Is the Earth warming? The current theory is that all this CO2 emission into the atmosphere is causing the Earth to gradually warm. This is expressed frequently as the "hockey stick", showing a gradual cooling from about 1300 to maybe about 1750, and then after that, a slow warming until about 1980, then suddenly shooting upward, producing a graph that looks like a hockey stick. An example might be this one from the UK. People concerned about global warming are saying that unless we do something about this, irreversible adverse things will happen such as the expansion of deserts and the flooding of coastal cities. Indeed, these graphs show about a 1.3 degree F increase in global temperature in the past 100 years.
We have now a new player in the game, however. The Sun has just passed the supposed minimum of its sunspot cycle and should be rapidly increasing in sunspots, especially at moderately high latitudes. However, for the past year, the Sun has shown almost no spots. What's happened to it? This is not the first time this has happened. In the 1600s, the Sun had no spots for an entire human lifetime. During this span of around 100 years, global temperatures fell about 0.9 degrees F, causing the "Little Ice Age".
Are we entering a new Maunder minimum? If so, the increase in temperatures caused by global warming will slow down or stop. The figures I have cited seem to suggest that the Earth will warm only by 0.4 degrees per century, or 0.04 degree F per year. That would then suggest that instead of preventing global warming caused by carbon emissions, we need to keep sending carbon dioxide into the atmosphere or else we could go into an Ice Age. Further, we will not be able to do this, because oil and other fossil production will eventually (and soon) decline and stop, at which point the ice age will come.
But I see a contradiction in this. The problem is that these figures suggest that the decrease caused by lack of spots is a substantial fraction of the increase caused by human-induced global warming. This should be reflected in the hockey stick graph. Since sunspots usually (and in the past century has) followed an 11-year cycle, that should cause 11-year oscillations in the graph of global temperature. But the graphs you see on warming in the past 100 years show no such oscillations. That suggests instead that temperature changes caused by sunspot changes are a minuscule fraction of the changes caused by human-induced global warming. But clearly they aren't.
Another way of looking at it is to look at the "solar constant", the amount of energy striking the Earth on the average. This is 1365 watts per square meter, and it can vary from 1363 to 1367 watts per square meter. Since the Sun has no spots, I would suppose the 1363 holds now. That translates into a decline of 0.3 degree F over the next few years. This also shows that sunspots cause a substantial part of the change in earthly temperatures, but by not as much as the 0.9 degree change cited earlier. and it does not resolve the contradiction between this type of reasoning which suggests 11-year oscillations in the global temperature and the lack of evidence of such cycles.
Until we resolve the contradiction, we don't know which way the world is going to go. Much discussion on global warming is one-sided, with people arguing unequivocally for one side or the other, both the global warming zealots and the global warming deniers. We need to stop arguing and do some analysis. Will the real global change determiners please stand up?
Sunday, July 05, 2009
Monday, June 29, 2009
Michael Jackson and Peak Oil
Oil prices are rising, the economy may be starting to stagger again, and many countries are fast using up their oil supplies. So what does the nation, and the world do? It goes ape over Michael Jackson at his death. This says a lot about where we are and where we are headed. See my companion blog "Beyond Opinion" for further information on Michael Jackson, and for a good description of what he means for us, look at James Howard Kunstler's weekly column "The Man in the Mirror".
Thursday, May 14, 2009
What now?
It's been some time since I posted here. But a lot has happened. I thought for sure that oil would continue to rise. But it rose too fast. It included the rise that should be there due to increasing scarcity of oil, but it also included the investments of many people who felt that oil stocks would continue to go up. The combination caused the price to shoot to $147 a gallon and gasoline to over $4 a gallon. People need gasoline to do their business. When they could not get it, they cut back on other things, including the mortgage payment. This caused the foreclosures, which in turn endangered the banks and threatened the entire financial system. When this happened, a severe recession occurred, causing even oil to drop drastically in price, all the way down to $35 a barrel and $1.46 a gallon for gasoline, causing me to get a gasoline bill in the single digits. The price of oil has moved back up to $57 a barrel.
