Say goodbye to business as usual (Headlines from the Meltdown)

CARDIN COMMENTS:

Bye-bye to Business As Usual

If there’s a single theme that unites the past week’s crop of news, analysis, commentary, and prophetic utterances, it is that Business As Usual — a term that surely deserves the proper-noun caps by this point — is altogether dead.

Okay, that may be jumping the gun a bit. Presently BAU still in the dying stage. But for all practical purposes, as a model for what we inhabitants of planet earth can and should expect out of life from here to the end, Business As Usual is a freshly minted corpse.

By BAU, I refer to the fossil fuel-based, technologically advanced lifestyle that all of us, whether we hail from the “developed” or “developing” world, whether we’re members of any nation from the First World to the Third, from any and all cultural, ethnic, and socioeconomic backgrounds — the lifestyle, I say, that we all, each and every one of us, have come to think of either normal (if we’re from the First World “developed” nations) or desirable (if we’re from anywhere else). For the better part of a century, we have all either been shoring up and improving our hold on this way of life or else pining after and struggling to achieve it.

That’s too bad, since this way of life is a dead end.

I leave it to the assembled links and excerpts below, as well as all of the other relevant items you can find anywhere and everywhere these days, to establish the point. I’ll just end this week’s comment by noting the poignancy of the phenomenon identified by The Los Angeles Times in the final piece excerpted below. Titled “Raised in boom times, many Gen-X and Gen-Yers see their dreams go bust,” the article reports:

Raised amid a long stretch of financial bounty and weaned on video games, cellphones, iPods and weekends at the mall, many Generation X and Y members have barely seen a time when they couldn’t spend freely on the latest styles and gadgets.

….”This generation as a whole has not experienced any substantial kind of financial difficulty,” said Leslie Winefield, director of the Portland, Maine-based Institute for Financial Literacy. “It could be a defining moment for them.”

This relates directly to what I wrote a couple of weeks ago in “The end of the future as we knew it,” where I said,

We members of modern industrial civilization, especially we members of its current Western (especially American) variety, are no longer able to pretend that we’re going to live in a Star Trek-type utopia that emerges as the logical endpoint of the civilizational trajectory our collective lives have followed for the past several decades. Sorry, but it’s over. It’s just not going to happen. That future is almost certainly dead.

….And for some but probably not all of us, what may die in this process is not just a particular vision of the future — the one you see embodied in advertisements for cell phones, iPods, automobiles, restaurants, clothing, retail stores, television programs, computer platforms, tooth whitening products, exercise machines, financial institutions, pharmaceuticals, etc., etc., etc. — but the very idea that the future is real. Maybe, just maybe, some of us will experience an awakening to the present that does away once and for all with the fallacious notion that there’s really a future out there and a past behind us, and that we’re sandwiched between them and burdened with the weight of both.

It’s not all that surprising, really, that I was writing preemptively in tune with what the L.A. Times article identifies. After all, I’m a Gen-Xer myself, raised in the 1970s and 80s with VCRs and cable television (both of which my family first acquired when I was in junior high school) and come of age during the hyper-pseudo-prosperity of the Reagan years. That article from Los Angeles is talking about me and my generation.

And I, for one, can report that it’s not so bad having your basic economic, political, cultural, and environmental view of the world exposed as an illusion. I mean, sure, it’s shocking and disorienting at first, but when you come to see clearly that your inherited and preprogrammed view of the world was a big lie that was based on and supportive of a fundamentally empty, inhuman, and ecologically unsustainable set of assumptions, the prospect of Business As Usual going bye-bye becomes rather attractive.

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The Era of Cheap Food, Energy, and Credit at an End

The Daily Reckoning (U.K. edition), April 24

Eight years into a new millennium, it feels like the end of an era. The end of the eras of cheap credit, cheap food and cheap energy. Will they be back? Even Pollyanna might swallow hard before giving the nod to that one.

On the credit front, banks around the world may have lost somewhere in the region of a $1trn between them, so something has to give. Namely loans to customers. Whether they be first time buyers trying to get a foot on the housing ladder, a business needing finance or some private equity house putting together a leveraged buyout. Subprime has blown a large hole in the banks, and that means credit rationing for customers.

