The Day Of The Doombats  

The seers at LEAP/E2020 (whatever or whoever that is), have prophesied that we are about to enter phase 2 of a global systemic crisis (via LATOC). Personally my portfolio suffered something of a systemic crisis of its own this week, though thankfully so far its been a mere flesh wound to the thick layer of fat stock prices have put on over the past year.

Last February, LEAP/E2020 anticipated that a global systemic crisis was to be triggered at the end of March. Today, three months later, LEAP/E2020 can anticipate that the initial phase of this crisis is about to be finished and that, as soon as the beginning of June 2006, the crisis will enter a phase of acceleration. Before detailing the main features of this new phase (described in GEAB Nr5), LEAP/E2020 would like to clarify the 4 different phases of a global systemic crisis.

A global systemic crisis develops following a complex process where 4 phases can be distinguished, overlapping one another:

• in the first so-called “trigger” phase, a variety of until then un-related factors, start converging and interacting in a way that is perceptible mostly by careful observers and central players
• in the second “acceleration” phase, a large majority of players and observers suddenly become aware that a crisis is there and that it has already begun to affect a growing amount of the system’s components
• in the third so-called “impact” phase, the system starts to transform radically (implosion and/or explosion) under the strain of cumulated factors, simultaneously affecting the whole system
• in the fourth and last “decanting” phase, the features of the new system born from the crisis begin to appear.

In the present situation, LEAP/E2020 estimates that the initial trigger-phase is about to finish and that, during June 2006, the world will enter a phase of acceleration of the crisis.

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LEAP/E2020 therefore estimates that these sectoral losses of confidence will converge in the course of June 2006, and induce the acceleration of the crisis process. The acceleration should elapse over 3 to 6 months and convey seven concrete consequences:

1. accelerated collapse of the Dollar
2. internal social and political crisis in the US
3. Iran/USA/Israel military conflict
4. increased global inflation
5. stop of the process of trade and economic globalisation
6. accelerated emergence of new regional/continental « blocks »
7. rebalancing of world assets’ comparative value.

The passage to phase 3 (so-called « impact-phase ») of the global systemic crisis process will occur when at least four of the previously mentioned factors will have taken place. Simultaneously, it is possible, during the acceleration-phase already, to distinguish some of the tendencies that will shape up the future global system, and therefore to start initiating the decisions and policies likely to prepare a post-crisis future.

Safe Haven has a post called "Road Kill on Main Street" (or, Massive Wealth Transfer: Dead Ahead) by David Andrews, which is also rather gloomy in its prognostications for the future of the economy (at least some members thereof). I still don't buy the whole gold bug argument about gold being a safe haven - but then again, my aversion to unjustified herd like behaviour has cost me dearly many times - and the huge run up in gold prices over the past 2 years is just another example of this.

When the Great Inflation comes along, would you rather be in "paper" or in "things"? You cannot keep up with inflation if you are in dollars. Get out of those dollars and into precious metals. If you want to own gold, buy actual gold. If you want to own silver, buy actual silver. Worldwide, gold is going east, leaving us here in the west to wallow in funny money. Soon, the east will not only have most of our jobs, but most of our wealth, too. Our government spending is out of control, and the speeding train is already partially derailed. It is too late to get it back on track. Our cost of living is rising faster than our incomes, and everybody seems to be OK with that. Right? Central banks have done a 180 and are now buying, not selling gold. The real thing. They want it all. But you are happy with stocks?

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What, you say - you have stocks and the Dow has been again knocking at the door of 11,700? Fergitaboutit. That was in year 2000 dollars. It would have to go much higher in 2006 dollars to even come close. The Dow is not levitating on its own powers. Fed "repo" money keeps it up there. For your benefit? NO. For the benefit of foreign owners of US debt. The more foreign debt money the Fed and the government can keep safely "parked" in toppy equities, the less of it they have to worry about going chasing after the likes of Unocal or our ports.

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As a nation, Americans need to start thinking long-term, not next week, next month, or even next year. Our standard of living will decline - gradually, if we are lucky - as the dollar loses its status as the world's reserve currency and we no longer have access to the savings of the rest of the world. This is going to be a very painful adjustment for all of us. I am not afraid to come right out and predict that life as we have known it for so long, our best years, will soon be behind us. We will have to rebuild from scratch. Those who will be first to pick up the pieces will not be our youth, but the older ones who remember what life was like in a simpler time. The young have been wired and electronicized for so long that they could not survive even a medium-term power outage. An unlimited quantity of cheap energy is another thing that will go the way of the Dodo bird.

