Sep 132021
 September 13, 2021  Posted by at 12:30 pm Finance Tagged with: , , , , , ,  21 Responses »

Thomas Cole The Course of Empire – The Arcadian or Pastoral State 1834



This essay is from longtime and very dear friend David Holmgren, guru/founder/apostle of permaculture, who says:

“Your constant work has help kept me informed through the roller coaster.




David Holmgren:

As the pandemic rolled into its second year, I became concerned that the psychosocial fallout of the pandemic, and especially the response at the global and local levels, could represent an existential threat to permaculture and kindred movements. At one level, this threat is the same as that to families, workplaces, networks and organisations more generally, where a sense of urgency to implement the official response, especially lockdowns and mass vaccination, is producing a huge gulf between an ever more certain majority and a smaller minority questioning or challenging the official response.

My aim in this essay is to focus on the critical importance of using all our physical, emotional and intellectual resources towards maintaining connections across what could be a widening gulf of frustration and distrust within our movement, reflecting society at large. I want to explore how permaculture ethics and design principles can help us empathetically bridge that gulf without needing to censor our truth or simply avoid the issues.

While the pandemic and the responses to it will pass in time, I believe the future will be characterised by similar issues that test our ability to tolerate uncertainty and diversity and to thus exercise solidarity within kin, collegiate and network communities of practise.

International Permaculture Day May 2013 Daylesford Community Garden

Future Scenarios and the Brown Tech future

The positive grounded thinking that characterises permaculture has always been informed by a dark view of the state of the world and long-term emerging threats. Future Scenarios is my 2008 exploration of four near-future ‘energy descent’ scenarios driven by the variable rates of oil and resource depletion on the one hand and rate of onset of serious climate change on the other. Six years later, I wrote the essay ‘Crash on Demand: Welcome to the Brown Tech Future’ where I ‘called’ Brown Tech as being the already emergent scenario.

In the longer version of this ‘Pandemic brooding’ essay, I review and reinterpret this work in light of the pandemic and responses to it.

Permaculture pluralism

Anyone involved in permaculture knows that permies can come to quite different conclusions about what is the most ethical and practical solution to the same problem. For example faced with marauding wildlife, some will go to considerable expense (and resource consumption) building elaborate fences, anti-aviaries and other deterrents to separate wildlife from food. Others will treat the wildlife as another abundance of the system to be harvested. Various permaculture principles, as well as the fundamental ethic of Care of Earth, might be invoked to support both approaches.

Likewise, many permies believe taxation is essential to redistribute resources from places of abundance to those of scarcity and as an expression of solidarity essential to any functioning, let alone ethical, society. Others see almost all the expenditure by governments of tax revenues as representing rape of Mother Earth’s abundance and theft from Indigenous peoples, and further as either downright evil or at best a bandaid covering festering wounds. An ethical response is to minimise taxpaying (by reducing income and consumption). Again, design principles and ethics can be invoked to support either position.

From my perspective, grappling with the ethical and systemic issue is more important than the notion that there might be a correct answer, and therefore a wrong answer, to the challenge. In the past, there have been heated debates, and agreements to disagree, but rarely would participants in permaculture design courses, convergences or networks see the answers of others as reasons to reject permaculture. Many celebrate personal actions as small-scale experiments with their good, bad and interesting outcomes informing other experiments, especially the next generation’s, as we muddle through energy descent to hopefully more benign, or at least less-bad, futures.

Pandemic flavoured Brown Tech

I believe the pandemic and the responses to it represent a major turning point in crystalising the Brown Tech future. It ticks so many boxes:

  • a nature-driven crisis which has been long predicted, and to some extent, planned for
  • rolling uncertainty that progressively breaks down past expectations
  • a crisis which, like a war, requires the suspension of normal economic activity, personal rights and governance processes
  • a demand for strong action by government for the common good informed by science
  • a revival of Keynesian policies including a massive increase in government debt
  • an enemy (the virus) that can be easily demonised without there being too many defenders to ignore or silence
  • strong censorship of broadcast media and novel efforts to censor social media to sideline debate that could undermine the rapidly emergent and evolving program.

If the crisis is not solved, then demonisation progressively shifts to those resisting the plan.

This situation is creating the fork in the road where some permies will find themselves (perhaps surprisingly) following the program, while others will have become certain that they will at least quietly resist complying to some degree or other, right up to a radicalised public resistance, whether that be through resigning from work, street protest or satirical art.

We can learn and gain, individually and collectively, from these increasingly divergent paths – but the learnings could be painful. Let’s consider the benefits that might have led permies down one or another path, perhaps unwittingly, to increasingly polarised positions.

The mainstream plan

Although there are differences of emphasis and policies around the government responses to the pandemic, these debates are around the margins, even if they are at times heated. Most fundamentally, the mainstream plan, informed by the scientific and medical establishment, takes the following as self-evident:

  • The virus is an existential threat to society that must be contained and disarmed if not eliminated before an establishment of some hoped-for, tolerable new normal.
  • Social distancing, disinfectant cleaning, testing, contract tracing, masks and various levels of quarantine, border controls and lockdowns are the only mechanisms available to prevent collapse of the health system and deaths escalating to horrific levels in the short term.
  • Novel vaccine technology is the only real hope for a tolerable new normal.
  • To achieve effective herd immunity and minimise death, some great majority of the adult population and probably children need to get vaccinated as soon as possible.
  • The adverse effects of these provisionally approved vaccines are minor and/or rare and much less than the risk of the disease.
  • Preventative and early treatments are at best of marginal value, or more likely based on false hope and fraud.
  • The suspension of normal civil liberties is a necessary, albeit temporary, measure to achieve the plan in a timely fashion and reduce the suffering both from the virus and the plan itself.
  • People who actively resist the plan need stronger social, economic and, where necessary, legal sanctions to ensure their actions don’t prevent the plan from working for the common good.
  • Apart from debate around the margins about how best to respond to these givens, debate and questioning at the level of science, logistics, economics, law, politics, media and social media is not just unnecessary, but an existential threat to the plan and society at large, so must be prevented by unprecedented means.
  • It is the responsibility of every citizen to play a part in the plan, be bold in convincing those who are hesitant, and challenging those not following the plan, especially those actively resisting it.

Permies following the plan are likely to see themselves as being part of a society-wide collective effort to minimise pain and suffering in the aged, the disadvantaged and those in poor health; a choice in favour of collective and longer-term gain at the cost of individual and short-term sacrifice. For many of us, this is a perfect metaphor for what is needed to address the climate emergency. By accepting what appears to be a broad consensus of global, national and local medical and scientific experts, we avoid the protracted debate and lack of a technical consensus that has stymied governments in initiating strong action to address the climate emergency.

For permies in despair about the waste and dysfunction of the consumer economy, the closure, albeit temporary, of many discretionary services and businesses is a taste for how we might need to decide what is important; maximum consumer choice for the affluent versus the provision of basic needs for all. The personal sacrifice and adaptation to difficulties, including stay-at-home lockdown, have been opportunities to focus more on the important things in life and get a taste of what social solidarity feels like.

Reports of contrarian views seem to mostly come from sources contaminated by association with climate denial and other views we categorically reject. The resisters’ outrage looks to many like just more selfish, science denying and ignorant right-wing rednecks, trying to prevent collective wisdom and social solidarity from working. Familiar powerful bad players in global corporations or nation states have been replaced by much more immediate angry undesirables, who without much power or vision, could wreck the hard work of the collective to create a workable new normal.

The dissident view

It is more difficult to generalise about those who question or reject the program. A great diversity of views, explanations, feelings and actions flourish in an environment of unprecedented censorship. While there is great sensitivity about the term ‘censorship’, let alone ‘propaganda’ by those supporting the plan, for those on the other side, it is astonishing how rapidly the axe has fallen on enquiry, and debate, in the mainstream media, social media, workplaces and families, let alone in defence of what – until very recently – most of us took as our inalienable rights.

For many permies, the pandemic seems another example of hyped threat like the ‘war on weeds’, ‘war on drugs’, ‘war on terror’ used to manipulate the population to comply with some version of disaster capitalist1Disaster capitalism feeds off natural (climate change) and other disasters to provide recovery and reconstruction services funded by the public that typically benefit the corporate providers and contribute to ongoing dependencies. The term was used by Naomi Klein to describe the evolution of late stage capitalism over recent decades. solutions. Most sceptics acknowledge the virus as real, but not as dangerous as the cure in lockdowns and other draconian measures. The ‘war on the virus’ seems just as futile or misguided as all the other wars on nature, substances and concepts. So much for trying to have nuanced discussions about viruses as an essential and largely symbiotic mechanism for the exchange of genetic material and mediation of evolution!

While the closure and loss of cafés, gyms and hairdressers might not be a great loss, except to those directly affected, many of us have noticed that the official response to the pandemic tends to follow a pattern of support and strengthening of dominant corporations while leading to the weakening and likely collapse of small business and community self-organised activities.

During the first lockdown, ‘stay at home in your household’ was celebrated as a great plus for people getting the RetroSuburbia message. More recently, the messaging about the problem of shared and multi-generation households being suspect has been building, especially in the working-class western suburbs of Sydney and Melbourne where many of essential and less well paid workers live. We have shifted from a joke about ‘which permie created the pandemic?’ to a gritted teeth recognition that the response to the pandemic is working to vacuum people into another level of dependence on techno-industrial systems.

Many permies have taken advantage of the shift online to network more effectively around the country and the world, but we are deeply troubled by our increasing dependence on mediated experiences and what seems like draconian regulation of informal engagement with people and nature. The concerns for what this is doing to children are far more serious than the loss of the regulated version of social interaction that children get at school.

For many of us, it is completely natural to be sceptical about one big fast answer provided by the giants of the pharma industry, while they have been granted legal immunity for the consequences of their novel products.. Many have made the rational assessment that the very low risks of the virus (for most of us at least) seem better than the unknown of a novel technology approved and pushed on a frustrated and frightened population in record time. Some in this camp were sceptical about vaccines in general but most have been influenced by the largely censored views from some leading global experts, that these vaccines are in a totally different risk category to all previous vaccines.

While waiting and seeing what happens next may look selfish to the majority, the difficulty in getting access to data and unbiased interpretation drives many to rely on their gut feelings. One or more examples of spin and manipulation of data by officials, and especially the media, leads to a general collapse in trust about any, and even all, aspects of the official story. For instance:

  • Many of us have seen evidence that existing low cost and low risk treatments are available and used effectively in some countries resisting the ‘no available treatment’ orthodoxy.
  • Most understand that while the vaccines seemed to give some protection from more severe effects at least in the early stages, they do not appear to stop transmission, at least of the latest variant.
  • Many wonder why the build-up of natural immunity from prior exposure to the virus is not considered as part of the solution that should at least be discussed before vaccine passports are implemented.

Concerns about more serious adverse effects of the vaccines, as predicted by some experts, have developed into alarm, anger and resistance as both the evidence increases and efforts at cover up and spin become worse. Extreme consequences that many of us dismissed early on as highly unlikely are now showing up in hard-to-read scientific papers, clinical reports and official records and databases.

A similar process has happened with the official responses. For example vaccine passports are now widely discussed and debated as part of the attempt to get as many people vaccinated as possible, as the efficacy of vaccines falls and concerns about adverse effects lock in resistance by a minority. At the start of the pandemic this possibility was decried as paranoid conspiracy theory.

France has been leading the charge to impose vaccine passports for many public and work spaces including hospitals. It’s hard to assess how large the resistance will be in different countries and circumstances but there are already signs that whole industries will lose a significant part of their workforce as some substantial minority of the population withdraw their work, consumption and investment in the system rather than getting the vaccine. Whether by design, policy stupidity or the unexplained viral power of censored scientists and vaccine doubters to overcome the largest public health education/public relations/propaganda effort in history, it is conceivable that the result could be economic contraction on a much larger scale than has occurred as a result of lockdowns so far.2 I can’t help but see what is unfolding as a bizarre version of my ‘Crash on Demand’ scenario

Economic contraction could mostly be in the discretionary economy, but how would the health system cope with a loss of staff, especially if some combination of ineffective vaccines against new strains and antibody-enhanced disease lead to medically informed people losing faith before the general public? Part of the solution might be doctors and nurses from overseas,3In the week since I wrote this sentence, doctors from overseas are now part of the plan for Australia or the adoption of treatment options for Covid currently being used with success in countries like Mexico and India.

Australia and New Zealand seem to be something of a test bed for the most authoritarian regulations in an attempt to keep Covid as close to zero as possible (and failing). Large numbers of people in other countries see us as a police state and wonder why there hasn’t been more resistance Down Under.

Some of us have noted plans promoted by the World Economic Forum for a Global Reset that will require a command economy to respond to the climate emergency, and that the pandemic is an opportunity to implement some of the structures and processes needed to create what some fear is a global new world order.

For many people, the trajectory from trust to mistrust often leads to either deep depression or an energised anger, mostly focused on the authorities but often expressed to friends and family at great cost to all concerned.

Although I have some of those thoughts and feelings, I mostly feel a great tension between a deep and somewhat detached fascination with the big picture and the sense of urgency I habitually feel in spring to get fully cranking with the seasonal garden and generally keeping our home at Melliodora shipshape. I feel like I finally have a box seat to watch the train of techno-industrial civilization hitting the Limits to Growth stone wall and breaking apart, all in slow motion.

The rapidly evolving situation and all its psychological, sociological and economic dimensions suggest an expanding field of possibilities. These could include:

  • a cyber pandemic that crashes the global financial system,
  • a short war between China and the USA4Part of my ‘A History from the Future’ story happening in 2022
  • rapid reduction in consumption of oil and other critical resources and consequently greenhouse gas emissions as a result of the virus,
  • plus of course accelerating climate disasters.

In different scenarios, concern about the virus and the ability to implement the plan could become ever more intense, or alternatively, be shunted offstage or metasatised into dealing with the next crisis. Consequently, the details of what worked, what didn’t, who takes the credit and who gets the blame, would probably all be lost in the swirling muddy waters of compounding crises.

A personal view of the pandemic

Up until this point, I have not indicated my personal interpretation of either the virus or the response because I wanted to focus on the bigger systemic drivers without getting muddied in the good/bad, right/wrong, us/them polarities. However we all have to face what life throws in our path with whatever internal and collective resources we have at hand. As is my lifelong habit, I have done my own ‘due diligence’ to understand and guide my personal decisions. In the past I have always been open about my conclusions and decisions, whether around the campfire or on the most public of forums. I have often joked about the comfort I feel in being a dissident about most things including being beaten up at primary school in the early days of the Vietnam war for being a ‘commie traitor’ to being ostracised in the 1990s for opposing the ‘war on weeds’ orthodoxy of the environmental mainstream. But today being a dissident is no joking matter. Unfortunately the psychosocial environment has now become so toxic that the pressures to self-censor have become much more complex and powerful. Much more is at stake than personal emotions, ego, reputation or opportunities and penalties.

