FNMN Reloaded  

Time for some traditional Friday Night Fear Mongering.

Jeff Vail starts it off with a post on "Stomry Weather" - looking at portents of war in the Persian Gulf and financial collapse in the US (go to the post itself for plenty of links). Jeff also has a post at The Oil Drum on "Financial Intelligence: How Arbitrage Forensics Provide Insight into Saudi Knowledge" which outlines another view of Saudi oil production having peaked. Jeff doesn't go into detail about the British sailors captured by the Iranians saga - Alternet has a post on this.

Oil is up $2 today, seventh straight day of gains. What will happen in Iran? Tensions are escalating, the situation with the captured British sailors seems to be beyond the control of either Iran or the UK, and the sheer quantity of military forces operating on edge in close proximity in the Persian Gulf makes the probability of an accidental "Gulf of Tonkin" type incident more and more likely by the hour. Not to mention incidents of the non-accidental type. Now it seems that the Nimitz is heading to the gulf to replace one of the two US carriers operating there--there will, of course, be a bit of an overlap, so for a period there will be 3 US carriers in the gulf. Oh, did I forget to mention that the French carrier, the Charles de Gaul, also recently arrived in the Arabian sea? Four carriers in one place almost speaks for itself. I wonder which would better build public support for an attack on Iran, the Nimitz "getting struck by a Sunburn SSM" while trainsiting the Strait of Hormuz, or the de Gaul "hitting a mine" while making the same passage. People keep asking me when and if we're going to attack Iran. I didn't think we'd attack Iraq (booked a vacation that I had to skip, in fact), so maybe I'm overly conservative in these areas as it is, but I'm rapidly coming around to the prospect of an attack on Iran. I still think that we're looking for an incident to build support back home--and the current administration will probably keep ratcheting up the tension until such an incident becomes inevitable. Hey, if it happens before the current troop funding for Iraq expires, then Bush could force the Democrats' hand on war funding, kill the timeline issue entirely, and give McCain a 20 point lead in the '08 presidential race.

But that isn't the only rosy news. The mortgage problems are getting worse. You've heard all about the sub-prime mortgage issue. Now take two minutes and carefully look at this graph:



Scared? If not, look again. That's $ 500 BILLION in sub-prime ARMs set to adjust higher in the next 24 months, and given the recent events, these people will not be able to get new sub-prime loans to refinance to fixed rates. The risk allocation system of Credit-Swap Derivatives did an admirable job of redistributing the first $100 billion in defaults (though only about $10 billion has actually defaulted, the rest are still at some point in the foreclosure process), but will it be able to handle this, or will it bring down the whole house of cards trying? So far only 44 mortgage lenders, including 3 of the top 10, have imploded (see the mortgage lender implode-o-meter) in the sub-prime debacle. How will the economy handle the next wave, which will be between 5 and 50 times as large? ...

Bill Bonner at The Daily Reckoning has some notes on the subprime mortgage market and the end of empire.

A thought crossed our mind. How many of today’s artists could create a beautiful statue out of a block of marble?

But blocks of marble are not our beat here at the Daily Reckoning, so let us get back to money. What is endangering America’s money is the same thing that is undermining its position in the world - slipping standards. And slipping standards is what had brought about the fifth of our Big E’s.

We began to review our Four Big E trends the other day: Energy, Experimental Money (the faith-backed dollar), and the Exodus of power and wealth from West to East. Today, we look at our fourth - the Empire.

When we say that America is an Empire, it is neither a matter of desire or reproach. It is simply an observation.

Some readers think it is unpatriotic or un-American to notice. But while a good husband doesn’t notice when his wife gets fat, perhaps, a citizen with his wits about him might do well to keep a close eye on his government. And if he looks carefully at America circa 2007 he will see that it more closely resembles an empire than a modest republic.
Its troops…its culture…and its commerce…impose themselves over almost the entire planet.

Empires must be empires and follow the imperial path…from humbug, to farce, to disaster. They must believe what isn’t true (that they have some intrinsic, inalienable advantage)…and they must relax their standards…as they stretch…and then overstretch…until they have stretched too far.

