Nicole Foss
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Hi Snuffy – good to hear from you, and sorry I missed you on my epic US trip. I think you’re right that the healthcare insurance premiums are going to be the straw that broke the camel’s back for many households. Obamacare was scripted by the insurance companies to ensure profitability, not to give affordable healthcare to the masses. It’s going to result in taking affordable healthcare away from people who already sort of had it (albeit at an already inflated price), rather than giving it to people who didn’t. People will be forced to pay the fine for not subscribing because it’s cheaper than the healthcare they didn’t have because they couldn’t afford it. They’ll be worse off because of that tax, and they’ll still have no healthcare. It’s the worst healthcare system in the world IMO, for everyone except the very rich, and it may just be a factor in pushing the US economy over the edge. It was going there anyway of course, and for far more reasons that healthcare. I expect the opposition to claim, after the fact, that Obama is to blame for the collapse because of this issue and its impact on confidence in government. Never mind that they are actually risk factors everywhere you look. People are being willfully blind when it comes to systemic risk, as they always are at a peak.
What I can’t understand is all the deflationary talk. It seems like we have a government that is going to do all it can to stay in power and if that means giving people tons of money and jobs then they will do that ……Thus creating inflation…not deflation….I guess I can see deflation in the short run but they realize they are going to have to do something to “goose” the economy….that is why they won’t let go of QE….flood money into the masses somehow….and there are ways to do that other than QE…Ted
No one is being given tons of money and jobs, and the odds of that every happening at nil. Bailouts are never for the little guy. The QE money is not getting into the real economy and circulating, so provides no support for a wage price spiral. It’s going to the top of the financial food chain where it’s helping the 1% to blow huge assets bubbles.
At the same time, the value of many debt instruments is falling, and that is deflation. That process is going to pick up momentum sharply once we turn the corner into the next phase of the credit crunch, which I don’t think is too far off. There’s so much outstanding debt – a huge multiple of global GDP. When the credibility of the promise it represents disappears, so will it’s value, and the whole inverted debt pyramid will pancake. In the process, the top of the financial foodchain will lay claim to all the underlying collateral. This is how all credit bubbles end – in a deflationary implosion. The size of the hangover is proportionate to the party that preceded it, and this has been the largest credit blowout in history. We can expect a deflationary depression for the record books.
Yellen’s Fed won’t be able to bail out the muni bonds. And in any case, bailouts are never for the little guy, or the little guy’s pension fund. Bailouts are for the top of the financial food chain.
Hi Dan, good to hear from you 🙂 Scary fundamentals indeed, and getting worse, not better, despite the ridiculous level of optimism.
The Doomstead Diner podcast questions are scripted in advance. That makes it harder to create a conversational flow following an answer, but I suppose easier to make sure all the points you wanted to raise as an interviewer got raised as planned. I never script anything I say in advance because I prefer free-flowing conversation, but to each his own style.
I am not optimistic about Japan. In purely financial terms, they are further along the deflationary path because they began their slide in 1989 when their bubble burst. They have already lived through nearly 25 years of ‘bear market’ and deleveraging. They may be about to experience what come afterwards – a currency hyperinflation – and be broken all over again in a different way.
In energy terms they’re screwed, and in health terms too in eastern Japan, thanks to Fukushima. Geopolitically they’re far too close for comfort to a superpower that hates them (for good historical reasons – see the rape of Nanking). It’s not at all an optimistic picture in Japan.
It’s been a flying visit to SE MI, on a whirlwind lecture tour. I really enjoy visiting with people on route. It’s challenging to stay on top of all the logistics though, since there are lectures most days, and often several hours of driving too. Perhaps another time I can drop in. MI is not so far from eastern Ontario.
The velocity of money has a huge impact. When I was in Western Australia recently (the home of the successful mining industry that has driven Australian prosperity), shop owners were telling me that business had not been so bad for 30 years. Why would this be so? Well, Chinese demand for commodities is down as their bubble begins to burst (because they’ve already grossly overbuilt infrastructure and stockpiled everything as well), so mining projects in Australia are being cancelled. This has not yet resulted in a loss of high paying jobs, but the fear that it will has resulted in discretionary spending falling off a cliff. In other words, the money is still there, but people have suddenly stopped spending it. that shift can happen on a dime, because it’s psychological.