Following my instinct for transparency, I will state my position, which has been evolving since I first started to consider whether the novel virus in Wuhan might lead to a repeat of the 1919 flu pandemic or even something on the scale of the Black Death. I can summarise my current position and beliefs as follows:

  • The virus is real, novel and kills mostly aged, ill and obese people with symptoms both similar to and different from related corona viruses.
  • It most likely is a result of ‘Gain of Function’ research at Wuhan Institute of Virology in China supported by funding from the US government.
  • Escape rather than release was the more likely start of the pandemic.
  • Vaccines in use in western world countries are based on novel technology developed over many years, but without resulting in effective or safe vaccines previously.
  • The fear about the virus generated by the official response and media propaganda is out of proportion to the impact of the disease.
  • Effective treatment protocols for Covid-19 exist and if those are implemented early in the disease, then hospitalisation and deaths can be greatly reduced, as achieved in some countries that faced severe impacts (especially Mexico and India).
  • The socioeconomic and psychosocial impacts of the response will cause more deaths than the virus has so far, especially in poor countries.
  • The efficacy of vaccines is falling while reported adverse effects are now much greater proportionally than for previous vaccines.
  • The under-reporting of adverse events is also much higher than for previous vaccines, although this is still an open question.
  • The possibility of antibody dependent enhancement (ADE) leading to higher morbidity and death in the future is a serious concern and could be unfolding already in countries such as Israel where early and high rates of vaccination have occurred.

Given the toxic nature of views already expressed about (and by) people I know and respect, I am not going to engage in an extensive collating of evidence, referencing who I think are reliable experts and intermediaries who can interpret the virus, the vaccine or any of the related parts of the puzzle. Outsourcing personal responsibility for due diligence to authorities is a risky strategy at the best of times; in times of challenge and rapid change the risks escalate. I do not want to convince anyone to not have the vaccine, but I do want to provide solidarity with those struggling (often alone and isolated) to find answers, so the following are two starting points that I think could be helpful:

As a healthy 66-year-old I am not personally afraid of the virus, but if greater virulence and death rate do emerge with new variants, I might consider the preventative regimen recommended by the FLCCA doctors. There is no way I will be getting any of the current vaccines in the foreseeable future, no matter what the sanctions and demonisation of my position on this matter.

At this point there may be readers who decide to ignore anything and everything I have written as obviously deluded. These are the costs of transparency.

Valuing the Marginal

Tolerance, let alone celebration of diversity, is not the easy permaculture principle many of us assume. Valuing the marginal can be even harder, especially if we study the darker periods of human history.

Over most of history, minority ethnicities and subcultures lived in ambiguous complementarity with dominant majorities. For hundreds, if not a thousand, years my Jewish ancestors made valuable contributions to European culture while managing to maintain their own culture to an extraordinary extent. They lived in ghettos not just for protection from the eruptions of intolerance in the dominant Christian communities but to ensure their language and culture wasn’t swamped by that of the majority. While the Jews carried the elitist belief that they were God’s Chosen People, they didn’t attempt to gain converts and were naturally respectful to the majority Christians. They survived through all but the worst of antisemitic pogroms by not antagonising the majority, largely accepting the restrictions placed on them by society. What else could they do?

Similar dynamics could emerge from the virus and the vaccine, where a subculture of home birth, home education, home food production and alternative health brings together people of previously diverse subcultures, including permies, who are excluded from society. That exclusion will seem self-inflicted to the majority, but for those excluded it will feel critical to both survival and identity.

Is it sensible to plead for tolerance in line with sensitivities to the rights of other minorities? Or is that just an invitation to be stoned to death, if not literally then virtually, on social media?

Unfortunately one of the weaknesses of western culture, which shows up in both Christian and Muslim traditions, is the idea that if a particular path is the correct one, then everyone should follow it. From the perspective of east Asian philosophy and many Indigenous traditions, harmonious balance is more important than the right way. The yin yang symbol showing each polarity containing the seed of its opposite encapsulates this critically important antidote to the recurring western theme about the triumph of good over evil. In The Patterning Instinct Jeremy Lent explores how these different world views have shaped history and that any emergent ecological world view will foreground the importance of harmonious balance.

The wisdom of the collective

I want to lead by example in trying to understand and articulate why it is good that the majority of the population appears to be strongly behind the official plan and that maybe it is even good that a majority of my permaculture colleagues might be lining up to get vaccinated, when I have no intention of doing so.

Firstly, I acknowledge the obvious reason that if the official story is right, the majority getting vaccinated will combine with naturally acquired immunity and control the worst effects of the virus without the need to get every last dissenter vaccinated.

Secondly, given the pressure to push the vaccination rate in every way possible, encouraging some extra hesitators to resist will only increase the pressure and possibly lead to harsher sanctions as well as more broken family relationships, reputations, pain and suffering, which could be worse than potential adverse effects of the virus, or the vaccine, on those people.

Thirdly, because so many people I respect as intelligent and ethical are following the plan, I won’t fall into the trap of losing respect for who they are, what they have done and what else they might do in the future. And if it turns out this is the start of a more permanent hard fascist command state, then we need people of good values on the inside to keep open whatever channels of communication remain possible.

As systems unravel, the stories that make sense of the world also fall apart and in the desperate search for mental lifeboats, different stories come to the fore. The mainstream story around the pandemic is one such mental lifeboat that allows people to maintain faith and function. Without the renewed source of faith and order from rational science guiding technological wizardry, the psychosocial shock from a pandemic could be enough to create social, economic and political chaos on a historically unprecedented scale, at least in long-affluent countries like Australia.

Whatever the nature of the next crisis, I think it will require citizens to by and large accept that the behaviours, rights and freedoms we took for granted are artifacts of a vanishing world. Further, it will provide a harsh reality check on how dependent most of us are on systems we have no control over, so most will find they have little choice but to accept the new state of affairs.

While I might resent what I see as unnecessary sanctions on those resisting, I accept than in the early stage of Brown Tech energy descent, harsh and by some perspectives, arbitrary, controls on behaviour will be part of our reality and are arguably necessary to maintain some sort of social order (even if short-sighted or not sustainable in the long run). My aim is to focus on how we ameliorate the adverse effects of a predicament that humanity cannot escape.

More philosophically, the virus and the response to it could be seen as a meditation practise showing us how no one is an island separated from the whole of life. To break down the toxic notion that we are free agents to do as we choose without consideration of consequences, especially for future generations and the wider community of life, is something permaculture teaching has tried to bring to daily life. How we do this in meaningful ways is a constant challenge.

Sympathy for the devil

Having at least had a go at seeing the good in the mainstream plan, I now want to articulate quite passionately why the majority should at least tolerate and not seek to further punish the minority for their resistance. To advocate for this within the permaculture movement, I appeal to our pluralism in celebrating the diversity of action. This is especially where permies take the risk of being the unvaccinated guinea pigs, who can at least be a control group in this grand experiment on the human family. Beyond that, I hope our colleagues inside the tent will see the need to express solidarity with our right to chart our own course and not feel they have to be silent for fear of being cast out of the tent.

While I respect the younger permaculture folk following the plan for the common good, I still believe the most creative deep adaptations to the Brown Tech world will be crafted at the geographic and conceptual fringes by younger risk takers coming together in new communities of hope. While the paths to the armoured centre and the feral fringes both have their risks, those on the inside, especially older people, should accept that the young risk takers on the fringes might create pathways though the evolutionary bottleneck of energy descent more effectively than the best resourced and rationally devised plans from within the system of thinking that has created the civilisation crises.

Whether or not the pandemic will lead to the flowering of creative light-footed models for adaptation, the larger energy descent crisis for which permaculture was originally designed (that most permies recognise as the ‘Climate Emergency’) needs these responses at the margins. If the permaculture movement cannot digest this basic truth and at least defend the right of people to craft their own pathways in response to collapse of all certainties, then our movement will have failed the first great test of its relevance in a world of energy descent.

Some permie dissidents will double down in their focus on preparation to survive and thrive in spite of the sanctions, while others will be energised by non-violent direct action to resist what they see as draconian and counterproductive collective punishment. In doing so they may draw on past experience, or inspiration, from the frontlines of anti-war, environmental defence and free communication resistance.

In the past, more apolitical permies trying to introduce permaculture to socially conservative punters could still acknowledge, at least privately, the element of truth in the quip ‘permaculture is revolution disguised as gardening’. In today’s climate, can permies inside the tent accept and appreciate their colleagues on the frontlines of a new resistance movement that might moderate the extremes of how society navigates the larger climate emergency? Or will they flip and decide permaculture was, after all, mostly hippy nonsense now further contaminated with toxic right wing conspiracy madness, so must be dumped as unfit for purpose in our new world?

In saying this, I’m not suggesting we should all follow suit, let alone belittle or demonise those who don’t take the walk on the wild side. That would also be a contradiction of permaculture ethics and design principles. As we have always taught, ethics and design principles are universal but rarely lead to clear and conclusive solutions. Strategies and techniques vary with the context; wonderful elegant design solutions for one context can be hopeless white elephants, or worse, in another. Context is everything and as colleague Dan Palmer has so effectively applied in his Living Design Process, the people context is as complex, subtle and diverse as that of the land and nature.

The sovereignty of persons to choose freely how they grapple with the tension between autonomy and the needs of the commonwealth is not just an ideal from western Enlightenment civilisation working out how to apply the gift of fossil fuel wealth. It is a fundamental expression of how the ecology of context is constantly shifting, and that all systems simultaneously express life through bottom-up autonomy of action and top-down guidance of collective wisdom.

In times of great stability, the distilled wisdom of the collective, embodied in institutions, carries human culture for the long run. Sometimes the sanctions on the individuals who rejected the rules of the collective were harsh and, according to modern thinking, arbitrary but over long periods of relative stability, those rules kept society working. In times of challenge and change it is, ironically, dissidents at the fringes who salvage and conserve some of the truths of the dying culture into the unknown future to craft new patterns of recombinant culture.

What we call ‘science’ had its origins in what Pythagoras salvaged, almost single handedly, from the decadent and corrupt theocracies of ancient Egypt of which he was an initiate, before he walked away from the centre to the margins of civilisation. Major failures in the application of so-called trusted science have been a feature of our lived experience. Tragically, science could be one of the casualties as humanity passes through the cultural evolution bottleneck of climate chaos and energy descent. Permaculture was one attempt to craft a holistic applied design science grounded in observation and interaction, taking personal responsibility and accepting (negative) feedback, designing from patterns to details, and creatively using and responding to change. I still believe that salvaged and retrofitted versions of practical science crafted at the margins will serve humanity better than rigid faith in the priests of arcane specialised knowledge maintained by an empire of extraction and exploitation. Can we be sure what the father of science and mathematics would do in this time of turmoil?

Whatever the historical significance of these times, maintaining connections across differences of understanding and action within permaculture and kindred networks will strengthen us all in dealing with the unfolding challenges and opportunities of the energy descent future.

David Holmgren
September 2021




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Mar 152019

Raphael The miraculous draught of fishes 1515



There are days, though all too scarce, when very nice surprises come my way. Case in point: yesterday I received a mail from David Holmgren after a long period of radio silence. Australia’s David is one of the fathers of permaculture, along with Bill Mollison, for those few who don’t know him. They first started writing about the concept in the 1970s and never stopped.

Dave calls himself “permaculture co-originator” these days. Hmm. Someone says: “one of the pioneers of modern ecological thinking”. That’s better. No doubt there. These guys taught many many thousands of people how to be self-sufficient. Permaculture is a simple but intricate approach to making sure that the life in your garden or backyard, and thereby your own life, moves towards balance.

My face to face history with David is limited, we spent some time together on two occasions only, I think, in 2012 a day at his home (farm) in Australia and in 2015 -a week- in Penguin, Tasmania at a permaculture conference where the Automatic Earth’s Nicole Foss was one of the key speakers along with Dave. Still, despite the limited time together I see him as a good and dear friend, simply because he’s such a kind and gracious and wise man.

In his mail, David asked if I would publish this article, which he originally posted on his own site just yesterday under the name “The Apology: From Baby Boomers To The Handicapped Generations”. I went for a shorter title (it’s just our format), but of course I will.

Dave has been an avid reader of the Automatic Earth for the past 11 years, we sort of keep his feet on the ground when they’re not planted and soaking in that same ground: “Reading TAE has helped me keep up to date..”

In light of the children’s climate protests today, which I have yet to voice my qualms about (and I have a few), it only makes sense to put into words a baby boomer’s apology. To have that phrased by someone with the intellect and integrity of David should have everyone sit up and pay attention, if you ask me. And perhaps it would be good if more people would try and do the same: apologize to those kids.

Here’s my formidable friend David Holmgren:



David Holmgren: It is time for us baby boomers to honestly acknowledge what we did and didn’t do with the gifts given to us by our forebears and be clear about our legacy with which we have saddled the next and succeeding generations.

By ‘baby boomers’ I mean those of us born in the affluent nations of the western world between 1945 and 1965. In these countries, the majority of the population became middle class beneficiaries of mass affluence. I think of the high birth rate of those times as a product of collective optimism about the future, and the abundant and cheap resources to support growing families.

By many measures, the benefits of global industrial civilisation peaked in our youth, but for most middle class baby boomers of the affluent countries, the continuing experience of those benefits has tended to blind us to the constriction of opportunities faced by the next generations: unaffordable housing and land access, ecological overshoot and climate chaos amongst a host of other challenges.

I am a white middle class man born in 1955 in Australia, one of the richest nations of the ‘western world’ in the middle of the baby boom, so I consider myself well placed to articulate an apology on behalf of my generation.

In the life of a baby boomer born in 1950 and dying in 2025 (a premature death according to the expectations of our generation), the best half the world’s endowment of oil – the potent resource that made industrial civilisation possible – will have been burnt. This is tens of millions of years of stored sunlight from a special geological epoch of extraordinary biological productivity. Beyond our basic needs, we have been the recipients of manufactured wants and desires. To varying degrees, we have also suffered the innumerable downsides, addictions and alienations that have come with fossil-fuelled consumer capitalism.

It is also true that our generation has used the genie of fossil fuels to create wonders of technology, organisation and art, and a diversity of lifestyles and ideas. Some of the unintended consequences of our way of life, ranging from antibiotic resistance to bubble economics, should have been obvious, while others, such as the depression epidemic in rich countries, were harder to foresee. Our travel around the world has broadened our minds, but global tourism has contaminated the amazing diversity of nature and traditional cultures at an accelerating pace. We have the excuse that innovations always have pluses and minuses, but it seems we have got a larger share of the pluses and handballed more of the minuses to the world’s poorest countries and to our children and grandchildren.

