Real Congressmen of Genius

Let's do a quick rundown of challenges facing the U.S. at the moment:

• Iraq (at best, improving from a very low point, at worst, bogged down in more of the same)
• Afghanistan (simmering)
• Pakistan (potentially coming to a boil and with the U.S. threatening military incursions into the tribal areas)
• Iran (lot's of bluster, but it looks like there may be some real progress in negotiations here - but still a touchy situation)
• Mexico (mucho violence, plus the looming petroleum catastrophe described in the previous blog posting)
• Federal Debt Crisis (fugly)

With all of those issues on the table, plus the many other issues out there involving federal legislation, big changes in the nuclear weapons proliferation regime, refinery problems, electrical grid issues, etc. what did the United States Congress see fit to do?

Go out and kick a valuable ally right in the nuts over an issue six decades old.

House wants Japan apology
‘Comfort women’ resolution urges government to say it’s sorry
by Edward Epstein, Chronicle Washington Bureau

(07-31) 04:00 PDT Washington -- The House passed a resolution Monday calling on Japan to finally formally apologize to tens of thousands of "comfort women" forced into World War II sex slavery, despite vigorous lobbying by the Japanese government.

The measure sponsored by Rep. Mike Honda, D-San Jose, which culminated years of lobbying by the surviving women from several Asian and European countries and their supporters, passed by voice vote after about a half hour of debate in which no one spoke in opposition.

To people in the United States, the issue is just one of many obscure foreign matters on which Congress weighs in with nonbinding resolutions. But in Japan, Honda's demand for an apology 62 years after Japan's surrender has been headline news for months. It has become one of many troubles dogging Prime Minister Shinzo Abe, whose ruling Liberal Democratic Party was routed Sunday in elections for parliament's upper house...

Yes, the issue is an ugly one. That said - the Japanese have apologized before. They have paid reparations. Even if they apologize, it won't end there. There will always be a group of people who will want more.

Oh yeah - and the Japanese are major buyers of U.S. treasury products - the things that keep our bloated federal government working. What a great idea, piss off a military and economic ally over an ugly issue from two generations ago.

I wonder how the U.S. Congress would react to a Japanese Diet resolution calling for an official apology for slavery in the U.S. from the 1800's? Or demand reparations to African-Americans who lived under Jim Crow Laws?

Amazing, the blinding arrogance of power in the waning days of Empire.

"Fuck Martha Stewart! Martha's polishing the brass on the Titanic. It's all going down, man!" - Tyler Durden

PEMEX Numbers

This chart sums it all up:

Cantarell is one of the greatest oil fields ever exploited by the human race. Her day is done.

Let's drop all sarcasm and my normal, feeble, attempts at humor. PEMEX has a problem. And that means North America, specifically the United States, has a problem. The following charts use data taken from the 2006 PEMEX Statistical Yearbook:

Depression Through Inflation

Depression through inflation is a phrase my father often uses to describe an environment where bottomline costs are increasing, but profits are stagnant due to competition or lack of ability to grow market share. Costs eat you up and eventually destroys you. Anyone who remembers owning crop land during the 1980's is familiar with this phenomenon.

In a Peak Oil world, where you have to run harder and harder, just to stay at the same, or nearly the same, level of production, that concept applies. You have to drill more rigs, hire more people, buy expensive equipment - all just to keep production from declining too fast. Anyone who is familiar with the long slide from peak production in Texas knows this trend very, very well.

Death of the Cash Cow

As I've touched on in the past - PEMEX, is an enormous cash cow for the Mexican Federal Government.

And the figures in the chart above are just the direct duties paid to the government. What about the VAT associated with all the good purchased by PEMEX employees, the graft and contracts associated with providing work for PEMEX, etc. The tax collection trend is up, so all is well, right?

Well, take a look at the reserves trend:

NOTE: The projected reserves figures are simple polynomial extrapolations off the data. This is not a rigorous analysis of the raw data (which I don't have access to) but a best-guess based on current trends. From looking at the exploration data in the yearbook, PEMEX peaked out in their exploration efforts back in 2004. The number of fields they've been discovering peaked out in 2003 at 33 fields discovered (but none large enough to offset that collapsing reserves figure).

Proven reserves maybe have another decade left. Ten years. Ten years for Mexico to prepare for an enormous shock to their economy, as export income dries up. The U.S. could go out and strike a deal with Saudi Arabia back when we peaked out - we had the guns and money to do it. But Saudi is at or past peak production now as well. The great oil export game is coming to a close.

According to PEMEX, their exports (in terms of volume of oil shipped) topped out in 2003. Probable reserves give them some cushion as far as domestic needs are concerned - but for how long? And can they keep up their production numbers in the face of Nigerian-style disruption?

Mexico is the Number 2 source of oil for the United States (they passed Saudi Arabia in 2007). In a few years those billions of barrels will no longer be available for U.S. consumption. Period. End of story.

What else is there to say? If you have not already done so, begin preparing yourself for the post-fossil fuel world and an age of chaos.

More Fun With Socionomics

They have a new interview up over at the Socionomics Institute. It seems funny on the face of it, but the underlying implications are, well, disturbing.

Take a few minutes to give it a listen. The link below will download a .zip file for you. If you want to hear it streaming, click here, and then look for the headline below.

Socionomic Alert !! Ladies with Pink Tasers Are Coming to a Parking Lot Near You!
That’s right, Tasers are going mainstream, priced for the consumer market at $350 and made in a variety of designer colors. Looking for that special gift for that special someone? Socionomics has some ideas for you and explains why a Taser may be the perfect gift.

That Can't Happen in the U.S. Military

In Another Brick in the Wall, I touched on how the tools of the nation-state are being hollowed out and taken over by groups, gangs and tribals of various stripes, with Nigeria just one example among many.

Take a few minutes, check this out and ponder the ramifications:

Gangs Spreading In The Military

(CBS) U.S. Army Sgt. Juwan Johnson got a hero's welcome while home on leave in June of 2004. "Not only did I love my son - but my god - I liked the man he was becoming," his mother, Stephanie Cockrell, remembers. But that trip home was the last time his family saw him alive. When Johnson died, he wasn't in a war zone, he was in Germany.

"He had finished his term in Iraq," his mother said. "I talked to him the day before his death. He said, 'Mom, I'm in the process of discharging out. I'll be out in two weeks'."

On July 3, 2005, Sgt. Johnson went to a park not far from his base in Germany to be initiated into the 'Gangster Disciples,' a notorious Chicago-based street gang. He was beaten by eight other soldiers in a "jump-in" - an initiation rite common to many gangs.

And if it is making headlines at CBS, just how deeply penetrated are the various branches of the armed services?

When they muster out and retain their ties to the gang, what does that imply for the spread o these ties in civil society - where gangs are already a major force in many urban and increasingly suburban areas? Socionomics would tell you that this is just the beginning...

(UPDATE) Looks like I am behind the times on spotting this trend. Hat tip to Curzon over at Coming Anarchy (a must read for anyone interested in geopolitical trends).

This is the kind of ugly trend that could reinforce the existing move towards private security and armies. What happens when the national army is infiltrated by gangs who would use their uniform and their rifle as a road to profit, not protection under the Constitution? For those with the means, that could lead to them trusting Blackwater over the U.S. Army...

Things Can't Be That Bad, Can They?

I'll be offline for a few days. When I return I hope to have reviewed the 2006 PEMEX Annual Report and Statistical Yearbook.

Just from a glance over the tables, it looks bad - no exports within 5 - 10 years based on depletion rates and internal Mexican demand. I am surely wrong on this, otherwise it would be plastered all over the front page of every major newspaper in the country. I am of the Peak Oil camp, but I have always thought the peak would be out around 2010 and that Mexico could hang on for quite awhile.

If the PEMEX numbers are accurate (and unlike the Saudis, they report reasonbly reliable numbers) then the end of the fossil fuel transportation era is much, much closer. And the effects of the lost revenue on the Mexican State? Well, let's just leave that until Monday.

