Archive for March, 2008

Of Blue Moons and Black Swans

Monday, March 24th, 2008

People who hang around here and read this blog from time to time know that I’ll tend to criticize people in public life, purported leaders, who rely on what I call “old-school” world models to guide their choices of what we do to deal with the current crises we are facing. Virtually the whole class of political leadership in the USA/the globe rely on a rigid kind of thinking you can call “linear thinking” which includes cyclical thinking about our present economic and resource crises.

In other words, we’ve had credit crunches, recessions, boom-and-bust in real estate, high oil prices, all these problems before, and if you just give it time, everything cycles back around and things go on as “normal”, much to the benefit of the global ruling class, fortunately for you if you’re part of that class.

I’ve linked two separate articles here that raise the question of whether the current economic storm we’re heading into is merely more of the old-school, usual fare, or something new.

Blue Moon Economics by Kurt Cobb asks

“Are we merely experiencing a cyclical,
albeit once-in-a-blue- moon event that will resolve itself in lower
prices for all the commodities that make our modern society
possible…or are we facing a long-term struggle for the declining
resources of the globe, a struggle that will potentially endanger our
lives and completely transform our society?”

While James Howard Kunstler’s

Black Swans Everywhere carries on Kunstler’s perspective that the “peak oil thing” is not going to behave as the old, cyclical crises of old: There is something indeed wholly new going on here, and the USA is in for a new kind of oil shock:

The bottom line is that high prices for oil is hardly the only thing
America has to worry about. Pretty soon the US will have to worry
about getting the oil at any price — meaning, we’re in for shortages
and supply disruptions sooner rather than later.”

Myself, I tend to believe that Terence McKenna’s “Novelty Wave” theory has something to it. In the course of human history, inflection points or important moments in time occur which are actually novel–they’re not a cyclical repetition of some former phenomenon, but something that has never been seen before. And after the novelty event occurs, the world cannot continue in the way it did before.

For Generation Zero, turning 18 late in 2012, if this economic crisis is not just a “blue moon” and there really are flocks of black swans everywhere, there will be no possibility of living the way of life most of us grew up taking for granted. Events now happening will condition their lives into a kind of permanent crisis-mitigation mode. Sort of like, All Katrina Relief, all the time.

To grasp novelty, one needs to discard linear thinking and go fractal, embrace the complexity and chaos afoot in nature as well as human events, hang loose, eat your favorite hypotheses and paradigms for breakfast, and get on with dealing with whatever change is at hand. The end of the petro-economy, for one good example. Or the end of the usury-based debt-slavery system of illusory prosperity for another.

Unfortunately for us, people in public office do not subscribe this this novelty view of history, but rather, tend to cling to the past. When an economic system suddenly breaks down or collapses violently, they merely pull out the old toolbox and try to tweak the system back to “normal” functioning.

But if what we’re seeing is not just something that happens “once in a blue moon” but is truly a “black swan” occurrence, none of the old tools (for example, the Federal Reserve Board cutting rates repeatedly just as Alan Greenspan did in the wake of the 9-11 events) are going to suffice. In fact, just doing the same thing over and over, but expecting different results is–well, you’ve all read the supposed quip from Albert Einstein about what that is.

Bobby G.

Last Train to Lhasa…

Friday, March 14th, 2008

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Midival Punditz “136″ video

Sunday, March 9th, 2008

Skip this video if you’re just reading stuff, another internet time-waster.

YouTube Video of Midival Punditz “136″

Good intro to the India techno wave sweeping the planet, “mashing it up in the urban outskirts”, as usual featuring Vishal Vaid’s vocals. “The dawn breaks orange, the peacock sings, and Delhi still swings.” By the way, “136″ is the beat count for those DJs mixing on the decks.

Matt Simmons lets the $300/bbl oily cat out of the bag on CNBC

Sunday, March 9th, 2008

Did anyone else catch Matt Simmons on CNBC’s ever-so-obnoxious, yet somehow fun, “Fast Money” show Friday?

There it was, at the bottom of the screen, in easy-to-read print: “Simmons sees $300-a-barrel oil” and he was talking about the not-distant future either.

What i found especially interesting was Simmons talking about the Club of Rome, and how people often tell him he “sounds like one of those Club of Rome guys.” You’ll recall the Club of Rome, and the Limits to Growth authors, doing their work around the time of the first 3 earth days. Here’s the fascinating part about what Simmons said–at least i found it fascinating.

He said that at first he knew nothing of the Club of Rome, and the Limits to Growth forecasts, which had predicted us running seriously short of global resources by the year 2050. Now it appears, Simmons said, that the Club of Rome people were a bit too “optimistic” in those forecasts–that in fact, the resources crunch(es), including oil, are already at hand.

To establish his bona fides, CNBC noted that Simmons’s investment firm has placed something like $125 billion in capital deals for oil industry corporations.

One of the CNBC hotshots said something to the effect, won’t the Athabasca Oil Sands save us?

Simmons immediately dismissed that idea as nonsense–all that energy and environmental devastation for such a small amount of “low-quality oil that has to be mixed with higher quality oil.” He left the viewer with only questions, no answers. I’m not sure what Simmons’s agenda really is, but the candor is refreshing, although the implications are creepy.

Soon peak oil will change our world, and not with a happy Obamaesque full of hope kind of change, either.

