The Clusterfuck Nation Chronicle
Commentary on the Flux of Events

by Jim Kunstler   


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April 3, 2006
Americans ought to regard the word "growth" with trepidation. When invoked by presidents and economists, it is meant to imply ideas like "more" or "better." It's a habit of thinking left over from the exuberant phase of the industrial age, when there was always more of everything to get.  Nowadays, though, as we enter terminal years of cheap energy, the word "growth" invokes a new set ideas.
     For instance, "impossible." With the price of oil edging toward $70-a-barrel now, and likely to flirt with $100 by the end of the year, the effect will be higher costs for virtually all products and services, and tremendous stress on every socioeconomic organism from the family to government at all levels to the Ford Motor Car Corporation. The only "growth" we might expect under these conditions is the growth in our exertions to stay where we are, and the truth is that many of the weak will simply fall behind.
     Another idea that "growth" might invoke would be a fear of an unstoppable rising population competing for scarcer resources: incomes, energy, food, shelter. Surely this is one of the specters behind the illegal immigration issue, a dawning recognition that the American cornucopia is becoming an emptier basket, with fewer fruits, less energy, and not many gold nuggets left in it.
     For those of us positioned against the suburban juggernaut, "growth" invokes the destruction of more landscape, the conversion of pastures and croplands into McHousing subdivisions, with a long menu of additional liabilities -- not least being the huge investment in a living arrangement with no future. One would think the "homebuilders" could see this coming -- with oil edging toward $70 -- but the truth is that their companies are programmed for only one kind of behavior -- to keep building 3000 square foot McHouses 27 miles outside Dallas, Minneapolis, Atlanta, Denver, et cetera. Since they won't change the programming, then they will continue their destructive behavior until circumstances make it impossible for them to continue -- when the housing bubble blows up in their faces -- and then the companies will just die.
     The cheap energy era led us into a climax of surpluses, and these surpluses represented the general "more-ness" and "better-ness" of late industrial society. In a post cheap energy world, accumulated surpluses will be meager to nonexistent. There is bound to be a scramble for whatever is left. Geopolitically, this means a contest for the world's remaining oil, which tends to be concentrated in just a few places. In each nation, there is likely to be a parallel scramble for whatever fruits, gold nuggets, and therms are still to be had, throwing off a lot of red-hot political sparks that will burn people. A lot of the remaining energy worldwide will be devoted to these scrambles, and thus essentially wasted.
     There are many ways of viewing this "growth" predicament, and some strategies we can turn to in the face of it. An obvious one is to change our behavior, to stop acting as though our destructive, terminal, and futile activities were beneficial or indispensable . For instance, we could yield to the reality that the age of mass motoring will have to end. Instead of desperately seeking "alternative fuels" to run our 100 million cars, we could make an effort to restore our railroads. Instead of a million McHousing starts out in the meadows and cornfields, we could repair our existing towns and cities. There is no reason why they cannot be rewarding, beautiful places. There may well be greater benefit in walking more and driving less. The well-off Americans who have visited Europe over the past several decades invariably notice this. Anyway, we are going to need every meadow, cornfield, and pasture that we have, because as cheap energy wanes, we are going to be desperate to grow enough food to feed ourselves -- another reason to be wary of alt.fuel fantasies based on growing crops dedicated to gasoline substitutes.
     One esteemed (and extremely shy) reader refers to the process of moving from a high entropy society to a sustainable one as "autonomic devolution."
     "Positive feedback driven social systems breed self-amplifying trends which ultimately self-destabilize," he writes. "Autonomic devolution societies consist of localized islands of self-sufficiency."
      I believe
we are inevitably heading to that destination. The only thing I wonder about is how violent and destructive the process will have to be.

March 27, 2006
       This is how deluded the American public is now: Various polls are showing that the war in Iraq has reached new lows of unpopularity. The dumb bunnies in the news media are implying that when the numbers get low enough, we will pull our troops out and go home.
      This is not going to happen. Our inordinate hubris has led us to believe that this conflict is optional.
      Notice, too, that the war-weary public has done, and continues to do, nothing to change its habits of profligate oil use which have driven us to project our military into the Middle East.
We have not even begun a discussion of what we might do. We just expect to keep running American society exactly the way it has been set up to run -- as a nonstop demolition derby, with hamburgers and fries between laps around the freeway.
      At the highest level of public discourse, the cluelessness is shocking. The New York Times Sunday Book Review ran a front-page piece yesterday on Francis Fukuyama's latest salvo, America at the Crossroads, which is largely about our Middle East war policy, without once using the word "oil." The reviewer, Paul Berman, is not a dummy, but he has evidently flown up the national rectum with the rest of the people who are paid to think in our society. To these guys, the whole issue is an effete argument over strategic fashions such as "realistic Wilsonianism."
       The plain truth is, if anything happens to upset the current management and allocation system of the the global oil markets, the industrial economies of the world will collapse, and America's will collapse hardest and worst because of the way we have arranged things for ourselves. The global oil markets currently revolve around Middle East oil production. If the region is overcome by instability, than it's simply GAME OVER.
       You can spin out any number of strategic scenarios about what is liable to happen in the Middle East from here on, with or without America trying to run a police station there, and none of them are good. They range from Iran gaining control of twenty percent of the world's remaining oil, to a free-for-all world war joined by virtually all the nations capable of projecting military power into the region. W
e'd be stuck with the consequences because we are otherwise too cowardly, lazy, and greedy to face our situation at home -- which is simply that we cannot keep running a drive-in utopia. We have to make other arrangements and we have to make them now.
       Our denial runs deep and hard. Even the educated minority (including the tech wonks) believe that we can run the freeways and the WalMarts on alternative fuels. They flatter themselves listening to the morning yammer about "renewables" on NPR as they make the daily commute from, say, the suburban asteroid belts of Northern Virginia into Washington, DC.
They bethink themselves progressive, cutting edge, morally superior in their Priuses.
      The major media have done a huge disservice to the public in supporting these delusions. CBS's 60 Minutes show did it twice this year already, broadcasting one segment that flat-out stated the Alberta tar sands would solve all our problems, and then a second segment a few weeks later stating that coal liquefaction would keep everything humming indefinitely. CNN ran a prime-time Sunday show the week before last saying that we could keep running all our cars on ethanol forever. The damage that this disinformation might do is really out of this world.
      What can we do? Oil man Jeffrey Brown of Dallas has made the interesting suggestion that we replace some or all of the national income tax with a substantial national gasoline tax. A congressional debate over that would be worth hearing. It would be a good start in concentrating our minds in the right direction: that is, toward the problems we have created for ourselves at home. There are many other things we could do also, from rebuilding our railroads to removing incentives for suburban development. They would all require major shifts in our behavior. We can either begin them voluntarily or wait for events to compel us to live differently. In the absence of that, our presence in Iraq is not optional.

