by James Kunstler
Whenever somebody complains about "the lies that George Bush & Co. told to get us into the Iraq war" (as Frank Rich did in The New York Times on Sunday), I wonder how those lies compare to the lies that the American public tells itself every day — for example, that we could run America without oil from the Middle East, or that hybrid cars will save Happy Motoring, or that we can have an economy without producing anything of value.
Meanwhile, the Dow Jones index went up over a hundred points the same day that 32 people were massacred on a university campus. And bear in mind that the massacre did not occur late in the day but literally around the same time that the New York Stock Exchange rang its opening bell — so that as the body counts mounted through mid-day, the stock markets only went higher! They must have liked what they saw. Then, the rest of the week, while the cable news Mommy-Daddies went through the familiar rituals of bewildered hand-wringing, and NBC released the trove of farewell videos sent in by shooter Seung-Hui Cho between killings, the Dow piled on another 250 points to close at an all-time record high just under 13,000.
Could the financial markets be more detached from reality, from life on the ground (or in a free-fire-zone classroom) in this nation?
Doug Noland over at Prudent Bear.com is right: we've entered a euphoric phase of financial arbitrage capitalism with extreme Ponzi overtones, a pyramid scheme of revolving credit rackets and percentage spread plays completely abstracted from any reality of fruitful activity. The reason we don't even call "money" by its former name anymore is precisely because we realize at some semi-conscious level that "liquidity" is not really money. Liquidity is a flow of hallucinated surplus wealth. As long as it flows in one direction, into financial markets, valve-keepers along the pipeline, like Goldman Sachs, Citibank, or the hedge funds, can siphon off billions of buckets of liquidity. The trouble will come when the flow stops — or reverses! That will be the point where we will rediscover that liquidity really is different from money, and if we are really unlucky we'll discover that our money (the US dollar) is actually different from real wealth.
Known and very popular cialis coupon which gives all the chance to receive a discount for a preparation which has to be available and exactly cialis coupons has been found in the distant room of this big house about which wood-grouses in the houses tell.
Noland and others recognize the severe distortions in the finance sector, and they are surely correct to flag the implied dangers. But even these clear-eyed observers survey the disturbing finance scene without factoring the global energy situation. In a nutshell: world oil production seems to have peaked about 10 months ago. Being just past peak, there is still a huge amount of oil going into world economies. But being just past peak we are now seeing how complex systems proceed toward instability and breakdown when the underlying energy flow turns toward contraction.
The situation in finance is particularly sensitive and acute because an overall contraction in available energy means the end of industrial expansion (a.k.a. "growth") at "normal" rates of three to seven percent annually. More to the point, it means that certificates, contracts, deals, plays, and rackets pegged to the expectation of growth will lose their legitimacy. Meaning, stocks, bonds, collateralized debt obligations, hedges — anything that represents the hope and expectation for more-of-anything — will no longer be understood to represent real value.
The current euphoric hysteria should therefore be viewed as a form of disorder in its own right. The players in the markets are making their moves based on misunderstood signals. They think the world is awash in energy and prosperity. They believe Cambridge Energy Research Associates (CERA) and the Chairman of the Federal Reserve. They believe that the mortgage fiasco and the associated imploding housing bubble are just a couple of temporary zits on the handsome WASPy face that Wall Street presents to the world. In the background, though, feedback loops are aligning to rock the systems we depend on for daily life in the real world. Capital will become unavailable. Food will grow scarce. Trade will be interrupted. Mobility will be constrained. And an awful lot of pissed-off people will be poised to fight over the table scraps of industrial civilization.
April 16, 2007
Blowing Green Smoke
Tom Friedman, celebrated New York Times columnist and author of The World is Flat, riffed on (or around) the issues of climate change and energy in that newspaper's Sunday Magazine this week ("The Power of Green"), and managed, in the process, to misunderstand just about every implication these conjoined problems present. Friedman's specious thinking is symptomatic of exactly what is wrong with our public discussion of these matters generally, and their presentation in mainstream media in particular.
I'm fond of saying that if America could harness the power it wastes blowing smoke up its own ass, we could magically escape our energy-and-climate-change predicament. I say this repeatedly to counter the increasing volume of lies we tell ourselves in order to maintain the illusion that we can continue living the way we do. Like so many other commentators suffering from cranial-rectosis, Friedman believes that we can keep on running our Happy Motoring utopia if we just switch fuels.
Friedman gives no indication that he understands the fundamentals of the global oil situation. He writes:
People change when they have to — not when we tell them — and
falling oil prices make them have to. That is why if we are looking for
a Plan B for Iraq — a way of pressing for political reform in the
Middle East without going to war again — there is no better tool than
bringing down the price of oil.
