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Are You Crazy To Continue Believing In Collapse?

General Ideas

It’s nerve-wracking to live in the historical moment of an epic turning point, especially when the great groaning garbage barge of late industrial civilization doesn’t turn quickly where you know it must, and you are left feeling naked and ashamed with your dark worldview, your careful preparations for a difficult future, and your scornful or tittering relatives reminding you each day what a ninny you are to worry about the tendings of events.

Persevere. There are worse things in this life than not being right exactly on schedule.

Two simple words explain why more robust signs of an economic collapse have hung fire since the tremors of 2008: inertia and fraud.

Never in human history has there been such a matrix of complex systems so vast, dense, weighty, and powerful for running everyday life (nor a larger population engaged in it). That much stuff in motion takes a while to slow down. The embodied energy has kept enough of it running to give the appearance of continuity. For instance, agri-biz still sends its amber waves of grain and tankers of corn-syrup to the Pepsico snack-food factories, and the WalMart trucks still faithfully convey the pallets of Cheetos, Fritos, Funyons, and Tostitos from the Pepsico loading dock to the big box aisles of glory. The freeways still hum with traffic even though oil is pricey at $100 a barrel. The lights stay on. The gabble and blabber of Cable TV continues remorselessly in the background of life. All of that is due to inertia. It gives the superficial impression of the old normal carrying on. Things go on until they can’t, in the immortal words of Herb Stein

The fraud is present in the abuse and misrepresentation of official statistics used as metrics in government policy, in the pervasive accounting chicanery of that same government in its fiscal dealings, as well as in our leading financial institutions and corporations, including control fraud in banking, interest rate rigging, mortgage and title fraud, front-running, naked shorting, re-hypothecation, money laundering, pumping-and-dumping, channel stuffing, the endless innovation of swindles, and, most importantly, the fundamental mispricing of the cost of money, which reverberates through everything else, most particularly real estate, stocks, and bonds. Beyond that, in the shadows of the shadowland known as shadow banking, a liminal realm of secrets and intrigues, only a few are privileged to know what is going on, and you can be sure they only know their end of the trade — while immense sums of ever more abstract “money” slosh through the derivative sewers on their way to oblivion in the ocean of failed trust.

So, don’t feel bad if this colossal armature of folly still stands, and have faith that the blinding light of God’s judgment will eventually shine even unto the watery depths where failed trust has sunk. Sooner or later the relationship between reality and truth re-sets to the calculus of what is actually happening.

Meanwhile, the big questions worth reflecting upon are: What is the shape of the future? How might we conduct ourselves in it and on our way to it; and how will we think and feel about all that? It’s very likely that the journey to where we’re going will be rougher than the actual destination, once we get there. There is a hearty consensus outside the mainstream financial media and the thickets of academia that the models we have been using to understand the economy look more broken each month, and this surely adds to the difficulty of constructing our own mental models for how the everyday world of the years ahead will operate.

Some of the commentators in blogville and elsewhere like to blame capitalism. Capitalism is a phantom adversary. It isn’t an economic system. It isn’t an ideology, really, or a belief system. If the word means anything, it describes the behavior of accumulated surplus wealth in concert with the known laws of physics — the movement of energy through time and space — and the choices we make organizing society in relation to that.  The energy is embodied as capital, represented in money for convenience. Interest expresses the cost of money over time and the risks associated with lending it. By the way, interest rates work the same way under all political systems, despite attempts in some societies to criminalize it.

During the high tide of the industrial expansion, when fossil fuels were cheap and we accumulated the greatest wealth surplus ever in history, humanity made some very bad choices, squandering this possibly one-time bonanza. We fought two world wars, and lots of wasteful lesser ones. Russia and its imitators attempted to collectivize wealth under gangster government and only succeeded in impoverishing everyone but the gangsters. America built suburbia and Las Vegas. The one thing that no “modern” culture did was plan for a future when the fossil fuel orgy and the techno-industrial fiesta might wind down, which is exactly the case now. Instead, we opted for the Julian Simon folly of crossing our fingers and hoping that some unnamed band of genius wizard innovators would mitigate the problems of resource scarcity and population overshoot just in time.