March 20, 2006
      An acquaintance told me a weird story yesterday. Let's call him "E." He runs an Internet consulting company here in Saratoga Springs. It employs about twenty-five people in a downtown building E put up a few years ago.
       Last month a freak windstorm ripped through here and took down the electric power for three days. E lost communication with the payroll service (a separate company) that issues his employee's salaries. The storm happened in the middle of the day, Friday, payday.
      The power came back on Sunday night, and on Monday two of E's employees each asked for private meetings with the boss. Because of the storm, they said, the payroll company had failed to make electronic salary deposits in their checking accounts. They were concerned because they were late on their mortgage payments and without the past week's electronic paycheck, they couldn't pay their mortgages.
     E told me that these were "high-level employees" with substantial salaries who were both living in "very high-end homes," which around here would mean around a half-million dollars (and I know that in some parts of the US, like Washington, DC, or San Francisco, a half-million barely gets you a "pre-owned" raised ranch). He said he was shocked to discover that his executives were living from paycheck to paycheck, in houses that by normal criteria (i.e. pre-bubble standards) they probably couldn't afford.
     "What if something happened to me?" E said. "What if I was hit by a bus? That would be it for the company. That would be the end of their paychecks, and what if they didn't find another job almost immediately? I don't want to interfere in their personal affairs, but I can't help feeling that I really need to talk to them about this."
      Meanwhile, our cretinous, pandering local newspaper, the Saratogian, published a special real estate section on Sunday under the banner "Progress 2006." The headline under the banner said, "If You Build It They Will Come," and the accompanying photo showed a rank of beige McHouses in a new subdivision. The sub-head said "Growth is the name of the game across the county."
      Spring here in the North Country brings with it a ripe expectation that the winter real estate doldrums will soon yield to raptures of zippy sales. Of course this is based on the assumption that the year ahead will be like the recent years just past, only better! The sense of momentum in the real estate markets is reinforced by the fact that so much stuff has worked through the arduous permitting process and is just now coming up for sale, with even more stuff behind it moving through the cloacal pipeline, so to speak -- so therefore the buyers will automatically appear drooling into their checkbooks.
     I don't think so. I think that what we are getting here is stupendously delusional behavior. The ebullience in the newspaper only tells me how much unexpressed subconscious terror lurks just below the surface of wished-for "normality." For one thing, anybody who walks around this town can hardly fail to notice how the realtor's signs are accumulating in the front yards. Nothing's moving. Outside of town, in the suburban asteroid belts that only ten years ago were cornfields and cow pastures, there's a much more lavish supply of new houses. I detect an odor of bloodshed.
     This has been a hot market for a while, because Saratoga is an historic "main street" town in pretty good condition with a high level of cultural amenity, close to the gigantic Adirondack Park. The three old cities nearby which comprise the employment centers of the Capital District -- Albany, Schenectady, and Troy -- are in such a state of squalid decrepitude that practically anyone gainfully employed has fled shrieking lately, and Saratoga has attracted many willing to tolerate a 30-plus mile commute.
      For years following the two oil crises of the 1970s, the real estate market in Saratoga fell stone dead because the fear of rising gasoline prices and long lines at the filling stations remained so vivid. We're headed back to scary gasoline prices again, only this time it will not be a temporary crisis. And this time, there will be a huge surplus of unsold houses. There will also be a substantial number of house owners getting in trouble with their mortgage payments, and one way or another their houses may end up adding to the supply of available houses. There is also very likely to be trouble in the financial markets, with dark implications for the value of the US dollar, for the movement of interest rates, and for the availability of further credit.
      It makes my head hurt to imagine the coming carnage on the real estate scene here. Nation-wide, the latest figures are not reassuring. Even hot markets cool off when evil economic winds blow. According to the California Association of Realtors, sales of existing, single-family detached homes were down 24.1 percent, the highest year-on-year decline since December 1990 when sales dropped 25.2 percent. The National Association of Realtors reports Massachusetts home sales are down 21 percent and listings up 41 percent. In Florida existing home sales are down 19 percent. In Alabama existing home sales down 21 percent and listings up 1
7 percent. Pennsylvania sales down 17 percent. Minnesota sales down 7 percent and inventory Up 35 percent.
     Meanwhile housing "starts" (under construction) jumped 14.5 percent in January of 2006. Permit approvals were up 6.8 percent. That old dawg, momentum.
     House "affordability" reached a 14-year low according the US Department of Commerce. Foreclosures were up 27 percent so far in 2006.
     You wonder, finally, how many current homeowners will lose their houses? How many developers will lose the shirts off their backs? How many banks will get stuck with foreclosed property? And how will the United States economy function without a phony-balony real estate bubble market driving it?

March 13, 2006
     Politics is the way we work out our collective national psychology -- if you believe in such a thing (and I do). American politics have fallen into a gothic family melodrama, and the theme is the same one being played out on the micro level all over the country: failed parenting.
     The Republicans have made themselves into the Daddy Party and the Democrats have become Mommy and both are failing.
      George W. Bush is our "Ward Cleaver," the very visible head of the household with no apparent duties other than being visible. The mission of the Daddy Party is pure Daddy stuff: to prevent the daughters from getting in trouble (having fun) with boys, to grub as much money as possible via mysterious corporate activities to support the family, and to defend the household if necessary. So, we get the "right-to-life" campaign (which is becoming the anti-contraception and anti-sex campaign), and the tacit support for any kind of corporate mischief in pursuit of profits in the "marketplace," and the prosecution of war against "the terrorists."
     The Mommy Party wants everybody to feel good and for all outcomes to be fair, even if Mommy has to use force to make it happen. Since the Mommy Party is not afraid of appearing cultivated and is in charge of the family's education, the Mommy Party has taken defacto control of the universities, where justice and fairness are the main courses of study. Mommy's discipline there is very severe for those who cross Mommy -- ask Larry Summers over at Harvard. The men of the Mommy Party are uniformly pussy-whipped and must submit to an ideology that regards gender confusion as an achievement -- because all daddies are such losers.
     The Daddy Party has entered a zone of failure both frightening and abject. Daddy has mismanaged the family finances so badly that the re-po man may take the house away. He's on a rampage against his daughters (some of whom remain romantically infatuated with Daddy and still wish to please him at all costs). He's addicted to a petroleum-based smack and refuses to consider any behavioral changes that might get him off the stuff. And he's gone and poked a stick into the largest hornets' nest in his drug dealer's 'hood."
     The Mommy Party doesn't want to talk about the mismanagement of the household and its relations with other households. The Mommy Party is excessively concerned with appearances (sometimes at the expense of the truth). The Mommy Party gets around these inconveniences by focusing on everybody's feelings. The Mommy Party is like an Oprah show that never ends and resolves nothing.
     Because Daddy is failing so badly, and the family anxiety level is so high, the children allied with Mommy have fantasized a dark Daddy alter-ego that they transfer their fears to. That's Vice-president Dick Cheney. Daddy's activities may be mysterious, but his alter-ego's duties are clear: to keep those corporate systems running things in the background happy and productive by any means necessary. Nobody doubts the alter-ego's power and influence in these matters. He is considered as adept as Daddy is inept. If you cross him, he might even blow your head off, so watch out.
     With the Daddy Party entering what appears to be terminal failure, all eyes are now turned to the Mommy Party and its presumed figurehead, Mommy-with-a-vengence, Hillary. There is still the hope that she can carry on as the head of a single-parent family, keep the corporate flywheels spinning, and even look after the family's security from the thugs coming into the 'hood.
      My own guess is that actual conditions in the household may be too far gone for even Mommy to set things right. Our situation with oil and natural gas are much more dire than the kid's realize. Dad's investments were idiotic and his portfolio is shredded. Not only is the house about to be repossessed, but the car and the home theater will be going with it. The bad 'hoods around the world are set to explode. The kids are going to have to grow up fast. Some will just go feral. Some will become Mommies and Daddies themselves, and they will try to form new households with the remnants of the old one. Maybe they can cobble together something like an American common culture out of whatever's left, and recreate some organizing principles for a family life that make sense.
Let's just hope that social services doesn't have to come in to clean up the mess.

March 6, 2006
      You've heard of "Pimp My Ride." Well, the New York Times is running a new joint called "Pimp My Read."  This week's Sunday Time
Magazine devoted itself to the idea that housing bubble is (in Martha Stewart's words) a good thing. In fact, Martha herself is getting into the racket, lending her name to a 650-unit (they're just units) suburban subdivision outside of Raleigh, North Carolina. If she was shrewd about the deal (could it be otherwise?) than Martha will get paid whether the project tanks or not.
       Really, the whole issue of the Mag was just an opportunity for the financially-strapped Times to sell a shitload of advertising to the real estate investment trusts, the luxury condo hucksters, and the home furnishing industry. It will probably go down in history, along with Yale economist Irving Fisher's 1929 proclamation that the US had achieved "permanent prosperity," as one of the seminal documents of societal cluelessness in the face of obvious calamity.
      My favorite story in the joint was "Home Economics" about Harvard whiz Edward L. Glaeser, 38, "a genius" urban theorist, who sports bespoke English suits (with watch-fobs!) and who has managed to construct a comprehensive view of how we live in America without factoring in the global energy predicament. Apparently Glaeser's major contribution to the field is the arresting idea that whatever has been happening out there in America will certainly continue to happen --exactly in the Irving Fisher tradition. For instance, people have been moving to the Sunbelt for sixty years because there's no winter there to hassle with, so that trend will continue. Also, suburban sprawl is just fine, no problem, let's get more of it up-and-running. (Glaeser's theory is related to Times columnist David Brooks's incisive formulation that suburbia must be okay because the public seems to like it.)
      What these pimps and geniuses don't get is that America's future is all about discontinuity. Virtually everything you see out there will not keep going.
We will discontinue granting interest only, adjustable rate mortgage loans for half-million-dollar McHouses to schlemiels one paycheck away from bankruptcy -- because the practice will prove to be reckless and ruinous not only for the schlemiels, but for the financial system as a whole. Americans will stop moving to the Sunbelt when they discover what life is really like in Phoenix and Houston without cheap air conditioning. After the suburbs implode financially from a pandemic of defaulted mortgages, we will see how well they operate on $5-a-gallon gasoline (or higher), and how carefree it is to heat a 4000-square-foot McHouse in a permanent natural gas crisis. We'll also discover that telecommuting over the Internet is not so "cool" in brownout nation.
       Obviously these clowns are whistling past the graveyard as the air audibly hisses out of the housing bubble, and the very appearance of these fatuous reassurances in America's chief enabling organ of popular delusion ought to be a signal to the still-alert out there to run shrieking for safety.  It's interesting to note, by the way, that the New York Times ran an editorial last week titled "The End of Oil," by Robert B. Semple, stating starkly that the global oil production peak was for real. The catch was that the chickenshit Times editors only ran the piece on their Web edition, not in the printed newspaper. The next day, in the print edition, they ran a big display ad from Exxon-Mobil saying that peak oil was just a shuck-and-jive by a claque of alarmists. Of course, one of the wonderful things about democracy is that people are free to believe whatever they like.