So what's next? That's hard to say. The Fourth Turning says that history comes in cycles or turnings. The stages of life are 22 years long, and so are the lengths of generations, so history also comes in periods of 22 years, called turnings, which come in First, Second, Third, and Fourth varieties. The first is a High in which high hopes for society are made. This is followed by the disillusionment of the Second Turning, when the babies of the First rebel against the previous Crisis parents, as in Jimi Hendrix, campus protests, and marijuana. The Second Turning also included a mini-depression and two major oil crises. This gave way to the decadent Third Turning, or unraveling, with the focus placed on the individual, as societal pillars wear away. This leads to a Crisis, the Fourth Turning. The last Fourth Turning was the Great Depression and World War II.
I believe now the Fourth Turning has started. It started on 2007 July 27, when the Dow plummeted 400 points because of mortgage foreclosures. It really gained momentum in late summer 2008, when many institutions teetered on the brink and had to be tarped out.
HS Dent is a stock market advisor who bases his decisions essentially on the Strauss and Howe Turning theory. He predicted a big boom in the late 1990s, and booms in the Double Zero years, and now he calls for the Great Depression of the 2010s. I read his column, and he is calling for the current deflationary conditions to continue. Keep your money in money market funds and it will stay the same while deflation occurs; hence your buying power increases.
However, the major crisis on the horizon is Peak Oil. Apparently the production of oil has peaked. It dropped drastically this year, from 88 million barrels/day to 82, but that was because of lack of demand. Still it forms a peak. It may not recover from this, because the oil fields are starting to run out. A stock advisor who is aware of peak oil is Stephen Leeb. He says the low price of oil is temporary. The economy will pick up again this year, and when it does, so will the price of oil. We are already seeing this. Oil goes up and down with the market. He is calling for this to continue, with first prosperity, then a runaway inflation.
So which is it? Will we have deflation or 100% inflation? It's hard to say. It is a vicious cycle:
1. When the economy improves, the demand for oil will go up.
2. So oil prices go up.
3. So demand for oil (and other things) goes down.
4. So oil prices go down.
5. So demand for oil goes up.
(go to step 2)
When oil goes up, its demand goes down, and then oil prices go down. Hence the second derivative of oil prices is roughly proportional to the negative of oil prices. If you write this down as a differential equation and solve it, you get a sine function, a sinusoid. Both demand and oil prices go up and down over and over again. What happened in 2007-9 maybe the first such oscillation.
So now I can't predict much what will happen, so that makes it hard to invest. I don't want to invest in stock funds, only to lose my money in a stock bust like in 2008, but I don't want to hold it in money market funds, have inflation go way high and lose the purchasing power of my money and become a pauper in a multi-million-dollar house. Leeb and Dent have their ideas as to what to do, and they are as different as night and day. Dent says invest in bonds, money market funds, and Treasurys. Leeb says invest in commodities, such as BHP Billiton stock. I will be watching the market carefully to see which way to go.
So what's next? That's hard to say. The Fourth Turning says that history comes in cycles or turnings. The stages of life are 22 years long, and so are the lengths of generations, so history also comes in periods of 22 years, called turnings, which come in First, Second, Third, and Fourth varieties. The first is a High in which high hopes for society are made. This is followed by the disillusionment of the Second Turning, when the babies of the First rebel against the previous Crisis parents, as in Jimi Hendrix, campus protests, and marijuana. The Second Turning also included a mini-depression and two major oil crises. This gave way to the decadent Third Turning, or unraveling, with the focus placed on the individual, as societal pillars wear away. This leads to a Crisis, the Fourth Turning. The last Fourth Turning was the Great Depression and World War II.
I believe now the Fourth Turning has started. It started on 2007 July 27, when the Dow plummeted 400 points because of mortgage foreclosures. It really gained momentum in late summer 2008, when many institutions teetered on the brink and had to be tarped out.
HS Dent is a stock market advisor who bases his decisions essentially on the Strauss and Howe Turning theory. He predicted a big boom in the late 1990s, and booms in the Double Zero years, and now he calls for the Great Depression of the 2010s. I read his column, and he is calling for the current deflationary conditions to continue. Keep your money in money market funds and it will stay the same while deflation occurs; hence your buying power increases.
However, the major crisis on the horizon is Peak Oil. Apparently the production of oil has peaked. It dropped drastically this year, from 88 million barrels/day to 82, but that was because of lack of demand. Still it forms a peak. It may not recover from this, because the oil fields are starting to run out. A stock advisor who is aware of peak oil is Stephen Leeb. He says the low price of oil is temporary. The economy will pick up again this year, and when it does, so will the price of oil. We are already seeing this. Oil goes up and down with the market. He is calling for this to continue, with first prosperity, then a runaway inflation.
So which is it? Will we have deflation or 100% inflation? It's hard to say. It is a vicious cycle:
1. When the economy improves, the demand for oil will go up.
2. So oil prices go up.
3. So demand for oil (and other things) goes down.
4. So oil prices go down.
5. So demand for oil goes up.
(go to step 2)
When oil goes up, its demand goes down, and then oil prices go down. Hence the second derivative of oil prices is roughly proportional to the negative of oil prices. If you write this down as a differential equation and solve it, you get a sine function, a sinusoid. Both demand and oil prices go up and down over and over again. What happened in 2007-9 maybe the first such oscillation.
So now I can't predict much what will happen, so that makes it hard to invest. I don't want to invest in stock funds, only to lose my money in a stock bust like in 2008, but I don't want to hold it in money market funds, have inflation go way high and lose the purchasing power of my money and become a pauper in a multi-million-dollar house. Leeb and Dent have their ideas as to what to do, and they are as different as night and day. Dent says invest in bonds, money market funds, and Treasurys. Leeb says invest in commodities, such as BHP Billiton stock. I will be watching the market carefully to see which way to go.
Thursday, October 23, 2008
A Tale of Two Tsunamis
One of the most misused words in the English language right now is tsunami. You almost never heard of the word until late 2004, when the most powerful tsunami of our lifetimes struck the Indian Ocean off Sumatra, killing 220,000 people in several nations. Ever since then, people have used, overused, and misused the word repeatedly to describe any kind of a great change or event. Everything's a tsunami nowadays. If instead, a half-mile-wide asteroid had struck Sumatra killing 220,000 people, everything now would be an asteroid strike. Especially galling is the use of the term to mean the coastal wave that floods and demolishes coastlines during a hurricane (or typhoon or cyclone). That's a storm surge, not a tsunami.
So here we have two people using the word tsunami to mean something, namely Jim Kunstler and Alan Greenspan. In his Clusterf_ck Nation Chronicles for this week, Mr. Kunstler describes this whole credit crisis as a tsunami. He said that what we are seeing now is the withdrawal phase of a tsunami, namely the deflationary recession that seems to be developing as a result of so many mortgages foreclosing and the resultant credit freeze. He compares it to the hundreds of feet revealed by the withdrawing waves of the ocean, describing the flotsam and shipwrecks that are revealed. Then he says that the tidal wave part is coming, namely runaway inflation, and that will wipe all the financial stuff clean. He says that all the money that the Fed put in will come sloshing back. I am not too sure that such an inflation will result, but it seems plausible to me. In any case, he used the word tsunami properly.
Not so Alan Greenspan. Today he said, "We are in the midst of a once-in-a century credit tsunami". He then says, that whatever regulatory changes are made, "they will pale in comparison to the change already evident in today's markets." But he does not show how the credit crisis is like a tsunami. Nowhere in his words do I hear him speak of a withdrawal phase and a tidal wave, and nowhere do I see any other valid reference to a tsunami, other than it is a big change. He is one of these people that use tsunami to explain anything and would have used "asteroid strike" instead if the great destructive event of late 2004 had been an asteroid strike instead of a tsunami.
So please use tsunami sparingly and properly, and beware of upcoming inflation that could destroy the economy in the next few years.
So here we have two people using the word tsunami to mean something, namely Jim Kunstler and Alan Greenspan. In his Clusterf_ck Nation Chronicles for this week, Mr. Kunstler describes this whole credit crisis as a tsunami. He said that what we are seeing now is the withdrawal phase of a tsunami, namely the deflationary recession that seems to be developing as a result of so many mortgages foreclosing and the resultant credit freeze. He compares it to the hundreds of feet revealed by the withdrawing waves of the ocean, describing the flotsam and shipwrecks that are revealed. Then he says that the tidal wave part is coming, namely runaway inflation, and that will wipe all the financial stuff clean. He says that all the money that the Fed put in will come sloshing back. I am not too sure that such an inflation will result, but it seems plausible to me. In any case, he used the word tsunami properly.
Not so Alan Greenspan. Today he said, "We are in the midst of a once-in-a century credit tsunami". He then says, that whatever regulatory changes are made, "they will pale in comparison to the change already evident in today's markets." But he does not show how the credit crisis is like a tsunami. Nowhere in his words do I hear him speak of a withdrawal phase and a tidal wave, and nowhere do I see any other valid reference to a tsunami, other than it is a big change. He is one of these people that use tsunami to explain anything and would have used "asteroid strike" instead if the great destructive event of late 2004 had been an asteroid strike instead of a tsunami.
So please use tsunami sparingly and properly, and beware of upcoming inflation that could destroy the economy in the next few years.
Friday, September 26, 2008
Will Football Bring Peak Oil to the Nation's Attention?
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.
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.
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.
Tuesday, July 29, 2008
The Five Biggest Problems in the World, Reconsidered
Among all of my blogs, the one I posted to Cliffhanger on 2006 July 26, entitled "The Five Biggest Problems in the World Today" has received more comments than any other blog I have made. Apparently people are interested in world problems, and I think it is good, because that means that there is some hope for the world after all. The problems I listed were:
1. Peak Oil
2. Global Warming
3. Retirement of Baby Boomers
4. Prevalence of Mainline Religions
5. Discrimination
The most recent call, from AndimsoNice, accused me of watching too much CNN. I certainly did not get Peak Oil from CNN. You still get little about this major problem in the news media, even though oil prices are $4 a gallon, the airlines are having major problems, and there are food and fuel shortages throughout the globe. However, the three problems AndimsoNice mentioned are indeed serious ones, so let's consider them. Here they are:
1. Clean drinking water
2. Genocide
3. Food shortages (not foot shortages!)
1. Clean drinking water. Indeed many places in the world are experiencing fresh water shortages. Georgia, a state in the US, is one of these. Some of the lakes have almost gone dry recently from the shortage of water there. Water is a renewable resource, but only so far. After the population grows above a certain point, it consumes more water than can be made available by Nature, so then it becomes non-renewable. Also, water is non-renewable in places where it is scarce; in other words, the deserts. Cities such as Almaty, Phoenix, Timbuktu, and Urumqi are going to have serious problems in the future because hardly any water falls from the sky at these places. They have to rely on rivers or aquifers, which will dry up if population grows rapidly, as it is doing in Phoenix, and perhaps in Urumqi. Global warming caused by fossil fuel consumption is creating more desert and exacerbating the problem. I call this problem the Water Limit, rather than Peak Water, because we don't produce water; there can be no peak production. Another problem lies behind both Peak Oil and the Water Limit, and that is population growth. Ultimately, the human population will have to stop growing.
This problem is a serious one, and I really did not list it, but it does relate to Peak Oil and Global Warming.
2. Genocide. Why do certain people or tyrannical rulers want to kill entire populations or ethnic groups? I think it is because of this "we vs they" mentality. If people are dissatisfied with life, a tyrant can seize on this dissatisfaction and whip up hatred against another people, as Tutsis against Hutus or Germans against Jews. Religion makes the problem worse, as if people were houses, God would be an unoccupied property, and sooner or later, this tyrant will occupy that house and become God. Belief in one self and in those around you may be the best way to help combat genocide. Certainly if genocide exists, it needs to be wiped out, either by the victimized people or by others; for example, our troops should not be in Iraq and Afghanistan but in Myanmar and Sudan.
In any case, Peak Oil will make this problem worse, as people will say that we are running out of oil, so make sure we get it and not those barbarians over there. This problem is related to both Peak Oil and Discrimination, since committing genocide against a people is an extreme case of discriminating against them.