Have a great weekend. Keep your eyes open and your powder dry.

(Update) Looks like some analysts are getting ugly trends from the PEMEX report as well. It all depends on whether they can grow their reserves faster than depletion will destroy them. From a look at the Statistical Yearbook, it looks like 2004 was the peak year for exploration - if they found anything big, they better move into the development phase quickly.

Another Brick in the Wall

Another glaring example of how state systems will continue to be hollowed out by networked tribes in a 4GW world:

Nigerian navy ousts 10 officers for smuggling oil

ABUJA, July 27 (Reuters) - Nigeria's navy has retired 10 officers, including a rear admiral, because of evidence they were involved in smuggling stolen crude oil, the chief of navy staff was reported as saying by the official news agency.

Nigeria is the world's eighth biggest exporter of crude oil but a sizeable proportion of its output is stolen by thieves who either drill into pipelines or hijack barges loaded with oil. The theft and smuggling of oil are known as "bunkering". Industry experts say much of the violence that plagues the oil-producing Niger Delta is connected to bunkering.

Armed gangs fight turf wars over bunkering territory, they say, while corrupt government officials and members of the security forces protect the gangs in exchange for a cut of the profits. Proceeds from bunkering fuel crime and militancy.

One other thing that was not mentioned - proceeds from bunkering feeds the families of the men and women who engage in this theft.

Just blowing it off as "one of those things that happens in foreign countries" would not be wise. All state systems are vulnerable to this type of infiltration. When times get tough, when resource pressures mount, remember Boss Hogg's rule of life: "Blood is thicker than water". Whether this "blood" tie is a gang, an ethnic militia, a clan - whatever - when these kinds of ties become more beneficial than a higher loyalty to a far away government, then the state is in trouble.

Tribes matter, these "mafias" we see glimpses of every now and then matter (immensely) and the tools with which one can hollow out a state are growing in number every day.

Hold Your Breath

I've held off on commenting about yesterday's big drop in the DJIA (and on the slide that is happening, at the moment, at least) as I am not sure whether this is another hiccup like that from late February or if this is the real thing - a bear market in equities.

I am still unsure if we have broken the back of this enormous credit bubble that has been building since Greenspan's "emergency rates" helped fuel a debt bubble in mortgage and junk bond markets. If the bond market stays frozen, then we will have a serious issue on our hands.

If nothing else, dust off your Gambler's Analysis, make sure you have cash on hand - that's the funny green federal reserve notes that are so ignored today in favor of VISA checkcards.

Monday next week will tell the tale of the markets. And if the markets go, watch for the anger to build up rapidly and watch how that contributes to the international scene. This could be it, folks, but don't panic just yet.

Here's Hoping These Guys Don't Get It

Decaying infrastructure is a problem the world over. The execrable Baby Boomer Generation has ignored it in the U.S. and it looks like the elites in Mexico have done the same:

Sewage Spill Looms as Mexico City Mayor, President Cast Blame
by Patrick Harrington, Bloomberg

July 26 (Bloomberg) -- Summer rains threaten to overload Mexico City's drainage system and flood Latin America's largest urban area with sewage, as the president and mayor blame each other for the predicament.

"We may witness the worst flooding in modern history in Mexico City,'' President Felipe Calderon said in a speech last month that Mayor Marcelo Ebrard refused to attend.

Calderon said the water and sewage drainage system "faces problems more grave than some authorities have reflected with their actions.''

Ebrard retaliated at a press conference, blaming the federal government for not investing enough in the drainage system.

July and August are the crucial months, when most of the area's 76 centimeters (30 inches) of annual rainfall occurs. Calderon warned that the city is on the brink of "catastrophe.''

He isn't exaggerating, said Jose Ramon Ardavin, deputy director of the National Water Commission. Location, soaring population and crumbling infrastructure combine to put the city at risk...

Now, this is bad enough. But on the heels of the recent infrastructure attacks in Mexico - there is an even more frightening paragraph further down in the article:

A failure in a single section of the main drainage canal could flood 210 square kilometers (80 square miles) and require the evacuation of 4 million people, according to an Inter- American Development Bank report.

Hmmmm, let's see, are there any armed, angry groups inside Mexico that might want to stick it to the federales with an infrastructure attack? Any groups under pressure from the federales that might need a crisis to get the heat off of them? Any groups who have demonstrated that they can hit infrastructure targets with skill and precision?

Nah. Don't worry about it. Nothing bad will happen...

New to the Blogroll

I've added 'Arms Control Wonk' to the blogroll down under 'Tech'. I got to work on an IAEA non-proliferation project a few months ago and find the topic quite fascinating. I can't say I always agree with Dr. Lewis on policy, but the man is very, very bright and adds a lot of sarcasm and humor to a fascinating (to me) aspect of the world stage.

Check it out.

You Can Call Me Al (Qaeda, That Is)

A new article is up over at Defense and the National Interest on the "Long War" - a concept well worth studying as the elites are selling it hard:

America takes another step towards the “Long War” (Part I)

The flood of information and commentary available today can obscure events of the greatest significance. We see that today, as America takes another step towards the long war. Without thought or reflection, without debate by our elected officials, without our consent. In many ways just like the Cold War.

If the US starts a new long war, it is our war – for good or ill. Congress and the President are our agents no matter how they conduct our affairs. As bin Laden reminds us, following our leaders does not relieve us of responsibility.

Wars put all that we that we have, all that we are, on the table to be won or lost. Before we enlist ourselves and our children in a new war, let’s think. Is the wager worthwhile? Are the odds in our favor? Are there alternatives other than war?
In the past we have neglected these questions to our sorrow...

I'd suggest putting this in your mental "back pocket" to help make sense of the various government pronouncements on defense issues. Personally, I believe the Long War paradigm is going to be shaken to pieces by a collection of other, more pressing problems that will erupt over the coming years such as Peak Oil, a credit crunch (Son of Subprime) and a host of smaller, grinding clashes at a lower level - the product of a negative social mood - that I have labeled The Great Collapse. These will be a Long War in and of themselves, but one that will focus attention internally, leaving little time for Empire. But it is always good to have a handle on where we've been and where the elites want us to go.

If you like this type of analysis (not necessarily his conclusions, but if you like the rigor and his approach) I suggest you check out other articles by the writer who calls himself Fabius Maximus.

MENDing Mexico

Photo by Arturo Lopez/AP

More details are emerging on the recent bombing of natural gas and petroleum pipelines in Mexico, and those details are ugly for anyone interested in Mexican oil production and distribution (that would any of you living north of the Panama Canal):

Mexican bombers also hit crude oil pipeline
Bombers in Mexico, who targeted crucial gas pipelines, had detailed knowledge of the vulnerable energy installation.

by Kevin G. Hall, The Miami Herald

WASHINGTON -- Saboteurs who blew up natural gas pipelines that shut down one of Mexico's main industrial regions earlier this month also crippled an important crude oil pipeline in an operation that indicated extensive knowledge of Mexico's energy infrastructure, U.S. officials said Tuesday.

Not only were oil and natural gas pipelines targeted, but the bombers also knew enough about energy installations to destroy the shutoff valves along several pipelines that allow for the wide national distribution of oil and natural gas.

''These are massive steel valves -- they're gigantic,'' a U.S. official familiar with the bombing investigation told McClatchy Newspapers. ``These are major, very expensive shutoff valves that control the flow of all this petroleum. This wasn't a round tube in the middle of nowhere.''

SMALL DETAILS
And the bombers knew which side of the valve they should strike, ensuring that crude oil didn't flow to a nearby refinery and that natural gas didn't flow to foreign and Mexican manufacturers in the central Bajio region, said the official, who agreed to talk only on condition of anonymity because of the extreme sensitivity of the probe in Mexico...

Insiders selling out info on petroleum infrastructure. Kidnapping as a major industry in Mexico already. How long before the shake-downs of PEMEX begin by local gangs? How long before they MEND the Mexican petroleum industry?

