As part of my membership in the American Automobile Association (not AAA - that's an honor student's report card), I get the magazine AAA World. The big picture on the front cover is an Interstate highway sign saying "50": The Interstate Turns 50. After some hunting around for it because the front page of the contents looked more like a blary ad than like a table of contents, I found it on page 62. On 2006 August 13, the Interstate System will be 50 years old. Interesting. It started on my 10th birthday, so on that date I will be 60 years old. 10 + 50 = 60, and the Interstate System has been an integral part of my life, as it has for everyone around me.
The article contains some interesting information on the Interstate highway system, including its history. It seems that Dwight Eisenhower started it by going on a tour of the United States in 1919 to document all the places in our country that it was hard or impossible to get to by automobile as justification for his plan to build a network of superhighways in our country. Later on, when this adventurer was President of the United States, on 1956 August 13, Congress passed and Eisenhower signed into law the Federal Highway Act of 1956. It mandated the construction of a network of superhighways across the nation. These highways would have no stop signs, no intersections, no rail crossings, no highway traffic jams, and in fact nothing to impede auto traffic. When you get on one, you just simply go and go and go forever into the distance. This made distant places a lot easier to go to and changed drastically our lifestyle in this country. In fact, it has been called not only an economic force, but a democratizing force as well.
Some of the early cartoons presented in the article are interesting. For example, one has the treasury secretary put a stethoscope to the highways of our nation; in his other hand is a doctor's satchel. Another one has a series of letters to Congressmen soaring in to the air to the nation's Capitol, with cars driving on it as though the letters were a superhighway. The cartoon was urging us to prevail on our leaders to construct such a highway system. The system is just about complete now, and in many places it looks like something unearthly or extraterrestrial, with all these highways crisscrossing all over the place. Take a look at Rochester, New York's Can of Worms, Richmond, Virginia's James River Bridge, Bryan Park area, or I-895 bridge, or Washington, DC's Springfield Mixing Bowl, and you see what I mean.
But has it all been good? Think of all the land that was used up in constructing the Mixing Bowl. It must be a square mile or more. And they are still making it bigger and bigger. The highways have encouraged us to drive cars all over the place and to go out farther and farther into the suburbs, engaging in what Jim Kunstler ("Clusterfuck Nation Chronicles") calls "an idea with no future". This network of highways makes us dependent on the automobile, and it does not do all what it was intended to do. It avoids city traffic jams, which are annoying, all right, but it causes superhighway traffic jams, which are colossal and waste huge amounts of our citizens' time and fuel. Further, the fuel which drives all of this Interstate is about to run out. The world is nearing "peak oil", after which production will decrease from year to year, causing shortages all over the place. This could lay waste to this entire assemblage of concrete ribbons. Maybe the superhighway system is the Great Moai Statue of our society, like the statues that Easter Islanders built before they ran their remote island out of trees and their way of life.
The AAA article says nothing about this ominous future of our interstate system, and further, they have the gall to praise, in a subarticle entitled "A Recipe for Success", Colonel Sanders and his Kentucky Fried Chicken enterprise. That's right, AAA. With these highways comes Kentucky Fried Cruelty and We Do Chickens Wrong, not to mention trans fat as well.
The Interstate System of highways is a great achievement of humankind. From out of dust and dirt arises an intricate and complex network of concrete ribbons throughout our nation. I say we should use what's coming up, the system's 50th birthday, to say "Mission Accomplished" and not build any more Interstate highways. Instead, let the rising cost of gasoline take traffic jams off the highways.
Wednesday, June 28, 2006
Tuesday, June 06, 2006
Economic Collapse and Bubble Boom, Part 2
I received both books today, The Coming Economic Collapse by Stephen Leeb, and The Great Bubble Boom, by Harry S. Dent. I haven't read all of these volumes, but I have read enough to come with some conclusions. I believe Leeb more than I do Dent.
