[Newfie]

I have been reading a bit about Greece and the "austerity" program, and how the real problem is there is no real growth.

It strikes me our real problem is finding a way to deal with CONTRACTION. We have climbed to far, over extended ourselves, now we need to back down...on energy use, resource traction, water use, POPULATION.

Yet I see no discussion of this,no admission that it is a possibility let alone a necessity.

I see no planning for contraction beyond that of a merger few doomers. Or perhaps some military planners.

Am I missing something?

[dinopello]

I'd settle for a plan that contemplates a viable economy where the growth in economic activity is no more than the growth in population - aka stagnation.

[GHung]

Question is; what's YOUR plan, since any planning at scale is likely to be focussed on making sure the 1% gets to keep their wealth. I just ordered a bunch of seeds at a seasonal discount since I've found last year's seeds have a pretty high germination rate.

My hightunnel (greenhouse) is almost ready to plant and I'll be doing late beans and cucumber crops, along with some fall tomatoes, beets, other stuff. I also love figs which are a bit hard to overwinter here, so I'm reserving some space in the hightunnel for three or four fig bushes. I salvaged some discarded netting from a golf course/driving range (heavy-duty polypropylene); enough to enclose the sides and end doors; hoping to keep the birds out. We'll see......

I've spent the weekend getting my water/irrigation system into the structure for the drip/fertigation plan, and am experimenting with making my own fish emulsion using bream from our pond (grind them up in a blender, add water, sugar, bacteria, and let rot for a few weeks).
Strain and apply via drip. I'm also composting a few rolls of hay that we cut from our pastures every year.

Planning for contraction? Secure your food, water, shelter, energy sources, community connections, and skillset. A pretty good place to start anyway.

[Ibon]

Planning for contraction? Secure your food, water, shelter, energy sources, community connections, and skillset. A pretty good place to start anyway.

Good list for each and everyone of us. I think Newfie is contemplating the global juggernaut however and the existing inertia and asking how macro institutions will adjust to contraction.

Starting with the point that there is no macro institution talking about contraction and the fact that austerity is not a Greek anomaly but the beginning of a new macro trend.

[yellowcanoe]

It's been almost 7 years since the financial crash of 2008 and the rate of economic growth in developed countries has been pretty weak over that period. You'd think politicians and economists would have figured out by now that the days of robust economic growth are over and little or no economic growth is the new norm. I think the problem is that the consequences of no more economic growth are so dire that no one in authority wants to admit that that is the situation we are in.

If you take on a mortgage, it is a burden and you likely want to pay it off as soon as you can. However, governments don't think of debt that way. Instead, they look at debt as a percentage of gdp. If the economy is growing at say 3% a year, there is no need to actually pay off any debt since the debt as a percentage of gdp will drop each year. With little or no economic growth, government debt becomes much more difficult to deal with -- the only way to reduce the cost of servicing that debt would be to actually start paying down the debt.

Dinopello points out the issue of population growth -- even if there is a rate of economic growth matching the population growth the result is still a stagnant economy where on average living standards are not increasing.

Economic growth is also a key factor in making pensions viable -- we can't expect stock prices to keep rising if corporations are not growing their business.

Now if you are a politician and you know the economy is going to have no growth or contract and you tell people the following
1. Living standards are going to decline
2. We need to drastically scale back immigration
3. You are going to have to work longer
the chances that you will be elected are somewhere between zero and nil.

[Outcast_Searcher]

It strikes me our real problem is finding a way to deal with CONTRACTION. We have climbed to far, over extended ourselves, now we need to back down...on energy use, resource traction, water use, POPULATION.

Yet I see no discussion of this,no admission that it is a possibility let alone a necessity.

There are quite a few threads on this site (and I presume many similar sites) discussing the problems and impossibility longer term of BAU growth. Some scientists, conservationists, etc. discuss this.

But you're certainly right -- it's a tiny minority.

But given human nature, look at the array of forces against a meaningful plan (much less action) to get the human community overall to scale things way down BEFORE nature does it for us (brutally). Examples, off the top of my head:

1). Almost everyone wants more stuff -- and a "better life" for their family.

2). An extension of one is their community, state, country -- etc. Because a stronger economy implies more opportunity for more stuff for them.

3). Just like with AGW, the truly BAD effects of BAU growth are seen to be generations away. You can't get most people to meaningfully plan for their OWN needs (say, in retirement). People are just too short term oriented (generally) to plan multiple generations ahead.

4). Most people don't look at the world in a balanced way -- this is a psychological phenomenon. Most people think they're above average drivers. They think someone ELSE is the problem, or at least more so than themselves. So since they see they can't fix it by giving stuff up themselves (since "everyone else" will keep over-consuming and overpopulating), they just shrug and keep consuming.