For Those of You Scoring At Home

I suggest you bookmark this link, which records insider transactions of Countrywide Financial Corp. stock. For those that don't know - the "Mozilo, Angelo R." that is the name beside the huge number of sales is the Chairman and CEO of Countrywide. Check out his recent transactions:

Not a purchase among them. And that is just for June and July. You do the math on whether it is a sign of things to come for the mortgage industry and thus, the housing and credit markets.

CFC is the 600 pound gorilla of the not-so-prime loan industry. Their loans were the high-octane fuel that helped drive up house prices all across the USA up until the recent crack-up of markets like Las Vegas, Miami, Phoenix, etc.

When CFC goes down, the credit spigot is officially shut, in my opinion. Who knows how far prices will fall then. And credit is what keeps fractional reserve banking alive and functioning.

This is a very important fact that most mainstream commentators lose sight of. They talk constantly about "all that money out there" when folks like me fret about the financial system. What they are talking about is "all that credit out there" - and if that dries up, that means your business expansion slows or goes negative, it means wages don't grow, it means folks get fired and it means you can't service existing debt - which hurts the balance sheets of banks and causes them to get more conservative so they can survive, which means being picky with loans, which means credit contracts and the spiral continues down, down, down.

Walls

There have been a flurry of articles on the "evil rich folks and their walls" theme recently, most with the tone of this one:

Behind high gates, the wealthy escape from outside world
by Graham Norwood for the Guardian Unlimited

...The gated community was born in Los Angeles in 1915, when Fremont Place erected a gate to keep its residents safe - and keep everyone else out.

The estate was the preserve of the rich and famous, with silent movie star Mary Pickford and safety razor inventor King Gillette residents. Now such estates have spread around the world. China is undertaking the equivalent of a gated city for up to 200,000 people.

But the tide may be turning against the 'them and us' mentality that many believe epitomises the gated estate ethos in Britain at least...

One would expect that kind of delusional lack of historical context in a U.S. paper, but the British, at least I thought, still had an educational system that attempted to instill some sort of teachings of the lessons of history. Alas, I was apparently wrong.

The gated community was not "born in Los Angeles" and it sure as hell was not born in 1915. The first gated community was born the day after the first harvest by an agricultural community - that was the day nomadic raiders swooped in and looted them of their agricultural "wealth" that had been created by "dispossessing" the nomads of their grazing and hunting lands and converting those grasslands to crop land.

Gated communities were the rule in societies around the globe, not the exception, for most of recorded history.

Only in the last few centuries of optimism, material progress and in the fossil fuel powered orgy of excess of the last few decades have walls been seen as negative barriers to social cohesion. On a macro scale, the massive engines of war birthed by the early Industrial Era which, in megapolitical terms meant offense was now more dominant than defense, allowed for the tearing down of defensive barriers as uneconomical and unworkable. Defense is making a comeback, with all the assorted paraphenalia one would expect in its wake.

In socionomic terms, the same optimistic mindset that tore down city walls also led to the tearing down of vile legal walls such as Jim Crow laws and apartheid.

Now, with the worm turning, with the world sobering up from an era of Catastrophic Abundance, we are seeing the return of walls, gates and guards. If you believe, along with Mr. Norwood above, that "the tide may be turning against the 'them and us' mentality that many believe epitomises the gated estate ethos" well, then, best of luck to you.

This is not investment advice, but for you construction folks out there, as home building continues to atrophy, I would strongly suggest getting into the business of building walls for existing homes or neighborhoods and into the work of retrofitting communities for more violent, uncertain times. Wall building will be a profitable pursuit for a long, long time to come.

Fun With the Big Picture

I'll have a few new posts up soon. Been very busy with an experiment we ran today. It went well, but that means a lot more number crunching and a little less Futurejacking.

Until then, check out this article by Byron King, who writes on Peak Oil occasionally. He works to tie together issues of liberty, peak oil, transportation and, like the rest of us, is feeling his way around the edges of What Comes Next.

Whiskey & Gunpowder
July 23, 2007
By Byron W. King
Pittsburgh, Pennsylvania, U.S.A.

Freedom, Corrosion and Investment Opportunities

On July 5, I traveled to Las Vegas to give a talk at Mark Skousen's FreedomFest 2007 convention. Mark is one of the great thinkers and public intellectuals of our age, whose brilliant, brief and ineffable class and style far exceed what you see or read with the usual schlock emanating from the drive-by media and the puff-piece celebrity commentators. So Mark's gathering was far more than an investment conference full of stock picks, although there were stock picks galore, and there is nothing wrong with good stock picks. The economic and investment themes were there, of course. But the conference also offered a set of sessions concerning history, philosophy, current events and other themes, delving into modern culture and its trends and direction...

Transition Crises

I need a little help. I'm looking for any good source material - books, journal articles, etc. on complex societies that have gone through major transitions or crises.

For instance - is there a good history and/or personal account of the collapse of the Austro-Hungarian Empire? How about one of the cyclical collapses of China? Or the Meiji Restoration (a "crisis" leading to more complexity)? Any others out there that I am not familiar with?

I'm trying to expand my lens a bit more with some first-hand or at least well-researched and detailed accounts of societies that have collapsed or fallen down a good notch.

I'm well-acquainted with with work of Tainter and Diamond, two names that often come up.

Just curious if anyone out there has a good suggestions. Leave a comment or kick me an email, whatever works best for you.

Thanks in advance.

This Is Not Investment Advice...

Here's a thought. Figures as of right now indicate a radiation release of around 90,000 becquerels from the big quake that struck the TEPCO nuclear facility last week.

The radiation in your body that is there from potassium, radium, etc. from the environment is around 6,000 Bq. In other words, the radiation release in Japan was less than that of a bus of school children driving down the road.

TEPCO stock has dropped hard.

People are eventually going to figure out that the reactors at this plant functioned beautifully - they shut down safely during a huge quake.

TEPCO stock is priced in Yen, a currency that has been appreciating against the dollar recently.

You do the the math...

See You in Guantanamo

On the heels of Road to Serfdom, we get this:

Pentagon Aide Says Clinton Helps Enemy

WASHINGTON, July 19 (AP) — A Pentagon official has told Senator Hillary Rodham Clinton that questions she has raised about how the United States would withdraw from Iraq feed enemy propaganda.

The stinging wording of the message, from Under Secretary of Defense Eric S. Edelman, was unusual, particularly because it was directed at a member of the Senate Armed Services Committee.

Personally, I despise H. Clinton and all she stands for. That said, she is a U.S. Senator and part of her duty is to oversee the calamity that the Iraq War has become. Asking for a Plan B is now "aiding the enemy," apparently. And going into Iraq, creating a big terrorist training camp, providing the basis for scumbag Al Qaeda propaganda, bleeding the best and brightest soldiers of a generation dry based on a flawed strategy - that was not aiding the enemy at all, I guess.

After they take her out, who's next?

Hammering Home a Key Socionomic Point

I've blogged a good bit on socionomics and how "mood matters" - that humans in large groups don't make "objective" or "rational" decisions and we have to factor that into our plans for the future.

This concept is finally making it into the peer-reviewed, academic press. Perhaps, just perhaps, the idiocy that is Random Walk is stumbling into the ditch of history, to be replaced by something that actually describes investor behavior.

An illustration of just how unique the socionomic insight can be is illustrated in a new podcast from the Socionomics Institute. Take ten minutes over lunch and give it a listen. The link below will download a .zip file. To go to the site and hear it stream, click here.

The Differences in Financial and Economic Decision Making
Socionomics teaches us that people behave differently when making a financial decision to buy a stock or a home as compared to making an economic decision to buy a pair of shoes or a loaf of bread. Understanding the difference can have a huge impact on one’s success in the financial arena. Bob Prechter and Wayne Parker recently published an academic paper on this important subject.