February 27, 2006,
       As the bombing of the Golden Dome in Samarra last week resolves into the Iraq civil war that everyone has feared, expect a more widespread uproar against western interests generally through the Islamic world, with Iran doing everything possible behind the scenes to incite the main actors: underemployed young men from Algiers to Jakarta.
     The west and Islam have reached an inflection point. American influence in the eastern hemisphere may be the main object of Islam's wrath, but Europe can no longer pretend to be a disinterested bystander. The big issues are the perceived weakness of the west, the steady draining of the Islamic world's most precious resource, oil, and the hateful presence of western persons and culture in the Islamic ummah.
     Iran's wish to inflame, in effect, a world war may be based on equal parts
delusion and realpolitik, but the wish itself is more powerful than any sense of consequence. Iran sees the opportunity to run America out of the Middle East and to seize leadership of the Islamic world from the corrupt sheiks who have been sucking up to the west for decades and trading Islam's chief resource for whoring sprees in Monte Carlo and Las Vegas. The religious split in Islam between Sunni and Shi'a works to Iran's advantage because Shi'a are motivated by an additional sense of grievance, and as the dominant force in Iraq can bring that country into its orbit even while Iraq is occupied by American troops -- only emphasizing America's weakness.
      Meanwhile, Iran can work in the background to stimulate mob violence against western embassies and interests in Syria, Pakistan, Afghanistan, Indonesia and will directly fund the Palestinian Hamas government dedicated to wiping Israel off the map. The recent cartoon riots in many places were just a preview of coming attractions.
      Many readers and correspondents have sent me anxious emails about the opening of Iran's Euro-denominated oil bourse in March. I don't share their conviction that this bourse will destroy the US dollar's advantage as the world's reserve currency. But I do imagine it will irritate an already dangerous situation. Its other objective would seem to be an effort to drive a wedge between Europe and America.
      However, Europe is also addicted to Middle East oil. The attitudes of France and Germany might change drastically if their main supply point, through the Suez Canal, happened to be choked off for some reason. Another dose of civil disorder, like the riots that rocked France last fall
, would also clarify their shared position vis-à-vis Islam. Europe will certainly not benefit from an Iran armed with nuclear bombs and missile delivery systems.
       Iran seems to be in one of those moods that nations fall into where delusions of grandeur converge with a sense of grievance and with the appearance of opportunity to prompt extremely reckless behavior. Hitler's Germany was in that mood in 1938. The US could get run out of Iraq by sheer anarchy, and the unwillingness of the US public to endure more deaths and expenditures, and that is probably the big opportunity that Iran perceives. But somewhere further down the line Iran might have to contend with the inconvenience of American long-range tactical air power, and with the ultimate option (unthinkable as it may seem) of turning Teheran into an ashtray. President Mahmoud Ahmadinejad seems to calculate that it is a risk worth taking.
      The perceived weakness of Europe is also probably overestimated.
The memory of the two world wars has made France and Germany hypersensitive about international quarreling, but they may not be able to stay on the sidelines much longer. Along with Britain, Italy, and Spain, they represent an economy and population base equal to America's, with a formidable capacity to mobilize in an emergency, especially with air power. The Islamic world has an old beef with Europe, and at the very least will enjoy watching them suffer.
      What has kept the big quarrel contained so far is the sheer geographical fact that most of the world's oil comes out of this likely battleground. America and Europe cannot risk the destruction of those wells, terminals, refineries, and pipelines, and none of the parties on the Islamic side are especially keen to trash all that stuff, either, since they have little besides figs and tangerines to fall back on.
      The current scandal in the US about the Dubai-based company being invited to run US port facilities only underscores America's weakness, our feckless pretense that there is no fundamental conflict between Islam and the west, that we are so generous, open-minded, good-willed, and self-confident that even the boundaries of political common sense have dissolved. Of course, some Americans may be wondering why we can't find any American company to run American ports. But the American press is too stupid to even ask that question.

February 20, 2006
     Friday morning the sky went dark like a sudden memory of wartime, and a cold wind roared out of the northwest in a fury over my town in upstate New York. The winds picked up through the morning and pretty soon things were flying around outside my office window, including the trellis in the garden. Then trees toppled over. The trees crashed down across powerlines and at one-thirty in the afternoon the power went out in Saratoga Springs. It would stay down all weekend. I went out to take a look later on Friday afternoon. Many of the shops and bistros downtown closed by late afternoon. The yearly regional music festival called the Dance Flurry had to shut down.
     Back home, t
he furnace quit working. Even though it burns natural gas, it requires electricity to power the igniters. People we knew were already heading up to the big box hardware emporiums for generators and kerosene heaters.  I came across one neighbor trying to hook up a generator. He was very blue because he owned ten rental properties around town and he had no idea how he was going to keep the pipes from freezing if the temperatures really plunged as low as the radio was saying: single digits.
      That night, my girlfriend was struggling to get back upstate from New York City on Amtrak
. She couldn't reach me because our telephones were all cordless models with plug-in transmitter bases that didn't work with the power off. So she called our friends around the corner, who had a hardwired phone (which can run whether the electrical service is on or not), and I got the message. They stayed at my place for dinner. It wasn't too bad. The gas stove was still working -- though not the oven, which could only be turned on via an electronic keypad -- and we had penne with mushrooms and a nice salad by candle light. I had lots of candles on hand, and a kerosene lamp and a battery-powered lantern and several flashlights. Lucky me. With the stove burners all lit, we were perfectly comfortable at the table.
      Sally finally got home from New York around eleven. It was eerie coming into town with all the lights off, she said, and her seat on the train had been the only one in the car without a reading light that worked, so she'd already had a lot of practice sitting in the dark -- thanks a lot, Amtrak. I like sleeping in a pretty chilly room, so passing the night was fine -- apart from my normal insomnical tendencies. But the next morning, when the inside temperature reached 49 degrees, and the radio said there was no telling when service might be restored, we decided to make other arrangements.
     We were lucky. We had friends two towns over who had power and a spare bedroom. On the way over there (about fifteen miles) I went past two gas stations with long lines of cars waiting around them, and people at the pumps filling up red plastic auxiliary cans. W
e turned on the local TV news late Saturday night to see what had transpired during the day and a there was a news report about a house in Saratoga that had burned down that night because the people who lived there had cranked up the fireplaces and the chimneys were not adequately cleaned. The address the TV news-reader gave was around the corner from us. It was not anyone I knew. They lived across the street from the couple I made dinner for on Friday.
      Sunday afternoon I went back into town. The power was still down in my neighborhood. There were rumors that it was supposed to come back on sometime between noon and the dinner hour, but it was still down at 3:30pm. The people next door happened to be loading some stuff into their car when I came by. The temperature inside their place was 39, they said-- despite the fact that it was about 15 outside. Perhaps the water heater was keeping things above freezing. I went past the burned house on my way back to our temporary quarters. It was a Dutch colonial dating from perhaps the 1920s. The house was obviously totaled. The windows in the upper stories were
blown out and you could see everything inside was charred black. They had got plywood nailed up over the first floor windows already.
       So, this was our little disaster of the year. The downtown merchants lost a pile of money with the Dance Flurry getting canceled, and the neighbor we didn't know got burned out, and we didn't hear yet what happened to the other neighbor with all the rentals. One house over on Spring Street lost a roof -- which blew off and landed in Court Street. Our little rented cottage is okay so far. The landlord ran a propane construction heater in there on Saturday and said he was coming back late this afternoon to give it another blast. The daytime temperatures tomorrow are headed back above freezing again. i suppose we'll be able to get back in tomorrow sometime (Monday).
       The odd thing, of course, is that all the way back since Christmas we have enjoyed (yeah, strange word) supernaturally warm temperatures this winter. We've had whole weeks in the high 40s and even mid-50s. The lakes and ponds did not freeze this year. The ground is bare and we've had zero cross-country skiing. The winter carnival in town was all but canceled except for the chowder contest between the downtown eateries. I had been predicting back in December that a normal winter would get us into trouble with punishing home heating prices. The bills have been high, despite the mild weather, but not killing as they could have been with normal temperatures. And the market price of natural gas has sunk way down to the $7-8 range because demand has been so low.
     The week preceding the storm was like spring up here. Personally, I liked walking the dog around town wearing only a sweater, with none of the slush and icy snard which is usually underfoot here all winter. Bu
t everyone is a little nervous about what this all means. We'd prefer winter, when all is said and done. We read about the Greenland ice caps melting and we put it together with what is happening to us, and the picture is not reassuring. Especially when it resolves into freak wind storms that are generated by very cold fronts colliding with masses of abnormally warm air, in places that they shouldn't be this time of year.
      Being homo sapiens, we are not that good at thinking ahead. I wonder if any of my neighbors have imagined a March featuring funnel clouds and patio furniture flying through the air?