3. Food shortages. Population growth is strongly behind this one. If there are more mouths to feed, more land is needed to grow the food for them. Peak Oil is also strongly related to this problem. In fact, this may be one of the worst effects of Peak Oil. Food is grown for the world today in such bountiful places as Iowa and Brazil, but to grow this food requires oil to transport the food to where it is needed, to operate the farm machinery to grow the food, to make the fertilizer for the crop and so forth. About 90% of the cost of food nowadays is oil. And so food shortages will appear and get worse as oil production declines.
This problem is so related to Peak Oil that I include it as part of this problem.
So now I rank the problems of the world as follows:
1. Peak oil and Food Limits.
2. Global Climate Change and Water Problems
3. Retirement of Baby Boomers
4. Prevalence of mainline religions
5. Discrimination and genocide
1. Peak Oil
2. Global Warming
3. Retirement of Baby Boomers
4. Prevalence of Mainline Religions
5. Discrimination
The most recent call, from AndimsoNice, accused me of watching too much CNN. I certainly did not get Peak Oil from CNN. You still get little about this major problem in the news media, even though oil prices are $4 a gallon, the airlines are having major problems, and there are food and fuel shortages throughout the globe. However, the three problems AndimsoNice mentioned are indeed serious ones, so let's consider them. Here they are:
1. Clean drinking water
2. Genocide
3. Food shortages (not foot shortages!)
1. Clean drinking water. Indeed many places in the world are experiencing fresh water shortages. Georgia, a state in the US, is one of these. Some of the lakes have almost gone dry recently from the shortage of water there. Water is a renewable resource, but only so far. After the population grows above a certain point, it consumes more water than can be made available by Nature, so then it becomes non-renewable. Also, water is non-renewable in places where it is scarce; in other words, the deserts. Cities such as Almaty, Phoenix, Timbuktu, and Urumqi are going to have serious problems in the future because hardly any water falls from the sky at these places. They have to rely on rivers or aquifers, which will dry up if population grows rapidly, as it is doing in Phoenix, and perhaps in Urumqi. Global warming caused by fossil fuel consumption is creating more desert and exacerbating the problem. I call this problem the Water Limit, rather than Peak Water, because we don't produce water; there can be no peak production. Another problem lies behind both Peak Oil and the Water Limit, and that is population growth. Ultimately, the human population will have to stop growing.
This problem is a serious one, and I really did not list it, but it does relate to Peak Oil and Global Warming.
2. Genocide. Why do certain people or tyrannical rulers want to kill entire populations or ethnic groups? I think it is because of this "we vs they" mentality. If people are dissatisfied with life, a tyrant can seize on this dissatisfaction and whip up hatred against another people, as Tutsis against Hutus or Germans against Jews. Religion makes the problem worse, as if people were houses, God would be an unoccupied property, and sooner or later, this tyrant will occupy that house and become God. Belief in one self and in those around you may be the best way to help combat genocide. Certainly if genocide exists, it needs to be wiped out, either by the victimized people or by others; for example, our troops should not be in Iraq and Afghanistan but in Myanmar and Sudan.
In any case, Peak Oil will make this problem worse, as people will say that we are running out of oil, so make sure we get it and not those barbarians over there. This problem is related to both Peak Oil and Discrimination, since committing genocide against a people is an extreme case of discriminating against them.
3. Food shortages. Population growth is strongly behind this one. If there are more mouths to feed, more land is needed to grow the food for them. Peak Oil is also strongly related to this problem. In fact, this may be one of the worst effects of Peak Oil. Food is grown for the world today in such bountiful places as Iowa and Brazil, but to grow this food requires oil to transport the food to where it is needed, to operate the farm machinery to grow the food, to make the fertilizer for the crop and so forth. About 90% of the cost of food nowadays is oil. And so food shortages will appear and get worse as oil production declines.
This problem is so related to Peak Oil that I include it as part of this problem.
So now I rank the problems of the world as follows:
1. Peak oil and Food Limits.
2. Global Climate Change and Water Problems
3. Retirement of Baby Boomers
4. Prevalence of mainline religions
5. Discrimination and genocide
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