The Road to Serfdom

Thanks to Harleydog, the very bright mind over at Prudens Speculari, for bringing the following brand new Executive Order to my attention:

Executive Order: Blocking Property of Certain Persons Who Threaten Stabilization Efforts in Iraq

...notwithstanding any contract entered into or any license or permit granted prior to the date of this order, all property and interests in property of the following persons, that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of United States persons, are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in: any person determined by the Secretary of the Treasury, in consultation with the Secretary of State and the Secretary of Defense,

(i) to have committed, or to pose a significant risk of committing, an act or acts of violence that have the purpose or effect of:

...

(B) undermining efforts to promote economic reconstruction and political reform in Iraq or to provide humanitarian assistance to the Iraqi people;

...

Sec. 5. For those persons whose property and interests in property are blocked pursuant to this order who might have a constitutional presence in the United States, I find that, because of the ability to transfer funds or other assets instantaneously, prior notice to such persons of measures to be taken pursuant to this order would render these measures ineffectual. I therefore determine that for these measures to be effective in addressing the national emergency declared in Executive Order 13303 and expanded in Executive Order 13315, there need be no prior notice of a listing or determination made pursuant to section 1(a) of this order...

Who get's to decide what constitutes undermining efforts at stabilizing Iraq? Writing a blog or article that criticizes the approach taken? To whom can you appeal? If all of your assets are instantly blocked, what resources will you have to appeal with?

God help us all.

I suggest you all go find your copy of The Road to Serfdom and re-read Chapter 10. Then go give a few bucks to Ron Paul. The Republic needs him now, more than ever.

Oil Forecasts Updated

Very busy today with a project and handling the latest influx of Catastrophic Abundance clients (thanks George!).

Here's some excellent brain food to chew on until the next posting here at FutureJacked:

Updated World Oil Forecasts, including Saudi Arabia
From The Oil Drum

1. Executive Summary
   World total liquids supply production (Fig 1) remains on a peak plateau since 2006 and is forecast to fall off this peak plateau in 2009. As long as demand continues increasing then prices will also continue increasing.
2. Forecast world crude oil and lease condensate (C&C) production retains its 2005 peak (Fig 2). The forecast to 2100 shows declining C&C production, using a bottom up forecast to 2012 (Fig 3). The forecast to 2012 shows a 1%/yr decline rate to 2009, followed by a 4%/yr decline rate to 2012.
3. World oil discovery rates peaked in 1965 (Fig 4) and production has exceeded discovery for every year since the mid 1980s. Discoverable reserves in giant fields also peaked during the mid 1960s (Fig 5). The time lag between world peak discovery in 1965 and world peak production in 2005 of 40 years is similar to the time lag of 42 years for the USA Lower 48 (Fig 6).
4. World C&C year on year production changes to March 2007 and April 2007 (Figs 7,8) show significant declines for Mexico, North Sea and Saudi Arabia; significant increases for Russia, Azerbaijan and Angola. As Russia is likely to be on a production plateau and Saudi Arabia has probably passed peak production, the world C&C production will continue to decline slowly.
5. Key producer Saudi Arabia recently released an updated project schedule which does not show originally scheduled expansions of Shaybah phase 2, 0.25 mbd and Al Khafji Neutral Zone, 0.30 mbd. Consequently, it is now almost a certainty that Saudi Arabia passed peak C&C production of 9.6 mbd in 2005 (Figs 9,10).
6. World natural gas plant liquids is forecast to increase due to new OPEC projects (Fig 11). World ethanol and XTL production is forecast to double by 2012 (Fig 12). World processing gains are forecast to decline slowly to 2012 (Fig 13).

(more...)

What is your Plan B when petroleum production begins to decline?

Straight From the Pages of Catastrophic Abundance...

Wow, angry eco-vandals (this is just the beginning) and a small country providing the cover of sovereignty to what are currently labeled criminal activities. Some of the scenarios from Catastrohpic Abundance were obviously not as far out as I thought when I wrote them...

Hummer Owner Gets Angry Message
by Allison Klein, Washington Post Staff Writer

On a narrow, leafy street in Northwest Washington, where Prius hybrid cars and Volvos are the norm, one man bought a flashy gray Hummer that was too massive to fit in his garage.

So he parked the seven-foot-tall behemoth on the street in front of his house and smiled politely when his eco-friendly neighbors looked on in disapproval at his "dream car."

It lasted five days on the street before two masked men took a bat to every window, a knife to each 38-inch tire and scratched into the body: "FOR THE ENVIRON."...

Socionomics, hard at work, bashing in windshields and soon coming to a neighborhood near you.

...and...

Drug barons turn Bissau into Africa's first narco-state
by Jonathan Miller in Bissau for The Independent

Welcome to Africa's first narco-state, a country with just 1.5 million people but a roaring drugs trade. Every day an estimated one tonne of pure Colombian cocaine is thought to be transiting through the mainland's mangrove swamps and the chain of islands that make up Guinea-Bissau, most of it en route to Europe.

Western intelligence sources describe it as "the worst drugs trafficking problem we've ever encountered on the [African] continent", and admit they have been blind-sided by the sheer scale of it. "The more we learn, the more we're shocked by the numbers involved. We've all been slow off the mark," said one top US Drug Enforcement Agency official in Europe...

...Guinea-Bissau's Interior Minister, Major Baciro Dabo, and the head of the navy, Jose Americo Bubu Na Tchutu, are alleged by multiple sources to be key facilitators of the trade.

How Long before we get a country to establish a Minister of Drug Import/Export? Or would that push prices down too far? Probably it stays illegal, states continue to be hollowed out from within by gangs, mafias and corporations and Lord how the money will roll in for the connected.

Next step, in my opinion, will be some sort of non-state currency, probably gold-backed or commodity-backed that will be embraced by a network of hollow states to facilitate the wealth generated by what is currently illegal trade. Maybe a few small states do go ahead and legalize the drug trade, combined with no extradition treaties to attract capital in large quantities. Sort of Dubai, but with the final step taken of providing a shield of sovereignty for the drug lords who would reside there...

Rumblings

The troubles in Pakistan mount. As we touched on in Pakistan Burning a few months ago, this underreported story is beginning to gain traction in the mainstream press:

16 Pakistani Soldiers Dead in Attack

by Bashirullah Khan, Forbes

MIRAN SHAH, Pakistan - Suspected militants attacked security forces in northwest Pakistan Wednesday, killing 16 soldiers and wounding up to 21 others in two separate strikes against military convoys, officials said.

The escalating violence follows the scrapping by militant leaders of a 10-month-old peace accord with the government in the Afghan frontier region of North Waziristan.

On Tuesday, a suicide bomber blew himself before a rally in the capital supporting Pakistan's chief justice against the president, killing 15 people...

Keep an eye on where the violence flares up, then refer to this map below - the locations of Pakistan's nuclear facilities (plants, fuel cycle facilities, weapons labs, etc.):

Image from the Federation of American Scientists

Makes one wonder just how deeply the weapons labs are infiltrated by radicals of various stripes. Also, it makes one wonder just how much "talent" is being imported from the laboratory of Iraq to aid militants in their campagin against the Pakistani military establishment.

John Robb's Open Source Warfare concept is proving valid yet again...

Revolting Against Conformity

I regard Chuck Palahniuk as the best writer of minimalist fiction out there. For those that have avoided modern fiction, check out Fight Club (avoid the movie). This interview is from a few years ago...



In the video clip, he refers to people passing out during a reading of one of his short stories. He is referring to 'Guts'. It is not at all funny, as he says, but it is definitely disturbing. I was in Kansas City a few years ago for one of his readings and he narrated it. I didn't pass out, but I did break out into a cold sweat and nearly puke. It is far more powerful when you hear it presented to you by a powerful speaker. Reading it is uncomfortable enough.

Anyway, if you are looking for something disturbing and engaging, check out his work. Plus, I think he is the type of artist who is in touch with the zeitgeist (pardon the academic stink to that term) and his work could be speaking to us from the future.

Read Fight Club, meditate on the Space Monkeys and on some of Tyler's vision and think about what you hear in activist circles these days. Look for socionomic themes and how he plays with human emotions, especially those of alienation, anger and violence.

