Nobel laureate economist Paul
Krugman doesn't get it. Not even Nouriel Roubini, the doomer's
doomer of economists, truly comprehends what's about to happen to the
global economy.
Even in the midst of financial collapse, the economic discussion
utterly fails to take into account the
effects of the rapidly worsening global energy situation (aka Peak Oil)
and the consequences that the draining of the financial capital pool
will have for our ability to bring oil alternatives on-line in time.
Without oil or a substitute, economic activity will be constrained by both
financial and energy shortages, rather than just one or the other. Most
substitutes that have the potential scalability to meet the challenge
(e.g. a switch to electric cars and electric rail) require serious
capital to fund the infrastructure build-out, and capital is in shorter
supply every day. The double whammy of oil shortages and capital
shortages could even result in a worsening of global warming if we
switch to cheap coal rather than expensive renewables to replace our
declining oil supplies. We have at most 5 years to address this
situation. At this time there aren't even any coherent plans in place
and money is rapidly becoming scarce.
Then there's the global
food situation that is being exacerbated by climate change (which is
causing worsening droughts and floods), the rising cost of fertilizer
and the depletion of irrigation water. The global economic recession
will have amplifying consequences for regional food shortages, since
lower economic activity and the implosion of global credit markets will
have a braking effect on donations for international food aid. This is
already happening to Zimbabwe. If a region's food supply declines, so
does its economic capacity, as an underfed workforce is much less
productive. That in turn makes the recession or depression worse.
All
these factors will work together over the next two to five years, and
the interaction has the potential of creating a level of global
distress that is an order of magnitude worse than a simple recession,
no matter whether it looks like a V, a U, a W or an L. I don't
think we're going to see significant inflation, and that scares
the crap out of me. Instead, I'm convinced we're going to see a massive
global deflationary event, starting with a debt shock within the next
two years and spiraling into a deflationary depression as debt and
credit (the modern electronic version of money) evaporates.
We are facing a serious shitstorm. I expect the situation to
transition
from recession to depression rather suddenly, though I don't know
exactly when.
What I've read over the last four years has led me to the conclusion
that by the end of 2010 we'll probably be in the first year of a
global depression, one that could last several decades due to worsening
energy shortages and the rising relative cost of raw materials. In fact
it's entirely possible that the situation by 2020 could be the new
normal -- the words "recession" and "depression" imply recovery, which
in my opinion is not at all guaranteed in this situation.
So all is doom, right? Wrong. So deliciously, wondrously
wrong...
 I sat transfixed in front
of my TV here in Ottawa on the night of Tuesday, November 4,
2008. On the screen Barack Obama delivered his acceptance speech,
and the world changed in front of my eyes. For eight long years I
had assumed that all was lost in the USA,
and by extension, in the world. Emerging from that long dark night of
the soul was an indescribable, ecstatic experience.
Obama himself was not the reason for my joy, however.
Obama the President is beholden to powers behind the throne and is
constrained by circumstances beyond his control and outside
influences. As well-meaning as he may be, he will not be able to
change the course of events that have already outrun our ability to
comprehend, let alone control them. Obama the Idea, and the
simple fact of his election, though -- ahh, now that's another
story. The symbolism of his election and what it implied about a
shift in public consciousness was what made me leap for the champagne.
I have been watching the world spiral towards doom for several
years
now. A sense of ineluctability has suffused my growing comprehension of
the probable outcome of the converging crises in ecology, energy and
economics. That combination of severity and inevitability left me in
deep, mortal despair for a long time. I finally accepted that there is
no technical “solution” waiting in the wings to be discovered or
applied, but even that equanimity simply left me in a limbo of hopeless
acceptance.
Then earlier this year I finally understood that the road out
of our
predicament can only be orthogonal to the problem space itself. If we
cannot hope to change the trajectory of our world, all that’s left is
to change ourselves. Personal transformation, in which individuals
change to become metaphorical “imaginal cells”
in the caterpillar body
of humanity offers at least a glimmer of hope, esoteric though it may
be.
But is such a transformation possible on a scale large enough
to
affect humanity as a whole? I was still unsure of that until midnight
on that delirious Tuesday. It was then that I understood that such a
metamorphosis was not only possible, but was happening in front of my
eyes. In that moment the signs I had seen in Paul Hawken’s description
of “Gaia’s antibodies” in his book “Blessed Unrest” were
validated.
Our civilization may not have a future in its present form,
but the
idea that we may have a chance to chrysalize and emerge as something
completely new fills me with an irrational flood of optimism.
Gobama, the Butterfly President!
November 14, 2008
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