Stephen Leeb believes that peak oil will profoundly affect our society. He shows this more than in his earlier book The Oil Factor, and in some cases suggests we could be nearing an end to our civilization, although he says this need not happen if we take the right actions. Like other peak oil people, he says that oil prices will continue to rise for the foreseeable future. This happened before, in the 1970s, and he uses that decade as a model for what is coming up in the next few years - the Double Zeroes and the Teens. During that time, inflation threatened to get out of hand. It was stopped by Fed chairman Paul Voelker raising interest rates so high that they suppressed inflation, and eventually caused things to come back to low inflation. Mr. Leeb notes this can't happen this time because of huge consumer debt. If Bernacke were to try that, housing buyers would disappear, people would not be able to pay their adjustable rate mortgages, and house prices would plummet, taking stocks and the economy with it. So the only thing left is to let inflation rage. This implies that we could be heading towards million-dollar homes, then million-dollar cars, then million-dollar computers and so forth, and I hope we aren't heading towards 1923 Germany.
Leeb says that wind holds the most promise to replacing oil in our society; he doesn't mention the idea of converting coal to gasoline, as in his earlier book, I guess because he says that wind can be used to electrolyze water into hydrogen for fuel for fuel-cell vehicles. Among the investments that should be shunned are those that did poorly in the 1970s: cash, bonds, stocks, and small-cap stocks (although the latter did well in the 1970s). Instead, he says we should invest in oil, gold, real estate, China, India, and alternative energy. It is hard to follow such a strategy now because it seems that oil and gold have a tendency to drop in price as of late. But he says we should invest in these things.
Harry Dent did not do as well with his Bubble Boom. He uses generational theory and the upcoming Fourth Turning for his predictions. He says that a booming market, to the extent of Dow 40,000, will come in the next few years, by 2010. Then he says the Mother of all Depressions will occur, because the Baby Boom generation will start retiring and require support. He even describes a mini-history of 2010-2024 and beyond. I read through this and it seems like a repeat of the Great Depression and World War II. He even calls for the election of an FDR-like president in 2012. If he is talking about a Crisis President, I think this president is more likely to show in 2008, and I made a claim on Beyond Opinion that this president could be Al Gore. He does present a graph in which there is an uncanny resemblance in the Dow of 1921+ and the Dow of 2002+, but many other authors have found such similarities, and they haven't panned out. The truth is that no two Fourth Turnings are the same. The one before the Great Depression and World War II was completely unlike those crises. Instead of dragging on for 16 years or so, this one, the Civil War, was over in only 4 years, and it did not involve much economic dislocation, at least for the North. Dent makes the same mistake as President Bush - overemphasizing terrorism and ignoring peak oil. Neither Leeb nor Dent mention global warming.
Harry Dent seems to completely ignore peak oil, and assumes we are going to have an adequate supply, and gives brief mention to the Athabasca tar sands in Canada, although that oil takes a lot of energy to get from the tar. He devotes an introduction to peak oil, and he suggests that prices are going back to under $40 a barrel and that oil and oil stocks are about to tumble. I don't think so. The problem is not some trick or some technicality in a figment of the imagination such as a stock's price, but is a genuine supply problem with the stuff. His reading is fascinating in places, however, and he demonstrates well the concept of the S-curve, which is also called the logistic curve. Dent applies this curve to automobiles, computers, and cellular phones. He says that we are 90% into the Internet S-Curve. I think he should apply his S-curve concept to cumulative oil production. He will find that we are near the 50% mark on that curve; i.e., nearing peak production. His recommendations are for stocks of all kinds until 2010, and then invest in money market funds and the like. Leeb says those investments will lose purchasing power to inflation.
I asked both of these men about the theory of the other. Leeb does say in his book that retirement of baby boomers (a prediction of the Fourth Turning) will drag the economy, but that peak oil is the more serious problem. A spokesman of his said that baby boomers will continue to find work into their later years and so that will not be a problem, unless peak oil makes it one. However, as we have seen, Dent does not mention peak oil at all, and actually says that oil prices are a bubble and are about to tumble.
Which am I to believe more? I'd go along with Leeb. The Fourth Turning is an interesting concept, but still merely an abstract concept, but oil is a real substance. Either way, we could be in for some hard times, and I believe that the Fourth Turning crisis will center on finding how to continue civilization without fossil fuels.