Steve at Deconsumption has made a brief blogging reappearance to give two thumbs up to Marc Widdowson's book "The Phoenix Principle and the Coming Dark Age".

... to get to the point of this post, one minor benefit to being away these past few months is that it gave me a chance to read "The Phoenix Principle and the Coming Dark Age" by Marc Widdowson (downloadable for free at the author's website The Coming Dark Age). I ran across a strong recommendation of it somewhere awhile back, maybe two years ago or more, and I'd even gone so far as to print the entire book out (in 4 parts and probably over 400 pages). But maybe the dark title turned me off a bit....and the fact that it was a free e-book may have dissuaded me as well from taking it too seriously. At any rate, I tucked it away in a drawer for a later date when I'd have more time.

Well I finally found the time, and I'm absolutely floored by it. It's head-and-shoulders above any other study of social collapse that has emerged in recent years. It's a classical study in every meaning of the term, and monolithically referenced to boot. At some point The Phoenix Principle will likely form one of the cornerstones for a new field of socio-historical science that seems to be emerging around the study of social collapse. (And as a side comment, I think it's imperitive that such a study does emerge, since it would likely prove of greater benefit to humankind than almost any other study modern science has yet undertaken--revealing to ourselves exactly why it is we continually walk the path of self-destruction. But that, as they say, is a whole 'nother subject).

Actually, the tone of "The Phoenix Principle" isn't dark at all, aside from some of its implications. Widdowson presents a fascinating and truly sweeping view of major historical empires throughout world history, and offers an analysis of exactly what special confluence of forces allow a certain rare few of them to suddenly rise-up so dynamically as to set themselves apart as true "empires" in domination of the rest. From this starting point he begins to outline a broad but concise set of theorems to help define the social dynamics (both internal and external) that drive this endlessly recurring theme of growth, ascendency and the inevitable collapse of such human civilizations.

On a personal note I'd point out that long-time readers of Deconsumption might recall an early series of posts I'd grouped together under the title "The Cycle of Man" in which I tried to similarly outline the over-arching "framework" of civilizations, and how we might thereby recognize the aged-ness and degeneracy of this framework in our American empire, serving to show that a major, global cycle had already ended and was beginning to unravel. I eventually pulled those posts from the site. I'd gradually lost interest in examining things that seemed to me to be glaringly obvious, and I also felt it wasn't possible to communicate this kind of study well in the cursory style of an internet weblog. And it's undoubtedly for the best, since "The Phoenix Principle" works directly in that vein and is admittedly far superior to anything I would have come up with if I'd persisted. Plus, it written several years earlier.

But it's comforting (if only to my ego) to know that Widdowson identifies exactly the same framework I have. To my mind there were three essential structures which, if properly maintained and brought together in the right relationship, serve as the catalyst to launch an otherwise sedentary and balanced society off on an unstoppable rampage of growth. I termed these Government, Enterprise and Culture. And Widdowson observes the exact same elements, naming them as "power relations, commercial activity, and moral and aesthetic sensibility". He shows that by accustoming oneself to the study of these macro-forces it's possible to diagnose the true health of a civilization...and to fade the "white noise" produced by the almost incomprehensible number of smaller-scale and shorter-term movements going on within it, which distract the greater mass of society from recognizing their true predicament.

"The Phoenix Principle" is an inspired study, and virtually every page of my copy has been highlighted with insights and observations that struck me as novel, significant and enlightening. Generously, the full text is offered free of charge at the author's website The Coming Dark Age, which also provides an ongoing news-feed documenting our present collapse, similar to what this and many other websites nowadays are doing. ...

At any length, I heartily recommend it as a worthwhile read, at least until I can get Deconsumption up and running on a regular basis once again....

"Green Man" at The Oil Drum has issued what he calls "A Peak Oil credo" within one of the comments threads, provoking widespread agreement and dark muttering. Personally I think it would be better titled "The Doomer Manifesto", but whatever...

This morning I took a few minutes to record my Peak Oil thoughts. I did so in a series of "I Believe" statements. I think this is generally a good exercise, if only to explicitly formulate the assumptions I filter new information through.

I do not claim that anyone else should share these beliefs. You will note that I offer no arguments to sway others to my "camp". I offer no defense of them.

