Yes, the news is bad, but Lordy, people seem to be outdoing each other in predicting how horrible things will be.
First, some examples of the current problems:
The Russian bond market is dead. Their companies can no longer borrow on international markets. Yields are approaching 80%, up from 12% last year. This is way beyond junk bond…
Failure to save East Europe will lead to worldwide meltdown, says Ambrose Evans-Pritchard, but y’know, he seems to delight in being apocalyptic.
Social collapse best practices by Dmitry Orlov, who now has a booming book / speaker business telling the US citizens how their economy will crater worse than the USSR’s did.
Even John Robb is saying we’re all doomed, The Depression scenario is here
Well, call me a contrarian, but it seems to me the planet has muddled through way worse times than these and come out the other side. Besides, I’m starting to see the Prophets of Doom trying to out-apocalypse each other. “Oh, so you believe your scenario is dire. So, Mr. Happy Face, you say we’ll be living in caves and not eating worms. Well, you better start practicing eating earthworms now.” That kind of thing. To which I say, count me out.
First off, the apocalypse may not happen. (Oddly, some, both on the left and the right, really seem to want a collapse of civilization, how weird is that?) Second, making a religion out of being gloomy is not a path to recovery. Optimistic people who think they can effect change, often do. But if you think we’re screwed, you’ll probably sit home or turn to crime or drugs instead.
Our chances of solving the very real problems we face are much better if people think they can be solved, rather than giving in to disaster chic.
First, a disclosure: I’m buying both General Electric stock and ammunition. I think it could go either way.
That said, when you look at the two-pronged challenges we face– materialism and overpopulation– I could be convinced that perhaps civilization as we know it IS the problem.
So far, the “solutions” being proposed address only a few symptoms. A real solution would talk about reducing population and bringing us back to a sustainable economy and lifestyle. I haven’t heard that from any of our human thinkers. But trust me: Nature has a solution for us if we don’t find one for ourselves.
In fact, Nature has already begun to implement her solution. Over 25,000 people starve to death every day, most of them children. In 2003, 3.3 million died of chronic malnourishment, diarrhea, or malaria. Over 17 million die from communicable diseases each year. Most of these, of course, remain out of our sight, in faraway, poverty-stricken places like Africa, India, and Haiti, so it’s easy not to notice.
Nature’s population reduction program hasn’t caught up with the birthrate– yet. Nor has she significantly affected the planet’s ultra-privileged (that’s us)– yet. But clearly we have a choice: get our act together or let Nature do it for us. We won’t like the latter choice much.
Seriously, we need to get our heads out of the sand: millions of people in the world would fight each other for an earthworm to eat!
My rule of thumb? If the talking heads and politicians start talking about us “MAYBE” heading into a recession: We are already there.
Now? They are talking about “MAYBE” a Depression-like reccession. The numbers coming out on every front seem to justify some reasonable amount of hysteria about this. (Nice double-talk like stuff there, eh?)
You are right about panicking. The world has been in it and pulled out on the other side still existing many times over, and it will again.
The main reason I really believe some of the hysteria is justified is the fact that the people in charge of cleaning up this mess aren’t really addressing the real problems. Our Plutocracy has clearly collapsed into a Kleptocracy. The Robber Baron Banks prove that clear as day.
In situations like this you need a certain amount of hysteria to point out that reality and get the leaders to do something more than just continuing to enrich themselves off of our “little people” backs.
All I can see is the West calling for “solutions” to get back to where they were in the luxury stakes. The model of capitalism and the drive for “growth” is hardly an answer for the majority of the world. Like DJ said, there are millions who have never known the world that the West is trying to save, we have to stop looking at our own little comfort bubble and crying because it is burst and start looking at the world situation and realising we are part of that problem, not isolated in the consumner West. Do you honestly believe that if the economy in the West suddenly pick up the poor of Africa etc. would be delighted, the previous level of luxury consumerism in the developed world didn’t make any difference in their lives, it could be argued that it made it worse, so why should they believe different now. As usual we are worrying about ourselves and to hell with the rest of the world. The real world is not just those “developed” countries and their high standard of living, also there is no guarantee that the balance will swing back to that ratio again.
As a confirmed Suckist, I can tell you that its sometimes dissonant living with Bob “Perkypants” Morris. Did he drink the Obama koolaid?