We were the first generation to have the clear scientific evidence that emergent global civilisation was on an unsustainable path that would precipitate an unravelling of both nature and society through the 21st century. Although climate chaos was a less obvious outcome than the no-brainer of resource depletion, international recognition of the reality of climate change came way back in 1988, just as we were beginning to get our hands on the levers of power, and we have presided over decades of policies that have accelerated the problem.

Over the years since, the adverse outcomes have shifted from distant risks to lived realities. These impact hardest on the most vulnerable peoples of the world who have yet to taste the benefits of the carbon bonanza that has driven the accelerating climate catastrophe. For the failure to share those benefits globally and curb our own consumption we must be truly sorry.


David Holmgren


In the 1960s and 70s, during our coming of age, a significant proportion of us were critical of what was being passed down to us by our parent’s generation who were also the beneficiaries of the western world system, which some of us baby boomers recognised as a global empire. But our grandparents and parents had been shaped by the rigours and grief of the first global depression of the 1890s, the First World War, The Great Depression of the 1930s and, of course, the Second World War. Aside from those who served in Vietnam, we have cruised through life avoiding the worst threats of nuclear annihilation and economic depression, even as people in other countries suffered the consequences of superpower proxy wars, coups, and economic and environmental catastrophes.

While some of us were burnt by personal and global events, we have mostly led a charmed existence and had the privilege to question our upbringing and culture. We were the first generation in history to experience an extended adolescence of experimentation and privilege with little concern or responsibility for our future, our kin or our country.

Most baby boomers were raised in families where commuting was the norm for our fathers but a home-based lifestyle was still a role model we got from our mothers. In our enthusiasm for women to have equal access to productive work in the monetary economy, few of us noticed that without work to keep the household economy humming we lost much of our household autonomy to market forces. By our daily commutes, mostly alone in our cars, we entrenched this massively wasteful and destructive action as normal and inevitable.

As we came into our power in middle age, the new technology of the internet, workshop tool miniaturisation and other innovations provided more options to participate in the monetary economy without the need to commute, but our generation continued with this insane collective addiction. In Australia, we faithfully followed the American model of not investing in public transport, which moderated the adverse impacts of commuting in European and other countries not so structurally addicted to road transport. By failing to build decent public transport and the opportunities for home-based work, and wasting wealth in a frenzy of freeway building that has choked our cities, our generation has consumed our grandchildren’s inheritance of high quality transport fuels and accelerated the onset of climate chaos. For this we are truly sorry.

In pioneering the double income family, some of us set the pattern for the next generation’s habit of outsourcing the care of children at a young age, making commuting five days a week an early childhood experience. This has left the next generation unable to imagine a life that doesn’t involve leaving home each day.

These patterns are part of a larger crisis created by the double income, debt-laden households with close to 100% dependence on the monetary economy. Without robust and productive household economies, our children and grandchildren’s generations will become the victims of savage disruptions and downturns in the monetary economy. For failing to maintain and strengthen the threads of self-provision, frugality and self-reliance most of us inherited from our parents, we should be truly sorry.


Some of us felt in our hearts that we needed to create a different and better world. Some of us saw the writing on the walls of the world calling for global justice. Some of us read the evidence (mostly clearly in the 1972 Limits To Growth) that attempting to run continuous material growth on finite planet would end in more than tears.

Some of us even rejected the legacy of previous generations of radicals’ direct action against the problems of the world, and instead decided we would boldly create the world we wanted by living it each day. In doing so, we experienced hard-won lessons and even created some hopeful models for succeeding generations to improve on in more difficult conditions. That our efforts at novel solutions often created more sound than substance, or that we flitted from one issue to another rather than doing the hard yards necessary to pass on truly robust design solutions for a world of less, leaves some of us with regrets for which we might also feel the need to apologise.

These experiences are shared to some degree by a minority in all generations but there is significant evidence that the 1960s and 70s was a time when awareness of the need for change was stronger. Unfortunately, a sequence of titanic geopolitical struggles that few of us understand even today, a debt-fuelled version of consumer capitalism, and propaganda against both the Limits to Growth and the values of the counterculture, saw most of us following the neoliberal agenda like sheep into the 1980s and beyond.



After having played with the privilege of free tertiary education, most of us fell for the propaganda and sent our children off to accumulate debts and doubtful benefits in the corporatised businesses that universities became. We convinced our children they needed more specialised knowledge poured down their throats rather than using their best years to build the skills and resilience for the challenges our generation was bequeathing to them. For this we must be truly sorry.

Many of us have been the beneficiaries of buying real estate before the credit-fuelled final stages of casino capitalism made that option a recipe for debt slavery for our children. Without understanding its mechanics we have contributed to – and fuelled with our faith – a bubble economy on a vast scale that can only end in pain and suffering for the majority. While some of us are members of the bank of Mum and Dad, when the property bubble bursts we could find ourselves following the bank chiefs apologising for the debt burden we encouraged our children to take on. Some of us will also have to apologise for losing the family home when we went guarantor on their mortgages. For not heeding the warnings we got with the GFC, we will be truly sorry.

Some of us have used our windfall wealth from real estate and the stock market to do good works, including creating small models of more creative and lower footprint futures that have inspired the minority of the next generations who can also see the writing on the wall. But most of us used our houses as ATMs for new forms of consumption that were unimaginable to our parents, from holidays around the world to endless renovations and a constant flow of updated digital gadgets and virtual diversions. For this frivolous squandering of our windfall wealth we must be truly sorry.


While our parents’ generation experienced the risks of youth through adversity and war we used our privilege to tackle challenges of our own choosing. Although some of us had to struggle to free ourselves from the cloying cocoon of middle class upbringing, we were the generation that flew like the birds and hitchhiked around the country and the world. How strange that on becoming parents (many of us in middle age) we believed the propaganda that the world was too dangerous for our children to do the same around the local neighbourhood. Instead we coddled them, got into the chauffeuring business, and in doing so encouraged their disconnection from both nature and community. As we see our grandchildren’s generation raised in a way that makes them an even more handicapped generation, we must be truly sorry for the path we took and the dis-ease we created.

After so many of us experimented with mind-expanding plants and chemicals, some of us were taken down in chemical addictions, but it was dysfunctional and corrupt legal prohibitions more than the substances themselves that were to blame for the worst of the damage. So how strange that when in middle age we got our hands on the levers of power, most of our generation decided to continue to support the madness of prohibition. For this we must be truly sorry: to have seen the light but then continued to inflict this burden on our children and grandchildren. For having acquiesced in the global ‘war on drugs’ that spread pain and suffering to some of the poorest peoples of the world we should be ashamed.

When the ‘war on drugs’ (a war against substances!) became the model for the ‘war on terror’ (war against a concept!) some of us reawakened the anti-war activism of the Vietnam years but in the end we mostly acquiesced to an agenda of trashing international law, regime change, shock and awe, chaos, and the death of millions; all justified by the 9/11 demolition fireworks that killed a small fraction of the number of citizens that die each year as a result of our ongoing addiction to personal motorised mobility.

While the shadow cast by climate change darkens our grandchilden’s future, the shadow of potential nuclear winter that hung over our childhood as not gone away. Many of us were at the forefront of the international movement to rid the world of nuclear weapons and thought the collapse of the Soviet Union had saved us from that threat. Coming into our power after the end of the cold war, our greatest crime on this geopolitical front has perhaps been the tacit support of our generation for first, the economic rape of Russia in the 1990s, and then its progressive encirclement by the relentless expansion of NATO. In Australia we have meekly added our resources and youth to more or less endless wars in the Middle East and central Asia justified by the fake ‘war on terror’. For this weakness as accessories to global crimes wasting wealth and lives to consolidate the western powers’ control of the first truly global empire, we should hang our collective heads in shame.

While some of our generation’s intellectuals continued to critique the ‘war on terror’ as fake, the vast majority of the public intellectuals of our generation, including those on the left, have supported the rapid rise of Cold War 2.0 to contain Russia, China and any other country that doesn’t accept what we now call ‘the rules based international order’ (code for ‘our empire’). This is truly astonishing when looked at in the context of our lived history. Let us hope that sanity can prevail as our empire fades and future generations don’t brand us as the most insane, war-mongering generation of all time. For our complicity in this grand failure of resistance we should be truly sorry.


click to order David’s latest


On another equally titanic front, the mistake of giving legal personhood to corporations was not one that our generation made. However most of us have contributed our work, consumption and capital to assist these self-organising, profit-maximising, cost-minimising machines of capitalism morphing into emergent new life forms that threaten to consume both nature and humanity in an algorithmic drive for growth. At a time of our seniority and numbers, we failed to use the Global Financial Crisis as an opportunity to bring these emergent monsters to heel. Do our children have the capacity to tame the monsters that we nurtured from fragile infants to commanding masters?

And if they do find the will to withdraw their work, consumption and capital enough to contain the corporations, will the economy that currently provides for both needs and wants unravel completely? This is a burden so great most of us continue to believe we have no responsibility or agency in such a dark reality. We trust that history will not place the burden of responsibility on our generation alone. But for our part in this failure of agency over human affairs we apologise. Further, we should accept with grace the consequences for our own wellbeing.

Most of us feel impotent when thinking of these failures to control the excesses of our era, but on a more modest scale we have mindlessly participated in taking the goods and passing on the debt to future generations. No more so than in our habitual acceptance of antibiotics from doctors to fix the most mundane of illnesses. For our parents’ generation, antibiotics represented the peak of medical science’s ability to control what killed so many of their parents and earlier generations.

For us, they became routine tools to keep us on the job and our children not missing precious days at school. Through this banal practice we have unwittingly conspired with our doctors to rapidly breed resistance to the most effective and low-cost antibiotics. We took for granted that future generations would always be able to work out ways to keep ahead of diseases with an endless string of new antibiotics. For having squandered this gift we are truly sorry.


Further, despite the fact that some of us have became vegetarian or even vegan, our generation’s demand for cheap chicken and bacon has driven the industrial dosing of animals with antibiotics on a scale that has accelerated the development of antibiotic resistance far faster than would have been the case from us dosing ourselves and our children. For supporting this and other such obscene systems of animal husbandry we apologise to our grandchildren and succeeding generations and hope that somehow an accommodation between humanity, animals and microbes is still possible.

We experienced and benefited from the emergent culture of rights and recognition for women, minorities and the people of varied abilities, and many of us who fought to extend and deepen those rights have pride in what we did. However some of us are beginning to fear that in doing so we contributed to creating new demands, disabilities, and fractious subcultures of fear and angst unimagined in previous generations. While we might not be in the driving seat of identity politics and culture wars, we raised our children to demand their rights in a world that is unravelling due to its multiple contradictions.

In this emerging context, strident demands for rights are likely to be a waste of valuable energy that younger people might better focus on becoming useful to themselves and others. For overemphasising the demand for rights and underplaying the need for responsible self- and collective-reliance, perhaps we should also be sorry.

And is this escalating demand for rights by younger people itself connected, even peripherally, to the increasing callous disregard for the rights of others? Especially in the case of refugees, this careless disregard has allowed political elites to use tough treatment of the less fortunate to distract from the gradual loss of shared privilege that once characterised the ‘lucky country’. To the shame of those in power over the last two decades (mostly baby boomers) those policies are now being adopted on a larger scale in Europe and the US.



In our lifetimes religious faith has declined. For many of our generation, this change represents a measure of humanity’s progress from a benighted past to a promising future. But the collective belief in science and evidence-based decision making has now become a new faith, “Scientism”, which seeks to drive out all other ways of thinking and being from the public space. At the same time, religious fundamentalism is now resurgent. Is this too something that our generation unleashed by preaching tolerance while enforcing an ideology we didn’t even recognise as such?

A significant sign of the good intentions of our generation has been our recognition that the ancient war against nature, which has plagued human life since the beginnings of agriculture, and indeed civilisation, must end. One powerful expression of our efforts has been the valuing of the biodiversity of life, especially local indigenous biodiversity. In the ‘New Europes’ of North America and the Antipodes, seeking to save indigenous biodiversity has grown into an institutionalised form of atonement for the sins of the forefathers.

While this seems like one of our achievements, even this we have bastardised with a new war against naturalised biodiversity. Perhaps the worst aspect of this renewed war against novel ecologies is that we have accepted the helping hand of Monsanto in using Roundup as the main weapon in our urban and rural habitats. The mounting evidence that Roundup may be worse than DDT will be part of our legacy. While history may excuse our parent’s generation for naïve optimism in relation to DDT, our generation’s version of the war on nature will not save us from harsh judgement. For this we should be truly sorry.

Of course any public apology in this country invites comparisons to the apology by governments to the stolen generation of Australian indigenous peoples for the wrongs of the past. This unfinished sorry business is beyond the scope of this apology, but it is an opportunity to reflect critically on our common self-perception of supporting indigenous peoples’ rights in contrast to the normalised racism of previous generations.


Our generation’s invitation to, and enabling of, Australians of indigenous descent to more fully participate in mainstream Australian society may have been a necessary step towards reconciliation; or could it have been a poison chalice drawing them even deeper into the dysfunctions of industrial modernity that I have already outlined. We can only hope that people with such a history of resilience and understanding in the face dispossession will take these additional burdens in their stride.

In any case, this apology is not one that comes from a position of invulnerable privilege, giving succour to those who are no threat to that privilege. For many baby boomers, now caring for parents and dealing with their deaths, we are more inwardly focused. For some of us, especially those estranged from parents, through this both painful and tender processes we are finally growing up. But a comic tragedy could play out in our declining years if a combination of novel disabilities, the culture of rights and amplified fears lead to our children and grandchildren’s generations mostly experiencing harder times as far worse than they might really be, and deciding we are the cause of their troubles.

We baby boomers will increasingly find that in our growing dependence on young people we will be subject to their perspectives, whims and prejudices. Hopefully we can take what we are given on the chin and along with our children and our grandchildren’s generations we can all grow up and work together to face the future with whatever capacities we have.

We might hope this apology is itself a wake-up call to the younger generations that are still mostly sleepwalking into the oncoming maelstroms. In raising the alarm we might hope our humble apology will galvanise the potential in young people who are grasping the nettle of opportunities to turn problems into solutions.

We hope that this apology might lead to understanding rather than resentment of our frailty in the face of the self-organising forces of powerful change that have driven the climaxing of global industrial civilisation. Finally, the task ahead for our generation is to learn how to downsize and disown before we prepare to die, with grace, at a time of our choosing, and in a way that inspires and frees the next generations to chart a prosperous way down.



Oct 272017

Salvador Dalí White calm 1936


It’s been a while since we last heard from longtime friend of the Automatic Earth Dr. Nelson Lebo III, New Englander living in Wanganui, New Zealand. Nelson has written a fine collection of articles on this site through the years.

Of course I thought, when I first saw this piece in my mailbox, that he would have written about New Zealand’s new prime minister, Labour’s 37-year-young Jacinda Ardern, whose first action in her new job will be to prevent foreigners from buying existing homes in her country. It’ll be interesting to see how she intends to do so while remaining inside the Trans Pacific Partnership -TPP- agreement.