For examples of this, any discussion of reducing carbon emissions is met with "The Chinese will burn so much coal, drive so many cars, etc. it doesn't matter WHAT we do). Or consider the Greek tax situation (cheating). I've read credible articles stating that the general perception of the Greeks is that "The OTHER guys are tax cheaters and will cheat no matter what, so why should I pay my taxes" (I'm paraphrasing this).

5). Our science and knowledge in general is very incomplete. There is also a lot of ignorance. Look at the ongoing fight over AGW. Heck, look at all the resistance to even very well understood things like evolution. Despite there being NO evidence for the super-beings we call (by various names) God, something like 90% of people believe, at least to some extent, in such a being. So, good luck even getting a strong majority of people to believe/admit there IS a problem. I don't see simple logic working (there can't be infinite growth on a finite world), at least not with so much functional innumeracy. And again -- the "infinite" issue is perceived to be a very long time away.

6). So against all this you have politicians who are elected to make decisions for people. Their motivation is to make people want to vote for them the NEXT election -- not fix things a relative handful of constituents are concerned about in the longer run.

7). Therefore, I think that by the time you get overall society to change their mind enough to collectively want to change enough to make a serious effort -- it will be too late by a LONG shot. The signs are already blatant and seem to be accelerating. The concerned people were certainly talking about such issues in the '60's (I wasn't around before then). And how much "progress" have we made since then? Well, we've continued BAU growth, consumption, pollution, AGW, etc. for the ensuing 50 years. I'm betting (sad as it is) that in 50 years the problem will be much worse, and the willingness to fix it will still be MUCH too small.

[GHung]

Ibon: "Starting with the point that there is no macro institution talking about contraction..."

That's my point. Those of us actually acknowledging this inevitable future best be making our own arrangements since it's the prols who'll bear the brunt of contraction, as always. The less financialised your survival strategy is, the farther your finances will go (whatever remains of your monetary wealth). Whatever isn't needed for food, energy, all that, can be conserved for property taxes, medical needs, etc... Getting used to austerity involves planning, preparation, and practice. Pay things forward now while you can.

Think austerity can't happen to you? "Collapse now and avoid the rush." Spend your time and energy on things that you can actually affect.

[Timo]

Contraction didn't start with Greece. I'd argue it started with Iceland a decade ago. A Grexit from the Euro just has everybodies undies pulled up too tight, an thus it's getting everyone's attention. As goes Greece, so goes Spain, Purtugal, Italy, France, right on down to the end of the European Union, altogether. Russia is now in complete denial of their contraction. Ditto China, and the US. Maybe one of the few nations not contracting, at the moment, is Germany, hence their insistence that Greece pay up.

No one will discuss economic contraction in any menaingful way, because to even mention the topic is political suicide. In some countries, such talk is grounds for a coup. Our world leaders may intuitively know we're in for a long, long spell of economic contraction, but they don't dare mention that knowledge in public. Their best defense is the maintenance of public ignorance. It's much better to go to war with another country, just to create a distraction from domestic realities.

Unfortunately, that charade can only go on for so long before the SHTF, big time. As citizens, are we really going to rise up and demand that our leaders acknowledge that the sky is falling, and that they do something to address our impending doom? We seem to be doing some of that with climate change, but so far, that's going like a snowball in hell. And for some reason, climate change is a bit easier to discuss than economic contraction. Discussing contraction means acknowledging our patterns of consumption, which means acknowledging our use of physical resources, and their depletion, which leads to AGW, and yada-yada. Anyone who has the capacity to study and understand all of these relationships has absolutely zero power to affect any change in the status quo. They publish their findings in journals, and then they get yelled at for being doomers.

So, the lesson of all of this is to always look on the bright side of life! No one likes a doomer.

[Pops]

I haven't been following Greece per se, seems to me it has lots of kinda sorta unique problems, but China is different. It is big, it's blown a huge bubble by essentially hoarding real estate. It is in no way accidental that the crazy growth in the Chinese economy along with the US & global RE Ponzi boom scheme (blame it on Clinton the First & BushCo II eviscerating trading rules and bank regulation) coincided with the massive commodity bubble of the oughts. We talked about that around here but I don't think we gave it enough credit, pardon the expression...

The upshot being easy money "pulled forward" demand and resources that would have otherwise have been consumed down the road somewhere. We burnt more, built more, borrowed more than we would have without the easy credit.

