Monday, June 30, 2008

An October Scenario

Let's impose a planning grid on the noise and turmoil of daily news items and the babble of talking heads and use it to help us plan for any asymmetric events that might be lurking in the dark, like a grue, ready to pounce.

We will use Monday, October 13, 2008 as our arbitrary crisis date. It's a Monday in October - as good a day for a crisis to begin as any.

The hope is that you will use the events and questions generated from them to help crystallize your plans and preparations. It has been very easy to sail along and watch as this crisis slowly builds. Now is the time to move from spectator to actor, if you have not already.

We'll step through a multi-week scenario. If you have a specific point you want me to review or research, kick me an email at flagg707 -at- gmail -dot- com.

What This Is NOT

This is NOT the end of the world. Markets have crashed many times in the past. Floods and riots have swept cities and countries. Entire economic systems have fallen, only to be rebuilt (I suggest you educate yourself on the rise of industrialization in Great Britain for a review of one such collapse and rise), new religions and politicals systems have penetrated the mental hardware of entire populations, virulent memes that have reordered the thought patterns of nations for generations to come.

It is the FutureJacked opinion that another such wave of change is heading towards the U.S. It will consist of an economic component (the collapse of late-stage degenerate finance crony capitalism), a social component (a shift in mood away from the full-blown consumerist materialism that dominated the 20th century), a political component (the reorienting politics towards a more local focus as the federal government flounders in insolvency) and a whole host of blowback effects that I have no way to foresee at this juncture.

If your planning relies on some New Age pablum about the Space Brothers coming to save us after the Maya calendar resets in 2012, or expect Jesus to return based on your timetable, not His to save our world from the accumulated follies that must be paid for, well, then go find another web site to peruse. This is not for you.

The War Game Scenario

It's Monday, October 13. You wake up, have some coffee. Maybe you have the news up on your PC or Bloomberg is playing on the television, the sound muted as you glance at the occasional news item scrolling across the screen.

The DJIA futures are down hard before the market opening. There are stories of angry exchanges between the U.S. Federal Reserve, the SEC, the U.S Treasury and the IMF as a result of the ongoing audit of the U.S. financial system. The President has invoked a number of Executive Orders, declaring the books of a number of financial firms as national security interests, preventing IMF auditors from reviewing them. In addition, there are continuing lawsuits by gold bugs to fully audit the gold holdings at Fort Knox, which the federal government refuses to do as well. The recent collapse in gold prices, along with that of stocks, oil, ag commodities has befuddled the "experts" and recrminations have filled the newspapers, blogs and television news programs since early September.

You go to work or to school or out to your permaculture garden to work. You check back in at lunch time (or late breakfast for you on the West coast or in the Rocky Mountains) and the markets are crashing hard, down over 707 points. The market has whipsawed violently all day, but the trend is down, and down hard. You wonder briefly about your 401(k) plan, or your annuity. Maybe if you've read up on how pension funds invest you are worrid about your pension as well.

But hey, buy the dips. The market always goes up. Besides, the newsies are talking about some significant intervention by the Feds or the Plunge Protection Team or a bailout coming from the Saudis.

The market closes down 911 points. Trading was suspended in smaller exchanges. A few online brokerage firms watched their servers crash as customers attempted to execute sell orders in numbers never before witnessed.

Gold had a brief flurry upwards, but, to the consternation of most crisis investors, it fell and fell hard by the end of the day as well, as big investors unwound long positions to cover their losses elsewhere.

That night, the evening news is awash with high-level federal officials, cabinet members, the SEC Chairman, the Fed President and anyone else who looks impressive in a suit on television. Larry Kudlow is not on as regularly scheduled and is in the back of the studio, foaming at the mouth, restrained. Kramer is eerily calm, his usual antics damped down. The message is the same:

  • All is well.
  • Your money is safe.
  • Speculators are to blame.
  • Fundamentals are sound.
  • The rumors that a huge number of regional banks are technically insolvent is not true.
  • Your money is safe.
  • Buy an SUV.
  • Rumors of a surprise federal move to prevent all withdrawals from IRA and 401(k) accounts are false.
  • Rumors that California may declare bankruptcy are false.

