We have known for many years now that not only is oil a finite resource, but that production of it will peak sometime in the Ut-Oh (00) Decade, after which supplies will decline while demand is still rising, causing major adverse consequences. But no one ever seems to talk about it. All the politicians, including Senator Obama tonight, speak of energy independence from rogue nations, and expect too much out of other sources of energy. Everything else, including Iraq, the nuclear desires of Iran, Israel, health care, global warming, mountain removal, and the Presidential election campaign seem to be more important, at least in the eyes of the media.
The latest financial crisis is an example of this. All kinds of attention has been applied to the crisis, and people have warned that another Great Depression will result if the Great Bailout Package of 2008 is not passed quickly. That may very well be true, since I see firms, such as Bear Stearns, AIG, Washington Mutual, Lehman Brothers and so forth fail left and right. But we have been through this in the last Great Depression, and we know what the solution is, and it will be applied.
The whole thing is masking the real danger to our future: Peak Oil. What happens when the oil and gasoline run out?
We may find out this weekend. There is an event coming up which will bring attention to the media and the nation as a whole. Hurricanes Gustav and Ike have disrupted oil and gasoline production at a time when gasoline supplies were low and when there is almost no slack in the system. Major shortages have now appeared in the Southeast, including many of the cities that I have visited in recent years to go to conventions: Atlanta, Knoxville, Charlotte, and Nashville. Nashville is said to have only 15% of its gasoline stations open. Still, this is regional, and gasoline will come back.
Enter Football. This is the sport which takes even more public attention than Iraq, global warming, or the election. It seems that global warming and Iraq take priority over Peak Oil, and further, that Football takes priority over these. What happens when the Georgia Bulldogs meet the Crimson Tide of Alabama is far more important than how the financial crisis is resolved and certainly more than Peak Oil.
Well this weekend, Peak Oil may effectively trump Football. There is a gasoline shortage in Athens, Georgia, home of the Bulldogs. What happens when zillions of fans zero in on Athens to watch this Great Game of the Year? It will run the stations out of gasoline and people will not be able to go to work on Monday, that's what. And that is when the nation will find out about Peak Oil. A petroleum executive has recommended cancellation of the game; that in itself would be a significant event, but not one to bring attention to the American public. Besides, Governor Sonny "Chicken" Perdue has called the idea "ridiculous". We will see what ridiculous is when the following events happen.
Hordes of fans from Georgia, Alabama and other states descend upon tiny Athens to watch the game, guzzling gasoline at pumps along the way. The fans run the pumps out of gasoline. Many fans can't finish the trip. When the game is over, everyone tries to go home, but can't because the pumps are all dry. Thousands of cars run out of gasoline on the highways, producing scenes reminiscent of the end of Persian Gulf War I or out of Deep Impact, the movie. The authorities can't get these cars out of the way, because they don't have the gasoline to do it with. In fact, the police can't even do their normal patrols, and so unruly crowds develop and loot and pillage Athens and the surrounding area. When Monday morning comes, thousands of residents can't go to their jobs or do their business; Athens shuts down. A week later, when food trucks can't get through, food shortages develop and a possible famine may occur.
I am not saying these events will necessarily occur. But if even only some of them occur, maybe the newscasters and media harpies will pause on the financial crisis a bit and take a look at what is happening in Athens, Georgia. And maybe then the entire nation will realize what Peak Oil is and what it means about its future.
Friday, September 26, 2008
Sunday, September 21, 2008
Ill-Conceived Taxpayer Revolt
I now hear from CNN that taxpayers are revolting against the bailout plan. They object that why should they pay for the mistakes of all these fund managers and banks? I can see to some extent their anger. We pay the government taxes, then the government gives this money over to mismanaged companies. One person says, "The government does not have $700 billion dollars. WE have $700 billion, and it is being taken from us." Another one says, "Stop blogging, posting comments, and call your congressman."
This now reminds me of the American Revolution. That Fourth Turning was started by anger by the people over taxes, although the rowdy devil-may-care attitude among the youth of that era was a contributer. I do not think the Fourth Turning that is now occurring will be like the American Revolution.
As I said in my previous blog, it won't be like the Great Depression either. This is because people will do it a different way this time, and there are protections now that weren't there in 1929. Instead of standing aside, preaching about prosperity around the corner, and letting the free market freely take down all the stocks and all the banks along with it, we are now bailing out all these companies and holding the line on the market threat. I believe Mr. Paulson says if we don't approve of this proposed $700 billion bailout package, the result will be disaster. I believe he is correct. In fact, if we don't pass this, a repeat of the 1930s Depression will occur. These people that are complaining about the government robbing them with these deals are probably not old enough to know what this Depression was all about. 62 is a pretty old age, but if you are 62 years old, you have never experienced what this Depression was like, and neither has anyone younger. We forget because those who were around then are few and not speaking up as loudly as they were.
