United Sachs of Amerika

I really don't like to re use images but I do it to make a point. I have spent several years puzzling over why our country's economy went over a cliff like Wily Coyote. Our political and financial leaders and our media have their take on the causes of this collapse and what they think are the proper solutions to address the problem. Their advice has filled me with unease. After the twin towers fell down with the help of 15 Saudi nationals and three of their friends, our president was asked what Americans could do and he said"Shop." I knew then that America had a problem far bigger than the loss of 3000 of our citizens inside two collapsed buildings.There were two obvious questions that the media did not ask:1. Why would these Arab terrorists do such a thing and 2. Why would our president say such a thing? It was at that moment that I suffered a cognitive dissonance breakdown. This was cognitive dissonance on steroids. No one in power asked the questions. All I could think was "What in heck is going on here?" It has taken me a long time to figure out how we got to this point and it has involved a lot of reading and conversations and I have come to a general set of conclusions that I think explains why all this happened and who the responsible parties might be. I do not have definitive proof and my conclusions are more in the nature of allegations. My research has involved retrospective looks at the history of economic collapses as well as financial panics, cultural collapses, social collapses and collapses of civilizations. I assumed that I might find clues to our current economic collapse by looking at others in the near and distant past and I have addressed aspects of these in past blogs and will likely do the same in future blogs. But in this posting I think I have found the proximate causes and source of this current depression or recession if you will. Plainly stated, the causes are the policies of the Federal Reserve Central Bank and the US Treasury with the help of now massive too big to fail central banks and global banks both here and around the world. I think I can trace the beginning of this current problem as far back as the 1980's and 1990's. President Reagan got the ball rolling when he fired then Federal Reserve Chief Paul Volker and replaced him with an Ayn Rand libertarian by the name of Alan Greenspan. There is ample documentation from the 1990's laying out how this policy evolved. In the early 1990's the US was the unchallenged economic and military super power with the collapse of the Soviet Union. This allowed our military and political and corporate leaders to imagine the US as THE new Imperial Power in the world.
When you are the only imperial power, you get to tell the world to jump and all they can ask is "How high?". If you are the sole imperial power, you get to decide who is with you and who is against you. And if you cross an imperial power, you will pay a price and anyone who interferes with an imperial power's access to energy will pay the ultimate price.
Any questions?
And so it went. One of the first items on this new agenda was money, that little item that makes the world go round. It would be a whole lot simpler if the US could just deal with one global currency. Let's just make the US dollar the global reserve currency and we'll price everything important like oil in dollars. That would make trading and commerce nice and simple for everybody, like us.Any objections out there in the trading pits of the world? No? Good.
Now that we had the global reserve currency, everybody wanted it, so our merchants caught on to the Wall Mart model
of the lowest price, Always! My pappy always used to say that there were two ways to get rich: don't spend it or go out and earn it. Our leaders chose the former and the fedsters and the banksters and all their associated chums in the IMF and the World Bank went along with this idea by loaning dollars all over the world to any country that wanted to build sweatshops to sell cheap stuff to the US. Somewhere along the way the boys behind those marble and glass facades had decided that stuff made in a sweatshop in China was a better deal than at a factory in Ohio. And why not just tweak the tax law to allow our own good ole American companies to build those factories. That way they could insure that that stuff could be made for half the quality but one fourth of the price and the US tax system could allow these American companies to write off all those pesky expenses of closing factories and paying pensions and health care to those lazy middle class union workers. By now children of those middle class union workers were pouring out of colleges with MBA and law degrees and