Stephen Leeb believes that peak oil will profoundly affect our society. He shows this more than in his earlier book The Oil Factor, and in some cases suggests we could be nearing an end to our civilization, although he says this need not happen if we take the right actions. Like other peak oil people, he says that oil prices will continue to rise for the foreseeable future. This happened before, in the 1970s, and he uses that decade as a model for what is coming up in the next few years - the Double Zeroes and the Teens. During that time, inflation threatened to get out of hand. It was stopped by Fed chairman Paul Voelker raising interest rates so high that they suppressed inflation, and eventually caused things to come back to low inflation. Mr. Leeb notes this can't happen this time because of huge consumer debt. If Bernacke were to try that, housing buyers would disappear, people would not be able to pay their adjustable rate mortgages, and house prices would plummet, taking stocks and the economy with it. So the only thing left is to let inflation rage. This implies that we could be heading towards million-dollar homes, then million-dollar cars, then million-dollar computers and so forth, and I hope we aren't heading towards 1923 Germany.
Leeb says that wind holds the most promise to replacing oil in our society; he doesn't mention the idea of converting coal to gasoline, as in his earlier book, I guess because he says that wind can be used to electrolyze water into hydrogen for fuel for fuel-cell vehicles. Among the investments that should be shunned are those that did poorly in the 1970s: cash, bonds, stocks, and small-cap stocks (although the latter did well in the 1970s). Instead, he says we should invest in oil, gold, real estate, China, India, and alternative energy. It is hard to follow such a strategy now because it seems that oil and gold have a tendency to drop in price as of late. But he says we should invest in these things.
Harry Dent did not do as well with his Bubble Boom. He uses generational theory and the upcoming Fourth Turning for his predictions. He says that a booming market, to the extent of Dow 40,000, will come in the next few years, by 2010. Then he says the Mother of all Depressions will occur, because the Baby Boom generation will start retiring and require support. He even describes a mini-history of 2010-2024 and beyond. I read through this and it seems like a repeat of the Great Depression and World War II. He even calls for the election of an FDR-like president in 2012. If he is talking about a Crisis President, I think this president is more likely to show in 2008, and I made a claim on Beyond Opinion that this president could be Al Gore. He does present a graph in which there is an uncanny resemblance in the Dow of 1921+ and the Dow of 2002+, but many other authors have found such similarities, and they haven't panned out. The truth is that no two Fourth Turnings are the same. The one before the Great Depression and World War II was completely unlike those crises. Instead of dragging on for 16 years or so, this one, the Civil War, was over in only 4 years, and it did not involve much economic dislocation, at least for the North. Dent makes the same mistake as President Bush - overemphasizing terrorism and ignoring peak oil. Neither Leeb nor Dent mention global warming.
Harry Dent seems to completely ignore peak oil, and assumes we are going to have an adequate supply, and gives brief mention to the Athabasca tar sands in Canada, although that oil takes a lot of energy to get from the tar. He devotes an introduction to peak oil, and he suggests that prices are going back to under $40 a barrel and that oil and oil stocks are about to tumble. I don't think so. The problem is not some trick or some technicality in a figment of the imagination such as a stock's price, but is a genuine supply problem with the stuff. His reading is fascinating in places, however, and he demonstrates well the concept of the S-curve, which is also called the logistic curve. Dent applies this curve to automobiles, computers, and cellular phones. He says that we are 90% into the Internet S-Curve. I think he should apply his S-curve concept to cumulative oil production. He will find that we are near the 50% mark on that curve; i.e., nearing peak production. His recommendations are for stocks of all kinds until 2010, and then invest in money market funds and the like. Leeb says those investments will lose purchasing power to inflation.
I asked both of these men about the theory of the other. Leeb does say in his book that retirement of baby boomers (a prediction of the Fourth Turning) will drag the economy, but that peak oil is the more serious problem. A spokesman of his said that baby boomers will continue to find work into their later years and so that will not be a problem, unless peak oil makes it one. However, as we have seen, Dent does not mention peak oil at all, and actually says that oil prices are a bubble and are about to tumble.
Which am I to believe more? I'd go along with Leeb. The Fourth Turning is an interesting concept, but still merely an abstract concept, but oil is a real substance. Either way, we could be in for some hard times, and I believe that the Fourth Turning crisis will center on finding how to continue civilization without fossil fuels.
0=1, Blogger?