The demonizers of capitalism propose to remedy our compound predicament by just getting rid of money. But the idea of a human society without money leaves you either up a baobab tree on the paleolithic savannah, or in some sort of Ray Kurzweil techno-narcissistic masturbation fantasy multiverse with no relation to the organic doings on planet earth. I suspect as long as there are human societies there will be things to exchange that have a quality we call “money,” and as long as that’s the case, some individuals will have more of it than others, and they will lend some of their surplus to others on terms. What most people call capitalism was a model of economy derived from a particular transitory moment in history. It seemed to describe reality, but after a while it didn’t because reality changed and it was, finally, just a model. Nothing lasts forever. Boo-hoo, Karl Marx, J.M Keynes, and Paul Krugman.

What’s cracking up first is the complexity and abstraction of our current money operations, sometimes loosely called the financialized economy. If we blame anything for our problems with money, blame our half-baked attempts to mitigate the wind-down of the techno-industrial cavalcade of progress by issuing ersatz surplus wealth in the form of debt — that is, promises to fork over hypothetical not- yet-accumulated wealth at some future date. There are too many promises now, and too few trustworthy promisors, and poor prospects for generating the volumes of wealth as we did in the recent past.

The hidden (or ignored) truth of this quandary expresses itself inevitably in the degenerate culture of the day, the freak show of pornified criminal avarice that the USA has become. It only shows how demoralizing our recent history has been that the collective national attention is focused on such vulgar stupidities as twerking, or the Kanye-Kardashian porno romance, the doings of the Duck Dynasty, and the partying wolves of Wall Street. By slow increments since about the time John F. Kennedy was shot in the head, we’ve become a land where anything goes and nothing matters. The political blame for that can be distributed equally between Boomer progressives (e.g., inventors of political correctness) and the knuckle-dragging “free-market” conservatives (e.g., money is free speech). The catch is, some things do matter, for instance whether the human race can continue to be civilized in some fashion when the techno-industrial orgy draws to a close.

Peak Prosperity



24 Comments on "Are You Crazy To Continue Believing In Collapse?"

  1. rollin on Thu, 6th Mar 2014 1:14 pm 

    Nice to see one of the pundits of collapse realize it can happen slowly. Although the writer appears confused, still pushing the end of civilization as we know it. Maybe another civilization is now growing up within this one, not noticed yet.

    He uses the typical ploy of pointing out there are evil and bad things going on in society. Not new.
    Meanwhile there are all kinds of good things going on, people bending over backwards to help others and protect other species. There is an underground movement of goodness that is rarely brought to light by that most horrible thing of creation, MSM. MSM spouts death, disaster, criminality, horror, mental illness; anything that will titillate or draw attention. Anyone listening or watching the news would think this is a horrible world. MSM seems to purposely avoid all the wonderful, good and kind acts done every day and spew out dirt and fear instead. Unless of course a hero is involved (more eye-grabbing headlines).

    Actually, we have one of the better possible worlds. Whether it changes or just fades away into something different is not important. Try living today and doing some good instead of fearing a potential future that will probably be far different than is contemplated.

  2. Davy, Hermann, MO on Thu, 6th Mar 2014 1:14 pm 

    Yeap, peak entropy of a system in diminishing returns at the limits of growth. The system is in a long term growth bubble involving energy and population carrying capacity. The global finance system is the short term bubble involving phantom projections of future growth and energy supplies. This finance system is now a Ponzi scheme of debt ready to shatter. This financial bubble has been driven by excessive money creation and the resulting debt and leverage. It is in effect a huge wealth transfer from the less wealthy to the more wealthy. This is being done by corruption, manipulation, distorted leading indicators and the disregard for the rule of law. This Ponzi scheme can continue on for a time because there is still much wealth to be canalized from the lower classes. At some point it will be the confidence at the top that shatters the Ponzi scheme. When the big players blink and run for the hills watch out. When the leaders in this bubble creation cash in it is game over. The results will be a society wide contraction and or collapse. The longer this plays out the worse the distortion created. It would be better if we had another 2008 style correction. If we have another correction like 2008 it will force change because there are no tools left to reflate a bubble? We will have to do less with less. There is nothing sure about a soft landing and reboot to a lower standard of living. It becomes less and less likely the longer the social fabric is destroyed in the mammoth wealth transfer occurring today. The longer real wealth becomes phantom wealth destroying confidence in trade and wealth exchange the less like there will be an economic reboot.

  3. Davy, Hermann, MO on Thu, 6th Mar 2014 1:16 pm 

    Rollin I agree with you but this effort is being destroyed daily. What we are facing because of our overshoot of carrying capacity is so far out of proportion to the positive efforts that I fear the worst! I want you to be right!!

