Dickens on the Square has come and gone...
Seemed to be a success!...
Friday, November 26, 2010
Its that time of year again...
Downtown McKinney's premier festival, the 30th Annual Dickens
of a Christmas...Home for the Holidays is this weekend.
...Festival Hours:
Friday, November 26, 2010: 10 a.m. - 8 p.m.
Saturday, November 27, 2010: 10 a.m. - 8 p.m.
Sunday, November 28, 2010: 12 p.m. - 6 p.m.
Festival Location:
Historic Downtown McKinney
Monday, November 22, 2010
Gross All Over
I was kind of relieved to be leaving the country again this week with Thursday's Feast of Football looming, followed by the "consumer" buffoonery of Black Friday. Distance affords reflection and this is a good week to ask ourselves what, exactly, lies on the other side of this massive wall of suspense we have constructed around the fate of our money system?
What a scary season! This is what it feels like to hit the wall of limits to everything the earth provides us. Our oil problems are for real and urgent, despite the arrant nonsense ("There Will Be Fuel") published last week in The New York Times - a news organization that runs a direct hose-line of smoke up its own ass from the oil industry's chief PR shop, IHS-CERA, The Times's sole source on the energy beat. Meanwhile, Europe is back to imploding financially again (with Ireland as the rotting head of the dead fish in the current rotation). The US housing sector has flat-lined, the banks are so lost in the "mortgage-gate" morass of lost and robo-forged documents that the ghost of Roy Cohen couldn't get them out of it alive - though Lloyd Blankfein and Jamie Dimon must pray to tiny gilded statuettes of old Roy in their late night sweats. Ben Bernanke is set to shovel huge transaction fees to the "primary dealers" (i.e. Lloyd's and Jamie's banks, et al) in his scheme to buy treasuries through them monthly at a whopping premium instead of directly from the source - with the side effect of making it an act of futility for ordinary Americans to save money the old-fashioned way, at interest. The fetid remains of decomposing CDOs line the vaults and stain the books of financial institutions everywhere. Accounting fraud is still the order-of-the-day in everything from Fannie and Freddie to your neighborhood HMO. Government at all levels is dead broke. Did I leave out endless war at endless cost (of money we don't have)?
There's a lot to feel uncomfortable about. But the question remains: what will be there when we break on through to the other side (as The Doors used to say... remember them? Probably not).
You can bet there will be a "workout" of all the imbalances, distortions, perversities, rackets, obligations and other financial dead weight paralyzing this country. America will be dragged kicking and screaming through it - like a 14-year-old video gamer through the Okefenokee Swamp - and it all amounts to one thing eventually: a society with much less money, and perhaps with a lot of things in disarray. After being crybabies for a while - and if we don't blow up the planet - we'll face the task of reconstructing a society that has some kind of future. It probably won't look like the way we live now. Are you ready to imagine what that might mean? Readers are incessantly twanging on me to lay out some kind of agenda, some "positive vision" - or, resorting to the phrase I so disdain for its sad-sack sanctimony, to "offer some solutions." Since it is Thanksgiving week, a time of gratitude and humility, I'll try to oblige. I have stated a lot of this before, but readers seem to forget.
Basically, we're looking at a re-set to a lower-scale type of economy and smaller, more local, autonomous units of governance. We have to move from unmanageable levels and layers of complexity to more direct, local modes of activity. We would necessarily have to let go of a lot of things that have provided comfort, convenience, and incessant diversion from reality. I'm not altogether confident, for instance, that we can even keep local telephone systems operating - let alone cellular networks that can download porn movies, if that gives you any idea of how things might shake out. And forget about getting "back on track" with the so-called consumer economy. The struggle to hang onto all this crap may steal all our attention from the really necessary tasks.
Will there be money? And what will it be? A lot of idealists promote what they call "local currency." Presumably this is some kind of paper medium-of-exchange representing claims for future work or goods. Their models are Berkshire Bucks and the scrip issued in Ithaca, New York. I do not believe this for a moment, anymore than I believe we'll be driving psychedelic Volkswagon buses to rock festivals twenty years from now. I believe money will be silver and / or gold. If any paper is involved it would be something like a promissory note from a person with a lot of silver and gold, perhaps even one affecting to act like a bank, as the Medici did. There may be other miscellaneous kinds of tradable paper - bills of lading, letters of credit - but nothing like the abstract nonsense we're swapping around today. I doubt that corporations as we know them will survive the end of the age of fossil fuel driven hyper-complexity, and by then their paper will be in utter disrepute anyway. There's no reason that barter would not be a common feature of daily life, even if gold and / or silver are circulating. This is certainly how I imagined the future in the Witch of Hebron and World Made By Hand.