quickly finding out that the real money was not in using air tools building stuff but using the new fangled computer tools to move money at warp speed. So instead of putting on tool belts, they donned pin striped suits and headed downtown to join the new industrial revolution, the Information Economy. They handed off their tool belts to the hard working brown folks now pouring over the porous southern border. Meanwhile back inside the big banking towers there were guys with computer science degrees and MBA's living the American Dream and trying to think up new ways to use that most fundamental tenet of the American Dream:Something for Nothing! It was the computer revolution that fueled the next leg up. With the aid of computers, sharp eyed traders and economists were finding little discrepancies in the pricing of assets such as bonds in world markets and they discovered that they could use those very slight differences in prices to make money. They discovered that trading these slight differences might only net say .01 % on a trade but it worked every time. The next step was to leverage the bet, 10 times. That made the return 1 %. 100 times made it 10%. . So investment banks turned into betting casinos. New words were invented to describe what they were doing like arbitrage, pairs trading, and a myriad of other names were invented to describe these complicated bets. Initially they bet on government bonds using complex strategies of going long and short and taking options. Most of this began with a new hedge fund in Wall Street called Long Term Capital Management(LTCM). The members included traders and statisticians from most of the Wall Street Trading houses and even a few Nobel prize winners. They felt they had a can't miss strategy and no one had yet heard of Taleb's term Black Swan, to describe rare events. But the East Asia Financial crisis and the Russian bond defaults became those Black Swan events and LTCM collapsed. The Federal Reserve stepped in because the losses were enormous but the Fed managed to put together a bailout of LTCM by passing the hat around Wall Street to the big banks. I'll skip over the details but this helped to cement the Fed/Big Bank marriage even more. People took to calling these trading strategies derivative trading, and in the late 1990's many people like CFTC Chairperson Brooksley Born began to question the wisdom of allowing this unseen unregulated trading which clearly had huge risks to the economy. But these wealthy bankers like John Corzine and Hank Paulson of Goldman Sachs and Robert Rubin and Larry Summers and supportive Senators like Phil Graham and of course Al Greenspan of the Fed wanted nothing to do with any stinking regulation of their casino. How they crushed Brooksley Born and abolished the last wall to their trading strategies, the depression era Glass-Steagall Act with the help of President Clinton has been well covered in several books and documentaries. With Brooksley Born and other troublesome pests now passing under the FED/Banking steamroller and Glass-Steagall out of the way, the way was clear for the banks aided by the hands off Fed to really expand derivative trading worldwide. The banks wasted no time developing the next product that would make everyone's payday for the next decade: Securitization of Assets. They used the US mortgage market as their playground and since mortgages no longer resided at the local S&L or bank, they could buy these mortgages and "bundle" them converting a "debt" into an asset . It was magic and they could mix and match mortgages, slice and dice mortgages and covert them into something like a stock or bond that could be sold to unsuspecting buyers. To make these debts more palatable they bribed and paid the big rating agencies to put their good housekeeping seal of approval on them. And with easy Al Greenspan keeping interests rates as low as possible to get a new bubble inflating to replace the tech bubble popping, these new securities seemed to be just the ticket paying a nice rate of return to unsuspecting suckers which included not only other banks but municipalities, individuals andpension firms both here and abroad. Profits exploded at these banks as they spread these securities all over the world. But down in the dungeon levels of Goldman Sachs there was another branch of the company who were nervous enough about these securities that they crafted secret derivative shorting strategies of these securitized mortgages just in case the housing market didn't keep rising . Hank Paulson was careful to make sure that this dirty secret never saw the light of day. Things went swimmingly with the whole cast of rogues passing through the swinging doors between Government, the