These types of falsehoods and misrepresentations of what is actually going on form the essence of all modern public relations, especially for heavy industrial consumers of non-renewables of all types, constitute a steady chipping away at a very accurate human response towards radiation, one that I would suggest is in fact highly rational. It is especially discouraging to find such things repeated by those who might otherwise pride themselves on being somewhat critical in their view of modern society.

What I find totally and utterly irrational is that when faced with the total inability to handle a process that was never meant to exist on earth, people continue to pretend that it’s a rational decision to create it. This is simply false. It was a refusal to start winding down power consumption, coupled with a military requirement to obtain nuclear materials for nuclear weapons, that was directly responsible for humanity entering this lunatic course of action in the first place.

The entire nuclear project has always been totally irrational, on so many levels it’s really hard to pick just a few, but here’s some: assumption, despite ALL history as positive proof against this faith, that societies will. continue to be able to handle these toxic systems as they change in fundamental ways. Poster child for this? Ukraine, today, requiring about 2 billion euros to create a new sarcophagus for Chernobyl.

Assumption that current, present, financial situation, will enable states all around the planet to keep funding such toxins, and to then have the capital and resources required to do so into the future. This is almost beyond absurd, and seems to involve a willful decision to ignore the economic chaos that those who have followed the unwinding socially, economically, and politically, have been noting for years as an almost inevitable outcome of global production maximums being reached in key raw materials, especially oil. In other words, current US debt levels are about 65 trillion, probably more now. Assuming this economic system will remain viable and able to cope with large scale and long lasting radiation releases from failed plants or improperly disposed of, or, as we have learned, not at all disposed of, radioactive materials, of all types, is totally irrational.

Next: the assumption, again despite all empirical evidence to the contrary, that financial / political corruption will not work steadfastly and consistently to minimize disaster preparedness and to lower expected danger levels to fit required finance and cost compromises that constitute the essence of especially private industry, but also corrupt government/private connections like we find in China and France. Case studies: Bush group dismantles ability of FEMA to properly function, then Katrina exposes the non-existent privatized fraud that created almost no required response means. Case 2: Diablo Canyon (yes, diablo means devil in Spanish…) reactors in California, sue, successfully, to avoid proper disaster preparedness. That’s in the San Andreas fault zone. Case study: Chinese freeway collapses due to contractors cheating; Chinese high rises collapse due to contractors cheating.

Again, a clear and explicit case of irrationality and magical thinking ignoring reality on the parts of apologists. See the political/tepco ties in Japan that created lax regulations and enforcements as real-world examples of this.

There are so many others, for example: in case engineers and other such alleged ‘experts’ we are supposed to have some faith in re nuclear energy were asleep in their required liberal arts classes, history in particular, several major regions of the globe were bombed heavily from 1938 to 1945, these regions today contain hundreds of reactors. They include China, Japan, Germany, France, Italy, etc. This war was not an aberration, these regions have been engaged in a near constant state of warfare since nation states came into existence. Thus, it is massively irrational to assume a precarious peace will last. Case studies, that are more recent than WWII: the former Yugoslavia blows up into violent warfare, that lasts for years, and features brutal and totally ruthless attacks on whatever was there to attack. Georgia, invaded by Russian backed troops, if I remember right.

Other regions subjected to basically indiscriminate bombing campaigns post WWII: Vietnam, Laos, Cambodia, Honduras, Korea, Iraq, Afghanistan, Serbia/Croatia.

It is irrational to believe that what has always happened among a set of people will not happen because that makes the ideology that one is attempting to justify impossible to justify rationally. We have not entered into a magic golden age of peace and tranquility. The USA is currently involved in two occupying wars, a situation that makes the people who are occupied very grouchy. Pakistan is highly unstable. It is irrational to assume that when these states fail or collapse further that the world can fix the reactors as they begin to fail there.

Key and absolutely core: the ongoing failure to engage in proper long term storage of nuclear core wastes as they are created. This is ongoing. Ignoring this fact nullifies all other positives. Pretending this stuff is going to go away when it has not gone away is profoundly irrational, since it ignores a reality that is clear and present for more than 40 years now. A corollary of this irrationality is saying certain wastes with half lives of say, 10,000 years will be safe in 10,000 years. This is of course beyond absurd, Fukushima has I believe 200 tons of this material. This means that in 40,000 years, the storage, should it even happen, will still contain 12 tons of highly radioactive materials. Ignoring this simple arithmetic is another example of the fundamentally irrational quality of the pro nuclear position. France, with their systems, cut this amount to 1/20th, but they do not eliminate it. I don’t know the negatives of their methods, but I assume they are significant, since I now assume all propositions put forth by apologists are based on lies and deception.

I could go on, but I believe it is totally pointless, because the level of irrationality and near willful self-delusion among proponents of this horrifying technology, which resembles in my opinion more than anything else an attempt to make material the notion of ‘hell’ that has always plagued Christian Western man (not anyone else, by the way, Hell is a fairly unique notion, not found really in the form we see it in Christian dogmas in other non-semitic religions.). One is tempted to note, following Soros, that nuclear bombs / reactors, are nothing more than a reflexive effort to make real the core Christian bias of a thing so evil that it defies all human attempts to control it. Sort of like a nuclear reaction, that is. I think people understand this at some core level, and it is this that makes them have the utterly rational reaction of abhorrence that apologists strive to minimize.

But I also do not believe that such decisions were ever made rationally, nor do I believe that proponents of these long lasting toxin generators are proponents for rational reasons. This has grown very obvious to me reading these threads. I am heartened however by the fact that normal people continue to have a rational reaction, which PR and spin and self-interested deception and misdirection, internalized by some, propagated by others, constantly is trying to fight and suppress.

Now, to get back to the overall rational reasons to abhore radiation, let’s look at a few places: long term genetic damage caused by radiation releases. See Chernobyl and Hiroshima and Nagasaki for examples of this, always whitewashed by pro-nuclear apologists to minimize this fact. Normal strategy used: point only to direct deaths, filtering out every possible indirect or long term death, illness, mutant babies, or whatever. Increased cancer rates.

Note the restricted zone around Chernobyl, note the 15 to 30 years required to shut down and in a nuclear power plant. Note the types of injuries being experienced by Chernobyl and Fukushima plant workers, who are basically sacrificing themselves to save the greater social body.

Note the fact of how little plutonium is required to generate cancers. Note the fact that plutonium is a totally 100% unnatural element. Note that each major failure basically removes between 500 and 2500, or more, in a future worst case scenario, possibly coming to a Fukushima reactor near you if today’s news reports about massive radiation spikes prove to be correct.

I find, in fact, when we note all the realities around this perverse, and I would suggest, fundamentally evil technology of nuclear power and weaponry, that the reaction of rational abhorrence is about the most rational possible reaction anyone could possibly have.

I see as a given that our current system is going to change, and change fundamentally, as resource depletion continues to alter the ease with which we extract, and waste, non-renewable, or not quickly enough renewable, raw materials. I find myself tending to agree with John Michael Greer (aka: the ‘Arch Druid’) re the time frames over which the ensuing changes will occur, mainly because Greer’s views tend to match reality as we find it documented in our histories.

Greer also makes an effort to study actual history and related areas that touch on these questions, unlike most of the other commentators out there, and he also is pushing out information that tries to help deal with the issues, which you’ll see at the end of this essay, is really the core difference between those prophets of doom and those who will actually find the way forward as our present grows into the future.

However, I also believe that significant portion of people who think we will see a sharp steep global collapse are simply confusing a drop in available consumption levels with the end of all life (aka: The End of Life as We Know It).

A Realistic View of Real-World Change

The way this so called collapse (better called: change, adjustment, alteration in prevalent mythologies and deeply held cultural biases) develops will be regional, not global. I’ve thought that for a while now. This is, by the way, another reason I don’t consider myself a ‘doomer’. Regional alterations do not make for a unitary moment of doom, they are something we have seen throughout history. Remember, Italy in its center was largely empty after the Roman Empire moved its center to the east, and the Barbarians had invaded one too many times. Then time moved on, and Italy wasn’t empty any more. Norway’s northern regions were emptied of Norwegians after the black plague, but NOT of human habitation, the Saamies (Lapps) were happy to move back in and occupy the land with their nomadic reindeer herding way of life until very close to the modern era. There is, I think you have to agree, a certain ethno-centrism involved in the belief that the failure of a single means of human social organization is somehow ‘doom’, when for others, it might be the ticket to the possibility of living a real life again, freed from the bonds of industrial non-sustainable production. It all depends on your point of view.

The notion, presented by Greer, among others, that changes will occur in staircase form I think doesn’t require much of a leap, since changes are coming in staircase form already. Just as an example: Colin Campbell (retired petroleum geologist, and prominent peak oil observer and analyst) points to the technical peak of global oil extraction as being marked by extreme social, economic, and political volatility. I look around myself in 2010 and find just that. Resource wars ongoing, political instabilities, ongoing. So that part seems pretty much right on.

The Real Turning Point

I don’t like getting into more sci-fi speculations, but to me, it’s fairly obvious that the reason 1970 was the real turning point for the global human culture based on non-sustainable resource exploitation is that is when the global population went into serious overshoot, beyond carrying capacity. The real warning flag back then was the requirement of instituting industrial, non-sustainable farming techniques, called, in Orwellian style, the ‘green revolution’ in order to avoid famine and provide enough food stuffs to feed the now clearly non-sustainable population numbers created by ceaseless population growth.

This topic used to be something people were aware of, but now industrial non-sustainable farming, perversely named ‘green’, is considered as ‘normal’.

The Myth of Perpetual Consumption and ‘Growth’

The real problem, and this is what Oscar Guardiola-Rivera (a Columbian author/intellectual/historian) also notes, is the notion that we can continue growth based economic systems based on relentless and brutalizing extraction of all available materials, when the quantity and qualities of those materials grows less, ie., when they peak in qualities and quantities. I would say most of our primary raw materials are now in this state, but we ignore it, pretending that brown lignite is somehow equal to anthracite, or tar sands equal to sweet light crude, or leaching gold out of rock with acids equal to finding raw gold ore, or silver, etc.

It’s also important to review the term ‘growth’, which really doesn’t mean growth in any normal sense, it means consumption of finite raw materials. Growth is what you see plants and animals do through their lifespans. What we call ‘growth’ is actually much more accurately understood by a term like speed of destruction. Or, as I outlined in some earlier postings, the rate of excavation in the process of digging ourselves deeper and deeper into the pit we are creating for ourselves. The more ‘growth’, that is, the further down we have gotten.

But growth itself, and capitalism, isn’t monolithic, that is, even though overall system growth may halt, the individual components of that system will keep on searching for new avenues to grow in, like ‘green’ things that aren’t green, but the overall system will not be sustainable within its current model or core biases because that growth is currently only possible by consumption of raw materials in a non-sustainable manner.

What I’m learning however from George Soros’s book, The Alchemy of Finance, is that it’s a serious mistake to believe that a current core set of core underlying socially generated biases are going to last. Since we cannot see beyond these biases in general, and since they shape what we do, our actions, and create the results, the core notion of the so-called doomer position really is just noting that our current core biased world view is not going to last. Which it can’t, since it’s based on resource extractions done in a way that guarantee failure long term, and now, increasingly, in the short term as well, as we hit extraction limits of more and more key resources, particularly those that fuel the system, oil and coal.

But there’s nothing new in this situation, this is how capitalism works, and how it has worked ever since it appeared. Ruin, strip out, profit short term while handing long term costs to the social body, who have to take care of those costs for all time, basically.

It is, however, important to keep one thing in mind: We live, here, today, in a tiny blip of history where production and extraction occur globally. So we are all tied in to some degree to the heavily flawed (non) logic of this way of organizing social life and resources.

Just as you really can’t fully choose to not participate in this current system, so too will we not have a real choice of how we interact with the systems that bumpily arise to replace them, in whatever manner that happens.