Radio New Zealand has a portrait in which she says ‘I Want The Government … To Bring Kindness Back’. And obviously my first thought was: wait till you meet Donald Trump. But it would be misleading to put the lack of kindness in politics on his shoulders. There’s too much blood on too many hands.

But Nelson didn’t address her this time. I hope he will soon. Instead, and I should have known, he writes about Koyaanisqatsi, life out of balance. When I wrote The Koyaanisqatsi Economy a month ago, he said he had been thinking of the same theme.

Nelson named his article “Pura Vida trumps Koyaanisqatsi”, but I thought his emphasis on volatility is too important to not be the headline. Especially given that volatility in financial markets is at a -near- record low, while it appears blatantly obvious that this not reflect the ‘real world’ at all.

Nelson’s summary of the real world: “..hurricanes, mass shootings, hurricanes, opioid epidemics, hurricanes, people sleeping in cars, hurricanes, rising suicide rates, hurricanes, and children dying from cold damp homes..”

If that doesn’t spell volatility, what does? Forget about financial markets reflecting anything real anymore. Thanks to central banks, markets are fiddling while Rome burns.

Heeeeeere’s … Nelson:



Dr. Nelson Lebo III: Volatility is the new normal – that’s the message I gave a local Rotary Club when I spoke to members four or five years ago. I had been told beforehand the group was “worldly” and specifically instructed in the invitation to challenge them with my presentation. As a weekly columnist in the city’s paper – the Wanganui Chronicle – I was widely known for my positions on wealth inequality, climate change, and debt, as well as a wide range of practical approaches to address these issues.

Around that time it was clear that a post-GFC new normal was functioning worldwide and many writers were using the term. By then The Spirit Level (Pickett & Wilkinson, 2009) had been widely read and widely praised for its documentation of the relationship between wealth and income inequality and social problems. Additionally, peer reviewed research based on decades worth of data had shown there was a quantitatively measurable increase in extreme weather events: more big storms and more big droughts.

I thought my audience would be well on board.

Judging from the response that day, however, the brief I had been given was misguided and most club members were neither expecting nor wanting a presentation that challenged the dominant paradigm of infinite growth without consequences no matter how factual. As a mid-week midday meeting with New Zealand ‘fush ‘n chups’ on the menu the message that the-world-as-you-know-it-has-changed-forever was a bit heavy for people on their lunch break.

The response that day was, of course, perfectly ‘normal’. Almost no adult human seeks out new and different worldviews. On the contrary, we are far more inclined to cling to outdated ones, à la “Make America Great Again” than to acknowledge changing realities.

Social media allows us to reverberate in echo chambers of our own beliefs where we know we’re right because the echo told us so. Social science researchers have told us this for decades. The Internet just makes it worse and more obvious.

I’ve been writing about Trump, doubling-down and the post-truth world for two years now, and if anything I am more certain of the point I’ve been trying to make: most people are irrational. Seems there’s now a Nobel Laureate who has been arguing the same for decades. Behavioral economist Richard Thaler was recently awarded a Nobel for his study of the psychology of economics, which seeks to understand how we are irrational and the impact on traditional economic theories that have failed time and again (think 2008 Global Financial Crisis) because they don’t sufficiently incorporate human factors. (Remember Greenspan’s admission?)

In no way do I intend to single out the Wanganui Rotarians, but rather use this example as illustrative for what my community, nation, and the entire world face: volatility made worse by inertia. In other words, the longer we choose to ignore inconvenient truths the greater will be their negative impacts.

This situation usually manifests in the form of tipping points . Malcolm Gladwell defined a tipping point in his debut book of the same name as “the moment of critical mass, the threshold, the boiling point.” Everything looks fine with the economy and the climate…until it’s not. And by ‘not fine’ we are talking really NOT FINE à la Greece, Puerto Rico, Houston, etc.

Tipping points is volatility on steroids. Brace yourselves.

Well-informed leaders from President Obama to Pope Francis agree the greatest threats facing humanity are climate change and wealth inequality. I’ve written extensively about both for many years yet neither appears to get much traction locally or globally. Our ‘leaders’ ignore these issues at all of our peril because the result of each is increasing volatility in many forms: social, economic, financial, political, and an increasing incidence of extreme weather events.

Volatility is not good for social order, and where I live is a perfect example of the canary in the coalmine: a coastal, river city with high levels of inequality. It’s a tipping point waiting to happen.

Some readers may remember the 1982 film by Godfrey Reggio called Koyaanisqatsi, named using a Hopi term meaning “chaotic life” or “life out of balance.” The film is unnerving, as is much of what comes via news media these days: hurricanes, mass shootings, hurricanes, opioid epidemics, hurricanes, people sleeping in cars, hurricanes, rising suicide rates, hurricanes, and children dying from cold damp homes. And then there’s Myanmar: When Buddhists become the aggressors, you know the world is well and truly out of balance.

Okay, so the world is out of balance. What can be done about it?

Our solution to imbalance, as any regular reader of our blog knows, is called “Eco-Thrifty.” This approach to design and to life is about living better on less. Seems we have good company along these lines in the form of Costa Rica, the small Central American nation that regularly tops the Happy Planet Index published by the New Economics Foundation.

Despite per capita income one quarter that of New Zealand (ranked 38th of 140) and one fifth that of the US (108th of 140) Costa Rica matches many Scandinavian countries in terms of equality, wellbeing, life expectancy and ecological impact.

As Jason Hickel of the Guardian recently put it, “Costa Rica proves that rich countries could theoretically ease their consumption by half or more while maintaining or even increasing their human development indicators.”

“The opposite of growth isn’t austerity, or depression, or voluntary poverty. It is sharing what we already have, so we won’t need to plunder the earth for more.”

Sharing is at the heart of the permaculture ethics, where it is joined by caring for the environment and caring for people. Although we practice permaculture on our farm and in our community, we’re not dogmatic about it. What drives the eco-thrifty bus is resilience accompanied by regeneration.

Resilience, in this context, is the ability to withstand a pulse. It does not happen by accident. It can be designed, built and managed. Resilience only matters 0.0001% of the time, but when it matters it really matters. Resilient homes stand up to earthquakes and hurricanes. Resilient farms stand up to major rain events and extended droughts. Resilient communities withstand economic downturns and ‘natural disasters’.

Regeneration, in this context, is about getting better, stronger, more resilient over time. Regenerative farms grow food while building soil fertility, reducing erosion, storing carbon, managing storm water, and increasing biological diversity. Regenerative communities reduce crime, domestic violence, drug abuse, and suicide rates while keeping wealth and resources circulating locally. They improve quality of life while shrinking energy use, pollution and wealth inequality.

From these perspectives Costa Rica is a good, albeit imperfect, case study. It is, however, about the best example we can find and has the data to show long-term consistently high quality of life.

Pura Vida trumps Koyaanisqatsi.



Aug 212016

Dorothea Lange Home of rural rehabilitation client, Tulare County, CA 1938


Our by now regular contributor Dr. Nelson Lebo III, the New Englander ‘lost’ in New Zealand, sent me another article, and it’s great (well, in my view). His title for the article may put some people on the wrong foot, but I think that’s alright.

I’ve been to New Zealand a few times, and Nicole of course has even moved there, so I was aware of how poorly constructed many homes are -and often made of wood-, but I’d never heard of ‘curtain banks’. Still, they exist all over the country. Turns out, lots of New Zealand homes are so damp and moldy that curtains can literally save lives, and certainly make them more comfortable/bearable. But many people are too poor to be able to afford curtains. Hence the curtain banks. I’d be curious to know if similar initiatives exist anywhere lese on the planet. Do let me know.

Nelson’s second ‘bank’ is made of/filled with water. Agriculture, in particular the one-trick pony of the dairy industry, has caused the land to deteriorate so badly that water washes off the hillsides and the land without natural barriers like trees and shrubs left to stop and naturally regulate it. In other words, there is no ‘water bank’ or ‘stream bank’ left. I really like Nelson’s comparing this velocity of water to the velocity of money in a financial system.



Dr. Nelson Lebo III: Banks…what is there to say that hasn’t already been said? If you read the Automatic Earth, if you watch Max Keiser, if you’ve followed The Crash Course, there is no comment about financial institutions I can make that would add to the critique. That’s not my gig anyway. My gig is to offer realistic, achievable, grass roots, no-excuses alternatives to the dominant neoliberal consumerist paradigm. One approach I’ve gravitated toward over the years goes by the name of permaculture.

Permaculture has been around for decades. You’ve probably heard of it but do you know what it is? Yeah, that’s the problem. My observations are that the eco design methodology known as permaculture suffers in two fundamental ways: a confusing name and dogmatic application by inexperienced converts. The name is the name – no changing it at this point – and there is no antidote for dogma. But for a general audience of readers I’d like to lay out the ethics and practice of permaculture in the clearest ways possible – by using concrete examples.


Example One: The Permaculture Ethics

When engaging with permaculture as a design methodology, practitioners are bound to follow a simple code of ethics: care for the environment; care for people; and, share surplus resources. I appreciate this ethical code because it helps distinguish a permaculturist from anyone else who may be involved in some aspect of the ‘sustainability movement’ such as an organic farmer, recycler, green builder, eco-entrepreneur or local currency advocate.

This is not to say that a permaculturist cannot engage in all of these (indeed they do), but that anyone who practices one or more than these is not necessarily engaging with the permaculture ethics. Think of large-scale organic farms in California that truck in “certified organic” inputs and ship out bags of lettuce thousands of miles to the East Coast. Not permaculture.

People may take a permaculture course or buy a permaculture book for various reasons, but these do not necessarily make them a practicing permaculturist. I like to make the point that the difference between a permaculturist and a survivalist is 100 cases of baked beans and a gun. If you ain’t sharing, it ain’t permaculture.

I also appreciate the ethics because they are an integral part of the design process. In other words, the ethics can be used to help shape a larger project. An example of this is the ‘curtain bank’ that we recently opened in our community.



Those unfamiliar with curtain banks can be forgiven as many developed countries around the world have decent standards for housing that include high performance windows and central heating. But most of the New Zealand housing stock has been variously described as “sub-standard”, “abysmal”, “horrid”, and “a joke.” Mind you, that’s a bad joke instead of a funny one.

The majority of homes in this country are so cold that curtains must be used as a serious way to reduce heat loss. It is not uncommon for overnight indoor temperatures to drop into the mid-single-digits Celsius and daytime indoor temperatures to barely reach double-digits. I’ve heard stories of frost on the inside of windowpanes.

To add insult to injury, we also suffer from wealth and income inequality that make the purchase of new or even second-hand curtains out of reach for many families. As a result curtain banks have popped up in cities around the nation to redistribute second-hand curtains free of charge.


Applied Permaculture Ethics

Sharing surplus resources : People of means replace their curtains for various reasons, but most often for aesthetic ones. If the curtains are still in good condition and free of mould, they can be dropped off at the curtain bank, which makes them available for other households. Like any bank it accepts deposits and grants withdrawals. No fees. No contracts. No interest rates.

While traditional banks have the privilege to ‘lend money into existence’ we cannot lend curtains into existence, although it would be nice. We rely on donations from good people in our community to be passed on to other good people in our community. Which brings us to the next ethic.

Caring for people : It’s no secret that there is a link between sub-standard housing and illness in New Zealand. Sadly, most of the housing in our city is cold and/or damp. These unhealthy homes are especially hard on children and seniors. Many lack adequate curtaining.

Getting properly installed curtains, insulating blinds and window blankets into as many homes as possible helps make the occupants more comfortable and healthier. This is straight up caring for people by addressing some fairly basic needs.

Care for the earth : Improving the ‘thermal envelope’ of a home is the best way to save the energy required for heating and cooling. Saving energy is generally considered good for the environment by reducing carbon emissions or reducing the number of rivers dammed or even reducing the number of solar panels that need to be manufactured.

In these ways curtain banks tick all of the boxes for the permaculture ethics.


Example Two: Applied Eco-Design

The other example I’ll share is a direct application of eco-design: imitating nature to develop or reestablish robust ecological systems. The latter of these is sometimes called ‘regenerative design’.

Most of New Zealand is plagued by a legacy of bad farming practices most easily described as overgrazing steep slopes and allowing stock to foul streams.

We took possession of our small farm two years ago and have been working persistently to – dare I say it – ‘heal the land.’ Currently we are in the process of reestablishing a wetland and protecting the streams from stock. Additionally, we are planting native trees and poplar poles on steep hillsides to prevent slips, reduce erosion and provide bee fodder.

We are doing all this because that’s what nature wants. In other words, that’s the way the land was 1,000 years ago (less the non-native poplars) and given enough time that’s what it would revert to after the permanent removal of large hooved mammals. Our work just speeds up the process and allows for a continued agricultural function, which we are still figuring out.

All of this work is supported by our amazing Regional Council, which offers expert advice, low-cost poplar poles, and matching funding for fencing and native plantings. I cannot speak highly enough of these programmes. Horizons Regional Council does a fantastic job of looking at the big picture and applying holistic solutions. Unlike most government bodies and agencies, they get it.


Lake Horowhenua Planting Day


Forests and wetlands play important roles in moderating seasonal water flows across large land areas. In other words they store water high on the landscape during wet periods and release it slowly during dry periods. It works like a bank by accepting deposits and granting withdrawals.

Much of the farmland in our region suffers from extreme weather on both ends – wet and dry. Neither is good for stock, nor good for farmers, nor good for water quality, nor good for anyone living downstream. It’s a lose-lose-lose-lose situation and the reasons are clear: not enough trees on hillsides and streamsides. That’s basically it.

The solution is to build resilient waterways by imitating nature. Projects like ours are the best way that landowners and supportive communities can directly address the extreme weather events associated with a volatile changing climate.

The restoration work on our farm will help – to a tiny degree – everyone who lives and works downstream and downriver from us by keeping water out of the system during peak rain events. This is critical to our community that already faces tens of millions of dollars in repair bills from the last two major rain events that occurred just 13 months apart.

Given enough farmers with enough will and enough government assistance there is no reason we could not fence off all the streams in our region and plant all the steep hillsides to appropriate species. It’s much cheaper than cleaning up over and over again after serial flood events.


Alternative Banking

So what this is all about is developing alternative banking systems – stream banks and curtain banks among others – and getting communities involved. This is what resilience is all about (see also Resilience is The New Black and Climate, Energy, Economy: Pick Two)

This is the heart and soul of permaculture design thinking, and it is the best way to address the two biggest issues facing humanity: wealth inequality and climate change.

When I dip my toe into the financial news media on occasion I hear this phrase: “the velocity of money” as it pertains to the “health of the economy.”

I thought of the phrase the other day while meeting with a client on managing storm water on their large rural property after they had already done everything wrong. Yes, they had done absolutely everything wrong and I was trying to get them to understand that channelizing water only makes it go faster and cause more damage. The damage was obvious after the last major rain event – that’s why they called me in for an assessment.