On A Lighter Note...

For those cricket fans out there, or anyone who enjoys a good story, check out my friend Andy Heger's website, The Voyage of Spectacle, and read the five-part series, Sri Lanka Superfans.

Andy and his fiancee Melissa are spending the next few years cruising about on a yacht. He's one of the funniest, most intelligent individuals I've met in my life and he always manages to find an adventure or two wherever he roams. If nothing else, it's a nice break from Iraq, war, toxic CDOs and current events in general...

99 Red Balloons

The 'Mortgage Lender Implode-O-Meter' currently reads 99 fallen mortgage companies. By the time you link over to it, the number might be higher.

So what, you may ask - a few companies got overextended and went out of business. It happens all the time. And what does that have to do with the big macro events discussed at Futurejacked - such as terrorism, the coming mood trend change, war, power, etc.?

It has to do with how "money" and "credit" work in a fiat currency system - the system used all over the world.

Banks miracle money out of thin air when they make a loan. That is a bit of a flippant way of putting it - but the description is not inaccurate. A loan is made to someone, backed by deposits on-hand that might be a fraction of the loan value. If the bank holds $1 million in deposits, they may lend out $10 million or even more, counting on enough folks being able to pay off their loan to avoid bankruptcy themselves.

The economy must grow to service that debt. Growth is predicated on more loans putting more credit to work at buying stuff.

When the supply of credit starts to shrink (through fewer lenders and tougher borrowing standards) then that means the supply of buyers needed to push up prices and asset values shrinks. The ramifactions of that scenario are vast and dire.

Just think about it. Check out the implode-o-meter from time to time and be happy that markets are still advancing and that the downturn is not yet upon us. Get your house in order, get your debt down to a manageable level and get prepared for an interesting future.

Freeze a Yankee

When I was a young kid, my family lived in Lubbock, Texas for several years. This was the mid-1970's and oil was booming. Texas had passed its production peak, but in the face of oil shocks and high prices, oil companies were drilling fast and furious. A national speed limit of 55 miles per hour had been imposed. Inflation was roaring. The East Coast elites had plenty of their own troubles, as New York City flirted with bankruptcy and the Vietnam War ground to a messy close.

An unofficial election tune was making the rounds at the time and stuck in my head. It went:

Freeeeeeze a Yankee!
Drive 75, freeze 'em alive.
Governor Briscoe's promised us
That if any damnyankee raises a fuss
We're gonna cut off the gas, shut off the oil
And let 'em all freeze and boil!

It had a fun tune to it, it rhymed and my father, a die-hard conservative Democrat, loved it. Socionomically, it is also a very interesting tune - playing on separatism and anger as a negative mood swamped the country. Perhaps that's another reason it stuck so well in my spongy little brain at the time? Who knows.

Socionomics aside, I was reminded of that tune today when reviewing some stories over at NEI Nuclear Notes. One in particular jumped out at me:

New York Attorney General Joins Fight Against Indian Point

From yesterday's New York Daily News:

State Attorney General Andrew Cuomo will join the fight to shut the Indian Point nuclear power plant, just 25 miles north of New York City in Westchester.

Cuomo will announce today his support of Westchester County Executive Andrew Spano in his legal battle with the Nuclear Regulatory Commission, the federal agency that oversees Indian Point, the Daily News has learned.

Cuomo's office will provide the support through research, advice and lawyers for court appearances.

As I'm sure many recall, Cuomo's father, former Governor Mario Cuomo, helped lead the fight that eventually led to the closure of the Shoreham nuclear power plant on Long Island.

As usual with these kinds of stories, I initially cringed. Here we have a highly populated, influential state that is going to need massive amounts of electricity if it hopes to retain any semblance of its current lifestyle in the coming decades.

Like the feeble-minded Germans, New Yorkers have taken their abundance for granted and believe that if they just wish hard enough, that they can miracle more electricity out of their butts instead of making rational decisions on power generation.

But, what's done is done. This political hack, Cuomo, will support the closure of a low-carbon source of electricity. It is quite possible that he will be successful. Where will he be when the brown-outs begin? Oh yeah, out in front of television cameras, blaming "greedy power companies" for a mess he personally helped cause. And what's worse, the voters will let him get away with it.

And that makes me wonder where the other regions of the country will be when the brown-outs begin in the Northeast. Nuclear power is strong in Illinois and throughout much of the South. It is under attack in the Northeast. What happens when TVA or Exelon (in Illinois) is faced with supporting the national grid and the electricity parasites in the Northeast or supporting their customers and the states that made the decision to allow nuclear builds in their states?

What do I do if I'm the governor of a state that goes dark because New York is demanding electricity while shutting down reliable power plants?

Hmmmmm. Keep on eye on the emotional content of news stories on energy issues. We could see the rise of a new sectionalism - one based on power-haves versus power-have-nots. Reality always intrudes on fantasy, even if it takes longer than most might wish.

Have fun with that, Mr. Cuomo.

Iran WarWatch (Part Thirteen)

With several positive signals having gone off recently (Pyongyang shutting down its nuclear reactor in an attempt at de-escalation on the Korean peninsula, record (nominal) highs for the DJIA and S&P, lack of national panic over a truly horrendous housing market, etc.) it would seem to be an odd time to return to the Iran WarWatch, but there have been several new developments that bear watching:

Lieberman: US will back Israeli strike on Iran
by a Staff Writer, Israel Today

Israeli Minister of Strategic Affairs Avigdor Lieberman said on Tuesday that he received the tacit blessing of Europe and the United States for an Israeli military strike on Iran's nuclear facilities.

“If we start military operations against Iran alone, then Europe and the US will support us,” Lieberman told Army Radio following a meeting earlier in the week with NATO and European Union officials.

Lieberman said the Western powers acknowledged the severity of the Iranian nuclear threat to the Jewish state, but said that ongoing conflicts in Afghanistan and Iraq are “going to prevent the leaders of countries in Europe and America from deciding on the use of force to destroy Iran's nuclear facilities,” even if diplomacy ultimately fails.

The message Lieberman said the NATO and EU officials conveyed to him is that Israel should “prevent the threat herself.”

We also have a third U.S. aircraft carrier headed towards the Persian Gulf (the Enterprise, headed to join Stennis and Nimitz). Also, just from a psy ops perspective, please notice that U.S. government media spinners have taken to calling the Persian Gulf the Arabian Gulf - a little thing, maybe, but all part of any good ramp up to a conflict.

My guess - keep an eye open for the mid-August period. Congress goes on recess August 6th - 31st for the Summer District Work Period. That would make a fine window for an Israeli attack, followed up by U.S. strikes when Iran hits U.S. forces in retaliation. And speaking of the ability to strike at Iran, USA Today had a story on how the Air Force is ramping up its presence in Iraq:

Under the radar: Air Force ramps up in Iraq
by Charles J. Hanley, Associated Press for USA Today

BALAD AIR BASE, Iraq — Away from the headlines and debate over the "surge" in U.S. ground troops, the Air Force has quietly built up its hardware inside Iraq, sharply stepped up bombing and laid a foundation for a sustained air campaign in support of American and Iraqi forces.

Squadrons of attack planes have been added to the in-country fleet. The air reconnaissance arm has almost doubled since last year. The powerful B1-B bomber has been recalled to action over Iraq.

The escalation worries some about an increase in "collateral damage," casualties among Iraqi civilians. Air Force generals worry about wear and tear on aging aircraft. But ground commanders clearly like what they see.

If the expeditions in Iraq and Afghanistan have shown nothing else, it is that air power is a limited tool for counterinsurgency or 4GW conflict. Building up bases for B1's is a much different thing than building bases for close-support craft like the A10.