Fed and Wall Street and everyone making more and more money right up to the waning months of the junior bush administration. By then Hank Paulson had moved over from Goldman Sachs to the Treasury so he could have the 500 million or so he had in Goldman Sachs retirement tax free as one of the perks for going through that swinging door. When the housing market began its collapse and the securities became less secure, and when people started to refer to them as "toxic waste", the banks discovered they were holding on to a huge declining asset that no one wanted and dozens of banks became essentially insolvent when these assets became in effect liabilities. The Fed and Hank Paulson knew that this problem threatened him and a lot of his cronies with ruin so he did what any robber would have done: He held up the American People telling everyone that Armageddon would certainly happen if the banks weren't covered for their bad bets. He had to have been particularly worried about his own plummeting net worth because Goldman stock was dropping in value just like all the other banks. In a mere 3 page paper he told the Congress and the American People that they had to come up with three quarters of a Trillion dollars virtually overnight or it was Armageddon and the world financial establishment would collapse. We are now more than one year past that amazing con job by Treasury and the Fed and many trillions has been given or promised since in a series of futile gestures to prevent Armageddon. We have been served up all manner of justification for these actions which have convincingly demonstrated to discerning observers that the Federal Reserve would do whatever it took to protect and preserve its own even if it meant bypassing the Congress and the Constitution in the process. High net worth individuals, Sovereign Wealth Funds around the world, Hedge Funds and Banks were holding the bonds in these sinking banks and GSE's like Freddie Mac and Fannie along with Insurance companies like AIG. They had been the aiders and abettors of this bubble and they stood to lose big if their badbets weren't covered. The American People didn't want it, members of congress not on the bankers payroll didn't want it, but the Fed and Treasury wanted it. Thus it happened. How on earth did it happen? Where did the Fed get the money? Ben Bernanke once remarked that, “the US government has a technology, called the printing press (or today, its electronic equivalent), that allows it to produce as many US dollars as it wishes at essentially no cost”. And so there you have it. That building above is the De facto White House. It is where the real power resides in this country. It is the Fourth Branch of Government and arguably, the most powerful. That Fed with Goldman Sachs and other bankers pulling the strings,has decided that no bondholders In these banks and insurance companies will get financial haircuts and Lloyd Blankfein, current CEO of Goldman, has decreed that if he wants to pay his executives $30 Billion in bonuses this Christmas, he will, even if the taxpayer has bailed him out. It should be clear to anyone that these people have no shame and no limits to their chutzpah, their greed, and their contempt of the American taxpayer . And as I write this, absolutely nothing has happened to change or limit the influence of these Wall Street banks. They can still trade derivatives to their heart's content with no oversight whatever and they can securitize anything within their reach. In effect, they are the shadow government and they know it. The only glimmer of hope is that Republican Representative Ron Paul of Texas has a bill with over 300 cosponsors to have the GAO audit the Fed and I urge anyone who is reading to write or call their congressman to support this audit. The banks and the senators who are tools of the banking lobby such as Barney Frank, Mel Watt, and Charles Schumer are fighting tooth and nail to stop this grass roots movement which is perhaps might be the only bipartisan bill to appear in the Congress this year. I will also provide a link to a petition which is perhaps worth signing. If this bill passes, there is no assurance Barak will sign it, but that is another matter. Here is the link:http://stopbailoutben.com/?source=e2-fix. I have a myriad of sources for the information contained in this posting with especial thanks to theautomaticearth.com , and Mish at http://globaleconomicanalysis.blogspot.com/ as well as a number of other economic books and fellow bloggers out there in cyberland who I do not have the time or space to thank at this time. Ron Paul's book is called End the Fed. The gigantic building early in the blog is of course, the seat of government, Goldman Sachs.