February 13, 2006
     The failure to lead in this country now includes all the major fields of enterprise and resolves into a general and total failure of authority that threatens to drag us into darkness. Leaders in politics, business, the news media, science, medicine, education, and the organized religions have all failed to prepare the public for the hardships that will attend a global energy crisis supercharged by climate change, disorder in the financial markets, and almost certainly more war.
      President Bush's failure to lead was obvious in his state of the union speech, and in actions that followed -- such as signing on with the continued starvation of Amtrak last week. If Mr. Bush doesn't like that crypto-private company, he could start an initiative of his own to reform and reorganize the railroad system we desperately need. So too, by the way, could Hillary Clinton or John Kerry, or any other putative Democratic leader. But they're too busy grubbing around the contribution circuits to fatten their campaign war chests.
The major news media's failure is near total, especially at the highest level of the New York Times, which gives more ink to narcissistic blather about gender identity than to the issue of how industrial civilization is going to carry on without its primary resources. The cable news networks have sunk into such mires of craven whorishness that they don't even pretend to broadcast news between eight o'clock and midnight anymore, just tabloid crime spectacles and celebutante melodramas. The Wall Street Journal has resigned from reality in order to DJ the financial sector's dangerous game of musical chairs.
     I haven't heard one college president address the question of how we are going to reform education when it ceases to be a mass consumer activity and the giant campuses of the land-grant diploma mills enter their own waiting crisis of scale.
     Where are the doctors speaking out about the nightmarish swindle that corporate medicine has become? The most conspicuous public doctor, Senate majority leader Bill Frist of Tennessee, is under investigation precisely for working one angle of that swindle -- insider trading of medical services stock. Isn't it bad enough that hardworking people have to face cancer and mutilating injuries from auto accidents without also shoving them into personal bankruptcy?
      Business leadership in America has become nothing less than a transparent wholesale shift of wealth by irresponsible boards of directors from the pension funds of longtime employees t
o the pockets of grifting CEOs -- or the outright looting of supersized enterprises such as Enron. Here's an interesting question-of-the-day for those of you who ponder over business matters: how does a person really improve his standard of living after the first $10 million? Give that some thought, because a few years hence a furious public is going to be asking that very question of fattened corporate executives as they prepare to roast them on spits over the flames of discarded automobile tires.
      Where are the clergymen in America who are willing to tell their congregations that casino gambling is a moral fiasco and that the worship of unearned riches is an offense in the sight of God?
      Where are the scientists who will inform the public and its political leaders that we really are in trouble with oil and natural gas, that markets do not magically deliver rescue remedies on demand, that technology and energy are not interchangeable and mutually substitutable, and that our nation is about five years from falling into a condition of energy starvation that will bring down all our complex systems of daily life?
     When the public finally discovers how they have been let down or played by these leaders, there will be a convulsion more severe than the one that tore this country apart in 1861.

February 6, 2006
     By now,
President Bush's wildly irresponsible remarks on energy in his state of the union speech may have already vanished down the memory hole, but the damage will linger on. "America is addicted to oil," Mr. Bush began, failing to mention that underlying this addiction was a living arrangement that required people to drive their cars incessantly. A clueless public will continue to believe that "the best way to break this addiction is through technology. . ." and that "we must also change how we power our automobiles."
Bush recommended ethanol. As one wag put it after the speech: "America's heroin is oil, and ethanol will be our methadone." The expectation will still be that everybody must drive incessantly.
    It is hard to believe that Mr. Bush does not know the truth of the situation, or that some of the clever people around him who run his brain do not know it, namely that ethanol and all other bio-fuels are net energy losers, that they require more energy to grow and process them than they produce in the end, and that the energy "inputs" required to do this are none other than oil and natural gas, the same fuels we already run engines on.
     The president also said that "breakthroughs on this and other new technologies will help us reach another great goal, to replace more than 75 percent of our oil imports from the Middle East by 2025."
     In point of fact, our oil imports from anywhere on the planet will be reduced by more than 75 percent because by that time worldwide oil depletion will be advanced to its terminal stage, and nobody will have any oil left to export -- assuming that the industrial nations have not ravaged each other by then in a war to control the diminishing supply of oil.
     The key to the stupidity evinced by Mr. Bush's speech is the assumption that we ought to keep living the way we do in America, that we can keep running the interstate highway system, WalMart, and Walt Disney World on some other basis besides fossil fuels. The public probably wishes that this were so, but it isn't a service to pander to their wishes instead of addressing the mandates of reality. And reality is telling us something very different. Reality is saying that the life of incessant motoring is a suicidal fiasco, and if we don't learn to inhabit the terrain of North America differently, a lot of us are going die, either in war, or by starvation when oil-and-gas-based farming craps out, or in civil violence proceeding from failed economic expectations.

     I hate to keep harping on this, but Mr. Bush could have announced a major effort to restore the American railroad system. It would have been a major political coup. It would have a huge impact on our oil use. The public would benefit from it tremendously. And it would have put thousands of people to work on something really meaningful. Unlike trips to Mars and experiments in cold fusion, railroads are something we already know how to do, and the tracks are lying out there waiting to be fixed. But the reigning delusions of Hollywood and Las Vegas prevent us from thinking realistically about these things. We're only into wishing for grand slam home runs and five-hundred-million-dollar lottery jackpots. Anything less than that makes us feel like losers.
    Meanwhile, the official Democratic Party response to Mr. Bush's fucking nonsense was the stupendous fatuousness of newly-elected Virginia Governor Tim Kaine's rebuttal, a saccharine gruel of platitudes and panderings that made me want to shoot members of my own party on sight.
     History will look back in wonder and nausea at the twitterings of these idiots as the world they pretended to run lurched into darkness.

January 30, 2006,
     Practically everyone I know spends hours each day wringing his hands over George W. Bush becoming a fascist despot. But Bush is not the one to worry about as far as that goes -- anymore than Louis XVI was capable of acting like Napoleon Bonaparte. What they had in common was something different. Their regimes ushered in a loss of legitimacy.
     Legitimacy is the quality that society vests in the individuals and institutions who run things, the belief that their authority is credible and deserved. Legitimacy
can slip out from under authority all of a sudden, as a critical mass of the public loses faith at a deep level in the people in charge. Sometimes the result is the overthrow of government. Sometimes cultural authority goes out the window, too, as happened in the aftermath of the First World War in Europe, which produced a kind of nervous breakdown in the arts as well as the death of three dynasties (the Hohenzollerns, the Hapsburgs, and the Romanovs).
     The last loss of legitimacy in American political life climaxed in Richard Nixon's resignation. It was an orderly process, enabled by the ingenious framework of the US Constitution, but the institution of the presidency suffered, too -- and that is one of the reasons why Baby Boomers who lived through it are among the greatest hand-wringers over Bush. To many of us over fifty, all presidents after JFK are to some degree assholes.

     It is easy to see the potential loss of legitimacy among all the authorities in American life today. In government, it is the astounding denial of such obvious dangers as global warming, recklessness in finance, and the gathering permanent energy crisis. The news media also fritters away its legitimacy, as when CBS's "60 Minutes" show broadcast a mendacious segment telling the public that the tar sands of Alberta would immunize us from a global energy shock. The arts lost their legitimacy decades ago, leaving little besides irony over their failings.
     But if the American public becomes subject to political despotism in the years ahead, it will come from somebody other than Bush and it will come because the public will demand it. The American public itself has been so grossly passive, complacent, and irresponsible in its raptures of credit-card shopping, infotainment, and easy motoring, that when our society runs into trouble due to the things we have ignored, the public will beg to be pushed around, they will crave to be directed toward some purposeful action to save their asses.
     That's why I think it's ridiculous to waste time wringing our hands over Bush. One day, very soon, for instance, we will find ourselves in a gasoline crisis that will not end. We will not be able to transport people and the goods they need around our country. Our railroad system will be a shambles because leaders like John Kerry were too busy wringing their hands over other things -- so we'll be stuck with no alternative to the interstate highway system. Likewise when the housing bubble implodes and the public discovers that an economy based on cheap oil suburbs and credit for the uncreditworthy can't continue, and nobody warned them about it.
     At some point not far away, we'll have a president who puts children in uniforms because their parents will have been scared to death by their own lifetime of slovenliness. It may not get us anything, except the illusion that we can regain what has been lost forever. And it may not last long, as the illusions finally fall away and we are left with only what we can do for ourselves locally. But it will not come from George W. Bush. It will come because of our own fantastic inattention to the things that really matter.

