebound, repeating a popular 2009 trading gambit when prices last crashed.
The fundamentals for the price of oil are so much worse than they were back in 2008.
We could potentially be looking at sub-$50 oil for an extended period of time.
If that is indeed the case, there will be catastrophic damage to the global economy and to the global financial system.
So hold on to your hats, because it looks like we are going to be in for quite a bumpy ride in 2015.
Boom Goes The Dynamite: The Crashing Price Of Oil Is Going To Rip The Global Economy To Shreds
If you were waiting for a “black swan event” to come along and devastate the global economy, you don’t have to wait any longer. As I write this, the price of U.S. oil is sitting at $45.76 a barrel. It has fallen by more than 60 dollars a barrel since June. There is only one other time in history when we have seen anything like this happen before. That was in 2008, just prior to the worst financial crisis since the Great Depression. But following the financial crisis of 2008, the price of oil rebounded fairly rapidly. As you will see below, there are very strong reasons to believe that it will not happen this time. And the longer the price of oil stays this low, the worse our problems are going to get. At a price of less than $50 a barrel, it is just a matter of time before we see a huge wave of energy company bankruptcies, massive job losses, a junk bond crash followed by a stock market crash, and a crisis in commodity derivatives unlike anything that we have ever seen before. So let’s hope that a very unlikely miracle happens and the price of oil rebounds substantially in the months ahead. Because if not, the price of oil is going to absolutely rip the global economy to shreds.
What amazes me is that there are still many economic “experts” in the mainstream media that are proclaiming that the collapse in the price of oil is going to be a good thing for the U.S. economy.
The only precedent that we can compare the current crash to is the oil price collapse of 2008. You can see both crashes on the chart below…
Price Of Oil Since 2006
If rapidly falling oil prices are good economic news, that collapse should have pushed the U.S. economy into overdrive.
But that didn’t happen, did it? Instead, we plunged into the deepest recession that we have seen since the Great Depression.
And unless there is a miracle rebound in the price of oil now, we are going to experience something similar this time.
Already, we are seeing oil rigs shut down at a staggering pace. The following is from Bloomberg…
U.S. oil drillers laid down the most rigs in the fourth quarter since 2009. And things are about to get much worse.
The rig count fell by 93 in the three months through Dec. 26, and lost another 17 last week, Baker Hughes Inc. data show. About 200 more will be idled over the next quarter as U.S. oil explorers make good on their promises to curb spending, according to Moody’s Corp.
But that was just the beginning of the carnage. 61 more oil rigs shut down last week alone, and hundreds more are being projected to shut down in the months ahead.
For those that cannot connect the dots, that is going to translate into the loss of large numbers of good paying jobs. Just check out what is happening in Texas…
A few days ago, Helmerich & Payne, announced that it would idle 50 more drilling rigs in February, after having already idled 11 rigs. Each rig accounts for about 100 jobs. This will cut its shale drilling activities by 20%. The other two large drillers, Nabors Industries and Patterson-UTI Energy are on a similar program. All three combined are “likely to cut approximately 15,000 jobs out of the 50,000 people they currently employ,” said Oilpro Managing Director Joseph Triepke.
Unfortunately, this crisis will not just be localized to states such as Texas. There are tens of thousands of small and mid-size firms that will be affected. The following is from a recent CNBC report…
More than 20,000 small and midsize firms drive the “hydrocarbon revolution” in the U.S. that has helped the oil and gas industry thrive in recent years, and they produce more than 75 percent of the nation’s oil and gas output, according to the Manhattan Institute for Policy Research’s February 2014 Power & Growth Initiative Report. The Manhattan Institute is a conservative think tank in New York City.
A sustained decline in prices could lead to layoffs at these firms, say experts. “The energy industry has been one of the job-growth areas leading us out of the recession,” said Chad Mabry, a Houston-based analyst in the energy and natural resources research department of boutique investment bank MLV & Co. in New York City. “In 2015, that changes in this price environment,” he said. “We’re probably going to see some job losses on a fairy significant scale if this keeps up.”