The human race (North American division) had better reinvent small-scale farming or there will be no Homo sapiens around these parts. Plenty of knowledge and skill is still out there, though not widely distributed. There are people who still know how to breed working animals, train mules, oxen, and dogs. We can grow edible plants without dumping oil-and-gas byproducts all over the ground. Our soils are pretty played out, but we know how to improve them. A much greater percentage of people will have to take up this line of work. I see agriculture coming back to the center of economic life. It doesn't have to be like the 13th century, but I rather think the social relations around farming could be starkly different than the model we know today, if only to keep the wandering riff-raff at bay. I don't know if the countryside will be orderly enough, otherwise.
We have no idea how we're going to make useful products when the conveyer belt from China to WalMart grinds to a halt, as it surely will. I would not bet on nanotechnology or carbon ladders-to-the-stars or related techno-grandiose horseshit so popular these days at the corporate-sponsored conferences, where venture capitalists dressed in black like the old Viet-Cong spin their fantasies between plates of basil-infused duck with quinoa farfalle, sets by Vampire Weekend, and other blandishments of the dead-end techno-wankery life. My guess is we'll be making a lot less stuff, and there will be little plastic involved (except what can be scrounged up), and it will be more like cottage industry than Henry Ford's River Rouge assembly plant. Surely water power will have something to do with it, perhaps hydro-electric, if we're lucky.
It may be too late to improve the railroad system. There's quite a bit left, though too many places have been cut off from it, especially small towns - which will regain importance as farm trading towns with or without the railroads. But our continued investments in new freeways and airport expansions have been about the dumbest choices we've made in recent years. And now that we're heading into a vortex of capital scarcity - that is, lack of money for any kind of project - we may be out of luck on fixing the railroads. Especially as political mischief mounts and Sarah Palin huddles with Glenn Beck to put the final polish on her inaugural address. Need I mention that our fantasies about running the Happy Motoring matrix on alt.fuels is one of the most corrosive delusions plaguing our culture now, especially among people who ought to know better.
There's no guarantee that the USA will hold together as a continent-sized federal republic, and if history is any guide the fact is that political boundaries constantly shift over time. Manifest destiny is looking less manifest these days. If anything, the federal government can only become more broke, more ineffective, and finally irrelevant. If there is any Big Brother, he will show up in your county courthouse in a cheap suit. Or perhaps we're in for more interesting costumes. Personally I could go for something other than Land's End casuals. But please, check the "no" box on ruffed collars and Star Trek outfits. I stray from my theme....
Anyway, I'm convinced that a sore beset public, broke, hungry, idle, and hopeless, will beg somebody to push them around, or at least tell them what to do. Our new "leaders" will range in style and disposition just like the honchos of yore, from Otto the Illustrious, to Charlemagne to Ethelred the Unready. Who knows what residue of Anglo-American law will persist. My guess is that some of these characters will act more in dispatch than in the interests of what used to be known as justice.
I do think the next ten days or so might be pivotal ones in the global banking system. Europe is not doing a very good job of sweeping its sovereign bankruptcy problems under a rug the size of Belgium. Faith is withering away in currencies and tradable paper of all kinds. Any sort of gross instability from any player in the global money game can blow up the equity, bond, commodity, and currency markets. And things are getting gross all over....
Posted from the departure lounge, Sydney airport, en route to Perth....
Wednesday, November 17, 2010
An interview with James Howard Kunstler...
1. When will the average US citizen wake up to the perils of peak oil?
JHK: When a crisis comparable to the 1973 OPEC embargo -- with lines at the filling stations and hefty price-hikes -- whaps them upside the head. For now, what I call the psychology of previous investment is a massive impediment to the public's ability to think clearly. By this I mean mainly our sunk costs in suburbia, including all its furnishings and accessories. That's where we put so much of our "wealth" over the past sixty years. I regard these as tragic mis-investments, of course, because the wealth has gone into a living arrangement that has no future. The housing bubble crash is greatly aggravating the problem, because it is de-valuing the whole kit-and-kaboodle. But the net effect for now is only to generate more anxiety among the public, which leads to more confusion, more cognitive dissonance, more static in the collective imagination, and more political noise -- in short, more obstacles to clear thinking.2. There seems to be no political will to tackle the reality of peak oil. What might tip that balance (before we hit the proverbial wall)?
JHK: Leadership in America has been abysmal on these issues -- and not just in politics, but in business, media, education, the enviro community, even the clergy. For the politicians, I have to suppose that the implications of peak oil are just too painful to face. They simply do not compute into any winning formula. They won't go near it.I'm quite convinced that Dick Cheney and George Bush were informed about the oil situation, in particular its relation to the national defense. After all, Robert Hirsch arrived on the scene loudly in 2005 with his report, commissioned by the US Department of Energy, which was quickly suppressed because its conclusions were so stark. Bush made occasional remarks about our "dependence on foreign oil" but he didn't have the guts to spell it out further, and he was a tool of Big Oil, after all, which has run a PR campaign for ten years denying the peak oil story. Anyway, he didn't want to interrupt the fabulous credit-driven boom of the years leading to his final months in office, when things really did go south.