….As for the era of cheap food, its return looks unlikely unless there’s a catastrophic reversal of the long-term economic and demographic growth trends in place. Or agricultural production revives once again confounds global warming and the Malthusians. China will one day boast a middle class whose numbers will equal the entire population of the US. Will they want to subsist on a bowl of rice a day? No. They’ll be wanting hamburgers, pizza, steak and sushi… or the cultural equivalent thereof. The rich world will just have to learn to share with the nouveau riche world and bid more for it. Food rationing in the east. Food rationing in the west. Mighty US retailer Walmart is limiting the purchase of rice, reports Bloomberg, and another US retail giant, Costco, is considering a similar move. Elsewhere, Irish Banana importer Fyffes reports higher import costs are accelerating fruit price inflation.

And then there’s cheap energy… Well, maybe one day we’ll be saved by science, but the quest for an alternative to finite hydrocarbons remains a live one. And until that day comes we’ll continue to be pay close attention to the oil price, now retreated to $117 from its recent relentless march up to $120 high. And on the idea mentioned recently of what price oil has to hit before people start giving up on the car, a reader writes…

Oil at 200 bucks within the next five years? Quite probable, but down to 80-85 first as this spike runs out of steam. Overall when peak oil (maximum daily supply exceeded by minimum daily demand — not the stuff in the ground ) hits us then the price will go as high as it can ($400) before the global transportation infrastructure grinds to a halt and with it the global economic infrastructure. Global warming just doesn’t stand a chance because we won’t see 2100 as a civilised planet.”

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Say goodbye to ‘business as usual’

John Michael Greer, The Archdruid Report, April 23

Those of us who are watching the crisis of industrial society arrive on schedule take our omens where we find them, and one appeared yesterday morning in the unlikely form of an internet ad riding shotgun on a peak oil blog. The header was striking enough — “Oil Will Hit $100!” — or it would have been, except that one of the main benchmark grades of crude oil closed not far below $120 a barrel that evening. When the ads on your computer screen have already been left in the dust by the headlines, it’s fair to say, yesterday’s assumptions are in serious need of revision.

Meanwhile, rolling blackouts and food shortages are making life more difficult for people in many of the world’s poorer nations. Even in the United States, where instant availability of consumer products is generally considered an inalienable right, the first spot shortages of grain products have made ripples in the media. I won’t even get into the plunging real estate prices and financial implosions along the route of the slow-motion train wreck the global economy resembles so much these days. One way or another, it’s turning into a bad week for believers in an imminent return to what most people nowadays consider business as usual.

….What we most need to realize at this juncture is that the way things have been in the world’s industrial societies over the last century or so is in no way normal. It’s precisely equivalent to the new lifestyle adopted by winners of a lottery whose very modest income has suddenly leapt upward by $1 million a year or so. After a few years, the lottery winners might well become accustomed to the privileges and possessions that influx of wealth made possible, and children growing up in such a family might never realize that life could be any other way. The hard fact remains, though, that when the lottery money runs out, it runs out, and if no provision has been made for the future, the transition from a million dollars a year to the much more modest income available from an ordinary job can be very, very rough.

….[W]e’re running out of the energy resources that make it possible for every man, woman and child in America to dispose of the equivalent of $512,811 in labor every year. It’s as though the 30 billion invisible guest workers whose sweat powers the American economy are quitting their jobs one by one, and moving back home to the Paleozoic. When the process completes itself, and the long curve of depletion finally sinks low enough that it’s no longer economically worthwhile to extract the remaining dregs of fossil fuel from the ground, the amount of labor each of us will have at our disposal will be much, much less than it is today.

….The farmers of the future may well use intensive organic methods rather than the field agriculture of an earlier day, just as the craftspeople of the future may well spend some of their time crafting solar hot water heaters and shortwave radios. Still, this sort of handicraft economy is a mature and effective social technology, and far and away the most common way societies provide for the needs of their members. It is, one might say, business as usual.