If the price of oil makes a major comeback, the carnage will ultimately not be that bad.
But if it stays at this level or keeps going down for an extended period of time, it is inevitable that a whole bunch of those firms will go bankrupt and their debt will go bad.
That would mean a junk bond crash unlike anything that Wall Street has ever experienced.
And as I have written about previously, a stock market crash almost always follows a junk bond crash.
These are things that happened during the last financial crisis and that are repeating again right in front of our eyes.
Another thing that happened in 2008 that is happening again is a crash in industrial commodity prices.
At this point, industrial commodity prices have hit a 12 year low. I am talking about industrial commodities such as copper, iron ore, steel and aluminum. This is a huge sign that global economic activity is slowing down and that big trouble is on the way.
So what is driving this? The following excerpt from a recent Zero Hedge article gives us a clue…
Globally there are over $9 trillion worth of borrowed US Dollars in the financial system. When you borrow in US Dollars, you are effectively SHORTING the US Dollar.
Which means that when the US Dollar rallies, your returns implode regardless of where you invested the borrowed money (another currency, stocks, oil, infrastructure projects, derivatives).
Take a look at commodities. Globally, there are over $22 TRILLION worth of derivatives trades involving commodities. ALL of these were at risk of blowing up if the US Dollar rallied.
Unfortunately, starting in mid-2014, it did in a big way.
This move in the US Dollar imploded those derivatives trades. If you want an explanation for why commodities are crashing (aside from the fact the global economy is slowing) this is it.
Once again, much of this could be avoided if the price of oil starts going back up substantially.
Unfortunately, that does not appear likely. In fact, many of the big banks are projecting that it could go even lower…
Goldman Sachs, CitiGroup, Societe General and Commerzbank are among the latest investment banks to reduce crude oil price estimates, and without production cuts, there appears to be more room for lower prices.
“We’re going to keep on going lower,” says industry analyst Brian Milne of energy manager Schneider Electric. “Even with fresher new lows, there’s still more downside.”
OPEC could stabilize global oil prices with a single announcement, but so far OPEC has refused to do this. Many believe that the OPEC countries actually want the price of oil to fall for competitive reasons…
Representatives of Saudi Arabia, the United Arab Emirates and Kuwait stressed a dozen times in the past six weeks that the group won’t curb output to halt the biggest drop in crude since 2008. Qatar’s estimate for the global oversupply is among the biggest of any producing country. These countries actually want — and are achieving — further price declines as part of an attempt to hasten cutbacks by U.S. shale drillers, according to Barclays Plc and Commerzbank AG.
The oil producing countries in the Middle East seem to be settling in for the long haul. In fact, one prominent Saudi prince made headlines all over the world this week when he said that “I’m sure we’re never going to see $100 anymore.”
Never is a very strong word.
Could there be such a massive worldwide oil glut going on right now that the price of oil will never get that high again?
Well, without a doubt there is a huge amount of unsold oil floating around out there at the moment.
It has gotten so bad that some big trading companies are actually hiring supertankers to store large quantities of unsold crude oil at sea…
Some of the world’s largest oil traders have this week hired supertankers to store crude at sea, marking a milestone in the build-up of the global glut.
Trading firms including Vitol, Trafiguraand energy major Shell have all booked crude tankers for up to 12 months, freight brokers and shipping sources told Reuters.
They said the flurry of long-term bookings was unusual and suggested traders could use the vessels to store excess crude at sea until prices rebound, repeating a popular 2009 trading gambit when prices last crashed.
The fundamentals for the price of oil are so much worse than they were back in 2008.
We could potentially be looking at sub-$50 oil for an extended period of time.
If that is indeed the case, there will be catastrophic damage to the global economy and to the global financial system.
So hold on to your hats, because it looks like we are going to be in for quite a bumpy ride in 2015.
Subscribe to:
Posts (Atom)