The suburban types check their 401(k) accounts that night and grimace. Many won't check them at all. Most see this as just another hiccup in the markets. The sun sets on a nervous country. The doomers are convinced this is the end and head out to the ATM to withdraw cash. A few more people than normal go to Wal-Mart of the local grocery store and stock up on supplies - much like the rush you see before a big storm hits.

Action

If that happened, would it affect you directly and immediately? Directly, but not immediately? A retiree living on dividend and bond income will have a different response than someone who has taken a flyer on a few stocks. What specifically would a severe market drop do to you? If anything?

How strong is your bank? If we see a continuing wave of write-downs of assets, will this destroy the balance sheet of the institution that holds your money? How exposed is your bank to commercial real estate? If your bank experienced sudden losses and had to shut its doors for a few days (or weeks... or months...) to be reorganized by the FDIC - do you have any cash on hand to help you through the transition? How would you pay your house payment or rent?

If you are a speculator, are you ready to execute short sales? What would you do if the exchange changed the rules to crush the shorts? What if you bet paid off handsomely, but the clearing firm used by your brokerage failed?

If you knew a crash was imminent - what actions would you take? How would you change your equity portfolio? How different would a crash portfolio be than what you currently have invested - if you have anything invested.

Market crashes are not difficult to prepare for in and of themselves. It's the follow-on effects that we'll worry the most about. That's what we'll look into tomorrow...

Thursday, June 26, 2008

Anecdotes and Worry Points



Posting has been spotty recently for a number of reasons - work, travel and family mostly. But there's more to it. I think we are getting close to a tipping point in social mood, from cautious (or Xanax-induced) optimism based on hope and the fact that the U.S. has been in a bull market since roughly 1982, with even the significant market drop after 9/11 barely denting the overall optimism to a new phase of anger, disbelief and rage. Frankly, I've not been sure how I want to write about it.

The actual mechanics of what's about to hit can be found in popular alternative economics sites like Mish's Global Economic Analysis, Elliott Wave International, Urbansurvival, Of Two Minds and plenty of others. The rot that has eaten away at the credit structure holding up the spending patterns, work and expectations of most U.S. citizens. Banks are watching their asset base vaporize. Their asset base is the magic elixir that keeps the alchemy of fractional reserve banking functioning. Destroy the asset base and banks must reduce lending. Reduce lending and the party is over for the current structure of the economy.

So others are already covering that beat. Writers like John Robb are charting what they see as the coming rise of Resilient Communities and how small groups will use modern technology to carve out niches that either don't need, or feed upon, a state structure (meaning here a big central government). Lot's of good theory and anecdote floating around and done by experts better at it than me.

Our niche here at FutureJacked will begin to focus more and more, at least in the short term, on scenario planning. We'll start a series next week that will game out what you would need to be doing between now and a fictional Crash/Crisis come this October. That's far enough out for some good work and October is a good month to postulate for market crashes (1929, 1987). Again this is not investment advice, just a thought experiment.

What Gives?

I am thinking that this long plateau in reasonably positive social mood that has held over the last several years in the face of a lot of negative economic and social "fundamentals" is finally about to give. Folks are realizing just how dire their economic situation is. When that realization goes from the "shocked and hoping it will all go away" phase to the "shocked and angry and want to make someone pay phase" then we could very well be on the cusp of a New American Revolution.

Yes, I think the underlying rot is that bad. I am not calling for violent change of anything, but it is my observation that we have unsustainable patterns of spending and growth in social programs and in the military. As necessary and good as those programs may be, when the money runs out, then that is all she wrote and the millions of people who's lives, livelihoods and mental software is geared to working through such systems. Then you have the stresses upon the system from high energy costs and the growing concern over Peak Oil that is trickling into the mainstream consciousness.

Peak Oil, it's geological ramifications aside, is going to make for a great bogeyman in the coming years. I believe, as we discussed in Catastrophic Abundance, that Peak Oil will be far more devastating as an emotional hook than the very real and very painful economic adjustments it will foster. Peak Oil will serve as the operating system for whole new generation of mental software that groups will be seeking to upload into brains all across the world. I believe it will inform a culture of limitations, of scarcity, of anger and exclusion, of draconinan laws for population control and dispensing of medical care.