As I explained the biological – rather than engineering – solutions, I felt we were going around in circles because they did not really want to hear what I had to say. They just wanted to be rid of the water. Sorry, but that’s not an option without over half a million dollars to spend on massive underground drains, which don’t solve the problem but simply pass it on to everyone downstream. And besides, they don’t have the money anyway.

Finally, I simply said, “The only possible solution is to slow the water and spread the water. It’s the only way to stop the damage.”

And that has me thinking. Should we apply the same approach to dollars?

I reckon a critical piece of the puzzle for neglected rural economies like ours is to slow and spread the flow of money as much as possible before it inevitably drains back to the major centres of power and wealth.



Dorothea Lange wrote about the photograph at the top, back in November 1938:

“Home of rural rehabilitation client, Tulare County, California. They bought 20 acres of raw unimproved land with a first payment of 50 dollars which was money saved out of relief budget (August 1936). They received a Farm Security Administration loan of $700 for stock and equipment. Now they have a one-room shack, seven cows, three sows, and homemade pumping plant, along with 10 acres of improved permanent pasture. Cream check approximately 30 dollars per month. Husband also works about ten days a month outside the farm. Husband is 26 years old, wife 22, three small children. Been in California five years. ‘Piece by piece this place gets put together. One more piece of pipe and our water tank will be finished’. From Shorpy.



Jun 062016

Jordan Osmond and Samuel Alexander Image from ‘A Simpler Way: Crisis as Opportunity’ 2016

On July 27 2015, I posted a 2-hour interview with Nicole Foss that was recorded when we were in Melbourne in April that year. The interview -though not the full two hours of course- was always meant to be part of a documentary by our friends Jordan Osmond and Samuel Alexander. The documentary is now out.

Below, you can find the trailer, the full documentary, as well as a re-run of the full interview with Nicole. I haven’t had time to watch the documentary, just got the mail from Sam, but I will later today. No doubt, it’ll be worth your while and mine. I remember complimenting them on the sound- and picture quality of the interview last year. Plus, get the likes of our dear friend Dave Holmgren together with Nicole and Ted Trainer, amongst others, and you can’t very well go wrong, can you?

(NOTE: Saw some rushes, and it may contain a tad much hippieness and/or reality-TV semblance for some)

The trailer:

With the text published with it:

The overlapping economic, environmental, and cultural crises of our times can seem overwhelming, can seem like challenges so great and urgent that they have no solutions. But rather than sticking our heads in the sand or falling into despair, we should respond with defiant positivity and try to turn the crises we face into opportunities for civilisational renewal.

During the year of 2015 a small community formed on an emerging ecovillage in Gippsland, Australia, and challenged themselves to explore a radically ‘simpler way’ of life based on material sufficiency, frugality, permaculture, alternative technology and local economy. This documentary by Jordan Osmond and Samuel Alexander tells the story of this community’s living experiment, in the hope of sparking a broader conversation about the challenges and opportunities of living in an age of limits.

The documentary also presents new and exclusive interviews with leading activists and educators in the world’s most promising social movements, including David Holmgren (permaculture), Helena Norberg-Hodge (localisation), Ted Trainer (the simpler way), Nicole Foss (energy and finance), Bill Metcalf (intentional communities) and Graham Turner (limits to growth).

The full documentary:

Then the text I included back then:

The fimmakers about their project:

The purpose of the documentary is to unflinchingly describe the overlapping crises of industrial civilisation and explain why a ‘simpler way’ of life, based on material sufficiency not limitless growth, signifies the only coherent response to those crises. The dominant mode of development today seeks to universalise high-consumption consumer lifestyles, but this is environmentally catastrophic and it has produced perverse inequalities of wealth. Even the privileged few who have attained material affluence rarely find it satisfying or fulfilling, because consumerism just leaves people feeling empty and alone. Consequently, our forthcoming documentary seeks to show why genuine progress today means rejecting consumerism, transcending growth economics, and building new forms of life based on permaculture, simple living, renewable energy, and localised economies.

But what does that mean? And how should we go about building a new world? Mainstream environmentalism calls on us to take shorter showers, recycle, buy ‘green’ products, and turn the lights off when we leave the room, but these measures are grossly inadequate. We need more fundamental change – personally, culturally, and structurally. Most of all, we need to reimagine the good life beyond consumer culture and begin building a world that supports a simpler way of life. This does not mean hardship or deprivation. It means focusing on what is sufficient to live well. The premise of our documentary is that a simple life can be a good life.

One of the main concerns driving this documentary, and the Wurruk’an project more generally, is the uncomfortable realisation that even the world’s most successful ecovillages have ecological footprints that are too high to be universalised. In other words, even after many decades of the modern environmental movement, we still don’t have many or any examples of what a flourishing ‘one planet’ existence might look. This is highly problematic because if people do not have some understanding of what sustainability requires of us or what it might look like, it will be hard to mobilise individuals and communities to build such a world. A Simpler Way represents an attempt to envision and demonstrate what ‘one planet’ living might look like and provoke a broader social conversation about the radical implications of living in an age of limits.

We hope that this documentary will challenge and inspire people to explore a simpler way of life and to begin building sufficiency-based economies that thrive within planetary limits. If you feel this is a worthwhile film for social change, please support our project by donating here [link coming soon] and sharing the link with your networks.

And finally, the Nicole interview I posted last year, of which significant parts are in the documentary.

Apr 212015
 April 21, 2015  Posted by at 9:20 am Finance Tagged with: , , , , , , , , ,  8 Responses »

DPC Betsy Ross house, Philadelphia. Birthplace of Old Glory 1900

Robert Merton: QE Makes Everything Worse (PiOnline)
ECB Is Studying Curbs on Greek Bank Support (Bloomberg)
Investors May Be Ignoring Potential ‘Collateral Damage’ From Greece (MarketWatch)
Creditors Chase Consensus With Greece to Unlock More Aid (Bloomberg)
Greece Orders Public Entities to Store Cash in Central Bank (WSJ)
Greek Mayors to Protest Government Decision to Seize Their Cash (Bloomberg)
Herr Schäuble’s Foibles: The Eurozone Rebalancing Conundrum (Parenteau)
Chinese Economic Outlook “Skewed Heavily To The Downside”: BNP (Zero Hedge)
Major China Real Estate Developer Kaisa Defaults On Its Dollar Debt (Bloomberg)
Does Collapse of Chinese Developer Kaisa Signal More Defaults? (Bloomberg)
Change They Don’t Believe In (Jim Kunstler)
EU To Launch Military Operations Against Migrant-Smugglers In Libya (Guardian)
Embargo Relief? Russia Tests Food From Greece, Hungary and India (RT)
How ‘The Guardian’ Milked Edward Snowden’s Story (Julian Assange)
Political Murders in Kiev, US Troops to Ukraine (Ron Paul)
EU To Charge Russia’s Gazprom With Market Abuse (Reuters)
Canadian Home Prices Inflated By More Than 25%, Economist Magazine Warns (G&M)
Sydney’s Housing Roulette Wheel: Are You Feeling Lucky? (SMH)
Australia Central Bank Fights Resurgent Carry Trade In Aussie Dollar (SMH)
One Million Australians ‘Entrenched In Disadvantage’ (Guardian)
Permaculture In Malawi: Food Forests To Prevent Floods And Hunger (Guardian)

” This may call for central banks to use a different set of policy tools than manipulating long-term rates, and may even argue for the Fed to actually raise long-term rates faster than what is recommended by traditional monetary policy.”

Robert Merton: QE Makes Everything Worse (PiOnline)

[..] … while QE has increased absolute wealth, it has simultaneously lowered relative wealth for a large class of investors. This could lead to the opposite of the desired effect for this group of investors. Lower relative wealth means investors need to save more to improve their funded status, especially where regulations are strict, and it results in less consumption and investment, and may not remove the deflationary overhang. [..] An alternate, more sophisticated approach to explaining why QE may not work to stimulate aggregate consumption is, perhaps, because the demographic mix of the U.S. (and most parts of the developed world) has shifted toward older people. Unlike 30 or 40 years ago, the enormous baby boomer generation, and even retirees, are much wealthier (including human capital) than in the past, and they are wealthier than current generations earlier in their life cycle.

So the wealth effect does not lead to an increase in consumption and, potentially, has the opposite outcome. [..] When baby boomers were in the sweet spot for housing needs, expenditures on children and cars, etc. 30 to 40 years ago, the effect the central banks were expecting from QE might have worked better, as they expected it would, but that need not be a reliable prediction under the changed current demographic and wealth distribution. [..] We believe it is imperative for central banks and academia to examine this perspective immediately and develop a new monetary policy toolkit, because it would be tragic if the central banks’ attempts to improve economic security with the current orthodoxy leads, instead, to less consumption, less investment and greater retirement insecurity. [..]

A recent study by the Center for American Progress shows that millions of Americans (as high as 50% of households) are in danger of retiring with insufficient money to maintain the standard of living to which they are accustomed, and the problem is getting progressively worse. Your previous editorial argues that QE by the central bank may impose unintended costs on pensions, at both the institutional and retail level. This suggests more research needs to be conducted to examine how monetary policy affects relative wealth, not just absolute wealth, and whether traditional approaches are outdated given the current retirement landscape. This may call for central banks to use a different set of policy tools than manipulating long-term rates, and may even argue for the Fed to actually raise long-term rates faster than what is recommended by traditional monetary policy.

Read more …

The ECB as a political party will not work out.

ECB Is Studying Curbs on Greek Bank Support (Bloomberg)

The European Central Bank is studying measures to rein in Emergency Liquidity Assistance to Greek banks, as resistance to further aiding the country’s stricken lenders grows in the Governing Council, people with knowledge of the discussions said. ECB staff have produced a proposal to increase the haircuts banks take on the collateral they post when borrowing from the Bank of Greece, the people said, asking not to be named as the matter is private. While the measure hasn’t been formally discussed by the Governing Council, it may be considered if Greece’s leaders fail to quickly convince euro-area finance ministers they can reform their economy and secure bailout funds, one of the people said.

Greek lenders are mostly locked out of regular ECB cash tenders while the country’s government, which holds talks with euro-area partners in Riga this week, tussles with its creditors over the much-needed aid payments. Instead, the banks currently have access to about €74 billion of emergency funds from their own central bank – an amount that has been rising and which will be reviewed this week. There’s “no doubt” that the ECB is losing patience with Greece, said Frederik Ducrozet, an economist at Credit Agricole CIB in Paris. “Greek banks will need more funding before long, so in a way larger haircuts or a lower ELA cap are equivalent.”

Read more …

Does Q€ make Greece’s position weaker?

Investors May Be Ignoring Potential ‘Collateral Damage’ From Greece (MarketWatch)

Investors aren’t really sweating the potential for a Greek exit from the eurozone, a prospect that had the markets on the verge of panic just a few summers ago. Are market participants too relaxed? Only time will tell for sure, but here’s a look at what’s happening and why some analysts think investors are underplaying risks while others remain relaxed. While Greek bond yields continue to jump and the German 10-year bund yield moves ever closer to zero on safe-haven flows, the yields on other seemingly vulnerable eurozone countries aren’t showing much stress. Italian and Spanish government-bond yields jumped at the end of last week as Greek fears were revived, but remain near historic lows.

After retreating on Friday, inspired in part by Greece as well as moves by China and other factors, European stocks rebounded on Monday, with Wall Street also bouncing back. Major indexes in both regions aren’t far off record highs. The euro fell versus the dollar, but is holding above recent lows below $1.06. It wasn’t that long ago that fears over contagion sent Italian and Spanish government debt yields soaring, briefly stretching above 7% for 10-year bonds—a level seen as unsustainable. That added to a vicious circle as investors worried that banks, carrying large amounts of government debt, would take massive hits, requiring bailouts from those same governments. The ECB’s subsequent creation in 2012 of a bond-buying program, though never used, reassured investors that a sufficient backstop was in place, allowing Italian and Spanish yields to fall back from crisis levels.

Now, the ECB is buying €60 billion of bonds a month as part of its quantitative-easing program—a move that has driven yields lower across most of the eurozone. Large chunks of the yield curve in Germany and other so-called core countries are now in negative territory, meaning bondholders pay for the privilege of parking money with those governments. Erik Nielsen at UniCredit Bank in London argued, in a note, that the ECB’s quantitative-easing program is part of the reason why markets aren’t—and probably won’t be—rattled by the threat of a Greek exit. “Markets are strong enough (yes, we’ll get volatility, but that would be a buying opportunity), the ECB’s toolbox is good enough and QE is already in place,” Nielsen wrote.

In fact, Greek politicians who think the threat of contagion gives them a bargaining chip may be misleading themselves, he said, because “whatever leverage they think they might have within the European context has been suspended by QE.”

Read more …

I doubt that everyone involved feels that way.

Creditors Chase Consensus With Greece to Unlock More Aid (Bloomberg)

Greece and its creditors remained at loggerheads with time running out to unlock aid and avert a default. The sides haven’t even set 2015 budget targets, let alone on policies to meet them, an official representing creditors said Monday, asking not to be named as talks aren’t public. Euro-area finance ministers said in February that a list of measures must be agreed upon by the end of April. European leaders want Greece to do more to revamp its debt-burdened economy, with progress to be reviewed on April 24 in Riga, Latvia, when finance ministers from the currency bloc meet. European Commission Vice President Valdis Dombrovskis said in an interview in Washington that creditors might need to wait until mid-May to see what Greece can deliver.

“The situation with Greece needs to be resolved soon,” Cypriot Finance Minister Harris Georgiades said in a Bloomberg Television interview Monday. “It would be a negative development if no progress is made at the meeting in Riga.” Dutch Finance Minister Jeroen Dijsselbloem, who chairs meetings of his euro-region counterparts, said in Washington on Saturday that a deal won’t be ready by the Riga gathering. Greek bonds fell as yields on three-year notes rose 115 basis points to 27.9% as of 2:45 p.m in Athens. With the country running out of cash, credit-default swaps suggested there is about an 84% chance of Greece being unable to repay its debt in five years, compared with about 67% at the start of March, according to CMA data.

A default on the country’s €313 billion of obligations and an exit from the euro would be traumatic for the currency area and plunge Greece into a major crisis, ECB governing council member Christian Noyer told French newspaper Le Figaro in an interview published Monday. “The ball is in the court of the Greek government,” he said.

Read more …

“Deputy Finance Minister Dimitris Mardas had warned that such a move was coming. “Similar provisions already exist in Holland, Portugal and England..”

Greece Orders Public Entities to Store Cash in Central Bank (WSJ)

Greece’s government issued a decree Monday requiring public bodies such as state-owned companies and public pension funds to transfer their cash reserves to the central bank as the country’s cash reserves continue to dry up. The decree, published in the government gazette late Monday, came as no surprise, the government having telegraphed the move last week. But it still represents evidence of an escalating cash squeeze amid renewed concerns of Greek default. Greece’s parliament has recently passed a bill allowing the Greek government to borrow funds held by state bodies and social-security funds via repurchase agreements, or repos, and has borrowed money from entities such as the central bank and the country’s job centers.