They have evolved considerably in my time lurking at TOD [The Oil Drum]. I expect that they will continue to do so. Thus, they represent a snapshot of one man's view of the near future.

I am enclosing them, below, for your amusement.

1. I believe that light sweet crude production peaked several years ago - probably in the 2000 era. This is mostly a refining issue, and one that can be fixed with sufficient investment in existing refineries to process available grades.

2. I believe Deffreys was probably right about the peak of C+C [conventional crude + condensate] production being the fall of 2005. Since C+C is the overwhelming single component of all liquids production, and it is now in decline, we entered the bumpy plateau at about the same time.

3. I believe that the first crossover event, where demand bumped up against available supply, ocurred in 2005. We had a round of price increases that resulted in demand destruction. Prices continued to climb into 2006 based on market momentum. The new floor of $60 was established. I define "bumping up against available supply" to mean that surplus capacity dropped to an unacceptably low level.

4. I believe that 2006 was an unusually quiet year as far as energy issues went. A relatively mild winter lead into a fairly mild summer (as far as air conditioning loads were concerned). There was almost no hurricane activity, due to an El Nino pattern. The first six weeks of the 2006-2007 winter were the warmest on record. Rebel activity in Nigeria was constant at a low level. We had a pipeline interruption from Alaska that was quickly repaired. The Israeli/Lebannon conflict was brief and did not spread. There was a great deal of feel-good propaganda leading up to the election. Prices held at $60.

5. I believe that quiet years will be the exception going forward.

6. I believe that we are now a year and a half into the bumpy plateau of all liquids production.

7. I believe that actual peak, which may have already ocurred, will not be more than a 5% increase in today's production. For all practical purposes, peak is now.

8. I believe that the relevant issue is not when peak will occur, but how long we can expect to remain on the bumpy plateau, and how rapidly we drop off it.

9. I believe that the bumpy plateau will not be symmetric around the peak. Peak may occur at any point in the plateau, including near the beginning or the end. This is due to the fact that the ultimate limit will not be geologic, but above-ground factors. We will approach but never quite reach the geologic limit.

10. I believe that 2007 will witness another crossover event, and we will see a large increase in prices, another round of demand destruction. A new, higher support level will be established for prices. I would guess that this would be in the $80 range.

11. I believe that production estimates made by reputable Peak Oilers are probably pretty good, but that decline rate assumptions are overly optimistic. Projecting historical rates of decline into the next couple of decades paints too rosey a picture. Historical rates of decline were dominated by fields which were developed with traditional techniques. We have seen, in Yibal, in the North Sea, and in Cantarell, very high rates of decline associated with modern production techniques. As the weighted mix of producing fields trends towards fields developed with these techniques, we will observe the overall decline rate to be higher than historical norms.

12. I believe, based on the above and bottom-up analysis such as the Megaprojects list, that the bumpy plateau will be relatively short. We will begin to drop off it as soon as 2010. Above-ground factors could accelerate that.

13. I believe that the result in industrialized nations will be a series of crossover events, of increasing amplitude and frequency. Since there is probably some minimum time that the market needs to accomodate a spike in prices with demand destruction, the events will eventually merge into a fairly continuous process. This will look like a super-inflation (not quite hyper-inflation) in energy prices. Perhaps on the order of 30%-40% per year, compounded.

14. I believe that demand destruction sufficient to match the decline rate past the bumpy plateau will require an ever-deepening recession/depression that eventually reaches economic collapse.

15. I believe that when economic collapse finally occurs worldwide that consumption will drop sharply, and create a cushion of surplus capacity, even as production continues to decline.

To quote Dmitri Orlov:

An economy does not collapse into a black hole from which no light can escape. Instead, something else happens: society begins to spontaneously reconfigure itself, establish new relationships, evolve new rules, in order to find a point of equilibrium at a lower rate of resource expenditure.

Prices will drop. The spin will be that "the crisis is over" and "good times are just around the corner".

16. I believe the Peak Oil is only one of the major challenges facing industrial civilization. As serious as it is, history may record it as an "also-ran". In America they are, in temporal order: recession, natural gas shortages, peak oil, collapse of the economy, collapse of the political order, climate change. Other nations will have a somewhat different order of occurrance based on their particular circumstances.