* * * * *

The Peak Oil Crisis: The Case for 2008

Tom Whipple, Falls Church News-Press, April 24

In recent weeks there have been developments suggesting that the troubles associated with peak oil may be coming faster than many realize.

….If our stockpiles do not start to build more rapidly in the next month or two, then watch out, for in recent years the U.S. has slowly moved towards a just-in-time system for oil and products to lower inventory costs. Keep in mind that much of our “stockpile” is trapped in pipelines, sitting in partially-processed tanks at refineries, and aboard ships and barges where it is no use to the consumer. It was only a couple of years ago that we were hours away from shortages.

There are many forces at work in the world’s oil markets today. How they will all balance out over the rest of the year is impossible to tell. During the last few months, however, developments suggesting much higher prices and shortages have come to the fore as witnessed by the steadily increasing prices for oil and gasoline. Unless something comes along to reverse these forces in the next few months, we are likely to suffer very serious economic troubles before the year is out.

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Peter Schiff: The American standard of living is on the way down; it’s time to start stockpiling things

Interview with Peter Schiff on the Glenn Beck Program, March 17

SCHIFF: [Politicians] don’t want to admit they have been lying to us all these years. They want to create the U.S. economy as if we had a good economy. You know, sub crime wasn’t just a problem that happened in a healthy economy. The sub prime was the pin that predicted the bubble. The problem was we had a bubble economy in the first place. It wasn’t viable. You can’t have an economy where everybody runs deficits, where we just import things that we didn’t make and give the world an IOU. And we all live on a giant credit card. That can’t last. That can’t happen forever and, you know, it’s finally come to an end and so rather than trying to recreate that bubble, rather than going deeper into debt and sending everybody, you know, checks and hoping that there’s a stimulus package so they go out and spend more money, we need to address the fundamentals that got us into this mess. We need to return to a nation where people save money, not spend money. And where we actually produce stuff. But, you know, the transition back to a viable economy from a bubble economy cannot happen without a recession. It can’t happen without a lot of people losing money. But the Fed doesn’t want to fess up and politicians don’t want to admit the mess that we’re in. So they want to prepare that they can make it all better by printing money and they can’t.

GLENN: What does the average Joe do?

SCHIFF: Well, the average Joe has to understand the mess we’re in. Just like you had the heads of Bear Stearns on television last week saying, hey, there’s no problem, everything is great, these rumors are false and next thing you know the stock falls through the floor. Well, it’s the same thing with the entire U.S. economy. You get, you know, the big wigs, the Ben Bernankes and you get Henry Paulson going on all the Sunday morning shows ensuring us that the fundamentals are sound, that everything is great. They are just as fundamentally sound as Bear Stearns were. So people have to understand they are getting lied to by Wall Street, they are getting lied to by the government. Most of the financial shows out there that they think they are getting advice, they are not. They are getting Wall Street propaganda. So people have to take action. They have got to do what I wrote with my book, Crash Proof. People have to get rid of the U.S. dollar or get into other currencies like the Swiss franc or the Singapore dollar or the — they have got to buy gold.

GLENN: Peter, I’m talking about the average person. I’m talking about the guy who is bustin’ his butt, the family is living paycheck to paycheck.

SCHIFF: You want the average person who has no savings.

GLENN: I’m talking about, yeah, the average person in America that is just barely squeaking by. What do they do?

SCHIFF: You know, I don’t know. It’s going to be tough. I mean, maybe one thing they can do is stop making their mortgage payments because that’s a waste of money and maybe they can do something constructive with that money. I mean, certainly people can start stockpiling things.

GLENN: Wait, wait, wait, wait. Wait, wait, I can’t just have you say on national radio stop making your mortgage payments. What do you mean by that?

SCHIFF: You are throwing money down a rat hole. It’s going to be tough for people that don’t have any savings and they are working paycheck to paycheck. Certainly they can stockpile things. Things are going to get more expensive. So, you know, don’t wait to buy, you know, your food items, things are nonperishable, fill up your cupboards. You can buy things like razor blades and shaving cream, things you know you are going to need because they are going to get more expensive.

