We cannot drill our way out of this oil crisis. Since 2000, oil companies working in the U.S. have doubled the number of wells drilled per year.
Although increased drilling has added new oil to the nation's supply, it has not done so fast enough to offset the terminal decline of existing fields.
We are going to have to import more of our oil. Period.
It's posted on PIMCOs web site. There are several points raised that require reflection: (1) Industrial policies as national defense; (2) US default on debt and capital controls to prevent capital flight; (3) Reduction of US standard of living and dropping of minimum wage by 50%; (4) cutting social services and raising of taxes.
There are some very extreme measures in his proposals. But there is also arguable merit in each and every one. The US standard of living is going to decrease, whether we like it or not. Social Security should be social ensurance for the poorest, not a retirement program. Offshoring manufacturing is putting the US into a strategically weak position.
Wow! The guy sure did his homework! I saw that I was on the same page with regard to "normal" interventionist policies of the FED no longer working to correct imbalances. I've been saying this since I started posting. Americans will have to take a major reduction in the standard of living, stop spending and start saving or lose it all. We will all live to witness the play-out of this global chess game, I am afraid. And it won't be easy to watch. _________________ A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
Live in Arizona? Check out: http://sustainablearizona.org and read my blog.
Using the seasonally adjusted total unemployment rate of 5.6% and adding to it "discouraged" workers, the rate grows to 5.9%. Factor in other groups of people who are underutilized in the work force, you can ratchet the number all the way up to 9.6%. And, for the sake of comprehensiveness, if you use the non-seasonally adjusted numbers, that rate would swell to 10.9%. So, those are the numbers, and I'll leave readers to draw their own conclusions.
Posted: Mon Dec 27, 2004 8:27 am Post subject: Re: Restructuring the Global Economy
trespam wrote:
I found this a shocking read.
Good article - thanks for posting it!
And, Trespam, do you see now why I'm an advocate of grabbing resources? Add the consequences of Peak Oil to the material in PIMCO's article and you come up with a rather nasty result. Quite possibly one that would destroy our society. _________________ Dieoff. Fun to watch. Better with hot buttered popcorn!
Joined: Sep 29, 2004 Posts: 2102 Location: Pennsylvania, USA
Posted: Mon Dec 27, 2004 12:21 pm Post subject:
A great, all-in-one article. Who will be the world’s next superpower? Might the task be shared amongst countries? Very good questions to ponder. I think that the Bush administration thinks as long as the US can keep the rest of the world relatively unarmed, then the restructuring can be orderly.
The British Empire was effectively ended by Hitler and a new world order emerged thereafter, though not the one Hitler was hoping for. Historically, these realignments are set in stone by major conflicts. Will the US face a major war causing it to draw back it's satellite bases around the world?
Joined: Aug 18, 2004 Posts: 694 Location: SF Bay Area, Calif
Posted: Mon Dec 27, 2004 6:53 pm Post subject:
Very interesting article, trespam.
Dialynas advocates that the US default on its debts and enforce this decision on the debtor countries at the point of a gun.
Dialynas wrote:
Trapped by debt in a weakened state, the U.S. is now impelled to pursue unorthodox policies to relieve its burden, including military confrontation.
He also imposing tariffs and "taxing" other countries.
At home, he proposes:
* Raising taxes.
* Cutting social spending, especially for senior citizens.
* Reducing minimum wage by 50%.
The only way for such a program to be implemented would be through a dictatorship and a permanent war state.
I think that we'll be hearing more proposals like this in the coming years. It's more or less what Bush and the neo-cons are planning, but without the nice-sounding phrases.
It's interesting that Dialynas assumes that the only strong card held by the United States is military force. Manufactured goods from the US are not competitive. Political influence is weak, which he attributes to the US debt (and to which I would add the incompetence and bullying of the current administration.) The appeal of the US as a market is diminishing, since the US cannot continue spending as it has and there is danger of default or devaluation.
So, when Dialynas says, "The global rebalancing requires the participation and sacrifice of all countries," one has to scratch one's head and ask "Why?" Why would other countries sacrifice for the sake of a spendthrift United States? The answer, as Dialynas implies, is that there is no reason. In fact, "The threat of military engagement by America will be required to re-establish global economic/political balance."
It's interesting to see how Dialynas depicts the United States as a victim: "In this regime, the U.S. pays and everyone else plays."