17. I believe that we are not tens of years away from these things, but (perhaps several) tens of months. That before the lumbering political system, which includes the corporatocracy, can be pressed into action we will reach a point, again to quote Dmitri Orlov, where "No long-term planning [is] possible. Large new projects [are] not even considered.".

18. I believe that solutions, where they can be found at all, are to be found at the individual and community levels.

The Yomiuri Shimbun is reporting that 132 million in Asia 'face starvation' / Warming may cut harvests by 30% in 2050s.

Grain harvests in the Asian region will drop by as much as 30 percent, leading to skyrocketing food prices and the starvation of 132 million people in Asia in the 2050s, if fossil fuels continue to be consumed at the current rate, according to a report of the Working Group II of the Intergovernmental Panel on Climate Change. The report includes the likely impact of global warming on Asia and assesses the impact of global warming on human activities and the ecosystem. It is expected to be adopted by the U.N. IPCC at a meeting in Brussels starting Monday,

A report of the Working Group I on the cause and environmental predictions of the greenhouse effect was released last month. According to government sources, the report found that many Asian areas, including Japan and eastern Russia, have already seen a decline in grain harvests, a phenomenon that will make it more difficult for developing countries to meet their growing demand for food. In addition to rising temperatures caused by global warming, chronic flooding, heat waves and droughts are behind the falling harvests, the report says.

In the future, grain harvests will drop by between 2.5 percent and 10 percent in the 2020s, and 5 percent to 30 percent in the 2050s, compared with the amount harvested in 1990, the report says. Even if the mercury rises by just 0.5 C in winter, the wheat harvest in India would be badly affected, the report says. In the event the temperature rises 2 C, rice harvests in China could plunge by between 5 percent and 12 percent, according to the report.

Higher seawater temperatures in the area spreading from East Asia to Southeast Asia would drastically change fish habitats, with minnows in tropical seas most at risk, which would see fish catches decline.

The melting of glaciers in the Himalayas, which serve as a natural dam, would lead to a scenario that could threaten the life of more than 700 million people who rely on meltwater, the report warns. The report predicts that if the Himalayan glaciers continue melting at the current speed, they will have almost vanished by 2035.

The New York Times reports on the widening income gap in the US - "Wealth Concentration at Pre Great Depression Levels".

Income inequality grew significantly in 2005, with the top 1 percent of Americans — those with incomes that year of more than $348,000 — receiving their largest share of national income since 1928, analysis of newly released tax data shows. The top 10 percent, roughly those earning more than $100,000, also reached a level of income share not seen since before the Depression.

While total reported income in the United States increased almost 9 percent in 2005, the most recent year for which such data is available, average incomes for those in the bottom 90 percent dipped slightly compared with the year before, dropping $172, or 0.6 percent. The gains went largely to the top 1 percent, whose incomes rose to an average of more than $1.1 million each, an increase of more than $139,000, or about 14 percent.

The new data also shows that the top 300,000 Americans collectively enjoyed almost as much income as the bottom 150 million Americans. Per person, the top group received 440 times as much as the average person in the bottom half earned, nearly doubling the gap from 1980.

The Guardian reports Fidel Castro is saying that the poor will starve because of the uptake of biofuels. Maybe he's been reading Monbiot ? Via Energy Bulletin, which also has a roundup of news from the "Via Campesina" movement - one of those things I'd never even heard of - its nice when you learn something new (and there isn't much new in this post, to be honest).

The Cuban leader, Fidel Castro, today attacked George Bush's new-found fondness for biofuels, warning that food stocks for millions of people could be threatened.

In his first foray into international politics following months of recuperation from intestinal surgery, Mr Castro claimed that valuable agricultural land in poorer countries could be taken over for biofuel crops destined for wealthier nations.

Mr Castro made his attack in an article for the communist party daily, Granma, which was headlined: "Condemned to premature death by hunger and thirst - more than 3 billion people of the world." "This isn't an exaggerated number; it is actually cautious," said the article by Mr Castro. "Apply this recipe to the countries of the third world and you will see how many people among the hungry masses of our planet will no longer consume corn. "Or even worse: by offering financing to poor countries to produce ethanol from corn or any other kind of food no tree will be left to defend humanity from climate change."