Action Items

1. The minute you hear about an attack on Iran, leave work (if applicable) and top off the gas tank on your car. Then, go to a hardware store and pick up a couple of gas cans and fill them up as well. Invest in a stabilizer such as "Gaskeep" or "Sta-Bil" as well.
2. Withdraw some cash (you can always put it back in your account) - the reason I say this is that it might come to where U.S. forces use nukes and that would probably result in some serious sanctions from China which would cause massive turmoil in the financial markets. Hell, all China has to do is stop buying treasuries tomorrow and the country is screwed (thanks Baby Boomer politicians for spending us into this hole).
3. Do some research online as to how much petroleum passes through the Persian Gulf - do the numbers yourself, don't just accept the media version. Think about the impact a shutdown in Gulf traffic would have on petroleum prices.
4. Keep your eyes on the financial and housing markets in the U.S. When those break sharply lower, know that time is short before another major conflict erupts (whether that conflict will be an external war or an internal political crisis in the U.S. is still up in the air).
5. Check out alternative news sites like UrbanSurvival for fresh, if disturbing, perspectives on events - even if you don't agree with these alternative assessments, they will at least get you thinking.
6. Pray that this is just another in the long series of war scares with Iran.

Conflicting Socionomic Signals

An issue faced by those of us who incorporate socionomics into our analyses is the fact that at times like this - a late-stage primary (and supercycle?) 5th wave (by my count) gives a mix of negative signals along with the positives associated with a bull market.

The bright minds over at the Socionomics Institute have a new interview up that discusses this topic. Worth 7 minutes of your time:

Socionomics and Conflicting Cultural and Market Signals
Socionomics recognizes that at certain points in wave patterns there can be quite a few conflicting trends and signals in the culture and in financial markets. Join Dan Gough and Vadim Pokhlebkin for a discussion on how to navigate these times and reconcile issues like war and peace, presidential popularity, and pop culture.

Another Shot of Tequila, Por Favor...

If you read no other story today, check out Jeff Vail's new article over at The Oil Drum:

Mexico: A Nation-State Dissolves?
by Jeff Vail

Before I highlight the specific events that are undermining the Mexican Nation-State, let me talk first for a moment about what it means for a Nation-State to collapse, an important topic as it’s an experience that will become increasingly common over the next decade. When a Nation-State collapses, the cities don’t all catch on fire simultaneously whilst roving hoards pillage the countryside and the population starves. Nation-State collapse is not the apocalypse—it is exactly what it suggests to be: the collapse of the notional union of Nation and State under one central, viable government. Nation-State collapse also doesn’t suggest that there will no longer be Nation-States. It is my prediction that there will be a Mexico, an Iraq, etc. for quite a long time. What collapse does mean is that the importance of Nation-States will decline sharply, as they become increasingly ineffectual both domestically and internationally...

Also, I've added a new blog over under Random and Useful. The Spy Who Billed Me is a great resource touching on the shift of intelligence and black ops work from governments to private interests. Some great stuff there.

The Face of a Networked Tribe (Part Two)

A few days ago I took a stab at trying to describe one of the many faces of what networked tribes might look like in the coming years. Today, we'll look at another aspect - how might those with some wealth and influence in their communities survive in an era of radical politics, angry demagoguery and the disruption of economic life as we have known it?

Face Number Two - Huey Long Meets ELF, Hilarity Does Not Ensue

Let's say you, or someone you know, finds himself sitting in a very nice home some time in early 2008, thinking about the future. Let's call him Dan. The end of 2007 marked a horrible time in financial and employment markets, as a derivatives debacle caused a collapse in over 1,000 hedge funds and took the broader markets down with them as highly-leveraged equity and bond plays had to be unwound. In addition, employment crashed, breaking the 9% unemployed number after the housing downturn took hold - and that percentage is just the official number. Combined with the huge spike in oil prices that occurred after Israel struck Iranian nuclear sites at Arak and Natanz, plunging the U.S. into a wider war with Iran - things are looking grim for most Americans.

But not for Dan. He had cashed out of the markets back in the spring of 2007 and sold off a portfolio of rental homes back in 2006. In a vault in his basement he holds cash and precious metals, along with dehydrated food, a few firearms and plenty of ammunition. He seems prepared.

The more he thinks about it, though, he is almost more vulnerable than his less-fortunate fellow citizens who are bankrupt or struggling to make ends meet.

The headlines scream at him from him laptop every morning when he logs on to review the news.

"Rich Profit From the Poor Who Lose Their Homes"

"Free Markets Are Not-So-Free for the Bankrupt"

"Flooding Blamed on Carbon Emissions, Two Coal Trains Attacked at Switchyard"

"Time for the Wealthy to Pay Their Fair Share Says Senator"

"Local Utility Shuts Down Generators at Dam Facility After Bomb Threat"

"Unused Property Should Be Seized and Given to the Homeless Says Local Activist Group"

"Climate Change 'Traitors' Killed in Car Bombing Outside Local Country Club"

"Farmland Seized by County Authorities - Unsustainable Farming Practices Cited"

And those are just the mild stories. Dan knows that changes in taxes and property laws are coming. It is unlikely that those changes would be creative or structured to support growth or at least stability. Dan has read his history and his socionomics and knows that in times of waxing negative mood, the dark, irrational impulses in human nature are released, often with devastating effect.

In a world where property makes you a target, in a world where progress and economic growth itself is blamed for all the ills of society (and even as 'traitorous' against the Earth), how does someone of material wealth secure his life and fortune as well as that of his family?

Action Items

1. If you are a man or woman of wealth (assuming your wealth survives to some degree after the coming derivatives collapse that I expect hits markets) in what form is your wealth concentrated? Are you heavy in property? Stocks? Do you have cash on hand? It is strongly suggested (but this is NOT investment advice) that you have cash and other tangible goods on hand, ready to barter with or to aid your associates and those you choose to favor.
2. What about "social wealth" - by that I mean your networked tribe - how extensive is it? Are people friendly to you based on family or personal loyalty - or do you have to buy most of your friends and associates? Take stock of your tribe. Be very realistic. If you don't like the results, start building up your network of family and friends as best you can.
3. Get to know soldiers returning from Iraq. If you have property, especially arable land, consider making an offer to any local combat soldiers who return from Iraq. Let them use a portion of your property or sell it to them, but hold the note yourself. Basically, offer these combat-proven men a chance at a place to live and the ability to either find a job or grow some of their own food or something along those lines. Give some money to your local VFW. Throw a big Memorial Day festival with your own money and make sure you get to know local vets. Build a feudal tie with them. When the time comes, having a few battle-hardened men who are a member of your tribe will come in handy.
4. Keep an eye on the political scene. In times of stress laws, especially those governing property, taxation and, more recently (as shown by their creative use in Russia) the environment can change rapidly to the detriment of proprety owners and investors who made smart plays and wound up rich while the vast majority of investors wound up bankrupt. Be ready to sell or abandon property. Be ready to make deals with local politicos - those folks are going to loot the system for all it is worth when the time comes. The best you can hope for is to avoid the worst of the rising flood of stupidity and anger.
5. Be ready to flee. Have an exit strategy, whether it is getting out of your town, your state or your country.

Remain Calm, All Is Well (Part Sixteen)

The pressure continues to build...

On the financial front, the subprime rot continues to be exposed to the light:

Managers: Subprime Blame Lies With Rating Agencies
by Lawrence Carrel, TheStreet.com Senior Writer

...Robert Rodriquez, chief executive officer of First Pacific Advisors, was even more blunt. "We haven't seen much of a problem in the subprime area [but only] because the pricing is a fraud; the ratings are bullshit," said the two-time recipient of Morningstar's Fund Manager of the Year.

"I don't buy these prices, but as long as someone can provide capital to keep the finger in the dike, the charade will go on."

Rodriguez concurs with Gundlach that rising subprime mortgage delinquencies are a problem not just for hedge funds but also for major banks and other financial institutions.

And here is a lesson in how to blow up a hedge fund...

Of course, for those that consider finance boring, we can also turn our gaze south and watch the "birth pangs" of a new failed state:

Mexican oil, gas pipelines attacked
By Héctor Tobar and Marla Dickerson, Times Staff Writers

MEXICO CITY — A leftist guerrilla group claimed responsibility Tuesday for a series of bombings of pipelines operated by Pemex, Mexico's national oil company, and authorities moved quickly to protect the nation's oil and gas industry from further attacks...