Other things that have me convinced that we are near a tipping point are random conversations I've had in my travels recently. I learned long ago to keep my more "non-mainstream" conclusions about the fate of consumer-materialist society to myself. In places as diverse as Philadelphia, Pennsylvania and Exeter, U.K. I got into conversations with people who are convinced that we are facing an apocalyptic end to current society - and they brought up the topic, not me. Now, granted, such anecdotes are the worst sort data cherry-picking, worthy of Amory Lovins fulminating against nuclear power, but these were not hippy-dippy radicals or drop-outs. These were informed young people - the kind that even ten years ago would be talking about growth, the excitement of globalisation and all the possibilities of a world full of cheap and abundant energy.

I know it is not rational or scientific, but I really think that the positive mood that holds the whole Wall Street ponzi scheme together, as well as provides docile citizens who happily consume government services and corporate products, is about to evaporate and that it will evaporate far more quickly than most would believe.

We'll kick off that discussion in the coming days. Until then, review your situation, maybe unplug from too much focus on "international events" and get connected to your community or neighborhood. Have a stock of emergency supplies, as recommended by the feds. Have some cash on hand.

Be thinking of how to make a positive impact should a significant downturn in the economy swamp our country. We are going to have to rebuild things one locale at a time - and small numbers can make a huge difference in times of sweeping change.

P.S.

The newest Progress in Socionomics is out. Take a few minutes when you get the chance and read over it. I think it will provide you with useful tools in analyzing the big mood shift I expect is upon us. I especially recommend the interview with Maj. Tyson and following it up by reading the paper.

Monday, June 23, 2008

George Carlin, RIP


George Carlin has died. I have fond memories of sneaking downstairs to play his comedy cassettes as a kid. Only later in life did I begin to realize he had a lot to say about important issues and that he wasn't just a dirty joke artist.

Rest in as much peace as you can, George.

Thursday, June 19, 2008

What If?

Blacklight Power's "Fifth Force" Device

I must admit I have a soft spot for freaks of science. I've studied and even tried my hand at a few "perpetual motion" devices using magnets or trying to "recreate" Bessler's Wheel - if for no other reason than to play with the mechanics of it.

I still regard "free energy" as a pipe dream and won't bore you with my interpretation of why the physics just won't work.

That said, I guess if you don't like the way that we understand physics today, then change physics. Which is exactly what the researchers at Blacklight Power have done. I have little use for theoreticians in general, but they are putting their money where their mouth is and are engineering devices to take advantage of their supposed new understanding of physics.

I have followed them over the last three years and while it so far has been jam yesterday and jam tomorrow, it's never been jam today - but now they are going to try and build a working device that gives a tremendous power output from little fuel input.

If it works, I'll let you start working out the ramifications for power distribution, wealth destruction as utilities fall, the ability of small groups to become sustainable with modern conveniences, etc. Imagine the Branch Davidians at Waco with an in-house power source, running A/C and lights while under siege instead of using kerosene lanterns? Imagine storms ripping through your town and instead of downed power lines and no electricity for days, the lights never go off? Imagine, imagine, imagine...

But I'm not betting the ranch on it just yet.


What if Blacklight Power works in 2009 ?
from Next Big Future
...They [Blacklight Power] claim that the device will generate power at ten times less cost than the cheapest coal, wind and nuclear power now. They are expecting to have built a factory for mass producing power generation devices in 2009 and to scale the system up to 3MW or more and down to smaller power levels...

Tuesday, June 17, 2008

For Those Interested...




For those of you who are still trading this market - or for those of you who are interested in macro-style analysis - Elliott Wave International is hosting another "Free Week." You get access to their premium products that normally cost hundreds of dollars per year (you get The Financial Forecast Short Term Update, The Elliott Wave Financial Forecast and Bob Prechter’s Elliott Wave Theorist).

Many of you already signed up for previous Free Weeks, and your "EWI Club" membership will let you log on for free for this promotion as well.

At the very least, I would recommend signing up if you haven't already (it is free and takes 30 seconds) and reading Robert Prechter's most recent Elliott Wave Theorist entitled Stocks and Oil; Barack and Hillary. In addition to Mr. Prechter's most recent Theorist, you get access to the last several months worth of analyses for all three products, which let's you examine their track record for yourself (and in the case of the Short Term Update, watch it unfold over the week).

Take a few seconds and sign up. I believe it will be worth your time.

