A Drop of Rain

Check this list of current foreign holders of US government debt. I found that while reading Economic Fragility Underestimated – Collapse May Be Imminent on Seeking Alpha.

The 4 Key Reasons an Economic Collapse is Likely Imminent

1. The U.S. has unprecedented, massive amounts of current and coming debt.
2. Foreign countries have experienced their own crises, and they cannot offer added levels of debt funding for the U.S. Even if they could, they are unlikely to do so.
3. Productivity is declining, and everything the government is doing is further hurting productivity.
4. The U.S. is printing unprecedented, massive amounts of money and no longer has an ability to control inflation and deflation.

The US treasury department list of Treasury Security holders is updated I assume every month, last stats from April. Note that almost every major holder has less US government debt in April than in May, despite the US government selling record amounts of debt to fund it’s bailouts of the cancerous financial leeches which abuse the term ‘industry’ beyond belief (’industries’ produce things, and debt is not a thing).

So who is buying the rest? I assume we, the US tax payers are. And please don’t spout any of that Fox news generated nonsense about ‘tax and spend liberals’, this is about gross economic collapse fueled by 20 years of removing financial regulations, coupled with humanity reaching a peak in per capita natural resource consumption, then a physical peak in gross natural resource production, especially in oil, which is the primary resource that drives our modern non-sustainable ‘economy’.

Watch that chart to see what happens. Since the US needs to sell some 1.5 trillion more debt this year if I get the numbers right to keep afloat, and since increasing amounts of the debt held now by China and other major debt holders is short term, the real stat to track is who is buying the long term debt.

I suspect that the Chinese and others are now in the process of moving their longer term debt, as it comes due, to shorter term positions, which avoids creating the appearance of dropping long term investments in US bonds while actually creating the situation where they can exit slowly by translating dollar holdings into real things, like oil companies, natural resource contracts, and so on.

This is a big game, and the USA is losing.

Online version, read it here.

More than any other species, human beings are gifted with the power to manipulate our environment, and the ability to accumulate and transmit knowledge across generations. The first of these gifts we call technology; the other we call culture. They are central to our humanity.

Accumulating over thousands of years, culture and technology have brought us into a separate human realm. We live, more than any animal, surrounded by our own artifacts. Among these are works of surpassing beauty, complexity, and power, human creations that could not have existed—could not even have been conceived—in the times of our forebears. Seldom do we pause to appreciate the audacity of our achievements: objects as mundane as a compact disc, a video cellphone, an airplane would have seemed fantastical only a few centuries ago. We have created a realm of magic and miracles.

At the same time, it is quite easy to see technology and culture not as gifts but as a curse. After millennia of development, the power to manipulate the environment has become the power to destroy it, while the ability to transmit knowledge transmits as well a legacy of hatred, injustice, and violence. Today, as both the destruction and the violence reach a feverish crescendo, few can deny that the world is in a state of crisis. Opinions vary as to its exact nature: some people say it is primarily ecological; others say it is a moral crisis, a social, economic, or political crisis, a health crisis, even a spiritual crisis. There is, however, little disagreement that the crisis is of human origin. Hence, despair: is the present ruination of the world built in to our humanity?

Is genocide and ecocide the inevitable price of civilization’s magnificence? Need the most sublime achievements of art, music, literature, science, and technology be built upon the wreckage of the natural world and the misery of its inhabitants? Can the microchip come without the oil slick, the strip mine, the toxic waste dump? Under the shadow of every Chartres Cathedral, must there be women burning at the stake? In other words, can the gift of technology and culture somehow be separated from the curse?

Table of Contents (under fold)
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Good video of Harper’s Kevin Baker’s July 2009 cover article: Barack Hoover Obama: The best and the brightest blow it again.

It’s pretty long, worth watching. But I have to say, the people who called in to that c-span show, both left and right, don’t give me much room for optimism. The right continues to ignore every single actual foundational component of our current issues, the Libertarians continue to blindly regurgitate their absurd anti government, pro free market foolishness long after the current financial collapse has once again proven, as if this even needed proving, that free markets don’t exist, they are fictions designed to disguise the blatant grab of power and wealth by those who espouse them. Not to say actual free markets don’t exist, but they aren’t run by oligarchs and cartels, they are individual, non corporate, and, most important, local and community based.

No hope in this administration I’m sad to say, find a copy of the July Harper’s magazine and find out why, or watch the video, it covers most of the key points.

Remember: without single payer health care, dismantling of the current financial oligarchs, and a serious redoing of the corporate lobbying industry (like banning it completely) we will not be able to move on to the next phase of our existence.
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Just a quick note, keeping in mind that we live in an allegedly globalized world, which will allegedly prove more efficient etc. That’s all nonsense of course, globalization is all about corporations moving responsibilities and liabilities (such as environmental concerns, labor costs, and so on) to where they can generate the highest short term rates of return while generating the greatest possible social disruption and global destruction in the process.