...Explosions sent flames nearly 1,000 feet into the air before dawn Tuesday outside the city of Corregidora, in the central state of Queretaro, where several pipelines were severed, including a 36-inch pipe that transported natural gas to local distributors and a 16-inch line that supplied a local refinery with crude oil.

Officials said no one was injured in the attacks.

The EPR statement said the group carried out "surgical harassment actions" at 1 a.m. Tuesday and had done so at the same hour Thursday, striking a total of four locations in central Mexico.

The U.S. Army has been recruiting Mexicans to serve as troops. Many are in Iraq as we speak, learning the craft of modern insurgency tactics, 4GW, COIN, etc.

When they return, just how much money do you think the narcotraficantes are going to offer for their services? Look at how vicious the Zetas have been. This can only get worse - and I won't even mention the decline of Cantarell today...

But wait, there's more! With your purchase of a collapsed Mexico and an impending derivatives disaster you get a bankrupt U.S. government, a shattered electrical distribution grid and the on-going calamity that is the Iraq conflict. All at no extra charge.

And in the face of all of that? The current favorite story on CNN?

Bus-sized squid washes up on beach

Action Items (most of these have been on previous action items):

1. Cash (in bills in your possession, enough to last you a few weeks)
2. Food (enough for a few weeks without visiting the grocery store)
3. Friends and Family (build your networked tribe)
4. Information (ignore the headlines, ignore the main stories on CNN and Fox - look for the deeper themes)
5. Look for positives (don't dwell on doom and gloom - view the coming changes as a chance to rebuild society on a firmer foundation)
6. If you live in a major urban area, move. Now.
7. If you own a home anywhere. Sell it. Now.

Obvious Crisis Coming...

Great quote from George Ure this morning:

"If I were to generalize the current world situation as "Obvious crisis coming, led by fools" it might sound a bit harsh. Cynical, even doomsayer-ish if there is such a term. Perhaps. But would that be an inaccurate way to describe the current world condition here at the dawn's early light?"

Ahhh, but accuracy is way overrated in the U.S., at least at the moment...

The Face of a Networked Tribe (Part One)

Things continue to simmer about the globe - Pakistani forces are storming the Red Mosque, Iran is furiously digging tunnels near Natanz in an apparent attempt to shield their centrifuges and uranium stockpiles from attack, problems in the U.S. mortgage market continue, etc. Events simmer, but nothing has boiled over.

Yet.

Instead of just rehashing the news, let's start a new posting series on how to cope in a world that has "boiled over." By that I mean, how does one handle radically altered circumstances.

Much of this type of thinking and planning is covered in Catastrophic Abundance in detail.

One concept I stole from John Robb was that of the Networked Tribe. As Mr. Robb points out, "[a] tribe is the oldest and most successful organizational type ever devised. Its main purpose is to create a sense of social identity that strengthens the ability of the individual and the collective to survive."

In my interpretation - tribes are a simple, stable building block for societies. If the world suffers a collapse into anger, economic depression and suffers a massive failure of infrastructure (electric, sewer and governmental) then people (at least those who survive) will turn to what works.

Tribes work. In a world where technological advances (hopefully) remain in place - even if constrained (i.e. one cell phone per family or the clan owns its own cyber cafe where you can log into the internet as opposed to everyone having a computer and phone) - then tribes could become quite effective in retrieving power and influence that has been lost to the nationstate, at least in the Westernized world.

Those free-thinkers among us may not always like all the baggage that comes with tribal life - emphasis on common mythology, blood ties or the clan over merit and efficiency, standards of behavior that are rigidly enforced, the need to participate in blood feuds, etc. In times of stress, you take the good with the bad. Think of tribes as Good Ol' Boy Networks (or, as we are seeing in the sciences these days, Good Ol' Girl Networks - boys being too busy playing PS3 or Wii), built to serve the needs of a specific group.

As I touched on in Catastrophic Abundance, in the new world we are facing, one might be a member of several tribes - some family-based (probably your primary tribe), some regionally or ethnically-based and others based on choice (fraternal organizations, religio-mystic groups, etc.).

Face Number One - Simple Economic Dislocation

You wake up tomorrow and find that China has ceased buying all U.S. Treasury Bonds, Bills and Notes in retaliation for a U.S. attack on Iran. In addition, U.S. financial web sites and ATM networks are swarmed by cyber attacks from unknown assailants. Gasoline goes to $10 per gallon. Layoffs are imminent in many service jobs as people stop eating at restaurants as much since their plastic doesn't work. In addition, a heat wave strikes, collapsing the electricity distribution grid across wide swathes of the country, adding to the chaos.

You have $6 in your pocket and a wallet filled with Credit and Debit cards that do not function. If you are part of a networked tribe you can quickly make contact with various "members" (whether kinfolk or other) and check on their situation. Within a few minutes if cell phone networks and email are still functioning or hours if you have to do it on foot or by landline, you can have a rough tally of the resources available to the tribe. You'll know who has food stockpiled, who has cash, who has a full tank of gas in their car, who needs help, etc.

You can turn to each other for protection should violence erupt (as was seen in Iran when gas rationing was imposed a few weeks ago). You may be the one low on cash, but perhaps you have a stockpile of food or you know how to fix a portable generator or you can at least serve as a lookout over someone's garden. Tribes look out for their own - but you have to meet your responsibilities as well. You have to give, not just take, as many are trained to do in the tribe that is the modern Welfare State these days.

Actions:

1. Reconnect with your family.
2. Get a hardcopy printout of the phone numbers (computers can crash, power can be shut off, paper will be there) of friends and family - those you would want to be part of your 'networked tribe.' Know who has a skill. Know who owns land or has an extra room. Don't talk about 'doom and gloom' when reconnecting - just start building up the ties now, just in case they are needed later on. There's no need to preach about being prepared or Peak Oil or anything else like that. Those realities will surface soon enough. If you have built up good personal relationships beforehand, the rest will take care of itself.
3. Be creative - tribes don't have to be completely family or ethnically based.
4. Have a good working relationship with various people in your community. Join a few fraternal groups. You never know who will be able to help, or who you might be able to assist in the Coming Chaos.

Twilight or Dawn?

Time to get back in the saddle here at Futurejacked after some much-needed downtime.

First off, thanks again to those who purchased a copy of Catastrophic Abundance over the weekend, I appreciate it and hope that the scenario planning methods prove very useful to you in the future.

Next we come to a theme I've been wrestling with for some time - are "we" (the Westernized world) topping out and about to enter into a long, traumatic and, in the end, invigorating "correction" (a drop in economic activity, a turn towards smaller and smaller social units and away from the nationstate, an upswing in violence and anger - standard socioniomic hypothesis for negative social mood) or are we building a base from which we will see one final explosion of positive social mood and all that entails - prosperity, goodwill in social relations, innovation and expansion of technology, etc.?

As you may have gathered, I am in the camp that believes that we are seeing a twilight of an expansion that has been running for at least 200 years or so. It would appear most indicators are topping out - whether it be petroleum production, markets, military influence of the current superpower, etc. There is a time to reap and a time to sow. The reaping is nearing completion, in my analysis. The time to restructure, to abandon the inefficient, to sow the seeds for whatever is coming next is approaching.

This is not a "Four Horsemen of the Apocalypse" view, this is just an approach that regards life and history as cyclical.

For instance, if we truly are at Peak Oil, in my view, the very human need for speed and transportation will come up with alternative ways of powering vehicles, power plants and processing facilities. The problem is, it will almost certainly take a collapse of the petroleum infrastructure to force this move because the Western World is built to run on liquid fossil fuels. There is not enough infrastructure - both physical and mental to make the jump yet. Not enough people are convinced it is necessary. The transition will be long and hard because there won't be enough wealth available to invest at first. Financial markets themselves may shutter for periods of this long crisis, exacerbating the problem of building up usable new methods of producing biodiesel, fertilizers, etc.