Population Overshoot

There’s been a fair amount of population overshoot on the planet, however, this is really not a very big question in my opinion, really it’s just this overblown western self, the ego, that views itself, and all other overblown selves like it, as the essence of existence. A few plagues and famines, a drought here and there, a crack in heavily non-sustainable food production methods, loss of natural gas based fertilizers, the bank reclaiming one too many farms, and the numbers drop. This too will happen regionally. The formula here is very simple: any country that today, here, now, depends on food imports to sustain its bloated population numbers is going to experience population reduction. There is no point in pointing to how the stuff is distributed, that is how it is distributed, each region views human rights and the laws governing socially acceptable distribution of the social generated materials differently.

Given the clear tautology that non-sustainable means cannot be sustained, not, can be sustained if we want since we don’t want to live sustainably, how these population adjustment events occur will be seen as they occur, I’m not worried about that part to be honest, I’m more worried about the damage we are doing long term to our ecosystem, the long term waste products we are leaving behind, etc.

Our Real Legacy to Future Generations

Even global heating doesn’t worry me that much, since it’s basically just going to shrink the land mass area that humans can live on sustainably, although of course, the cost will be far higher long term than mere problems for humans in the future. We are also wiping out species after species, and sometimes now even entire ecosystems.

In terms of history, the 1000 years it will take to recover CO2 levels, and so restore more or less normal temperatures to the ecosystem, is not that big a deal. However, the multiple tens of thousands of years the nuclear wastes require is another story, that is the most grotesquely selfish and irresponsible thing that human beings have ever done, period, bar nothing. Even numbers like: 10,000 year half life are so deceptive, since that’s only half of the material gone or degraded, the true number is closer to 100k years before the stuff is degraded enough and in enough quantity. This is simply inexcusable, to create this type of waste to feed our greedy desire for cheap and easy energy for a mere 50 or so years.

But it’s not just the 1000 years of global heating that is the legacy we leave behind. The massive species extermination we are now directly responsible for, and which can only advance as global heating increases and bloated human populations gut more and more of our ecosystems by means of the tools industrial techniques create, that too has to be considered as one of the worst things ever done, but that’s going to happen no matter what, we are not going to stop ourselves until it’s too late. We can, however, today, choose to stop the nuclear error, thus removing at least one of the evil deeds we leave as an unwelcome legacy to our future generations.

A Closer Look at the Doomer Position

When we take a closer raw doomerism, it’s useful to note that we have a roughly 2000 year history of apocalyptic cults. These cults are generally connected to Christianity here in the European West (West as opposed the East, Asia and the Americas, in this context). For example, in the years leading up to the year 1000, there was virtual certainty among those in the know that 1000 would be the end of days.

To me, all that doomerism is, is the humanist form of this same cult, and is, in my opinion, largely motivated by an excessive attachment to a non-sustainable way of life. Freud, who I generally dislike intensely, had noted something he observed in hist patients that he named the death instinct. While I reject this as an instinct, I have started to suspect that he may have found something in our own culture’s underlying biases that in fact looks very much like just such an intinct.

I believe a look into the history of such apocalyptic cults would be quite interesting, as well as revealing. Could it be that some of us have had a sense of the impossibility of our project for millenia now? This would not surprise me, after all, humans evolved not in large scale centralized cultures, but in smaller ones, living in direct contact with the ecosystem, and its natural cycles, large and small, local and regional (the seasons, for example, would always be central to any worldview that lives with its ecosystem, rather than off it). Given such an evolution, a sort of built in sense of what actually works at some level would not at all be surprising, and so living in violation of what works could very well trigger responses that even someone as clueless in any larger sense as Freud could pick up on.

Here’s a very good comment re this problem from Guardiola-Rivera:

The former (the view of the native people’s) is based on a forward looking ethic that involves reading history as a cycle of destruction and creation, in which the creation of future environments remains our collective responsibility. The latter (Euro style ‘progress’ and exploitation) is backward looking and contains its own delusion, and idea of regeneration in violence and accumulation, a self-reproducing drive to live the myth of El Dorado in a frozen present of permanent abundance and near useless renovation. And if the future is simply more of the same, then nothing we can do would make the slightest difference. The result is irresponsibility and the spoiling of Nature, as well as a sense of social paralysis (my emphasis)
What if Latin America Ruled the World, pp. 184

As you can see, there is nothing new in the doomer view, it’s always been with us here in the West, that’s why Christianity puts heaven into the future instead of here, in the present, as all other serious religions do, it’s why our science comes up with its big bang instead of seeing a constant stream of expansions and contractions, occurring well beyond our tiny, restricted, limits to perceive, since the time frames are just too big. So that forms how we think too, deeply, we here in the self-styled ‘modern’ age, actually believe that things start and finish, instead of cyclical change, which is what all sustainable societies have to see in order to be sustainable. It’s amusing to see a people and culture that views itself as so sophisticated and smart take on such a childish core conception of reality. Doomerism is simply mistaking a change for the end times, the inflection from expanding raw material extractions to diminishing raw material extractions. That view is almost built in to us, so it’s an easy mistake to make.

You’ll observe, however, that nobody who is engaging in real world activities that strive to avoid the issues Guardiola-Rivera warns us about in his statement ‘irresponsibility and the spoiling of Nature, as well as a sense of social paralysis’ have a doomer view. Turn off the TV folks, the real world is out here, and always has been. Hats off to the new generation of young organic farmers, to the farmers’ markets that are growing incredibly quickly in popularity, and in number, and to the localizers, to the permaculturalists, to everyone, that is, who is working to shape a sustainable tomorrow today rather than pine about the doom that is coming tomorrow.

There might be concern, worry, a pressing sense of urgency, but what there is not is the self-indulgent social paralysis that can be the only logical outcome of adopting the doomer’s perspective. The question is simply, are we willing to begin creating tomorrow today? Or will we insist on attempting the foolhardy project of perpetuating that which cannot be perpetuated?

It’s very important to look at such views and see what’s actually driving them, because to do so gives us a way to learn how to see our real world environment.

“if the Worst Possible Scenario happened at all the world’s gas/coal power generation stations simultaneously” – well it happened, in part, there, we call it global warming these days. Not as spectacular as exploding reactor roofs, not as fast as a cloud of radioactive debris, but the effect is here with all of us, it is enormous and irreversible. But it’s out of interest when people make their judgements.

If all four units in Chernobyl would have burned as #4 obviously it would have been much worse, yes, it would have contaminated Europe badly, but far from inhabitable. And that reactor design was a goddamn pit of hell compared even these 40yr old BWRs. Now Fukushima looks like crap, it will do some harm, it will hurt people, but not to the extent you believe.

Of course nuclear waste from all plants must be taken care of, there is research, I believe there are already finished plans for reactors that besides producing power, burn this “spent” fuel to shorten it’s dangerous effects to about ~2 centuries, which, while I agree is a lot of time, still looks somewhat shorter than it would take to remove all those greenhouse gases your gas/coal plants gushed into the atmosphere.

60 years of nukes vs. 120 years of ff power generation, yet the negative effects are hard to compare.
(src: theOilDrum 2011-03-16)

No known human non-sustainable, large scale, centralized, culture has been able to correctly predict the condition of that human culture 2 centuries in its future.

Just 65-70 years ago bombs were being dropped on all key facilities in Europe, Russia/USSR, China was being bombed, Japan was bombed. That’s only 70 years, not even remotely close to 2 centuries. And that’s only one way things can and do go bad.

Yes 2 centuries looks shorter than multiple thousands of years, but there is no way this heavily industrialized system is going to exist in 2 centuries, sorry. It’s a blip in history, a dip at the bottom of the pit. Also, what we have to look at is our present, not some uncreated future.

If we want to understand the real world, we must divert our gaze from a hypothetical final outcome and concentrate our attention on the process of change we can observe all around us.
George Soros, The Alchemy of Finance pp. 31

Such an observation shows us that the comparison of the dangers of nuclear power danger to the danger presented by the CO2 released by coal burning is false, both are being extracted and consumed as quickly as possible, and coal consumption is not slowing down, it’s speeding up.

I think the thing that is hard to grasp here is that when we started using nuclear energy, this was basically a tacit admission that we had reached the maximum levels of energy extraction, at least when looking at matters from a relatively sane one or two century perspective (the 7 generation model of decision making). All nuclear energy did was let us dig ourselves a bit deeper, with slightly longer lasting toxic waste as the outcome.

Coal alone is being produced and consumed at maximum levels, barring the global heating induced flooding of Australian coal mines, of course. I realize we have been brainwashed for decades about nuclear power being a replacement, that was the dream promoted in the 50s, but reality soon showed that the old too cheap to meter dream would never happen. And it never has happened.

In a way nukes are the ultimate toy/gadget, only it’s corporations that profit from making these, and so they are understandably reluctant to release the tax payer funded teat. In my view, the actual maximum of overall real energy production happened some time in the 70s, only we are only now starting to see that fact. Nuclear was introduced in order to mask that fact from ourselves, rather successfully I might add, since up to this week it was still being considered as our way out from the pit we are digging ourselves with coal and other fossil fuel generated CO2 gases.

I will repeat this point because it’s important to drive it home: not one pound of coal has not been burned, in the long term, from nuclear power plants being online, but a massive amount of conservation has NOT happened in the first world because of them. These nuclear power plants are just enabling devices, not positive future paths, or solutions to any problems. The developing world is developing on coal, and is adding nukes as well. Besides, uranium is depleting as a resource, and will deplete even more quickly as global demand rises.

I keep seeing this fallacy appearing in even the best of intentioned people, but the facts do not cooperate. The USA has something like 50% of its energy being generated in coal powered plants today. They are adding more I believe, so is China, India, etc. I think even Saudi Arabia is looking to add coal power, because oil is too valuable to burn. If you draw a baseline of generation levels, I will bet that expansion in consumption since the 70s largely matches the expansion of nuclear. Nuclear energy is digging us deeper, it’s not helping us get out of the problem.

Looking globally, coal is now being extracted at the maximum levels the mining industry can manage. It is also rising in price, so clearly demand is outpacing supply, thus no coal burning is being stopped at all, and thus, no CO2 is being stopped from being added to our atmosphere. We are burning coal, oil, natural gas, and uranium, at full speed. There is no surplus coal being produced, no surplus oil, and I believe, no surplus uranium. There is a small uptick in gas extraction rates because the US market is flooded with that quick depleting fracked natural gas, so that’s probably what we should be using as we try to reach a lower level of consumption, before it’s too late, that is. This logic isn’t complicated so I think it’s just mental habits and repeating what we’ve been told rather than any malicious attempt to deceive that keeps most people from seeing these simple facts.

In other words, it appears that we are now on the inflexion point of major change. This inflection point can be determined when the key resources are no longer able to keep up with demand, that is demonstrated by the price the market demands to supply them. The only question now is how long the current levels of consumption can be maintained. Once those cannot be maintained, you will see wars, increasing system instability, and it is this that forms the ultimate reason to stop all nuclear development now. We will not have the resources to correct the failures in the future. Coal is merely the silent killer that creeps up on us, but is even worse, but adding bad to worse in no case results in better. Dealing with nuclear failures requires a huge amount of socially mobilized resources, and a definite level of social cohesion, which can only be found in a functioning and fairly stable society.

These wars and system instability, by the way, are not hypothetical, they are happening now. Iraq is one such, a miserable failure, of course, but still that’s what it is. The Mideast convulsions are one way you can see how systems destabilize, often in highly unpredictable, chaotic ways. Those are the weak links, the way the stronger links manifest these instabilities is not yet known, but one thing you can be certain of, there is no safe predictable future for a nuclear power plant in any nation in the world over the next 100 years. Some may do ok, but that cannot be predicted in any meaningful way.

Both Coal and Uranium are non-sustainable, highly toxic materials, neither of which has any place in any sustainable energy mix, but sadly, both are promoted by entrenched corporate interests who do everything they can to keep these profit generators running. Profit for them, not for us, we pay the price, so does the planet.