The economy’s going down, it’s going to get a lot worse, and there will be real suffering before its over.
Just looking at the housing market, one can see there is a lot of bleeding to come.
Housing (including utilities) is affordable, says HUD, when it does not exceed 1/3rd of a family’s annual budget.
http://www.affordablehousingonline.com/affordit.asp
Now that lenders have gone back to standard lending conventions — meaning the borrowers must have 20% down and be employed) — the affordability standard has become relevant again to them.
The median household income in 2007 was $50,233. (That’s gone down, I imagine).
http://en.wikipedia.org/wiki/Household_income_in_the_United_States
Deduct social security (6.2) and medicare (1.45):
$50,233 –($50,233 x 7.65%) = $46,390.
Taxes are difficult to determine, because taxpayers have varied exemptions and deductions. So let’s assume our crafty Median family pays *no* income taxes to the State or Federal governments (extremely unlikely). The maximum house payment they can afford (including utilities) is $46,390 x 1/3 = $15,463 per year, or $1,288 per month.
Assume further the thrifty Median family rarely turns on the heat or lights, doesn’t use a telephone, rarely bathes, and eats all their food raw. Therefore their utilities bill is $50 per month.
$1,288 – $50 = $1,238. This is the “affordable” amount available to cover the mortgage payment, insurance, and property taxes.
Let’s assume the interest rate is 6.5% and the insurance and property taxes are accounted for by adding another 1% to the interest rate – how much house can they afford, at 7.5% interest?
Assuming 20% down, they can afford a house that cost $221,500. Here in California, that might buy you a rathole in a gang-infested neighborhood … or a hideaway far from amenities, such as employment. Stucco shacks here in South San Francisco (a somewhat low rent district) have asking prices of $600,000, and are not selling. Clearly the prices are due some deflation.
According to the National Association of Realtors – our Median family could afford to live (medianly) in the South or Midwest. But not elsewhere.
http://www.realtor.org/wps/wcm/connect/a0a78e804d0074afa729ef8d0a12d865/REL08Q4T.pdf?MOD=AJPERES&CACHEID=a0a78e804d0074afa729ef8d0a12d865
After having sampled the many flavors of Obama Koolaid, I find the blueberry flavor most refreshing…
Ok, yes, it’s going to get dire. But what I’m talking about are the Doomsters who predict the electricity will go off, transportation will cease, and we’ll live huddled in tiny groups fearful of outside marauders.
Jim Kunstler seems positively giddy about the prospects about having to go back to horse-powered farming as long as those hideous people in the Hamptons get their just deserts and we all pay penance for our profligate ways.
Housing was a huge bubble. It popped. That doesn’t mean the lights will go out.
Think, perhaps the lights will go out for an awful lot of people, perhaps not all over the world. What do you do if you are one of those people??
What if you’re one of the majority that has no lights to go out?
As for farming with horses, I’m not opposed to it– I think we might all be better nourished, happier, and need less sunscreen (i.e. the temp won’t rise quite so fast). Does that magnitude of change scare me? You bet. But we would surivive. We done some planning to make sure.
OTOH, those who already farm by horse (or water buffalo– or by hand) would probably be better off, since we’d be in less competition for resources.
Fascinating post and fascinating comments!
(Except DJ, your snippet about population controls FREAKS me out to no end, eugenics is evil, evil, evil.)
My own take is that despite the cosmetics of the Great Depression, 2009 and the next few years will look a lot more like 1914 than it will the 1930’s. When everybody is making money, globalization is great, but now that Earth’s economy has collapsed, these multi- and bi-lateral ties between nations and non-state actors (Al-Qa’eda, ExxonMobile, Gates Foundation) begin to resemble the rigid, inconvenient alliances between empires that dragged the entire planet into horrific war and genocide from 1915 – 1945.
That’s not supposed to be my own gloom and doom prediction, I’m just saying that I think the economic collapse is just a COINCIDENCE in the much larger scheme of Globalization and the (so-called) Long War.
As sea levels rise, millions will die.
Best to get used to it, UJ, as it is happening.
And we can’t stop it.
Eugenics, UJ? That’s not at all what I said. Eugenics is breeding for improvement of the species. I said population control– something no one wants to talk about. I’m not even saying how it should be done. (I’m sure there are white folk out there who have some pretty scary ideas, but I’m not one of them.)