If the socionomic hypothesis proves correct in its predictions, then I truly expect that the idea of economic growth, of technological innovation, of optimism, will come under attack. At some point, things could be bad enough that scientists and free-thinkers may have to go underground in the face of environmental activism and terrorism that views growth or technological progress as "unsustainable".

It's getting across the abyss of the "correction" that is worrying me at the moment. Here's hoping we have one more big push forward before the decline.

More to come as I get my thoughts straight from my time off.

Good luck to you all, keep your eyes open and your powder dry.

Back In... 5 Days

I'm off for a little down time to celebrate the birth of the Republic and to do a little more research on various "Plan B's" I'm working on in case of an "asymmetric event" in either the financial markets or in the energy markets due to a conflict with Iran. I leave you with something positive to contemplate as July 4th comes and goes. I'll be offline most of the time and will be back posting again by late on the 8th or early on the 9th.

Game On

Wow. What has happened over at Bloomberg? They are all over this unfolding "mark to market" calamity facing hedge funds that have substantial CDO holdings in the subprime and Alt-A tranches.

United Capital's Devaney Halts Redemptions on Funds
By Jody Shenn and Jenny Strasburg

July 2 (Bloomberg) -- United Capital Markets Holdings Inc., a brokerage run by John Devaney, halted redemptions on some of its hedge funds that invest in subprime-mortgage bonds.

The funds are within the company's Horizon Strategy group, including the Horizon ABS Fund LP, said Michael Gregory, a spokesman for the Key Biscayne, Florida-based firm.

"We did that as a defensive move because we had an unusually high number of redemption requests and we didn't want to be a forced seller in this market,'' Gregory said in a telephone interview. One of the redemption requests was from an investor who had put up about 25 percent of the funds' money.

The decision by Devaney, 37, follows the collapse of two hedge funds run by Bear Stearns Cos., which also lost money amid a plunge in bonds backed by subprime mortgages. As the Bear Stearns funds faltered, prices of the securities tumbled on concern the bonds would be dumped on the market at fire sale prices. Owners of similar securities may face $90 billion in losses, Deutsche Bank AG analysts predicted June 29.

"People are very nervous about how deep the revaluations of these securities will have to go,'' said Virginia Parker, who helps advise about $1.8 billion in client money at Parker Global Strategies LLC in Stamford, Connecticut. "These positions didn't get marked down until June. Nobody's hand was forced in the market until then.''

Don't they know they are only supposed to reprint the press releases from the companies and to not ask questions?

And what about that investor "who had put up about 25% of the funds' money?" What is he or she thinking right about now?

Thorium Reactor Concept in India

I'm not sure what to think about the story below. The nuclear engineer in me is excited to watch the development of breeder reactor technology for thorium - a widely abundant resource. Then there's the historian in me that gets sick at his stomach, realizing the that my country, the United States, has already built most of the ideas talked about in this paper over forty years ago.

We built test versions that worked, then we threw them in the trash heap, in our arrogance, drunk on cheap fossil fuels and abundant energy, never planning for the day when power generation would be a precious commodity. A day that is very, very close to dawning.

Thorium reactor in India soon!
from The Times of India

...The novel Fast Thorium Breeder Reactor (FTBR) being developed by V. Jagannathan and his team at the Bhabha Atomic Research Centre (BARC) in Mumbai has received global attention after a paper was submitted to the International Conference on Emerging Nuclear Energy Systems (ICENES) held June 9-14 in Istanbul.

Power reactors of today mostly use a fissile fuel called uranium-235 (U-235), whose
"fission" releases energy and some "spare" neutrons that maintain the chain reaction. But only seven out of 1,000 atoms of naturally occurring uranium are of this type. The rest are "fertile", meaning they cannot fission but can be converted into fissionable plutonium by neutrons released by U-235.

Thorium, which occurs naturally, is another "fertile" element that can be turned by neutrons into U-233, another uranium isotope. U-233 is the only other known fissionable material. It is also called the "third fuel". Thorium is three times more abundant in the earth's crust than uranium but was never inducted into reactors because - unlike uranium - it has no fissionable atoms to start the chain reaction.

I know that nuclear power is frowned upon by most of the Peak Oil crowd. Fine, frown away. It is the only source of power that can be built to provide MORE fuel at the end of a cycle than what you started with. We've built them. They work.

As for other thorium fuel ideas, there is a company called Thorium Power working hard to implement a design that works in existing PWRs - a way to bridge the gap betwen current reactors and a new generation of designs.

Yes, there are problems with these reactors - since we've only built a few prototypes, there have been engineering problems to work out. But the technology is there. (And I still really like the molten salt version of the thorium-to-U233 breeder - another concept that was built and that worked and that was abandoned).

We are never going back to a world of supercheap fossil fuels (unless a major Depression deflates asset values across the globe - and then the fuel may be cheap for awhile, but you won't have two nickels to rub together in order to pay for it, so what would it matter). We can go to a world where electricity is still available in reliable, abundant amounts.

I fear that world lies on the other side of The Great Collapse, though. The Elliott Wave structure of nuclear power generation looks grim and I doubt the ability of the Baby Boomer Generation to adequately plan for the long-term health of the country. But - we can hope. And we can work towards new technologies that will save some areas of the country from the worst of the downturn, ready to spring forward when the bear market grinds to a close.

The Polarization Continues

Another sign of rising negative mood, as if straight from a socionomics text:

Gang Mayhem Grips LA
from The Observer

...'All of the signs are there that a racial war is going to explode in this city,' says Khalid Shah, director of Stop the Violence, one of the groups organising the meeting. Memories of the 1992 Rodney King riots, which claimed 53 lives, remain fresh, but Shah believes that worse is ahead. 'It will be 10 times bigger than what happened after King. You are looking at an event which could not only paralyse an entire city but an entire state,' he warns...

What else is there to say. The coming road will be long and rocky. Get some good shoes now...

2000 Days

2000 Days until the end of the Mayan Calendar.

Awhile back I put a counter at the bottom of the blog, ticking off the seconds between now and the end of the current cycle of the Mayan calendar (long count), which rolls over December 21, 2012.

Now, I do not subscribe to Mayan theology (though I do find it fascinating). My beat is the modern theology being cooked up by a globalized mass mood to "explain" the end of this Grand Supercyle advance in Elliott Wave / socionomic terms. References to 2012 continue to pop up, mostly as a joke or in books tucked away in the New Age section of book stores.

The end of this calendar just marks a shift, from one cycle to the next. I say "just" but according to some of the theology being built up around this calendar date, the end of this cycle could include massive flows of "energy" into the earth by a galactic alignment, the magnetic field of the earth could flip, wreaking havoc with electronics, etc.

The "reality" of what might happen in 2012 is not really my concern. I do not expect a "portal to the underworld" to open up at that time. I hope that the (very real and provable) alignment of the solar system with the centerline of the Galaxy doesn't cause a major increase in gamma-ray bursts or heavy doses of plasma flows that do flip the magnetic pole. If it does, I guess I'll worry about it then.

What does worry me is that a portal into the darkest parts of the human psyche will be opened up around then and that 2012 will be an excuse that some folks will use to go crazy, to tear down, to hurt, to destroy.

Should we enter 2012 swamped by a negative mood of crushed property prices, a jobs crash, the world consumed in a post-Peak Oil nightmare, falling equity prices (should the exchanges even be operating), and the death of the Welfare State by bankruptcy - expect a number of cults to spring up, feeding off the negativity and using 2012 as a hook for their "End of Days" message. Can we say Aum Shinrikyo on steroids?

No real tips or pointers for you at the moment. Just keep your eyes and ears open for references to the Maya calendar and 2012 and check the tone of those references. If they begin changing to a darker message of chaos and destruction, add an analysis of what might come using the method from Catastrophic Abundance.

Remember, mood matters. Look behind the news headlines. Pull back the curtains, the window dressing, the stories that are told that explain away this mood and look to the cause - only then can you truly be prepared.