I’ve written all this before, but I have not recently provided a concise summary. This essay provides a brief overview of the dire nature of our predicaments with respect to fossil fuels. The primary consequences of our fossil-fuel addiction stem from two primary phenomena: peak oil and global climate change. The former spells the end of western civilization, which might come in time to prevent the extinction of our species at the hand of the latter.

Global climate change threatens our species with extinction by mid-century is we do not terminate the industrial economy soon. Increasingly dire forecasts from extremely conservative sources keep stacking up. Governments refuse to act because they know growth of the industrial economy depends (almost solely) on consumption of fossil fuels. Global climate change and energy decline are similar in this respect: neither is characterized by a politically viable solution.

There simply is no comprehensive substitute for crude oil. It is the overwhelming fuel of choice for transportation, and there is no way out of the crude trap at this late juncture in the industrial era. We passed the world oil peak in 2005, which led to near-collapse of the world’s industrial economy several times between September 2008 and May 2010. And we’re certainly not out of the economic woods yet.

Crude oil is the master material on which all other depend. Without abundant supplies of inexpensive crude oil, we cannot produce uranium (which peaked in 1980), coal (which peaks within a decade or so), solar panels, wind turbines, wave power, ethanol, biodiesel, or hydroelectric power. Without abundant supplies of inexpensive crude oil, we cannot maintain the electric grid. Without abundant supplies of inexpensive crude oil, we cannot maintain the industrial economy for an extended period of time. Simply put, abundance supplies of inexpensive crude oil is fundamental to growth of the industrial economy and therefore to western civilization. Civilizations grow or die. Western civilization is done growing.

Not only is there no comprehensive substitute for crude oil, but partial substitutes simply do not scale. Solar panels on every roof? It’s too late for that. Electric cars in every garage? Its too late for that. We simply do not have the cheap energy requisite to propping up an empire in precipitous decline. Energy efficiency and conservation will not save us, either, as demonstrated by the updated version of Jevons’ paradox, the Khazzoom-Brookes postulate.

Unchecked, western civilization drives us to one of two outcomes, and perhaps both: (1) Destruction of the living planet on which we depend for our survival, and/or (2) Runaway greenhouse and therefore the near-term extinction of our species. Why would we want to sustain such a system? It is immoral and omnicidal. The industrial economy enslaves us, drives us insane, and kills us in myriad ways. We need a living planet. Everything else is less important than the living planet on which we depend for our very lives. We act as if non-industrial cultures do not matter. We act as if non-human species do not matter. But they do matter, on many levels, including the level of human survival on Earth. And, of course, there’s the matter of ecological overshoot, which is where we’re spending all our time since at least 1980. Every day in overshoot brings us 205,000 people to deal with later. In this case, “deal with” means murder.

Shall we reduce Earth to a lifeless pile of rubble within a generation? Or shall we heat the planet beyond human habitability within two generations? Or shall we keep procreating as if there are no consequences for an already crowded planet? Pick your poison, but recognize it’s poison. We’re dead either way.

Don’t slit those wrists just yet. This essay bears good news.

Western civilization has been in decline at least since 1979, when world per-capita oil supply peaked coincident with the Carter Doctrine regarding oil in the Middle East. In my mind, and perhaps only there, these two events marked the apex of American Empire, which began about the time Thomas Jefferson — arguably the most enlightened of the Founding Fathers — said, with respect to native Americans: “In war, they will kill some of us; we shall destroy all of them.” It wasn’t long after 1979 that the U.S. manufacturing base was shipped overseas and we began serious engagement with Wall Street-based casino culture as the basis for our industrial economy. By most economic measure, we’ve experienced a lost decade, so it’s too late for a fast crash of the industrial economy. We’re in the midst of the same slow train wreck we’ve been experiencing for more than a decade, but the train is teetering on the edge of a cliff. Meanwhile, all we want to discuss, at every level in this country, is the quality of service in the dining car.

When the price of crude oil exhibits a price spike, an economic recession soon follows. Every recession since 1972 has been preceded by a spike in the price of oil, and direr spikes translate to deeper recessions. Economic dominoes began to fall at a rapid and accelerating rate when the price of crude spiked to $147.27/bbl in July 2008. They haven’t stopped falling, notwithstanding economic cheerleaders from government and corporations (as if the two are different at this point in American fascism). The reliance of our economy on derivatives trading cannot last much longer, considering the value of the derivatives — like the U.S. debt — greatly exceeds the value of all the currency in the world combined with all the gold mined in the history of the world.

Although it’s all coming down, as it has been for quite a while, it’s relatively clear imperial decline is accelerating. We’re obviously headed for full-scale collapse of the industrial economy, as indicated by these 40 statistics. Even Fortune and CNN agree economic collapse will be complete soon, though they don’t express any understanding of how we arrived at this point or the hopelessness of extracting ourselves from the morass.

We know what economic collapse looks like, because we’re in the midst of it. What does completion of the collapse look? I strongly suspect the economic endgame is capitulation of the stock markets. Shortly after we hit Dow 4,000, within a few days or maybe a couple weeks, the industrial economy seizes up as the lubricant is overcome with sand in the crankcase. Why would anybody work when the company for which they work is, literally, worthless? Even if they show up for a few days to punch the time-clock, the bank will not issue a check, and the banks won’t be open to cash it. It won’t be long before publicly traded utility companies don’t have enough employees to keep the lights on. It won’t be long before gas (nee service) stations shutter the doors. It won’t be long before the grocery stores are empty. It won’t be long before the water stops flowing through the municipal taps.

There are those who question my credibility, particularly when I make predictions. We’re in the midst of a war to save our humanity and the living planet, and some readers are worried about my credibility, as determined by the power of the main stream. My responses are two-fold: (1) I’m hardly sticking my neck out, unlike when I made my “new Dark Age” prediction in 2007 (at which point the price of oil had yet to exceed $80/bbl, the industrial economy appeared headed for perennial nirvana, and everybody who read or heard me thought I was insane); of the fifty or so energy-literate scholars I read, about half indicate the new Dark Age starts within a year, and a large majority of the other half give us less than two years; (2) Get over it. This war has two sides, finally. This revolution needs to be powerful and fun, and we cannot afford to lose. We cannot even afford to worry about seeking credibility from those who would have us are having us murder every remaining aspect of the living planet on which we depend for our survival.

Credibility? Respectability? It’s time to stop playing by the rules of the destroyers. We need witnesses and warriors, and we need them now. It’s time to terminate western civilization before it terminates us.

Lesson over. The exam comes within a couple years. And pop quizzes come up every day in this unfair system.

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This essay is permalinked at Counter Currents, Revelations, Islam Times, New Age Op-Ed, Island Breath, creative informationalist, Before It’s News, Mammon or Messiah research, Hot Kashmir, remedios’s posterous, and Running ‘Cause I Can’t Fly.

Update: So far, the comments at Counter Currents are absurd to the point of being humorous. But they cannot compare to the ludicrous nonsense landing in my hate-filled email in-box. Fear of the future must be driving this insanity. Similar stupidity fills the right-wing blogosphere. Google “Guy R. McPherson” for a taste.

Update 2: This essay is mentioned in the Melbourne, Australia Herald Sun, which adds one of my interviews from 2008. As usual, the comments are particularly insightful with respect to denial of both sides of the fossil-fuel coin.

Of course, had stock traders known the dire nature of AIG, for an easy example, the economy would have completed its ongoing collapse long ago. Fortunately, Americans prefer presidents and presidential candidates who lie about the likes of AIG (and, as nearly as I can distinguish, everything else).

But back to the smoke-and-mirrors recovery. It’s fizzling out and there is worse to come. The Wall Street Journal predicts collapse will come in 2011. Over on CNBC, the recommendation is to buy barbed wire as the endpoint of devaluation appears. Others prefer a different phrase: the next step down, also known as a dead end. If you’re a part of Saudi Arabia’s royal family — welcome to the blog, by the way, and feel free to post a comment — it’s time to get out before the apocalypse comes to the kingdom.

For the imperialist-in-charge, what to do, what to do? Now that the Keynesian approach has about run its course, Obama is set to re-open offshore drilling program in a feeble attempt to keep the current game going. And there’s undoubtedly more stimulus headed our way, even though we already passed the point of debt saturation: each new dollar of federal debt now subtracts 45 cents from GDP.

If you’re having a tough time swallowing the notion that the economy can go from apparent recovery to the toilet in a few years, remember what most people believed in 1930: they thought the bad economic news was behind them, too. It’s looking a lot like 1930.

Even usually clueless Americans are getting nervous about the economy — apparently they’re no longer watching television. But even the ever-soothing voices on the tube are pointing out that the gusher in the Gulf is getting worse by the day, with economic implications bound to bury the coast for decades. The BP spill is probably gushing on the order of 100,000 barrels per day, not the 70,000 bpd reported by BP, a number that keeps going up as they keep repairing the problem. The spill certainly exceeds estimates by ultraconservative marine scientists.

But even the latter scientists agree about the existence of the undersea plume (or cloud). I am definitely not applying the “scientist” label to anybody working for the Obama administration: those former scientists gave up their integrity card when they started lying in the name of political fortune. Their new jobs are to hide the facts, not reveal them.

Despite the ongoing game of obfuscation, striking similarities have emerged between the financial collapse of 2008-2009 and the Gulf disaster. Among other characteristics, BP is paralleling the actions of the big banks, aided by the Obama administration, in covering up the truth. It comes as no surprise that BP CEO Tony Hayward has racked up a “greatest hits” list of quotes only a politician’s mother could love.

Energy analyst Matt Simmons predicts BP will declare bankruptcy within a month. That would be one way to escape paying for damages. The more likely approach, in my opinion, is a full-scale bailout by you and me. That route is already wending its way through Congress, although GOP House leader John Boehner is shying away from the idea he proposed earlier.

In a stunning bit of good news — in the category of throwing us a bone — BP finally released the list of toxins in the dispersants. Now that I’ve seen the list, though, I’m not particularly happy about it.

Finally, a single article from the mainstream points out that maybe we should re-think our oil-drenched lifestyles. Oil drilling threatens our future, as even the BBC has determined. Will that be enough to get us off the devil’s excrement? Certainly not if Barack Obama or the politicians in Louisiana have their way.

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This essay is permalinked at Energy Bulletin and Island Breath.

How does one know what to believe, and who to trust? We’re surrounded by lies. During our finest moments, we don’t believe the media, the politicians we elect (from the very small slate of candidates selected for us), or the CEOs and NGOs to whom we give our money. Awash in misinformation yet surrounded by culture’s unrepentant, never-ending message, we vacillate between cynicism and swimming in the powerful current of culture.

Although the happy-talk Obama administration — and its proxy and partner in crime, the mainstream media — would have you believe the industrial economy has recovered, many signs indicate the impacts of the last oil price spike haven’t been fully worked out. The U.S. national debt rises every day, and it already exceeds the value of all currency ever produced and all gold ever mined. It cannot be paid off. Ever. If the notion of a Soviet-style default doesn’t give you pause, consider still-rising foreclosure rates, still-falling home prices, massive unemployment, financial bankruptcy at all levels of government, ballooning entitlement programs, and collapsing pension programs. This is merely the short list of economic issues we face. Needless to say, every single one of them is a profound surprise to the vast majority of neoclassical economists, few of whom saw this economic recession coming (as if passing the world oil peak didn’t provide sufficient warning, well in advance).

Knowing culture will lead us astray, we nonetheless invite scorn when we seek the truth beneath the cultural current of the main stream. Culture does not have answers to meaningful questions. But skepticism for the sake of skepticism is no virtue, either.

Applying reason as a path to knowledge (as I’ve suggested here and here, for example) is easy enough in theory. But in practice, it’s difficult to extract the facts and then synthesize them into a coherent message that guides the way. Much less the Way. And yet, we muddle along, individually and societally, relying on some inexplicable combination of faith and rational thought. For me, the guides include data (recognizing they are undoubtedly massaged before general release), historical anecdotes (ditto), my own dubious moral compass (shaped, necessarily, by culture), and an informed set of predictions from a variety of scholars. As with any gestalt, mine is formed from parts that don’t quite add up to the whole.

So how do we go from this list of economic issues to the notion of economic collapse? I’ve moved from imperialist city educator to economic doomer rural sharecropper in one (damned difficult) step. This move was driven by many factors, including the profound (and profoundly late) realization that we live immorally, buying and selling nature’s bounty at an imperialist whim. Another contributing factor was my strongly held suspicion that we’re headed for a collapse of the industrial economy by the end of 2012. If the industrial age does not end soon, we’re headed for the complete absence of habitat for humans on Earth. Obviously, there is plenty of disagreement with me on both points, and I’ve been asked to make my case. What tea leaves do I read?

I restrict this essay to economic collapse, thus leaving the issue of environmental collapse to previous posts (and perhaps future ones). The data on collapse are clearer than the rest of my guides, so I’ll start with them.

The data interact with other elements: History indicates 10 of 11 recessions since World War II and all 6 recessions since 1972 were preceded by a spike in the price of oil. The lifeblood of civilization, and its price, dictates the direction of the industrial economy. At some point, the price of oil becomes too great to maintain the industrial economy. In fact, a per-barrel price of $147.27 nearly brought the industrial economy grinding to a halt. Only massive, and massively illegal, intervention by the executive branch of the U.S. government kept the lights on in your grid-tied house, the trucks coming to the grocery store, and water coming out the taps. These actions have been written about widely. A quick search on “plunge protection team” is a nice starting point, although the issue is far broader than even omniscient Google reveals.

For information about oil supplies, I rely on Hubbert’s model and data from the U.S. Department of Energy’s Energy Information Administration (EIA). Hubbert’s model indicates we passed the world peak for crude oil in December 2005. Data from the EIA indicate peak month was May 2005. Because the industrial economy is barely limping along today, in far direr condition than when the price of oil exceeded $140, I doubt it will take a second round of $140 oil to bring the industrial age to its overdue close. Several forecasters suggest we’re headed beyond that mark with a year or so.

A little more from history: Empires fall. All of ‘em, so far. Some fall slowly, others rapidly. Some fall with a modicum of grace, others with extreme violence. American Empire is so complex, so dependent on finite materials, and intricately connected with the entire global economy that it’s difficult for me to foresee a long, peaceful decline.

The industrial economy relies heavily on crude oil, and particularly inexpensive oil. We’re perfectly willing to spend $400/gallon for gasoline to support our imperial ambitions in Afghanistan if that’s what it takes to keep the price of oil at a reasonable level for us exceptional Americans. (How exceptional? Check the charts in this essay.) But when the price of gasoline exceeds $4/gallon in the heartland, there’s trouble brewing for our all-important economic growth.

In addition to the near-term price of oil, our empire is threatened by the ever-tightening grip of globalization, which ensures that economic collapse in any of the world’s large economies will lead, domino-like, to economic collapse throughout the industrialized world. This grip was allowed and facilitated by cheap oil, and it’s no coincidence that the end of the cheap-oil era resulted in financial crises throughout the civilized world. Today, Greece is the word. But Portugal, Spain, and Japan hover on the brink (Japan is the world’s second-largest economy). So does the U.S. and the remainder of the industrialized world, though you’d never know it based on mainstream media reports from this country. We have the advantages of the world’s reserve currency and the largest killing force in the history of the world (and the willingness to use it, everywhere, all the time). But when China stops buying U.S. Treasury notes, a process already under way, the de facto rate of interest will rise, taking us inexorably and likely quickly into the land of hyper-inflation. At this late juncture in the industrial era, the only questions of great significance are whether our bubble will pop before China’s, and which of myriad potential events will serve as the proximate cause to the end of American Empire. The price of oil was a trigger event, and it might be again. But it might not, too.

As far as my moral compass is concerned, I’ve written plenty about that. There’s no need to pummel the deceased equine yet again. Check the archives, if you’re interested. Or, for a different take on the situation, read this.

So much for the models, data, history, and my sense of morality. What about those voices I hear words I read?

When I open my browser to start the day, several tabs reveal themselves. Some of these websites give the facts, as accurately as they can be determined: Bloomberg energy prices, American stock markets, and the U.S. national debt clock. Others are information clearing houses with occasional original essays, notably including the sites of Matt Savinar, Mike Ruppert, Rice Farmer, and Chris Martenson, along with Energy Bulletin, Counter Currents, and The Oil Drum. Others provide synthesis and analysis: Business Insider, Baseline Scenario, Dmitry Orlov’s blog, Speak Truth to Power, Economic Collapse Blog, The Automatic Earth, and Zero Hedge. Finally, one tells me what people are thinking out there in the culture of make believe: MSNBC. Needless to say, that’s the scary one.

I’m not foolish enough to read every article, much less read every article linked from these pages. But there is plenty of fodder here, much of it informed by biophysical economics. Biophysical economists, unlike neoclassical economists, know about finite materials. As a result, the former know starvation can kill people. Any self-respecting neoclassical economist assumes the rumbling of his stomach will cause food to appear.

Now let’s pause for a quick story about neoclassical economists.

Four shipwrecked economists wash ashore on a deserted tropical island. The first Asian economist says, “I’ll gather wood and start a fire to keep us warm and cook our food.” The second Asian economists says, “I’ll find water.” The third Asian economist says, “I’ll find food.” The American economist sits down, smiles, and says, “When you’ve got that all taken care of, I’ll consume whatever you produce. You’re darned lucky I’m here: Without me, the entire system falls apart in a hurry.”

Note that confidence among U.S. consumers fell in April. Unexpectedly, of course.

We now return to our regularly scheduled essay.

Among the places these links lead are the following. This summer’s hurricane season likely will contribute to high oil prices. And we might not need the hurricanes: According to the International Energy Agency, world oil demand will set an all-time record this year, exceeding the amount actually being sucked out of the ground by 2.4 million barrels per day. The global financial system is primed and ready to implode. The Fed admits to breaking the law in the name of transferring wealth (and not to me or you). And the Fed, like the U.S., is bankrupt. That alone will cause hyperinflation. “Real estate built America, and it’s going to take it down. Foreclosures will be the wrecking ball for the American economy.” The economic crisis in Greece is just getting started. Recent reports of economic growth are mere mirages from the smoke-and-mirrors cabal behind the curtain (duh). More than half your tax dollars support the military (yeah, that’s sustainable; even an increasing percentage of military personnel is questioning whether they will accomplish their amorphous mission in Afghanistan). Warren Buffett bought the Burlington Northern Santa Fe railroad, calling it an “all-in bet” on the U.S. economy, as if he’d been reading the work of James Howard Kunstler. Buffett’s partner Charles Munger wrote a parable transparently about the U.S. economy titled, “Basically, it’s over.” A large European bank warned its clients about completion of the ongoing collapse by the end of 2011. The U.S. dollar will collapse, causing world economic collapse, by 2012. Catherine Austin Fitts moved from New York City to rural Tennessee to build a doomstead. As should be obvious, “from now on the risk of entering a collapse must be considered significant and rising” (pdf file). And so on. The evidence mounts daily, and it all points in the same direction.

My interpretation and synthesis of these many essays and the data on which they rely suggests the industrial age is near its terminus. How near? Recognizing the difficulty of predictions, and the animus they elicit, I’ll go out on the often-wrong limb of forecast and give us a 99% chance of “lights out in the empire” by 21 December 2012. And I didn’t even look at my Mayan calendar.

Reinhart and Rogoff’s 2009 book, This Time is Different, describes financial crises in 66 nations dating to the 13th century. For a change, I agree with the rallying cry of people subject to previous collapses: This time is different. This time it’s not one of 66 nations. It’s every country in the entire industrial world. Indeed, this time is different.

In short, civilization is only a few days removed from chaos or, if you’re an optimist like me, from anarchy. This has always been the case, for every failed civilization as well as the one left standing. With every passing day, we move further into ecological overshoot and also closer to the end of western civilization and its apex, the industrial economy. For most individual industrial humans, the end will not be welcome. But for the living planet on which we depend, and therefore our very species, the end of industry will bring a welcome relief from decades of oppression. It might even give us back our humanity while granting our species a few more decades of planetary existence.
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This essay was inspired by a comment from Marguerite Daisy. It is permalinked at Counter Currents, Bluegrass reVisions, and Island Breath.

Indebtedness is a form of servitude, usually involuntary, and, in extreme cases imprisonment. Consider, for example, current rates of interest, usurious compared to what savers earn on their savings in the same banks that charge that interest. Many religious organizations loath interest rates as immoral and criminal. According to all four gospels in the Christian bible, even the normally passive, peaceful prophet of Christianity got so worked up about usury in a temple he started acting like Bobby Knight on the sidelines of a basketball game.

Purchases by consumers (this awful word is used here only because that’s what we have become — involuntarily) drive the world’s industrial economy. And purchases by consumers depend on the confidence of those consumers, so that consumer confidence underlies commercial success. If a potential consumer has no confidence in his ability to purchase an item, then he won’t. If enough potential consumers lose confidence in their abilities to purchase and pay for any particular item, the sales of that item will plummet, causing the manufacturer and sellers of that item to fail.

Considering the current financial situation, which will no doubt crash again within the next year, we can help create a situation that will both change behavior for the better and prevent people from getting into financial trouble. The latter portion is vital to getting wide support, and will be a huge challenge for hopelessly optimistic, reality-challenged members of the industrial economy.

How do we convince people they definitely cannot afford to take out loans to buy things? More impact will be realized by targeting luxuries such as houses, cars, and appliances than small “goods.” The Obama administration recognizes this, and has therefore rewarded people for purchasing houses, cars, and — most recently – appliances, by giving them huge financial incentives (i.e., taxes on other Americans who might not even be tempted to play the “consumer” game).

Loans are required for most people to purchase these “durable goods” (which are no longer durable or good). Loans traditionally are seen as safety nets, but it has become clear they really represent traps. Never mind the psychological or ecological implications of consumerism — there exists no evidence suggests anybody has minded so far — the focus here is on the trap into which each potential consumer falls by taking out a loan to mindlessly invest in transient baubles. Every loan is a bad deal for the borrower, although credit cards represent the largest trap (even with the new rules).

The system needs you to keep borrowing. If you stop borrowing, then who knows what could happen.

The risk levels described below are approximate and will vary according to your personal situation and the jurisdiction in which you operate. Seek legal advice if you are uncertain.

No risk:

Don’t take out a loan for anything. If you need it — and probably you don’t — save your money and buy it, or barter for it.

Encourage others to join you. Start by sharing your car, your garden, your yard, and your lawnmower. Pass stuff on. Give it away. You don’t need that loan, and neither do the people you care about. Caveat: Sharing leads to liability.

If you already have loans, and most recent students do, then seek deferral under economic hardship. Odds are pretty high you’re actually experiencing economic hardship, so this is no big deal. And even if you’re not, there’s no sense feeding the beast if the beast defaults down the road. Caveat: If you lie about economic hardship, your claim about hardship is legally fraudulent.

Low risk:

Start a “misinformation” campaign (from the point of view of the loan companies).

1) Via snail mail, send out false press releases from loan companies and banks to media outlets such as local radio stations, local press and even the nationals if you are brave enough. These press releases should discourage people from taking out loans because, after all, people don’t really need all the toys they buy on credit. If you make the “press releases” as complete as possible, and word them so that responses are not required, then there is a good chance they will be run without questions being asked.

2) Do a bit of subvertising, on the internet or (for a little higher risk) on billboards: focus on loans companies and banks changing the messages to emphasise the theft aspect of loans. Alternatively, just remove loan adverts entirely. For more information on techniques, read this post.

Other potential actions along these same lines include:

Obvious satirical routines can be developed for a variety of venues. This strategy should hold particular appeal to artists.

Medium risk:

Walk away from your mortgages, as suggested by Dave Pollard: Many Americans are now living in homes with mortgages that are greater than the value of their property. Why would anyone continue to pay a debt that is higher than the asset it secures? After all, big corporations view pulling the plug on unsuccessful ventures and sticking the debtholders and shareholders a key business strategy. The whole idea of “risk capital” is that the interest and other fees you earn for lending to risky borrowers compensates you for the risk, so that if the borrower defaults you accept the loss and chalk it up to experience. Yet for some reason homeowners feel some moral obligation to throw good money endlessly after bad. This of course is exactly what the corporatists, who have no such moral compunction, are counting on, what economists call moral asymmetry. The logical response would be to tell the lender to write off the excess of the mortgage beyond the property value, and refinance the mortgage accordingly. Apparently in some US states (called “recourse” states) this moral asymmetry is institutionalized — that is, lenders can go after a mortgagee’s personal assets if they default. There is, of course, no recourse when the corporatists walk away from debts, offshore their operations, and stiff the taxpayers whose subsidies and bailouts paid for the corporatists’ ventures.

Where is the sense of outrage here? Have the education system and media so dumbed down the citizens that they can’t see this scheme for the cruel and criminal con it is? If everyone with a mortgage greater than the value of their home either walked away from it, or was legally empowered to require the excess to be written off as the “bad debt” it is, then of course there would be many bank failures and plunging profits. That’s how the market system is supposed to work. The lenders, of course, want it both ways, and Obama and the citizens consumers seem blithely willing to let them have it.

Walking away from your mortgage entails medium risk because it will damage your credit rating. Obviously, this doesn’t matter in the long term, but it still causes concern for many people. Additional risks vary among states, up to and including loss of assets for every person named on the mortgage.

Via electronic communications, send out false press releases from loan companies to media outlets. These press releases would discourage people from taking out loans because, after all, citizens don’t really need all the toys they buy on credit. This scheme requires technical expertise: The instigator will hide behind an alter-ego and fake domain.

High risk:

Taking a step beyond abandoning your underwater mortgage, don’t pay off your mortgage even if you’re not underwater. Simply default but continue to occupy your house. Ditto for other loans (but kiss your car goodbye when the repo man does his job). In many cases, lenders can ill afford to tell their stockholders about toxic loans, so — if you avoid undue attention and your loan is too small to “bother” with — the borrower gets the loan for no payments while the lender gets stuck. This point was viewed as radical as little as a year ago, but the idea has been receiving plenty of attention from the media, and even CNBC is on board.

Tactics for throwing off the shackles of debt

These actions are high risk because they could bring criminal proceedings related to fraud. Probably they won’t. But stranger things have happened, so we issue the following disclaimer:

Recognizing that even civil disobedience is illegal, the authors and the host of this web site do not condone any actions that break the law under the jurisdiction where the described activity is taking place.

Which, of course, doesn’t mean you shouldn’t do them at your own risk.

What we’re trying to do here is help bring down a house of cards: People feeling forced to pay debts far greater than the real value of the assets that secure them. People seduced into getting into debt needlessly. People paying usurious interest rates and fees because the banks own the politicians. It’s a debtors’ prison without locks and doors, and it’s immoral. Please help us bring an end to it.
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This essay is part of a larger collaboration between the authors. It represents the third month of the Monthly Undermining Tasks

On the other hand, I keep getting asked to come up with politically viable solutions to both predicaments. Some people think such an activity is worthwhile, and I’ll give it a shot with this post.

With respect to energy decline, totalitarian socialism worked for Cuba. When the Soviet Union collapsed, Cuba experienced 90% decline in crude oil supply essentially overnight. The Cubans muddled through, shoulders to the wheel, with no measurable loss of human life. Even today, two decades later, their standard of living exceeds ours for every measure that counts (and no, GDP doesn’t count). With respect to emissions that drive climate change, the Cuban model is far superior to the leading economies in the industrialized world. If there is a viable political model to deal with both sides of the fossil-fuel coin, it’s found in Cuba and perhaps other countries characterized by totalitarian socialism.

Here in the United States of Advertising, in sharp contrast to the Cuban model, a 0.5% decline in world oil supply nearly brought the military-industrial complex to its knees. Thanks to heavy doses of Keynesian-style bailouts to corporations, the republic was saved, but it still teeters on the brink. It looks like the federal government will continue to function for a few more years, even with a 3% annual decline in world crude oil supply (cf. Cuba, with its 90% decline). And, lest you think the system isn’t working, think again. The system is working exactly as it was designed to work: capitalism for the poor and socialism for the rich. If it’s not working for you, it’s only because you’re not financially wealthy enough to matter.

I seriously doubt we can switch to totalitarian socialism in time to save lives in this country. We’re already too deep into fascism to switch horses. At this point, the sheeple probably would go along, but the corporations would not. Ours is a command economy, and the commands come from the corporations: If they tell legislators to vote for an initial $700 billion bailout package, you can bet how it will turn out: “in no time the taxpayers ended up with more than eighteen times that, $12.8 trillion in loans, spending, and guarantees.”

For those who do not believe we’ve yet reached the point of fascism in the U.S., consider these tidbits:

JP Morgan has taken over the U.S. food-stamp program, and has created jobs along the way. The jobs are in their call center in India.

The federal government has assumed a controlling interest in GMAC, after buying the nation’s largest car company.

The Federal Reserve is seriously considering the purchase of more (toxic) assets from Fannie and Freddie.

Your favorite Treasury Secretary told AIG to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis. Meanwhile, he repeated the administration’s commitment to economic growth at all costs, including runaway climate change: “There is no greater priority for this administration than getting Americans back to work.”

It’s a quick trip to jail for blowing the whistle on the criminals at UBS, which happens to throw big money in the direction of Obama.

The list goes on. These are merely the most recent examples of an essentially endless list.

Will fascism work? Only for the fascists, I’m afraid. After all, you cannot even land a job in the OBusha administration unless you’re willing to kill the right people. Hopefully, this system will work only for a very short time. It’s difficult to imagine a scenario by which it lasts as long as the Cuban solution.

Further evidence the American economic system is working as planned is found in projections for this year. If you think 2009 was punishingly bad for the American middle class, think again: economic black swans will be the least of our problems, according to a dozen mainstream economists. For starters, social security goes bankrupt this year, with no politically viable solution except printing money (the one-size-fits-all plan for the current administration). Meanwhile, bonuses are up — way up — on Wall Street. And although the last decade was characterized by a decline in stock markets and a net loss of jobs, the next 10 years has us headed straight for the post-industrial Stone Age. This likely will bring back to a decent sense of community, which marked Stone-Age cultures for the first couple million years of the human experience.

The U.S. economy is still shedding jobs, after setting records for the percentage of Americans out of work for an extended period (and, no, those jobs aren’t coming back). A few criminals continue to profit from the ongoing economic implosion, and the harbinger of hope appears to be among the scoundrels. No wonder his administration changes the rules every time they think nobody’s watching.

Meanwhile, a steady rise in the price of oil, hence gas, threatens to further strangle out-of-breath consumers. And speaking of gas, the public and their politicians seem completely disinterested in the huge methane flux coming from beneath Arctic seas, even though: (1) ongoing global warming threatens to thaw Siberia’s subsea permafrost, (2) the amount of carbon trapped in shelf permafrost is in the range of 1,600 billion tonnes – roughly twice as much carbon as in the atmosphere now, and (3) the release of this once-captive carbon would have catastrophic effect on our climate and life on Earth.

Not to worry. It’s merely life on Earth. It’s not as if the release of methane poses a threat to the vaunted industrial economy of the United States, or causes something as dire as childhood goat trauma.

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This entry is permalinked at Island Breath.

What does that mean? Who was John Maynard Keynes, and what did he have to say about people, society, and economics?

Keynes was a British economist, journalist, and financier who proposed tremendous government intervention into the financial markets. Specifically, he suggested governments spend money they did not have to prop up capitalism (i.e., to further enrich the financially wealthy). He was born in 1883 and died in 1946, and his ideas about macroeconomics were widely hailed before of World War II. In particular, he developed a dump-money-on-it solution to deal with economic recessions (all of which were called depressions until the Big One, 1929-1933, inspired us to change the name). But Keynes’ policies were largely disregarded between the early 1960s and 1980, when Ronald Reagan brought them back into style. Perhaps the biggest contemporary fans of Keynes are Ben “Helicopter” Bernanke and his new best friend Barack Obomber, the current Liar-in-Chief of the most bankrupt country in the history of the world.

Oddly, Keynes believed capitalistic economic policy could contribute to social justice and individual liberty: “The political problem of mankind is to combine three things: economic efficiency, social justice and individual liberty.” Shortly after World War II, Keynes dreamed of a day when economics would fade in importance, and we would spend time dealing with our humanity: “The day is not far off when the economic problem will take the back seat where it belongs, and the arena of the heart and the head will be occupied or reoccupied, by our real problems — the problems of life and of human relations, of creation and behavior and religion.” It’s difficult to imagine such sentiments emanating from an economist, much less one whose policies are designed specifically to transfer money from those who have little to those who have much.

Although Keynes thought government intervention was necessary to maintain financial markets, he had little good to say about the British government: “I work for a Government I despise for ends I think criminal.” Contrary to his reputation, he even expressed doubts about the role of government in macroeconomics: “Government machinery has been described as a marvelous labor saving device which enables ten men to do the work of one.”

In addition to questioning his government employer, Keynes had his doubts about capitalism: “For my part I think that capitalism, wisely managed, can probably be made more efficient for attaining economic ends than any alternative system yet in sight, but that in itself it is in many ways extremely objectionable.” His doubts extended to his entire professional field: “Economics is a very dangerous science.” And this, too: “The outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes.” I would hardly call the distribution of wealth arbitrary, especially when Keynes’ policies are employed, but it certainly is inequitable.

Keynes saw the dark underbelly of capitalism in a way few contemporary economists acknowledge: “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.” And more: “The decadent international but individualistic capitalism in the hands of which we found ourselves after the war is not a success. It is not intelligent. It is not beautiful. It is not just. It is not virtuous. And it doesn’t deliver the goods.” Sing on, John, sing on. Had he stopped right there, I would be his biggest fan.

During the Great Depression, Keynes clearly understood the dark side of humans, as well as the ability of humans to manipulate financial markets for ill-gotten gains. In 1931, he wrote: “When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues. We shall be able to afford to dare to assess the money-motive at its true value. The love of money as a possession — as distinguished from the love of money as a means to the enjoyments and realities of life — will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease … But beware! The time for all this is not yet. For at least another hundred years we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight.” I don’t think it’ll take until 2031 to rid ourselves of the concept that money matters. Then again, I’m an optimist.

Keynes was quick to criticize other economists as well as the government and the entire system of capitalism: “If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid.” Further, he didn’t think the field of economics required an exceptional intellect: “The study of economics does not seem to require any specialised gifts of an unusually high order.”

The Weimar Republic was going up in economic flames during the middle of Keynes’ career, yet he never abandoned the inflationary approach as a solution to virtually all economic woes. Paradoxically, he credited Lenin with developing a means for destroying capitalism, then promoted the idea himself: “Lenin is said to have declared that the best way to destroy the Capitalistic System was to debauch the currency … Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million can diagnose.” Stunningly, there’s more to his damning critique of ramping up the printing presses: “If, however, a government refrains from regulations and allows matters to take their course, essential commodities soon attain a level of price out of the reach of all but the rich, the worthlessness of the money becomes apparent, and the fraud upon the public can be concealed no longer.”

In thinking the public would notice they were getting screwed, and then do something about it, Keynes clearly overestimated the public intellect.

Keynes’ macroeconomic policies have held up remarkably well, especially in light of his own occasional critiques of governments, capitalism, and the notion of printing money. Further, his own fallibility at prediction was cemented in 1927 when he said, “We will not have any more crashes in our time.” Later, he concluded, “There is no harm in being sometimes wrong — especially if one is promptly found out.” The fact that he was “promptly found out” in the last 1920s slowed neither his predictions nor the widespread acceptance of his policies.

Keynes was reportedly a genius, and yet he failed to foresee the dire economic straits that would result from the policies he proposed. Consider, for example, the huge debt faced by American taxpayers. Never mind that, at this point, the FDIC is too broke to take over failed banks. The matter is trivial relative to the magnitude of the debt we all face. It is clear that, as with the former Soviet Union, default is the only option.

As you can imagine, I’m a big fan of Keynes’ best-known and most accurate quote: “In the long run we’re all dead.”

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This post is permalinked at Island Breath.

If oil traders knew the truth about declining energy availability, the per-barrel price of oil would be $300 within a week. If stock traders knew the truth, we’d see capitulation of the markets shortly thereafter. If Americans knew the truth, they just might come to grips with reality, rally together, put their collective shoulders to the wheel, and start building a better world than the ominicidal culture of make believe to which we’ve all become accustomed.
But we’ll never know, because the cabal of morally bankrupt bankers and politicians running this country — and also the industrialized world — will keep playing the shell game as long as they are allowed by the impotent media. Or, more likely, until the reality of oil priced in excess of $200 per barrel interferes with their imperial ambitions.
The consequences of the shell game extend well beyond economic disaster and the likely extinction of our species. In the short term, they include hijacking the world’s marketplace, complete with child labor, hunger, and pollution (especially abroad), continued decline of intellectual “capital” in our universities, ratcheting up the war machine by attacking yet more countries (perhaps bringing a rapid demise to American Empire), further extending imperial overreach, continued shrinking of our credit-based economy, continued enrichment of the financially wealthy (including $100 billion for eight of Warren Buffett’s companies), continued profiteering by the insurance industry, and continued land grabs in poor countries by wealthy countries. All with a U.S. military on the verge of complete collapse and despite widespread acknowledgment that American-style capitalism is not working.
To reiterate the choices facing us: (1) The economically dire truth and potential for chaos, now, or (2) Certain chaos and probable extinction, later. The moral certainty of the former choice is absolute. Perhaps that alone explains why we’re choosing door number two.
Will reality intervene in time to save the living planet, including our own species? Is 2012 soon enough? Stay tuned.
In the meantime, think about what you’d do. Let’s play King For A Day. Would you trust industrial humans with the truth? Or would you commit us to chaos and probable extinction in the name of politics? In your response, please wear two hats: first your own, then, to make the game realistic, the hat of your favorite billionaire.
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This post is permalinked at Energy Bulletin and Counter Currents.

The financially wealthy have improved their lot by stealing from the middle class, then calling in the troops to protect the thieves. The property of rich folks has always been more important than the lives of the poor, a fact that will continue to create misery for the “other” 99% of us until the entire industrial economy fails. Personally, I can hardly wait.
What’s next is anybody’s guess, but it’s obvious the economic dominoes are clack, clack, clacking away. Losses from commercial real-estate lending pose a huge threat to U.S. banks. Citigroup is among the large banks in dire shape. JP Morgan has traded in the formerly profitable enterprise of commercial banking for the risk-free venture of taxpayer-funded investment bank. The United States is already bankrupt, although few have recognized how badly we’ve overshot the economy (I suspect even fewer recognize the far more dire case of ecologic overshoot). In short, the soul of capitalism has been sucked into the black hole created by the wizards on Wall Street, never to be revived again. The too-little, too-late response from oil companies and civilized governments: a fight to the death for the last drops of black gold.
We’ll give up war as soon as the typical member of the National Rifle Association turns over his automatic assault rifle to the Make-a-Wish Foundation.
Virtually no neoclassical economists saw this coming, and with good reason: The dismal science is not a science. A stone-age shaman with a handful of chicken bones is a better forecaster than your typical economist. Even the Grey Lady has exposed neoclassical economists as latter-day hucksters, finally recognizing there are limits to growth: “all biophysical economists see only very bleak prospects for the future of modern civilization.” I disagree only with the tone, which suggests civilization is redeemable.
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This post is permalinked at Energy Bulletin.

I fully expect Obama to cave into the richest one percent of Americans, yet again, on the issue of health care. The wealthiest one percent in this country has never had it so good — their share of this country’s total income is the highest it’s been since 1929 — and many of them will profit from the $23 trillion in bailout largess the Treasury Department now says could be headed to financial firms. Now they’re launching an attack on health care, because the current system is perfect for them. It allows rich folks ready access to the best doctors while the rest of us have to wait incessantly for overpriced treatment of limited value. FDR warned us about this the last time we were in the midst of a Great Depression, but the corporate goons won that battle (like most of the others, before and after).
While he’s propping up the rich by destroying the middle class, Obama’s solution to the financial crisis is to run the printing presses as rapidly as possible, thereby generating a massive deficit. Even the projections of his own government hacks don’t have us getting a handle on this deficit before Medicare, Medicaid, and Social Security go belly-up.
At the same time he’s destroying our future, Obama is making the classic, oft-repeated error of pursuing war in Afghanistan. Although the likely consequences include U.S. bankruptcy, even I have a hard time fully supporting Obama’s bloodlust for killing citizens who already find themselves firmly in the stone age. In response to Obama’s imperial overreach in Afghanistan and elsewhere, Chalmers Johnson is wisely recommending we dismantle the empire. I don’t see a lot of support for Johnson’s excellent idea, because our society is firmly committed to twittering while Obama burns our future. Most Americans have not learned anything from history, and therefore will support Obama as he commits us to a trifecta of consequences seen throughout the history of the world: imperial overstretch, perpetual war, and insolvency. Johnson indicates this is “leading to a likely collapse similar to that of the former Soviet Union.” He makes it sound like a bad thing.
As the empire crumbles, a few voices in cyberspace have us going back to 1910. They recognize that our culture — which they know possesses us, not the other way around — is fatally destructive to the biosphere, and that we might have to go back to tying our shoes, cleaning our floors with mops, and churning butter. But they can’t imagine much further back than a Model T in every garage and train service connecting the nation. I can. But perhaps I’m just a hopelessly romantic uber-optimist.
As it turns out, revised data indicate that this particular “recession” is worse than prior estimates. The first 12 months saw the economy shrink more than twice as much as previously estimated, reflecting even bigger declines in consumer spending and housing. And, by the way, the housing recovery really isn’t one. If you want to derive any equity from your house, it’s time to sell. On the heels of the collapse of the residential housing market comes an even bigger blow to the economy: the commercial sector is toast, too.
Even Ben Bernanke is waking up to reality, finally admitting the current economy may be worse than Great Depression. He goes on to say growth will resume at 1% in the second half of this year, thus echoing mainstream economists court jesters who have been calling the current quarter the “bottom” of the recession for several quarters in a row. Green shoots, anybody? Mustard seeds? If you find ‘em, you’d better eat ‘em. It could be a while between meals.
In contrast to Benny and the jesters, Marketwatch is giving investment advice about the end of civilization. And just when you thought the news couldn’t get any better, Business Week says we’re likely headed for another oil shock, albeit worse than any previous one.
At some point, perhaps mainstream economists will recognize the link between energy prices and the economy. But since virtually none of them have noticed a spike in energy prices preceded 10 of the last 11 recessions, including the latest 3 big ones, I’m not terribly hopeful they’ll ever recognize it’s time for them to start thinking the unthinkable: the myth of perennial economic growth is dead..
And lest you think I’m calling for personal responsibility to solve our myriad problems, I know better. Personal responsibility is just another excuse for passing the buck to individuals, as if you and I had a damned thing to do with either of the twin evils of the fossil-fuel coin. We don’t run this civilization, folks, so we’re not to blame for runaway greenhouse or the economic consequences of declining energy supplies. Indeed, we need go back only 52 years to find powerful military voices recognizing the importance of oil and other fossil fuels to the maintenance of American power and western civilization.
Despite the unbridled optimism of left-leaning “scientists,” it’s almost certainly too late to save civilization and our species without bringing down the industrial economy. Another oil shock or two and we’re headed right back to the stone age, and just in time to save the living planet and therefore our species’ only chance of persisting beyond the current century
More good news: Increasing evidence, along with this anecdote, indicate you can stop sending your children to the K-12 concentration camps we call schools (actually, we’d have been a lot better off had we done so years ago). It’s too late for these institutions to rebuild the thinking class. They’re too busy promoting capitalism for the poor and socialism for the rich.
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This entry was inspired by numerous comments from Stan Moore.

Within the last six months, President Obama has exposed himself as a dyed-in-the-wool neoconservative. I’m sure many of you disagree, just as many of you believe we still have generations left in the industrial economy. But all you self-proclaimed progressives who adhere to the principles of Business Party II (as opposed to Business Party I) can’t be impressed with the Obama cabinet, now that’s it’s completely stocked with Clintonistas and Reaganites. And then there are Obama’s frequent references to his political hero, Ronald Reagan, who was the first and most obnoxious face of neoconservatism in this country. Just when you think it can’t get any worse, reality comes knocking.
Obama has been willing to tackle politically difficult issues, including last weekend’s address to Catholic U, when he tackled abortion. As a politician he is, of course, unwilling to seriously infuse the debate with science. But at least he is putting his rhetorical skills to some good use. Why, then, is he adamant about promoting economic growth? After all, he surely knows (1) the days of economic growth are behind us, and (3) the consequences of economic growth are overwhelmingly horrendous for other cultures and species and even our own species.
Yet Obama keeps plowing ahead, pushing the neoconservative agenda at all costs. Consider his recent decision to avoid action on global climate change, even if it means extinction of the polar bear. And he recently appointed Cheney’s chief assassin to head up the continued occupation of Afghanistan. His administration continues to hand out buckets of money to the big boys on Wall Street, thereby continuing the neocon strategy of socialism for the rich and capitalism for the poor. The “stress test” for the banks could not have failed more miserably, but Obama is staying the course, thereby reminding me of the excellent John Ralston Saul quote with which I commenced one of my recent books: “Never has failure been so ardently defended as though it were success.”
There’s hardly a shred of evidence to support the idea Obama is a political liberal. Sure, he’s intellectually curious, and damned clever, which puts quite a bit of distance between him and his neocon predecessors. But when will he use his vaunted courage and rhetorical skills to tell the truth about runaway greenhouse, energy decline, or economic collapse? When will he begin talking about, and acting upon, the truly significant issues this generation faces?
Oh, that’s right: Never.
Seems Obama knows there is no political solution to either side of the fossil-fuel coin. We cannot use politics as usual to deal with energy decline. Ditto for runaway greenhouse. In other words, there is no viable political solution to deal with either issue. The significant questions then become:
“Can we save the few remaining species and cultures on Earth, by destroying the industrial economy?”
“Can we extend the persistence of our own species on this planet a few more generations by bringing down the industrial economy?”
I have a three-word answer for liberals, progressives, conservative, neoconservatives, anarchists, pagans, Christians, druids, Tories, Democrats, Republicans, and all the rest of you: Yes, we can!