But this decree makes the transfer of state bodies’ cash reserves to the Bank of Greece compulsory, excluding the country’s social-security funds. “This practice already exists in several countries of the European Union,” a senior government official said Monday, adding that the state has the ability to borrow cash from state bodies that don’t have an immediate need for it, but for no more than 15 days. Greece needs a deal to secure billions of euros in bailout aid to avoid defaulting on its debts by this summer and potentially tumbling out of the euro. But the overhauls that creditors want, including further pension cuts and tax increases in a country reeling from years of drastic austerity, could split or bring down the government of radical-left Prime Minister Alexis Tsipras, which was elected in January on an anti-austerity ticket.

In remarks to journalists last week, Deputy Finance Minister Dimitris Mardas had warned that such a move was coming. “Similar provisions already exist in Holland, Portugal and England,” Mr. Mardas said last week. “It is one of the possibilities.” In Paris, French finance minister Michel Sapin said Monday that Greece’s decision to pool the cash reserves of public entities at the central bank was only an emergency solution and the country needs to move faster on economic overhauls. “Greece is dealing with an emergency,” Mr. Sapin said in an interview on French television channel BFM TV. “But that is not sufficient because it’s not just a question of urgency, it’s a question of getting down to the fundamentals.”

Read more …

But an act that raises many questions, nevertheless.

Greek Mayors to Protest Government Decision to Seize Their Cash (Bloomberg)

As Greece struggles to find cash to stay afloat, local authorities say they oppose a government decision to use their reserves for short-term financing. “The government’s decision to seize our reserves not only raises legal and constitutional issues, but also a moral one,” said George Papanikolaou, mayor of Glyfada, the third-largest municipality in the metropolitan region of Attica after Athens and Piraeus. “We have a responsibility to serve our citizens,” Papanikolaou said by phone on Monday. Glyfada has about €16 million in cash reserves, he said. Running out of other options, Greek Prime Minister Alexis Tsipras ordered local governments and central government entities to move their cash balances to the central bank for investment in short-term state debt.

The decree to confiscate reserves held in commercial banks and transfer them to the Bank of Greece could raise as much as €2 billion, according to two people familiar with the decision. The money is needed to pay salaries and pensions at the end of the month, the people said. “It is a politically and institutionally unacceptable decision,” Giorgos Patoulis, mayor of the city of Marousi and president of the Central Union of Municipalities and Communities of Greece, said in a statement on Monday.“No government to date has dared to touch the money of municipalities.”

The Athens city council and the union of municipalities and communities in Greece will convene tomorrow to debate the order, a press officer of the mayor’s office said. “Central government entities are obliged to deposit their cash reserves and transfer their term deposit funds to their accounts at the Bank of Greece,” according to the decree posted Monday on a government website said. The “regulation is submitted due to extremely urgent and unforeseen needs.” The additional funding may be only enough to pay salaries and a €770 million tranche owed to the IMF on May 12, the people familiar with the decision said.

Read more …

“It is, in other words, not inconceivable there may be a Germexident before there is a Grexident..”

Herr Schäuble’s Foibles: The Eurozone Rebalancing Conundrum (Parenteau)

[..] recognition of the shifting composition of Germany’s trade surplus may also hint at some of the reasons why German policy makers may not be terribly interested in Ponzi financing the external liabilities of peripheral Eurozone governments much longer. After all, the periphery no longer appears to be where the main customers of their tradable goods companies dwell. It is, in other words, not inconceivable there may be a Germexident before there is a Grexident, as Germany has less to lose with respect to its neo-mercantilist growth strategy now if the peripheral economies are left to fend for themselves in servicing their existing external debt loads. Recall also, as depicted in a recent piece called Draghi’s Doom Loops, that the profitability of Germany’s banks and insurance company is also being undermined by the ECB’s PSPP initiative.

For the time being, however, the result of the rabid pursuit Austerian policies has essentially made somewhat obsolete the hand-wringing over the Eurozone current account recycling mechanism design flaw that can be found in places like Yanis Varoufakis’ masterful treatise, The Global Minotaur. We will simply have to wait with bated breath for the second edition to be scribbled and released once the Troika has insured the current Greek Finance Minister will have much more free time on his hands.

This brings us to what we can and should recognize as Herr Schäuble’s Foibles. For you cannot possibly ask a country that has pursued a neo-mercantilist growth strategy to just drop it. You especially cannot expect a warm, favorable response from said country when key policy authorities and their key economic advisors, believe the whole world can (and should) follow in its virtuous footsteps by also running trade surpluses – a bold challenge to the rest of the world which unfortunately ignores the small algebraic fact that global trade balances have to net to zero. At least, that is, until we open up trade with Martians and Venusians.

You especially cannot expect to get anywhere by asking a neo-mercantilist nation to just drop it and take steps to deliver a trade deficit, if the policy makers of that nation also believe it is equally virtuous to maintain a fiscal balance near zero. Simply put, if you take away their trade surplus as a driver of growth, that means they can only get growth if their domestic household or business sectors are willing and able to deficit spend in perpetuity.

Read more …

“Iron ore prices have collapsed by close to 50% since last July and over 65% since the beginning of 2014. Falls have accelerated in recent weeks, almost becoming a rout, with prices down over 30% year-to-date.”

Chinese Economic Outlook “Skewed Heavily To The Downside”: BNP (Zero Hedge)

With the country’s tough transition to a service-based economy being made all the more difficult by the hit industrial production will likely take as Beijing ramps up efforts to fight a pollution problem that was thrust back into the spotlight early last month thanks to a viral documentary, it’s reasonable to suspect we’ll be seeing a lot more of the idle cranes, empty construction sites, and half-finished abandoned buildings that greeted Bloomberg metals analyst Kenneth Hoffman who returned from a tour of the country earlier this month. Ultimately, Hoffman’s assessment was that metals demand in China is collapsing and isn’t likely to pick back up for the foreseeable future.

This is bad news for the Chinese economic machine and it’s also bad news for any iron ore miner out there whose marginal costs aren’t low enough to stay profitable in the face of a protracted downturn in prices because if you can’t convince the big guys that your price collusion idea will pass regulatory muster, well, they’ll likely take the opportunity to keep right on producing despite the slump and run you out of business. With the stage thus set, we bring you the following from BNP who explains why iron ore prices aren’t likely to rebound any time soon, and why the economic outlook for China is indeed “as bad as the data looks, if not worse” (to quote Mr. Hoffman). Via BNP:

Global commodity prices have fallen sharply since last summer, dragged down by a cocktail of fading Chinese industrial demand, surging supply and a strong USD. Oil has inevitably garnered the majority of headlines but iron ore prices have fallen even further. Iron ore prices have collapsed by close to 50% since last July and over 65% since the beginning of 2014. Falls have accelerated in recent weeks, almost becoming a rout, with prices down over 30% year-to-date.

Read more …

“It’s been a canary that has been chirping for some time..”

Major China Real Estate Developer Kaisa Defaults On Its Dollar Debt (Bloomberg)

Kaisa Group became China’s first real estate company to default on its U.S. currency debt, capping a month of distress in bond markets amid an anti-corruption probe and fueling concern that losses will spread. The default coincides with the expiration of a 30-day grace period on $52 million of missed interest payments on two dollar-denominated bonds, according to a Hong Kong stock exchange statement Monday. Kaisa, based in the southern city of Shenzhen, is struggling to service 65 billion yuan ($10.5 billion) of debt owed to both onshore and offshore lenders while becoming embroiled in President Xi Jinping’s crackdown on graft.

The developer’s problems have rippled across the region’s debt market, where investors starved of yield elsewhere in the world have swooped in to boost returns. As the government’s anti-corruption probes widen, it’s raising concern that defaults will spread after overseas noteholders bought a record $21.3 billion of bonds issued by Chinese property companies. “It’s been a canary that has been chirping for some time,” Gary Herbert at Brandywine Global in Philadelphia said. “This is the beginning of an adjustment period in China that will see a lot of credit investors, who were chasing the promise of higher yields, ultimately disappointed.”

Kaisa’s default follows the surprise return of founder Kwok Ying Shing last week. The developer’s woes started late last year when the Chinese government blocked approvals of its property sales and new projects in Shenzhen, said to be linked to an investigation of the city’s former security chief Jiang Zunyu. Kaisa “is focused on facilitating the release of its 2014 audited financial results,” according to its statement. Following that release, the company “will continue its efforts to reach a consensual restructuring of its outstanding debts.”

Read more …

The whole housing sector is collapsing, so yeah, more defaults are certain.

Does Collapse of Chinese Developer Kaisa Signal More Defaults? (Bloomberg)

Kaisa Group captivated Wall Street by minting fortunes from troubled real estate in China. Now the developer is in trouble itself – and the question is how far the pain will spread. On Monday, the news came that many had been dreading for months: The company, caught up in an anti-corruption probe, is buckling under its debts as a slumping real estate market drags down the entire Chinese economy. After missing $52 million in interest payments, Kaisa, once a stock market darling, now confronts an uncertain future. It’s a remarkable comedown for a company that burst onto the scene in 2007 as billions poured into Chinese real estate. Its troubles, long in coming, have set investors on edge and have many asking if Kaisa is a one-off or the start of something worse.

Just last week, Standard & Poor’s warned that “more defaults cannot be ruled out,” saying it’s concerned about how profitability in the Chinese property sector is faltering. “More than one big developer is going to go under,” said Erik Gordon at the University of Michigan. “Busts follow booms. There’s no reason for it to be any different in China.” While there was no immediate reaction in Chinese markets to the default Monday, the saga has sparked jitters among the country’s corporate bond investors on multiple occasions over the past several months. So while China’s equity market has been booming – the result of optimism that government stimulus efforts will shore up the economy – high-yield corporate bonds have posted almost no gains since the end of November, having sold off in January before rebounding in recent weeks.

Kaisa’s benchmark dollar bonds, meanwhile, are hovering at prices that show investors anticipate the company will saddle them with losses of more than 40% when a restructuring offer is made. Its stock has been suspended in Hong Kong since March 31 after sinking 48% in four months. The default, the first ever by a Chinese developer on dollar bonds, is in part emblematic of the slowdown in China’s property market. The real-estate market is helping drag down the economic expansion to its slowest pace since 1990 after serving as a key engine of outsized growth rates over the past five years. The average home price has fallen 6.1% in the past year, the steepest decline on record, according to the National Bureau of Statistics.

Read more …

“Mostly, though, she has no idea where history is taking us, in case you’re wondering at the stupefying platitudes offered up as representative of her thinking.”

Change They Don’t Believe In (Jim Kunstler)

The unfortunate consequence of not allowing the process of “creative destruction” to occur in banking and Big Business is that the historic forces behind it will seek expression elsewhere in the realm of politics and governance. The desperate antics of central banks to cover up financial failure can’t help but provoke political upheaval, including war. It’s a worldwide phenomenon and one result will be the crackup of economic relations — thought by many to be permanent — that we call “globalism.” The USA has suffered mightily from globalism, by which a bonanza of cheap “consumer” products made by Asian factory slaves has masked the degeneration of local economic vitality, family life, behavioral norms, and social cohesion.

That crackup is already underway in the currency wars aptly named by Jim Rickards, and you can bet that soon enough it will lead to the death of the 12,000-mile supply lines from China to WalMart — eventually to the death of WalMart itself (and everything like it). Another result will be the interruption of oil export supply lines. The USA as currently engineered (no local economies, universal suburban sprawl, big box commerce, despotic agribiz) won’t survive these disruptions and one might also wonder whether our political institutions will survive. The crop of 2016 White House aspirants shows no comprehension for the play of these forces and the field is ripe for epic disruption.

The prospect of another Clinton – Bush election contest is a perfect setup for the collapse of the two parties sponsoring them, ushering in a period of wild political turmoil. Just because you don’t see it this very moment, doesn’t mean it isn’t lurking on the margins. This same moment (in history) the American thinking classes are lost in raptures of techno-wishfulness. They can imagine the glory of watching Fast and Furious 7 on a phone in a self-driving electric car, but they can’t imagine rebuilt local economies where citizens get to play both an economic and social role in their communities. They can trumpet the bionic engineering of artificial hamburger meat, but not careful, small-scale farming in which many hands can find work and meaning.

The true genius of Hillary is that she manages to epitomize every failure of our current political life: the obsessive micro-manipulation of image, the obscene moneygrubbing, the tired cronyism, the entitlement masquerading as sexual equality. Mostly, though, she has no idea where history is taking us, in case you’re wondering at the stupefying platitudes offered up as representative of her thinking.

Read more …

“Right now, people desperately seeking a better life are drowning in politics. We have to restart the rescue – and now.”

EU To Launch Military Operations Against Migrant-Smugglers In Libya (Guardian)

The European Union is to launch military operations against the networks of smugglers in Libya deemed culpable of sending thousands of people to their deaths in the Mediterranean. An emergency meeting of EU interior and foreign ministers in Luxembourg on Monday, held in response to the reported deaths of several hundred migrants in a packed fishing trawler off the Libyan coast at the weekend, also decided to bolster maritime patrols in the Mediterranean and give their modest naval mission a broader search-and-rescue mandate for saving lives. A summit of EU leaders is to take place in Brussels on Thursday to hammer out the details of the measures hurriedly agreed on Monday.

The 28 EU governments called for much closer cooperation with Libya’s neighbours, such as Egypt, Tunisia, and Niger, in an attempt to close down the migratory routes. But senior political figures and EU officials conceded this would be difficult and also voiced scepticism about the emphasis on targeting the traffickers. Following the reported deaths of around 1,300 migrants in three incidents in less than a fortnight in the waters south of Sicily, the pressure was on the EU and its member states to come up with new policies addressing headlines branding the incidents “Europe’s shame”. “I hope today is the turning point in the European conscience, not to go back to promises without actions,” said Federica Mogherini, the former Italian foreign minister who is the EU’s chief foreign and security policy coordinator and who chaired Monday’s meeting.

The meeting “identified some actions” aimed at combatting the trafficking gangs mainly in Libya, such as “destroying ships”, Mogherini said. Dimitris Avramopoulos, the European commissioner for migration issues, said the operation would be “civil-military” modelled on previous military action in the Horn of Africa to combat Somali piracy. The military action would require a UN mandate. No detail was supplied on the scale and range of the proposed operation, nor of who would take part in it. But European leaders from David Cameron to Angela Merkel and Matteo Renzi, the Italian prime minister, were emphatic on Monday in singling out the fight against the migrant traffickers as the top priority in the attempt to rein in a crisis that is spiralling out of control.