So now is not the time to be self-righteous about how the Government is robbing you of money. We need to support the current efforts at trying to keep things afloat. Congress needs to pass this emergency measure! If they don't, the Dow will plummet 1000 points in one day, and you can prepare to see much of your life savings disappear. Of course, those who run the companies need to be thrown out, but let's keep the companies afloat so we don't have another 1930s Depression.
Write your Congressman, and tell him you support the plan.
This now reminds me of the American Revolution. That Fourth Turning was started by anger by the people over taxes, although the rowdy devil-may-care attitude among the youth of that era was a contributer. I do not think the Fourth Turning that is now occurring will be like the American Revolution.
As I said in my previous blog, it won't be like the Great Depression either. This is because people will do it a different way this time, and there are protections now that weren't there in 1929. Instead of standing aside, preaching about prosperity around the corner, and letting the free market freely take down all the stocks and all the banks along with it, we are now bailing out all these companies and holding the line on the market threat. I believe Mr. Paulson says if we don't approve of this proposed $700 billion bailout package, the result will be disaster. I believe he is correct. In fact, if we don't pass this, a repeat of the 1930s Depression will occur. These people that are complaining about the government robbing them with these deals are probably not old enough to know what this Depression was all about. 62 is a pretty old age, but if you are 62 years old, you have never experienced what this Depression was like, and neither has anyone younger. We forget because those who were around then are few and not speaking up as loudly as they were.
So now is not the time to be self-righteous about how the Government is robbing you of money. We need to support the current efforts at trying to keep things afloat. Congress needs to pass this emergency measure! If they don't, the Dow will plummet 1000 points in one day, and you can prepare to see much of your life savings disappear. Of course, those who run the companies need to be thrown out, but let's keep the companies afloat so we don't have another 1930s Depression.
Write your Congressman, and tell him you support the plan.
Is This the Fourth Turning?
There is a theory of history by Neil Howe and the late William Strauss that says that since there are four periods of a person's life (childhood, young adulthood, midlife, and elderhood) and four types of generations (Prophet [Boomer], Nomad [Gen X], Hero [Greatest Generation, Millennials] and Adaptive [Silent]), there are four types of periods of history, called the First, Second, Third, and Fourth Turning. The First Turning is a societal high, wherein everything works well and people supported the community. The Second Turning is a time of social turmoil, wherein the Prophet generation challenges the precepts of those in power, causing social changes (for example, civil rights legislation). The Third Turning results from this and constitutes a period where the individual is prominent and society falls apart. The Fourth Turning is one of crisis when people restore the order and one way of life dies and another is born.
The latest First Turning was the 1950s and early 1960s, culminating in John F. Kennedy's Camelot. The latest Second Turning was the youth rebellion of the 1960s and 1970s, when youth protested the Vietnam War and how the Greatest Generation was handling things. It also was a period of financial turmoil, when two gas crises occurred and a period of lagging stock prices prevailed. The latest Third Turning was the Culture Wars of the 1980s, 1990s, and early 2000s, when people did their own things, building credit card debt, obtaining subprime mortgages, and driving gas-hungry SUVs. The question is when the next Fourth Turning will occur.
Such a turning starts with a catalyst that causes a crisis. The 9/11 attacks were not such a catalyst. It was instead a heralding event, similar to the Boston Massacre, the Dred Scott Decision, and the sinking of the Lusitania. Katrina was not such a catalyst. But the present financial crisis may be such a catalyst. It started on 2007 February 27, with the collapse of the mortgage market, leading to a buyout of Countrywide Financial. The crisis simmered for a while, causing a downturn which caused oil prices to slide back. It then broke out in full force in the week of September 15-19 with the bankruptcy of Lehman Brothers, the buyout of Merrill Lynch, and the government rescue of AIG.
This is somewhat surprising. I thought for sure that peak oil would be the catalyst, but it's possible the mortgage crisis was caused by peak oil. In any case, it appears to have come. The mortgages were the "spark" (Strauss and Howe) that turned into a Crisis. They say that it will be a long time with us, another sign that this is it.
If this is the Fourth Turning, then how will it proceed? The last one started with a Great Depression. That was caused by the laissez-faire, let the market resolve it attitude of the Republicans of that time, including Herbert Hoover. Once FD Roosevelt got into power, he used the powers of the government to turn this country around. We all have knowledge of this Depression now, although you have to be at least 75 years old to have felt the effect of it. In this day and age, if you are at the retirement age of 62, you have absolutely no experience of what things were like during the Great Depression.
However, knowledge of the Depression is affecting events, and my feeling is that this will not be a Great Depression, at least not in the way that the 1930s was. That is why all the bailouts. Every time something that will crash the economy and cause a big Depression threatens (e.g., the failure of AIG), the Government comes in and bails it out. This is one way of handling it. Will it work?
The problem is that for the past few years, with reckless Third Turning abandon, we have been living off money that does not exist; for example, high credit card debts and unpaid mortgages. This present crisis is now people and the system recognizing this fact. The problem is how to fairly distribute the non-money so that it does not cause trouble. Repeated government bailouts will spread it out among all of us by increasing the federal deficit. This will be made up by higher taxes, reduced benefits, or more likely by the Government simply printing more money. This means inflation is headed up, meaning that a serious hyperinflation may be headed our way. The "Mother of all Depressions" may resemble Germany in 1923 more than it does the US in 1932.
In the near future, this crisis will gradually get resolved, and another boom may occur next year. People will feel better about themselves and the market, and once again prosperity will occur. That's when Peak Oil will confront us. The new prosperity will undoubtedly increase oil prices, and may cause them to increase dramatically. Sooner or later we will have to deal with the problem of declining oil supplies. We will need to conserve in the years ahead, even if we get all these alternative sources to work.
The latest First Turning was the 1950s and early 1960s, culminating in John F. Kennedy's Camelot. The latest Second Turning was the youth rebellion of the 1960s and 1970s, when youth protested the Vietnam War and how the Greatest Generation was handling things. It also was a period of financial turmoil, when two gas crises occurred and a period of lagging stock prices prevailed. The latest Third Turning was the Culture Wars of the 1980s, 1990s, and early 2000s, when people did their own things, building credit card debt, obtaining subprime mortgages, and driving gas-hungry SUVs. The question is when the next Fourth Turning will occur.
Such a turning starts with a catalyst that causes a crisis. The 9/11 attacks were not such a catalyst. It was instead a heralding event, similar to the Boston Massacre, the Dred Scott Decision, and the sinking of the Lusitania. Katrina was not such a catalyst. But the present financial crisis may be such a catalyst. It started on 2007 February 27, with the collapse of the mortgage market, leading to a buyout of Countrywide Financial. The crisis simmered for a while, causing a downturn which caused oil prices to slide back. It then broke out in full force in the week of September 15-19 with the bankruptcy of Lehman Brothers, the buyout of Merrill Lynch, and the government rescue of AIG.
This is somewhat surprising. I thought for sure that peak oil would be the catalyst, but it's possible the mortgage crisis was caused by peak oil. In any case, it appears to have come. The mortgages were the "spark" (Strauss and Howe) that turned into a Crisis. They say that it will be a long time with us, another sign that this is it.
If this is the Fourth Turning, then how will it proceed? The last one started with a Great Depression. That was caused by the laissez-faire, let the market resolve it attitude of the Republicans of that time, including Herbert Hoover. Once FD Roosevelt got into power, he used the powers of the government to turn this country around. We all have knowledge of this Depression now, although you have to be at least 75 years old to have felt the effect of it. In this day and age, if you are at the retirement age of 62, you have absolutely no experience of what things were like during the Great Depression.
However, knowledge of the Depression is affecting events, and my feeling is that this will not be a Great Depression, at least not in the way that the 1930s was. That is why all the bailouts. Every time something that will crash the economy and cause a big Depression threatens (e.g., the failure of AIG), the Government comes in and bails it out. This is one way of handling it. Will it work?
The problem is that for the past few years, with reckless Third Turning abandon, we have been living off money that does not exist; for example, high credit card debts and unpaid mortgages. This present crisis is now people and the system recognizing this fact. The problem is how to fairly distribute the non-money so that it does not cause trouble. Repeated government bailouts will spread it out among all of us by increasing the federal deficit. This will be made up by higher taxes, reduced benefits, or more likely by the Government simply printing more money. This means inflation is headed up, meaning that a serious hyperinflation may be headed our way. The "Mother of all Depressions" may resemble Germany in 1923 more than it does the US in 1932.
In the near future, this crisis will gradually get resolved, and another boom may occur next year. People will feel better about themselves and the market, and once again prosperity will occur. That's when Peak Oil will confront us. The new prosperity will undoubtedly increase oil prices, and may cause them to increase dramatically. Sooner or later we will have to deal with the problem of declining oil supplies. We will need to conserve in the years ahead, even if we get all these alternative sources to work.
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