January 23, 2006
     I'm fond of saying that I'm allergic to conspiracy theories.
Behind our country's dismaying governance, cluelessness really rules, not plotting or scheming. Take, for example, these astounding remarks made Friday by former US Secretary of Labor Robert Reich on NPR's "Marketplace" show:

"As China grows -- at the current rate it's growing, in twenty or thirty years -- and becomes the number one largest economy in the world, I think China may become our nemesis."

     One would think that Mr. Reich is a pretty smart guy -- former Rhodes Scholar (same class as Bill Clinton), Harvard faculty, cabinet secretary. Now, why on earth would Mr. Reich believe that China can possibly keep behaving the way it does for another two or three decades? China faces energy starvation along with the rest of the world. China has less oil left than the United States (and the US would have roughly four years worth of oil if we were deprived of imports -- 26 billion barrels used at the rate of 7 billion a year).
     There is no way that China can put another one half percent of its population behind the wheel of a car without sending its army and navy out to seize foreign oil fields -- let alone continue manufacturing toasters and Christmas tree ornaments for Americans. And Americans are not going to have the the cash to buy those things, whether or not we are actively engaged in a war for the world's remaining oil. And all this trouble is going to play out in the next decade, not in "twenty or thirty years." Near the end of the segment, Reich repeated this inanity:

"As China, over the next twenty, thirty years, grows and prospers, a lot of Americans are gonna say, now, wait a minute. . . ! The endgame, we hope, is more and more economic integration, a Chinese middle class that is more and more prosperous, that is able to buy things from the United States, that looks a little bit more like middle-class Americans live, and therefore is not so different from us."

     An arresting fantasy, isn't it? A Beijing that resembles Atlanta, full of strip malls dishing out cheeseburgers and other interesting foreign foods to Chinese soccer moms hurrying back to Toll Brother's starter homes in Chinese knockoffs of the Ford Explorer.
     Note to Mr. Reich and the rest of the people he is smoking opiated hashish with: you've got it backwards. Over the next twenty, thirty years America gets to be more and more like Chinese peasant life in 1949. Why? Because neither America nor China (nor anybody else) can continue running industrial economies the way we have been, or even a substantial fraction of that way, in an energy-starved world. Nor will anybody come up with a miracle technological rescue remedy to keep all the motors humming.
     Our second peckerhead of the day is David Brooks of The New York Times. Actually, Brooks could qualify for peckerhead of the decade among mainstream news pundits, since his fantasies about America diverge so extravagantly from the realities our nation faces. In his most recent column, Mr. Brooks asserted that the desert wastelands beyond the last ring of Phoenix's current suburban asteroid belts would become the next suburban utopia, adding an additional million people to that hopeless mega-metroplex. Note to Mr. Brooks: Arizona's groundwater basins are overdrawn. Most of the rivers are tapped nearly to their limits. The southwest is suffering its worst drought since the 1950s, and climate change signs suggest that the drought will persist. This is happening, of course, as the nation (and the rest of the world) enters an epochal depletion of fossil fuel resources that will, how shall we say, put the fucking shnitz on further suburban development of any kind. Mr. Brooks writes:

". . . half of the buildings in which Americans will live, play and work in the year 2030 don't even exist yet. We are in the middle of a $25 trillion building boom that is changing the face of the country, and most of it is happening in desert places like this one."

Another note to Mr. Brooks. An economy based on land development and housing bubbles is finished. We are going to have to make other arrangements for running a civilization, and return to traditional methods for occupying the terrain of North America, without the prosthetic enhancements of Ford Explorers.
     This is the quality of thinking that we are getting from leaders in politics and opinion in our country now. It could not be more inconsistent with reality. No evil cabal of corporate CEOs is paying off either of this idiots. They arrive at their opinions by a simple failure to pay attention to what is really happening in the world. Their failure will contribute to a greater failure of authority in this country when we hit the wall of economic pain in the months ahead, and the public wonders why it wasn't informed. That failure of authority, and the angry response to it, will lead to a very dangerous
politics of grievance and recrimination.

January 16, 2006
     The past week's adventure took me up the back roads through a little corner of eastern upstate New York into Vermont to Burlington, to tape a public TV show. Are you indignant to read that I drove there in a conventional gasoline-powered automobile? Guess what -- one doesn't have a choice, given the pathetic condition of our railroads, and I haven't ordered my soy-diesel-powered one-man zeppelin yet. Anyway, the subject is what I saw along the way.
      It would be hard to imagine a sadder landscape than these rural backwaters along the New York / Vermont border. Geographically they are still beautiful. It's a region of tender hills, well-wooded now, and ribboned with trout streams. It's the human furnishings that are desolate and what they say about what we have become as a nation. This was a farming region of course, and the re-growth of the woods is a symptom of farming's decline the past fifty years.
      Dairying was the big thing through the first three-quarters of the 20th century. But regional milk production became irrelevant during the decades of cheap oil, when New Yorkers could just as easily get milk and cheese from Wisconsin or California. So now only a few relic farms still operate. Every building in the landscape related to farming is now decrepit. Siding and shingles have peeled off the barns. The sills are rotting and the ridgeboards sag. The tractor sheds are too far gone to keep tractors in, so the machines sit out in the rain now. The older houses -- many of them dating from the Greek Revival of the 1850s -- are subject to indignities beyond simple neglect. Many are partially cocooned in plastic, because fixing the wooden parts was too expensive, or just too difficult for people whose skills are now limited to operating cars, televisions, and forklifts. The yards are littered with plastic debris: tricycles, hoses, and patio chairs disintegrating under the daily ultraviolet -- and you could see it all because a week of January temperatures into the 50s melted all the snow cover off.
      You can track the decades of overgrowth in the pastures: sumac and poplar in the early going, then regular trees. In many places, stone walls from the 19th century run along the roads in woods that were sheep meadows a hundred and fifty years ago. You have to wonder how long all that wood will be there now, with heating bills up 50 percent this year and no relief in sight. Indeed, I wonder if the remnant of people living here will have any idea what to do with their land, when the forklift jobs in the Target Store regional warehouse thirty-eight miles away are no longer there. I'd like to suppose that even people unaccustomed to challenges can be resilient and resourceful when they simply have to be. But if the televisions stay on, they may just choose to die in front of them.
     The towns along way -- Salem, Granville, Fair Haven -- may be even sadder than the farms. All civic vitality seems to have been drained out of them by a persistent wasting disease. Little of any value has been built in decades, and certainly nothing with any beauty. Here and there gas stations bloated into snack marts vie for supremacy of the highway intersections, but the little downtowns with their vacant storefronts echo with loss and grief.
Everything fixed has been fixed badly. The houses are encased in plastic siding, grimy with years of tailpipe emissions. Here and there a screw falls out of a sofit and a dangling plastic panel flutters in the wind. The town streets are empty. The windows are broken in the small factories along the trout streams. Only the county highways that turn into the Main Streets show any signs of life, and that, of course, is the life of the highway itself, the endless cavalcade of motoring. Cars and trucks are the sole investments made here.
      I traverse this landscape goggling at the sights in wonder and nausea. This part of America has become something worse than a former Soviet backwater, something sadder. In these places, we have managed to overcome even the hard-won fruits of enterprise achieved by the independent people who preceded those alive now. Everything they wrested from the land has been thrown away, or allowed to rot in place -- so that more attention can be paid to televised entertainments.
Eventually, I reached the outer asteroid belt of car dealerships and fried food shacks that precedes Burlington. Here the mood switched from depressed to manic. Here, America was still busy, actively destroying itself. Given what we have managed to make of a farming and small town landscape, you had to imagine what these suburban vistas would be like fifty years from now.

January 9, 2006
       I helped burn a fe
w thousand gallons of aviation fuel flying out to San Francisco over the weekend to attend a meeting of people concerned about the injustices of globalism -- not exactly my bag, as we liked to say so many years ago, but a worthy crew of thoughtful folks to consort with. My job, as I understood it, was to introduce the idea that this baneful globalism is not a permanent condition but a set of transient relations made possible by the fabulous inputs of cheap energy we continue to get.
      I had the local news
on the boob tube up in my hotel room before the kickoff cocktail schmooze. There was some kind of grotesque traffic accident on the Nimitz Freeway across the bay and the TV station had aerial shots from their helicopter showing a vast ribbon of frozen headlights snaking clear down from Alameda to Fremont in the violet crepuscular rush hour gloaming. The news clones were treating this like an everyday event, ho-hum, and I had to suppose it was. But it was easy to imagine the despair of someone stuck down there in a Toyota Highlander with a bladder near bursting and not a hope in the world of being able to do anything about it. How many people pee all over their car seats every night, I wondered. Must be a few at least.
     These, I was moved to reflect, are some of manifestations of being at peak. Peak Oil, that is. The all-time worldwide production zenith.
     Now, I was also moved to wonder: why do the good people of the Bay Area willingly endure this insanity? They built a subway about thirty years ago called Bay Area Rapid Transit (BART), but it barely goes anywhere except back and forth under the bay. It would cost less to put in surface light rail lines down both sides of the bay than to fix two freeway overpasses -- but they'd rather pee on their car seats because at least they'd be able to choose their own tunes while doing so.
     Many of my readers, I sense, wonder why things aren't falling apart across America right now, given the hallucinatory nature of our economy. The answer is that Peak Oil is not the end of anything, it's the peak of everything. We're getting more oil now than ever before or ever again, and it is making us crazy. It makes it possible for me to succumb to the invitation to fly across North America for a one-day meeting. It keeps feeding the spreading tumors of suburbia. It supports the illusion that burning liquid hydrocarbons results in the creation of wealth.
      When the TV news cut away to a commercial break, it was an advertisement for some kind of snazzy new mortgage deal featuring 30-second approvals. Getting a mortgage now is easier than stepping off a curb (except, who walks anymore?). This is exactly what is making it possible for people to buy houses so far away from anything that they end up peeing on their car seats to get there in the evening. It also unleashes magical streams of liquidity for the playas in the the financial markets to convert into personal fortunes. Unfortunately, they have to pee on their car seats, too, because the stupidity of our culture is absolutely democratic and the playas get stuck on the freeway just like everybody else, only they pee on real leather seats.
      Peak is making us insane and passing peak will make us more insane. There may be no moment of clarity, only new kinds of delusion and disorder. We'll keep behaving the way we do until we can't, and then we won't.