Do Buy(!) Meltdown 2.0

The blog servers are really humming now that we have all given thanks to the turkeys of the world. The grist for a new blog is piling up head high. I've spent the entire morning reading amazing takes on Dubai, Obama, TARP, and world markets. Mostly it's about how hopeless this world debt situation is and how badly it will all end. I can particularly recommend Jim Kunstler's Monday morning blog which is hilarious if a bit dark. The automatic earth is well done and continues to feature Dorthea Lange photos which are darkly appropriate . I did uncover a 6 month old in depth report on Dubai which is stunning and harks back to the day when the US had good overseas journalists. It is a must read:http://www.independent.co.uk/opinion/commentators/johann-hari/the-dark-side-of-dubai-1664368.html.
While you read about it, keep in mind that this is the place where Halliburton and Darth Cheney moved to as their corporate headquarters, the slave state hell of Do BUY!
Dubai does have some features of their society that I wish we could adopt selectively here, like debtors prison. You owe money, you go to the hoosegow. In the good old US of Tarp, we pay you if you owe money. One other curiosity was that at market close on the Thanksgiving Friday bloodbath, one of the few stocks up big was Sturm Ruger, the gun and ammunition manufacturer. Could this be a portent?

Meltdown in Dubai

You are looking at the world's tallest building at 2684', over one half mile high. It is the Burj Dubai and the lightning strike of the world credit implosion hit home in the improbably bizarre desert nation state of Dubai this thanksgiving when Dubai World, a giant real estate development conglomerate told the world banks that it was going to be missing payments on its $60 Billion loan for the next 6 months or so. Dubai is famous for its extravagant Mall of the Emirates with a 5 run ski area with real snow and islands in the shape of a palm trees and the world for sale to uber wealthy nutcases. The company has dredged up vast quantities of silt from the Arabian Gulf using computer modeling to make home site islands in the shape of countries and palm fronds. Sales haven't taken off as hoped and real estate prices have gone off a cliff mirroring the collapse in Las Vegas real estate, our home grown equivalent to Dubai. Dubai is the poster child of environmental unsustainability. Dubai has little in the way of oil and gas resources, at least as compared to it's wealthy neighbors in the Persian Gulf but it somehow managed to promote itself as a financial services and destination resort to the Gulf Region but that business model is obviously at risk as are a lot of misbegotten commercial real estate projects elsewhere. The sums to bail out poor Dubai are chump change compared to what Tim Geithner and Helicopter Ben and Nasty Larry have parcelled out to Goldman Sachs and AIG but it will be a wake up call to the nincompoops who run the world's investment banks. But not to worry, maybe Tim or Lord whatshisface of the Bank of England will step up again and provide taxpayer funded help to keep this Tower of Babel on schedule along with all the other nonsensical projects in the pipeline. The announcement from Dubai was scheduled to coincide with a big Islamic holiday so it will be a few days for the financial sandstorm to clear up. Speculation has it that the big money in UAE, namely Abu Dhabi with it's giant sovereign wealth fund will step up with a bridge loan but other financial bloggers think that Abu Dhabi is fed up with Dubai and may instead come in and pick up distressed assets for pennies on the dollar. Regardless of what happens, it bodes poorly for US Commercial RE which is already in deep feces. The CDS market has been humming with risk spreads widening as the smart money seeks financial protection from high risk countries like Dubai. Some of the countries where risk premiums are rising besides Dubai are Greece, Spain, Italy and the good old USA. Premiums are dropping in former financial basket cases like Russia and Brazil. It's a curious world we live in. Happy Thanksgiving.

President Obama: Wake up!

President Obama is in a death spiral, a flat spin which is taking the country down with him
This will be a blog with images of important dangerous economists who have brought this country to its knees and the few economists who have tried to prevent this economic depression. I'll give you a hint:the economists who ruined this country pictured to the left have Y chromosomes. The woman economist is Brooksley Born who tried to stop the madness being hatched by the pictured economic thugs while serving as commissioner of the CFTC. She was crushed by Robert Rubin, Larry Summers and Al Greenspan in the 1990's when she had the temerity to question the emerging cancer of unregulated derivative banking. Sadly, she is gone, flattened by the Wall Street Banking steamroller . The pictured bully boys are still atop that steamroller and now they have finally aroused the ire of Main Street, and are back on their heels fighting for their survival. Tim Geithner was shredded in front of a congressional panel last week and at one point he lost all cool and had the chutzpah to blast a republican congressman from Texas for causing the current unregulated banking debacle . The preposterous irony of course was that the debacle happened on his watch when he was the head of the NY Fed, the one person who could have done something to mitigate the disaster. He engineered the enormous bailout of AIG which had the effect of funneling taxpayer money straight into the coffers of Goldman Sachs and other huge investment banks who had made bad derivative bets both here and abroad . His crime was that he allowed GS and the others to get 100 cents on the dollar, courtesy of the taxpayer. Worse, he lied about the whole process from beginning to end. The tens of billions that went to Goldman Sachs will allow them to pay out $30 billion to their greedy executives this Christmas. Fed Chairman Bernanke has an op ed in this Sunday's Washington Post angrily denouncing the congress for even thinking of oversight and regulation of the Fed, which the Congress itself created in 1913. His is a sample of some of his outrageous assertions:

“Now more than ever, America needs a strong, nonpolitical and independent central bank with the tools to promote financial stability and to help steer our economy to recovery without inflation,” he said.

And when it comes to monetary policy, he said, “independent does not mean unaccountable.” He said the actions of the Fed were already thoroughly reviewed and needed to be protected from Congressional influence, “which would undermine the confidence the public and the markets have in the Fed.”