The octogenarian leader wrote that during a meeting earlier this week between the US president and American car manufacturers, "the sinister idea of converting food into combustibles was definitively established as the economic line of the foreign policy of the United States".

As Bush and his pet Iraqi bloggers noted yesterday, things continue to improve in Iraq.

ONE of the bloodiest chapters in Iraq's sectarian strife has unfolded in the northern city of Tal Afar, where gunmen, some of them apparently police officers, participated in the revenge killings of scores of Sunnis in the aftermath of a huge double suicide-bombing in a Shiite area.

Two hours after the explosion of the truck bombs, which killed 83 people and wounded more than 185, the gunmen - some of whom witnesses recognised as police officers - went house to house in a Sunni neighbourhood on Tuesday night, dragged people into the street and shot them in the head, witnesses and local leaders said. The killing went on for several hours before the Iraqi Army intervened. The police are mostly Shiites, although the city is mixed.

The Turkoman Front political movement condemned the killings in a statement.

"The militia after the explosions, backed by the police, raided the Sunni houses in the area and pulled people outdoors and killed them," it said. "There are tens of bodies still scattered on the road. In the meantime, the state security forces are incapable of doing anything."

An Iraqi Army spokesman said the final toll from the retaliatory violence was 70 people killed, 40 kidnapped and 30 wounded. "They were all Sunnis," said Major-General Khorsheed Doski, the spokesman for the 3rd Brigade of the Iraqi Army.

However, there was conflicting information about the dead. Military sources described those killed as men, aged between 20 and 60. But Salih Qadou, the chief doctor at the Tal Afar hospital, said there were women and children as well. He said 60 were killed.

"So many bloodied corpses were brought in on Tuesday night that the entry hall could not be kept clean," Dr Qadou said. "If you would have seen the inside of the hospital yesterday, it would have looked as if it were painted red despite all our efforts to clean the entry … I haven't heard or seen such a massacre in my life."

A witness to the killings, Muhie Muhammad Ebrahim, groped for words. "After the events of yesterday, which claimed the lives of a lot of people of Tal Afar, mostly Shiites, a horrible thing happened," he said. "Some of the families of the victims were enraged, and with co-operation of some policemen they attacked the Sunni areas. I can say that a public slaughter took place."

Mike Davis (author of "Planet of Slums", amongst other things), has a new book on the history of the car bomb out, and has a new article in TomDispatch asking "Have the Car-bombers Already Defeated the Surge?".

Despite heroic reassurances from both the White House and the Pentagon that the six-week-old U.S. escalation in Baghdad and al-Anbar Province is proceeding on course, suicide car-bombers continue to devastate Shiite and Sunni neighborhoods, often under the noses of reinforced American patrols and checkpoints. Indeed, February was a record month for car bombings, with at least 44 deadly explosions in Baghdad alone, and March promises to duplicate the carnage.

Car bombs, moreover, continue to evolve in horror and lethality. In January and March, the first chemical "dirty bomb" explosions took place using chlorine gas, giving potential new meaning to the President's missing weapons of mass destruction in Iraq. The sectarian guerrillas who claim affiliation with "al-Qaeda in Mesopotamia" are now striking savagely, and seemingly at will, against dissident Sunni tribes in al-Anbar province as well as Shiite areas of Baghdad and Shiite pilgrims on the highways to the south of the capital. With each massacre, the bombers refute Bush administration claims that the U.S. military can "take back and secure" Baghdad block-by-block or establish its own patrols and new, fortified mini-bases as a realistic substitute for local self-defense militias.

On February 23rd, for instance, shortly after the beginning of the "Surge," a suicide truck-bomber killed 36 Sunnis in Habbaniya, west of Baghdad, after an imam at a local mosque had denounced al-Qaeda. Ten days later, a kamikaze driver ploughed his truck bomb into Baghdad's famed literary bazaar, the crowded corridor of bookstores and coffee houses along Mutanabi Street, incinerating at least 30 people and, perhaps, the last hopes of an Iraqi intellectual renaissance.