January 2, 2006
     The sheer weight and inertia of American life kept our systems on their feet through 2005
, despite a worsening economic climate and some harsh body blows, like the hurricanes that pounded oil and gas production in the Gulf of Mexico. In a way, some perverse law of sociopolitical physics seemed to concentrate all the year's destructive potential in the devastation of New Orleans, Biloxi, and other Gulf Coast towns -- while the mighty din of motoring and cheeseburger sales roared on elsewhere without pause from Cape Cod to Catalina.
     First, a little background briefing on where we are at -- to use some of the bad grammar now normative in American life -- before I make predictions (i.e. guesses) about the year ahead.
     You can only introduce so much perversity into an economic system before distortions cripple it. From 2001 through 2005, consumer spending and residential construction had together accounted for 90 percent of the total growth in GDP, while over two-fifths of all private sector jobs created since 2001 were in housing-related sectors, such as construction, real estate and mortgage brokering. Much of the money spent did not really exist except as credit -- incomes as yet unearned, hallucinated liquidity, wished-for wealth, all based on the expectation that house values would continue to rise at 10 to 20 percent a year forever. It became a reckless racket, all predicated on sustaining an economy that had lost its other means for generating wealth -- foremost its infrastructure for making things besides suburban houses.
     This housing bubble economy represented, holistically speaking, the wish to maintain a sense of normality in American life, under conditions of disintegrating normality, and it is no symbolic accident that it centered on the images of hearth and home, because fundamental comforts were what many Americans actually stand to lose in a reality-based future. T
he decay of standards and norms in banking behavior applied-to-housing started, as in the case of the proverbial rotting dead fish, at the head, the federal reserve, and infected every lowly loan officer through the body until, in effect, lending standards ceased to exist.
     The suburban housing bubble and its related activities were predicated on the idea that we could continue building out a living arrangement dependent on cheap oil and methane gas, and that all the subdivisions and strip malls would retain value for decades to come. Of course, this was the central delusion of the suburban sprawl economy, because it was obvious to anyone who gave the situation more than a cursory glance that cheap oil and gas were the things we were least likely to have in the decades to come.
     This reality had begun to penetrate the American collective consciousness and will be represented in 2006 by millions of individual choices to not buy a new suburban house, either because the individuals fear the expense of long commutes or they fear the cost of heating a 4000 square foot house occupied by only a few people (or both). As the inventory of unsold new houses mounts up, the prices of all houses, new and old, will start to go down. There will be enormous psychological resistance to this reality, expressed in a lag of correct pricing, as the owners of these value-shedding "investments" wait for the bubble behavior (anticipated 10 t o20 percent asset appreciation) to return. Eventually they will get the picture.
     The velocity of change in the housing bubble (and the psychology involved) will be greatly affected by oil and gas prices. It seemed to many of us watching the energy markets that the world may indeed have passed through its all-time oil production peak in 2005. Production in 2005 was nearly flat over 2004. The world was producing and also using roughly 82 million barrels of oil a day. Oil coming into new production was not making up for signs of depletion showing among virtually all the world's major producers. Iran, Russia, Mexico, Venezuela, the North Sea, and, of course, the USA, were all past peak. The big mystery was Saudi Arabia, but their inability to boost production from the 50-year-old fields that comprised their main reserves suggested that they were topping out, too. Which left an energy-hungry world with the need to either A.) make other arrangements for powering industrial economies, or B.) contesting for control of the remaining oil reserves, which were substantially concentrated in the Middle East and Central Asia.
     Here, I hasten to remind the reader that peak is peak, meaning right now we are all operating on the basis of a lot of oil flowing around the world. The comfort level is still high. The factories are still humming in China, and the six-lane commuting corridors are still full of big cars around Atlanta, Dallas, Denver, and Minneapolis. The problem is that the oil supply will soon steadily diminish at a rate of at least three percent a year, and that necking down of supply is likely to be expressed in greater geopolitical friction and turmoil between the great nations who crave oil. The US entered into the military phase of this turbulence
before any other nation. We used our superpower status to set up a centrally-located Middle East garrison in Iraq, under the idealistic cover story that we were removing a dangerous head-of-state and helping to set up a model democracy that would invite us to stick around the vicinity indefinitely, and thus retain some control over the deportment of other oil-rich states in the region.
     The foregoing is the background of my predictions for 2006, which
will be the year that the hardships and difficulties I lump together as The Long Emergency get some serious traction.
      The world oil allocation system is now so fragile that any disturbance in one producing region can send damaging shock waves around the planet. There is no more "swing producer." The US squeaked through the huge loss of oil production capacity this fall by taking oil from our own strategic petroleum reserves and from Europe's. These actions kept oil prices in the high fifty-dollar-range through the holidays, giving Americans a false sense of festive security. Those withdrawals are now over. Global demand for oil is still increasing. The strategic reserves will now have to be refilled (they're called strategic reserves for a reason). This will start oil prices moving upward again -- they already have moved above $61 as of this morning.
      I can't predict whether some maniac will drive a Zodiac boat into a tanker in the straits of Hormuz, or fire a shoulder-launched missile at an Arabian refinery. If nothing like that happens, the first year of post-peak will express itself in turbulent oil markets. Fear of not getting enough will rule. Futures will be overbought and then dumped or shorted and then overbought again. This will at least increase the violence of the ratcheting effect in the markets. Overall I expect to see $100-a-barrel oil at some point this year. Last year I made a bet with a friend that oil would end 2005 at $75. I lost the bet. But it is a fact that the price of oil altogether ended the year 40 percent higher than 2004, so it is not as if the markets did not show extraordinary stress.
     New laws regulating gasoline mixtures will also contribute substantially to higher gasoline prices (perhaps as much as 40 cents a gallon). So I will predict gasoline breaking through the $4-a-gallon mark sometime this year.
     Our natural gas situation is pretty dire. Prices shot up for a while above $17 (per one million btu's), but that was the energy equivalent of $100-a-barrel oil) and based at the time on the enormous damage in the Gulf of Mexico prior to the start of the heating season. The heating season so far as been abnormally mild in the northern US and prices have slumped back to the $11 range -- which is still a lot higher than the $7 range in 2004. Unlike oil, we will get no quick relief from international gas sources if the rest of winter turns sharply colder. We're short of terminals to receive significant quantities of imported liquefied natural gas and they cannot be built quickly (or cheaply). The natural gas markets in the US respond very sharply to current conditions. A warm week and the prices sink. A cold one and the price shoots up. Our gas storage for the year is slightly below 2004 levels. Even if we have a mild winter overall, there will be spikes of cold. Our production is still crippled in the Gulf. Therefore, I'll predict that methane gas prices will spike above $20 sometime before May.
     High gasoline, heating oil, and methane gas prices will absolutely kill the housing bubble for reasons I've already outlined. The production home builders will be idle, stuck with huge inventories in places that never should have been suburbanized in the first place. A lot of Americans holding "creative" mortgages -- no money down, interest only, adjustable rate, what-have-you -- will be crushed by the expense of their obligations. Many of them will go bankrupt under new bankruptcy laws that leave no wiggle room for escaping partial repayment. Their houses will flood the real estate markets in an orgy of distress selling. "Greater fools" will snap up these "bargains," failing to realize that many of the logistical liabilities will remain -- namely remote locations and huge heating costs of enormous McHouses -- even if the ownership terms are less hazardous than the previous owner's. At some point in the future, after several flippings perhaps, all those 4000 square foot houses 44 miles outside Denver (or Cleveland, or Seattle) will be seen as the mistakes that they are, and their cash value will reflect that.
With the cratering of the housing bubble, the US economy has to fall on its ass. The global economy is likely to fall on its ass, too, since so much of it depends on the decisions of Americans to take out exotic loans for buying houses they can't afford. Large numbers of jobs will vanish in construction, remodeling, real estate sales, and the various mortgage rackets -- those things precisely related to the recent gains in GDP.
      The sheer falloff in new mortgages will send a tsunami through financial markets addicted to continuous supplies of new "money" to preserve the illusion of expansion. I'd called for a Dow-4000 late in 2005. I think that was just an error in timing, and still call for the Dow to sink into that range, or worse, in 2006. This will represent a moment of painful clarity for market professionals, as they realize that an industrial economy and the finance that serves it must be based on the expectation of generating real future wealth, not on zero-sum rackets, games of monetery musical chairs, or casino legerdemain. Hedge funds, which depend on predictable stability, will be especially vulnerable. They will certainly take some large banks down with them when they go. I'll call for the so-called government sponsored entities of Fannie Mae and Freddie Mac to groan under and then drown in a sea of non-performing loans, probably with overtones of criminal irresponsibility.
     If these things occur, ugly things would happen to the dollar. I would predict an episode something short of hyperinflation -- say a rapid 30 percent drop in dollar value -- with a later deflation in the price of things like houses, paintings by Childe Hassam, and many consumer goods. Which means that standards of living will fall across the board as incomes vanish with jobs and food and energy prices rise -- while Americans try to shed their houses, at the same time that consumer products sit unsold on the shelves of WalMart, Target, and Best Buy. This will spell the beginning of the end for the chain store universe.
     The commercial airline industry is already whirling around the drain. 2006 will send it decisively down that drain. Since we cannot do without aviation in a nation as large as the US (with train service on the level with Bolivia) then the government may have to take over the crippled air routes. If that happens, then service will certainly be greatly diminished. Fewer people will be flying under the circumstances, anyway, but there is no reason to believe that this will all occur smoothly. Among other things, huge pension obligations would remain to be worked out.
      By similar reasoning, I see an excellent chance for General Motors and Ford to go out of business in 2006. Sales of their stupid SUVs were already tailing off in the second half of last year, and they are not positioned to offer much of anything else. Anyway, a middle class groaning under insupportable debt and bankruptcy is not likely to be assuming new time payments for exactly the kinds of vehicles they would be insane to depend on.
      As America roils in economic pain, factory workers in China will be thrown out of work. They will be extremely pissed off, and as their appeals go unappeased, they might start making political trouble in their country. That could easily stimulate Chinese leaders to divert their nation's attention with a compelling military project -- say some moves into the oil-rich former Soviet lands to China's west. Sooner or later, China eventually will go cuckoo from a shortage of fossil fuels. It only remains to be seen how this will express itself. So far it has only done so in terms of an aggressive outreach in oil contracts with producers like Venezuela and Canada. But those arrangements were based on a peaceful world and a peaceful China.
      I have no idea what will happen with Iran. Their leader Mr.
Mahmoud Ahmadinejad, is clearly a maniac -- calling for Israel to be removed to Alaska, for instance. But here I invoke my allergy to conspiracy theories by saying I do not necessarily expect any US or Israeli strikes against that country. One could argue that Iran could comfortably kick back and watch America get tortured by the insurgency next door in Iraq, and I think they will do just that through 2006. The nuclear card is wild, however, and anything could happen if they keep slapping it on the table.
     Which brings us to the extremely sore subject of Iraq. I maintain that our reasons for being there have not changed one bit, namely to make sure that we don't lose access to Middle East oil in any shape or form. Now my stating that
does not mean I think we will necessarily succeed. The creation of a constitution in Iraq and holding elections based on it amounted to an admirable stunt, but I tend to think this experiment will dissolve into sectarian violence and civil war, probably within 2006, no matter what else we do. I predict that circumstances will impel us to withdraw from the Iraqi cities but that we will not give up large bases near the oil production areas of the north and south, and that we will continue to control the air space over Baghdad. Our position in that country would then devolve to a sort of Fort Apache situation. I imagine the vast emptiness of the desert combined with air cover will afford us some protection. But our presence there will only inspire more turmoil, hatred, and jihad elsewhere.
      King Abdullah seems to be in pretty good health, but he is going on 82. I predict that there will be fissures in the kingdom, and continued confusion about their oil production capacity. But by the end of the year it ought to be clear that they have not increased their output. Peak for Saudi Arabia may be the beginning of the end of the Saud kingdom -- since peak itself is highly destabilizing.
     In Europe, we are beginning to see some of the first tectonic heavings over energy as Russia jerks poor Ukraine around on their natural gas shipments. England has managed to piss away all the former advantage of their North Sea oil bonanza and they now face a future of dependence on Russian gas plus the bankruptcy of their remaining industrial base. France
enters 2006 somewhat more energy self-sufficient, at least as far electricity is concerned, since 70 percent of it comes from nuclear reactors. The other nations of Europe are apt to get restive this year, and may more actively join the worldwide contest for access to fossil fuels. At the same time, they will be struggling to contain large Muslim immigrant populations and I would be surprised if there were fewer problems in 2006 than last year -- with the riots in France and the London subway bombings. We tend to write off Europe as a region of sclerotic cafe layabouts, but for the time being many of these nations can still mobilize potent military forces if they have to defend vital interests. Generally, I predict 2006 will see a shift in power to the big energy bear, Russia. It's industrial infrastructure is otherwise decrepit. It's armed forces are bankrupt. But it has at least enough nuclear arms to blow up the world a few times over, so that, combined with its oil-and-gas assets, require us to take it very seriously.
     Japan has nearly been forgotten. It now imports 95 percent of the fossil fuel it needs to run itself. God knows what they will do if geopolitical turmoil shuts down the shipping lanes that bring a steady stream of oil tankers to the islands. They are capable of mobilizing to defend their vital interests. We just haven't seen them do it since the 1940s. What role Japan will play in the Pacific remains a mystery, especially in relation to the growing power of China. Perhaps some of this oriental mystery will be revealed in 2006. Perhaps Japan will enter into some kind of Asian co-prosperity sphere alliance. Japan's economy will otherwise be subject to the severe economic strains emanating out of America.
     South America is going loco on us. They will probably never amount to a united front, but one-by-one they will become more hostile to us, in the manner of Venezuela's Hugo Chavez and the newly elected Evo Morales of Bolivia, a former coca farmer who aims not to allow America any more say in what crops his people can grow. Chavez can jerk America around on oil imports if he wants to, but probably not without risking his health and position.
Mexico's economy is dependent on ours, only Mexico will suffer by another order of magnitude if the US economy turns down in a big way. In 2006 I think we'll see the first signs of overt hostility between our two nations as the US desperately tries to come to grips with the flow of illegal immigrants, and Mexico attempts to divert its suffering peoples' attention by making threats of incursion and reviving claims to lands along the border. We could see the first shots of what could turn into a huge ongoing border nuisance, perhaps even a quasi-war. Meanwhile, Mexico's premier oil field, Canterall, has entered depletion. They depend on imports of natural gas from us, and under the rather insane terms of NAFTA, we in the US depend on imports of gas from Canada to make up for the stuff we have to sell to Mexico. Those relationships may be subject to review.
      Here in USA, I predict that we will be diverted by a fantastic circus of congressional hearings and court proceedings. It will be scandal-o-rama for the Bush administration and the Republican party. The domestic spying issue will be a huge stink (I recognize I defended it on this blog), but it raises issues that our political system cannot digest right now. The Abramoff scandal is going to be huge and may take down twenty congressmen. Karl Rove will probably join Lewis "Scooter" Libby in the indictment pen for the Valarie Plame incident. Tom Delay is going to have a very ugly trial in Texas, and senate majority leader Bill Frist may end up being prosecuted for stock sale irregularities. These shows may so successfully entertain the public -- and the cable news impresarios -- that we will fail to notice the rising predicament of oil and gas prices and the cratering of the suburban sprawl economy (just as Watergate -- a very satisfying melodrama for those of us who were young reporters in 1973-4 -- diverted the US from the first throes of the oil crisis). All this activity will tend to degrade the standing of the Republican party to "junk" status. But there is no sign that the Democrats offer an alternative world-view to the "non-negotiable American way of life."
      Political circuses will not completely divert the middle class from its own suffering, as their mortgages devour what is left of their financial lives. But as they sink in fortune and hope, I predict we will see a turning of all the recent celebrity envy -- and the infotainment value spun off it -- into a vicious hatred of the rich and famous and a new desire not to emulate them, but to punish them. Look out, Nicole Ritchie and the Donald Trump. The grandchildren of Ozzie and Harriet will be looking to eat you for dinner starting in 2006