  4. rollin on Thu, 6th Mar 2014 1:58 pm 

    Davy, watch this film.

    https://www.youtube.com/watch?v=frXklECPkD0

  5. eugene on Thu, 6th Mar 2014 2:01 pm 

    As one who is paying for this debacle, I, often, can tell the economic situation of a comment by the level of complacency/optimism displayed. I am paying for debacle as I live on Social Security, that “entitlement” so many of us leaches off the government get, and my saving are getting zip for interest. Ever increasing numbers of Americans, and the rest of the world, are paying also. But we are invisible to the upper classes. We are never spoken of and if we are mentioned it is with some disparaging comment how “we just aren’t trying hard enough”.

    I think the speed of “collapse” depends entirely as to where you are on the economic ladder. America protects the “uppers” by sacrificing the “lowers” ie poor, elderly, disabled, unemployed, etc. For those sacrificed, the collapse is coming on rapidly. But it is this way in all nations and all times. The elites, often, don’t have the sense to know they are the elites and rattle on about better worlds. It’s a better world for you, appreciate it but understand your status in life stands on the backs of those much worse off.

  6. rollin on Thu, 6th Mar 2014 5:20 pm 

    Eugene

    Peasants with torches, they always fear peasants with torches.
    The rabble has to get up off it’s duff and do something to shake up the status quo.

  7. GregT on Thu, 6th Mar 2014 6:12 pm 

    “Are You Crazy To Continue Believing In Collapse?”

    All good things must come to an end. There is nothing crazy about believing in the truth. Collapse will come, as it always does, and always will.

    What IS crazy, is believing in infinite exponential growth. Something that is not only unrealistic, but impossible. Yet we have people everywhere that are still chanting the mantra of craziness; “growth, growth, growth” they say, while they continue to tell us that there is no possibility of collapse.

    The crazies have taken control of the asylum. The rest of us would be well served to get away from them, as far away as possible. The collapse is already well underway.

  8. Nony on Thu, 6th Mar 2014 6:15 pm 

    1. TOD is dead.

    2. There were a heck of a lot of 2005-2008ish predictions that have certainly not come true in the time frame that was touted. Matt Simmons, Colin Campbell, etc. etc.

    3. Gail…sheesh. I actually like people like Berman and Kopits and Rock. They may be more peaker than me, but can still have a discussion. But the hard core doomer types…it’s more like religion for them. And sorry, the end of the world did not occur when the prophets said it would…

  9. ghung on Thu, 6th Mar 2014 6:33 pm 

    Gosh Nony, and your beliefs aren’t “religion”? A religion that doesn’t permit you to see the collapse unfolding all around you as predicted, albeit on its own time scale rather than as predicted by some? Predictions are generally always wrong at some level, especially ones about the future. Keep that in mind when you predict that natural gas will be what you think it will be, or put too much faith in humanity’s cleverness.

    One of Levon Helm’s last lines in a movie: “Once you think you’ve got it all figured out, YOU’RE WRONG”.

    As for TOD, at some point much of what was discussed there will be viewed as prophetic (just my belief). The signal-to-noise ratio was pretty high at one time. Someday, some student will re-discover their archives, sift through the noise and say “WOW,, just WOW! It was all there.”

  10. Pops on Thu, 6th Mar 2014 7:09 pm 

    If one considers an average business the margin of profit might be somewhere around 10%. If the business is large maybe even less.

    When, in the course of events that profit may erode and perhaps become a loss but as long as the business can convince someone that the turnaround is about to happen with just a little more credit infusion things continue apace.

    Until they don’t. Radio shack just announced they are closing 1,100 stores and Staples another 225 and Kmart is closing lots but not announcing it I guess.

    Did those locations just stop making money last week? Naw, they’ve been bleeding capital for years but inertia and normalcy bias keeps them stumbling along like zombies in polyester smocks.

    There was a huge overhang of retail pre-2008 (driven by the real estate boom) and much of it was pruned immediately after the recession but I’d guess lots of it is being kept afloat by 0% interest funny money.

  11. Nony on Thu, 6th Mar 2014 7:27 pm 

    Pops, agreed. Creative destruction. Like in this video. There is a blend of capital being destroyed and wealth created.

    In the long term, though, water runs downhill and bad businesses get closed. Every startup in the world has a story about how their profits will hockey stick. Some do, some don’t. Some get closed later than they should have, some (e.g. Chevron in the Barnett) would have benefited from hanging in there a little longer.

    https://www.youtube.com/watch?v=ds8eek0e8qM

  12. Pops on Thu, 6th Mar 2014 9:30 pm 

    The problem Nony is that corrected for inflation and population and excluding the cost of unleaded, Doug Short shows we are still 6.7% below where we were in ’05 as far as per capita retail sales –

    Even though the savings rate was a paltry 4.3% a couple of days ago.