NOTE: In the interests of full disclosure, I am an EWI affiliate, which means I get credit if someone new signs up. If this bothers you, you can avoid the tracking cookie by directly typing in http://www.elliottwave.com/ and signing up that way. It doesn't bother me one way or the other - this is good information and it is free, so take advantage of it.

Monday, June 16, 2008

And a Few Anecdotal Warnings

Panic Image Courtesy Panic Disorder

Something is going to give as the emotional tension continues to ratchet up and up. I think we can make it to roughly October before the slings and arrows of reality penetrate the Xanax fog that a lot of the opinion leaders in this country live in...


Peak Oil: Saudis May Be Strapped for Oil, Close to Full Capacity

Saudi Arabia's pledge to boost oil production by 500,000 barrels per day may not be achievable, a source close to the Saudi oil industry told CNBC.com...

Hollowing Out Mexico: Tough Habit to Break

...Such talk [of drug runners as heroes] is increasingly common throughout Mexico today, from prisons to mountainside towns, as the country wages a ferocious military campaign against powerful drug cartels that make an estimated $13 billion a year and control swaths of national territory. On one side is the president, the military, the law; on the other, the drugs, the violence, but also the stuff of legends—the supposed Robin Hoods who steal from the rich and give to the poor, the bad boys for whom rules don't apply...

Ag Shock: Grains close sharply higher and finish with enormous weekly gain

...Last night and today rains continued to sweep across many parts of the Midwest only adding to further problems. Farmers, elevators and some end-users look to be buying back some of their hedges. We could be seeing some farmer buying as they declare prevented planting and in turn need to buy back their hedges. The market has reached a tipping point and now is in full panic. The weather has remained too bad for too long and now a smaller than expected crop is inevitable. We are just starting the growing season, but the market needs to anticipate the worst. We could see the market continue to rally heading into the pollination window and see where to go for there. It feels however, like the market is going to factor in the worst-case scenario before we get too much further into the growing season...

Delusional Reporting: Are People Smarter than Media Pundits? Yes; Something Is Deeply Amiss

...Here on Planet Earth, a moribund, easily manipulated Mainstream Media is waking up to trends which have been in place for years: to wit, Peak Oil, the Housing Bubble Bust, fraud, insane risk and mismanagement in investment banking and lending, the risks of derivatives, the commercial real estate market's demise, local governments heading for bankruptcy, the collapse of the dollar and the resulting rise in inflation and the cost of imports--I could go on, but you already know all the profoundly important factors Easterbrook ignored/chose to gloss over...

RC Can Have Two Meanings


When the abbreviation RC is used here at FutureJacked, it means "Reslient Community" and is a theme we'll continue to focus upon in the coming months. Well, it can also stand for Refugee Camp.

Right now, the "Tent City" problem is still a marginal phenomenon and it is still easy for the mainstream to ignore it or brush it off as a bunch of addicts getting what they deserve. Unless you see a new wave of job creation that provides work at a solid wage, though, this phenomenon will grow - it's simple debt dynamics at work. Too much debt was taken on and now the growth that the debtors were counting on to bail them out (whether growth in wages - which, when adjusted for inflation is stagnant overall or growth in house prices, which is stagnant or declining) is stalling.

Do whatever you can, whatever it takes, to avoid being swept up in this. These "Tent Cities" can easily be made into mini-Gaza Strips by putting up some razor wire and a few private security guards. Don't think that in a time of crisis, especially if some Tent City residents commit an atrocious crime or two that it can't happen.

'Ontario residents only' at Tent City
By David Kelly, Los Angeles Times Staff Writer

Dozens of Ontario police and code enforcement officers descended upon the homeless encampment known as Tent City early Monday, separating those who could stay from those to be evicted.

Large, often confused, crowds formed ragged lines behind police barricades where officers handed out color-coded wristbands. Blue meant they were from Ontario and could remain. Orange indicated they had to provide more proof to avoid ejection, and white meant they had a week to leave...

Just curious - how long before the authorities realize that the wrist-bands are a stop-gap measure at best (anyone who's ever been at a bar that admits 18 year olds but serves alcohol knows what I am talking about) and move to something a little more accurate - like chipping the "criminals" so a crowd can be scanned quickly and segregated out rapidly?

And on another note - this kind of tragedy is NOT a node from which a "reslient community" will be formed (in my opinion). True RCs will be rare, almost city-state like in their initial appearance, in my estimation.

Refugee Camps, on the other hand, could become all too prevalent in a world without a new frontier to absorb populations and in a world where few have the skills to survive outside an office environment. Hell, they might even be marketed by the authorities as a new and positive mode of living - a sort of anti-suburb - with promises of community and food and medical attention. That would let the authorities get some sort of handle on the unhoused population. My guess is that the reality of such places will not be anything like we'll see reported...

Hat tip to Mish.

Saturday, June 14, 2008

Book Review: Reinventing Collapse


Reinventing Collapse came in the mail just before my recent trip, which allowed time for reading on flights and pondering Dmitry Orlov's work. Here is a perspective on this latest in Peak Oil/Collapse literature.

I had been eagerly anticipating this particular work. Most of the Peak Oil/Collapse works these days are rehashes of The Long Emergency, Deffeye's books or cut-and-pastes from Matt Savinar's site.

Here was a book that offered "The Soviet Example and American Prospects." I was very excited to read a variety of anecdotes, case studies and other applicable data points that could help me with some blog posts I have planned on the formation of Resilient Communities and Networked Tribes.


Reinventing Disappointment

In summary, I was quite disappointed. This was a book that could have offered so much more. Mr. Orlov was the right man in the right place to write such a work, but what he produced was a pale shadow of what someone of his intelligence, experience and education could have delivered.

For those of you who are still on the fence and think the U.S. will sail through the coming crisis on the back of techno-miracles or through blind luck, then this book is for you. It will specifically address many points of what were once known as "American Exceptionalism" - back when we were exceptional - and demolishes them thoroughly. For those of you looking to learn from specific points of the Soviet Collapse, to read specific examples of smart adapative responses or utter failures, this is not the book for you. As I was in the latter group, that lack colors the following review.

Let's go over it chapter by chapter.


Chapter One - The Soviet Example

The book began on a very high note. The introduction and this first chapter lay out the rationale for such a work, with some very interesting notes and stories from Mr. Orlov's experience of traveling back to Russia, post-Soviet collapse. He hinted at some of the difficulties encountered in travel and business, but also alluded to some of the paradoxical strengths that helped Russia mitigate the fall of the Soviet Union. I was hooked.


Chapter Two - Superpower Similarities

This chapter got old fast. Partially this is because I read Mr. Orlov's essays published by Matt Savinar a few years ago and partially is simple ego. In order to get his point across that the U.S. and Soviet Union (S.U.) weren't as far different as some think, he makes sure to paint as black a picture as possible of the U.S. and the decrepit systems that keep it afloat in this late stage of Consumerist Materialism. Fair enough, I thought, that's his premise, this will be short and sweet and we can get on to the meat of the work.

But it wore on and on. I get it - the U.S. has significant flaws and an historical karma, if you will, that is freighted with violence and oppression. The efforts to address this are of course ignored and the S.U./Imperial Russia version is given a much lighter shade of gray. Fine. Anyone who is reading his book, though, understands much of this. If you are reading Reinventing Collapse, you have a grasp of these things, why drone on and on on about it? I was looking for facts and stories - I got a bunch of assertions I'm supposed to take ex cathedra. Again, fine, if that's what it takes to get the "Soviet Example" explained to me, I can deal with it. The chapter had to eventually end, and it did.

This chapter does have some very interesting nuggets, oases in the desert of the "two legs bad, four legs good, America baaaad, SU not so baaaad" template that shaped this chapter. The subsection on Information Technology (pg. 29) and the sections on The Cost of Technological Progress (pg. 33) and Militarism (pg. 35) had some very interesting points.

I was especially intrigued by his review of how information technology developed and how the lack of software patents was possibly the only thing that allowed it to take off. From my experiences with IP, I agree with him wholeheartedly here - and this is another reason I think any solutions in the U.S. to a significant collapse in the economy or an oil supply shock are going to be hampered by many who will never believe that the old system is dead as soon as Peak Oil hits - and they will fight tooth and nail to preserve a legal and corporate system that won't be viable in the coming century. The lost time during the transition could wind up being catastrophic.

I wanted more out of the "Costs" section as he refers to the Chernobyl Disaster multiple times as a key swing point for the legitimacy of the old S.U. Being a nuclear engineer, I am obviously interested, but got nothing more than high-level "it made us all distrust the Communists." Okay, but, like Oliver Twist, I was left asking for more. I didn't get it.

Mercifully the chapter ended. We all knew America is bad, bad, bad. But finally, I would get the anecdotes and case studies that would prove useful in the coming years, because I had made it to Chapter 3.


Chapter Three - The Collapse Gap

Reading the sections of this chapter in the Table of Contents gets anyone interested in scenario planning excited. Here's a man with direct experience and contacts in Russia ready to discuss housing, transportation, money, energy and a whole host of other issues.

Then I began to read it. It was Chapter Two, all over again, for the most part.

America is bad. The legacy petroleum infrastructure that it is tied to will be dysfunctional at best. The "efficient" market-based systems that drive corporations reduce inventory and stockpiles, leaving few things to scavenge or steal during a collapse, reducing any cushion. Cars are bad phallic symbols and lacking one will lead to chaos in the U.S. Basically, premises that anyone shelling out the bucks for this book would already be familiar with to one degree or another. And oh yeah, did we mention that America is bad, though some of the citizens are nice?

There were few extensive examples from the Soviet Experience. For instance, in the Transportation section, there are no real direct examples of, say, the daily life of a Russian citizen in both urban or rural environments. Hell, there was a much better anecdote in the damn Introduction that discussed how Mr. Orlov and some friends used vodka to barter for scarce fuel. That's what I was expecting. I got "The population of the United States is almost entirely car dependent, and relies on markets that control oil import, refining and distribution, as well as on continuous public investment in road construction and repair." No shit, Sherlock.

Examples? Well, Russian trains range from okay to great and they get crowded at planting and harvest time, when Russian citizens head out to their dachas. Okay - how about a story of one family over the course of a year or season and how they get to their gardens, tend them and reap the harvest? Nope, nothing substantive - just cotton candy.

The section on food, where all kinds of case studies could have been very profitable was barren. Basically, the old S.U. was so inefficient when it came to producing food from collectivized plots that a tradition of kitchen gardening helped keep the populace fed during hard times. That's it. No examples of how the soil was tended, how the produce was guarded from thieves, what crops worked best, etc. Just a few paragraphs stating the obvious.

The entire chapter is like this. Few actual "Soviet Examples" are provided. Lot's of bashing on U.S. structures continues. One of my favorites is on how the lazy, fat "natives" who all rule corporations, of course, lord over a subclass of technoligcally capable men and women, mostly foreigners, while spending all their time on the golf course. Riiiiight. I worked as a computer programmer for many years for a reasonably large company. It had plenty of dysfunction, but the goal was to get the job done. My team of programmers was all "native" and we were twice as effective as the Russian contractors that were constantly being brought in on the cheap. Nice people, but when you wanted work done, it was us lazy natives churning it out.

Mr. Orlov finally generated a laugh from me on page 99, in a section on Ethnicity. This is surely to be a key issue, but again, it is all statements, no examples. No examples of Russians dealing with being a minority in a Former Soviet Republic. No examples of the fight with the Chechens, other than a few paragraphs glossing over it all. No discussion of Chinese illegals in the Russian Far East. What he did give us is "Russia's settlement of its vast territory was accompanied by intermarriage with every tribe the Russians met on their drive east." Really? Intermarriage? It sounds so nice, as if the Russians weren't busy doing what the U.S. was doing in the 1800's - killing all who stood in their way and taking the women of conquered tribes when it suited. While referencing the mass die-off and genocide of the American aboriginals there was of course no mention that the peoples conquered by Russia already had a built up tolerance to the diseases that ravaged the New World. It was made to sound like the fierce Russian drive to the East was just a bunch of bachelors heading out into the world, peacefully marrying the local girls... Then he goes on to point out, again, the obvious potential ethnic fractures the U.S. faces - but no specifics. No discussion of the ethnic breakdown of places that did collapse into ethnic violence versus those that survived. Just more telling, not showing.

Now, I'll be the first to admit that my reaction to the story about the programmers and the ethnic issues is just my little ego reacting to perceived insult and reading about my country in the most negative light possible. This would be fine if there was meat to go along with the beating. There was only gristle. I guess my expectations were just too high.


Chapter Four - Collapse Mitigation

This is actually worth reading. You might even read it first. His discussion of "activists" is worth reading.