Obama is another story, of course. He couldn't be so poorly informed as to not know about peak oil in most of its contours and implications, especially vis-a-vis the military, which has issued more than one report while he's been in office. So I conclude that he is a kind of charming bounder. I'm not necessarily sorry I voted for him, because I think McCain would have been worse, entwined as he is with the lunatic right-wing and its toxic aura of paranoid unreality.
It's unclear whether the media is too dumb to get the complexities of our oil predicament, or if they are just bought-off lackeys of the various corporate interests. Probably a combo on that. It is rather hard to understand, for instance, the vapidity of The New York Times -- in particular its op-ed pundits, Krugman, Friedman, Brooks. The Times's straight reporting on the oil scene has been scant and fatuous. The Wall Street Journal, ditto. TV news operates in its own special sewage canal of idiocy, so one might not expect much from there.
Since business in America has resolved more and more into a set of rackets, one can't expect plain-dealing from that sector these days.
I've seen the failure of the environmental community up close. Two years in a row at the Aspen Environmental Forum, I listened to the cream of the Green movement rhapsodize over all the cool new "green" ways you can run cars other than on gasoline. You see, their base assumption -- like everyone else in this society -- is that driving cars incessantly is a God-given entitlement. They were in a techno-rapture over electric cars, bio-diesel, and so on. They didn't once mention walkable communities or public transit. They're just not into it. I consider their position utterly disgraceful.
The clergy is an interesting case. Notice especially how the Sunbelt born-again crowd are perhaps the staunchest defenders of suburbia -- and everything that goes with it, including car dependency and and huge volumes of oil imports from unreliable foreign nations. They conflate suburbia with the constitution and Jesus and, really, their belief system is so incoherent and ridiculous that it must really frighten the educated folk of other nations who see how we carry on.
3. If you were President and had free reign, what would be your energy plan?
JHK:- I would commence a public debate on whether we go forward with a nuclear power program, to weigh the hazards involved -- but, frankly, there may be no other ways to keep the lights on in a decade or so. It may turn out that we are too short of capital to carry out such a program, or our society may be too disorderly in the years ahead to run it, or we may decide the hazards are not worth it, but the discussion must start now.
- I would direct major capital resources to repairing the conventional passenger railroads in the US, because commercial aviation as we know it will not continue another ten years, and ditto Happy Motoring, and this is a big continent-sized nation. If we don't get regular rail running, we may not be able to go anywhere. We should just put aside our fantasies about high-speed rail or mag-lev. We're too broke for that, and we need to temper our techno-grandiosity. But, believe me, Americans will be deliriously happy ten years from now if they can go from Des Moines to Chicago at 80mph on-time. During the Obama years, we've stupidly poured our dwindling capital resources into building more highways. This foolishness has got to stop. I would promote public transit at the smaller municipal scale as well, to go with regular rail.
- I'd begin the task of rehabilitating our inland waterways so we can move more goods around the nation by boat -- and in particular the port facilities that have been mostly removed in places like St. Louis and Cincinnati and around the Great Lakes.
- I would put an emphasis on walkable communities. I would prepare the nation for the possibility of gasoline rationing, since events could shove us into criticality at any time.
- I would begin closing down scores of unnecessary overseas military bases and I would terminate the nation-building project in Afghanistan since there is no possibility that we can control the terrain or the population there for anything more than the shortest run.
- I would direct the Attorney General of the US to mount investigations of the Bank of America, JP Morgan, Goldman Sachs, and other big banks in connection with the massive swindles and frauds in house lending and the securitization of mortgages -- because the rule of law requires that somebody be held accountable for the demolition of the banking system.
4. Now take out your crystal ball. What is the most likely scenario you see playing out in global energy supplies over the next few decades?
JHK: I see the USA getting blind-sided by events. We import nearly three-quarters of the oil we use and much of it comes from very dodgy places. The ideas derived from Jeff Brown's Export Land Theory tell us that oil export rates are certain to go down very steeply and soon. Before long, exporting nations will have to ask themselves whether they ought to keep some of their oil around for their own people.In the meantime, China is very busy spending its foreign exchange reserves on "favored customer" oil contracts, more or less cornering a lot of the market. I think that will lead to conflict between them and us. We may even invoke the Monroe Doctrine over Chinese oil purchases out of Canada.
Also meanwhile, we'll see the feedback loop of demand destruction leading to supply destruction as the oil industry becomes starved of capital to get at new production to offset worldwide depletions, and that will result in wildly gyrating oil prices -- all of which will shove the global oil industry -- production and markets -- into fatal instability. Nicole Foss's rap on this dynamic is an excellent reference.
The prospects for gross geopolitical mischief around this are huge, of course, meaning war in some shape or form -- and it will clearly be a war over dwindling resources. Also, of course, you can't overstate the potential for disorder in the Middle East. The king of Saudi Arabia is well over 80 years old now and his successor is also old and ill. I'd suggest we may see a Shia uprising on the western rim of the Persian Gulf (that is, the Arabian side) that would bring down the Saud royal family and ignite a major struggle all over the region.
There is currently a lot of hoopla over shale gas in the USA, but I think that will disappoint us, since it requires gigantic ongoing capital investment, and capital will be in ever-shorter supply. And this is not to mention the other problems and hazards associated with shale gas "fracking," such as the extreme forms of groundwater pollution and cancer clusters.
Bottom line: in ten years or fewer the USA will be starved for energy resources and probably on its ass in one way or another.
5. The economy's a mess. What's the best possible outcome to this and how does it come about?
JHK: The best possible outcome would be a peaceful re-set to a lower scale of activity -- the whole downscaling and re-localization package. It's hard to see that happening smoothy.It will be very painful because we're talking about liquidation and de-leveraging beyond even Great Depression levels. We have to allow a clearing of mis-investment. Unfortunately, this means not just the "toxic" paper from the colossal frauds and swindles of Wall Street but much of the infrastructure of suburbia itself, which is losing value now even despite massive government efforts to prop up house prices and pretend that losses in commercial real estate haven't occurred. That clearing process is so tremendous that it is hard to imagine a way that it could occur without leading to gross political disorder -- including the possible breakup of the USA into smaller autonomous regions. We're looking at institutional failure at never-before-imagined levels: pensions and social security lost, insurance companies and banks collapsing, the medical system in disarray, really the whole social safety net and beyond just dissolving. This is a comprehensive economic collapse beyond the scale even of the Soviet collapse which, Dmitry Orlov tells us, at least allowed people to stay in their homes and get around on public transit when all else failed.
One much-fretted-over outcome is authoritarian government in the USA. We can see the larval stage of that now with the tea baggers and the theocratic right-wing and a Republican Party that has made itself hostage to the John Birch Society -- but I maintain, as I wrote in The Long Emergency, that it's more likely the federal government will become impotent and ineffectual, and therefore unable to carry out a "corn-pone Nazi" program, even if such characters got a hold of the offices.
In any case, America will be faced with rebuilding all the major pieces of its economy at a lower scale: farming, commerce, transportation, education, banking, you name it. This re-set will occur naturally -- if we don't blow ourselves to Kingdom Come -- but there's no telling how long the process might take. We do know that following the collapse of Rome, Western Europe endured nearly a thousand years of relative hardship. I'd add that societies are essentially emergent organisms and that this economic re-set would therefore be an emergent phenomenon -- not something that required centralized planning or anything like it.
One notable side effect of all this will be a "time out" from technological innovation, which is destroying the ecosystem of the planet Earth, our only home. The human race needs a time out from all this techno-magic-mischief, a period to reflect on what we've done and how we ought to behave with this stuff. I don't even know for sure whether it's a time out or a game-over for technology, and I'm not convinced that we need to know at this point.
6. What steps are you currently taking in preparations for the upcoming “post-peak” years? What do you advise to those simply looking to protect the purchasing power of their current wealth?
JHK: Well, at 62 I've already outlived Babe Ruth, Mozart, Abe Lincoln, and George Gershwin, so however long I go from here is "gravy." But I do all I can to maintain good health. I eat mostly plants, as Michael Pollan would say. I get a lot of exercise. I lead a purposeful daily life. I stay current with the dentist. I made the formative decision of where-to-live over thirty years ago when I settled in a "main street" small town in upstate New York. My surplus wealth is invested for the moment in hard gold, the Sprott Physical fund, Australian and Canadian short term bond funds (cash equivalent), and Potash mining. I am renting my dwelling, sitting out the housing collapse. I acquired the NY State handgun permit (not so easy). I have some tubs of brown rice, lentils, and curry powder, etc., stashed away. Alas, I didn't have the capital twenty years ago to get hold of forty acres and a mule -- but that's not a bad idea for other people.7. Are you able to tell (either based on your website viewership or book sales, or from any other source) in which parts of the country/population your teachings are gaining the most traction?