Two days ago I posted a blog about two books about the future, written by H.S. Dent and by Stephen Leeb. I got a comment on it today and OK'd it for this blog. After I did that, Blogger continued to say that the blog had no comments. But when I clicked on "0 Comments", I got a comment! The one the commenter had submitted. Blogger, 0 comments is not 1 comment. Either there is a comment there or there isn't. It can't be both. The worst part about it is that I have to go all around my blogs clicking on notifications that say "0 comments" because some may have comments. Blogger needs some truth-in-commenter-counting audits.
Sunday, June 04, 2006
Bubble Boom and Economic Collapse
Peak oil is coming. Some say as early as 2005 December 16, which has come and gone, and others as late as 2037. To me it looks like it's coming in 2008. Our present steady oil market will be replaced by a declining one, and shortages, high prices, and possibly wars will occur. Further, baby boomers like me (I will be 60 years old soon) will start retiring in droves around 2010; they will live on retirement incomes and drag the economy down. Grim outlook. How should I invest? I have run into two financial analysts who take societal trends into account: Stephen Leeb, who takes peak oil into account, and H.S. Dent, who takes generational theory into account. Up to now, Stephen Leeb (The Oil Factor) calls for alternating mostly safe investments (if oil increases 80%) with investing in energy, gold, and real estate (bubble busting soon?) (if oil decreases or increases less than 20%). H.S. Dent (The Roaring 2000s) says that incredible boom times have come (yeah, the dot-com boom and bust) and that we are going to get more big boom, until 2010 when the Mother of all Depressions with 15% unemployment will arrive and last 15 years.
What do they call for now? Stephen Leeb has published a new book, The Coming Economic Collapse, in which he says that peak oil will cause the world economy to go into a severe recession or depression, but he says one can still "get rich" from it. I don't see how. H.S. Dent has published The Next Great Bubble Boom, in which he says an incredible boom will occur until 2009, with the Dow hitting 40,000 (that's right - forty thousand) and then the roofs are coming to be coming down everywhere like roofs on houses in New Orleans during Katrina: The Mother of All Depressions. I have ordered both books.
I will read them when I get them this week, and will find out what they say. In the meantime, I will say that investing in near peak oil times has proved to be tricky. Oil does not go monolithically up. Instead, it soars in price, causing people to grouse, grumble and do without. This causes demand to decrease ("demand destruction"), causing oil to fall in price. In addition, the higher gasoline and other fuel prices cause a slowdown in the economy and higher inflation rates, and these things cause the stock market to fall, taking energy funds and gold with it. So for example, my energy and gold shares have done great so far this year, until recently when they fell, costing me 1% of my portfolio. Stephen Leeb reminds us that we should not buy and hold, but at no time did his negative oil indicator sound. In fact, his positive indicator has hit several times. So I have held. But I do know one thing. If the weather models predict a major hurricane hit on the Gulf Coast, I am pulling out of stocks altogether.
What do they call for now? Stephen Leeb has published a new book, The Coming Economic Collapse, in which he says that peak oil will cause the world economy to go into a severe recession or depression, but he says one can still "get rich" from it. I don't see how. H.S. Dent has published The Next Great Bubble Boom, in which he says an incredible boom will occur until 2009, with the Dow hitting 40,000 (that's right - forty thousand) and then the roofs are coming to be coming down everywhere like roofs on houses in New Orleans during Katrina: The Mother of All Depressions. I have ordered both books.
I will read them when I get them this week, and will find out what they say. In the meantime, I will say that investing in near peak oil times has proved to be tricky. Oil does not go monolithically up. Instead, it soars in price, causing people to grouse, grumble and do without. This causes demand to decrease ("demand destruction"), causing oil to fall in price. In addition, the higher gasoline and other fuel prices cause a slowdown in the economy and higher inflation rates, and these things cause the stock market to fall, taking energy funds and gold with it. So for example, my energy and gold shares have done great so far this year, until recently when they fell, costing me 1% of my portfolio. Stephen Leeb reminds us that we should not buy and hold, but at no time did his negative oil indicator sound. In fact, his positive indicator has hit several times. So I have held. But I do know one thing. If the weather models predict a major hurricane hit on the Gulf Coast, I am pulling out of stocks altogether.
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