Falling velocity of money acts as a major driver of economic contraction, and no amount of quantitative easing will make any difference, either in Australia or elsewhere. Once the economy begins to contract, a self-fulfilling prophecy to the downside is created, with business pessimism, higher unemployment, lower spending and more business failures.
Human beings are collectively very good at self-fulfilling prophecies in both directions. This is why we have the historical record we do of cycles of boom and bust. Those are merely emergent properties of operating at civilizational scale.
We’re working on our new version, and it should be more like the original. I very much hope to rebuild our wonderful commenting community. I’ve been lucky enough to meet many of them in person on my travels, but would very much like to see them back here.
I’m not sure I’ll do a video tour of my place. We’ll see. There’s not much to see really, and it’s not that photogenic. I already did a talk on what I did there in the way of prep. It’s available free on You Tube.
My lasting memory of living in Thatcher’s Britain was the poll tax riots. I was there in Trafalgar Square for the demonstration, and left after the speeches. I was lucky to go the way I did, because the police on horseback charged the people going the other way. I saw the riot itself later, on TV from the safety of a friend’s living room.
There’ll be money in it for those who can sell snake oil. Some of the salesmen may be deluded into believing their own propaganda and some may be intentionally trying to screw others while they can.
There’s a lot of shale gas buzz in the UK at the moment, reflecting their desperation. The UK is so gas dependent now, and supply is dwindling. They’re primed to believe a home-grown solution is available. It’s the path of least resistance, but it would be a disaster for Britain.
Are they seriously thinking of fracking the Netherlands as well? I hope not, but I haven’t heard one way or the other. Holland is even more densely populated than the UK and the impacts could be even worse.
Alex,
Would you agree with Louis de Sousa and his recent piece on TOD on solar power?
No. I think he may misunderstand how power systems work and what is required to control them. Also, bubble dynamics is missing from the picture he paints. Prices are low on a temporary glut. This sets up a supply collapse in the longer term, just as we are in the process of seeing in natural gas in North America, and what I am expecting to happen to oil as well.
Good summary video. It’s very much in line with what we’ve been saying here at TAE for the last several years.
oilobserver,
Germany’s relative power is likely to increase in Europe IMO, although in absolute terms I expect a very substantial economic contraction there as the export markets dry up with the (in my view inevitable) demise of the single currency. The low level of personal debt is a positive factor, as is the existence of small scale renewable energy adjacent to demand (as opposed to the large scale projects Germany is currently contemplating that will probably never be built). Germany is closer to the Russian energy supply source than most other western European countries.
The major worry geopolitically is the potential for conflict over the break of up the European centralized institutions and governance structures. Already the blame game has begun in Europe, and I expect it to get much more pronounced. Blaming someone else is always easier.
I strongly second the recommendation to look into Sepp Holzer (an amazing Austrian farmer) and permaculture. A background in medicine will be very useful too. I would suggest keeping it basic, so as not to build in a dependence on very expensive techniques/drugs/equipment for your expertise to be applied. Primary healthcare will be vital. It’s a barter-able skill if even if no one has any money.
Also, make sure you carry no debt (less of an issue in Germany than elsewhere, but still worth pointing out) and have a cash reserve on hand if you can manage it. Whatever control you can have over the essentials of your own existence will be very useful.
davefairtex,
I think another (unspoken here) requirement that is key to your scenario is a complete collapse of credit availability. If however the credit system remains more or less intact, bank depositors are bailed out FDIC-style but the bondholders are thrown under the bus and/or the banking system gets a massive injection of capital, credit will remain available and deflation will be more limited than you anticipate.
The disappearance of credit is exactly what I am expecting. Credit is already tightening substantially in many places, and I expect that trend to pick up momentum. Credit is normally only available to the relatively wealthy, except during bubble times. As this has been a very large bubble, credit availability has persisted for long enough for us to have come to see it as the natural state of affairs. I think we’ll be returning to the previous condition, with an undershoot, where credit becomes far less available than normal, as opposed to far more available than normal.
So many people are going to be maxed out across the board, with looming (or realized) unemployment, a major credit squeeze, rising interest rates (as a risk premium) and rising taxes (especially property taxes). In this kind of financial perfect storm, price support for almost everything is very likely to plummet, with the caveat that the essentials would receive relative price support and would therefore fall less far in nominal terms (even as they rise in real terms).
I think you’re charting work is really good, and we’re really happy to give it the exposure it deserves. I’m just more bearish than you are.
We are not in, or anywhere near, any kind of hyperinflationary trend. Commodity prices are set to fall, and so-called money printing is not having any kind of stimulating effect on the real economy. Prices have been rising as a lagging indicator of desperate attempts to stave of financial collapse, but that trend has nearly run its course. What we need to be looking at, and preparing for, is the trend change at hand. It has been a long time in coming, but it is quite clear if you know what to look for. Betting on the recent uptrend continuing could not be more dangerous at this point. Look at the markets with a contrarian eye, and do the opposite of the what the herd is doing.
Pipefit,
Natural gas is ahead of oil in its ponzi cycle, in that the unconventional natural gas hype came first, in response to the terrible prospect in conventional projects. Now that cycle is reversing, and natural gas prices are set to rise on a looming supply crunch (because natural gas companies were losing so much money at the low prices their hype, and the consequent perception of glut, had generated). The same phenomenon is about to unfold in relation to unconventional oil, now that the hype is shifting in that direction. The perception of glut will drop prices substantially, even in the face of actual (but masked) scarcity in relation to current demand. As demand falls on economic contraction, that trend to lower prices will accelerate.
I don’t regard the ratio of oil price to gas price as any kind of indicator of inflation expectations. Nor would I expect either price to reflect relative BTUs, since prices are set by perception of scarcity/glut, not by the fundamentals. For what it’s worth, I expect the ratio to fall substantially over the next few years as the gas squeeze begins while oil prices fall, at least in North America. Elsewhere the cycle for gas is in a different position, with fracking hype only beginning.
I regard our financial position as at or near the peak of a counter-trend rally (a ‘b’ wave in an expanded flat correction to be specific, as the 2007 peak was in relation to the 2000 peak at a higher degree of trend). The implication is that the downtrend should resume fairly soon (ie wave ‘c’ is dead ahead, and ‘c’ waves above a moderate degree of trend are devastating). The persistent unnaturally low volatility combined with a sentiment extreme and insider selling are clear indications of a top. As we go over the edge, I expect volatility to spike.
People I know who live in Spain tell me that the official figures underestimate the size of property bubble significantly, because official property prices do not include the ‘brown envelope money’ that also changed hands on completion. That aspect is greatly reduced now, but that part of the price fall is invisible. The housing bubble in Spain was truly gargantuan. I think it has a very long way to go to the downside, and that prices will undershoot where the bubble began to the point where they would temporarily be worth less than the cost of their constituent materials. Skyhigh unemployment and a lack of access to credit mean purchasing power, and therefore price support, will be falling for a long time.
Dave, your scenario 3 best reflects my view:
“3) ???? (10%) – Spain leaves the eurozone, goes back to the Peseta, and prints money to solve the problem; possibly civil war or authoritarian government results in property prices becoming true bargains based largely on the Peseta’s 3:1 (?) exchange rate to the euro.”
I agree with Skipbreakfast that many properties will be completely worthless, and that this will drag down the average. As I have said before, a 90% fall from peak to trough is simply typical for a bursting bubble following an asset mania. It could easily be worse than that considering the scale of this particular bubble.
