Saturday, May 30, 2015

When the economy collapses...

It's an argument you can't make at family reunions or at the local Hardee's at breakfast time. But, many of us believe that there is essentially zero difference in Obama, Clinton, Bush I and II, Reagan other than packaging, and the power elite have spent millions on that packaging. But, what about what has really happened and is going to happen going forward? A couple pieces I bring to your attention: First from Dave Pollard -
So, here’s the thing: All “growth” in the economy, for at least the past half century, has come from producing and consuming more (mostly oil-based) energy, in total and per capita. All of it. Without finding and burning more and more hydrocarbons at an ever-faster rate all over the globe, there would be no “growth”. The belief that growth comes from “innovation” is simply wrong. The industrial economy is absolutely dependent upon “growth”. All investment markets are based on the presumption that profits will grow at a rate much faster than inflation. No growth, no incentive for investment. Without the presumption of perpetual growth, stock markets would collapse, and with them housing markets, currencies and the rest of the economy. That’s why this economy is so insane. Since the 1980s, it has become all-important for governments to perpetuate the myth that there is and will continue to be “growth”, and that the population as a whole benefits from it. Nothing could be farther from the truth. Actual inflation rates, using un-manipulated data, have been hovering near 10% for years, not near-zero as reported. Actual unemployment rates are near 25% even in the most prosperous countries. Actual GDP “growth”, adjusted for real inflation, has therefore been negative for decades. On a per-capita basis, very negative. Highly positive for the 1% mind you, but very negative for everyone else. By loaning ever-increasing amounts of money to people at artificially depressed rates (rather than the double-digit rates called for by real inflation), the average taxpayer has the illusion of becoming more wealthy, since assets are rising (though debts are rising faster). Net worth in real terms for all but the super-rich has been and continues to be in free-fall, and for most is now less than zero. There is no longer any pretence by any government or large organization that the staggering debts they have accumulated will ever be repaid. As debts become due, they are simply rolled over to new debt issues with large new borrowings added on. And the banks create new debt every time they print more money or loan or invest. This can only continue with the assumption of perpetual and accelerating growth, and the assumption that interest rates can be kept far below real inflation rates through the complicity of banks, governments, corporations, media and regulators, indefinitely. Both assumptions are preposterous. So the global economy now teeters on the edge, supported by two massive lies: That the economy is actually growing and can continue to do so forever, despite the finiteness and growing extraction cost of the oil upon which it absolutely and utterly depends; and that the mind-boggling and accelerating levels of debt that have been racked up are sustainable indefinitely — that people (mostly unwitting taxpayers) will continue to loan and invest money in a globally bankrupt economy in the expectation that future generations will somehow come up with some miracle to enable its repayment and some other miracle to enable growth to continue forever. As soon as those holding these debts lose faith that these miracles will inevitably occur, the economy is toast. Stocks, investments, houses and currencies will plummet to near-zero levels, oil-fueled production will grind to a halt, assets will be liquidated to repay debts, trade will evaporate, and the longest and deepest depression in human history will begin. For most it has already begun. This is why, considering the alternative “first collapse” scenarios of energy/resource exhaustion and runaway climate change, my bet is still on economic collapse as the first domino in the series that will herald the end of our civilization. I would be surprised if it is more than 20 years before this first domino falls. Extreme weather events and climate change will then just add another level of immiseration to an already desperate situation, as it will take out human-built infrastructure and essential resources (food, water, forests, and the means to keep temperatures within human livable limits) far faster than any human effort could hope to recover from, even with a healthy economy. Then we will see a Great Migration of humans, similar to what occurred during the last Ice Age, except instead of a few million people in motion, it will be a few billion.
And then this piece - The Coming Fury of An Angry America
In 2008, there were more household bankruptcies than divorces. The cost of crap fell and Wal Mart rose. Debt enslaved suburbanites now spend 32% less on clothing than they did a generation ago. 18% less on food, 52% less on appliances, and 24% less on cars. The middle class is consuming as voraciously as it ever has, however they have replaced sturdy $400.00 American Lawn Boy lawn mowers with $99.00 tin cans from China, and buy them now on credit. Some call that progress, others, value. In reality, it's inflation. The simple fact of the matter is Americans no longer have the disposable income to consume their way out of trouble, and that trouble lies in why it is the American middle class is broke, struggling, and increasingly angry. At the same time that consumables were falling in price, the fixed portions of the American Dream began an exponential increase. Two incomes meant two cars - or three, or four - and despite the fact that cars were cheaper, the cost of cars to the two-income family rose by 52%. Houses got bigger, and mortgages increased 76% - with 10 million of them in various states of distress and foreclosure. Health insurance rose 76%, taxes 25%. Childcare was an expense nobody had a generation ago, but one that became essential with two adults working. The cost of education had increased - as did the length of time necessary to obtain that education. A ticket to the middle class that cost 12 years of school - grade one through high school - now includes daycare, preschool, grade school, high school, and then college. Americans must now pay for the additional time. In 2005, that .09% of the earth that set the agenda for the planet was spending over 66% of its income on the fixed costs of the American dream alone, where it once spent less than a third. Or, to frame it in a way that defines the great problem, the American system that depends on rabid consumerism has left its heartland with exponentially decreasing amounts of disposable income, falling from 66% to 33% in a single lifetime. When George W Bush implored the middle class to spend its way out of the 9/11 chaos, in stunned and terrified whispers the American middle class muttered, "With what?" "The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country"- Edward Bernays, 1928
