Category Archives: crisis

Three factors

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A bit of a riff on my ‘hate it here’ post (NB newish readers should probably see this post for a bit more on the ‘hate’ part).

I’m not very good at discerning the timing of events – that is, I underestimate the amount of inertia in the system, and things happen much more slowly than might be expected on abstract logical grounds. That said, these are things that I see being important over the next fifteen years or so:

– first, the whole question of Islam/terrorism, and the likely political and strategic conflicts and realignments that might come about in the Middle East;
– second, the ongoing financial crisis and deflation, leading to (probably) a shift in economic power to the East;
– thirdly, crashing into resource limits, especially the peaking of the oil supply.

Now all of these three are going to interact in multiple and unpredictable ways. What I’m pretty sure about, however, is that coming out on the other side, we will be in a very different place. Which is why a lot of the prognostications that depend upon more or less ‘business as usual’ seem rather unreal to me.

I hate it here (updated)

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Thought I’d revisit this post from December 2006 (which I was reminded of by a conversation with Byron)

I wanted to use a blog post to write down how I see things panning out. I’ll probably re-appraise this on a regular basis, to see how my expectations are matching up with reality. I am conscious of an element of wishful thinking in the analysis – the simple truth is that I hate the way that the world is presently arranged, and I long for it to end. Maranatha!
One background assumption – I believe that humankind will not change its behaviour until it has exhausted all the alternatives. So this is pessimistic.
Point 2: the impact of a decline will spark a number of positive feedback systems, exacerbating the crisis. The positive side is that there will be some warning of what is coming, for those who can read the signs of the times. However, people will still not believe the scale of what is coming until it is too late. There will be a severe shortage of fuel throughout the West. Governments will ration it; at the bottom of the rationing heap will be the private user. Given the scale of the problem private commuting based upon fossil-fuels will cease, never to return. (This is a good thing. Kill the car! Let us be human!)
Point 3: one key positive feedback system will involve wider armed conflict throughout the world, especially in the Middle East. The key question there is whether the outcome will be an expansionist Islamist caliphate or an eventually nuclear Islamic civil war. I believe that the US/UK leadership is now actively fostering the latter. More widely, the West will outcompete the 3rd World for scarce petroleum and this will provoke die-off, especially in Africa. There are likely to be huge population flows towards the West in the coming two decades. Watch Mexico/US relations on this question, especially in the coming 18 months. Christians should also be aware of the push towards scapegoating of minorities, and be prepared to resist this.
Point 4: The solutions to global warming and peak oil are one and the same: powerdown and renewables. The most important long term question is whether and how far to continue using fossil fuels to preserve people in life, or whether we are able, in this generation, to make an effective change to a lower-energy and renewable civilisation. I do not believe that there are any cost-free options. There are many possibilities for a more peaceful transition; these are what Christians must spend their time working towards, so far as they are able and the divine grace precedes them. The princes of this world will deny them, and the world of the flesh will ignore them. The key issue is how far the angel of death is allowed to come.
BTW “I hate it here” is the title of Spider Jerusalem’s column. Spider Jerusalem is my hero.

A different sort of bubble

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Consensus – received opinion – accepted wisdom. Different expressions for a similar sort of thing, a framework for understanding the world. We can’t do without them, they are the ‘inherited background against which we judge between true and false’ (Mr Ludwig).

That does not mean, however, that they are not open to investigation and discussion, and that they can be quite shockingly disconnected from reality. (Mr MacIntyre has a good discussion on how to go about it in this book).

I’ve often in my own mind thought of the secular mind-set which is dominant in Western society as a ‘bubble’. Within the bubble it all makes sense; the assumptions are reinforced by the conversations taking place with other people within the bubble; those with assumptions outside the bubble are generally denigrated for being more or less mad or stupid. Those criticised tend to be conservatives, but there is an equally cogent left-wing critique of the bubble, so it isn’t just a left-wing/right-wing divide.

I was put in mind of this by reading these two articles, which each touch on the fact that the establishment bubble is becoming more and more disconnected from reality – and, I would argue, is about to burst. That bursting will lead to us living through some very interesting times.

Victor Davis Hanson: Pity the post-modern cultural elite
American Spectator: The American Ruling Class

The future is not what it was

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A Courier article – published here 2 weeks after publication in the paper itself.

