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Why doesn’t the ‘long emergency’ feel like an emergency?

Why doesn’t the ‘long emergency’ feel like an emergency? thumbnail

In 2006 when James Howard Kunstler published his breakthrough book The Long Emergency, the next two years seemed to vindicate his warning that the oil age was coming to an end with perilous consequences. Oil soared to $147 a barrel in mid-2008. A few analysts suggested that it was headed for $200; but that was not to be. By autumn the stock market had collapsed and with it the world economy. Oil, too, then collapsed, trading in the mid-$30 range by December as demand for oil fell off a cliff with the economy. It seemed for months that the world was headed for an economic depression.

But extraordinary stimulative spending by governments around the world and emergency measures by central banks reversed the trend and led to a weak, but extended recovery of sorts that lasts to this day (though not for everyone–just ask the Greeks).

Oil prices have rebounded and have remained at or near record levels for more than three years when measured by the average daily price of the world benchmark Brent Crude. That high price (higher on average than the year of the spike) is holding back economic growth. It is creating a seeming puzzle for economic policymakers who don’t understand why their extraordinary measures have not led to extraordinary growth. They are blind to the central role of energy and particularly oil in the economy.

Despite the so-called recovery, much of Europe remains mired in low or no growth, lingering on the edge of a deflationary spiral. Germany is the one bright spot; prospects for France continue to darken. In the United States jobs are only now starting to return to previous levels almost five years after a slow and laborious climb off the bottom of the so-called Great Recession.

Today, governments of some of the world’s largest nations are still running extraordinarily high deficits, though these have come down as the world has inched its way out of the recession.

What appears to be masking the ongoing emergency is the rise in stock and bond markets (which has disproportionately benefited the rich who hold the most stocks and bonds). The disconnect between the still sluggish economy and the stock market which keeps hitting new highs is one indication that dangers lurk in the world economy.

Retirees and others who are risk-averse have been getting virtually no interest on their money in the bank, interest that many rely on to live. For five years the world’s central banks have maintained ultra-low interest rates designed to goose the economy. This policy has forced these risk-averse investors out of their comfort zone and into the stock and bond markets to obtain income and a chance at growth. Such markets, of course, carry far more risk than bank CDs.

The people at the top and those with substantial retirement investments are doing okay again, but do not understand the precariousness of markets which are now totally driven by government and central bank policy–policy that will inevitably shift or, if unchanged, will stoke the world’s speculative fever to such a degree that no intervention will be able to prevent a financial crash.

Perhaps another reason that the long emergency we have entered does not seem like one is that some emergency measures have morphed into permanent fixtures of society. The Bank of England has held its key lending rate at 0.5 percent since 2009, the lowest since the opening of the bank in 1694. The projected U.S. federal deficit of $492 billion for 2014–which previously would have provoked sharp public debate about the ruin of government finances–today seems unnoteworthy when compared to the four straight $1 trillion plus deficits from 2009 to 2012. The abnormal is becoming normal.

Analyst Doug Noland at first didn’t believe that governments around the world would mortgage the future of their peoples to such an extent to protect and enrich the financial class in the aftermath of the 2008 crisis. Eventually, he dubbed the phenomenon the “government finance bubble.” He expects it to be the largest and final bubble of a series occurring in the last 30 years. At the end there will be no Bank of Mars to bail us out when the government finance bubble collapses.

On the energy front, new hydraulic fracturing technology combined with horizontal drilling is being touted as the answer to high oil prices. But oil prices remain stubbornly elevated. And, the technology itself is designed to harvest oil from shale layers thousands of feet below conventional reservoirs, layers which are far more difficult and expensive to exploit. In a way, our extraction of shale-based oil should be considered an emergency measure, one designed to forestall a decline in world oil production and one that would never have been taken if the easy-to-get oil hadn’t already been gotten.

Likewise, attempts to exploit oil under the Arctic Ocean (so far unsuccessful) are opening a new front in the era of “extreme oil” and should also be classified as emergency measures.

But the public and policymakers generally do not view these developments in oil exploration with concern. On the contrary such efforts are touted as evidence of humankind’s inevitable advance through clever manipulation of the environment using technology. It is just this idea of inevitability which holds the public mind in thrall regarding the economy with a promise that conditions will return to normal sometime soon–normal being defined down to include all sorts of emergency measures.

Meanwhile, the rampage of an itinerant army of vengeful youths in Syria and Iraq intent on building a new caliphate and the suddenly shifting borders of The Ukraine and Russia (accompanied by the downing of a civilian airliner by belligerents) seems to trouble the public elsewhere very little. Regarding the Middle East few are saying out loud that oil and water are among the driving forces of intensified conflict that threatens to make current borders obsolete.