And that’s the latest view from the Pit, a view growing more and more unstable and unpredictable by the week I might add. But that’s how it is down in the pit, we’ve left stability far behind, we’re so deep now we can barely even remember what it looks like.

You have fewer pieces than she does, and have now entered into a phase of the game where, while you are a skilled and talented player, you are also clearly able to recognize that checkmate is inevitable. She’s also got some options in the game which you don’t have, although you were given the option to inspect them before the game started, but chose to ignore that in favor of making up your own version of the rules, which isn’t actually permitted in this game. In other words, the real rules are absolute and determined by Y, the rules we generate will fail but we believe they won’t.

Building a nuclear power plant at the edge of the ocean facing a massive and extremely active earthquake fault is an example of making up these rules and ignoring the more fundamental ground rules of the game. In that case, the rules they made up were: we will build a x meter high (6, I believe) tsunami defense wall. In other words, the rule is that the tsunami that hits in potential will be less than x meters high. Mother nature doesn’t care about these made up rules, so the tsunami was as big as it was going to be, ie, larger than the rule said it would be, x+y, the quake was stronger than they designed for, so that piece of the ecosystem is now compromised and heavily damaged, and thus, the position occupied by X is now weaker than it was 5 days ago.

Making up rules like this is extremely common in I believe all large scale cultures that practice excessive non-sustainable resource extraction. Out of sight out of mind is another form of this rule invention, which is the rule we apply to most of our generated waste products.

Your pieces are parts of your ecosystem. You can use them all up before being checkmated, or you can gracefully tip the king over and admit the inevitable defeat, thus preserving the lives and future viability of your various pieces.

While some might point to the so-called marginal economic benefit of using nuclear energy as opposed to coal fired power plant energy, I am unable to actually derive any meaning from the term ‘marginal economic benefit’ since from what I understand all nuclear power is not economically viable in the first place. That is is, if all mining, construction, de-activation, and most important, permanent long term waste disposal costs are taken into account, the plant is a zero gain enterprise.

If we forget the entire ‘economic’ modeling, which I think is a good place to start, and look merely at extraction rates and long term viability of the various options, it’s clear that none of the current options have any future.

If we shut down our nuclear plants, as some suggest when trying to demonstrate a lesser of evils type argument, we would probably increase our coal extraction / burning rates in the short term, with a net gain/change in the chess game of exactly zero, since the coal will get burned up anyway somewhere in the world in all cases, only maybe not as quickly in the case where nuclear plants are not closed down or built. So while that might appear to present a reason to build nuclear power, it’s a false premise, since in fact what would happen is we’d just burn the coal anyway. So the reality is we are burning the coal, creating CO2, and show no signs of stopping, and generating long term highly toxic wastes, which threaten to poison our environment long term. That’s lose lose, instead of lose alone.

Keep in mind they are currently majorly revising actual economically viable coal extraction re reserves, with massive downgrades in future reserves. No more 200, 300 year future talk, it’s now approaching 20 to 40 years to reach global maximum production levels (although I am suspecting, based on rapidly increasing coal prices globally, that these levels have possibly already been reached due to unexpected massive increases in global demand based on Chinese and Indian coal use), which is about the same timeframes re time to oil production maximums being achieved (aka: peak oil) that were being discussed when I started following the so called ‘peak oil’ issue in the late 90s.

I see this only in terms of a realworld chess game where we already have lost too many key pieces to nature to ever win, or even reach stalemate.

Future generations will curse us, believe me, they will curse the heated global ecosystem from CO2 emissions they are going to inherit from us, which will take about 1000 years to return to a more normal level, and they will curse our mountains of toxic wastes (including but not limited to nuclear) we leave behind, which can take tens of thousands of years to finally become reasonably non-toxic, if they ever do. Discussions of ‘economic benefit’ when the outcome is only destroying more of our ecosystem long term in all cases is just not something I can find any heart to really get into.

I don’t know or understand why so many modern humans cannot respect mother nature, and why or where their profound contempt for her rules and limits came from, but I am unable to participate in that contempt or self-centered focus on personal greed, consumption, and fulfillment of desires that were not even an idea in someone’s brain 80 years ago.

I see now that the requirement for all decisions to be taken in long term was not some side thing for those who managed to live more sustainably than we do, it was the only thing. Despite this I see ground for hope, but not in any way a hope that will satisfy artificial notions of economic development. But that’s not a bad thing, it’s a good thing.

I have been reading, with great interest, Soros’s book The Alchemy of Finance, which strives to not be a work on finance, but on human behavior and social systems. It succeeds in my opinion. One of the key concepts therein is that the way we as thinking entities perceive reality is always filtered through our thinking, and this is not something you can get around. The requirement, so called, for x or y levels of energy consumption in my opinion fits in perfectly with this model. It’s a feedback loop, we believe we require x or y level, then we generate x or y level, then we believe we need x or y + 1, so we generate that. Once generated, that forms a new floor for what we believe is necessary for human existence, even though it’s totally obvious that it isn’t, nor has it ever been.

To be clear, what Soros is noting here is the inevitable failures of social ‘sciences’ to achieve the status of certainty that physical science is able to reach. In other words, there can be no social science because the agent who is investigating is the agent being investigated, and that agent contains biases that are not possible to work around. So what’s he’s talking about is understanding social systems. Personally I would go further, because I do not believe science itself actually is doing what it pretends to be doing, but that is going way too far afield, and would lead to pointless discussions that would do little good.

This recent Japan nuclear problem to me is a perfect test for the core premises of several books I’ve recently started digesting (Soros’s work here discussed, Taleb’s derivative and weaker, but still useful, Fooled by Randomness, as well as the excellent When the Lights Went Out – A History of Blackouts in America, by David E. Nye), and their premises are being proved not just slightly correct, but absolutely so.

The corollary of this point is that it’s not a one way process, ie, just as we adjust our world views to the x=x+1 process, so too when we hit the limit of that, determined by underlying tendencies and fundamentals, we are forced by material circumstances to adjust mentally to a model which now is x=x-1, until a new relative steady state is reached (itself an illusion, since only once actual sustainable living is reached can we discuss relatively steady states, but it’s an adequate working model).

So all the frantic statements and comments from people who insist that the x=x+1 condition are the only possible outcome and future for us are simply demonstrating Soros’s notion of reflexivity in an explicitly clear manner.

When x=x-1 becomes the prevalent bias, these people will vaporize, or rather, the bias will vaporize, and will be replaced by those who maintain equally adamantly that an ongoing x=x-1 is the natural condition, and it’s absurd to suggest otherwise. At some point in the distant future we will bounce off and on from x=x, each time being corrected, again, as we try to use x=x+1 model, and returned to the x=x model. This won’t be a choice, but it’s so far in our future it’s also pointless to even really discuss that future.

The core concept here is that there is no way for human beings to actually avoid the underlying bias and trendlines, which are mutually self-reinforcing, ie, there is no point of view outside of them that is solid, but we can note that this process exists, and then try to mold our thinking to fit this model, which in my opinion is a significantly superior model for understanding human actions and social thought.

To be clear: the bias we now internalize about yearly growth in consumption of electricity leads directly to yearly growth in consumption of electricity, it is a feedback loop. When our bias alters due to our views coming too far out of step with what the fundamentals can provide, the bias will swing to the negative side of the slope, which will involve declining, decreasing levels of electrical power consumption. How our biases achieve explanations to ourselves at that point remains to be seen, but one thing is certain, they will. I am glad to see such a fantastic real world test case here and now for these ideas, it’s rare real concepts can be so readily tested, Soros used the market to test these, but he knew the ideas were much larger than the market.

This is how Soros explains all bubbles and boom/bust cycles, and I would without hesitation include the growth/decline model as fitting this perfectly, only more slowly, and over a longer and more complicated period of time.

In other words, we view our normal as normal, but that normal itself is not fixed, it’s fluid, it changes. People don’t like change, but when it comes, it comes, one can either resist (as in rightwing climate heating denialism), or one can move with it, ideally a bit ahead of it to give you an edge. Not impossible at all. Difficult, sure. It’s worth noting that deliberately placing oneself behind the curve, as most climate heating denialists do, places you in a position where you may experience short term gain, but you are almost certain to have long term total failure, both as a country and as an individual. While it’s a possible course, it is neither wise nor offering long term advantage.

And that’s it for the latest view from the pit, we’ll see how things pan out as they panic and try to negotiate their way out of finite and absolute limits, in other words, call in more digging tools, we’ll bury the nuclear plants in cement and sand sarcophagi, then build more new ones, we need to power the excavation equipment at all costs, full speed ahead!

I’ve been following, as I noted in the previous posting, the writings of a wide variety of so called Peak Theorists/Commentators, and began to note certain… how to put this nicely?… let’s call it, oddities, about their views. Certain things don’t fit the facts, that is. This is not to discount the actual substance of the analysis presented, for example, as this recent WikiLeaks Cable clearly shows (story), the views criticized by the establishment as ‘nutty’ or ‘deluded’ are in fact basically exactly right. In this case, the leaked cable shows that the Saudis admit they have both overstated their reserves, by about 40%, exactly as it was said they had, and are lying about their ability to generate new supplies in terms of daily production rates.

So there’s no problem with most of the core engineering facts related to various so called ‘peak’ issues.

No, the problem lies much more deeply in my opinion, and that problem is rooted in how we as humans are chosing to view this situation. By projecting everything upwards, we in turn manage to suggest we are progressing. But we are not progressing, if we were, our planet would not be losing its ability to support life, the resources we are extracting at breakneck speeds would not be hitting extraction maxima, the ecosystem would be thriving, not dying off and losing diversity at record rates, and so on.

There is another serious problem with viewing matters as if we had attained some height, and that is that it suggests that all we need now to do is to step down from the peak and make our way back to the lower realms. In other words, don’t worry, gravity will pretty much take care of things for us.

I’ll be investigating these matters for a while, so I hope a few of you will bear with me, and possibly even contribute thoughts of value to the process. Please note that repeating dogmas and propaganda generated by the corporate media, especially the right-wing corporate media, is not a positive contribution, but it will be one of the areas I examine in the coming postings, if things go as planned.

The Nature of the Pit

First, I will admit an immense, and growing, frustration, with the entire tone of the discussion you find online, and in print, from Heinberg, who tends towards reasonably sane if somewhat dull views, to open polemicists like James Howard Kunstler.

I have been searching for the source of this frustration, and I believe I have finally found it. All of these people, more or less, buy into the myth that we have ascended, or have reached a peak, of culture, etc. I would like to suggest that this view is not just slightly wrong, it is horribly, and almost perversely wrong.

The doom these people are dreading/awaiting anxiously, has already happened. It has been ongoing for centuries, maybe millenia, depending on where you are looking. And this doom comes and goes, some areas recover from it, others are essentially destroyed for all time.

However, it does little good to just say the words, I think a bit more is called for, and since this is merely an online blog, I’m going to use it to explore some of these ideas a bit, veering here or there as opportunities present themselves, or as evolving events suggest new or old directions to look into.

What does it mean, then, to say we are in a pit? First of all, it serves to de-mythologize our activities. What we do, in essence, in our culture, is to dig things out of the ground, to break and open and reveal, to extract (a process we sickly, and somewhat egotistically, call: production) finite materials. We dig drainage ditches, we dig foundations, we create structures made out of materials almost exclusively mined or pumped out of the earth.

This is what we do as industrial humans. We dig subways, we clear land of life and replace it with monocultures, we fill the oceans with waste, and the skies with the offal of burning hydrocarbons, coal, oil, natural gas, etc. We then call this process ‘progress’.

The value of viewing this not as a positive achievement, i.e., ascending the peak, from which we look outward in Randian glory over our dominion, but as a negative one, is that things begin to actually make sense. It is also worth noting that the English language embeds such notions into our daily speech, for example: we are digging ourselves down into a hole, we are digging our way out of this mess, and so on. The examples are probably uncountable.