So, we have an economy completely dependent on a middle-class buying stuff and we have a disappearing middle class. Manufacturing is the same percentage of GDP that's it's been for years it's just the manufacturing companies don't need near the number of employees to make things. Another difference is that the stuff we build now people don't, or can't afford to buy - new cars, planes, etc. So corporations race to the bottom to make all the cheaper crap we can actually afford overseas to sell at Walmart so the Walton's can practice their own form of trickle down economics by practicing philanthropy with their billions rather than paying their people living wage jobs. We're going to have to change our measures of success and there are good folks out there doing helping folks prepare for this, all the voluntary simplicity folks, the early retirement extreme folks, etc. (One question that intriques me is when we'll get rid of the reality shows and professional sports that imply success has something to do with the accumulation of money.) The power elite know the "growth" scam has run it's course, so what do they do? They get one of their accolytes to break the news - the NYT's David Brooks - A Small Happy Life -
A few weeks ago, I asked readers to send in essays describing their purpose in life and how they found it. A few thousand submitted contributions, and many essays are online. I’ll write more about the lessons they shared in the weeks ahead, but one common theme surprised me. I expected most contributors would follow the commencement-speech clich├ęs of our high-achieving culture: dream big; set ambitious goals; try to change the world. In fact, a surprising number of people found their purpose by going the other way, by pursuing the small, happy life. Elizabeth Young once heard the story of a man who was asked by a journalist to show his most precious possession. The man, Young wrote, “was proud and excited to show the journalist the gift he had been bequeathed. A banged up tin pot he kept carefully wrapped in cloth as though it was fragile. The journalist was confused, what made this dingy old pot so valuable? ‘The message,’ the friend replied. The message was ‘we do not all have to shine.’ This story resonated deeply. In that moment I was able to relieve myself of the need to do something important, from which I would reap praise and be rewarded with fulfillment. My vision cleared.” Young continues, “I have always wanted to be effortlessly kind. I wanted to raise children who were kind.” She notes that among those who survived the Nazi death camps, a predominant quality she noticed was generosity.“Perhaps,” she concludes, “the mission is not a mission at all. ... Everywhere there are tiny, seemingly inconsequential circumstances that, if explored, provide meaning” and chances to be generous and kind. Spiritual and emotional growth happens in microscopic increments. Kim Spencer writes, “I used to be one of the solid ones — one of the people whose purpose was clearly defined and understood. My purpose was seeing patients and ‘saving lives.’ I have melted into the in-between spaces, though. Now my purpose is simply to be the person ... who can pick up the phone and give you 30 minutes in your time of crisis. I can give it to you today and again in a few days. ... I can edit your letter. ... I can listen to you complain about your co-worker. ... I can look you in the eye and give you a few dollars in the parking lot. I am not upset if you cry. I am no longer drowning, so I can help keep you afloat with a little boost. Not all of the time, but every once in a while, until you find other people to help or a different way to swim. It is no skin off my back; it is easy for me.” Terence J. Tollaksen wrote that his purpose became clearer once he began to recognize the “decision trap”: “This trap is an amazingly consistent phenomena whereby ‘big’ decisions turn out to have much less impact on a life as a whole than the myriad of small seemingly insignificant ones.”Tollaksen continues, “I have always admired those goal-oriented, stubborn, successful, determined individuals; they make things happen, and the world would be lost without them.” But, he explains, he has always had a “small font purpose.” Hans Pitsch wrote: “At age 85, the question of meaning in my life is urgent. The question of the purpose of my life is another matter. World War II and life in general have taught me that outcomes from our actions or inactions are often totally unpredictable and random.”He adds, “I am thankful to be alive. I have a responsibility to myself and those around me to give meaning to my life from day to day. I enjoy my family (not all of them) and the shrinking number of old friends. You use the term ‘organizing frame’ in one’s life. I am not sure if I want to be framed by an organizing principle, but if there is one thing that keeps me focused, it’s the garden. Lots of plants died during the harsh winter, but, amazingly, the clematises and the roses are back, and lettuce, spinach and tomatoes are thriving in the new greenhouse. The weeping cherry tree in front of the house succumbed to old age. I still have to plant a new tree this year.” This scale of purpose is not for everyone, but there is something beautiful and concrete and well-proportioned about tending that size of a garden.

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