Wait a minute! Who was in charge as the U.S. was running up its debt and sending its manufacturing overseas? Did China make the US do it? Hasn't the U.S. been the undisputed world power since the end of World War II and especially since the fall of the U.S.S.R? How can the U.S. be the victim if it was the country that set the rules?
Dialynas is unable to seriously analyze why the U.S. got in the situation it has. Instead he is on the prowl for enemies to blame. This is what makes him so ominous. It's the nationalist-militarist mindset, close to fascism.
What's interesting about Dialynas is that he proclaims an end to the conventional wisdom of the past 30 years. Free trade he says is a false idol. We cannot have both guns and butter, he says, so let's increase the guns. Most importantly, he implicitly admits that the U.S. is living beyond its means and the only way for it to retain its pre-eminence is through military threats.
Assuming that Dialynas's diagnosis is correct (which I largely do), one does not have to leap to the fascist solution.
Many former imperial powers have made the transition from a world power to a self-contained prosperous nation. Spain, England, Austria, Germany, and France, for example. Despite its problems, the United States is blessed with natural resources, an educated population, a developed infrastructure, and a lack of nearby enemies.
The United States will be reduced in power. The question is, will this transition be orderly and prosperous, or will it be a foolish series of military adventures?
***
Incidentally, the NYT has an article on Argentina's recovery from bankruptcy.... maybe we could get some ideas from them. Like Dialynas, they are pursuing a non-conventional path, but they do it without the military state.
http://www.nytimes.com/2004/12/26/international/americas/26argent.html?oref=login
(probably requires registration)
Joined: Sep 29, 2004 Posts: 2102 Location: Pennsylvania, USA
Posted: Mon Dec 27, 2004 7:56 pm Post subject:
I'm not living beyond my means and neither are most of the people I know. People I do know who live beyond their means pay dearly for it. When I was an employee, I was lucky to get two weeks vacation a year. I hadn't had a real raise when compared to inflation in years and I pay dearly for my health insurance.
My German friends get six weeks vacation a year starting on the first day of their employment. They are the highest paid workers in the world and enjoy free government provided healthcare, free college education (assuming they qualify) and a world class public transit system. On top of that, they rarely work past 12 noon on Fridays.
America has to reduce it's standard of living? I would gladly "reduce" my standard of living to match my German friends!
I'm tired of being told that I have to reduce my standard of living. I mean, give me a break. Everyone seems to think that we are all rich in this country. It's all relative.
Posted: Mon Nov 21, 2005 5:46 pm Post subject: Re: Restructuring the Global Economy
I don't know who dug this one up, but thanks for doing it! (Might be nice to make a habit of it, dig one up every week, for those of us who joined later and don't have time to dig through them all).
Anyway. I specifically wanted to lift out this bit:
Quote:
What might motivate some members of the cartel of Asian central banks that hold massive dollar reserves to sell these assets, or buy fewer of them? Perhaps it is their belief that U.S. policy makers will be foolish enough to take them out of their positions as they choose to protect themselves. Perhaps they will determine that their industrial development is well enough advanced that they no longer need to support the U.S. dollar to maintain their exports.
Couple this to the appointment of Ben Bernanke as successor of Alan Greenspan, and his quote about using the 'printing press'. What do we get? Does it spell opportunity for the foreign holders of US debt? Or does it not apply to this case?
Yesterday they showed a documentary over here named "The day the dollar drops..." (translated). It also mentions that at a recent meeting of the IMF in Washington at which all international banks were present, there was uncertainty, basically everybody thinks a dollar crash (within a 24h timeframe) is a possibility, but nobody knows where it would start.
Posted: Mon Nov 21, 2005 10:22 pm Post subject: Re: Restructuring the Global Economy
CARVER wrote:
I don't know who dug this one up, but thanks for doing it! (Might be nice to make a habit of it, dig one up every week, for those of us who joined later and don't have time to dig through them all).
That would be me. Moderators have a new tool that allows us to prioritize threads we would like to stay on the front page. I felt it was a good idea to bring the cream to the top of the milk now and again. _________________ A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
Live in Arizona? Check out: http://sustainablearizona.org and read my blog.
Joined: Oct 12, 2005 Posts: 281 Location: Washington State, USA
Posted: Fri Nov 25, 2005 8:53 pm Post subject: Re: Restructuring the Global Economy
I share the concerns raised by Dialynas and the other posts here. The US has dug such a deep hole, and shows NO concern, SO it may be useful to look at this situation as a poker player who is holding a Royal Flush.