This is ridiculous, absurd, self serving nonsense. The public has no confidence in an organization that is the defacto 4th branch of the government which you could easily argue is by far the most powerful and fully unaccountable branch of government. The Fed and Treasury are dominated and influenced by the Wall Street Banks and large corporations who are confident that Treasury and the Fed will take care of them to the detriment of the country. It is the Treasury and the Fed who decide how and when to raise and print money and who gets it on what terms, not the President, the congress or the courts or of course, the people. It is no accident that Treasury Secretaries, economic advisers and Fed officers are of , by, for, and from the big banks. That these men should be sacked goes without saying, but replacing them from the same pool of Wall Street Banksters changes nothing. They should be investigated and if found guilty of indictable offenses, sentenced and imprisoned. Ex Wall Street bankers have no place in a presidential cabinet. There are many qualified folks in academe and government who could be independent and non partisan. Paul Volker demonstrated vast independence which is why Reagan and Wall Street had him replaced. Brooksley Born, Elizabeth Warren, and Gretchen Morgenson are brilliant articulate women with a proven grasp of economics and finance and who appear to be tools of no one. The obvious political problem of Obama sacking an entire economic team and Fed Chairman and cabinet secretary would make it appear that he has blundered in his choice of advisers.

In fact, that is exactly what he has done, but keeping them would be the greater blunder. These men along with dozens of others are and have been tools and leaders of Wall Street and worse, victims of their own faulty neoclassical economic philosophies and Keynesian fallacious delusions . They have perverted capitalism into a ugly mutant blend of socialism for the rich, financial fascism, arrogant imperialism all designed to achieve total economic control over the society by subverting and destroying the free market and the currency of the United States. In this they have succeeded and now that the serfs are getting restive, they are starting to fight back and crush this mini rebellion before it gets a head of steam. One little statistic I read to give a little context: the average Goldman Sachs employee earned $770,000 last year. There are over 30,000 of them. 49,000,000 Americans are hungry and 3,000,000 are homeless and over $160,000,000,000 will be paid out in bonuses to banksters this year by banks who received BILLIONS from Treasury and the FED courtesy of the taxpayer who resisted those payouts but who could do nothing about it because a tiny minority of the super wealthy corporate bankster barons now tell the people and the government representatives when to jump and how high. Change at the Congressional and Senate level to at least audit and make accountable the FED is a necessary first step. Republican Ron Paul has over 300 members of the house who have signed on to his bill to do just that. If your representative is among the 150 odd who did not, find out why.

South of the Border.....or.. BIG IRON comes home

I have just returned from a trip to San Carlos,Mexico, in the Sonoran Desert on the upper East shore of the Sea of Cortez. I made the trip to retrieve our 1977 suburban, BIG IRON, I had left in a storage yard when daughter Heidi and I hopped on our Cal 48 KOHO to sail to Alaska last May. While we were en route,BIG IRON had to weather a hurricane . To return to retrieve our car I had to take a motley assortment of planes and buses and trucks to get to San Carlos. Once I arrived and saw the mess, I considered donating BIG IRON to the local recycler, but there wasn't any. I had heard there was a lot of damage to the town. There was. Houses and cars and boats washed away along with a lot of bridges and roads. And yet a lot of favorably sited structures were untouched. The local Mexicans were still hard at it ,both men and women with shovels and rakes and brooms trying to get all the gravel off the roads. The locals seemed nonplussed about it all but the resident expats were still pretty grumpy waiting to have their utilities restored. Many were still trucking in water. Anyway..back to my story. The old truck wouldn't start. She had been underwater a few feet. I was told San Carlos set a new all time rainfall record of 45+ inches of water in less than a day with normal annual rainfall only 6-8".Finding parts and help for my Suburban was a challenge with no auto parts stores nearby, no rental cars and the storage yard distant from the town. I did a lot of walking and met many nice Mexicans who all had stories to tell me. I found a used starter from a 1976 Chevy which worked. My old starter was new, which I had installed 6 months ago before the trip down but it swam with the fishes because unfortunately it is mounted low on the engine . It was corroded. I disassembled it, cleaned up the commutator, and did locate a replacement solenoid which I found on a bus trip to Guaymas, the nearest town of any size. The transmission had to refilled with new oil oil but the engine was fine. The whole job was done with a crescent wrench and vice grips and no sockets. There were lots of mosquitoes and mud and no way to jack up the car properly on supports and so working under it was a tight fit and rather messy. Other misc electrical gremlins still plague me but I managed to get it running with new gasoline. The trip north to the border had some trials and tribulations which included a Mexican tag team stealing my new CD player out of the dash while my back was turned. It was a clever trick done at a Pemex gas station with one guy distracting me while his buddy did his evil deed. I actually drove 1350 miles nonstop before I started seeing the mexican virgin of Guadelupe, the ghost of Brigham Young, and pink giraffes near Pocatello Idaho, so I had to stop to banish the demons and limp home the next morning. The old vermilion colored four wheel drive struggled up 8500' Teton Pass where it coughed and sputtered and belched and farted finally crested the summit after a few rest stops for the carburetor to gather its wits. I eventually coasted down the backside of the pass and chugged home to our log cabin in the cottonwoods. A friend asked me why I would spend $500 to bring back a car worth $400. I told him I was just doing what the government was doing.