But that's nothing new, it's happened over and over since whenever. The difference this time is we had people at the controls who think they ARE in control and they pulled out all the stops in '08 to keep the Calliope playing. So instead of a contraction to relieve business over exuberance, they have handed out cash rewards to the people who made the bad bets. Unfortunately, all the money floating around means there is no place left to lay a bet and the result is too much money sitting in corporate vaults, too many dollars means dollars lose value: inflation.

But what puts the US in a strange position is the surge in LTO is lowering our trade deficit — fewer dollars exported to pay for imported oil means fewer dollars floating around overseas. Add in weakness in other currencies and the general fear that makes people seek the dollar anytime things look bad, and you get more expensive dollars: deflation.

Which is what confuses me (among many other things): will there be dollar inflation or deflation? Or more importantly, will there be asset inflation or deflation.

[GHung]

Timo: "As citizens, are we really going to rise up and demand that our leaders acknowledge that the sky is falling, and that they do something to address our impending doom? "

There's nothing they can do, Timo. People can and will demand all kinds of things, especially when they feel entitled to those things,, but it'll be like Br'er Rabbit and the Tar Baby:

The Tar-Baby is a fictional character in the second of the Uncle Remus stories published in 1881; it is a doll made of tar and turpentine used to entrap Br'er Rabbit. The more that Br'er Rabbit fights the Tar-Baby, the more entangled he becomes.

In modern usage, "tar baby" refers to any "sticky situation" that is only aggravated by additional involvement in it.

https://en.wikipedia.org/wiki/Tar-Baby

Shit,,, we're already there. Best to head for the briar patch.

.

[Plantagenet]

If high oil prices are causing contraction, then you would think lower oil prices would re-start growth.

I'm surprised that the dip into lower oil prices we are seeing now hasn't resulted in an acceleration of GDP growth in the developed economies.

[Timo]

IWhich is what confuses me (among many other things): will there be dollar inflation or deflation? Or more importantly, will there be asset inflation or deflation.

I see your asset inflation, and raise you 3 GDP contractions.

Call!

[dinopello]

Question is; what's YOUR plan, since any planning at scale is likely to be focussed on making sure the 1% gets to keep their wealth.

Yeah, planning for oneself is the easy part. No need to negotiate, convince or work with others. That part for me was done a long time ago. I still try to work the hard stuff with the local community though. Even if not successful, it's something to do.

[Paulo1]

Plant,

The dip in oil prices have coincided with a rise in housing costs, fewer decent jobs, and quickly rising food prices. Mix in a stock market in obvious bubble-peak, financial upheavels, and wars that only make things worse....well, what would an improving economy look like? More hustle and bustle? More Chinese crap in people's storage units? Bigger houses with bigger mortgages? More complex cars bought with debt for whatever reason? Oh, I forgot to add in student debt for educations that are about high school level if kids put away their electronics and actually took schooling seriously. I forgot to mention loser Govt and loser 2016 candidates.

Why would anyone spend in confidence?

People better get used to living with less, and do so on their own volition.

I am going fishing in 1.5 hours. Hopefully, the sockeye are in although it is early for us. I have been getting 4 pinks and a couple of cod everyday. We have been eating fish like crazy and filleting the pinks for relatives who don't fish. We fill the freezer with coho, sockeye, and spring salmon....and smoke pinks. The carcasses go into garden trenches as we harvest our crops. Right now I am filling the garlic bed.

[Plantagenet]

I am going fishing in 1.5 hours. Hopefully, the sockeye are in although it is early for us. I have been getting 4 pinks and a couple of cod everyday. We have been eating fish like crazy and filleting the pinks for relatives who don't fish. We fill the freezer with coho, sockeye, and spring salmon....and smoke pinks. The carcasses go into garden trenches as we harvest our crops. Right now I am filling the garlic bed.

Good luck to you on your fishing. I was down dip netting salmon on the Copper River here in Alaska a week ago, and got my 25 sockeye---this year's Alaska resident subsistence allotment. We are also allowed to net one King, but I got all sockeye (red salmon) in the net this year. Had friends over for a nice salmon feast, and then we freeze up the rest for the winter.

I like your plan of giving the pinks to the relatives. Up here the pinks go mostly to the dog teams.

CHEERS!

[Newfie]

Planning for contraction? Secure your food, water, shelter, energy sources, community connections, and skillset. A pretty good place to start anyway.

Good list for each and everyone of us. I think Newfie is contemplating the global juggernaut however and the existing inertia and asking how macro institutions will adjust to contraction.

Starting with the point that there is no macro institution talking about contraction and the fact that austerity is not a Greek anomaly but the beginning of a new macro trend.

Thanks for clarifying my internet, you are spot on.

As for macro institutions considering contraction I believe that ( perhaps) the big reinsurance firms are looking at this. And with the the Global Economic Forum. Or maybe it's just a few from the insurance companies who participate in the Forum. It does seem Llodys has changed posture a bit.