Joining in the mess are Palestinians and Israelis who are once again in a hot war that seems to draw yawns from the rest of the world populace.

As long as we ignore the role of climate change and resource and energy depletion, we can delude ourselves that somehow things will return to the way they used to be–before the long emergency began–that political or ethnic factors are the main problems and that it has ever been thus! So, we tell ourselves not to worry too much since these problems are really local or regional; as long as we can stay out of the way, we think we can safely ignore them.

But, of course, we can’t because the world is now one global system dependent on critical resources coming from the very areas affected by conflict–oil, of course, in the Middle East and natural gas from Russia upon which Europe depends.

Is all of this happening too slowly to be considered an emergency? Emergencies generally make obvious the need for immediate and decisive action. Some people do indeed perceive that swift action is needed to address urgent energy and sustainability issues. But, it is also true that we will need decades-long engagement with such issues if we as a species are to navigate the path to a successful transition to a renewable energy economy that also conserves the soil, the water, the climate and ultimately us. Hence, the long emergency.

But in order to embrace such a worldview, most people would have to give up the supposed comfort offered by the financial bubble of the last generation, a bubble made possible by cheap fossil fuels, especially oil. It seemed as if the public might let go of this fossil-fueled fantasy after 2008. But because of the extraordinary financial measures deployed in an attempt to return us to business-as-usual, the global economic and financial system has been revived just enough to allow us to engage in a few more years of fantasizing–until our cumulative debts to nature and to one another catch up with us.

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16 Comments on "Why doesn’t the ‘long emergency’ feel like an emergency?"

  1. Makati1 on Sun, 27th Jul 2014 8:18 pm 

    Long article but if you have your eyes and mind open, you know we are in a slow decent to the bottom. No ‘recovery’, just faux currency with questionable real value. Monopoly money per se.

    Soon, the fall will speed up as more and more economies go into the ditch. Eventually there will be another world war. That is how most empires end. In desperation.

    I’m currently watching 10 hours of videos about WW1, when the German empire ended. WW2 was the end of England’s empire. WW3 will be the end of the US’ empire. Wait and see.

  2. Davy on Sun, 27th Jul 2014 8:35 pm 

    I agree with the author on most of his points. We here on this forum talk about these subjects daily. The point I want to make is there are allot of complaints about what the CB and global governments have done to avoid a contraction or worse. I am not convinced any other course of action is going to do any better. It may benefit a different class but a descent is a descent. I see no policies other than drastic population reduction and significant energy intensity reduction that could make a difference. These efforts would require unimagined lifestyle and attitude changes globally. Even with these changes the systematic consequences and unintended consequences may not allow anything but a bifurcation to a much lower level of economic activity. Once a systematic disequilibrium is breached nothing can be done but to ride the energy gradient downwards to some lower level that eventually coalesce. There is simply nothing we can do now offering hope for anything resembling today’s world. We have simply gone too far and our tether is no longer effective. We are lost in space so to speak. So when these folks on Zero Hedge as one example that claim to have the answers to our economic predicament they are in a fantasy world if they think the storm surge can be resisted. This is a hurricane and it will blow, batter, and rip apart the coast. All that can be done is to let it run its course.

  3. JuanP on Sun, 27th Jul 2014 9:22 pm 

    Great article. Nice way to end the day. Went raft fishing with my wife today and I’m beat. Also built and filled a new raised bed today. One third compost and cow manure, one third Vermiculite, and one third peat moss. I have 100 plants growing indoors for it. Tomorrow they go out and I start 100 new ones.

  4. R1verat on Sun, 27th Jul 2014 9:59 pm 

    JuanP~There is something about planting that keeps the thin thread of hope intact.

  5. Plantagenet on Sun, 27th Jul 2014 10:53 pm 

    The “Long Emergency” hasn’t started yet. Global OIl production is still slowly going up.

    Just wait until we hit peak oil.

  6. Perk Earl on Mon, 28th Jul 2014 1:53 am 

    The human experience tends to be one that accepts the here and now, not seeing the degradation of the planet or our lives along the way. It’s like a dream. When we dream in our sleep we accept things for what they are in each twisting, changing moment, only to see how absurd those situations were upon awakening.

    In our waking state it is not much different as we accept a government debt bubble to keep things going a while longer, or we accept more intensive geopolitical battles spreading around the globe, or paying more for energy, or receiving almost no interest for passbook savings even though not long ago we got several percent return that amounted to something that helped out, especially the retired. We even accept that we may not get a social security pension because of the huge debt bubble building.