Back to the Grind

It has been 6 months since the last blog. Long difficult trip up from Mexico on Koho, our Cal48 with daughter Heidi. It is docked near Glacier Bay for the winter. I may tell the story here someday. When I left the depression had started and my retirement was toast. When I got back 4.5 months later, the depression was still starting and the S&P had staged a monster bear market rally up almost 60% so I took that as a sign from heaven that it might be time to sell. I was out of touch most of the time from the brouhaha of the industrial world and it was with dismay that I returned to the same world I left. Barak has not figured it out and remains a captive puppet to his GS Thug Advisers and the Federal Reserve and is presiding over quantitative easing pouring money into wall street banks stealing a favorable economic future from my children. In the process he is destroying the dollar(down %16 in the past 6 months against most currencies). And there was huge news from the middle east totally ignored by all the media except Reuters. Saudi Arabia is moving to have it's crude listed on the Argus US Sour Crude Index based in London. So what, you say. How is that news? It's big news pilgrim and I hope somebody notes it somewhere. KSA has been unhappy with the volatility of the crude markets which are mostly western based, and of course primarily in the NYMEX in New York. It has been the perfect playground of the speculators who play in the futures market sandbox and the Saudis think a lot of the last spike to $147 was due to the unregulated futures speculators with their contracts and derivatives. So they have had enough and they have taken their dog and pony show elsewhere. They hope to have a more stable environment for oil prices which will help their fiscal planning and we will have to see if it works for them. I did not see any reference on how crude will be priced but I would not be surprised to see if petrodollar pricing may be nearing an end. If oil becomes priced in say, the Euro or a new Gulf currency(also rumored), the US can still buy oil on the world market as long as dollars can be exchanged for the new currency. But it is another sign that the days of dollar and US hegemony are nearing an end. And the Saudis are not even the biggest producer. Russia last month produced 10.04 MBPD which may be a peak for them. The Saudi Arabia peaked 29 years ago in 1980 at 9.9 MBPD. If the Russians and Africans and Latin Producers decide to emulate the Saudis, it is checkmate for the dollar. Oil demand in the US is now down to the mid 18 MBPD which is off 4.4% from a year ago but interestingly, that is due entirely to distillate fuels. Gasoline consumption is unchanged. Back here in Jackson Hole the Depression is marching on. For the first time in memory properties are being foreclosed on the courthouse steps and with the exception of some relatively cheap condos, the foreclosures have failed to attract bids any where near the reserve prices. Hotels are turning into rooming houses and advertising weekly and monthly rates. The Point is demanding $239 a week and super 8 only %650 a month. These cheap rates for pretty nice hotels are killing the apartment and condo market especially in the commuter towns of Victor and Driggs ID and Alpine WY and vacant rental listings are flooding the want ads just as job wanted ads have almost disappeared. Naturally the residential real estate market is dead and hundreds of tradesmen and carpenters have packed their dogs and tool belts into their pickups and fled for greener pastures. Boom and bust cycles are the rule in Wyoming but a residential bust this big has never happened. Credit is drying up and a builder recently advertised in the News and Guide for a loan of $1.2 Million for which he was willing to pay %12 "guaranteed" over 48 months. All of these local tidbits have the earmarks of a deflationary depression. Ah...Life at the end of empire.

