“Like a Ponzi scheme…that works!”

2008-Nov-19

After spending the day looking at the pitiful remains of my 401K, and despondent of finding a good way to protect the rest of it, I got out of the apartment by going to the movies, this one a showing of I.O.U.I.S.A., a whodunit about our outlandish national debt, on its way to ten trillion dollars, a bit under two hundred grand of debt for each of us.

The movie, even the cut down version did a good job showing the problem, but didn’t say much about a solution. Neither did the panelists, who seemed to have nothing better to say than “Don’t buy what you can’t afford.”

But the quote of the day came from Bill Emmons, an economist at the Fed. After pooh-poohing the inflationary effects of the Bailout, claiming it would get lost in the wash, he then said that our debt wasn’t that bad at all, since we got it at very good interest rates that were less than our GDP growth rate:

It’s like a Ponzi scheme…that works!

Oh. Really. Well, yeah, of course Ponzi schemes work…if you are the one at the top of the pyramid–like the Fed, instead of at the bottom–like us.

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The Lifeboat

2007-Nov-16

I’m watching Titanic again… When disaster strikes, we head for the lifeboats. If we have no lifeboats everybody dies. If the lifeboat takes off with too few people in it, people die. If a lifeboat tries to carry more people than it can hold, it capsizes and everybody in it dies.

I’ve been suggesting that this country (and the entire world) might just collapse, whether soon or half a century from now. When the cheap oil runs out, our food (which is totally dependent upon cheap oil) runs out, and world population , currently six billion and soon to rise to nine billion, will die off, possibly down to one billion.

I have no problem with my hope that those I love, family and friends, will be among the one billion who live rather than the eight billion who die. But life will depend on lifeboats, whether those lifeboats be countries or small tribes. I see our country as one lifeboat, but the lifeboat is already overloaded, at least once the oil runs out. Before cheap oil our country was able to support one or two hundred million people. We have over three hundred million and soil sadly depleted by use of petroleum-based fertilizers instead of sustainable agricultural practices.

Gee, it would be wonderful if the capitalists were right, and we could support an infinite population, with everybody supporting their family with jobs at WalMart. But I doubt the future will come out that way.

What I see currently is the normal split between Conservatives and Liberals. The Conservatives want just a couple lifeboats (perhaps in Paraguay) to hold themselves and maybe their immediate family, and the Liberals eagerly inviting everybody in the world to jump on in.

Between them, I’m not feeling hopeful.


Reinventing Collapse

2007-Nov-09

Ever the optimist, I am awaiting the collapse of the American empire which looks like it could come within decades rather than centuries, and we may get to watch. Dmitry Orlov got the opportunity to watch the fall of the Soviet Empire, and in his book Reinventing Collapse, due out next year, he discusses his view that Russia was much more resilient and able to survive the collapse of its empire than we will be.

For those who just can’t wait, he gives an outline of his views in Energy Bulletin, and I’ll just give a few of his thoughts. The article is worth reading in full, and I’m waiting for the book:

All empires collapse. No exceptions. Like Russia there will be widespread shortages of the basics, and no help in sight. Unlike Russia there is less secrecy here, so we will get to watch it all.

When faced with such developments, some people are quick to realize what it is they have to do to survive, and start doing these things, generally without anyone’s permission. A sort of economy emerges, completely informal, and often semi-criminal. It revolves around liquidating, and recycling, the remains of the old economy. It is based on direct access to resources, and the threat of force, rather than ownership or legal authority. People who have a problem with this way of doing things, quickly find themselves out of the game.

In the Soviet Union, government ownership meant that the collapse would be cushioned, because governments collapse more slowly than private companies. And the very incompetence and inefficiency of the soviet economy meant the people were better prepared than we are to make do for themselves. Our efficiencies will work against us as corporations efficiently cut us off.

And in our differences in family structure (multi-generation versus nuclear), food production (home gardens versus fast food), medicine socialized versus privatised, and even educational system (free for all versus crippling debts), we are much more vulnerable to a deeper, more devastating crash.

His suggestions: forget the government, forget corporate enterprise, rely on ourselves, and expect to make do with much less.


Dieoff and the Olduvai Gorge

2007-Jul-13

There are about six and a half billion people in the world. In the next few decades there will be about nine billion, far more than the earth can hold. Just about the time when the loss of cheap oil and water and global warming kick in to sharply reduce the amount of food in the world.

I do not expect to live long enough to see eight billion people in the world or one to two hundred million people in this country die of famine, pestilence, and war, but I expect to see quite a few go as we go back to where we came from.

So if I come across as a bit cynical…sure, I’m cynical. I believe we could stop the die-off, but I don’t think we will. Have a nice day.