But we’ve already exceeded our planet’s carrying capacity. We as a species can control our population, or Nature will do it for us. Take your pick.
We NEED to start talking about it. And we’ll find that at least some level of population control comes naturally from (1) educating women, (2) protecting the rights of women, and (3) improving infant survival rate. How do I know this? Several states in India have achieved ZPG WITHOUT forcible reductions in fertility.
Also, from now on, all Bob’s optimistic posts should include titular references to “Perkypants.” Something like “Revenge of the Perkypants” or “Perkypants Strikes Again!” Just sayin’ 😉
if you had a last name like Evans-Pritchard, you would be apocalyptic, too!
DJ, what data are you using to come to the conclusion that we’re overcrowded? We only know of this ONE planet with its ONE intelligent species, so how are we supposed to accurately judge how many is too much? Maybe this planet can only handle 300 million, maybe it can handle 300 trillion. How the hell do we know?
The issue as I see it is that we’re not using our resources and technology efficiently and effectively enough to deal with whatever our population is. I don’t think you can find ANY time in history where our population was at a perfect equilibrium and nobody died from starvation, disease or natural disasters. The idea that anyone has the right or the ability to decide when we have too many humans strikes me as unconscionably arrogant. In a word: evil.
Well, I’ve never been called “evil” before.
But consider this: Never before in human history have we reached the limits of our planetary environment– that’s why conventional economics considers the envirnment infinite.
About half the people on planet now live at subsistence level. To lift them up to a (material) quality of life half as good as the average American would require the resources of about 2.5 planets– even if we, the planet’s royalty, dropped our own lifestyle to the same level.
Put another way, a sustainable level of per capita CO2 emissions for the number of people on the planet today is about 2 tons– about 1/10 of what the U.S. generates. About half of the people in the world actually DO emit less than this. But imagine what our lives would look like if we had to join them!
What you seem to be saying is, “Breed all you want– just don’t complain about your grinding poverty.” That’s not evil?
DJ, I’m not saying don’t complain about the poverty, and I certainly wasn’t implying we should remain at our current carbon emission rates or anything like that. What I’m saying is that the solution to NONE of these problems is changing the number of humans we have. If our problem is CO2 emissions, fine, then let’s figure out how to reduce carbon, not reduce the number of humans emitting carbon. If it would take 2.5 planets of resources to maintain the population, then the solution is using resources more efficiently, not reduce the population.
And I’m not saying you’re evil, I’m saying the idea of population reduction as a solution to any problem is evil. It doesn’t mean you’re evil, or even at fault, evil is often quite rational (just not reasonable).
(Note: using “Evil” in the Platonic, Age of Reason type sense, not implying anything mythological like Jesus is Good and the Devil is evil or something like that. I don’t think you’re Sauron, DJ 😉 From here on out I’ll ditch the term since it seems a bit too provocative for the point I was trying to make.)
DJ is taking a Malthusian approach. There are too many people competing for too few resources. When that happens there’s usually a die-off. Not that anyone wants that to happen, just that is usually does.
I recently posted on my own blog about the apparent shift from Stage 3 bird flu pandemic to stage 4. A commentor offered this perspective:
“I don’t see what all the hubbub is about, Nature has been doing this since life began on this planet. As populations increase, resources dwindle and disease causing viruses and bacteria mutate and flourish. This in turn reduces the population and bringing them back into balance. Modern medicine has been waging war on this mechanism for the past hundred years and as a result increased the potential along with the increase in human populations. It is only a matter of time before a threshold is reached and medicine cannot keep up.
And then populations crash, and we become more in balance.”
Malthus argues that population WILL be limited. I argue that more people will be better off if we (as a species, not as a nation or culture or race) choose how to limit it rather than letting Nature do it for us.
I completely agree to your view point. Yes we are in the middle of a big crisis as otherwise 3.6 million Americans would not go unemployed but then still it could be solved. Lot of people are spreading fears among the general population by making their ill conceived comments. I also firmly believe that this financial storm will also pass and after necessary corrections America will emerge as a stronger nation. The present crisis is also turning into a global crisis and for that matter all the other major economies of the world are also to blame. They totally coupled their economies with the American economy by lowering their wages and dumping materials on American soil. They could have done better if only they would raise the level of consumption of their own people.