But I also suspect some of the military think tanks are spinning this out. God now if anyone listens to them.

No "proof" of either point. Just some circumstantial evidence.

[sidzepp]

One of the problems that presents itself is the fact that we have a serious conflict between the "Haves" and the "Want to Haves." The Western world has had their way with the remainder of the world for the past three centuries. During that time fame new economic and political models evolved (and are still evolving) and combined with rapid growth in science and technology created a lifestyle that we today take as granted and are not ready to give up. Our economies grew at phenomenal rates because we had cheap access to the resources needed to grow our economies.

Now we find ourselves in competition with the "Want to Haves," China, Brazil, India and a host of other nations that desire to obtain the level of life that we take for granted. As more and more nations compete with finite resources we find the expense going up. Very few people in the U.S. are willing to forego what they see as sacrifices to create alternate scenarios of progress.

The question is how to make 200 plus nations with their 7 plus billion residents utilize the science and technology at our hands to devise sustainable efforts which can preserve all life on this planet. Is it even possible or are we headed to a disaster which will spiral out of control?

[evilgenius]

If high oil prices are causing contraction, then you would think lower oil prices would re-start growth.

I'm surprised that the dip into lower oil prices we are seeing now hasn't resulted in an acceleration of GDP growth in the developed economies.

That could be because while the structure of the American economy does respond to oil prices, those of the Western Europeans don't as much. They have alternatives to getting behind the wheel that America doesn't. There is simply a different mix of worries that take a paycheck a different direction when it comes to paying the bills in Europe, probably beginning with transportation but extending to heating one's house, which is a greater worry over there. In this context austerity is kind of interesting. As long as it remains low enough it incentivizes free enterprise to take up the slack. Taken too far, though, and you get a train wreck because the government is into everything and the tax bite is heavy enough already. It may seem invisible to the unseasoned, but taxes in Europe, literally, permeate seemingly everything.

[AgentR11]

I've argued this here before, and I'll present it again.

Current policy of the Dread Powers the Be, is contraction with a catch.

Our financial structure requires NOMINAL growth. Basically growth in the measured economic output above stated inflation.

So, the economy *must* grow, in dollar terms and individual items must continue to have a gradual increase in dollar stated price. The math is actually pretty simple.

If the total inflation experienced by Bob is 6%, and the stated inflation is 2%, and his annual wage increase in 1%; then all the $ numbers go up; but Bob experiences involuntary power-down. Couple in a drastic cut in labor participation, and an even more drastic cut in full time, full employed labor participation; and you have power-down on a national scale; while Doug the Broker and Jane the Tycoon continue to do their business in a numerical world bound by a continuous, increasing function of price and money-supply.

Whether this power down is too slow to achieve ecological sustainability is debatable; but it seems clear enough to me, that those creating the patterns in the world, are crafting a world where 80% of the population make next to nothing, 15-18% of the population "do fine", 1-2% do "really well", all in service of that 0.001% of the population that is involved in designing the patterns of the modern world indirectly through the pursuit of their own self-interest.

One thing this form of power-down or collapse does not present is that mythical "reset" experience where all the lowly peasants once again return to the idyllic life of digging in the dirt and hoping not to starve to death in winter. We will have collapse, and their electricity bill will STILL be due, in dollars. Dollars that they will desperately struggle to earn.

Now globally, this is a bit distorted, as India and China for instance, have large populations they still need to bring up to this minimum modern subsistence level, of apartment, internet, TV, A/C, and a loaf of bread; so there is real growth there, but eventually, even there, they'll get the accumulation and involuntary power-down matrix set right with a little bit of time.

[Ibon]

Ibon: "Starting with the point that there is no macro institution talking about contraction..."

That's my point. Those of us actually acknowledging this inevitable future best be making our own arrangements since it's the prols who'll bear the brunt of contraction, as always. The less financialised your survival strategy is, the farther your finances will go (whatever remains of your monetary wealth). Whatever isn't needed for food, energy, all that, can be conserved for property taxes, medical needs, etc... Getting used to austerity involves planning, preparation, and practice. Pay things forward now while you can.

Think austerity can't happen to you? "Collapse now and avoid the rush." Spend your time and energy on things that you can actually affect.

We have to remember that we are still in the early days of adapting to contraction. I think each and every one of us making our own arrangements is the wisest thing to do. All of us at the same time are dependent, to various degree, on the global economy and macro institutions so the question of when we start seeing adaptation is in all our interest. My definition of macro institutions would be government, religions, corporations and the aspects of the economy that are in the hands of the private and public sectors.