    As long as we breathe, eat and sleep, we only vaguely recognize the departure from normalcy we once knew not long ago. So what is the difference between the dream in sleep and the waking state? Not much it would seem as both suspend the recognition of change for acceptance of the here and now.

  7. meld on Mon, 28th Jul 2014 3:10 am 

    The governments of the world will do whatever it takes to massage the figures to look positive. It´s what every government from the beginning of time has done. I´m mean for gods sake the UK and Italy are starting to include hookers and blow as part of GDP. They can´t even measure it, so if they need a nice little % bump here and there they just make it up. This doesn´t feel like a long emergency it feels like a very short and quick one,

  8. J-Gav on Mon, 28th Jul 2014 3:41 am 

    “A few more years of fantasizing …” sums it up pretty well. They’ll soon be counting farts as GDP to keep things going a little longer.

  9. Pops on Mon, 28th Jul 2014 7:52 am 

    J_G, They’ve already redefined GDP:
    http://www.theguardian.com/commentisfree/2013/apr/23/recalculating-gross-national-product-hollywood

    And they are redefining “manufacturers” to include companies that don’t make anything …
    http://online.wsj.com/news/articles/SB10001424052702303546204579439170777269630

    But to answer the question, it isn’t an emergency yet because there is still some room left on the credit cards. Yeah, we are making payments on one card from another but we’re still in the game!

    I found a good chart showing the price to earnings ration of the S&P is now the third highest ever:
    http://peakoil.com/forums/gail-where-are-we-headed-t70029-20.html#p1200979

  10. paulo1 on Mon, 28th Jul 2014 8:55 am 

    Sprinkler making that wonderful noise this morning….before the hot day hits. Every morning I haul two PU truck loads of ‘shot rock’ to beef up my river bank. I made a dumping cart that goes down my boat/dock ramp which saves me from packing the rocks down a knee breaking set of steps. We get some pretty high water every November…(actually it is effing scary with huge 200′ spruce and cedars cartwheeling down the chocolate milk river after a big and rapid snow melt ‘pineapple express’ event), and I don’t want to lose river bank.

    Time to prep in all manner of ways. Raised beds, PV systems, insulation, whatever each of us needs to do. Make a list. Ensure the list is doable, specific, and measureable. One of my listed tasks is “beef up the river bank to prevent erosion”. Pretty soon I can cross it off.

    Paulo

  11. J on Mon, 28th Jul 2014 11:14 am 

    I think Plant has it right. Once every chart is pointing down: steel production, coal production, oil (production), … all eyes will be on: food production. And it will be much harder to talk about a “recovery”.

    Malthus might have been wrong on timing, but he won’t be wrong on the final outcome.

  12. JuanP on Mon, 28th Jul 2014 11:52 am 

    Plant, While the long emergency has already started for many and life has always been a long emergency for the poorer half of the global population living on around or less than $2 a day, your point is good. Once production actually starts falling things will get nastier. I don’t look forward to it.

  13. JuanP on Mon, 28th Jul 2014 11:58 am 

    Paulo, I have only seen what you describe in documentaries and movies, never with my own eyes in real life. As a packrafter the idea of a 200′ cedar going down a raging river sounds very scary. It would be hard to pull me from a sight like that, from a safe distance of course.

  14. paulo1 on Mon, 28th Jul 2014 1:08 pm 

    Hi Juan,

    There is a big new bridge just downstream from me. The old wooden trestle bridge was washed out about 15 years ago. The new one has big abutments and only 1 centre support…span 200 feet? (I should measure it,it is probably wider than that). When the river is in flood we sometimes go up on the bridge to watch the water, but it is scary. It is very scary. When those trees come down we bail and watch from shore. If they hit the centre support there is a huge ‘BOOM’, and it either hangs up or twists around in the flow to spin downstream again…5 km to the sea. Our place has never flooded, and probably won’t because it seems to be about 7′ higher than the opposite bank and the rest of the valley. Plus, we are on a 4′ crawl space. But we have been cut off for several days at a time. The bridge supports are 3′ wide steel columns filled with rebar and concrete. They go down 80′ to hard pan….glacial till. the pipes are further reinforced with big concrete abutments.

    It flows just under 1700 cubic metres/second in flood.

    Paulo

  15. JuanP on Mon, 28th Jul 2014 1:49 pm 

    Hi Paulo, sounds like a very beautiful place.

  16. meld on Mon, 28th Jul 2014 3:20 pm 

    The charts will never point down because when they are down for too long they find a new way of “calculating” whatever it is they want to be going up. Eventually they’ll just start making it up, but that’s a good few decades away yet.

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