Bobby G.

in Central Wisconsin, USA sector of
NAFTA Free Trade Zone

Amy Heart takes the right stance

Thursday, March 6th, 2008

In a letter to the Stevens Point Plan Commission, (click that first phrase to link to the letter), I believe Amy Heart, District Five Alderperson for the City, takes the right stance on the incentives offered by Stevens Point to the huge transnational financial corporation AIG.

In fact Heart brings up problematic aspects of the Stevens Point-AIG deal that I failed to mention in my earlier blog post about it on this blog, dated Feb. 9th 2008. You may scroll to the bottom of the entries and click on “Previous Entries” if interested in my take on this situation.

Heart says “I as a citizen of Stevens Point have no interest in supporting the bottom line of the 10th most profitable corporation in America only to have bragging rights over my friends in Plover.”

That comment gets to the heart of the matter, no pun intended, when it comes to corporations using jobs and tax-base leverage on communities in order to get desired benefits from the community. The use of Tax-Increment Financing districts, TIFs, has been going on for decades and is now a deeply-ingrained part of the pattern of economic development in communities.

As I said in the earlier blog entry, this is all very “old-school” and represents no new thinking, no new model or “paradigm” being applied in our community. If the eco-municipality and sustainable community concept is going to really take root and thrive in the United States, at some point corporations are going to have to stop behaving as corporations of old, and start behaving as corporations of a new type, committed to the sustenance and viability of the community that hosts them.

One also has to question the old-schoolness of the thinking that this deal is some sort of done deal that’s all upside no downside. Here’s what Mayor Halverson of Stevens Point offers about this deal: “We will not be stretched at all with this deal,” Halverson said. “Even with the worst-case scenario, the city is still coming out ahead.”

The full story of the mayor’s confidence in the AIG deal is here, click this sentence for the link.

The mayor has been saying all along that property taxes paid by AIG for the land–but not the building–would be more than enough to cover the interest on the bond. No doubt, projections have been made by experts in city hall, all based on old-school thinking about the municipal bond market (interest rates are always nice and low, there is never any turmoil in such a stable market as muni bonds, etc.) to justify the go-ahead for selling muni bonds on the project.

The Stevens Point Journal uses the odd term “taking out a bond” when in fact what should be said is that the city will be selling these bonds in a deteriorating auction style market, hoping that there are enough bond investors to take up the full offering, and if not, that some big hedge fund or retirement fund or mutual fund somewhere will bail us out if buyers are scarce when the bonds hit the market.

Oddly enough, and quite ironically, the same day’s edition of the Stevens Point Journal has this story (click “this story”) dealing with a Wausau hospital facing a sudden wrenching change in the bond market hitting their bonds and leaving them facing sharply higher interest rates.

So, how much of a “slam dunk” or “done deal” is this “taking out a bond” going to be?

So many questions, so few real solid answers. But let’s give a thanks to Amy Heart for being courageous, honest and forthright in calling this deal into question.

Bobby G.

It’s official now: all-time even inflation-adjusted

Wednesday, March 5th, 2008

Just today the oil traders finally put to rest that “psychological barrier” of what was supposedly the all-time inflation-adjusted record high price for crude oil, by breezing past the “psychologically important” level of $103.76 (supposedly the inflation-adjusted all-time high price) to settle the day at $104.52.

Now that the traders have surpassed that “resistance level” as they say, we suspect that crude oil will now have a fairly easy ride up to the $120 level, as we suggested below in the posting for Feb. 24th.

As usual, the spin (lying) machine at OPEC was in full effect, as OPEC ministers asserted that they weren’t raising production for this or that reason, blame the USA, yadda yadda yadda. It’s not that the USA isn’t to blame for this record, and there is certainly lots of blame to be allocated globally. It’s more that the true truth is probably that OPEC doesn’t raise their production because…

…they can’t.

The reason for that? Most probably, the global peak of oil production has come, and gone, and this is now known in the OPEC oilfields, but can never be divulged to the global public, and especially the US public. No one wants to be responnsible for the ensuing crash in U.S. consumer confidence, in investor confidence, in home-buying confidence, in China-junk-buying confidence, or in U.S. political smugness.

No one knows what a panicked United States of America might do, and envisioning the next move of a heavily “armed madhouse” USA is probably a place nobody in the global market-crisis-management business wants to go.

Okay, but here’s where the (tractor-trailer) rubber meets the road. If you go to this EIA site and look at the third little chart down on the left hand side, you’ll see the chart labeled “STOCKS” and it is the stocks of “distillates” like especially diesel fuel that are freaking out the people in heavy transport, in agriculture, and in aviation. To see “distillate stocks,” just roll over the orange lettering to see that chart.

In dealing with the oil market news, everyone obsesses too much about the gasoline used by us commuters to get to our jobs, shopping, multiple children’s extracurriculars, teen cruising, hauling the bass boat, snowmobile, ATV and other amenities up and down the highways every day. But more worrisome is that orange-colored trendline in “distillates” which has been trending down toward the bottom end of the 5-year average range (shown in light blue color).

This decrease in distillates inventory is one reason why diesel fuel is going ballistic and will soon spike up over $4.00 a gallon. Since everything moves by diesel-fueled truck in this country, and the John Deere diesel-fueled tractor with like 16 wheels guzzling 15 gallons an hour is now the standard farm implement, and the railroads and container ships all move on that class of fuel, there’s real reason for concern.

The 1500-mile diet is already a thing of the past. We just haven’t got the news yet.
B.G.