On March 10th, another suicide bomber massacred 20 people in Sadr City, just a few hundred yards away from one of the new U.S. bases. The next day, a bomber rammed his car into flatbed truck full of Shiite pilgrims, killing more than 30. A week later, horror exceeded itself when a car bomber evidently used two little children as a decoy to get through a military checkpoint, then exploded the car with the kids still in the back seat.

In a demonstration of a tactic that has proven especially deadly over the past year, a car-bomb attack on March 23rd was coordinated with an assailant in a suicide vest and almost killed Deputy Prime Minister Salam al-Zubaie, whose tribal alliance, the Anbar Salvation Council, has accepted funding from the Americans and been denounced by the jihadis.

When it comes to the development of suicide vehicles, however, the most alarming innovation has, without doubt, been the debut in January of truck bombs carrying chlorine gas tanks rigged with explosives. Of course, "dirty bombs," usually of the nuclear variety, have been a longtime obsession of anti-terrorism experts (as well as the producers of TV potboilers), but the sinister glamour of radioactive devices -- scattering deadly radiological waste in the City of London or across midtown Manhattan -- has tended to overshadow the far greater likelihood that bomb-makers would initially be attracted to the cheapness and ease of combining explosives with any number of ordinary industrial caustics and toxins.

As if to emphasize that poison-gas explosions were now part of their standard arsenal, sectarian bombers -- identified, as usual, by the American military as members of "al-Qaeda in Mespotamia" -- unleashed three successive chlorine suicide-bomb attacks on March 16th against Sunni towns outside of Falluja. The two largest attacks involved dump trucks loaded with 200-gallon chlorine tanks. Aside from the dozens wounded or killed by the direct explosions, at least another 350 people were stricken by the yellow-green clouds of chlorine.

As in April 1915, with the first uses of chlorine gas on the Western Front in World War I, these explosions sowed widespread panic, underlining -- as the bombers no doubt intended -- the inability of the Americans to protect potential allies in al-Anbar Province, the heartland of the Sunni insurgency. (The recent discovery of stocks of chlorine and nitric acid in a Sunni neighborhood of west Baghdad will hardly assuage those fears.) ...

At least someone is trying to see the bright side of things - Google has reportedly switched their maps back to show pre-Katrina pictures of New Orleans and the Gulf Coast - welcome to the "good old days".

Google's popular map portal has replaced post-Hurricane Katrina satellite imagery with pictures taken before the storm, leaving locals feeling like they're in a time loop and even fueling suspicions of a conspiracy. Scroll across the city and the Mississippi Gulf Coast, and everything is back to normal: Marinas are filled with boats, bridges are intact and parks are filled with healthy, full-bodied trees.

"Come on," said an incredulous Ruston Henry, president of the economic development association in New Orleans' devastated Lower 9th Ward. "Just put in big bold this: 'Google, don't pull the wool over the world's eyes. Let the truth shine.'"

Chikai Ohazama, a Google Inc. product manager for satellite imagery, said the maps now available are the best the company can offer. Numerous factors decide what goes into the databases, "everything from resolution, to quality, to when the actual imagery was acquired." He said he was not sure when the current images replaced views of the city taken after Katrina struck Aug. 29, 2005, flooding an estimated 80 percent of New Orleans.

In the images available Thursday, the cranes working to fix the breach of the 17th Street Canal are gone. Blue tarps that covered roofless homes are replaced by shingles. Homes wiped off their foundations are miraculously back in place in the Lower 9th. So, too, is the historic lighthouse on Lake Pontchartrain.

But in the Lower 9th Ward, the truth isn't as pretty, 19 months after Katrina. "Everything is missing. The people are missing. Nobody is there," Henry said.

After Katrina, Google's satellite images were in high demand among exiles and hurricane victims anxious to see whether their homes were damaged. The new, virtual Potemkin village is fueling the imagination of locals frustrated with the slow pace of recovery and what they see as attempts by political leaders to paint a rosier picture.

Back to something positive tomorrow - don't forget Earth Hour tomorrow night (guess I'll be watching the football in the dark).