Just to play devil's advocate here let me list a 3 part question and a mind game?
What if the US has no intention of:
A. Paying off any of this foreign debt?
B. Allowing anyone to challenge the US dollar Reserve currency status?
OR
C. Allowing anyone else to control the world's oil, its price in dollars or its distribution, especially since the US government is populated by oil men who probably know more about Peak oil and Saudi Arabia than we do?
You may ask how can the US control all these events?
Remember that the US government is run by people experienced in the Soviet Cold War and the concept of "Mutually Assured Destruction", or affectionately known as "MAD".
I have just finished William Engdahl's excellent book "A Century of War" and just received William Clark's "Petrodollar" which on skimming seems to pick up on and extend Engdahl's book. The British played a game of hard ball geopolitics after their navy became dependent on oil, and the Brits then set up military bases in South Africa, Suez, Persia, and Kuwait, Hong Kong and then after WWI seized the Ottoman Turkish Empire (Now Iraq etc.) and the rest of the mideast. Their Empire depended on oil and control of the world trade sea routes.
Jump to today.
It is Engdahl's thesis that the US policy since Bush first took power to establish military bases in EVERY location to control access to all the world's oil if it were required to do so. The US military and the US economy requires oil, so let's not leave things to just to the free market, lets make sure of the outcome. We are the world's superpower, so act like a bully.
Remember "You are either for us or against us!"
The US navy now rules the seas even better than the British Navy did before WWI, during the height of the British Empire. No oil tankers could move, unless the US decides to let them. Both China and Japan are dependent on oil imports. Think intimidation.
Then thinking only their own self interest why would China or Japan or Europe WANT to topple the dollar when their own export economies would go into depression right along with the US? Their economies would tank too. The economy of China is expanding, so the Bank of China needs to issue more paper money too. The increased US dollars held are the "assets" backing this new Chinese money. We are doing the Chinese a favor, helping them expand, and we get all their toys imported into the US as payment. The Chinese government is conning their people too!
Thus we have a "MAD" stalemate. Everybody plays the game by the rules or,
Just a thought to get everyone thinking outside the box on how to restructure the world economy.
Just to be sure I am not misinterpreted, I am APPALLED that the US is taking this approach, and sincerely hope we can change direction to return to our values and International cooperation before MAD reaches its ultimate conclusion and the whole world gangs up on us as " The Allies", and we are the Evil Empire. _________________ An expert is someone who has made every mistake possible in their field and learned how to prevent them.
Joined: Oct 06, 2005 Posts: 190 Location: South Texas
Posted: Sat Nov 26, 2005 2:29 pm Post subject: Re: Restructuring the Global Economy
Regarding the military option, I think the U.S. has discovered the limits of military power in Iraq. A small insurgency has managed to stymie the world's most powerful military, and hasten the bankruptcy process in the U.S. at the same time. As much as the neocons or other warmongers in the Bush Administration would like to pick another fight to show what a dominant world power the U.S. is, they are constrained by public opinion over the Iraq quagmire. It will be a long while before anyone will support another foreign adventure, and any "reasons" given for any such will be looked at with a fishy eye. _________________ Exporting oil is an act of treason"-- Heitor Manoel Pereira, president of AEPET in Brazil, January 06, 2006
come see me sometime... http://www.sonofchaos.blogspot.com/
I'm not living beyond my means and neither are most of the people I know....
I think you're missing the point here. Even if YOU personally do not live beyond your means, the fact that the government runs a deficit automatically makes you financially liable. see what I mean?
yeah I know that doesn't sound fair but welcome to financial reality!
Every government that has ever existed stayed in power by ensuring that somebody had a vested interest in maintaining it's existance. In Ameirca:
1) If you're poor you get a welfare check.
2) If you're middle class you get a tax deduction.
3) If you're rich you get a tax loop-hole or subsidy.
Most of the money is in item 3) But in the end everybody has a vested interest in Uncle Sam dishing out the dough. Because of this a reduction in government spending is almost impossible. My crystal ball of doomerosity tells me there can only be one final outcome:
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Moderators have a new tool that allows us to prioritize threads we would like to stay on the front page. I felt it was a good idea to bring the cream to the top of the milk now and again.
But in the end everybody has a vested interest in Uncle Sam dishing out the dough. Because of this a reduction in government spending is almost impossible. My crystal ball of doomerosity tells me there can only be one final outcome:
