Oh the humanity!

I watched the G20 meet up on the news and saw that the markets were up today. Oh, the humanity of it all. I thought I'd seen enough of it squeezed apart like so much Pepsodent toothpaste but today really took the cake.

The intelligentsia were so long in the tooth. They cackled and crowed. About protectionsim and growth. Like this would make a difference. But it won't. It cannot. Its seed is written and dredged in the naught of things they bury their hope in. We've ruled the day and it is gone.

The numbers do not lie. This is the crux. The null point. The human arrow that pierces the heart. The wanton scribe that quills the ages. We have crossed the marrow. The cancer is here and it is...it is us.

I've set my traps and will wait. For the 'morrow is filled with maw and trials. I will take only the prey that happens into my snare. The smart man withdraws and waits. The bold ones will be burnt on the cross. Mark it my friends. Though my words be cryptic, there is wisdom within them. Be clever like the sparrow. Come forth only for worms. Hide your true colors.

And await the dark morn. Soon we will all be thus . Those that wait the earth. Wait that which abides all comers and occurrence.

Whose patience can overcome it? It was long coming. And long to go.

The Rumors of My Death Were Greatly Exaggerated

We've been on a bit of a hiatus and are back in the saddle. World events have rolled forward in the first few waves we saw last year. Obama swung in with a bang and the public deified him. And there's much to like. He's a mix of races and cultures, intelligent, not so egotistical that it's obnoxious (at least not during this honeymoon period), and is a family man to boot. He hit the ground running and scooped up most of the Clinton era players for his first term. Smart play. But the question on everyone's lips is, "Can he do it?"

And the answer is no. The tsunami is mountainous. It's apocalyptic. The depth of the rot and contagion infecting the world economy is beyond repair. Although his economic team seems relatively competent on the surface, they are shooting spit-wads at elephants. Or perhaps blue wales. The debt levels drowning the European and North American economies are staggering. They dwarf global GDP by several times. We are nearly an order of magnitude more in debt than we produce.  The enormity of it is staggering.

I can digress here and discuss some specific tactics being used to give this some frame. The US is attempting to re-ignite inflation by pushing newly minted cash (aka "liquidity") into banks and lending institutions of all kinds as fast as possible. They are also pushing down the interest rates on bonds, hence lending of all kinds, by buying up US Treasuries. This is a trick called "quantitative easing". It's what a government does when they have dropped their own lending rate to zero (or near zero) but the private market does not want to follow them there. The goal is to make borrowing so cheap that everyone wants to do it.

Will it work? Nope. Never has before. The problem with the current situation is that money is virtually standing still. When money does not change hands it ceases to be an exchange medium and just sits there. The government can dump as much as it can print into the economy. If it isn't getting used there is no effect. Prices begin falling when this occurs creating something called a deflationary spiral. Imagine you are thinking of buying a refrigerator. Your job is shaky and you're not sure if you will have one in a month. You do need the appliance but not so badly that you have to buy it right now. Now imagine that you have seen more and more 50% off sales the last couple of months and a 75% off "going out of business" sale just popped up. You are betting you can get that fridge a lot cheaper if you just wait a couple of months. Maybe even 90% off. So what to do? Well most folks will put off the purchase and buy it for 10 cents on the dollar. Now imagine everyone is doing this. For everything they buy. And it just keeps getting worse and worse.

Now look at the flip side. Businesses don't make much on 50% off sales. They go into the hole when things are 90% off. So they start closing stores and laying off employees. And those idled employees tighten their purse strings and wait for 90% off sales. It becomes a vicious cycle. 

This is what the world governments are trying to avoid. And guess what? It's already far too late to prevent. For those of you into the more exotic financial gauges you can look up the Baltic Dry Index. The BDI is a measure of shipping rates meaning world trade. It's currently sitting at about 10% of its high - meaning world trade is plummeting. Down the rathole. Sinking into the depths of a deflationary spiral. 

But there is some cheery news. All of the money Obama and team have printed and dumped into the economy will have a short term effect. So expect a slight plateau between now and Summer. Call it a respite, or a vacation even. For the short term things are looking OK. But Summer is going to be a bitch. Call it the Summer from hell. Stock up and wait for those 90% off sales. We're all going to need 'em.

So long George...

George Carlin died yesterday. He summed up the gist of the Ruling Elites post in a hilarious way last April .

Ruling Elites

As the slow crash progresses government revenues around the world are beginning to decrease as populations lay out more and more of their income to cover food and energy. (To wit, the state of California is unable to pay its bills and is resorting to gambling revenue to try to top up its meager coffers). Taxes and debt levels in "free" countries like the USA are at an all time high while revenues are falling. This is producing visible strains in the ruling elites and they are beginning to react. The US began with expansion of executive powers by the Bush presidency spearheaded by the modern day Robber Baron Dick Cheney. Bush and Cheney were able to pass the Patriot Act, which effectively suspended most protections of the U.S. Constitution, and they have recently passed a warrant-less wiretapping law that eliminates a remaining impediment to a US police state. There is currently a law winding through the US congress that will require all electronic financial transactions to be cleared through the U.S. Government. The only impediment that remains is to allow holding US citizen suspects indefinitely without trial. I suspect this will sneak through sometime in December and the U.S. transformation to a police state will be complete.

Democratic governments tend to form oligarchies over time and freedom and democratic rule are anathema to an oligarchy's long term survival. Oligarchies (the rule of "the few") need an ordered populace organized as a coherent, cash producing resource to continue to rule. Dictatorships are the narrowest form of oligarchy and are usually found in smaller countries while larger countries generally produce an elite ruling class that runs more like a distributed cabal. When an oligarchy is threatened a move toward autocratic rule is required to maintain the status quo.

If you look around the world countries with ruling elites are tightening their grip. The most obvious are ones like Zimbabwe and Venezuela with their public ruling thugs. But even "democratic" countries like Sweden have recently moved to keep their populations in line via police control. A slow crash increases the ruling oligarchies' need to reign in their populations. As revenue falls increased taxation and fees are needed. The populace reacts to rising costs and will push back toward taxes and fees by the oligarchy. A police state is the only way a ruling class can maintain their status.

As the resource wars commence due to dwindling energy and food (spearheaded by military juggernauts like the "Western Democracies") the ruling elites also need to corral their own populations in order to preserve the existing order. Police states are the result and are essentially inevitable over the next few years. Fortunately a police state in the modern world is difficult to maintain if the populace reacts by creating a de facto "free zone" of free speech and idea exchange, news sources, and untraceable commerce. The Internet is they key and I see a tug-of-war coming where the budding police states must figure out a way to control communication over the last domain of freedom they haven't been able to control. For the few of you there like yours truly who refuse to be ruled like so much chattel there *is* a lot you can do. The first is to become truly Internet literate. Read up on how it works, how your ISP (Internet Service Provider) provides service. Use TOR (The Onion Router) whenever you surf controversial subjects or use search engines. Add tools to your local PC's that remove cache files and scramble the empty sectors on your hard drive. Use tools that erase deleted data. Encrypt your hard drives. Use VPN's (virtual private networks) or SSL (Secure Sockets Layer - i.e. https:// ) whenever you access email or chat via IM or use a secure email provider. Use anonymous mobile phone cash cards if available in your country and refill them with cash only. The list goes on and on.

Over the next few months I'll try to create a set of "how-to" posts on how to make it nearly impossible for police states to track and corral you. You can be free, you can be anonymous, even in the face of an evolving police state - it just takes a bit of knowledge, effort, and caution.

Stay away from my hole

I caught a documentary yesterday about a bunch of folks who have underground bomb shelters. All of them are fully prepared for when "it" happens. They have stockpiled food, weapons, and medications. They have backup batteries, lighting, and chemical toilets. In short these folks are prepared for a single, sudden event that will transform our world. For some it is nuclear war for others a global pandemic and one even mumbled about aliens and meteors. The common thread is that all of them are preparing for a sudden, cataclysmic discontinuity. Whenever "it" happens they will scramble down their shelter, lock the blast door behind them, and presumably live for weeks or years until the food runs out or the accumulating methane vapors overrun their olfactory cells.

Most of these shelters are smack dab in the middle of American suburbia. They're surrounded by people, schools, cars, highways, and strip malls. It occurred to me while watching that the odds of an instantaneous event that will radically and permanently change our world are exceedingly small. Even if such an event were to occur, if you were smack dab in the middle of "it", why on earth would you want to stay there? Anyone in their right mind is going to move themselves to a place unaffected or less severely affected by "it". Living down a smelly hole in the midst of suburbia for months on end seems an odd survival gambit even if "it" were to occur.

But what of the more likely scenario that "it" is not a discontinuous process? What if "it" is a slow slide to food and energy shortages, economic decline, and increasingly desperate folks?
What if "it" takes years to occur? How are these folks going to draw a line in the sand as the kickoff signal to scurry down their holes? And if "it" is a slow process it's likely these folks will be the sole residents of their cul-de-sac, the others having long left the scene. It might be easier and just as safe to live in the house rather than down a smelly hole in the back yard.