I write this on the day that Mr Osborne has raised the rate of VAT to 20%. This is necessary, we are to understand, because without that extra income, the budget will not balance and the country will go bankrupt. Sadly, barring a miracle, I don’t see any way in which some form of bankruptcy can be avoided. Now, before I go further, I should say: this is going to be a very depressing article, so don’t read it until you’re in a robustly positive frame of mind (that, or quite convinced, with me, that the Rector’s reckoning can be wrong).

OK.

The future that we face over the next, say, eighteen months to five years, is one of financial depression, specifically deflation. Why do I say this? Well, let us begin by pondering some figures – these are in TRILLIONS of US dollars:

World gross product per year: 55
Total value of global issued currency: 65
Total value of world stock markets: 100
Total value of world real estate: 125
(So far so good, now for the kicker)
Total value of financial derivatives: 1600

Financial derivatives are all those complicated things we’ve heard about on the news over the last few years, like ‘sub-prime mortgages’ and ‘credit default swaps’. The simple conclusion from the above figures is that the financial world has long-since lost touch with the real world of tangible wealth. There simply isn’t enough real wealth corresponding to all the financial obligations that have now been entered into. To put this in simpler, more graphic terms – imagine the amount of wealth in the world as a cake. What the comparatively recent explosion in nominal financial wealth has done is to give a great many different people legal claims to the same bit of cake. On paper, the financial world says that we have a great many cakes – unfortunately there is only the one.

What this means is that the financial system is irretrievably bankrupt. Over the next few years we are going to see something called ‘deleveraging’ – in essence, all the debts are going to be called in. In Warren Buffett’s famous image, ‘we’re going to watch the tide go out and find out who has been swimming without their trunks on’. We are in what I think of as a ‘Wile E Coyote moment’ – remember the great Looney Tunes character, who sprints after the road runner over the edge of the cliff, and manages to keep running on thin air until the moment that he looks down?

Our political leadership has been committed to keeping the show on the road for as long as possible – or at least for long enough to ensure that the movers and shakers are able to get some measure of safety for themselves, eg with the bonuses still being given to Goldman Sachs and other bankers – but they are rapidly running out of options. What we are going to end up living through is a severe contraction of the money supply, what the economists call deflation. Most people are familiar with inflation – the price of everthing goes up – but we’re less familiar with deflation. It sounds at first like a good thing – the price of everything goes down – but the problem is that in a deflation our ability to pay goes down faster. It won’t matter if the average shopping bill comes down to £50 a week rather than £80 if the impact of unemployment and bankruptcies now means that families can only afford to pay £30 rather than £75.

We have been here before – in the 1930s most spectacularly – and the consequences are frightening. One way to get a handle on what it means is to consider real interest rates. If a bank charges a 5% interest rate, and inflation is running at 2%, then the real interest rate is 3% (bank charge minus inflation). However, in a time of deflation, the cost of money could become very high (with consequent damage to the economy) even when the nominal rate of interest is low, or zero (eg bank rate of 1%, deflation of -3% gives a real rate of 4% – the two negatives become a positive). Governments who try to stimulate activity in this context are ‘pushing on a string’, with just as much effect (look at Japan’s recent history). In this context, the very worst place to be is in debt, because the real value of the debt will increase rapidly. That applies especially to mortgages, as the nominal price of housing is likely to plummet leaving a great many people with massive negative equity.

Thomas Hardy once wrote, ‘If a path to the better there be, it begins with a full look at the worst’ (but see here). I’ve only skimmed over the nature of our financial crisis in this article – those who want to explore the background for this post might like to visit a blog site called ‘The Automatic Earth‘ which is where I got the figures from. There is a very great deal that people can do to prepare for these and the other crises that are accumulating around us, linked to the Transition process – but I’ll have to give the positive side in another article.

Dumbing Us Down (John Taylor Gatto)

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Modern education is rubbish. There, I’ve said it – but JT Gatto said it first. Modern education was set up on the factory model, to make people fit for working in the factories – a production line, producing producers (and consumers), willing to work until the bell goes. We spend so much time and effort and wealth on tweaking the system, prodding bits here and removing bits there, and yet it simply doesn’t get any better. How can we persist with such a destructive system? Gatto explains why… and it is fascinating. A highly readable and recommendable book.

Thing is, now that we have crossed the threshold into the Long Emergency, and budgets will continue to be cut for the foreseeable future, the old model is not just dead, it is deadening. Those kids that can just about fit in to the present structure can get by, those who stick out for any one of a myriad number of reasons will get squashed and discarded.

These are not new insights. The future is local, and small-scale, and probably home-ed.