I would expect house price to bottom in nominal terms for a decade at least. Housing markets go illiquid and then ratchet down one step at a time. Most people need do nothing at all for their home to lose value. All it takes is a few bargains at the margins at a lower price to give price discovery, then the whole neighbourhood of comparable properties goes down in value. The virtual value built up in the boom years simply disappears, because it never had any basis in reality. This is profoundly deflationary as the knock-on effect on the real economy are huge.
Even when house prices merely stop rising, a large economic stimulus is removed because people can no longer borrow against their home and spend the money extracted. In the bubble years in the US some people were supplementing their income by perhaps tens of thousands per year by using the house as an ATM. Cutting off that flow of money was a primary cause of the 2008 recession.
Credit bubbles artificially stimulate demand through the creation of excess purchasing power. When that purchasing power goes away, the demand borrowed from the future must be repaid. Recession becomes depression as economic activity freezes over. Spain is only at the beginning of this process.
As for Germany, they didn’t have a housing bubble, but their banks funded everyone else’s. Germany may be able to bail out their own banks, but not other EU institutions. I think a German internal bank bailout would come on a German exit from the EU.
The Sewdish bank bailout of the 1990s cost some 4% of GDP, compared to 40% for the Irish version (to date). Other countries could be worse. This is unrepayable debt. It’s nowhere near having fully deflated.
Rapala,
The crisis of 2008 isn’t over. What we were concerned about then is still very much on the cards. We’ve had a longer reprieve than we had expected in between phase I and phase II of the credit crunch, but that reprieve appears to be over. There are strong signals of an impending market reversal, indicating a coming shift from euphoria to concern and then to fear. The optimism we see at the moment is simply characteristic of a top. Things always look really good from the peak of a bubble, but at that point there’s nowhere to go but down.
Governments are not in control. It only looks that way when people are collectively optimistic, generating a temporary self-fulfilling prophecy to the upside. Once optimism becomes pessimism, their powerlessness in the face of a self-fulfilling prophecy to the downside will be obvious.
Thanks for the charts, much appreciated.
Europe is indeed tipping over the edge again, into phase II of the credit crunch. For those minded to gamble with something they can afford to lose, shorting would be the way to go at this point IMO (bearing in mind that all gambling is risky, that governments can change the rules so that you may not be able collect on having been right, and that there will be far more ways to lose your shirt than to make a lot of money, even if you’re right about the trend).
The unnaturally low level of volatility, combined with strong insider selling against a backdrop of optimism verging on euphoria, is a strong red flag warning. deflation is a very powerful force, and can take hold very quickly. When it does it very rapidly becomes a self-fulfilling prophecy.
Watch Europe as it’s in the vanguard of deflation, and in some countries acute liquidity crunch already. This is where the rest of us are headed.
Rapala,
Prices rise as a lagging indicator of changes in the money supply. The price rises we are seeing were baked in the cake thanks to earlier inflation. IMO (on balance of probabilities as always) we are about to see a major shift from ‘heroic’ attempts at reflation to accelerating monetary contraction. Insiders are selling at a time when we have seen an unnatural lack of volatility in the markets for some time. Sentiment is at an optimistic extreme. These are all powerful sell signals. Once the markets turn, liquidity contracts on loss of confidence. Prices will follow to the downside, albeit not immediately. Affordability will keep getting worse however, as purchasing power will be falling faster than price (not because money will be losing value – quite the opposite in fact – but because almost no one will have any). Cash is king in a deflation. Preserving capital as liquidity allows you to preserve your freedom of action. It amounts to holding on to a handful of choices to make later, at a time when you have a lot more opportunities and a lot more information as to what would be the appropriate choices to make.
tpverde,
I would be happy to come to Costa Rica. One of our readers had mentioned perhaps organizing an event there. I’ll be close by in Belize for the second half of this month. I’m hoping to get a feel for central America while I’m there.
I’m so glad it worked well for you. Too often mainstream ‘education’ can mean indoctrination. I used to despair over the textbooks my kids brought home, and we would have to contradict the propaganda in the evenings. All the home schooled kids I know have learned very effectively and have an innate intellectual curiosity. That is a very valuable thing.