Chapter Five - Adaptation

Another chapter where detailed scenarios or anecdotes from the very real Russian experience would be key. Another where such anecdotes were thin on the ground. That said, this is another solid chapter and gives some very useful ideas for preparing both mentally and physically. It's worth reading, but again, it's just statements, not "examples."


Chapter Six - Career Opportunities

Same evaluation as Chapter Five. It's not bad, it's just that for someone of Mr. Orlov's experience and talent, there could have been a lot of great examples here, rather than the high-level discussions that anyone who has thought about Peak Oil implications has already been puzzling through.


Conclusion

I think my negative reaction to this book mainly stems from my high expectations at the beginning. I really expected "Soviet Examples" that could be used to plan now and to act later, should events play out into a collapse scenario. Instead, it was like reading warmed-over Noam Chomsky - though more coherent, I must admit.

Monday, June 9, 2008

Coming Soon

I promise I'll get a post up in a day or so. In California for some nuke meetings. I don't make it out to the West Coast much and the river of automobiles on the freeways is amazing, especially with gas high and rising.

Thursday, June 5, 2008

Using Excel to Kneecap Nuclear Power

Amory Lovins is quite a character. On the one hand, he appeals to the techno-optimist inside of me. On the other, his sad devotion to the dying religion of the 1980's Anti-Nuke Movement is galling.

His Rocky Mountain Institute loves to churn out charts and papers "showing" how nuclear is a dead-end in regards to future power generation. Anyone with a knowledge of engineering and the relative power densities of fuels and a handle on the concept of capacity factors knows that nuclear has a place at the table - and probably quite a large place assuming no paradigm shifting energy technologies come along. Whether the big station solutions implemented in most places these days or the micro-nukes I think will be more feasible in the violent and uncertain decades to come, nuclear will be there - at least for those societies that wish to remain industrialized and electrified.

In response to another one of RMI's Excel Chart hit-jobs, David Bradish over at NEI has taken the RMI data and assumptions and done something very unfair in the eyes of the Anti-Nuke Religionists - he analyzed the data, took it apart and proceeded to shred it to pieces, revealing it for the "chartjunk" that it is.


Chart on Zero-Carbon Generation Sources for those who place their faith in RMI's staff

Amory Lovins and His Nuclear Illusion – Part One (The Art of Deception)
...Let’s sum up the apparent mistakes evident in just this one graph. First, RMI’s analysis erroneously uses twice the actual capacity factor for “non-biomass decentralized co-generation.” Second, RMI’s analysis distorts the actual contribution from nuclear’s “true competitors" with the use of chartjunk. Third, RMI’s analysis makes selective use of data in order to state that nuclear’s “true competitors” are turning “in a stunning global market performance” when in fact one their own sources actually says the opposite. Finally, RMI’s analysis misleads the reader by not stating that coal is included in this graph, when actually it is.This is about as much as I’m going to go into RMI’s so-called numbers and sources. The rest of my posts will focus on the following themes from RMI: centralized vs. decentralized energy; big plants versus small plants; energy efficiency and “negawatts;” nuclear and grid reliability; and costs...

Chart on Zero-Carbon Generation Sources after rigorous analysis. Huh.

This is important because we have to start getting reason and rational thinking back in the driver's seat when it comes to energy policy in the United States. We don't have the luxury of time or cheap energy any more to let us slack off.

Tuesday, June 3, 2008

The Chump Phase

For the next few posts, I'd like to focus attention on the challenges that reslient communities (RCs) will face in the coming years as we transition through the Great Collapse of the current economic model and build up a new one. I am trying to puzzle through ways that RCs might avoid being totally crushed by the legacy system during the transition phase. Lot's of great work is out there on the potential benefits and positive aspects of RCs, but not so much work is being done on how such communities move from "odd bunch of geeks and hippies in scattered areas" to "broad social movement with potential to overturn portions of the consumer economy." We talked a bit about this issue in The Marrano Option, but I'd like to flesh out the problem in general terms.

Here is where my train of thought is headed:

The Transition
If we do see the kinds of economic and social dislocation I expect in the coming months, we should then see a lot of RC variants spring up to deal with the problems. In some areas of the country it might involve guerrilla farming, bandos occupying houses that were foreclosed on, small-scale energy production fueled creatively (wind, stolen diesel, methane, etc. - I'll ignore my favority option - small-scale nuke for this discussion, that will be for areas that have access to capital, engineering talent and social stability). Other versions might include de-urbanizing, moving to small towns and, by force of circumstance, turning to subsistence farming - a sort of genteel poverty redux, but with a host of significant problems.