    So I’d say you’re half right, capital is being destroyed.

    http://advisorperspectives.com/dshort/updates/Real-Retail-Sales-Per-Capita.php

  13. action on Thu, 6th Mar 2014 9:34 pm 

    The Wolf of Wallstreet was highly entertaining. What’s with all the sexual connotations in this article, its actual collapse porn.

  14. Nony on Thu, 6th Mar 2014 9:47 pm 

    Pops, capital destruction can only go on so long. People will decide to stop funding bad opportunities.

    P.s. Anyone who invested in EOG 5 years ago, had their capital destroyed.

    http://www.nasdaq.com/symbol/eog/stock-chart?intraday=off&timeframe=5y&splits=on&earnings=on&movingaverage=None&lowerstudy=volume&comparison=off&index=&drilldown=off

    Stock has tripled and that’s not even accounting for the dividends…

  15. Nony on Thu, 6th Mar 2014 9:48 pm 

    didn’t have their capital destroyed (dyslexic)

  16. Pops on Thu, 6th Mar 2014 10:24 pm 

    “Pops, capital destruction can only go on so long. People will decide to stop funding bad opportunities.”

    Yea, that’s what makes me a doomer.

    http://peakoil.com/forums/peak-oil-profits-pops-t69218.html

  17. Davey on Thu, 6th Mar 2014 10:25 pm 

    Nony, those stock gains you mentioned can vanish like a pretty girl fart. We are talking some strange activity in all markets at the moment . Claiming exuberance in an environment of manipulation and distortions does not sell me.

  18. Nony on Thu, 6th Mar 2014 10:30 pm 

    Are you shorting anything?

  19. Nony on Thu, 6th Mar 2014 11:31 pm 

    Pops:

    I (really, honest, this time not a troll, boy who cried wolf) don’t see how that thread is any big aha. Dollars will go to opportunities and stop when they figure out something is not an opportunity.

    You’ve already seen an absolutely impressive boom in the Bakken when the price was high and the opportunity was there. People moving, trucks moving, just incredible. And if price drops to 40, the whole thing turns off (happened in 2008).

    I’m really sort of in shock that it is some sort of new finding that capital requires a return.

    I appreciate @Rock’s comment in that thread about never seeing a company leave oil in the ground (makes sense). But that’s not thinking holistically. Once the well is done…of course, you sell the oil, NPV, etc. But the point when Hoteling’s rule (look it up, has to do with pricing of depleting reservoirs) is in action is when the futures are NOT backwarded.

    IOW, you will never have current price at 50/bbl and next year price at 100/bbl. Because there’s an implicit arbitrage by storage. So you never SEE THIS. You may see the reverse. 100 for spot and 50 in the future (e.g. hurricane in the Gulf). But not 50 spot and 100 future.

    What you can see is something like 100 now, 110 next year, 120 the year after, etc. That’s Hoteling in action.

    See here:

    https://en.wikipedia.org/wiki/Hotelling's_rule

    BUT BUT BUT: what’s really interesting is that you have backwardation!!! IOW, 100 now, 90 next year, 80 in five year (I don’t know the exact trend, but it’s down and has been for a while). IOW, the market is pricing in an expectation of future price LOWER! Even your forum prediction thread has it lower. For some reason, people don’t buy the simple depletion argument…

  20. GregT on Fri, 7th Mar 2014 1:09 am 

    “For some reason, people don’t buy the simple depletion argument…”

    Maybe they’re buying into the continuation of the economic decline argument….

  21. Nony on Fri, 7th Mar 2014 1:38 am 

    Greg, that’s an option. But the equities markets don’t seem to support that.

  22. Makati1 on Fri, 7th Mar 2014 1:57 am 

    Everyone thinks they will get out of the Market Casino just ahead of the crash…

  23. GregT on Fri, 7th Mar 2014 7:27 am 

    Almost everyone I know is already in cash or tangible assets. Still a few dabbling in day trades though, get in and get out fast. Just like at the casinos, the markets are far too full of corruption.

  24. Davy, Hermann, MO on Fri, 7th Mar 2014 12:18 pm 

    Greg, and for us preppers, prep items. NR, is a prepper is considered a doomer. I guess the PD’s.

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