Vulcanelli and others,
We’re working on a new version of TAE, always with a view to improving the interface between the site and our readers. The lifeboat section has been a challenge to produce, because the two of us can’t cover too wide a range of topics in the available time, so we depend on others to submit material from their own fields of knowledge when it comes to preparation. There hasn’t been as much of that as we would have liked. Perhaps people don’t see TAE in that light, and so find other forums for their ideas.
I take Alan’s point about the community being fragmented since the move. I agree, and it’s very sad. A lot of effort went into building the community, with all its wonderful personalities, and much of it seems to have dispersed. We do need to find a forum format that encourages discussion. My personal preference has always been for combining discussions rather than dividing them. Otherwise one doesn’t reach a critical mass of participants to sustain a discussion.
How would people feel if we ran open threads, like the Drumbeat at The Oil Drum? If they appeared on the front page, say, once a week, they would attract a lot more participants than topics buried in the forum.
If readers have other suggestions, we’re all ears.
Davefairtex,
I do expect a population bust, at least initially, although there are a few complicating factors. In the longer term I expect birthrates to rise, although probably not as much as deathrates.
People have fewer babies when they don’t think they’ll be able to look after them, or when they don’t like the look of the world they would have to bring them into. This is to the extent that they have some control over the process. They may well not have modern forms of control, and it may take a while to get used to how people dealt with it in the past. I’m not thinking so much of the obvious nasty possibilities, but of other ways people limited family size. There must have been such methods, since average family size varied a great deal from culture to culture where circumstances were different, long before we had modern methods.
I expect things to get much worse for first world women in terms of rights and control of our own bodies. Our emancipation (which really only applied to middle class and up anyway) was probably a function of the availability of energy slaves. When these are no longer there, I expect culture to shift to make women feel drudgery is their duty again, and to deprive us explicitly of other options. In the Soviet collapse, women lost childcare, equal status and opportunities in a giant rejection of everything that had characterized the communist system (in a throwing-the-baby-out-with-the-bathwater kind of way). Men often drank themselves to death and women had to do whatever was necessary to cope.
The word proletariat derives from ‘ their only wealth is their sons’, meaning that the only asset poor people could control was the number of children they had, where children could be expected to produce more for the family than they cost to feed. This dynamic is why agricultural societies have such large families too – they generate farm workers who produce a net benefit for the farm. Of course the value of a large family depends on circumstances, like having land to work, but in very poor countries, slum dwellers may also have an incentive to produce children to send out to beg or steal or work in sweatshops. Children are the only form of old age security in many places as well.
Low birthrates in wealthier places have to do with factors such as low deathrates (so virtually all children can be expected to survive), the cost of giving a child what middle class parents would define as a good enough start in life, education leading to women with career aspirations instead, and the availability of external supports that mean people are not dependent on their children in old age. It costs a huge amount to raise a child in line with cultural expectations – with lessons for all sorts of things, a good school, a posh college (poshness being more important to many than the actual content of the education) and all sorts of material goods pushed at children through advertising. Most of those things will no longer be available anyway, except for the very wealthy. Child (and maternal) mortality will rise as access to medical care falls, career aspirations will disappear with skyhigh unemployment, education will be far less accessible to most, opportunities will be very limited, and external supports will no longer be available.
Already, some very alarming misogynist noises are coming out of parts of US society. Women should be very worried about where that is leading. I am expecting hardline political freaks to be elected in tough times, and in the US I expect those to be of the fire-and-brimstone variety likely to impose strict ‘morality’. To me that is terrifying. A century or more of cultural progress could be wiped out. In tough times, the strong tend to take out their frustrations on the weak, who may have no choice but to bear it. In fundamentalist places like Iran, clerics have been known to blame earthquakes on scantily clad women. This is the kind of spurious connection people make in hard times, when magical thinking comes to the fore. In such times people are far more prone to believing such things, or at least not daring to argue. Domestic violence is also endemic in poor places living on the edge. Access to justice and redress is sadly a function of wealth.