GLENN: I don’t think we also need to be recommending to people buying razor blades.

SCHIFF: Not to slit their wrists but just so they can shave. It’s going to get tough. What it means to be American, our whole standard of living is going to decline because of years of living beyond our means. It should be no surprise that when you live on debt and eventually when the bills come due and you can’t afford to pay them that you are going to have to reduce your standard of living. You know, a lot of Americans are going to have to find more viable forms of employment. There’s going to be a lot of Americans who are retired right now who a couple of years from now are going to be looking for work because the savings they have are just not going to be adequate to afford the higher cost of living that we’re all going to be stuck with.

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Load up the pantry, it’s time for Americans to start stockpiling food

Brett Arends, The Wall Street Journal, April 21

I don’t want to alarm anybody, but maybe it’s time for Americans to start stockpiling food. No, this is not a drill.

You’ve seen the TV footage of food riots in parts of the developing world. Yes, they’re a long way away from the U.S. But most foodstuffs operate in a global market. When the cost of wheat soars in Asia, it will do the same here.

Reality: Food prices are already rising here much faster than the returns you are likely to get from keeping your money in a bank or money-market fund. And there are very good reasons to believe prices on the shelves are about to start rising a lot faster.

“Load up the pantry,” says Manu Daftary, one of Wall Street’s top investors and the manager of the Quaker Strategic Growth mutual fund. “I think prices are going higher. People are too complacent. They think it isn’t going to happen here. But I don’t know how the food companies can absorb higher costs.”

….The latest data show cereal prices rising by more than 8% a year. Both flour and rice are up more than 13%. Milk, cheese, bananas and even peanut butter: They’re all up by more than 10%. Eggs have rocketed up 30% in a year. Ground beef prices are up 4.8% and chicken by 5.4%.

These are trends that have been in place for some time. And if you are hoping they will pass, here’s the bad news: They may actually accelerate.

….You can’t easily stock up on perishables like eggs or milk. But other products will keep. Among them: Dried pasta, rice, cereals, and cans of everything from tuna fish to fruit and vegetables. The kicker: You should also save money by buying them in bulk.

If this seems a stretch, ponder this: The emerging bull market in agricultural products is following in the footsteps of oil. A few years ago, many Americans hoped $2 gas was a temporary spike. Now it’s the rosy memory of a bygone age.

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Epic ‘noise’ in financial markets means what comes next is anybody’s guess

The Daily Reckoning, April 24

There is so much ‘noise’ in the financial system, it is hard to think. The papers are full of distractions and absurdities. You can find almost any point-of-view you want. Some argue that central banks are winning…that the stock market hasn’t gone down because it is getting ready to go up…and soon, the housing market will bottom out too.

“Fears of bank failures recede,” says a headline in the Financial Times today.

Others argue that the worst is still ahead…that the stock market will melt down…that housing prices will fall another 20%…and that the whole world will go into a monumental downturn.

“Housing slump may exceed Depression,” says a San Diego paper.

We take a middle view — that financial assets (including paper money), the financial industry, the credit cycle, the dollar-standard monetary system and the U.S.A. itself are in an historic decline…while emerging markets, gold and commodities are in a once-in-a-lifetime upswing.

We’ve heard about the panic that the doubling of wheat and rice prices is causing in China, India and other Asian countries. But now, reports the Washington Times, this panic is beginning to spill over to Americans. The article goes on to point out that bulk grocery stores, such as Costco, are having to put a limit on how much rice customers in certain states can buy. Americans have gotten a whiff of the high prices and fear that the shortages will spread from overseas, and have begun hoarding necessities such as oil, rice and flour.

….But for all those mommas hoping to get their babies a place at Goldman or Blackrock, we have a suggestion: aim for the legal department. Yesterday brought word from the Financial Times that “sub-prime produces a tsunami of lawsuits.” Our guess is that the financial industry has seen its best days. The wheels are falling off the deal machine. Bonuses are coming down. Employees are being laid off, cast off, spun off, and blown off in every department — save where the legal team does its work. The next few years are likely to produce further trimming in the financial industry ranks. But the in-house lawyers…and lawyers who work face them from outside firms…are bound to enjoy a boom. They’ve got to work out, renegotiate, defend, and deny thousands of claims. Their jobs are safe for years to come.