Have a Merry July 4th

2007-Jul-04

As I watch the parades, the frantic waving of flags and cheering anyone who looks like a military type, I see people frantically denying what they see coming for them… looks like Joe Bageant sees it too

The power of population is so superior to the power of the earth to produce subsistence for man, that premature death must in some shape or other visit the human race. The vices of mankind are active and able ministers of depopulation. They are the precursors in the great army of destruction, and often finish the dreadful work themselves. But should they fail in this war of extermination, sickly seasons, epidemics, pestilence, and plague advance in terrific array, and sweep off their thousands and tens of thousands. Should success be still incomplete, gigantic inevitable famine stalks in the rear, and with one mighty blow levels the population with the food of the world.
— Thomas Malthus, 1798

The Population Bomb…global warming… Homo sapiens hath shat, frolicked, killed and exceeded their MasterCard limits upon the earth, which is less than a second in geological time. Already we are on the way out because we did not have the common sense of lizards, which lasted tens of millions of years longer without so much as a calculator, much less computerized eco models.

If mankind were discovered on a dog’s hide the owner would give the dog a mange dip. Or if the earth were a Petri dish, we would be called pathology. Problem is though, mama earth tends to shed pathogens off her skin, which for us pathogens, is the ultimate catastrophe.

When forced to look at catastrophe on this order of magnitude, we either go numb in shock or look in delusion to something bigger, or at least something with more grandeur than Mother Nature flushing humanity down the toilet. Otherwise, one must accept the both ugly and the weirdly beautiful prospect of oblivion. Meanwhile, we begin too late to “make better choices.” Grim choices that do nothing but postpone the inevitable, which are called better ones and sold to us to make ourselves feel better about our toxicity. Burn corn in your gas tank. Go green, with the help of Monsanto. But not many can be concerned even with the matter of better choices. Few can truly grasp the fullness of the danger because there is no way they can get their minds around it, no way to see the world in its entirety. The tadpole cannot conceive of the banks of the pond, much less the wooded watershed that feeds it. But old frogs glimpse of it.

And wave our flags, and go to our political rallies and try to find something to like in the “first tier” candidates because the good candidates just can’t win because they can’t get enough corporate cash, and we buy our energe efficient florescent bulbs and try to ignore the mercury inside…and we pretend our feeble half-efforts will stave off what we have wrought. And pretend we have independence to celebrate.


Wealth and Survival

2007-Jan-12

General Systems Theory: Whether you are a person, a corporation, or a bacteria, what matters most is not how efficient you are every day but whether you can survive a crisis.

We all make mistakes, and likely most of us make an equivalent number of mistakes. That doesn’t matter. What matters is whether we have enough of a cushion to survive the mistakes we are certain to make. Why are so many humans today so fat? Because for most of human history the inconveniences and long-term health issue of overweight were less important than the ability to withstand a prolonged famine.

Wealth is a cushion that allows us to withstand any number of bad mistakes, which is why rich people never feel they have enough, and always want more, even if it means taking it from those with little.

A thought experiment, a game… Two people ante up a penny and flip a coin. The winner of the toss gets both pennies. When one person runs out of pennies, they die and the winner lives.

Now a slight variation…one person starts with ten pennies and the other starts with ten thousand. What happens? Right. The person with much more wealth lives while the person with little dies, no matter if the poor person makes better decisions or makes fewer mistakes or is “more responsible”. Wealth can overcome enormous differences in skill or talent.

In the real world, a rich person can literally get away with murder, while the poor might not be able to survive a few days of cold weather.

That same difference in wealth that can mean life or death, can more easily lead to the rich getting richer by using their wealth advantage to make the poor poorer. If a poor person misses a mortage or car payment because they have no cushion to protect them against adversity caused by their own mistakes or just random events, a rich person can use their cushion of wealth to get the assets of the poor for ten cents on the dollar. Over and over. Consistently. Being poor means being unable to protect yourself from those who want to take even what little you have.

Them what has, gets.


Empires Fall Apart

2006-Nov-24

In 1990, Yugoslavia fell apart into its tribal entities, and the Soviet Union broke up soon after. And now that we dumped Saddam from Iraq, it may well break up into Sunni, Shiite, and Kurdish areas. And even Canada is ever so slowly losing its grip on Quebec. Oh yeah, did I mention that some folks would like to break off parts of the USA?

All over the world empires are falling apart into their original tribal constituents. But the Neo-Conservatives would like to create a new world empire under the direction of the United States and its corporate backers.

The tide is against them, and they will fail to create a world empire. But how many millions (or billions) of people may die before the failure of empire becomes obvious?

At this point in history, the world is moving in the direction of tribalism. That could be a good thing if done right.