[..] Save the Children accused the EU of dithering as children drowned, after they failed to agree immediate action to set up a European search and rescue operation in the Mediterranean. Save the Children CEO Justin Forsyth said: “What we needed from EU foreign ministers today was life-saving action, but they dithered. The emergency summit on Thursday is now a matter of life and death. “With each day we delay we lose more innocent lives and Europe slips further into an immoral abyss. Right now, people desperately seeking a better life are drowning in politics. We have to restart the rescue – and now.”

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“One way countries could get around the sanctions is to set up joint ventures with Russian companies.”

Embargo Relief? Russia Tests Food From Greece, Hungary and India (RT)

Russia began quality control fruits and vegetables from Hungary, Greece, and India in order to begin imports, said Aleksey Alekseenko the head of Russia’s food inspector Rosselkhoznadzor. Next week products from Cyprus will undergo similar tests. “Approximately two dozen companies in Greece will be tested, the same number in Hungary, and four or five in India. Due to technical reasons, Cyprus asked for a small ‘time out’, so testing will begin on April 27 where we will check six to eight companies,” Alekseenko told Russian media Monday, Rossiskaya Gazeta reported. EU countries Greece, Cyprus, and Hungary have all asked Russia to cancel or reduce the food import embargo they face.

However, during Greek Prime Minister Alexis Tsipras’ visit to Moscow two weeks ago, Russian President Putin dismissed the possibility. One way countries could get around the sanctions is to set up joint ventures with Russian companies. Inspection should be finished by April 30, and the preliminary results will be published immediately, with the final results a few days later, according to Alekseenko. Russia’s agricultural food import ban on EU countries doesn’t expire until August, a year after the restrictions were imposed in response to Western sanctions. The ban also applies to the US, Australia, Canada, Japan, and Norway and includes meat, fish, chicken, cheese, milk, fruit, and vegetables.

Researchers at the Gaidar Institute, the Russian Presidential Academy, and Russian Academy of Foreign Trade and Economic Development calculated that Russia has reduced its agriculture imports by 40%, and exports have decreased by 25-30%. The measure was taken as a counter to sanctions imposed by Western countries on Russia, but is also believed to boost domestic agriculture. By banning imports, Russian farmers would have to boost production and in theory start producing better products.

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Well written.

How ‘The Guardian’ Milked Edward Snowden’s Story (Julian Assange)

The Snowden Files: The Inside Story of the World’s Most Wanted Man by Luke Harding is a hack job in the purest sense of the term. Pieced together from secondary sources and written with minimal additional research to be the first to market, the book’s thrifty origins are hard to miss. The Guardian is a curiously inward-looking beast. If any other institution tried to market its own experience of its own work nearly as persistently as The Guardian, it would surely be called out for institutional narcissism. But because The Guardian is an embarrassingly central institution within the moribund “left-of-center” wing of the U.K. establishment, everyone holds their tongue.

In recent years, we have seen The Guardian consult itself into cinematic history—in the Jason Bourne films and others—as a hip, ultra-modern, intensely British newspaper with a progressive edge, a charmingly befuddled giant of investigative journalism with a cast-iron spine. The Snowden Files positions The Guardian as central to the Edward Snowden affair, elbowing out more significant players like Glenn Greenwald and Laura Poitras for Guardian stablemates, often with remarkably bad grace. “Disputatious gay” Glenn Greenwald’s distress at the U.K.’s detention of his husband, David Miranda, is described as “emotional” and “over-the-top.” My WikiLeaks colleague Sarah Harrison—who helped rescue Snowden from Hong Kong—is dismissed as a “would-be journalist.”

I am referred to as the “self-styled editor of WikiLeaks.” In other words, the editor of WikiLeaks. This is about as subtle as Harding’s withering asides get. You could use this kind of thing on anyone. The book is full of flatulent tributes to The Guardian and its would-be journalists. “[Guardian journalist Ewen] MacAskill had climbed the Matterhorn, Mont Blanc and the Jungfrau. His calmness now stood him in good stead.” Self-styled Guardian editor Alan Rusbridger is introduced and reintroduced in nearly every chapter, each time quoting the same hagiographic New Yorker profile as testimony to his “steely” composure and “radiant calm.” That this is Hollywood bait could not be more blatant.

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Quelle coincidence!

Political Murders in Kiev, US Troops to Ukraine (Ron Paul)

Last week two prominent Ukrainian opposition figures were gunned down in broad daylight. They join as many as ten others who have been killed or committed suicide under suspicious circumstances just this year. These individuals have one important thing in common: they were either part of or friendly with the Yanukovych government, which a US-backed coup overthrew last year. They include members of the Ukrainian parliament and former chief editors of major opposition newspapers. While some journalists here in the US have started to notice the strange series of opposition killings in Ukraine, the US government has yet to say a word. Compare this to the US reaction when a single opposition figure was killed in Russia earlier this year.

Boris Nemtsov was a member of a minor political party that was not even represented in the Russian parliament. Nevertheless the US government immediately demanded that Russia conduct a thorough investigation of his murder, suggesting the killers had a political motive. As news of the Russian killing broke, Chairman of the House Foreign Affairs Committee Ed Royce (R-CA) did not wait for evidence to blame the killing on Russian president Vladimir Putin. On the very day of Nemtsov’s murder, Royce told the US media that, “this shocking murder is the latest assault on those who dare to oppose the Putin regime.” Neither Royce, nor Secretary of State John Kerry, nor President Obama, nor any US government figure has said a word about the series of apparently political murders in Ukraine.

On the contrary, instead of questioning the state of democracy in what looks like a lawless Ukraine, the Administration is sending in the US military to help train Ukrainian troops!] Last week, just as the two political murders were taking place, the US 173rd Airborne Brigade landed in Ukraine to begin training Ukrainian national guard forces – and to leave behind some useful military equipment. Though the civil unrest continues in Ukraine, the US military is assisting one side in the conflict – even as the US slaps sanctions on Russia over accusations it is helping out the other side! As the ceasefire continues to hold, though shakily, what kind of message does it send to the US-backed government in Kiev to have US troops arrive with training and equipment and an authorization to gift Kiev with some $350 million in weapons? Might they not take this as a green light to begin new hostilities against the breakaway regions in the east?

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As Gazprom CEO Miller is visiting Athens today…

EU To Charge Russia’s Gazprom With Market Abuse (Reuters)

The EU will launch a legal attack on Russian gas giant Gazprom this week, ramping up tensions with Moscow, when antitrust agents will accuse it of overcharging buyers in eastern Europe, EU sources told Reuters on Monday. The state-controlled company, a vital supplier of energy to Europe despite frequent political disputes, could receive a full charge sheet from European Competition Commissioner Margrethe Vestager on Wednesday, one source said. More than two years after Brussels started investigating Gazprom, the move comes just a week after the new EU antitrust chief charged U.S. tech giant Google with abusing its market power after five years of hesitation by her predecessor. Vestager has appeared determined to challenge big corporate powers since taking on the powerful post in November, regardless of past offers of compromise from both Google and Gazprom.

Despite the Danish commissioner’s insistence that she would look at only the legal merits of a case that focuses on Gazprom pricing policies differentiating between customers, the accusations will do nothing to ease EU frictions with Moscow over Ukraine in which gas supplies have played a major role. The sources said Vestager was likely to send the charge sheet, known as a statement of objections, to Gazprom once she returns from a trip to the United States, where she arrived within hours of charging Google. Such a document sets out concerns about possible anti-competitive practices. A source close to the Russian company said Gazprom had always wanted to find an amicable solution, so a statement of objections now “would not be a welcome move”.

Gazprom tried to settle the case last year by offering concessions to Vestager’s predecessor but talks floundered over its refusal to cut prices for eastern European customers. The EU antitrust chief is taking a tougher line than her predecessor despite the political ramifications of some cases, said Mario Mariniello, a former economist at the Commission and now an expert at Brussels think tank Bruegel. “Vestager is sending a message that her mandate is not about settling cases. If she has a solid case, she will push ahead with charges,” he said. “Sending a statement of objections to Gazprom now would be her way of saying that she will focus on the substance of the case regardless of the political implications.”

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It took a few years, but that never made it any less real.

Canadian Home Prices Inflated By More Than 25%, Economist Magazine Warns (G&M)

A fresh look at global house prices underscores the Bank of Canada’s angst over the Vancouver and Toronto markets. The magazine, which tracks prices in 26 markets, warned in its most recent report that homes are more than 25% overvalued in seven of those regions, “notably in Australia, Britain and Canada,” rising on every measure. Canada, of course, is not one market, but rather several regional ones that can differ markedly. Just last week, the Bank of Canada, which has pegged overvaluation at between 10% and 30%, again predicted a “soft landing” for the national market. But, as The Globe and Mail’s Tamsin McMahon reports, it warned that the oil hit to Alberta and the “continued robust price growth” in Toronto and Vancouver threaten “a correction in these markets.”

The Economist uses two ”yardsticks,” one of which is the ratio of home prices to rent, which is not deemed the best measure among some observers. But it also looks at the ratio of prices to after-tax income, a measure of affordability. Which in some ways backs up the Bank of Canada’s warning that “elevated house prices and debt levels relative to income continue to leave households vulnerable.” Bank of Montreal economist Robert Kavcic also tracks the Canadian markets, and his latest report, released last week, raised a red flag for Vancouver, in particular. The senior economist looked at average prices, resales, sales versus their 10-year average, and what he called the “historical market balance,” or conditions measured against the 20-year average.

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Canada, Australia, New Zealand, plenty housing corrections coming up.

Sydney’s Housing Roulette Wheel: Are You Feeling Lucky? (SMH)

How you perceive the state of the Sydney rental market depends on who you are. Sydney tenants might think rents are steady or rising, but they’re falling for Sydney landlords. And that feeds into a bigger question about how close the Sydney housing price boom is to topping out and a yet-bigger question about how much longer housing construction can carry the Australian economy without a correction. Sydney auctions set a clearance rate record over the weekend with the market increasingly looking like a feeding frenzy – would-be owner-occupiers with FOMO (fear of missing out) and investors knowing no fear at all. Basically, after such a strong run, would-be players of housing investment roulette have to very carefully ask themselves if they’re feeling lucky.

Net rental yields are often miserable and, no, prices don’t keep galloping ahead at the present rate indefinitely. The latest Domain rental survey found rent for the average house in the nation’s real estate hot spot rose from $500 to $520 last year. So that provides a headline about rents rising despite increased supply. To keep the maths simple, let’s say a property renting for $500 a week a year ago was worth $800,000. That means a gross rental yield of 3.25%. The average increase in prices means a new landlord buying the property today would pay $907,200 (before the outrageous stamp duty) and collect $520 a week rent – a gross yield of 2.98%. Include 5% for stamp duty and a little conveyancing, the purchase price is more like $953,000 and the yield falls to 2.83%.

There are a number of estimates of rental yields around, none of them especially authoritative. In a comprehensive assessment of the state of the housing boom, AMP chief economist Shane Oliver put the gross rental yield of housing at about 2.9%, which, after costs, comes down to a net yield of around one%. Pre-tax, post-tax, negatively geared or whatever, that’s lousy. You can get more from a bank deposit. (My suspicion is that most punters aren’t very good at considering all the costs before joining the landlord class. As a rule of thumb, maintenance, agent’s fees, body corporate fees and sundries will always be greater than expected, while gaps between tenancies will be longer and rent and rent increases will be lower.)

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“Finance companies get paid to borrow money for a month in euros and yen in international markets and can use that cash to buy 10-year Aussie sovereign debt yielding 2.35%.”

Australia Central Bank Fights Resurgent Carry Trade In Aussie Dollar (SMH)

Add a resurgent carry trade to the list of things keeping Reserve Bank Governor Glenn Stevens from getting a weaker Aussie dollar. A widening yield advantage on the nation’s debt amid a drop in currency volatility is luring investors back to the strategy. Borrowing equally in yen and euros to buy Aussie earned 1.6% this month, after the same trade lost money in the first quarter. Expectations for swings in the Aussie are approaching the lowest levels this year as there is some speculation of the timing of any US or Australian rate changes. “In a world of zero and negative yields, Aussie stands out as king – or if not king, certainly a member of the royal family,” said Robert Rennie, Westpac’s global head of currency and commodity strategy.

“Carry is here to stay for the foreseeable future.” Finance companies get paid to borrow money for a month in euros and yen in international markets and can use that cash to buy 10-year Aussie sovereign debt yielding 2.35%. The RBA has raised concerns that central bank bond-buying will prop up the Aussie at a time when the local exporters need depreciation to cope with slumping prices of iron ore, the country’s biggest export earner. The local dollar headed for its strongest two- week gain in a year as Germany’s average yields dropped below zero for the first time. Japanese investors bought a net 345 billion yen ($3.7 billion) of Australian sovereign debt in February, the most since August 2011, Japan’s Finance Ministry said.

Excluding debt held by the RBA, central banks owned 29% of Australia’s public debt as of December 31, according to the International Monetary Fund. Overall, foreign investors owned 67% of the total, a level Barclays calls “very high.” “Japanese and European investors still stand out,” said Kieran Davies, Barclays’s Sydney-based senior economist. “Relative to other currencies, our interest rates are quite attractive.” The premium offered by Aussie debt over its triple A-rated peers rose to 1.59 percentage points last week, the most in five weeks, and was headed for its biggest monthly increase since November 2013.

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“6% of the population – or 1.5 million people – were classed as living in entrenched poverty..”

One Million Australians ‘Entrenched In Disadvantage’ (Guardian)

More than a million Australians are “entrenched in disadvantage”, with many of them having little hope of getting out of poverty, research released before the federal government’s budget has found. Despite two decades of economic expansion in the country, up to 6% of the population – or 1.5 million people – were classed as living in entrenched poverty, the Committee for Economic Development of Australia report said. Before the launch of the report on Tuesday, the Ceda chief executive, Prof Stephen Martin, said it was time to “tear up the rulebook” on the way the government approached poverty. Any policy aimed at curbing disadvantage had to also tackle issues such as education and social exclusion, he said, identifying them as key areas for government intervention.

“Labour market programs – essentially using a big stick to tell people they’ve got to get a job or face even further financial disadvantage – should not be the primary policy instrument for this group of people,” Martin wrote in a piece accompanying the report. “It is absolutely clear that labour market policies have not worked because they fail to tackle the heart of the problem and yet it seems they are the only approach successive governments are willing to focus on. “The main problem often isn’t that people don’t have a job, but the consequence of a range of other issues including education levels, mental health, social exclusion or discrimination. “It may well be that welfare spending may have to increase but the payoff longer term is potentially significant.” Martin said it was a waste of taxpayers’ money and short-sighted to continue to spend welfare money without having effective policies in place to help people move out of poverty.

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The future of the world.

