A Drop of Rain

Check out this nice overview, I think pretty accurate except for Jeff Rubin’s constant reasoning failure: ie, oil rises > 150, economies collapse, so I’m not sure where he gets the idea that the world will ever pay super high prices for oil, like > $200, that doesn’t follow at all from his analysis, unless you are promoting a long oil position I guess.

Lots of points here I’d guess most rabid denialists simply have never thought about, like bringing jobs back home, and so on.

I’ve re-organized the categories to be more straight forward.

Now all news, interviews, commentaries from outside sources, will go in the category Currents of the Peak.

All items that are general commentaries will go into A View from the Peak. This will be the main focus of the blog from now on, in other words, if it’s a story about a specific news item, it will go in Currents, if it’s a general commentary, it will go in A View…

Reviews and Moving Past the Peak: Tips and Tricks will remain unchanged.

Since we’re now entering into the decline phase of global peak oil (and many other raw materials) production, there’s no real point in pretending that an economic grind down event is separate from oil price spikes and other raw material instabilities.

Also, I’ll probably start to add more background commentary, and less posting of news items, interviews, etc, which you can find great sources for on sites like www.theoildrum.com and www.energbulletin.net which both have good news overviews in general, drumbeat is especially useful.

And of course, see the right-hand column for more useful, and specialized links.

But from now on, it’s just going to be one long downhill roller coaster ride, with occasional severe dips and bumps, so there’s no particular point in presenting overly granular breakdowns of individual news events.

I will try to present more overviews, and will try to tie things together a bit for readers who might find their way here.

Best of luck to you in the future, but don’t expect the present or past to reproduce, it’s just not in the cards, this is a new event, and the models that can help us are models of smaller scale collapses. Stay out of debt, that’s the best advice at this point, live within your means, whatever you may feel you are entitled to have, what you can afford is what you actually should have today.

With the required denials, a leak from the International Energy Administration (IEA) confirms that not only is that agency fully aware of peak oil, it is being pressured by the USA to deny it is here to avoid full spread panic.

• Key oil figures were distorted by US pressure, says whistleblower
• Comments on Guardian article: “Key oil figures were distorted by US pressure, says whistleblower”

Among some of the more choice quotes:

“The IEA in 2005 was predicting oil supplies could rise as high as 120m barrels a day by 2030 although it was forced to reduce this gradually to 116m and then 105m last year,” said the IEA source, who was unwilling to be identified for fear of reprisals inside the industry. “The 120m figure always was nonsense but even today’s number is much higher than can be justified and the IEA knows this.

“Many inside the organisation believe that maintaining oil supplies at even 90m to 95m barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further. And the Americans fear the end of oil supremacy because it would threaten their power over access to oil resources,” he added.

A second senior IEA source, who has now left but was also unwilling to give his name, said a key rule at the organisation was that it was “imperative not to anger the Americans” but the fact was that there was not as much oil in the world as had been admitted. “We have [already] entered the ‘peak oil’ zone. I think that the situation is really bad,” he added.

And there you have it.

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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.