* * * * *

Things are seriously out of whack, and we’re on the verge of something major

James Howard Kunstler, Clusterfuck Nation, April 28

This has been a pretty remarkable month, actually, with all the problems of “The Long Emergency” accelerating impressively. Oil is now testing the $120 mark, the airline industry is imploding (largely over fuel costs), the housing scene has reached a degree of collapse unseen since the 1930s, food shortages have strayed out of the Third World and begun to affect Japan and the USA, bats are dying of a mysterious disease in the Northeast, and the Arctic sea ice is shrinking away to nothing.

We’re in a strange collective psychic bubble. We’d like to forget about all these troubling rumors of hardship and bad weather and just get on with the daily task of making a living and paying for stuff and enjoying our customary entertainments. The comforting ceremonies of everyday life seem to continue. The freeways are still full of cars. Nancy Grace comes on TV dependably at 8 p.m. and is there deploring the latest pervert arrest. The baseball season has ramped up and the teams are criss-crossing the nation in their chartered airplanes. The stock market is actually going up — what’s wrong with that?

But there’s an equally eerie vibe out there that things are seriously out-of-whack. We’re on the edge of something. We’re at the entrance of a dark passage where some of the ceremonies of daily life meet resistance. You go to the WalMart and five of your six credit cards are refused. Uh oh. It begins to dawn on you that you’re spending a quarter of your take-home pay filling up the gas-tank every week. There’s no dial tone when you pick up the telephone. How could all the supermarkets in town be out of rice? The local hospital just declared bankruptcy. The neighbors down the street auctioned off all their furniture in the driveway last week. Why does the cat pick up so many ticks these days?

Events are not through with us this year. They’ll keep moving where they will whether we believe in them or not. I’m hardly even convinced that it matters who wins the presidential race this year. It could end up being the world’s biggest booby prize.

* * * * *

Raised in boom times, many Gen-X and Gen-Yers see their dreams go bust

The Log Angeles Times, April 27

People everywhere are coping with rising credit card balances, falling home values and layoffs. But such worries are particularly jarring for a younger slice of the workforce that has known little but long-term financial prosperity and optimism.

After all, a large share of today’s 20- and 30-somethings — a nearly 80-million strong cohort — were in college or high school (and some in grade school) the last time the country experienced a severe financial jolt. Some can barely remember the mild recession of 2001, which was followed by an extraordinary boom that coincided with their entry into the workforce.

Raised amid a long stretch of financial bounty and weaned on video games, cellphones, iPods and weekends at the mall, many Generation X and Y members have barely seen a time when they couldn’t spend freely on the latest styles and gadgets.

In these tighter times, they’re watching their spending and they’re borrowing money from family members for the first time. To economize, some are moving in with friends and — the horror — even Mom and Dad.

And after years of being able to boast about promotions and climbing income, a growing number find themselves having to admit that they are out of a job. In the last year, the unemployment rate for 25- to 34-year-olds rose from 4.3% to 5.4% — nearly twice the increase for age groups above them.

“This generation as a whole has not experienced any substantial kind of financial difficulty,” said Leslie Winefield, director of the Portland, Maine-based Institute for Financial Literacy. “It could be a defining moment for them.”

About Matt Cardin

Teeming Brain founder and editor Matt Cardin is the author of DARK AWAKENINGS, DIVINATIONS OF THE DEEP, A COURSE IN DEMONIC CREATIVITY: A WRITER’S GUIDE TO THE INNER GENIUS, and the forthcoming TO ROUSE LEVIATHAN. He is also the editor of BORN TO FEAR: INTERVIEWS WITH THOMAS LIGOTTI and the academic encyclopedias MUMMIES AROUND THE WORLD, GHOSTS, SPIRITS, AND PSYCHICS: THE PARANORMAL FROM ALCHEMY TO ZOMBIES, and HORROR LITERATURE THROUGH HISTORY.

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