Brave New World

Well I am wrapping up preparations for a long ocean voyage across and around the Pacific Ocean. The old suburban keeps swallowing more food and gear. The drive down to the port in Mexico will total 1600 miles and the ocean distance traversed may approach 7000 miles broken into two long legs. If the weather gods smile upon us and our old fiberglass cockleshell holds together we may fetch up on the coast of Alaska before Independence Day. Cousin Hal and daughter Heidi are the intrepid crew. I have started to view the trip in metaphorical terms, as perhaps grist for my novel ideas and as an opportunity to reflect upon the changes sure to come this century as our world moves from an industrial economy to a deindustrial future. I will certainly use this time to enjoy a break from the brouhaha of the clanging culture and the madding crowd as we bid adieu to television, mass culture and the internet. There are so very few people who appreciate the consequences of these wrenching changes to come and the preparations that we as individuals must make to deal with an economy on the downside of the Hubbert Oil Peak which appears to have occurred last year. From here on out the world will start to have less oil and within a decade or so less cheap energy of all types. Very few people understand that the past few centuries of exponential population growth, industrial and technological expansion was caused by free and seemingly inexhaustible fossil energy and now that cheap energy availability is ending, so will this growth. But almost no one sees this Big Picture except for a few thoughtful observers. And it is just our rotten luck to be en mired in a severe recession or depression caused by the last gasp greed of corporate financial and government figures who have destroyed a world economy based increasingly on growth and unregulated capitalism and consumption of resources of all types. The devils who caused this recent collapse are fighting to revive their failed juggernaut by seeking a transfusion from the futures of our children saddling and layering on more and more debt on to a population increasingly unemployed and poor. It is always this way. The nobles maintain their wealth by exploiting the serfs. For a while in the post war period America enjoyed an explosion of wealth and an expansion of its middle class. By working at a job making things and providing services, an American citizen could provide shelter and sustenance for himself and his family on just his income and dream of a brighter economic future for his children.This was possible in 1970 and has become less possible with each passing decade and is now only possible if you are a noble. It is no coincidence that it was about 1970 when American reached peak oil production, the Hubbert Peak. This prosperity was made possible and was in fact facilitated by this nearly free fossil energy. This same peak has now been reached on a global basis and the energy that fueled this industrial expansion is starting to run out but the consequences are still invisible to the bulk of the population. The great automobile dependent suburban expansion with its malls and industrial parks and cloverleafs much of it built in inhospitable regions is long in the tooth and starting to decay. Metatastatic sunbelt cities dependent upon cheap energy such as Phoenix have no future and will almost certainly depopulate in coming decades as the invisible economic energy umbilical is cut in a scenario laid out in exquisite elegant detail by James Michael Greer in his Theory of Catabolic Collapse. And today our politicians, our media, and our people are obsessed with a collapsing economy. They think that someday they will be able to return to an economy they experienced for the past 30 or 40 years. The investment community dreams of a return to historical returns of 11% in their stock markets. They do not see that all this growth and wealth expansion occurred because of cheap available oil and cheap energy. I think that some regions will experience true social collapse with dangerous disorder while other regions with local production of food and goods will survive and even thrive. Countries who have evolved into highly complex networked economies dependent upon cheap energy will suffer a stair step decline in their standard of living. There have been periods in this nation's history when we had a dynamic social order, when we built buildings and cities of great beauty and created enduring art. I'm thinking for example, of the Craftsman Period from 1890 to about 1920. We can return to an economy based upon local production and livable walkable communities in habitable climates but until we wake up as a nation to the futility of trying to reflate an utterly doomed model, we will not be able to approach even the possibility of building a new sustainable and nurturing society. I am reminded of the lines of Matthew Arnold's poem, Dover Beach:
"And we are here as on a darling plain
Swept with confused alarms of struggle and flight
Where ignorant armies clash by night."