Working to build community while that can still be done may reduce the impact of some of these larger trends, at least in places. It is urgent that we do so, because it takes time and we have relatively little of that left. If we do not, the future will be dystopian indeed.
Thanks 🙂 That’s pretty much what I was going for – looking at expansion and contraction objectively as phenomena that transcend the personal, or even the institutional, so that blame is pointless. All we can do is to look at where we are in the cycle and work with it as constructively as possible. Anger is corrosive, and collective anger even more so. Angry populations to terrible things to their fellow human beings. There is nothing to be gained this way, and a great deal to lose.
kcl6750,
I wouldn’t write off the US dollar any time soon. I think it has a long way to go to the upside. The Swedish krona could do relatively well too, as a safe haven for capital flight from the eurozone. My worry for Sweden is that a sharply rising currency, combined with weakening demand, will kill their manufacturing sector. All exporters face this scenario. Trade dependency is dangerous at this point.
As for the Swedish banking crisis, that occurred in isolation. Resolving it cost Sweden about 4% of GDP and they moved on. Today, however, they have a huge housing bubble, debt to GDP of some 350% and a major export dependency. Sweden is in trouble going forward.
davefairtex,
I think the spreads are going to blow out over the next few months. Spreads wax and wane, reflecting the tug-of-war of greed and fear, as if collective psychology were inhaling and exhaling over time. The apparent taking off of pressure is a temporary suspension of disbelief in the powers of the ECB, while hedging bets in the form of continued capital flight to the core. When that suspension of disbelief ends, the spreads will widen again. This time I am expecting record spreads to develop since the ECB already used the ‘unlimited’ word and has no back up plan for when the market calls its bluff this time.
Viscount St Albans,
Prepping is big in the UK. See https://www.dailymail.co.uk/news/article-2240239/Armageddon-houses-Brit-preppers-stockpiling-food-weapons-preparation-end-world.html
I agree with your comment. I worry that warning people will become seen as dangerous and that those who wither warn or prepare will be demonized. This is one good reason to prepare as a community rather than alone. Solo preppers are far more likely to be targeted by the neighbours they left behind.
Psychology will be a crucial factor in what’s coming. Things will be twisted in the blame game in order to target specific groups of people. Magical thinking will become more and more common, so that spurious connections will seem more plausible and baseless slurs will be more likely to stick. This will be a time of psyops. We will be dealing with the dark side of human nature. All the more reason to do everything we can to deprive movements of anger and fear of support and keep our focus on the constructive. The alternative is probably a period of brutal totalitarianism. Think 1984.
Chrissie,
The expansion phase of a bubble artificially stimulates demand. People have more purchasing power (credit), so they demand additional goods and services. Other people set up businesses to supply those goods and services. When the expansion ends, credit is no longer available, so the stimulus disappears. Not only do we see no new business creation or growth, but as credit contracts, the existing businesses have to compete for sharply reduced demand (on the withdrawl of credit). A wave of consolidation ensues as there is too little demand to go around.
This is only the beginning for larger scale contractions though (as opposed to mere business cycle recessions). In larger contractions, credit can almost disappear, and asset price collapse. The leveraged bets placed on asset price appreciation go bad and go into default. The money supply (money plus disappearing credit) contracts sharply. Demand for everything falls very sharply.
For a period, there is almost no demand at all, so many suppliers go out of business. We see negative growth, falling asset values and falling demand for many years. Even the price of essentials is likely to fall initially, as people lack the money to purchase them and demand for them falls (temporarily).
We had 30 years of demand stimulus, and we can expect (IMO) at least 10 years of demand contraction, and quite possibly longer (although I would expect fluctuation and cycles with that overall contraction). A demand undershoot is on the cards – ie demand decreases at least to below what it was when our expansion began in the early 1980s.
William,
I don’t see it that way at all. Bankers are not far-sighted perceivers of oil fundamentals. Most haven’t got a clue about energy issues. They are trying to make money today. They follow trends, not lead them.