It was long ago noted that to understand reality, listen to the words average people use to describe it. I am buried under a mountain of debt, and I need to dig my way out. For example. My house’s mortgage is now underwater. These are accurate examples, and accurately describe the situation.

So my premise is that we are not at all on any peak, nor are we staring out from the hilltops like Ayn Rand’s teenage jerk-off fantasy books masquerading as serious thinking would have us believe. No, we are in a pit, and we are digging this pit deeper and deeper, with greater and greater intensity.

Think of, if you have read or watched old films, HG Wells ‘The Time Machine’, where he arrives at a time in the future where the controllers are subterranean beings, the Morlocks, who control the naive and enslaved surface dwellers. This was a nice metaphor, by the way, and it’s not surprising to find a guy like Wells writing those words, especially if you read some of his less known works.

Or look at C.S. Lewis, who authored a very interesting science fiction trilogy, the last book of which occurred here on Earth, That Hideous Strength, and featured an evil corporate type system that was engaged in a vast excavation project, the purpose of which remained murky to almost everyone involved, and the members of which all struggled to achieve status and good reviews but never actually received anything of real value in compensation. An interesting analogy that one too, and a very accurate one, we see this happening every day as people sell themselves to corporations in order to receive chits to give them the right to consume the products of these corporations.

C.S. Lewis had it right I think. And he’s not the only one, history goes far back with people who began to suspect things were not quite as they appear.

But our concern is not the distant past, nor the murky future. The present will be the focus here. And the activities of our present show us digging a lot of holes.

You can find fascinating engineering type stories in this site, and anywhere else you chose to look, oil wells drilled down to 35,000 feet, vast mines, monstrous extraction rates achieved in coal, copper, iron, and even geologically preserved aquifers, that is, very deep groundwater extracted to irrigate, non-sustainably, places like the US Midwest (look up the ogallala aquifer for a prime example, though there are many such found globally, Saudi Arabia gets most of its fresh water this way, for example.)

Extraction everywhere we look. Renewal, improvement, nowhere. Can you show me a case? Now and then a smart farmer, not run by an agribusiness entity, that is, will actually make attempts to stop the extraction of the top soil resource, but really, where did his water, fertilizer, tractor, combines, etc, come from? Extraction everywhere we look.

So with this mass of extraction, let’s just call this as it is: humanity is digging itself a vast hole. The hole is not fully global, but it is becoming so now, with the climate and oceans themselves changing, which is pretty much the end of the road for this notion, but that doesn’t mean we’ll stop.

No, this is why I think it’s more useful to view humanity as having descended, and as being in the active, and self-generated process, of increasing the rates of descent.

This is not a difficult idea to grasp I think, and it’s actually very useful to help us understand why people are acting in such a bizarre way today, and why the political discourse is growing increasingly out of touch with reality. Or is it?

The World of the Pit

The first thing to understand about the world of the Pit is that it is human activity that digs the pit. It is humans who decide to improve the extraction tools, to find better drills, larger shovels, more powerful explosives, etc.

So the first thing to understand about the Pit is that we make it with our activities. This is a really key point, and one that much peak type thought tends to sort of ignore, or simply view as too obvious to state.

When we decide to extract our latest favorite substance, say, oil, it is not a random event. In fact, every time we expand the power of our energy sources, we correspondingly expand our ability to dig, deeper, further, and more critically, wider.

Imagine a mine, then imagine hitting the point where a lot of the desired mineral is to be found. The mine spreads out, into galleries, using the stone to support the ceiling, which is the rock itself.

Our mining activities always work in this way, as for example the excellent series done by Heading Out from the OilDrum every Sunday often covers, re the engineering of coal, oil, gas, etc, mining/drilling.

To say that our actions are leading us upwards, to say we have progressed, to say we are ascended, or are higher than earlier copies of humanity working in vastly different ways (though the tendency to dig ourselves down into holes seems to happen most of the time we construct what we call ‘civilizations’), is really very self-aggrandizing.

In fact, I would suggest that the only person who could make such a statement would be one who has already lost sight of natural reality, ie, someone who lives breathes loves dies in a pit.

Our thinking is the thinking of decay, of decadence, not of aspiration, of freedom. It is the thinking of people without real horizons, only darkened and rapidly steepening walls surrounding them.

When we seek ‘higher’ things, we admit this, almost openly. People who lived in natural environments did not in general seek higher things, since they were already there. It is only us, who have dug ourselves down this deep, who must look upwards to find our way out.

Music, Art, are supposed to ‘elevate’ us. To raise our spirits. This raising would not be necessary if we lived in an elevated condition. Or, better put, not elevated, merely not depressed, sunken, darkened. Our Gods live up there, not down below. The gods of people who lived more or less in contact with the Earth’s surface tended to live right around them, like neighbors. As we began to dig, they began to appear to be higher up, like the Greek gods, on Olympus, for example

And they began to become abstractions, distance had made it difficult to see. The further we dig, the more abstract they become. Everything takes on this darkened quality, in fact. Christianity even went so far as to invent a god of the pit, Satan, which was a strange takeoff on the older notions of Hades, another construct generated by an earlier time, when Cities began to exist, the polis sprang into being, and the walls began to rise around us.

I want you to note that as much as possible, I am trying to avoid using too much metaphor here, as you know, by simply looking at your wall, the walls really have sprung up all around us. This wall is a reality, one of Pink Floyd’s biggest selling albums was called The Wall, in fact. All in all, you’re just another brick in the wall…

It is the task of Art, Music, etc, to tell the truth as best they can. So sometimes it’s worth giving a listen or look.

Daily Life: Dig baby Dig

Once I started to change my perspective, things that had made little or no sense began to become much more reasonable, almost instantly.

If we are digging ourselves down, this should, and in fact is, one of the cornerstones economically of our social system. And so it is. No deep drilling, no open face coal mines, no iron ore extraction, denies this fundamental fact.

So taking a fairly materialist position, our views of politics and social systems can become more reasonable.

Starting with the far right, heavily connected to, no surprise here, natural resource extraction, mining, drilling, and so on. See for example the ultra right Koch brothers. These are the diggers. They see only digging. They do not see the light above, only the task at hand, digging further. To say these people have no vision is not quite fair, they do, they see the next hole, how to expand another one, how to widen the mine face, how to dig down 12,000 feet, then spread a web of horizontal drill holes to suck the maximum material out at the minimum cost.

The diggers somewhat rightfully view themselves as the cornerstone of our society. And so they are, without this ongoing extraction, the hole would not be deepened.

More recently, and in a very weak form, some people have begun to question the wisdom of deepening the hole, and call for a slowing of the digging processes. This is generally now termed as ‘green’ thinking. Almost no green thinking is concerned with anything beyond slowing the pace.

To make a visual representation, the primary diggers and resource extractors want to extract and dig at maximum rates. They are not concerned about the angles the walls take, the dangers of cave-ins, and so on. They merely want to dig more, for to dig more confers some social status and power on them. They cannot see beyond this. So that is a limit that it’s important to understand. Such people view issues such as climate change/disruption with extreme suspicion because they absolutely correctly intuit that such a change challenges their primary and core access to social status and power.

How they explain this among themselves is not all that important, it’s like hearing mining engineers debate optimal drilling strategies or angles of descent.

Mingled among this crowd, but currently largely intrinsically hooked into this mindset, are some who are questioning the rates of digging, the structural integrity of the walls, the quality of the pipes used to line the drill holes, and so on. These are what we call ‘progressives’. The diggers tend to look on progressives, or reluctant diggers, with suspicion and often scorn, since almost everything the progressives do is dependent on the output of the diggers.

You’ll note, none of these are questioning the real wisdom of digging further as the walls above us are destabilizing.

A tiny minority of both groups is beginning to note that the actual walls are in fact beginning to bend, warp, destabilize, and an even smaller minority out of that group are beginning to question the nature of the entire digging project itself.

But since the series of interconnected pits, mines, and drill holes we have constructed is largely determining our daily existence since birth, the perspective required to see outside the hole simply cannot be generated in any convincing way.

Everyone, after all, knows that what we do is dig, and that the purpose of existence is digging, down, out, expanding the mines, carving out vast ornate galleries, piling the tailings up as far as we can make them go, to form what we call sky scrapers, digging massive tunnels to make transport more efficient, and so on. We even launch vessels made from materials we have dug up, fueled by other materials we have extracted from the Earth, into the skies, and flatter ourselves that by so doing we have left our foundations behind. But these are all just balloons held down by cords that are of an absolutely indissoluble character. Fantasies, fictions, flight without wings remains something we are allowed only in our dreams.

Bit by bit, we have dissolved everything into acids used to enable more rapid excavations, we use the fuels we extract now to extract more, faster, more furious, more desperate, for to stop digging, we are told, over and over, is death, the end of all things, the beginning of nothing, a fate worse, far worse, in fact, than death. So we dig, more, deeper, wider.

The caverns begin to fill with people, each is given a shovel, each is supplied with minimal foods, of a quality lowering by the year, enough to allow them to extract the shovelfuls they have been allotted as overseers peer over their ledgers and performance reviews, scribes with scraggly beards making entries to notate the required allocation of chits for the performance of the task achieved.

Some dig sideways, branching out the caverns into catacombs, the light provided by harsh electric bulbs, until soon many are born without even a hope of ever seeing the sun or moon.

The overseers nod their heads, urging on greater performance for the sake of maximal efficiency, the best of the bunch are handed engineering degrees and massive stacks of chits, claims on wealth, a portion of the extractions that are twisted and pulled into new shapes and soon to be discarded flavors are handed out like rewards given to good puppies while the digging never stops, the grind and groan of rocks and metal, shrieks permeate the air as machines generate greater and greater degrees of consumption, a vision from hell you might think but we are told it is our present, and that this is the greatest achievement mankind has ever reached, the greatest heights, the dream of man to be a god is now realized, we are told, but not by any god I can recognize as such.

The digging mass forms itself into religious units, which look up, to find the sky further each year, a bit more distant, and as it grows faint, they raise the cry of fundamentalist return, of absolute truth, of sin, of redemption, and all the litany of other false promises cast upon the water by those who may even truly want to be of use.

And so it goes, on and on, deeper and deeper.

Then One Day the Machines Slow, the Digging is Threatened

The first voices are cautious, careful not to disturb the great powers that generate the incredible quantities of extraction and production, but still, there is that nagging problem. Science, a powerful tool, designed to maximize production, make efficient extraction, help catalyze this or that into some other agent never before dreamed, control and regulate processes for greater efficiency, now and then sees what it should not see, the vision parts, and a hint is quietly published, spoken, discussed among the more arcane levels of the academies.

Maybe in Sweden early 20th century, when someone notes that the temperatures appear to be rising globally, already then detectable, already then understood clearly as to the causal agency, release of too much Carbon Dioxide into the atmosphere. But then the voice is stilled, allowed to speak but not heard, it fades, only to return later, then more forcefully, the air in the pit is now growing noticeably warmer, agencies are noting that financial repercussions, insurance payouts, issues are not working well, what is the problem? The digging goes on as the voices begin to join, the word stop is heard for the first time but does not fit, digging cannot stop, it must not stop, the hole is not completed after all!

Then other warning signs appear, oil fields begin to enter advanced stages of depletion, production rates plummet, replacement rates as well, like a hamster running in its wheel, it can’t get ahead. Oil field depletion is a problem noted by all competent professional petroleum engineers for decades. Depletion is a term designed to describe but hide the underlying truth, the pipes, the tubes, the sucking is slowing, the machines have spread, the hole is growing wider, there are few spots left on the planet left at surface levels, everything is sinking, but it is not a passive sinking, it is fueled always by non-renewable sources of energy, always the demand to extract, profit, oil, coal, life itself fails, species begin to lose their ability to function at the depths we are creating, one by one they snuff out, faster and faster, the rate is noted by many but nobody can offer a solution, the digging must go on after all, there is no way to stop, the walls themselves are now held up by machines, to stop means the walls will fail and the pillars will crumble, the situation requires more digging, and more manpower, there is no other solution, we will craft massive metal plates to shore up the walls, and we will cast monstrous pillars of cement and rebar to hold up the sagging and groaning ceilings of the caverns we excavate to contain the people who must dig more.