Permaculture In Malawi: Food Forests To Prevent Floods And Hunger (Guardian)

As January’s floods showed, Malawi’s climate is challenging. We have seven to eight months without rain, followed by torrential downpours pounding our parched landscapes. Climate change may make things worse, but the pursuit of charcoal and firewood, and the wholesale destruction of indigenous forests in favour of maize, has left the country vulnerable. Forests regulate water flow and protect topsoil. Restore the forests and you will go a long way to preventing flooding. Design the forests along holistic permaculture principles and you will achieve much more: water harvesting, fuel wood, high-quality timber, indigenous forest restoration and highly diverse food production.

In a country where almost half the children under five are malnourished and chronic hunger is common, any holistic solution must consider food sovereignty. One solution is forest gardening, an approach to food production based on the fact that forests are resilient and highly productive systems that have existed for thousands of years. Natural forests do not need pesticides or chemicals to ensure their yields, but rather exist in a constant flow of production and recycling. Permaculture has adopted this concept to create “food forests”, systems designed along the same principles as natural forests but with more of a focus on multipurpose plants and animals of direct benefit to humans.

A natural forest consists of roughly seven layers: the rhizosphere, ground covers, herbaceous layer, shrub layer, climbers, lower canopy and climax layer. While the species in a natural forest might not be of direct use to humans, in a food forest they are. Imagine a dense forest of mango trees, acacias, citrus trees, coconut palms, guavas, moringas, towering tamarinds and mahoganies. Climbing up many of these trees are passion fruit, air potato, loofa and shushu. Pigeon pea, cassava, the purple flowering tephrosia, hibiscus, amaranth and the big yellow flowers of cassia alata, occupy the shrub and herbaceous layers. Turmeric, arrow root and ginger grow in abundance. Aloe vera grows here and there and cow pea, sweet potato and watermelon crawl along the forest floor or edge.

The ground is strewn with a thick layer of decomposing leaves which serve to build rich, healthy soils and maintain the link with microorganisms. A mass of flowering species create excellent environments for bees and other beneficial insects. The system is self-replicating, has great commercial value and is highly beneficial to the health of all creatures that interact with it. Such forests can flourish in Malawi, and I believe it is our duty to provide these beautiful and plentiful systems for future generations. Indeed there are a number of successful examples of similar systems here already. Lukwe in Livingstonia is one of the best examples of well-established passive water harvesting systems in Malawi.

Read more …

Mar 162015
 March 16, 2015  Posted by at 12:09 am Finance Tagged with: , , ,  19 Responses »

Jack Delano Atchison, Topeka and Santa Fe, Sibley, Missouri 1943

Let me give you a quick update on our adventures down under: it’s already a month ago that Nicole was a key speaker at the Great Debate during the Melbourne Sustainable Living Festival. Time flies ever faster. I arrived a week later, and we spent two weeks in Melbourne in the granny flat of our friends Daryl, Lucy, Maggie and fierce border collie Sirius (Serious?) Black. Nicole and I hadn’t seen each other in almost two years, and that’s a long time when you try and run a company together.

Then, 10 days ago, we flew to Tasmania for the Australasian Permaculture Convergence, where Nicole was one of the keynote speakers, along with the very gracious David Holmgren and oldtimer permaculture pioneer Stuart Hill, whom I managed to squeeze a tap dance out of.

The Convergence took place in a little town named Penguin, on Tasmania’s north coast, which of course has a big statue of a penguin on the main road along its beach. It’s also sort of the birthplace of permaculture. Lovely part of the world. Do go see it when you get a chance. Great place to live too! We were invited to stay for the whole week with the very kind and generous Tom and Jerry (no, Jenny) in Burnie, a somewhat larger town half an hour away. Tasmania is quite a large island, with its own indigenous plants and animals, where only half a million people live in total.

The Convergence was a jam-packed 5 days with 200 people attending, with the everlasting challenge to find internet connection, much of which had to be done by tethering my phone. It is occasions like this that allow us to meet lots of people we would never otherwise have the opportunity to talk to, and there’s a lot of bright ideas in the permaculture movement. They just mostly need to be updated on the finance aspect of their world, and its consequences for everyone involved, and that’s sort of where we come in. Because David Holmgren, the guru of permaculture, is such a big fan of both Nicole’s message and my writing, people in the movement pay close attention to what we have to say.

It’s always a fantastic and at the same time humbling experience to arrive somewhere in the middle of nowhere at (for me) the other side of the world, and be invited to come stay with people who then tell you they’ve been reading you for years and consider themselves your biggest fans. That’s what happened when after the Convergence we were invited to spend two days with Phil and Lyn and stonedeaf Irish setter Rosie.

Wonderful people, and it’s at moments like this that you fully realize that the flipside of meeting all these fantastic people on your travels is that you have to leave them behind again at some point. In this case two days was definitely way too short. Traveling the way we do would not be possible if we had to stay in hotels etc., that would be a big energy drain. Staying with readers, with real people, on the other hand, keeps that energy flowing.

We flew back to Melbourne yesterday, where right now, as I write this, Nicole is doing an interview in the back yard of Sam, Helen and Laurie’s home for a documentary Sam and his cameraman Jordan are shooting on the theme: ‘What Can One Do In The Face Of The Crash?’. Tomorrow, we’re back on the road, or rather the air, to go to New Zealand, Nicole’s new home country. She’s moving soon to Wellington on the north island, so we need to get her stuff there from the south island. It looked for a while as if cyclone Pam, which devastated Vanuatu and other south Pacific islands, was perhaps going to disrupt plane traffic tomorrow, the 17th (it’s 15 hours later here than EDT), but the latest is that it’ll be alright. Not for all those who lost their homes on the islands, mind you.

We know there will be talks in the Bay of Islands area (details to follow), but other than that nothing’s carved in stone. So if you’re in New Zealand and you want to meet us or you want to organize events, drop us a line either by email or in the comments section. The internet (I like saying the Interwebs) is a great means of communication, and it allows us to do what we do, but meeting our readers face to face adds a whole, and very gratifying, dimension to the whole thing. So don’t be shy! We want to meet you too!

Jun 142014
 June 14, 2014  Posted by at 3:17 pm Finance Tagged with: , , , ,  1 Response »

DPC Whirlpool Rapids (Grand Trunk Railway) Bridge, Niagara Falls, NY 1899

The Automatic Earth’s Nicole Foss will be doing a speaking, teaching and workshop tour of Australia with Oz native permaculture co-guru David Holmgren, from June 29 to July 19. You can see the agenda in this post, as well as in the left side bar of The Automatic Earth, where it will be updated as more details become available. There is of course no need to mention that if you’re around any of the places they visit, or even if you’re not, this is definitely an opportunity you do not want to miss. I’ll be lazy for only this once and leave you with Dave’s own blurb for the tour.

Nicole Foss and David Holmgren Speaking Tour: Strategies for a Changing Economy – Survive and Thrive

We are approaching many limits to growth over the next several decades, and are consequently facing many challenges in our immediate future. Finance, energy, environment, resources and climate will all impact on the single-minded, one-dimensional trajectory human society has been on in our era of growth imperative. Our current path is unsustainable. It cannot and will not continue, so we must adapt our societies in order to build a new future.

The first challenges are being presented by the ongoing global financial crisis, which is far closer to its beginning than it end, and by the geopolitics of energy. Events in Europe, particularly in Cyprus, Detroit and latterly the Ukraine, represent a major wake up call that financial crisis is about to resume in earnest and that energy issues are moving towards criticality in many places. We must anticipate and navigate a period of rapid economic contraction and increasing risk of resource conflict, punctuated by the emergence of geopolitical wildcards.

Building resilience in an era of limits to growth

Nicole Foss will explore the links between the converging pressures facing us — economic contraction, peak energy and geopolitical stress. She will outline the implications for our everyday lives and share practical solutions she has observed from around the world.

Permaculture surfing the property bubble collapse

Drawing from 30 years of permaculture teaching, designing and demonstrating rural and urban agriculture food production systems for sustainable living, Transition activism and by personal example, David Holmgren will outline practical strategies to help households and communities survive, thrive and contribute to a better world.

Permaculture co-founder and the author of Future Scenarios, David Holmgren toured the country with Richard Heinberg in 2006 informing the public of the threats of imminent peak oil and the permaculture responses. Eight years on, more people have installed insulation and solar, started growing food, raising chooks, and buying from local producers.

Eight years on, the peak of conventional oil is already in the rear view mirror and the first stage of the second Great Depression is pulling apart economies and nations around the world. The mining boom has allowed Australia to dodge the worst, but the signs are not good. Government plans for austerity highlight the need for households and communities to increase their self reliance.

David’s updated presentation uses permaculture design principles to interpret the signs and show how getting out of debt, downsizing and rebooting our dormant household and community non-monetary economies are the best hedges that ordinary citizens can make. The idea that these household and community economies could achieve unprecedented growth rates if the monetary economy takes a serious dive is a good news story you won’t hear from mainstream media.

The shift of metaphor from ‘retrofitting’ to ‘surfing’ suggests a stronger role for positive risk taking behaviour change without the need for expensive changes to the built environment; that few will be able to afford. Returning to Aussie St, David shows how the permaculture makeover and behaviour change is progressing through the second Great Depression. Aussie St is not only surviving but thriving through the “dumpers” that property bubble collapse, climate chaos and geopolitical energy shocks have unleashed on the lucky country. It’s an endearing, amusing and gutsy story of hope for in-situ adaptation by the majority of Australians living in our towns and suburbs.

On this tour Holmgren is joined by Nicole Foss, leading system analyst, who explains how the deflationary dynamics that always follow finance and property bubbles, will rapidly impact individuals, families and communities, while the longer acting forces of Peak Oil and Climate Change will determine and limit the nature of any economic recovery. Nicole will paint a comprehensive picture of where we stand today globally, how our human operating system functions, how and why it is acutely vulnerable, and what we must do about the predicament in which we find ourselves.

The focus will be financial, social, and geopolitical, reflecting the priority of impacts likely to be felt in the relatively short term. The critical factors for change will be highlighted, with an outline of the possibilities that exist within the scope of the emerging reality. We must plan to restructure our societies from the bottom up, so that both the transition period and our eventual recovery from the coming upheaval can rest on a solid foundation. That foundation requires the resurgence of resilient communities and the development of true human capacity.

Her succinct and riveting presentation sets the scene for the positive permaculture strategies. More than just an affirmation of what many are already doing, Foss’s systemic perspective is a wake up call for those concerned about environmental and social issues to understand how their own exposure to financial collapse will determine whether they can shape a better future for themselves, their children and their communities.

The two will inform Australians how it’s possible, although not inevitable, to weather the coming storms with grace, rebuild community solidarity and provide a bulwark against the worst expressions of fear, blame and zenophobia that naturally arise in times of hardship. Most importantly, it will highlight how a small but significant minority following a path of enlightened self interest, and informed by permaculture design principles, may have a more powerful and positive influence than mass movements demanding their rights from weak and ineffective governments.

Humanity stands on the edge of a precipice, and where we go from here is in our own hands. There is both considerable danger, and the opportunity to address what is arguably the most challenging situation in human history constructively.

Survive and Thrive, with Nicole Foss and David Holmgren

(For up to date info, please see the Event page on our webiste.)


Nicole Foss, also known as ‘Stoneleigh’, is a Canadian sustainability, energy, and finance expert. She is best known for her works at her website, The Automatic Earth. Nicole was editor of the Oil Drum Canada website where she wrote on the connections between energy and finance. On this tour she will further explore the links between the converging pressures facing us (peak oil, financial crisis, climate change), the implications for our everyday lives, and solutions. She is a permaculture teacher as well.

David Holmgren is best known as the co-founder of permaculture, possibly the most successful export of ideas from Australia. As a permaculture author, his 2002 book, Permaculture: Principles and Pathways Beyond Sustainability is considered to be the benchmark literature when discussing sustainability. His books and essays have sparked many discussions amongst people seeking solutions for peak energy and climate change. David will focus on solutions, updating and extending his "retrofitting the suburbs" theme. He will also discuss the important role of the "informal economy", the household and local economy, which do not show up in official GDP calculations.

May 132014
 May 13, 2014  Posted by at 7:55 am Finance Tagged with: , , ,  65 Responses »

Arthur James Northwood Maori woman with catch of fish on Northland coast, New Zealand 1910

Atamai Village in New Zealand is an ambitious project aimed at providing its villagers’ basic needs, food, water, shelter, once the global economy and its energy resources start running dry. Changes to the climate are also on many people’s minds. The idea is to build a community that has an internal economy, with people buying each other’s products, in which permaculture plays a major role, while others work outside the village as long as that is viable. Since it’s expensive to set up a project of this scale, we’re talking a few hundred people, it’s not cheap to purchase a plot of land and/or a home. That is a problem in and of itself, because it selects for those with a certain amount of wealth, who will on average be “older”, while a good age balance is vital. It’ll be interesting to see how Atamai, and other projects of its kind, deal with that issue. Still, you have to start somewhere.

Atamai director Ben van der Wijngaart speaks with Nicole Foss, renowned expert on financial instability and limits to growth. They discuss some of the features and benefits of living in Atamai, and the best responses to the coming uncertainty.

Atamai is actively searching for new people to join. If a project such as this appeals to you, and you possess a skill set that you think would fit in with what’s required to make it run well – or better -, do read through the info provided at the Atamai site and contact the village.

NB: As you can see in the video, Nicole has joined Atamai and moved from Canada to New Zealand. That does not mean that she’s bought land or a home there. In fact, The Automatic Earth is on the verge of bankruptcy, we’re awfully underfunded. Nicole provides advice and skills for Atamai, in exchange for which she receives lodging. But the work for Atamai also means that you have seen less of her here at The Automatic Earth lately (though she’ll be back soon, don’t worry). That’s a vicious circle that only you can break by funding us through donations and purchases. Nicole and I don’t mind surviving on little, in fact that’s exactly what we signed up for, but we do still need to survive.

For more info on Atamai Village, visit:
See also this ad that we have been running for a while now in our right hand sidebar:

Feb 022014
 February 2, 2014  Posted by at 8:34 pm Finance Tagged with: , ,  7 Responses »

Marion Post Wolcott “Grocery store in Negro section, Homestead, Florida” January 1939

Nicole talks extensively (do have a seat available) in a very recent interview with Alex Smith at Radio Ecoshock about the discussion surrounding David Holmgren’s Crash on Demand: Welcome to the Brown Tech Future Crash on Demand, Nicole’s own reaction to it at The Automatic Earth, Crash on Demand? A Response to David Holmgren , the fact that many people apparently didn’t understand what she was trying to say (especially the line ”The best way to address climate change is not to talk about it” came under fire), and finally what we at The Automatic Earth think needs to be added to Holmgren’s paper, and why we insist that the financial crisis is such an important topic for everyone, including those in the environmental movement. It’s about time.

This article addresses just one of the many issues discussed in Nicole Foss’ new video presentation, Facing the Future, co-presented with Laurence Boomert and available from the Automatic Earth Store. Get your copy now, be much better prepared for 2014, and support The Automatic Earth in the process!