On not talking about agw

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I thought this was interesting, especially this quote:

“I very specifically avoided that whole area [climate change] for two reasons. The first is that I thought I could create a compelling enough sense of urgency without going into that topic, and the second reason is that I had worked with this enough in various life settings to discover that there are people on both sides of that story that hold very strong beliefs around that material…”

That is the same decision I made about my own book, although, since ‘climategate’, I am wondering whether to say something more. It’s very difficult to have a conversation that doesn’t generate more heat than light – on which subject, an interesting guest post at Byron’s place today.

On agw as a big red herring

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Byron asked: “Sam, do you agree that there is a significant body of hard-core deniers who are not open to evidence? I am not saying that every contrarian belongs to this group (nor that pathological behaviour is confined to contrarians), simply that there are powerful economic, ideological and social forces leading many to a place of epistemic closure on this matter. Would you agree?”

My simple answer is ‘yes’. Anthropogenic Global Warming (agw) as presented is a major challenge to the status quo, and so all those with interests in preserving the status quo will have a bias to resist the conclusions of agw. These can take many stripes; often, I would accept, there is a reactionary element involved, and there may even be some legacy influence from fossil-fuel providers funding propaganda.

However, it is also true – so it seems to me – that there are hard-core ‘affirmers’ who are equivalently immune to evidence, and that there are “powerful economic, ideological and social forces leading many to a place of epistemic closure” in favour of the agw hypothesis.

To my mind, agw is a plausible hypothesis with a significant amount of supporting evidence. It is less than certain; most of all, the dire predictions are much less than certain, and I tend to see bad theology in them.

Beyond this, I tend to see Liebig’s law as relevant. The dire predictions associated with the IPCC tend to assume, more or less business as usual, ongoing into through the twenty first century. This seems mindless to me. There is not a hope of business being anything like usual for the next fifteen years, let alone the next fifty or hundred. That is seen most explicitly for me in the assumptions employed re: fossil fuel use, but it applies to all the other limits to growth that we are hitting (and Byron has a useful list here). If we take Liebig’s law to apply to the world system as a whole (which I think is reasonable) then it seems highly likely to me that a very great number of the measures and results being sought by agw advocates will be imposed upon human society by reality. Our carbon dioxide emissions, and the whole impact of industrialisation upon the ecosphere, will substantially reduce from present levels. I see this as beyond any choice, whether that choice be made by individuals, nations or humanity as a whole. We in the industrial world are going to have to get used to using a great deal less energy, and soon (my wild-assed guess: 50% less energy in 15 years).

Which is why I see agw as a red herring. Although it makes for some dramatic pictures, the science behind agw is less certain than the science behind other ecological concerns (Peak Oil, deforestation, water scarcity etc), and the prognoses from agw are even less certain. Worse than this, they are alarmist and appeal to fear, and that has theological problems too. I simply do not see what is either achieved or achievable by the IPCC and its cohorts. Whereas something like Transition Towns (on the practical side) and the Dark Mountain project (on the human culture side) – these I find exciting, practical and inspiring.

The Hockey Stick Illusion (A.W. Montford)

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The subtitle for this excellent book is ‘Climategate and the corruption of science’ which sums up the sad tale. Montford succeeds in making a technical statistical argument quite readable, which is surely a sign of divine assistance.

In brief, and cutting out much fascinating detail, the story is this:
– until the mid-1990’s the consensus on climate history was that there was a ‘Medieval Warm Period’ (with temperatures higher than today), followed by a ‘Little Ice Age’, and then, from about 1850, a rise in temperature through to today;
– in the late 1990’s a group led by Michael Mann devised a new history in which those highs and lows were flattened out, and the rise in temperature in the twentieth century was emphasised – this is the ‘hockey stick’;
– the scientific rationale for the hockey stick was progressively investigated, especially by Steven McIntyre, and has been comprehensively demolished;
– the scientific credibility of the IPCC in this regard is less than zero;
– the ‘hockey team’ – ie those around Mann and supporting his work – resorted to a great many dirty tricks and obfuscations to confuse this truth. “Climategate” was simply the airing of the dirty laundry (almost certainly a leak from somebody inside who was disgusted by the attempt at covering up the truth).

The funny thing is that the hockey stick as such is pretty marginal to the question of whether AGW is true or not. It can, however, serve as something of a litmus test – anyone who accepts it reveals that they are ill-informed. For me, this is the most significant chart re AGW:

Even if we do nothing (and we won’t, so this is worst case) the CO2 concentration is likely to peak at around 450ppm, roughly equal to a .7C rise in temperature.