But the lack of planning is showing, now a well here, another there, is running dry, that field is slowing, oil is growing dear, and without oil the machines simply do not run well. The sun no longer shines directly on the land we farm, the fields require massive amounts of oil, of fertilizer, of water, to produce the crops required to feed the populace, themselves groaning now more and more as materials become harder to come by, more expensive, a new term is invented, demand destruction, to explain the fact that now some people are unable to pay the costs, and sit shivering in their caves, chipping away at walls in hopes of finding a small bit of coal to burn in their fireplace to cook their gruel.

Still we dig, drill, spread nets deep into the seas to catch and kill and then eat everything we can get our hands on, the oceans fill with waste and garbage, in areas larger than large US states, hopelessly drifting, dead zones appear, things are not looking so good, but we no longer see, we are buried, we know only our tunnels and tubes, our cement/asphalt lined avenues that cover the living, digging down a bit deeper every day, we see problems but tell ourselves we will solve them by digging a bit deeper, by widening the caverns, adding a few more people in key areas, but the land is failing, never here, always somewhere else, not our problem we tell ourselves, but their caverns are now starting to intersect with ours, tendrils spread across the planet, connecting, joined, vibrating, we call this creature the internet, and marvel that we can now talk to other caverns without even stepping out of our walls.

All so amazing, so there is talk about sending more rockets up to Mars, maybe Titan is promising, they say it may have water, so that’s a start, no?

The pumps begin to strain, we have hit a wall, there is no more oil per day now, production has maxed, the shrill diggers scream, drill baby drill, oil explodes from the bottom of the sea, so deep we feel right at home, remote robot craft are our eyes and arms and legs, we can do this, we tell ourselves over and over, a bit more drilling, dig over there, we haven’t tried that yet, so that should solve the problem.

But oil production is stubborn, it stays at the same level, we can’t pull out any more, and other countries have embarked on their own massive excavation projects, at scales never before dreamed, China jumps ahead almost overnight but oil does not, and then we have hit the wall. Digging projects are canceled no money today to pay the bills, one grinds to a halt, then another. Existing producers promise to expand production, but their expansion increasingly fails to even cover the depletion rates, game over signals red flashes, over and over, flashing red warnings, ignored, we can do this, let’s just fix it, dig over there, we missed a spot, the ice is melting anyway, so we can drill up in the North now, that should solve the problem.

But overall, the speed of the digging has slowed, and that is a problem, because we have constructed a world that is totally dependent on not just digging, but digging at a certain rate, we need to go down a certain number of feet per hour, remove so many cubic yards of material per second, a larger shovel, bigger trucks that should do it, so what if the quality of the ores is declining rapidly, we will just dig more out, we can process it, and that will help expand the hole anyway.

That’s where we find ourselves today. Stay tuned for further reports.

Given the degree of the problem, one thing is becoming more obvious: any changes to come are going to happen in totally unexpected ways. Why? Because we are entering into uncharted territories when it comes to how we believe the world works versus how the world actually works. The key word here of course is sustainability. If you can come to understand this word, you are pretty much most of the way home.

Near term it’s hard to see anything positive happening politically in the USA, unless you consider a non-stop barrage of instigation to violence from the neo-con far right, resulting in, surprise, violence, as a positive. That model is tried and true, admittedly, worked well for the brown shirts too. Personally I’d suggest anyone with any integrity distance themselves from such types, unless that’s the future you want of course.

Or the idea that force-feeding even more capital into large corporate systems (aka, health care ‘reform’ [pray tell, how is forcing more money into the HMO system, thus making it stronger, reform?], military outsourcing, etc) is somehow going to help actually solve our problems.

The main structural problem the EU will face is lack of domestically produced resources. The main positive the core European nations possess: a reasonably coherent political system, and reasonably rational voters who actually understand things when pushed, and of course, a sense of place, of history, mental, linguistic horizons broader than the local walmart parking lot or corporate funded tv/radio shows…

Almost the opposite of the US, oddly.

As a Greek friend of mine noted, Greece for instance, knows what fighting for ones rights means, they have done it in the 20th century, they know the stable can roll over almost instantly into civil war and chaos. Americans don’t. I score that US, 0, experience, 1.

But if we start climbing out of this hole we’ve dug ourselves, we might find that while Europe has had its ups and downs before, and has survived them, the US hasn’t, yet. So I give odds on Europe, still. Not at current populations, but it doesn’t take much to shrink a non-sustainable population, that’s what non sustainable means after all…

The USA has never seen or experienced any model that involves finite resources, and they simply do not have the mindset to understand what that is going to mean on every level of life, politics, everything. All the USA knows is consumption, and that’s the wrong model to get out of this pit we have dug ourselves. And that goes back to the very beginning, when the initial brit colonists stole already prepped farm land from the local Indians, since that was so much easier than doing it yourself…

I think the speed of change might catch people way off guard. Lots of scenarios out there, but nobody will know which one will appear in the real world.

Remember, the Roman Empire crumbled, moved, went East, but Italy was still there, in simpler form, and it came back, several times over the centuries. All without oil or steel, so I think it’s a bit over the top to insist on a future that resembles a non-sustainable present. Most euro towns are already built around non-car cores. Takes not so much to go back a bit, climb up a bit rather than dig further down. What’s, say, Phoenix going to do? LA? Dallas? Atlanta? Better think of something quick, they are running out of time, water, oil, and everything else required to sustain the non-sustainable.

I suggest that if we want to ‘advance’, we forget this ‘peak’ nonsense, and admit the truth. We have dug ourselves down deep into a hole, and digging deeper isn’t going to get us out of it. The first countries to understand this win long term.

The USA, as currently constituted, is NOT going to be one of those countries, not the way money and politics are now intertwined in a sick embrace, an embrace that won’t anything help when the time comes for rational decision making, and when social allocation of resources becomes a necessity, not something to debate about in online blog postings and chats.

In fact, looking at this from a persective of pits rather than peaks, I believe you can quite accurately summarize the political ‘choices’ offered to us as one of the following:

• Choice 1: Dig more, dig deeper, expand the mines, drill further. This choice would cover all the right, almost, in the US political system, and most of the so-called ‘left’. The most explicit form of this view is found in the: drill baby drill, dig more coal, now, make more power plants, now, form of discussion. China is also following this course, at near breakneck speeds. Maximal digging speed and intensity, get that hole as deep as possible as quickly as possible.
• Choice 2: Slow down the rate of digging and resource extraction. This would cover most of what we call ‘progressive’ thinking in the USA. Up to and including new Marxist type thought. This covers things like Priuses, ‘green’ consumption, ‘renewable’ energy, and so on.
• Choice 3: Stop the process. Almost nobody seriously argues this, since it involves an immediate cessation of growth (better termed: resource extraction). Growth is required for Capitalism to function, debt cannot be repaid unless the capital is grown to include the interest payments. This is a fundamental and core law of the functioning of Capitalism. No country in the world is viewing this as an option. Even people like Evo Morales, for example, refuse to even discuss population growth/planning when criticizing the industrial world, which makes their talk about capitalism and growth based systems somewhat absurd, since each new person added to an already stressed ecosystem, like Bolivia for example has now, has the same negative result, the hole has gotten deeper. But at least they are saying the words, if not actually engaging in the actions.
• Choice 4: this is not actually a choice, it’s necessity, and it is the actual meaning behind the word sustainable. Obviously, it’s getting out of the pit as quickly as possible. Nothing modern humans do is sustainable, with the exception of some very fringe remaining social groups (‘natives’) who still live sustainably, here and there across the planet, but their numbers are declining rapidly, and the forces confronting them are massive, powerful, ruthless, and uncompromising, since this way of life requires a fair amount of land. The forces pitted against these cultures have been engaging in such cultural destruction for centuries, possibly millenia now.

It’s important to note that choice 4 is not, as I noted, a choice. Sustainable living means living that can pass the 6 generation test (I think it was 6) that some Native Americans relied on when making core political and social decisions.

Choice 4 is the only option that actually would view us as doing what we are doing, digging ourselves deeper and deeper by the day despite all talk to the contrary. And thus, it’s the only choice that offers an actual solution, although due to certain limiting factors, this solution does not exist until we discover it, thus making endless polemics about ‘my solution is better than your solution’ largely irrelevant. This solution has to be found using different methods than we used to get to the bottom of the pit, there is no formula or trick to it.

Choice 3 could, if done properly, help lead to choice 4, but it could also simply keep us stuck at the bottom of the hole, as the walls begin to crumble down, rocks pelt us as small avalanches form on the unstable sides of the pit. In other words, choice 3 is not a very good one, although it’s better than 1 or 2.

I like Bloomberg.com as a news site, because it aims at capitalists, and the USA is a capitalist country, so news pointed at them tends to be more accurate than most standard corporate mass media. This doesn’t mean you can turn off your critical thinking, but the news there is often real, and points to larger trends, since such trends are exactly what businessmen need to have a solid understanding of in order to hope to make good decisions.

So it struck me when I read Airline Era Ends as Carriers Cull 50-Seat Jets ‘Nobody Wants’ .

The 50-seat jets once prized by carriers such as Delta Air Lines Inc. are being culled from U.S. fleets as higher fuel and maintenance bills make them too expensive to fly.

By 2015, U.S. airlines will have about 200 jets with 50 or fewer seats, down from about 1,200, said Michael Boyd, president of consultant Boyd Group International Inc. in Evergreen, Colorado. More than 80 have been scrapped in 2010, he said.

Got that? I don’t know if you followed the airline industry when oil went to $147 a barrel, in 2008, but one prominent airline CEO stated that the global airline industry becomes non-viable at oil prices over $100 per barrel. This is because of economies of scale certain pricing models enable. In other words, airlines have basically three fixed costs: 1. the physical airplane, 2. fuel, and 3. labor/corporate. Debt costs would mainly be centered around the cost of the aircraft.

The cost of the physical airplanes don’t change much, the cost of labor has been cut about as far as it can be cut, as you should be able to notice if you fly routinely. So that leaves only one variable, fuel costs.

The airline industry is in precipitous decline – across all regions and categories, from the low-cost carriers to the legacy giants. Even the success stories are doing little more than treading water.
…
Particularly if fuel prices continue to climb while demand remains weak, Neidl believes one or two U.S. carriers could disappear or be taken over in the next few years. While previously it has “seemed that airlines never die,” tight credit markets could make it difficult for them to find the financing they would need to operate through Chapter 11 bankruptcy protection.
www.aviationweek.com

The primary premise of peak oil is not that we will run out, but rather that oil, being a fundamental component of our economy, will become increasingly unaffordable as drilling costs go up and up to try to maintain a plateau of global oil production, currently hovering at around 82 million barrels per day, total liquids, about 72 million petroleum.

We are deep inside this cycle (GAO 2007 Report to Congress: pdf) now, most solid estimates, based on reality, not wishful thinking, put the actual peak in oil production somewhere between 2005 and 2008. If you factor in how much energy is now required to bring new oil production to the market, ie, deep sea drilling rigs drilling down some 25k feet or more in the ocean, or oil sands that require massive amounts of natural gas to melt the bitumen enough to make it flow so you can extract it, some analysts say that the peak actually occurred some years earlier in terms of the actually available energy being added to the supply total.

My working hypotheses, which I evolved some time ago during a fairly unrewarding discussion with a somewhat prominent proponent of the ‘doomer’ position, is that you have two extremely reliable metrics of systemic failures: 1. global air travel, and 2. the global internet. Both systems are extremely complex, both require that basically the entire global system is working in order to function.

I came to this conclusion because there’s an annoying tendency to proclaim the end of all things, a few times per year, while the system continues to not end, but to grind slowly downhill, disappointing prominent prognosticators who are foolish enough to confuse their (I believe) flawed understanding of what money, finance, and the economy, actually are with reality. This mistake creates constant bad predictions.

I like, and read routinely, a lot of these bloggers/writers, but the fact remains, they are constantly wrong when they make concrete predictions, and they are consistently wrong. This doesn’t mean they are wrong on the overall direction, ie, down, but they are most certainly wrong on the fundamentals of what makes our modern societies tick. Here I’m referring to the Automatic Earth, from which I regret not having collected the roughly bi-annual proclamations of full and total economic collapse, or James Howard Kunstler, who confuses his well founded loathing for the status quo and its aesthetic outrage against all that is good and decent (thoough he too is largely on target with his longer term views, found in for example The Long Emergency) with the actual state of this world in terms of specific predictions of collapse/economic ruin and so on.

There’s a few other less prominent people not really worth mentioning unless you are really into doomer porn (aptly named term for such gleeful anticipations of total collapse), so I’m going to leave them to the side, where various people who find such reading amusing can pick at those bones. Hint: if you want to go off and farm, just do it, but do it because you love the soil, growing things, nature, and the entire cycle of life, not out of some absurd notion that you will magically be able to ride out whatever storm you believe is coming down the pike in your rural hideaway.

So I have come to prefer a much more solid set of standards to gauge the overall health of both global and national systems. The airline industry and the internet are the two strongest contenders, because they both track with fair accuracy the overall curves of our ascent up the side of the growth bubble, and they will track our decent as well.

Dmitri Orlov recently wrote a nice piece about what that downhill curve will look like, Peak Oil is History :

I feel that the time is ripe for me to weigh in on the subject and declare, unequivocally, that Peak Oil is indeed bunk. Not the part about global oil production reaching a peak sometime right around now then declining inexorably: that part seems true enough. Nor the part about oil production in any given province becoming constrained by geology and technology once the peak is reached: that part, under properly designed experimental conditions, seems predictive as well. In fact, the depletion model has been confirmed beautifully by the example of the continental United States minus Alaska since 1970. But the idea that this same depletion model can be applied to the planet as a whole, is, I feel, something that must be rejected as utterly and completely bogus.
…
Let us look at it another way. As I mentioned, Peak Oil theory has been quite good at predicting the depletion profile of certain stable and prosperous countries and provinces. But these predictions become meaningless when extrapolated to the world as a whole, for one very obvious reason: the world cannot import oil.
…
Some might also wonder why a shortage of oil should automatically trigger a collapse. It turns out that, in an industrialized economy, a drop in oil consumption precipitates a proportional drop in overall economic activity. Oil is the feedstock used to make the vast majority of transportation fuels — which are used to move products and deliver services throughout the economy. In the US in particular, there is a very strong correlation between GDP and motor vehicle miles traveled. Thus, the US economy can be said to run on oil, in a rather direct and immediate way: less oil implies a smaller economy. At what point does the economy shrink so much that it can no longer meet its own maintenance requirements? In order to continue functioning, all sorts of infrastructure, plant and equipment must be maintained and replaced in a timely manner, or it stops functioning. Once that point is reached, economic activity becomes constrained not just by the availability of transportation fuels, but also by the availability of serviceable equipment. At some point the economy shrinks so much as to invalidate the financial assumptions on which it is based, making it impossible to continue importing oil on credit. Once that point is reached, the amount of transportation fuels available is no longer limited just by the availability of oil, but also constrained by the inability to finance oil imports.

And in the last paragraph I quote, you see where this starts to tie in with the topic of this posting. The airline industry operates under these same restrictions and rules.

Orlov is often tossed in the doomer crowd, but I don’t agree with this, even though he would tend to agree that he believes the US system is on a straight track to collapse. I hesitate to label him in this way because I think he’s simply too rational to be tossed in with the other people out there who promote such a viewpoint, generally based on very sloppy reasoning, and in my opinion deeply flawed understandings of what human nature and culture are.

Basically the key point to grasp here is that we have had a fairly smooth, albeit bumpy, uphill climb, in pursuit of the mystical, and arithmetically impossible, perpetual growth we’ve grown to accept far too uncritically as one possible reality we can pursue, out of many. Ignoring, that is, the fact that nothing can grow for ever.

Bubble economics, what we’ve been bouncing around in now for many years, going from one to the next, is merely an attempt to keep a system running that has reached the end of its rope. Ie, when real growth stops, start inflating bubbles. This is basically what Alan Greenspan did his entire career. The more bubbles we allow the harder the descent will be. This is somewhat sad, since it suggests that were we to stop being so silly, we could smooth thing out a bit. Norway, for example, has been discussing increasing the capitalization requirements of its banks from 10 to 1 loans/assets to 6 to 1 (assets means real cash by the way, not weird exotic derivatives with no actual market value, you know, the ones that US banks hold as assets and that keep them from going technically bankrupt today). Read an interesting overview of Norway’s own banking collapse, and the Norges Bank analysis of this crisis.

Here in the US, including that funny money, it’s I believe over 12 to 1, and if you forced hard accounting, ie, only counting actual fully liquid cash, who knows what it would be, probably 50 or 100 to one I’d guess. In other words, it’s not an absolute requirement that corrupt financiers use political influence and blackmail on equally corrupt government officials to force bad policies.

So it’s useful to see some concrete pointers along the way while we’re riding up and down these speculative and ultimately doomed bubbles. The failure of the 50 seat jet for regional flights is precisely such a metric, and ties in neatly to a larger pattern of airline consolidations that have occurred since the oil price spikes of 2008. Here’s a few recent examples: British Airways CEO Sizes Up Next Deal After Iberia , Ryanair’s O’Leary Ponders One-Euro Toilets, Standing Passengers, and another interesting one, Shell in Talks to Sell Swedish, Finnish Refinery Units to St1 . Airlines merge because growth isn’t possible any way at this point, with oil prices hovering around $70 per barrel, despite some absurd predictions from our friends over at theAutomaticEarth for prices in the $20 per barrel range. Budget airlines, as you’ve noticed by now, are cutting closer and closer to the bone, to cut all non fuel related costs to the absolute minimum possible to get the planes flying and out of the red money losing zone they have all been hovering around, with a few exceptions, since 2008 (Airlines Predict $9 Billion Global Loss).

The last item, selling refineries, is most telling. What global oil companies know is very different from what they say, but what they do is based on what they know. And what they know is that they are basically now unable to increase the petroleum reserves held by their companies, which makes the entire idea of running in-house refining operations something with a finite future. So as in the stock market, the smart players get out first, leaving the small time operators to take the losses, or maybe sending assets to smaller operators who may actually be able to run them at a profit as oil depletion sets in more seriously, with constantly escalating and/or unstable prices.

So where does that leave us? Basically it leaves us peeking over the edges of that big bubble we’ve grown up with since the great depression really kicked us out of our last big growth spurt. Only this time there’s one huge difference, well, actually, there’s a lot of huge differences, but the main ones are finite resources now impeding growth, along with long range planning failures allowing things like outsourcing local production to China and other low cost countries.

To make that more clear, we won’t be able to produce our way out of this coming wind-down, though China believes they will be able to do it. We’ll see how they do, given not enough land or water to sustain their current population, I’m not going to hold my breath for their future though.

So the two metrics I am working with, air travel and the internet, are the signs I’m going to pay attention to. You can actually add any you want, simply see our current society, the industrialized version that is, as a big bubble, you can draw big rings around that bubble, though you can only, as Orlov points out, see the part we’ve gone up. Each big ring corresponds to a key resource, and the machinery it runs. For example, coal and steam engines, coal fired electric power, still the most common way of producing electricity globally, oil and cars, diesel engines, airplanes, and bunker fuel run shipping fleets, which form the very real, steel, backbone of that abstraction we call ‘globalization’. And that backbone runs on cheap bunker fuel, the lowest grade of all the fuel oils. The same thing, by the way, happened in global shipping in 2008 when oil prices skyrocketed as happened with air travel, but it didn’t hit the news as much because bunker fuel just isn’t very interesting.

The internet is a special case, because every single node of that web is a computer, requiring massively toxic, and expensive, and barely profitable, chip production plants that now cost in the billions to create, and which leave behind a toxic trail of garbage, things like all those CRT monitors, oceans of mice, keyboards, motherboards, and so on. And that web is connected using electricity, which must be always on, all the time, all along all of the strands of that web, which themselves are physical cables, dug under ground, spanning the oceans, but most certainly NOT virtual in any way, shape, or form. These pieces make the internet the most sensitive component of our modern industrial system, being as a whole the most complex.

Airplanes, on the other hand, are much more flexible, for example, you can wind down regional flights, focus all flights on regional hubs, like they do now, to adapt to higher fuel costs, rising ticket prices, lowered ticket sales, and so on.

This is why the airline executive put oil prices at $100 the point where the entire model fails. At that point, ticket prices are so high that too many flyers can’t afford to fly, which leaves airplanes unfilled, which forces fewer flights, which lowers income for the airline industry.

With fewer planes selling, the big airplane makers, Boeing, Airbus, and some new Asian contenders, are left fighting over a shrinking pie. These companies too rely on economies of scale to make their aircraft affordable. Fewer sales, prices have to rise per plane. Prices rising per plane, have to raise per seat ticket prices (for example, I’m taking a flight this week that cost about $120 round trip 3 years ago, it’s now $320). Higher ticket prices, fewer tickets sold. See how it spirals down? This is why the airline industry is such an excellent model and test case for actual collapse and decline.

So watching airlines is a great way to gauge the overall health of the global system.

The internet, however, is the most delicate, and the most fragile. The failures to look for there are smaller ruptures in the weaker nodes of the web, 2nd and 3rd world countries failing intermittently, local server farms going offline briefly. I haven’t seen any such signs yet, though I’m not following 2nd and 3rd world web sites, hosted in those countries. In many ways, you won’t see these signs, since as local data centers fail, many sites will simply re-situate themselves to more stable areas, like a Venezuelan site moving to US based hosting companies.

So let’s watch this, the movement is unfortunately below the speed that humans are designed to react to, and there’s too much data out there, and far too much gibberish being spread by the corporate media, the governments, and various other far more insidious entities, like the Koch Brothers.

So without further fuss, here’s a few tidbits to chew on while you contemplate where to put your retirement or kid’s college fund money…

Money, Capital, Credit, and Bubbles… and what really does happen to Capitalism when growth fails?

I don’t want to get too far into this matter here, but this first article I think really demonstrates a point I’ve come to believe explains our use of money much better than anything else can. In other words, it shows the largely illusory nature of what we believe to be a fixed thing, money, cash, banking, flow of funds, etc.

Bloomberg, Currency Collapse May Stimulate Economic Expansion, BIS Says – June 14

Currency collapses tend to spur a resumption of economic growth rather than fueling a decline in gross domestic product, according to the Bank for International Settlements.
…
The positive effects of a weaker currency on GDP, including making local products cheaper than imported goods, may outweigh the negative ones, such as rising inflation. Currency collapses occur when the annual exchange rate drops by about 22 percent, according to the BIS, which identified 79 such episodes, “more commonly in Africa than in Asia or Latin America,” since 1960, Tovar said.

I don’t know about you, but to me this is just weird. It’s like, we’ve created a house built on air, and when we don’t like how high or low our house is, we lower or raise it by huffing and puffing a bit (ie, deflation/inflation of money supply). Again, this is weird. I get the strong feeling I am looking at the Emperor’s New Clothes, ie, there’s actually nothing there at all in that entire global flow of funds, balance of payments, etc.

But I’ve had a sneaking suspicion for a while now that since all this finance stuff is actually just an abstraction, at some point, if the game looks like it’s about to blowup, they might just change the rules of the game. That can look a lot of ways, but it will probably have to happen more or less in relative harmony with the other major players in the first world. In other words, if everyone owes everyone so much money they can’t possibly pay it off, maybe it’s just time to start over. They won’t say this of course. And China will certainly continue on its global buying spree before those dollars lose their value.

