Tipping Points: Near-Term Systemic Implications of a Peak in Global Oil Production
This is the Overnight Armageddon Scenario updated with lessons from the Great Recession.
The credit crisis exemplifies society's difficulties in the timely management of risks outside our experience or immediate concerns, even when such risks are well signposted. We have passed or are close to passing the peak of global oil production. Our civilisation is structurally unstable to an energy withdrawal. There is a high probability that our integrated and globalised civilisation is on the cusp of a fast and near-term collapse.
Basically the paper outlines the case for a "fast-crash" scenario centered around a collapse in monetary confidence due to peak oil:
The world economy functions on credit, which requires growth to sustain. Once it becomes generally accepted that energy growth and so economic growth have ceased, banks, bondholders, shareholders, etc will realize they will not be repaid their principle (let alone their profits) and world trade will collapse as the "haves" attempt to change their imaginary (soon to be nonexistent) assets into tangibles.
Which brings in the second major topic; the de-localized and globally interdependent economy. Simply put, there is no local economy without global trade since few local businesses today produce anything which isn't, in whole or part, sold into or sourced from the global economy. Once faith in world credit markets evaporate, so will "local" business large and small.
Leading to the final element (in my summary anyway) which is the dependance of the critical on the trivial. We talk here a lot about wasteful consumerism supporting lots of real jobs and this is the same idea applied to the greater infrastructure, i.e.: trivial Facebook (and PO.com) use enables the economy of scale that allows banks, business - infrastructures of all kinds, to function over the internet. Just one other example, cheap chip manufacture for games and refrigerators and cellphones enables cheap, readily available parts for all manner of critical infrastructure; electrical grid, military hardware, etc. The loss of the trivial greatly impacts on the critical.
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The idea of our self-organized, infinitely interconnected, energy/growth/credit dependent global economy tripping over it's own complexity is my personal default doom scenario. I work hard to keep my optimism up by encouraging self-reliance, localizing and "de-growth" and a variety of fixes - which, unfortunately, are the main targets of the paper:
They [cornucopians and optimists like me] have made suggestions including changing the debt based money system; pricing environmental externalities; reducing the working day; consuming less, controling population, increasing the lifetime of goods. In the context of the current financial crisis they often include some control on financial speculation.
There are way too many authors who spend time arguing their predictions for the future. The best part of this paper in my opinion is the author spends most of his effort outlining possible connections instead of justifying conclusions or selling his version of mitigation.
So anyway at least take a look at the summary, and read the entire paper (50pgs) if you have time and tell us what you think. I'll try to bump this thread now and then so take your time.
Of course, feel free to pull your usual opinion out of your butt without expending any effort but be advised, this thread is about the ramifications of the end of energy/economic growth, therefore "there will be no energy shortage" is off topic and will be deleted.