Liberty Requires Courage

Coming soon to a Main Street near you:

* CONFISCATION of precious metals
* MARTIAL LAW after another "terrorist" attack
* NATIONAL ID CARD due to the Real ID Act of 2005
* GUN SEIZURE spurred by actions of the United Nations
* REGIONAL and STATE SECESSION from the Union
* CIVIL RIGHTS and BILL OF RIGHTS suspension
* SECOND CIVIL WAR of the United States

OK, so now you think I am a hopeless wacko conspiracy theorist masquerading as a mild-mannered precious metals writer. GOOD! If that's what it takes to get your attention, all the better!

This then veers off into the realms of populist right wing NWO conspiracy theory - so hopeless wacko conspiracy theorist may indeed be the correct categorisation (and I'm someone who is always happy to at least consider the merits of any given tinfoil theory).

In a similar vein, Steve at Deconsumption points to Lyndon LaRouche's latest prophecy of doom - "The Greatest Economic Crisis in Modern History". I've never really managed to work LaRouche out (not that I've devoted much time to the process) - but on the whole he seems pretty toxic - a mix of some ideas that are basically correct interspersed with other more dubious memes. Steve also has posts on peak food and a new 911 tale.

This nation and the world are now facing, in the weeks and months immediately ahead, the greatest crisis in modern history; a greater crisis than World War II. This does not mean that it's a hopeless situation, it means that it only seems hopeless. There are clear solutions which are obvious to me, partly because I've spent a lifetime, or the greater part of a lifetime, in dealing with precisely these questions, and have an expertise in this matter, which unfortunately most of our people in government, for example, do not have. I can tell you, presently, the U.S. Congress, the Senate in particular, has no comprehension at present of what they're dealing with, or what's about to hit this nation, and what's about to hit them.

"The Hour" has a bleak article on alternatives to oil in the post peak period - "After the peak: Alternative fuel choices largely non-existent", which claims "Popular alternative fuel sources amount to little more than empty promise".

Dave Pollard has a pair of articles up on the future rerun of the great depression ("What to Expect When the Dollar Collapses "). I found the historical tales of depression era Canada in these to be a lot more interesting than Dave's predictions about what will happen after the US dollar collapse that he anticipates, but they are worth taking a look at anyway.

Just as in 1929, we now live in an economy that is living wildly beyond its means, depending on greater and greater fools to keep bidding up governments', corporations' and citizens' paper wealth. Just as in 1929, everyone is borrowing to buy, either in the hope that they can sell later for a profit (because it is the only way they can hope to increase their net worth), or because it is the only way they can buy at all. And just as in 1929, it is unsustainable, and will lead to a sudden severe reversal followed by a decade (or more, this time) of ever-worsening conditions, except for upper-income (six-figure, this time) earners.

I've just finished reading Pierre Berton's The Great Depression, the definitive history of the 1929-1939 depression. In Part Two of this article tomorrow I'm going to map the behaviours of that era onto the realities of the early 21st century, and tell a story of what life in the next Depression could well be like. Berton's depiction of the last Depression is one of spectacular political blundering and pig-headedness, and a mean-spiritedness that permeates the whole society. So today I want to explore whether (and if so, how) the attitudes of people (elected, management and grassroots) to their fellow humans are significantly different from what they were seventy years ago. The human effect of a Depression is, after all, as much a matter of how we treat each other as the economic variables that conspire to convert seeming affluence to staggering and protracted misery.

So what happens when an economic depression hits? Suddenly the stress level is increased by an order of magnitude, the poor begin to fear for their very survival, and there is no longer any assurance that there is 'enough to go around', so the rich and powerful begin to hoard and to repress the poor and weak to ensure they do not rise up so there is not enough for anyone. Indeed, Berton asserts that the Great Depression could equally be called the Great Repression, so great was the physical, social and cultural clampdown on the masses, and the steadfast refusal to invest tax dollars or incur deficits to relieve the human misery of the time. That refusal, Berton says, was not deliberate cruelty, but rather ideological -- the economists of the time (Keynes was not yet in vogue) believed that government intervention and government spending in economic turndowns would worsen the situation, and the political wisdom was that giving people anything for free would make them lazy and unmotivated to work and lead to communism. It was neocon ideology, and it was ubiquitous among the ruling classes (and the political parties in their thrall) at that time, except for the extraordinary administration of FDR.

In fact, there were at the time three competing ideologies, all of them idealistic, and all espoused, more and more loudly as the crisis worsened, as the solution for the society's ills, by men (women were not taken seriously in politics in those days) who were both arrogant and ambitious -- laissez-faire neoconservatism, communism, and fascism. This toxic combination of qualities -- fanatic idealism, arrogance and ambition -- produced some of the most despotic, extreme and dangerous 'leaders' the world had ever known, swept into power on populist platforms that preyed on the utter desperation and learned helplessness of the people. When moderation seems inadequate and ineffectual to deal with extreme suffering, extremism flourishes.

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The authors of The Fourth Turning expect that the next fourth turning -- the next cycle of stark authoritarianism -- to begin between 2010 and 2020, about eighty to ninety years after the last. The economic fragility of massive US debt and trade deficits, the End of Oil, ideological wars and terrorism, threats of pandemics and the spectre of eco-collapse precipitated by global warming all add fuel to their argument that the fourth turning is imminent, as such turnings are generally sparked by a crisis. We certainly have plenty of candidates to choose from for such a crisis.

So suppose we map the behaviours and events of 1929-39 on the situation we find ourselves in at the dawn of the 21st century. How might we expect people, governments and corporate management to behave if the crash of the dollar brings about another Great Depression? Will our 21st century ingenuity, pragmatism, connectedness, collective wisdom, resilience, and more tolerant, democratic outlook lead us to a quick and radical correction of the excesses that produce the coming Depression, a rapid and relatively painless end to it, and a more humane response to the suffering it does produce? And is this all complicated by the fact that this time, unlike 1929, we are facing permanent, absolute ends to the critical resources on which our society relies for its existence?

While a second "great depression" in the post peak period has been a staple of many peak oil writers (Colin Campbell being the classic example), I'm not sure how many lessons can be drawn from the first (other than to learn some of the things not to turn to if the economic going gets a bit tough). As Dave points out, the first depression didn't, for example, occur as a result of resource constraints - and many of the economic actions taken after the Wall St Crash of 1929 are hopefully now textbook examples of what not to do for central bankers.

One possible exception is the dustbowl of the 1930's - I've never understood if the timing of this environmental disaster was related to the arrival of the depression in any way, or simply a coincidence (feel free to educate me if any of you know). Either way it seemed to make life much tougher for all concerned, which is one area parallels could possibly be drawn if slow environmental collapse triggers economic problems over the coming years.

I think the "permanent, absolute ends to the critical resources on which our society relies for its existence" meme needs a bit of rethinking by those who espouse it. Resource bases that are being totally destroyed and can't be replenished are actually quite rare - even oil and gas, the best example, won't disappear entirely - it just gets harder and harder to extract remaining deposits - but we'll still be producing some of each even a century down the track. Most mineral resources don't get destroyed after the are extracted - they still exist in the economy somewhere - the secret is to fully recycle these - if you move the economy to the footing described in McDonough's "Cradle to Cradle", where biological and industrial "nutrients" circulate through closed loop systems, then you don't need to keep finding and extracting more resources - the system feeds itself. Its simply a question of industrial design...

"Dissident Voice" has an excellent article called "It’s the End of the World as We Know It…" (subtitled, A Review of Some Current Speculative Thinking on Collapse) - this one looks Jarred Diamond's "Collapse", Kunstler's "Long Emergency" and Lovelock's "The Revenge of Gaia". Its a long piece of occasionally Chomsky style analysis, and worth the read.

A specter is haunting global civilization: the specter of “carrying capacity.” In one forum after another, the idea that we are nearing Malthusian limits in terms of the development of highly organized societies and human habitation of earth is making itself heard. Scientists and sociologists point to different specific phenomena: species extinction and habitat destruction, over-population, global warming, peak oil, falling water tables, the proliferation of super-viruses, and so on, but the theme of most of these analyses is simple: things cannot, and will not, go on as they are much longer. Some of the thinking associated with this idea is rather timid and narrow, some of it is lyrical and reasoned, some of it is flat-out apocalyptic. Sometimes the same author exhibits more than one of these characteristics in the same article or book. Some of the proposed prescriptions for our plight are just about as frightening as the worst-case scenario themselves.

What’s most interesting to me is not so much the army of statistics being brought to bear to construct these hypotheses, or the particular focus of any given argument, as the type of thinking that different proponents apply, its relation to the times, and its chances of actually being assimilated and acted upon in any way that truly meliorates the problems it identifies. Three influential authors who’ve recently looked at the whole enchilada (and found that the cheese is disappearing fast) are the nominal subject of this review.

...somehow, after moving to San Francisco, one of the richest, most exquisitely situated cities on the continent, a place always dreamily eyeing a cornucopian future of infinitely expanding economic and technological horizons, I started to find myself thinking about collapse quite a lot. ... There is definitely something about California that encourages apocalyptic thinking. Perhaps this is because it’s the endpoint of westward expansion, forever: there are no more frontiers, no more territories to conquer; and the imperialist Euro-American psyche is forced to confront its limits, personal and political, to gaze at other civilizations not merely gazing back from across the border or the ocean, but claiming rights and pushing back, interpenetrating. The decline of the West begins here...

So it’s a logical place to contemplate the final human sunset, and yet, and yet -- at the same time there’s something about dystopianism that I profoundly reject. American optimism has always seemed somewhat ghoulish to me, like the hyperventilated laughter of a over-stimulated child. But there’s an elitism that permeates dystopian thinking so strongly that it gives me pause. You can bet that most of the people talking about “die-off” these days aren’t imagining themselves as the first to starve. Is a little eschatology a dangerous thing? I thought I’d do some reading and see.

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Mike Davis, a far superior social critic whom Kunstler cites (he cites a number of authors more worth reading than he is: Wendell Berry, for example, and Bill McKibben) did a brilliant analysis of the reactionary and often racist nature of much American dystopianism in his great book "Ecology of Fear". Through looking at dozens of examples of doomsday scenaria from the 19th and 20th centuries, he demonstrates that dystopianism is basically a literary way of waging the ultimate culture war, to punish and eliminate the author’s perceived enemies, whoever they are. In this Kunstler perfectly fits the bill, although he’d like us to believe his work isn’t fiction. But as a supposed social analyst, he makes the crucial mistake of assuming that bad systems must be made up of bad people: that is, that suburbia is really the fault of the greedy, self-interested, short-sighted and generally stupid people who live there. So of course there’s no hope for it, right? This is the ultimate in self-fulfilling prophecy.

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... western materialism also bought into straight-line fever. The foundational capitalist value, “growth,” is wholly and factitiously linear. Economic growth is slowly revealing itself to be as empty a promise as the shelves of a 1980s Moscow supermarket. Indeed, the psychotic party-on mentality of infinite growth has the potential, in the U.S. particularly, as it further unhinges capital from either moral or fiscal responsibility, of making Soviet Russia’s economic and imperial collapse look like the proverbial Sunday picnic. But for now the party continues, with ever fewer invitees and more onlookers, and with nature still carrying it all on her back, although beginning to show ominous signs of fatigue.

Here’s the fundamental fallacy of linear thinking: if you think something is good, you just do more of it and pretend that this will make the future even better. Such thinking also can be (and has been) used to justify fantastic levels of inequality that more integrated types of thinking would simply see as absurd. If we really are in it together, over the long haul, then of course what happens to any segment of society at any time has an effect on the rest, just as every element in a closed natural cycle is important to the health of the whole. But unhook the parts from the whole, unhook humans from nature and from each other, and set them each on a separate line towards an ultimate end point, and this is what you get: each against all, a society of parents simultaneously bludgeoned and bedazzled into stealing the future from their children, or their grandchildren.

Most current collapse-think is also characterized by this same linearity, a straight-ahead projection of current trends into the future. But it bears more than a passing resemblance to Christian end-times thinking, as opposed to a progressive linearity. Thus, if you think something is bad, you just project it inevitably getting worse and worse, and the concrete result is, well, the definition of reactionary. In men like Kunstler and Lovelock, the doomsday scenario seems to be the result of bitter, almost personalized disappointment, in Lovelock’s case over the utter failure of planetary stewardship by the richest, most relentlessly inventive societies the world has yet produced. If the civilization that was capable of producing someone like me can’t do it, such men bewail, then damn it all, nobody can! There is an astoundingly ungenerous level of personal arrogance at work here. As mentioned, this is not a new phenomenon in the Judeo-Christian male. One thinks also of Oswald Spengler’s Decline of the West, an elitist dystopian vision which seems positively sunny by comparison with Lovelock’s reduction of the human species to “a few breeding pairs in the Arctic” by the end of the 21st century. The grandiosity of this type of mindset is such, that if it gets too dissatisfied or despairing, it simply takes the whole of civilization down with it.