Urban areas will be interesting to watch. Some will succeed, I believe, but it will take significant changes on how they generate and use energy and on how they feed their populace. The day of the mega-city is limited, I think...

The Assumptions
This collapse and transition period I am expecting is based on some assumptions such as
  • A significant downturn in social mood which affects how the masses in society respond to incentives and events (i.e. whereas in a period of positive mood a disaster might be a spur to great engineering works or scientific solutions to problems, in a period of negative mood the majority will turn to blamestorming, magical thinking and abandonment of the affected area)
  • Petroleum prices that remain high and rising. Depletion continues to hollow out the new mega-projects that come on-stream. Oil prices per barrel have one more good drop in them, I think, maybe even down into the $70s, briefly, due to demand destruction and a wave of new supply, but my assumption is that petroleum will be very dear in the coming decades
  • Agricultural product prices for crops that are farmed on a mass scale (corn, cotton, soybeans, etc.) will be very volatile due to energy inputs, changing government subsidies, water problems in some areas and an aging demographic among farmers. This will drive a return to Victory Gardens and local allotment farming, in my opinion
  • Significant disruption of federal social programs. I've beaten this horse to death on more than one occasion, but just a reminder - the Baby Boomers are retiring. The Welfare State won't be able to survive that.
  • Disruptive technologies will continue to change how work is done. Many will not be able to adapt and I believe a large, world-wide underclass will form. An underclass dedicated to agriculture and local industry, while a global elite will work and live in a whole different economic sphere. I use the term "underclass" but in reality, it could easily turn out to be a lifestyle that returns dignity and meaning to the work and social lives of millions across the United States.
  • Stuff I haven't thought of. If this truly is one of those rare transition periods in history, we'll be living and making history with every choice and decision. Who knows what flavors of blowback we'll see?
The Chump Phase

What any potential "solutions" to a crashed system have in common is that the active and strong personalities that will be faced with rules suited to the legacy system that by then will have ceased to have a future. We will be in the "Chump Phase" - where the majority of people are still hard-wired to believe in the legacy system and all the attendant laws, regulations and law enforcement techniques. They will be played for chumps - work hard for a corporation, spend lot's on credit cards, don't rock the boat, keep up with the Joneses, buy that big house in the exurbs and oh yeah, by the way, the Man has re-jiggered the bankruptcy laws to make you a debt slave when the economy doesn't allow the majority of workers to grow their income enough to keep up with their debts. All these social and economic norms that we've been taught for the last few decades will only lead those who adhere to them down a blind alley.

At the same time, there will be a wide variety of behaviors that don't match up well with the legacy system laws. To succeed in this new world, you must adopt new habits, but in adopting new habits, you might get your ass tossed in prison for a variety of property rights violations, drug law infractions and who knows what sorts of affronts to social norms (i.e., polygamy or group "marriages" to build up capital and provide for defense of property and aid in raising children, seizing vacant land to grow food, economic activities that violate current law such as operating bot networks as part of a GlobalGuerrilla "tribe" or growing dope, not paying property taxes, etc.).

It will be a time that you must be nimble and adaptive, but the legacy system will still have tremendous power to hobble you and cage your creativity. It will prove interesting.


For What It's Worth

FYI for those of you who are intersted in Elliott Wave analysis. The June issue of the Elliott Wave Financial Forecast has an outstanding Special Section called "The Fundamental Tipping Point" which gives a fantastic historical comparison between the current economic situation and past turning points. There's a great chart that compares balance sheet items at previous turning points in the stock market. Very interesting, especially for folks who are leery of technical analysis and prefer more "fundamental" reasons for their equity analytics. If you don't want to buy a subscription, I think can buy a single issue - if it interests you.

And, on the Peak Oil front, be sure to check out this new analysis from Jeffrey Brown over at The Oil Drum - Is a Net Oil Export Hurricane Hitting the US Gulf Coast? It continues to hammer home the importance of the Export Land Model and its relevance to our precarious situation here in the U.S. as a petroleum importer.