This is a fascinating statement. It's predicated on the idea
that the US can achieve "energy independence," which is itself
predicated on the further idea that we can accomplish this by switching
out gasoline for ethanol. This is such an elementary error in thinking
that it would be funny if it wasn't the lead story in the flagship of
the mainstream media. As a Pennsylvania farmer put it to me in
February: "It looks like we're going to burn up the last remaining six
inches of Midwest topsoil in our gas-tanks." Friedman's statement also
ignores the facts that running cars on ethanol would make no material
difference in the amount of carbon dioxide released into the
atmosphere, or that ethanol is 20 percent less efficient than gasoline,
meaning we would have to produce and use that much more of the stuff
just to stay where we are.
Where climate change is concerned, this is a variation of the "Red Queen syndrome" (from Alice in Wonderland) in which one has to run faster and faster to stay in place. It also fails to take into account the tragic ramifications of setting up competition between food for humans and crops for motor fuels just at the point when a growing scarcity of oil-and-gas-based soil "inputs" (as well increasing climate problems in the grain belt) will drastically lower American crop yields. The symptoms of this unintended consequence have already begun to present themselves — for instance, January's food riots in Mexico, which resulted from Mexican corn being sold to American ethanol distillers rather than Mexican cornmeal millers, who couldn't match their bids.
Friedman goes on to tout Wal-Mart's mendacious campaign to "green" up its operations by, among other things, improving the mileage of its truck fleet from 6-mpg to 12-mpg. He writes:
Take Wal-Mart. The world's biggest retailer woke up several
years ago, its CEO Lee Scott told me, and realized with regard to the
environment its customers "had higher expectations for us than we had
for ourselves." So Scott hired a sustainability expert, Jib Ellison, to
tutor his company. The first lesson Ellison preached was that going
green was a whole new way for Wal-Mart to cut costs and drive its
Friedman's invocation of Wal-Mart here offers another layer of misunderstanding from the work he is best-known for, his best-selling book, The World is Flat, which asserts that globalism is now a permanent feature of the human condition. I demur from this view. I think we will discover (probably painfully) that globalism was a set of transient economic relations made possible by a half century of cheap oil and relative peace between the great powers, and that enterprises that rely on these transient mechanisms — such Wal-Mart, with its 12,000-mile merchandise supply chain to China, and its "warehouse on wheels" of tractor-trailor trucks circulating incessantly on America's interstate highways — will be on their knees in a few years as we enter the export crisis phase of post-peak terminal oil depletion and the great powers of the world act with increasing desperation to compete over the remaining supplies.
For someone operating at the top of journalism's food chain, Friedman is astoundingly ignorant. He asserts at another point in this article that climate change will require us to "[r]eplace 1,400 large coal-fired plants with gas-fired plants." Earth to Tom: America's natural gas supply is arguably more tenuous and problematic than its oil supply. To put it bluntly, over the next five years, we will fall off a cliff with natural gas. Apparently Friedman hasn't heard. Nor are we going to make up for this loss by importing liquid natural gas from distant lands. Nor would it make any sense to burn expensive imported methane gas to run power generation turbines. So, you see, there is no chance whatsoever that we will do what Friedman suggests. In fact, the 17 percent of all electric power that we currently get from gas will be lost to us in the near future, which could leave us with Third World style electric service. (Incidentally, the terminal decline of our natural gas supply also means we will lose control of the crucial resource used for making nitrogenous fertilizers, with self-evident further implications for our crop yields and our ability to feed ourselves or manufacture alternative motor fuels.)
Friedman's equations regarding continued industrial expansion in China and India are based on the assumption that they somehow will be immune to the global energy crisis and to the ecological catastrophes entailed by climate change. More likely: both nations will be overwhelmed by these things and the only question will be how desperate their political convulsions will be in response (or how rapidly they devolve back to twelfth century living standards).
At the heart of Friedman's thesis is his notion that the current incarnation of "the American Dream" is a good thing and can continue. By American Dream he apparently means membership in the Happy Motoring Utopia, with all its accessories, furnishings, and usufructs — the system broadly known as suburban sprawl. Here's the truth, Tom: suburban sprawl is a living arrangement with no future. It was a tragic mistake to squander the post World War Two wealth of our society to build it. It will come to represent an immense liability for this country's future, as it loses both monetary and practical value. And we will have to make comprehensive arrangements for living differently, if we want to continue this project of American civilization.
A telling omission in this article, by the way, is any mention of public transit. It's especially significant because the one thing we really could do right away to reduce our oil consumption would be to get passenger rail going again in this country. But this blind spot in Friedman's vision is only the flip side to his stupid belief that we can just keep all the cars running by other means.
Tom Friedman has no idea what the implications are of all these things. His fatuous advice to the nation — served up by a confused and cowardly Times editorial staff — will only spur more delusional thinking, which is, of course, the last thing we need. The showcasing of Friedman's article may represent an inflection point in the fate of the mainstream media — the moment when it demonstrates most clearly its failure to make current events comprehensible, the moment when its lost legitimacy is finally recognized. That legitimacy has been passing to the Internet, where commentators have no advertisers to pander to and no need to defend any status quo.
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