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In effect, economic collapse and total social collapse or cultural disappearance are not the same, and yet are somewhat confused in these analyses, particularly Kunstler’s. Cultures and even nations have continued to survive after the collapses of empires and economies, even after the most horrific genocides. In some types of fiscal collapse, like Argentina’s in 2001, the most significant difference is that the former economic elites lose some or all of their stranglehold on social and economic life. If you want an entirely conceivable picture of the US after an economic collapse, you don’t have to subscribe to anything as internally contradictory as Kunstler’s Long Emergency, just look at much of the Third World today. As anyone who’s spent any time there knows, for the most part it bears little resemblance to the hell of brutality and rat-eating barbarism that fires the middle class imagination with terror, it’s mostly a place of long lines, limited mobility, less physical comfort, hard work, and larger scale poverty. Unfortunately for Kunstler, it is not “intensely local” in the pure, bucolic, Jeffersonian way he imagines, as elites still manage to wreak local havoc through crony capitalism, and millions of people must shift about the globe continually in search of work. The idea that some of them might be white Americans in the future is the only new thing about the scenario.

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It’s possible to imagine a scenario in which an economic collapse in the world’s only super power, far from resulting in an inevitable descent into the maelstrom, might conceivably have strangely beneficial side effects: reducing US imperial adventurism, disposing of the rationale for Islamic extremism (except in those places where the US stupidly tried to hold onto its empire, as Russia has in Chechnya), giving space for and urgency to sustainable social and environmental alternatives, and putting the reins on predatory capital, all of which have been possibilities ridiculed and dismissed by the snake-oil salesmen of growth up to now. This may be as Pollyannish as other prophecies are dystopian, but the point is not to make a winnable argument. It’s to say that prophecy, even by scientists -- that is, what one chooses to believe is most probable or downright inevitable -- is inescapably based on personal philosophy, which is inescapably connected to ideology.

There are all sorts of good points made in that article, so even though I quoted a huge swathe of it make sure you read the rest. The second last paragraph I quote is worth considering for those peak oil apocaphiles who don't fully understand just how much of the world is already "post peak" - spending some time in the poorer parts of Africa, Asia or South America is something everyone should do (best to do it soon while airfares are still relatively affordable).

Finally, Robert at "Entropy Production" takes a stab at defining a peak oil taxonomy. This can result in a certain amount of ostracism, as I've found out in the past, but nevertheless it is worthwhile gazing into the mirror occasionally. Robert gets the award for word of the week - "doombat". Anyone who has even tried to unravel a complex conspiracy theory linking the Illuminati to peak oil and industrial collapse should find this concept a familiar one...

There are four major sub-denizen groups in the peak oil blogosphere:

1. Corncucopians
2. Traditionalists
3. Technopeakers
4. Doomers

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Doomers spawn from the same fertile sediment as traditionalists but the two differ significantly on philosophy. Traditionalists tend to view the world as primarily altruistic while doomers view the world as primarily avaristic. This in turn colours how they believe people at large will react to shrinking oil supply versus growing demand. Doomers view oil as some kind of faustian substance and generally contrive to make logical connections that convince them that society will collapse when oil production peaks.

Doomer powerdowns are the most common and mildest Doomer subspecies. Their philoshopy is based on the singular assumption that the cost of cheap oil is embedded in everything and that rare oil will quickly make all modern economic activities impossible, regardless of their relative value to society. Powerdowners are very likely to correlate peak oil with peak energy. The end game for the powerdown sect is humanity reduced to 19th century technology and infrastructure. Anacedotally, powerdowners are the most likely members of the peak oil community to be suburbanites themselves with few practical skills outside the 3rd sector of the economy. Since they are more highly exposed than the rest of the world, they have correspondingly more anxiety about the consequences of peak oil.

Doomer nihilists take the powerdown scenario one step further to the die-off scenario and believe that the end of the oil age is here and the future will be an exact replica of the Mad Max movies until humans consume all oil and then promptly reach paleolithic age technology. To an extent they fuse the metality of 2K survivalists with the doomer culture.

Doombats, as described above, merge doomer and moonbat culture. Essentially they believe in the doomer precepts but transfer all the responsibility to George Bush, Big Oil, the Military-Industrial Complex, or whatever illuminati cabal they hold responsible for the ills of the world.