My guess is the above story is a trial balloon for some re-evaluation of values. That certainly won’t help you any, but it might stretch this global financial collapse story out a bit longer than it should have run.

And while that story unfolds, hovering around the most elevated parts of the economic stratosphere, there’s a few guys who more or less thought they had a handle on the entire financial game, and thought they could surf any wave that came. Not a bad assumption, by the way, given past performance. I know most of these guys understand that money, capital, is primarily a tool to achieve one’s goals, but especially with Soros lately, it looks like he’s actually getting a bit worried, or confused.

Bloomberg, Soros Says ‘We Have Just Entered Act II’ of Crisis (Update2) – June 10

Billionaire investor George Soros said “we have just entered Act II” of the crisis as Europe’s fiscal woes worsen and governments are pressured to curb budget deficits that may push the global economy back into recession.

“The collapse of the financial system as we know it is real, and the crisis is far from over,” Soros said today at a conference in Vienna. “Indeed, we have just entered Act II of the drama.”

Soros, 79, said the current situation in the world economy is “eerily” reminiscent of the 1930s with governments under pressure to narrow their budget deficits at a time when the economic recovery is weak.
…
“When the financial markets started losing confidence in the credibility of sovereign debt, Greece and the euro have taken center stage, but the effects are liable to be felt worldwide,” Soros said.
…
Credit default swaps, which aim to protect bondholders against the risk of a default, are dangerous and a “license to kill,” Soros said today. CDSs should only be allowed if there is an insurable interest, he said.

And Soros isn’t the only guy who sees big warning signs ahead.

marketwatch.com, Warning: Crash dead ahead. Sell. Get liquid. Now. – May 25

But will Main Street exit? Will we ever learn? No. The Wall Street casino makes mega-billions for insiders like Blankfein and the Goldman Conspiracy. Yet “The Casino” is still below the 2000 record of 11,722. So after accounting for inflation, Wall Street lost over 20% of Main Street’s 401(k) retirement money between 2000 and 2010. Yes, Wall Street’s a big loser the past decade. Their advice is self-serving. Period.

Given their miserable track record, only a fool would bet with Wall Street. Betting odds are Wall Street will lose another 20% in the next decade from 2010-2020. Yes, today’s market is a “buying opportunity,” but only for Wall Street casino insiders like Biggs, Blankfein and even low-level staffers inside “The Casino.” But not for our 95 million Main Street investors, there’s more pain ahead, this market’s dropping.

Correction? New crash imminent, worse than 2008
More proof: Earlier economist Gary Shilling said price-to-earnings ratios are at a “nosebleed 22.5 level.” The Dow was around 11,000. Money manager Jeremy Grantham recently said the market’s overvalued 40%. That could mean a collapse to 6,600. Last week in Reuters’ “Markets Could Be Derailed Again,” George Soros echoed a “game over” warning with a “stark warning … that the financial world is on the wrong track and that we may be hurtling towards an even bigger boom and bust than in the credit crisis.”

Now Dow Theory’s Richard Russell is warning the public of an imminent crash: “Sell … get liquid … by the end of this year they won’t recognize the country.”

A bigger meltdown than the credit crisis? Yes, Bush’s team drove America into a ditch. But now Obama and his money men, Summers, Geithner, Bernanke, are digging the hole deeper. Soros says we have not learned “the lessons that markets are inherently unstable.” As a result, “the success in bailing out the system on the previous occasion led to a super-bubble.” Now “we are facing a yet larger bubble.” Worse than 2008?

This is just one guy writing, but people like Soros have a certain track record of being largely right. Definitely more than you or I. Not always, not invariably, but certainly more than the Ivy league types Obama has sadly decided to surround himself with. And noting that we have created nothing more than a ‘super bubble’ of government debt, fulfilling its role as debtor of last resort (that’s before the game ends, the play finishes, and the curtain drops, that is) is hardly new, Doug Noland’s Credit Bubble Bulletin has been pushing that point for years now, ever since the bailouts and government guarantees of risky/ bad / dangerous debt started around 2008.

Over the years, I’ve emphasized the prominent role “Wall Street alchemy” played in fueling Credit Bubble excess. The Street’s astounding capacity to transform risky loans into perceived safe and liquid securities was absolutely fundamental to the Credit Bubble. The OTC derivatives markets – including collateralized debt obligations, asset-backed securities, Credit default swaps, auction-rate securities, etc. – were critical for the intermediation of risky, high-yielding loans into “money”-like securities. This brand of risk intermediation and distortion was instrumental to the historic boom and bust – and this week it returned to the regulation spotlight.

As I’ve attempted to explain over the years, risk intermediation invariably becomes a central issue inherent to protracted Credit Bubbles and their resulting Bubble Economies. The amount of Credit necessary to sustain the Bubbles rises each year. And each passing year requires an increasing (exponentially-rising) amount of riskier Credit. Our government’s massive injection of Credit/purchasing power coupled with interest rate and market liquidity intervention sustained the existing economic structure. As they say, “that’s the good news.”

For the private-sector Credit mechanism to supplant government Credit will require an enormous expansion of risky loans. These risky Credits must then either be held directly by the financial sector or intermediated and sold into the marketplace. Admittedly, this may not be much of an issue today – with government Credit expansion and monetary stimulus abounding. But there is no escaping the harsh reality that acute Credit vulnerability is only held at bay by Trillion dollar deficits and ultra-loose financial conditions. I am skeptical of notions of shrinking deficits and a graceful Fed exit.
Doug Noland, Deficits and Private-Sector Credit, April 23 2010

Thomas Jefferson had something to say on these types of problems as well.

“And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.”
Thomas Jefferson to John Taylor, Monticello, 28 May 1816. Ford 11:533.
Jefferson Encyclopedia, wiki.monticello.org – Private Banks

“A spirit… of gambling in our public paper has seized on too many of our citizens, and we fear it will check our commerce, arts, manufactures, and agriculture, unless stopped.” –Thomas Jefferson to William Carmichael, 1791. ME 8:230

“Our public credit is good, but the abundance of paper has produced a spirit of gambling in the funds, which has laid up our ships at the wharves as too slow instruments of profit, and has even disarmed the hand of the tailor of his needle and thimble. They say the evil will cure itself. I wish it may; but I have rarely seen a gamester cured, even by the disasters of his vocation.” –Thomas Jefferson to Gouverneur Morris, 1791. ME 8:241

“All the capital employed in paper speculation is barren and useless, producing, like that on a gaming table, no accession to itself, and is withdrawn from commerce and agriculture where it would have produced addition to the common mass… It nourishes in our citizens habits of vice and idleness instead of industry and morality… It has furnished effectual means of corrupting such a portion of the legislature as turns the balance between the honest voters whichever way it is directed.” –Thomas Jefferson to George Washington, 1792. ME 8:344

“We are now taught to believe that legerdemain tricks upon paper can produce as solid wealth as hard labor in the earth. It is vain for common sense to urge that nothing can produce but nothing; that it is an idle dream to believe in a philosopher’s stone which is to turn everything into gold, and to redeem man from the original sentence of his Maker, ‘in the sweat of his brow shall he eat his bread.’” –Thomas Jefferson to Charles Yancey, 1816. ME 14:381
etext.lib.virginia.edu/jefferson/quotations – Money & Banking

Soros, like Jefferson, is an interesting guy, and I’ve enjoyed reading his thoughts over the years. But as I get older and see how these economic games play out, I am increasingly reminded of that simple statement in the Bible, Timothy: the love of money is the root of all evil.

Note the ‘the love of’ part. Most people put this as just ‘money is the…’, thus missing the key active ingredient required to generate the evil, the pursuit and love of money, an actor, carrying out an action, that is. Note further that it’s extremely unlikely that you would end up being a mega-billionaire like Soros if you did not love money. Unless you were just doing it because you find it to be a fun game, which I will admit is quite possible as well. Or some combination of the two, which is probably the closet to the truth.

I like that quote, by the way, because it seems to be quite accurate, and it’s in the Bible, so our local religious types can’t really argue with it. It is also supported by thousands of years of human tradition, at least the parts of our tradition where we lived in smaller tribal units (that’s probably about 99% of our history in most cases), where excessive collection of private property was generally discouraged via taboo and other strong social restrictions.

In fact, I’d hazard the guess that the observation that the love of money is the root of all evil is a surviving fragment of a much earlier world view. One where an excess of wealth, or more importantly, putting one’s own needs as primary in front of the needs of the social body, was not seen as a positive, but rather as a mark of insanity, or at least sociopathic behavior, to be punished by severe penalties. This doesn’t mean there weren’t rich men, big men, in our societies, just that their primary obligation was to their tribe, not themselves.

Hard concept I know for us to get in our modern world, where we’ve made virtues of vices to greater and greater degrees. For example, few methods would be more successful than a rigorous application of the 7 cardinal sins, at least if one’s goal is to successfully climb the corporate ladder(s) of ones choice.

BP and the financial world – ripples and repercussions spread

Whatever your views of Biblical topics is, one thing’s for certain: we are certainly doing a terrible job taking care of our environment. You know, the place you live? The only place you have to live in fact, no matter how far you drive, fly, ride, bus, sail, submarine, or just plain walk.

This problem is being highlighted by the BP Gulf Oil Spill, which is starting to send some ripples down into the fundamental fabrics of the web that generates our daily lives, especially in that surreal zone known as the financial sector.

BP has come to illustrate a single very disturbing thing to me, namely that during the financial crisis, the Bush/Obama administrations maintained that there was nothing they could do, they had to bail out the financial industries (sic – calling these things industries when they produce nothing is an obscene abuse of language) in question, etc, because our system couldn’t survive without them. Also discussion of the nature of contract law was brought up repeatedly, ie, it was not possible to violate the terms of existing contracts, so creditors had to be paid off.

Apparently, when it comes to concrete, material problems, we can do whatever we want, however we want in terms of government taking control of, and even possibly dismantling, offending corporate entities such as BP. Entities, I might add, that produce the life blood of our system, oil. At least such talk is certainly not off the table at this point. Odd that such options magically wouldn’t apply to something far more ephemeral, in fact, I’d argue, illusory, not to mention parasitically worthless, like the massive groups engaging in high risk financial speculations of the most arcane, indeed, metaphysical sorts (Credit Default Swaps, Securitized mortages, etc…), eg. AIG, Goldman Sachs, BofA, Chase, Citibank… kind of makes you think, no?

If you’ll recall, above I questioned a bit how we view things like money. No matter how you decide to view this yourself, one thing is for certain: a certain amount of money in general gives you access to a certain amount of resources, or control over them.

So watching BP as it stumbles around like a boxer getting his face slammed by an invisible opponent is pretty interesting. As is watching the system that the oil they produced for in the first place try to handle a failure of this magnitude. I’d call this a game changer, in fact, even though the term ‘Black Swan‘ is massively overused, I’d have to say if anything qualifies for a Black Swan event, the BP blowout/oil spill has to be that.

Just watch the stuff unfold, in real time, piece by piece.

Bloomberg, BP Bankruptcy Would Offer No Protection From Costs – June 15

June 15 (Bloomberg) –BP Plc, whose potential liability for the Gulf of Mexico oil spill has lawmakers and analysts raising the specter of bankruptcy, would be unlikely to avoid paying claims by seeking court protection, restructuring experts said.
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The U.K. energy company faces more than 200 lawsuits, and the U.S. is assessing the cost of restoring natural resources destroyed or fouled by the spill. BP’s liabilities include $37 billion in cleanup and potential litigation expenses, according to a June 2 Credit Suisse report. While a U.S. bankruptcy may halt many claims, it wouldn’t allow BP to avoid paying for most of the cleanup and damages, said New York bankruptcy lawyer Martin Bienenstock of Dewey & LeBoeuf LLP.
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BP said it won’t seek court protection. “We categorically deny those rumors,” said David Nicholas, a company spokesman.
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BP, the largest oil and gas producer in the Gulf of Mexico, may put all or part of the company into Chapter 11 bankruptcy, said Lynn Lopucki, a law professor at the University of California, Los Angeles. That would immediately halt spill litigation against it and place all claims under the control of the bankruptcy judge, he said.