Oil is not the primary driver to the downside – finance is, because finance is the operating system, and because changes in finance unfold so much more quickly than changes in the real economy.
In the 1930s we experienced a credit crunch even though oil (and everything else) was abundant at the time. This time the larger credit crunch will be exacerbated by resource shortages, but not immediately. For a while money will be in shorter supply than oil.
davefairtex,
The point of the interest rates graph was really to look at trends – supposed risk equivalence that subsequently broke down. Spreads will expand and contract over time, depending on whether people are optimistic or pessimistic. At times of relative optimism, spreads narrow, and at times of heightened fear they blow out. I am expecting them to blow out again in the not too distant future.
There are different risk distinctions at play – core vs periphery of the eurozone, inside vs outside the eurozone, long term vs short term etc. I am expecting all these spreads to increase as the crisis deepens. Places perceived to be relative safe havens (like the US) end up being bought some time under this dynamic, while places perceived to be at most risk will be eaten alive by it.
I didn’t ask for a donation, it was another commenter making that suggestion. Please don’t feel pressured.
I find that the uncertainties have been understated rather than overstated. We don’t know how many feedback loops there are, or how they interact. We don’t know if we’ve passed a tipping point with regard to any one of them. We are having effects not just on CO2, but also importantly on methane and water vapour. We don’t understand the cloud distribution effect that comes with water vapour changes.
In the past, major climate disruptions appear to have been primarily methane feedback loop related. We don’t know if this is part of a cycle of natural forcings. There clearly is such a cycle, since we have seen major fluctuations predating our influence as a species, but we don’t understand it at all. Therefore we don’t know where we may lie within it, and whether it might be accentuating or diminishing AGW. Previous methane events are not reassuring, to put it mildly, as they lead to mass extinctions.
We don’t really understand global dimming either, but we do know it’s having the effect of reducing incident solar radiation substantially. This may or may not be a result of geo-engineering. We know that three days without planes in the air after 9/11 made a noticeable difference.
What we do know is that the climate system is highly non-linear, so we simply can’t make linear predictions from CO2 levels to temperature changes. As you point out, the models have consistently underestimated the observed effect. I have very little faith in the models. We could easily be looking at a worse scenario, but we honestly don’t have enough information to make accurate predictions, especially in the light of the huge changes to economic activity and human behavioural response that are coming.
None of the top-down ‘solutions’ will have any positive effect. In contrast, they will probably make things worse by generating more hot air and more ponzi financialization. I see no need to encourage any of them for that reason.
What works are small scale initiatives in the aggregate, and I very much encourage those. I just don’t do it with climate mitigation as the stated goal, because framing issues in global terms is disempowering. We need to shift our focus to the local scale. That is where the real solutions lie, whether we talk about finance, energy or climate. Anything else is pretty much a waste of time and energy, or worse, counter-productive.
Kiwipoet,
We simply can’t say that any specific event is or is not a result of climate change. Climate science is probabilistic. The probability of a Sandy-like event may have gone up, but direct causation still can’t be drawn.
I think there is clearly a cycle of natural forcings, since substantial variations have been occurring for much longer than we have been having any effect. We don’t understand this element and do not know where we lie in this cycle. Any effect humans have could either be accentuated or muted by such a cycle, but we do not know the net effect.
Nor do we understand the extent of global dimming, the residence time for particulates in the atmosphere or the impact of coming finance/energy changes on emissions of greenhouse gases or particulates. We know CP2 has a long residence time and particulates have a short one, but do not know where the net effect will lie as we move into major changes.
We also do not know where we lie in relation to tipping points and spirals of positive feedback. We know they exist and can be very powerful, but again have no idea of the net effect of different feedback loops. We do know the system is highly complex and non-linear, so we can certainly say that predictions of a linear relationship between CO2 and temperature cannot be drawn. Reality is far more complex than that.
Climate science is far more complicated than most people think, and the existing models do not factor in vital elements. We don’t know nearly as much about it as we think, and our ability to make specific predictions in the face of this uncertainty is shaky. This is another reason I rarely discuss the issue. As soon as I open my mouth I have to spend a very long time explaining the complexity involved.