So it strikes me, what is the first thing to go when this system starts to crack due to rising resource costs and peaked production levels of key resources, like oil? Airlines, of course. So it’s not surprising to see, after a disastrous last year, that World’s airlines in fight for survival (with 9 billion US dollars in losses this past year).

Faced with their biggest crisis in history, airlines from throughout the world gathered in Kuala Lumpur to take stock and swap survival strategies.

“Numbers can tell powerful stories,” International Air Transport Association director-general Giovanni Bisignani told his audience of 500 airline representatives at their annual summit.

Airlines are expected to collectively lose US$9 billion (NZ$14b) this year as falling demand, lower yields, broken consumer confidence and the swine flu pandemic threaten to wipe out US$80b in revenue.

Those losses will come on top of last year’s US$10.4b deficit thanks to the double hit from record high fuel prices and the collapse of the world economy.

“The ground shifted and our industry was shaken,” Mr Bisignani says.

Airlines are in survival mode and in desperate need of help to see them through the crisis and allow them to emerge with a business model that delivers a financially sustainable future.

Yep. Can you say: (re)nationalized airlines? In fact, can you say: the only countries that will have any chance of controlling the bumpy downhill slide are going to be the ones where the state controls resource allocation and pricing? Watch the ‘free market’, one of the greatest pieces of nonsense ever generated as a concept in human history, start to show more and more how pathetically unable it is to actually do anything other than serve as an excuse to funnel more money to the hands of those who control it.

Some things to think about, if you want to take a deeper look at the worse case scenarios (which I recommend, pretty much all climate science findings are pointing to results consistently worse than predicted as worst case scenarios only a few years ago), give this latest by Dmitry Orlov, Definancialisation, deglobalisation, relocalisation.

Back to what is actually happening right now. There seems to be a wide range of opinion on how to characterise it, from recession to depression to collapse. The press has recently been filled with stories about “green shoots” and the economists are discussing the exact timing of economic recovery. Mainstream opinion ranges from “later this year” to “sometime next year.” None of them dares to say that global economic growth might be finished for good, or that it will be over in “the not-too-distant future” — a vague term they seem to like a whole lot.

There does seem to be a consensus forming that last year’s financial crash was precipitated by the spike in oil prices last summer, when oil briefly touched $147/bbl. Why this should have happened seems rather obvious. Since most things in a fully developed, industrialised economy run on oil, it is not an optional purchase: for a given level of economic activity, a certain level of oil consumption is required, and so one simply pays the price for as long as access to credit is maintained, and after that suddenly it’s game over. François Cellier has recently published an analysis in which he shows that at roughly $600/bbl the entire world’s GDP would be required to pay for oil, leaving no money for putting it to any sort of interesting use. At that price level, we can’t even afford to take delivery of it. In fact, at that price level, we can’t even afford to pump it out of the ground, because the tool pushers, roughnecks and roustabouts that make oil rigs work don’t drink the oil, and there would no longer be room in the budget for beer.

And so, the actual limiting price, beyond which no economic activity is possible, is certainly a lot lower, and last summer we seem to have experimentally established that to be around $150/bbl. which is something like 25% of global GDP. We may never run out of oil, but we have already run out of money with which to buy it, at least once, and will most likely do so again and again, until we learn the lesson. We will run out of money to pump it out of the ground as well. There might still be a few gushers left in the world, and so there will be a little bit of oil left over for us to fashion into exotic plastic jewelry for rich people. But it won’t be enough to sustain an industrial base, and so the industrial age will effectively be over, except for some residual solar panels and wind generators and hydroelectric installations.

I think that the lesson from all this is that we have to prepare for a non-industrial future while we still have some resources with which to do it. If we marshal the resources, stockpile the materials that will be of most use, and harness the heirloom technologies that can be sustained without an industrial base, then we can stretch out the transition far into the future, giving us time to adapt.

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Two quick ones:

1: USA Fire Sale, 2nd Meeting, June 2009: Political capital call – Eric Janszen. A somewhat satirical view of what a meeting between China and Geitner might look like today. This is part 2, here is Part 1. This post is worth reading because it’s basically true, and even if China isn’t going to say these very words to the US, they should. Now. Before the US is allowed to further destroy their future in a vain attempt to prop up a corrupt and rotten financial ‘industry’ (though the use of the term ‘industry’ requires quotes, since it produces nothing of value, and simply filters money towards its primary benefactors).

The result, probably? The American Empire Is Bankrupt. Covered further in De-Dollarization: Dismantling America’s Financial-Military Empire: The Yekaterinburg Turning Point.

“This means the end of the dollar,” Hudson told me. “It means China, Russia, India, Pakistan, Iran are forming an official financial and military area to get America out of Eurasia. The balance-of-payments deficit is mainly military in nature. Half of America’s discretionary spending is military. The deficit ends up in the hands of foreign banks, central banks. They don’t have any choice but to recycle the money to buy U.S. government debt. The Asian countries have been financing their own military encirclement. They have been forced to accept dollars that have no chance of being repaid. They are paying for America’s military aggression against them. They want to get rid of this.”