JHK: My only index of that is the size and mood of audiences where I speak around the country. The Pacific Northwest is always a lively spot. The people who show up are intelligent, informed, and interested. In Southern California I seem to be utterly unknown. Parts of the Midwest, such as Wisconsin and Minnesota, seem to be organizing for a different economy, but other parts (rural Illinois, Indiana, Ohio) are sheer zombie-land. New York City and Washington exist in bubble-fantasylands of their own. Rural New England is pretty peak oil aware, though the Boston-Cambridge hub is locked into transports of techno-rapture, probably due to the techno-grandiose culture of MIT. The baleful influence of Harvard shows up in the urban design and architecture field, where they are preoccupied with narcissistic careerism rather than repairing the human habitat. Dixieland is hopeless, what with their thrall to the born-agains and the misfortunes of their demographic (namely, "Cracker Culture" which celebrates ignorance and violence). I don't follow my book sales, frankly, and my website manager knows more about the activity on my site than I do.8. You speak to a lot of audiences and groups. What has shifted over the years and what, if anything, gives you hope in those trends?
JHK: I must tell you that I think almost nothing has shifted among the body politic except perhaps the levels of angst and desperation for individual citizens brought on by personal calamity involving job losses, debt, house repossession, family breakup, and related effects of our economic collapse. Meanwhile the distractions from all this pain and stress are ever more moronic -- Dancing with the Stars starring Bristol Palin -- can it get any worse?Mr. Obama, who I voted for, has done almost nothing to address our energy predicament, and the 2200-page financial regulation bill he signed does little to reform the problems in capital finance -- so, here we are eight months after Fin-Reg entering another stage of the banking crisis. We are still absolutely sleepwalking into the future.
9. It seems inevitable that the suburbs (with 60-mile commutes) and places like LA will suffer badly in a peak oil future. Do you still hold the view that some regions are going to fare substantially better than others?
JHK: It ought to be self-evident. I mean, compare Phoenix and Portland, Oregon. Phoenix is utterly toast in a few years. They can't grow any food there without expensive and heroic irrigation. They have water problems. They're slaves to their cars. They're in a place where even the hamburger flippers need air-conditioning to survive. It's quite hopeless there. Portland, on the other hand, has turned itself into one of the finest walkable cities in the USA and the Willamette River Valley is one of the most productive farming micro-regions in the world. Human beings will continue to live and thrive to some extent there. Similarly, I think the Great Lakes region is undervalued these days. It is whole lot of good ag land surrounded by the world's most extensive inland sea -- kind of a Mediterranean of fresh water. I remain pessimistic about Dixieland, which I think will be prone to violence and political disorder. In the longer run I believe it will become what it was before World War 2: an agricultural backwater. But, really, everybody in every region of the country will be touched by the problems of the long emergency.10. What question didn’t we ask, but should have? What’s your answer?
JHK: Will China dominate the world further into the 21st Century?A lot of people think so. I'm not so sure about that. They have problems that are orders of magnitude greater than ours with population overshoot, dwindling fresh water, industrial pollution, relatively little oil of their own, and legitimacy of governance. They've become net food importers.
We look at them and their recent accomplishments in awe -- and they've come a long way from the point thirty years ago when most Chinese lived like it was the twelfth century. But they came to the industrial fiesta very late. They are making some rather dumb choices -- like, trying to get their whole new middle class in cars on freeways, putting up thousands of skyscrapers. Their banking system is possibly more corrupt and dysfunctional than ours -- since it's run by the state, with very poor accountability for lending. As a Baby Boomer, I well remember China's psychotic break of the 1960s, when the country went cuckoo under the elderly, ailing, paranoid Mao Tse-Tung -- which is to say, they're capable of flipping out on the grand scale under stress. They are reaching out these days in a resource grab using their accumulated foreign exchange reserves. At some future time -- say, if the global banking system implodes, and their forex reserves lose value -- I wonder if they will reach out militarily for resources, and how the world might react.
In any case, I take issue with the Tom Friedman notion that the world has become permanently flat. The world is going to get rounder and bigger again. We'll discover -- surprise! -- that the global economy was a set of transient economic relations that obtained only because of a half century of cheap energy and relative peace between the big nations. Ahead now, I think you'll see the big nations shrink back into their own corners of the world. I'm not saying we'll see no international trade, but it will be nothing like the conveyer belt from China to WalMart that we've known the last few decades. And the prospects for conflict are very very high.
http://www.chrismartenson.com/blog/straight-talk-jim-kunstler-coming-cluster/47864
Monday, November 15, 2010
Sixty Lame Minutes
So, last night CBS hauled Aubrey McClendon, CEO of Chesapeake Energy, on board their flagship Sunday infotainment vehicle, 60 Minutes, to blow a mighty wind up America's ass (as they say in professional PR circles). America is lately addicted to lying to itself, and 60 Minutes has become the "go-to" patsy for funneling disinformation into an already hopelessly confused, wishful, delusional, US public.