The current apparent decline is rolling forward more as a set of slow waves. They will ebb and flow with the direction always subtly towards more desperation and chaos. The smartest way to live in the midst of a slow crash is to do things as you always have. Plant your garden, drive your car a little less each month, downsize to a fuel efficient one when you can, take a job closer to home or start a home based business, spend the weekends on your family farm or whatever country retreat you have to go to. Buy the bulk foods you cannot grow piecemeal and gradually build up enough to feed yourself and your family for many years. In short blend in, keep a cool head, and quietly redirect your lifestyle into something that is not dependent on Wallmart and that job in the city with its 80-mile daily commute. If you need a hole nearby just in case a sudden "it" happens well so be it. I think the odds of needing a well stocked suburban hidey hole are slim and the odds that you want to be living in one if "it" occurs even slimmer still.

Clean coal will save us!

I've always looked ahead aways and tried to guess how the USA will try to maintain its "non-negotiable" way of life. Since the oil is drying up and natural gas no real substitute for things like transportation the natural choice will be coal. The US has one of the largest coal reserves left on the planet and it will naturally use coal to stave off the inevitable. The first part of getting coal mainstream is to dispel the "myth" that it is dirty, toxic stuff that pollutes and causes 4x-5x the global warming effects when compared to natural gas and oil. The new buzzword is "clean coal", which is a somewhat hilarious oxymoron (if you ignore the tragic consequences down the road). I just watched a "clean coal" commercial that tried to convince me coal is both "clean" and the solution to "preserving our way of life" (in the US). This is the first of a long media blitz to convince everyone that "clean coal" is America's only hope. Course it doesn't matter that "clean coal" is neither clean nor anything more than a stopgap solution whose consequences will be severe.

I fully expect that liquified coal as a gas substitute will appear shortly and will be "guaranteed to burn more cleanly than petroleum based gasoline". Some pseudo-science will be dumped into select scientific journals to support this and a carefully orchestrated media campaign will ensue to make sure folks accept this as gospel. The major media outlets like CNN, MSNBC, Fox, etc will line up with "pro/con" viewpoints that will end with a subtle endorsement of "clean coal". A bunch of forward looking technologies will be showcased to show how we will dispose of coal's toxic byproducts and greenhouse gas emissions. None of these will be anything more than pie-in-the-sky Rube Goldberg-esque technologies but it will establish the idea that coal is "clean" and essential. Anyone questioning this in a serious and vocal manner will be branded as unpatriotic or worse.

The reality will be $3-$5 a gallon "clean coal" gas that Americans will use to ease themselves off of foreign petroleum. The side-effects will be a very rapid rise in CO2 levels beyond anything the IPCC or anyone else had considered possible. I fully expect that within five years of "clean coal's" appearance at the pump we'll see 450 parts per million CO2. Since my guess is "clean coal" fuel will be mainstream by 2010 this means 450 ppm by 2015.

Clean coal is a bit like treating a terminal cancer patient who has a year to live with something that makes it appear that the cancer has disappeared for 2-3 months but actually accelerates its growth markedly and kills the patient after half a year. The patient gets 2-3 months of symptom relief but suffers horribly in the 3 months following their "symptom free" period. Clean coal is the equivalent. It will relieve the end-of-oil symptoms for a brief period (say three to five years or so) but will accelerate climate change to the point that things become very ugly very quickly.

My guess is that the advent of "clean coal" fuel marks the terminal spiral of rapidly accelerating climate change that will produce sea level rise predicted for a century from now in a few short years.

Seeding the future

We're gearing up for our big move and just purchased a bunch of heirloom seeds to start food production this Summer. Unfortunately we won't be able to start until mid-July so the growing season will be a bit short this year. The sun shines about 15 hours a day through July and part of August so we should be able to grow some 60-day to maturity plants for canning and seeds. I just ordered this product which is a whole set of heirloom seeds sealed inside of plastic bags and then in a can. I'll plant the wheat to grow for seeds in preparation for a large crop next year.

Oil just broke $126 a barrel. The pundits have barely begun talking about the ramifications and Goldman-Sachs now claims oil could "spike" to $200 a barrel this Summer. The average person on the street is absolutely clueless. CNBS (i.e. CNBC) is claiming Brazil is the new place to invest because they have lots of farmland. Hate to tell ya guys that their farmland is drying out and probably won't be very productive in 5-10 years. And oil? Well $200 a barrel is going to look like the "good old days" in a couple years time.

Famland prices are also spiking in many places around the world so it looks like our timing was about perfect on our farm purchase. I suspect farmers will be the rising rich class in the coming years. That is until the food shortages get acute. Then governments (or your local warlord) will step in and take over.