2. The Message of Overconsumption. If you’re fond of your denialism about the status quo (ie, economy, environment, resources), these graphs are nice reminders that in fact, you cannot enter into exponential growth and expect to have long term success. For those of you who don’t follow such things, exponential growth is the essence of our modern ‘capital’ based economies (see Hubbert’s discussion of the ‘culture of money’ as well, which is a critical point to understand). More on this topic at hubbertpeak.com.

Capital is lends money, debt, which then requires growth to pay it back. Failure to generate this growth means the system fails. I know, of course, that denialists are all sheep who don’t use actual facts or data to come to their conclusions, so no amount of real data will ever change their minds, but for the rest of us, there might be some hope. And the sheep will just follow along eventually anyway, once you explain to them what the new reality and truth is…

Stop buying from corporations, start localizing, there is nothing they can do about this if more and more people refuse to gut their local communities, and start buying local, that money stays local, in your community. It’s a simple idea. Manufactored needs are not real needs, step out of the con-game.

Just a short note: check out this recent fora.tv video, Healing Mother Earth: E.O. Wilson

Long discussion about various ecological and biological issues, along with political etc, confronting the planet.

He has that sort of required view that some type of reform can fix this situation, but otherwise the video is pretty interesting, check it out.

This one is depressing, mainly because the Kogi people, like other native peoples I’ve heard or read, realize the problem is not at all complicated: we have violated the fundamental conditions for life continuing on the planet earth. Well, it’s also depressing because this was done in around 1990, when the early warning signs were becoming very clear to these people, who had watched the natural world for centuries, millenia probably. Now of course everything is worse, and growing increasingly bad by the month almost now.

Watch this if you don’t watch anything else. (Google Video Page)

What I really have to agree with is them calling us ‘little brother’. We are so completely arrogantly twisted in our views that we think our own ways, which are destroying the planet incredibly quickly, have anything to teach of value.

More film at nationalgeographic.com :: Keepers of the World (long flash video)

Personally, I’m getting tired of hearing people who are unwilling to engage in fundamental changes in our modern way of life talk about solutions etc when it’s those very ways of life that are the problem (you know, hybrids, wind power, high tech solar voltaic… all just ways to consume and destroy a little bit more before it all fails completely).

I’ll add a few of the better quotes from the first video, but I wanted to get this one posted first.

Amazing stuff. I can’t confirm if this suicide was all at once or if it happened over a period of time, but that’s just nitpicking details.

This is part of the larger global story of drought and corresponding drop in food production (read that article, it contains links to more specific articles about different parts of the planet’s food and water situation) which is fast proving the fantasy that human population will keep expanding to 9 billion is just that, a fantasy. 6 billion was already probably 6 times more than the long term maximum carrying capacity of the planet. Also check out the recent PBS report on glaciers and climate change (one hour episode of NOW, flash video).

Thank god this isn’t an ideological matter, no matter how people try to paint it.

Here’s the original article on the Indian farmer’s mass suicide:

Over 1,500 farmers in an Indian state committed suicide after being driven to debt by crop failure, it was reported today.

The agricultural state of Chattisgarh was hit by falling water levels.

“The water level has gone down below 250 feet here. It used to be at 40 feet a few years ago,” Shatrughan Sahu, a villager in one of the districts, told Down To Earth magazine

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What can you say? Things aren’t looking good.

Recently, in Barrons we have this interview with William Black:

Barron’s: Just how serious is this credit crisis? What is at stake here for the American taxpayer?

Black: Mopping up the savings-and-loan crisis cost $150 billion; this current crisis will probably cost a multiple of that. The scale of fraud is immense. This whole bank scandal makes Teapot Dome [of the 1920s] look like some kid’s doll set. Unless the current administration changes course pretty drastically, the scandal will destroy Barack Obama’s presidency. The Bush administration was even worse. But they are out of town. This will destroy Obama’s administration, both economically and in terms of integrity.

Yep, that’s about that. Or we can read to a recent winner of the (fake) nobel prize in economics (created because, as you hopefully have figured out by now, economics doesn’t merit a prize for anything), Joseph Stiglitz, Stiglitz Says Ties to Wall Street Doom Bank Rescue :

“All the ingredients they have so far are weak, and there are several missing ingredients,” Stiglitz said in an interview yesterday. The people who designed the plans are “either in the pocket of the banks or they’re incompetent.”

The Troubled Asset Relief Program, or TARP, isn’t large enough to recapitalize the banking system, and the administration hasn’t been direct in addressing that shortfall, he said. Stiglitz said there are conflicts of interest at the White House because some of Obama’s advisers have close ties to Wall Street.

A bit more of this interview under the fold.
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