McClendon told the credulous Leslie Stahl and the huge viewing audience that America "has two Saudi Arabia's of gas." Now, you know immediately that at least half the viewers misconstrued this statement to mean that we have two Saudi Arabia's of gasoline. Translation: don't worry none about driving anywhere you like, or having to get some tiny little pansy-ass hybrid whatchamacallit car to do it in, and especially don't pay no attention to them "green" sumbitches on the sidelines trying to sell you some kind of peak oil story.... It also prepared the public to support whatever Mr. McClendon's company wants to do, because he says his company will free America from its slavery to OPEC. By the way, CBS never clarified these parts of the story by the end of the show.
First of all, they are talking about methane gas, not liquid gasoline or oil. There are large deposits of methane gas locked into shale deposits roughly following the Appalachian mountain chain from New York State through Pennsylvania, West Virginia, into Ohio, but also hot spots out west. It's hard to get at. You have to basically blow up the shale rock deep underground with high pressure water that is loaded up with chemicals and sand particles to keep the rock fragments separated once they are blown apart. Chesapeake Energy specializes in this rock fracturing (or "fracking") method for drilling. You can get gas out of the ground this way. The question is how much, over what time period, at what cost.
At the present time, with America anxious about any kind of future energy, shale gas sounds like a dream-come-true. Mostly what the public saw on 60 Minutes last night was a sell-job for Chesapeake Energy to boost its stock price. Here are some facts:
• Over a 50 year period ahead, all the shale gas drilling of the Marcellus fields in New York State will produce the equivalent of three years US consumption at 2008 levels.
• A price of $8 per unit is required to make shale gas fracking economically viable in theory even for a short time. Gas is currently around $4. Expect to pay at least twice as much for gas.
• Even at higher costs, shale gas fracking is arguably uneconomical. It requires huge numbers of rigs, generally 8 wells per "pad," meaning very high capital investments. The wells produce nicely for a year, average, and then deplete very steeply - meaning you get a lot of money up front and very soon all that capital investment is a wash. Translation: Chesapeake can make a lot quick money over the next few years of intense drilling and they don't care what happens after that.
• Chesapeake itself estimates that 5.5 million gallons of fresh water are needed per well, often delivered in trucks, which require fuel.
• It takes three years, average to prepare a drilling "pad" and the up to 12 wells on it, working 24/7 in rural areas with significant noise and electric lighting
• The fracking fluid is a secret proprietary cocktail formula amounting to 5 percent of the liquid injected into the earth. It's composed of: sand; a jelling agent to suspend the sand because water is not "thick" enough; biocides to kill bacteria that thrive in jelling agent; "breakers" to thin out jell-thickened water after fracking to get the fluid out of the way of released gas and improve "flowback;" fluid-loss additives to decrease "leak-off" of fracking fluid into rock; anti-corrosives to protect metal in wells; and friction reducers to promote high pressures and high flow rates. Of the 5.5 million gallons of fluid injected into each well, 27,500 gallons is the chemical cocktail.
• Mr. McClendon said on 60 Minutes that it couldn't possibly harm the public's water supply because they were drilling so far below the 1000-foot-deep maximum of most water wells. He left out the fact that they have to drill through those drinking water layers to get down to the shale gas, and pump the fracking fluid through it, and then get the gas up through it. He also left out the fact that the concrete casings of drill holes sometimes crack and leak at any depth.
• The fracking fluid cannot be re-used. You have to mix new cocktail fluid for each injection.
• "Flowback" fluid inevitably comes back up with the gas, sometimes spilling over the ground. In any case, the stuff that does come back up is stored on the surface in lagoons. Often it contains heavy metals, salts, and radioactive material from drilling through strata of radon-bearing granite and other layers. Liners of flowback fluid lagoons have been known to fail.
• Gas well failures in Pennsylvania, where production was ramped up quickest in recent years, have ended up polluting well water to the degree that residents can no longer use their wells.
• Little is known about the migration of fracking fluids underground.
It seems to me that the chief mass delusion associated with this touted "bonanza" is that Americans would supposedly be able to shift to driving cars that run on natural gas. I believe they will be hugely disappointed. Between the cost of fracking production (and its poor economics), gearing up the manufacture of a new type universal car engine, and installing the infrastructure for methane gas fill-ups - not to mention the supply operation by either new pipelines or trucks carrying liquefied methane gas, we will discover that a.) America lacks the capital, and b.) that households will be too broke to change out the entire US car fleet.
What this disgusting episode really shows is how eager the USA is to mount a campaign to sustain the unsustainable at all costs, including massive collective self-deception. The lying starts at the very top, not just in Aubrey McClendon's office at Chespeake, but in every executive suite throughout the land - including the Oval Office - where any lie is automatically swallowed and then upchucked for public consumption in the interest of keeping a nation based on addictive rackets stumbling on without having to change our behavior.
Monday, November 08, 2010
r
Pre Post Mortem
The poetry of dynamic forces does not lend itself to easy explication. Thought exercise: Imagine the vector of a Chevy Trailblazer and a CSX coal train of four 3000-horsepower diesel engines hauling 88 loaded hopper cars four miles north of Chugwater, Wyoming. The Chevy driver left his meth lab, say, fourteen minutes earlier after piping up and doing three tequila shots. The lead engineer on the coal train, a sturdy fellow, five-feet-ten-inches and 270 pounds, having finished his supper of double deluxe nachos (with two meats and extra cheese) is entering a less than blissful realm of myocardial infarction. Meanwhile, a meteor the size of a basketball has passed into the troposphere on a trajectory to strike the planet Earth at precisely the point where the CSX line crosses state road no. 44. That there would be a snapshot of your US political economy.
Of course, lying and doubletalk don't help none, either. Such as the widespread falsehood that a "recovery" to the consumer credit nirvana and rising house prices of yesteryear is underway (Krugman, Friedman, et al). Or that a program called quantitative easing represents anything more than a national check-kiting scheme ramping up so many zeros that the goddess of infinity herself would run shrieking from the scene in embarrassment.
I saw a black swan in the botanical garden at Melbourne a week or so ago and it reminded me most poetically of Mr. Taleb's proposition that nobody really knows what is going on in this republic. And so, appropriately, we held an election in which many candidates who know nothing found themselves elevated to political office well-prepared for careers in lying and doubletalk in the service of knowing nothing. Join me please in cringing for our country's future.
The unvarnished truth of our predicament is that all pathways now lead to the same destination: a falling US standard of living as measured conventionally. What's unknown is how swift and severe this decline might be, exactly what all its implications are for the social order and geopolitics, and whether it might present itself in a form that could be called collapse. For the moment, one question is: do we go broke the standard way by having less money, or the trick way by destroying the value of our money so that folks (as President Obama might say) have lots of it, only it isn't worth anything. There is even at this late date much debate between the inflationistas and the deflationistas - that is, those who think the economy ends in a bang or a whimper.
I am stumped out loud, frankly, though an exogenous ill wind has me leaning just a bit in the "de" direction. The untold tonnage of bad financial paper out there, rotting away like so much herring stuffed in the bilges of a cosmic Flying Dutchman, would tend toward an outcome of wealth vanishing from our system - and money, which represents wealth, with it. Yet, there's no denying that the prices of everyday things such as food, gasoline, cotton, and steel are shooting up just now. Surely some of this is due to the sheer operations of finance, in which herds of believers in this-or-that stampede one way or another, in this case from bonds to commodities. But herds might get spooked by something (anything!) and suddenly reverse direction, seeking safety in cash and its equivalents. Really anything might happen in the stock markets, too, at this point, they are so detached from their former reality as a price discovery mechanism.
I like the formulation of John Michael Greer that we're about to see something called hyperstagflation, which would amount to sharply rising prices in an economy going nowhere fast. But if it's based on anything like the stagflation of the 1970s, that journey also ends in an inflationary fiasco, and logically some hyper version of it, which would kill the US government as we know it. Much as I loiter in the precincts of thought experiment, I don't really relish that outcome. But, sadly, we seem to be in one of those times when events outrun personalities and their meager abilities to react.
It's been my contention for weeks now that criminal mischief on the mortgage scene - all those lost, doctored, forged, robo-signed documents - will slow foreclosures (and even plain vanilla transactions) to the extent that the real estate market will choke on un-sellable property, leading to suffocation of the big banks and ultimately generalized thrombosis of the system. Hence: Dr. Bernanke appears on the scene with the defibrillation paddles of quantitative easing, hoping to goose the circulation of money through the quivering bodies of BAC, Citi, and their croaking cohorts. They may stagger back into their beds in the intensive care unit, but their fate has only been postponed.
Back in the real world, outside the hospital for ailing banks, it's harder and harder to get paid by anybody for anything, so the circulation of money slows in the everyday economy. Accounts receivable go unreceived. Payrolls can't be met. Pink slips are issued. Mortgages won't get paid. Credit card bills lie unopened on the kitchen table while the late fees, penalties, and other cockamamie charges rack up, and one day some suspicious looking fat men in mullet hair-doos and wife-beater shirts, with flames tattooed on their necks, show up with a tow truck and start hitching your car to it and you wonder for a moment how you managed to park illegally in your own driveway - wait a minute...!
Don't worry folks, that sound of heavy breathing you hear is the exhalations of the big banks reviving on their IV drip lines of financial liquidity. Pretty soon, the nurses will bring them Kansas City strip steak dinners, with truffled mashed potatoes, asparagus flown in from Chile, and even a nice year-2000 Clos Du Val reserve cabernet. You - you can go down to the food pantry and get yourself some government cheese. Melt it over some ranch-style Doritos and hunker down with Fox News where a dry drunk will explain to you the morbid workings of the Trilateral Commission and how the Rockefellers are scheming to take over the National Football League for the greater glory of Karl Marx while selling your daughter to Albanian white slavers. You'll think you understand the world. You'll feel fulfilled and easy in your mind.
Saturday, November 06, 2010
Monday, November 01, 2010
Now What?
On Tuesday, when the Republican Party and its Tea Party chump-proxies re-conquer the sin-drenched bizarro universe of the US congress, they'll have to re-assume ownership of the stickiest web of frauds and swindles ever run in human history - and chances are the victory will blow up in their supernaturally suntanned, Botox-smoothed faces.
But don't cry for John Boehner, Barack Obama.
The President and his Democrats may have inherited this clusterfuck from the feckless George Bush but they flubbed every chance to mitigate any part of it, ranging from their failure to restore the rule of law in banking (by prosecuting the executives of major banks who oversaw the systematic swindle), to mis-directing our dwindling resources toward ends (such as "shovel-ready" new super-highways) that won't promote a credible future for this society, to misleading the public in the fantasy that alt-energy will offset the disruptions of peak oil (and allow us to keep running suburbia, the US Military, and WalMart by other means).
It's really too late for both parties. They're unreformable. They've squandered their legitimacy just as the US enters the fat heart of the long emergency. Neither of them have a plan, or even a single idea that isn't a dodge or a grift. Both parties tout a "recovery" that is just a cover story for accounting chicanery and statistical lies aimed at concealing the criminally-engineered national bankruptcy that they presided over in split shifts. Both parties are overwhelmingly made up of bagmen for the companies that looted America.
Alas, the damage is now so pervasive in money matters that the federal government could be toast as a viable enterprise, even if a new party or two spontaneously rose up out of the ruins of a plundered democracy. Anyway, one of them will not be the Tea Party, with its incoherent agenda and moron cadres who seek to put Jesus back in the US constitution, where he never was in the first place - though they don't know that.
Nor is there any party on the left or even in the center with a clue or a moral compass. Its just one of those tragic moments in history - like 1850s America, when a strange vacuum of thought occupied the heart of political life, and the scene was cluttered up with mere place-holders like Millard Fillmore, Franklin Pierce, and James Buchanan. (Can you state a single idea or position, these political ciphers advanced?)
Where we stand now is on the cusp of another giant step into the abyss, since the latest storm of Foreclosure-Gate suggests pretty strongly that mega-tons of mortgage-backed securities are assured of blowing up, as well as the sundry derivatives of these things (CDOs, CDOs-squared, plus the massive fetid matter infesting the alternative cosmos of credit default swaps). If you follow the media-of-record like The New York Times and the Wall Street Journal, you would have to conclude that there is no extant plausible notion among financial leaders as to how the fiasco of botched mortgage-and-title documentation can be resolved. After three weeks of emerging events around this debacle, the consensus among the power brokers is to pretend that there's no problem, that the issue of missing, forged, post-dated, trashed, or non-existent paper related to claims on property can just be put aside, brushed under the rug, glossed over, ignored.
Let me tell you something: this problem is not going away. At the very least it is going to paralyze the real estate industry for as far ahead as anyone can see. For another thing, it could force the disclosure of what the banks are holding in their vaults in the way of worthless paper and expose their insolvency. For still another thing, it could lead to rafts of lawsuits that would additionally shove the banks toward collapse, demolish the claims that underlie our currency, call into question the meaning of property ownership per se that is the basis of Anglo-American law, and tie up the court system until kingdom come. In any case, every pension fund, state government, and insurance operation would be crippled. I could go on but you get the picture.... This might all sound extreme, but I repeat: nobody with any authority in this land has proposed a plausible way out.
By the way, I haven't even touched on the totally insane but now accepted practices of the Federal Reserve attempting to stage manage the velocity of money by so-called quantitative easing - a.k.a. the US writing checks to itself - because even that nonsense assumes that everything else remains more or less stable.
This is what the two major parties can look forward to as we swing around into the Yuletide season and then into 2011. The proud winners of seats in congress and the senate might as well put on clown suits and little pointed hats on Wednesday morning and drive around the Washington monument in toy cars. There will be a desperate need for a new politics in this country, for people unafraid to tell the truth and act in the genuine public interest. If we can't generate it from the saner quarters of this country where people think thoughts that comport with reality, I'm afraid we could see some generals step into the picture.
I write literally over the middle of the Pacific Ocean, en route from Australia where I spent the past week - not on vacation. It's a reminder that there are a lot of other players in the wide world - not all of them nations on the verge of a nervous breakdown.
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