Now, I don’t know about you, but everytime I see a company or politician categorically deny rumour x or y, that rumour is almost always true. Almost doesn’t mean always, but it’s very common, especially when such rumours hit the corporate type media. If you haven’t noticed this, my guess is you just haven’t been paying attention.

But wait a moment, what’s that we hear in the distance? It’s the cavalry, thundering up on their mighty steeds to restore peace and order.

In other words, BP has a lot to lose if they try to weasel out of their debts and obligations. If, that is, they determine that in fact they must strive to maximize shareholder value, the essential requirement of all corporations, especially the ones operating in the USA. In other words, if they try to cut and run. But watch how this game plays out, it’s interesting. Keep in mind the global big picture. The US consumes about 20-25% of global oil production, and has about 2% of global oil reserves. And has to import about 50% of their oil. Big market. Big profits. Wouldn’t want to lose such a market, now would we?

Bloomberg, BP May Lose U.S. Oil Leases, Contracts After Spill – June 14

BP Plc may lose control of its U.S. oil and natural gas wells and be barred from doing business with the federal government as punishment for the worst oil spill in U.S. history, industry and regulatory analysts said.

President Barack Obama and lawmakers are debating penalties that would cripple the company’s ability to do business in the U.S. as public outrage intensifies. In addition to BP’s culpability in the Gulf of Mexico spill, a 2005 explosion at BP’s Texas City refinery that killed 15 workers and a 2006 pipeline leak that dumped 200,000 gallons of crude at Prudhoe Bay, Alaska, will figure in the debate, said Michael Wara, associate professor of environmental law at Stanford University in Palo Alto, California.

“The government weighs whether there is a pattern and practice,” Wara said. “They’ll consider whether BP runs these incredibly complicated systems, where accidents can and sometimes do happen, or whether the company has a culture that disfavors safety and environmental compliance.”

And it’s not just about a few contracts, threats are being floated left and right as well, looks like the government really wants to get BP’s attention. That’s my take on it anyway.

news.com.au, BP executives could face 15 years’ jail – June 14

BP executives could face up to 15 years in jail for their role in the Deepwater Horizon oil disaster, legal experts say.

The advice from US legal experts came as executives from the world’s other major oil companies separately claimed the accident “was preventable,” reports said.

Jody Freeman, Professor of Environmental Law at Harvard Law School, told The (London) Times that if criminal negligence could be proved then “the law certainly provides for prison for environmental crimes”.
…
The warning came as executives from Exxon-Mobil, Shell, Chevron and ConocoPhillips prepared to distance themselves from BP, according to planned statements seen by Financial Times sources.

The oil industry leaders were planning to testify in front of a subcommittee of the US House energy and commerce committee tomorrow that the oil spill in the Gulf of Mexico would have been “preventable” if BP had followed the industry’s “best practices,” the sources said.

The rest of the oil industry is more than happy to sacrifice BP at the altar to save their own skins. And to pick over the that delectable corpse of BP. All that lovely oil, all those resources, all those oil leases… Talk about jackals circling in for the kill.

Interesting, no? You can see the game unfolding, more and more rapidly. Remember, inside BP, there are guys who want to win the game. They don’t care about anything outside winning. Those guys have power in the company, you can rest assured of that, they wouldn’t be who they were if they didn’t. And they are watching that power get dismantled as BP stock value plummets almost daily. Every major company has these guys, some are so good at the game they become their own game, like Soros, Warren Buffet, Jim Rogers.

So these guys, sitting in BP, are going to try to do something to preserve their power and status. And wealth, of course. This is why they play the game, they don’t care about you or me, the game is everything to them.

And other big players are taking note as well, as you can see here:

Reuters, BofA to limit duration of trades with BP – June 15

Bank of America Merrill Lynch (BAC.N) has ordered its traders not to enter into oil trades with BP Plc (BP.L) that extend beyond June 2011, a market source familiar with the directive told Reuters.

The order to the bank’s traders came from a high-level executive and was made on Monday, according to a source familiar with it. It told traders not to engage in trade with BP for contracts beyond one year from this month.
…
Limiting the duration of trades with a counterparty is one way in which banks can seek to protect themselves against risk that a company will be unable to meet its long-term obligations.

A BofA spokesman declined comment.

Groovy, no? Big games among the big boys. Translation: Bank of America sees a high probability of BP exiting the play stage right (or left, the precise scenario still remains to be worked out). So high, in fact, that they no longer want to play along.

So of course, BP gets the biggest boys on the block in their corner, Goldman Sachs highlighted as if they needed further highlighting. When the going gets tough, hire Goldman and anyone else you can find. I don’t know about you, but I think Goldman Sachs needs to be dismantled, now. It has its fingers in too many pies, and it does nothing to make this world a better place. In fact, when it comes to loving money, they have to be front and center.

NY Times, BP Hires Financial Advisers as Pressure Mounts – June 14

BP has hired several investment banks, including Goldman Sachs, the Blackstone Group and Credit Suisse, to advise on its options as it faces financial and political pressure over the Gulf of Mexico oil spill, people briefed on the matter told DealBook on Monday.

Among the matters the advisers have been asked to study are ways to handle BP’s mounting liabilities, one of these people said. The Obama administration has put pressure on the company to set aside money in escrow to finance potential liability claims and to withhold paying out its dividend.

BP has also been the subject of takeover speculation on Wall Street, another possibility that the advisers may be asked to consider.

Note especially the takeover rumours. Such takeover rumors aren’t rocket science. Just add cost to buy company stocks, then compare to value of company assets, oil in this case, then subtract debt, liabilities, etc. You know, the stuff BP will try to get rid of using some financial gimics and devices like splitting itself into new entities.

NY Times, Imagining the Worst in BP’s Future – June 8

The idea that BP might one day file for bankruptcy, particularly as part of a merger that would enable it to cordon off its liabilities from the spill, is starting to percolate on Wall Street. Bankers and lawyers are already sizing up potential deals (and counting their potential fees).

Given the plunge in BP’s share price — the company has lost more than a third of its value since Deepwater Horizon blew — some bankers and analysts say BP is starting to look like takeover bait. The question is, who would buy BP, given its enormous potential liabilities?

Shell and Exxon Mobil are both said to be licking their chops. And already, flinty legal minds are dreaming up scenarios in which BP would file a prepackaged bankruptcy and separate the costs of the cleanup — and potentially billions of dollars in legal claims — into a separate corporate entity.

Tony Hayward, BP’s chief executive, has insisted that his giant will weather this storm. BP is indeed a money machine: it turned a profit of nearly $17 billion last year.

Remember also why we even have corporations: to minimize risk to investors / creditors / and, most important, company officers, CEOs, boards, and so on. Maybe it’s time to let those people carry a bit more of the risk. When you look back at the history of corporations, they didn’t have this type of power or control over policy/politics in the past, and they don’t need to have it today.

And on and on it goes. Where it stops, nobody knows.

And if that wasn’t bad enough, Worst Locust Plague in Two Decades Threatens Australian Harvest! Sometimes you just can’t win, but you just have to keep going anyway, as if you had a choice in the matter.

The real problem, of course, is that most currently producing large fields are in a state of decline, forcing oil companies to go offshore to get new sources of oil. Drill baby Drill simply allows a tiny bit more high risk offshore drilling to take place. Remember, initial estimates of the recoverable reserves in the Macondo reservoir (the one that is spewing out oil into the Gulf of Mexico now, that is) put them at about 50 million barrels. That’s 2.5 days supply for the USA, give or take, or about 0.6 days supply for the planet.

BP spokesman Jon Pack said it’s still possible there will be oil produced in the area. The reservoir may have held about 50 million barrels of crude, he said. www.businessweek.com

Once global production goes into serious decline, an event slated to being around 2012 or so by the US military panel who just put out their report on this, no amount of new oil fields put online will be able to overcome the existing 5-7% yearly decline rates of currently producing fields. Do the math. 5% decline, the current conservative estimate, out of about 75 million barrels per day petroleum (the rest of the 85 or so million barrels per day is other liquids, including, oddly enough, stuff like ethanol I believe. So 5% of 75 million is 3.75 million barrels per day of new production, or increased production (read that as: pump out the oil faster) from existing fields.

Saudi Arabia claims 12 million barrels per day (bpd), is actually pumping I think around 8 or 9, which expert commentators believe is the actual real amount they can pump realistically except for short bursts of more heavy oil production. So in 3 years we need to add, now, as we speak, one new Saudi Arabia of production. That simply is not going to happen. And that’s at the lower 5% number. The higher, 7%, makes it closer to 2 years a new Saudi Arabia.

Let me put this clearly: no such oil pools have been discovered, and it takes decades in most cases to bring online oil fields after discovery. Discoveries peaked about 40 years ago, and have been declining ever since. This is the basic reality of global oil production peaks, and it’s why peak oil is called peak oil. No amount of politics can do anything more than add a very small bump to the downward trajectory of the production numbers. So I really suggest Fox news and the Republican party begin preparing their loyal support base for this reality, the blame game isn’t going to go over well and it just makes you sound stupid if you say things that have nothing to do with reality.

The true cost of drilling

While we’re shocked by the spill in the Gulf, the sad fact is in the third world, big oil spills constantly, and often fails to properly clean it up.

What the industry dreads more than anything else is being made fully accountable to developing countries for the mess it has made and the oil it has spilt in the forests, creeks, seas and deserts of the world.

There are more than 2,000 major spillage sites in the Niger delta that have never been cleaned up; there are vast areas of the Colombian, Ecuadorian and Peruvian Amazon that have been devastated by spillages, the dumping of toxic materials and blowouts. Rivers and wells in Venezuela, Angola, Chad, Gabon, Equatorial Guinea, Uganda and Sudan have been badly polluted. Occidental, BP, Chevron, Shell and most other oil companies together face hundreds of outstanding lawsuits. Ecuador alone is seeking $30bn from Texaco.

The only reason oil costs $70-$100 a barrel today, and not $200, is because the industry has managed to pass on the real costs of extracting the oil. If the developing world applied the same pressure on the companies as Obama and the US senators are now doing, and if the industry were forced to really clean up the myriad messes it causes, the price would jump and the switch to clean energy would be swift.

If the billions of dollars of annual subsidies and the many tax breaks the industry gets were withdrawn, and the cost of protecting oil companies in developing countries were added, then most of the world’s oil would almost certainly be left in the ground.

The real cost of cheap oil

And there you have it. I’m not sure people understand just how precarious our current consumption levels, and the economy that depends on them, are. There is no guarantee that we have some inalienable right to shop at WalMart buying garbage made in China, shipped in huge container ships, running toxic bunker oil.

[Updated Monday, June 7]
James Howard Kunstler just posted his weekly rant, which had this nice little comment, which puts it about as clearly as you can hope to do:

The obvious remedy for the oil-and-car problem would be to live in walkable towns and neighborhoods served by the kind of public transit that people are not ashamed to ride in. But it may be too late for that. We’re going to be a much poorer society from now on. We squandered the financial resources for that transition on too many other things. We’re stuck with our investments in houses and their commercial accessories, built where they were built, and no Jolly Green Giant is going to pick them up and move them closer together in an artful way that adds up to real towns. A reorganization of American life will occur, but now it will be on much less deliberate terms, a much messier and more destructive operation, a default to the smaller scale by extreme necessity, with a lot of losses along the way. The Deepwater Horizon incident only hastens the process.

Kunstler isn’t always that great, but he does sometimes pull out a good set of words when he’s feeling inspired by something or other. As always, ignore his comment threads, they are unmoderated mostly, and pretty much useless in terms of worthwhile statements that add to the discussion.

Here’s a site with multiple live camera shots from different sources, deepwaterbp.com. Same site, their wall of ROV videos (takes a long time to load, click on any video to see it full size, esc to return).

Some of these are I think windows media, not sure, some are flash.