December 26, 2005
      Last week's blog produced another blizzard of indignant letters on two counts. One bunch scolded me for claiming to admire anything about President Bush (I thought his defense of domestic spying was legitimate). The other castigated me for failing to accept that a US government plot was behind the 9/11 attacks.
      Speaking to the first one: while I think much of the public views 9/11 as just another drama that came over the cable channels, I also think it was an extraordinary injury to the nation in reality, and a huge insult to the professionals in the defense, state, and various intelligence departments. This extraordinary injury and insult has produced extraordinary results -- an unprecedented use of invasive electronic surveillance to desperately try to prevent another such injury. Unlike the Nixon years,
no evidence has emerged yet that this spying was directed widely at critics of government policy. If we are listening in on phone conversations and Internet chatter involving jihadists, then that is okay with me.  If this spying were to swing over to critics of the war and the news media on a wholesale basis -- as in the Nixon / Vietnam years -- I'd feel differently about it. But I do not see any evidence that it has. In the meantime, I don't see how it can be avoided.
     Whether it is effective is another matter. All we know is that there hasn't been another incident like 9/11 since 9/11/01 in America. The range of hard and soft targets across this land is immense. Either our government has been working very hard to track the right people, or we have been very lucky, or both. Or perhaps the targets we present in Iraq are more attractive right now. We certainly have plenty of vulnerabilities to be concerned about at home, ranging from the number of uninspected shipping containers coming into US ports, to our leaky borders, to the scores of chemical plants and nuclear reactors, to the hundreds of bridges and tunnels. Anyone can still drive a van packed with fertilizer down K Street in Washington DC, and there are countless shoulder-launched missiles and RPGs loose in this world. Now, all that may be "proof" to the paranoid that terrorist violence only happens when the government lets it happen, but it is not proof of that to me. Which brings us to the next point.
      I regard the 9/11 conspiracy theories as a fantasy and a distraction from the real problems we face. It is especially unfortunate that they became associated with the Peak Oil issue, and that was obviously a result of Mike Ruppert's elaboration of them in his book Across the Rubicon, which brought discredit to his otherwise good reporting on the global oil situation, and tainted others like myself who regard energy as the crucial geopolitical and economic issue of our time.
There is enough confusion in this nation without conflating the real concerns over energy with paranoid fantasies about government plots.
     That said, I think the foregoing illustrates the pernicious nature of delusional thinking generally in our highly-stressed society -- and I am as concerned over delusional thinking, delusional behavior, and delusional politics as I am over Peak Oil.
     The day after Christmas the world is very still. But events are churning in the background. I am looking toward reality-based signals to understand what is going on out there: how much oil is actually coming out of the ground around the world, how much unearned money Americans spent in WalMart before Christmas, how many individuals may have decided to not buy a new house in the far-out suburbs this fall because of high heating prices. Next week I'll publish my predictions for 2006. I think we were extremely lucky to get through 2005 without a debacle in the economy, and the financial sector in particular. But the imbalances out there are greater than anything the world has ever seen before and they are working their way through the system slowly like a gigantic pig inside the proverbial python. If we are actually at the all-time oil production peak, then there is still a lot of energy to be fed into this system. The trouble is that we are doing it at the very peak of a gigantic wave, and when waves break things standing on the shore tend to get broken.