Geo-engineering isn’t really common knowledge, so I would have no way of knowing who is and is not aware of it. Besides, replies here are for more than just the person who asked the question. Some lurkers may know and some may not.
I still think that relocalization and decentralization measures are the best way forward on this issue, as with finance and energy. These are more motivational due to scale and immediacy. I answer questions on climate change in all its complexity if people ask at my talks, but I don’t find raising the issue in the talk itself very helpful. Maybe I’ll write a piece on it for TAE one day.
Kiwipoet,
How would a discussion of climate change have added to this article? The point was to deal with preparation for disasters given that disasters of all kinds will happen and are only probabilistically predictable. This was not meant not be about storms specifically, but to address resilience and preparation for whatever may be thrown at us.
Not couching my arguments in terms of climate is a deliberate choice. IMO the best way to get people to do something about climate change is not to address it directly. If people’s focus is climate they are thinking at a global scale that is disempowering, and will be imagining that they have far more time than they actually have to prepare. It is a recipe for inaction.
Contrast that with making the same argument in terms of financial crisis and peak oil, which are far more immediate and personal. Many of the same actions need to be taken either way, but presenting the need for them in financial and energy terms means people are far more likely to actually do something. That something will most likely have direct or indirect benefits from a climate perspective as well.
Climate discussions typically focus on global top-down initiatives, such as government policy or large scale projects. These are destined to fail. All of them. Not only will they fail, but they will make matters worse in the meantime, and will therefore be counter-productive. There is nothing to be gained from such a top-down approach. What matters is people’s behavioural response, from the bottom up. The aggregate of behavioural change is what delivers benefits.
I am very concerned that too strong a climate focus will lead to large scale interventions along the lines of geo-engineering (google it – very scary stuff). Humans would generally rather continue business as usual and deploy some techno-fix to deal with the consequences than to change behaviour in a way that matters. Governments are already doing this, and the potential for large unintended consequences, and quite possible perverse, is significant. This is the kind of thinking that goes into top-down solutions, and it leads nowhere good. Some people will make a lot of money in the short term by doing such things while the underlying problem will get worse. That kind of thinking is what got us into trouble in the first place.
I encourage relocalization, decentralization, small scale, resilience, reduced dependencies, simplicity, community, flexibility and emergency preparedness. This is what we need to do for reasons of financial crisis and peak oil and climate change, and a host of other factors arising from reaching limits to growth. Climate is not ignored here, even though it is not specifically addressed.
It’s harder for people to find topics that are only in the forum, rather than linked to an article on the front page. It’s a good article to share more widely. Perhaps one of us will have a chance to write a piece for the front page on the topic at some point. Forced labour is going to get so much more common in the future, as human slaves replace disappearing energy slaves. There are so many people compared to the jobs and resources we’ll have in the future that life is sadly going to get very cheap. In the old days of slavery, a slave was an expensive investment and therefore not expendable. I hate to think what might happen to a new generation of slaves that are cheap and expendable.
Sadly I agree that many existing plants will end their days catastrophically when we can no longer control them. Station blackout is a major risk for reactors – at the heart of both Chernobyl and Fukushima.
SteveB,
What I want to do is to organize and categorize the primers, so all the finance ones (and other topics) are together and in some kind of logical progression. That way newbies have somewhere to start with where our worldview is coming from. To us and our long term regular readers it’s old hat, because we’ve been saying the same things over and over again for a long time, but to new people it can be confusing, overwhelming and impenetrable.
Also, there are some important primers that aren’t in the new primers section yet. I need to go through things to make sure everything that should be there is there.
Finally, some primers really need to be rewritten and updated. I’m hoping to get to some of this in December, as I’ll be in one place for the whole month. It’s a question of finding the right balance between doing administrative and presentational things versus creating new material to keep up with what’s going on.
Things are about to get exciting (and not in a good way) IMO, so there’s going to be a lot to write about.