Bonus articles: two excellent essays by our Man on Wall Street, Dmitry Podborits. The first is an incisive look at the exurban housing bubble. The second is an excellent essay on the economics of cutting edge solar technology. They run concurrently on Dmitry's website, Live Journal


December 19, 2005
      I rather admired George W. Bush's hard-boiled remarks Saturday about the secret snooping carried out by the National Security Agency. As if we could afford to do otherwise.
I just wish he'd quit calling it the War on Terror, which is so imprecise.
      The part I liked was his willingness to squarely confront the public's childish lack of seriousness. We want to be safe, but we don't want to hurt anybody's feelings. We want to feel secure within our borders, but we don't want to go beyond vigilance-lite. This is consistent with our new national religion, which is based on the idea that it's possible to get something for nothing.
     The public has a short memory. I maintain that, despite a lot of sentimental posturing, for most Americans the World Trade Center knockdown was just another television show, and few people can even remember the plot of an ABC Movie-of-the-Week from a few months ago, so why should they remember the details of 9/11/01? -- namely that a posse of Islamic maniacs flew airplanes into New York's biggest skyscrapers and collapsed them (as well as ramming the Pentagon and almost hitting another target except that the hijacked fourth plane crashed in Pennsylvania). And maybe we ought to keep tabs on other potential maniacs of that persuasion.
     By the way, I get indignant letters every day from people who are convinced that Dick Cheney headed a plot behind the 9/11 attacks. I regard these conspiracy theories as crazy, but the craziness itself seems to be increasing in breadth and amplitude across the land -- as a subconscious expression of our collective anxiety over a way of life with poor prospects.
Anyway, since no other major act of terrorist violence has occurred in the US since then, Americans seem to have concluded that nothing would have happened since 9/11, or can happen. So call off the dawgs.
      But listening in on people's phone conversations is probably pretty mild compared to what else may be going on
     As my friend Peter put it yesterday, "What you wonder is: how many motherfuckers our guys have been secretly whacking in these dark little corners around the world the past few years." His point is a good one. Do you suppose we've really discontinued covert operations out there? And if we didn't have our guys out there whacking dangerous motherfuckers, would the world be a worse place? And what percentage of the public thinks we don't do stuff like that anymore, or don't have to?
     The paradoxical thing about all this is that if the President is willing to tell America that we should grow up and get serious about national security, then why doesn't Mr. Bush tell America the cold, hard, grownup truth that we are entering a permanent global energy crisis that will force us to live differently? Or tell America the truth that we are occupying Iraq in order to maintain a foothold in the region where two-thirds of the world's remaining oil is? And that the basic equation is that our current way of life depends utterly on continued access to this oil -- so either change that way of life or get used to the necessity of maintaining a garrison in the Middle East.
If Mr. Bush was consistent with these messages, the public might actually gain a sense of purpose -- that is, of devoting our patriotic spirit to prepare for the great changes we face, instead of just pretending that the funburger fiesta-on-wheels can continue indefinitely?

December 12, 2005
     What on earth does George W. Bush mean by victory? To remake Iraq in the image of Indiana?

     I suppose I am the 1,289,654th observer to note that the president does a poor job of articulating the goal of our military venture over there -- which is to defend our access to the oil of the Middle East.
     Incessantly flogging the word freedom the past three years was probably his biggest mistake. It would have been more precise, modest, and useful to say that we were supporting elections under a new constitution (written with our assistance) because the alternative would be to just appoint a bunch of guys we liked to be a government -- and that government would have had no legitimacy among the Iraqi people, not to mention the bawling of world opinion against it (and us). So, of course, elections were a necessity, and the policing required to make that happen has been an ugly struggle.
     Otherwise, the most conspicuous freedom in Iraq, for most Iraqis, the past three years has been freedom from reliable electrical service.
     But victory? That's really a howler. Over what? The terrorists, I suppose, if you call the larger enterprise a War on Terror, another unfortunate locution. The fact is that there is a vast popular antipathy against the United States that emanates from west of Gibraltar clear across the eastern hemisphere to the south Pacific. In formal terms, it is an Islamic jihad. Its clear goal is to expel interlopers from Islamic territory. It imposes rather severe penalties on the perceived interlopers, and its tactics are not gentlemanly, especially where civilians are in the way.
     Victory against this would seem to imply the extermination of at least tens of millions of Islamic young men, not a realistic goal. We are equally unlikely to charm them into a change of affection by demonstrating the art of elections.
      Getting back to the smaller theater of Iraq itself, we see a cast of characters arrayed against our presence: Shiites acting as proxies for neighboring Iran; former Baathists seeking crazily to regain control; Sunnis desperately trying to keep a hand in the oil revenue, since most of the oil lies in either Shiite or Kurdish territory; and of course there is probably a contingent of international jihadistas, young men from all over the Middle East and elsewhere, with no regular work except to harass and exasperate the infidel occupiers. There is certainly an inexhaustible supply of these young men. And an inexhaustible supply of munitions at their disposal. There is no chance whatsoever that we are going to pacify these warriors. They will not rest until we depart their ummah and we are not going to do that until there is no oil left in it.
      So, victory in any conventional sense that Americans understand this word is out of the question, and the President's use of it is his biggest blunder since the "mission accomplished" stunt of 2003. The Iraq elections may succeed in establishing a legitimate government -- but then what? Will it govern for a month and a half and fall apart? The eventual likely outcome, as everybody knows, is civil war in Iraq, and perhaps a widening conflict with Iran on one side, Syria on the other side, and Saudi Arabia left to the Jihadistas. Elsewhere in the world, things will continue to blow up.
     Meanwhile, back here in This Land is Your Land, the easy motoring utopia will remain non-negotiable and we'll drive Amtrak into bankruptcy.