Mar 192009

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Maybe the world economy will rebound. I’m not an expert so I can’t guarantee that it will. But assuming that it does, there are some factors looming on the horizon that will The end of cheap oil will bring an end to globalization and the roadways will be less crowded as oil reserves decline..finish what Wall Street started. And there is no fix.

Globalization, the “inevitable” movement that would bring peace and prosperity to the world through trade agreements, has not done that. Well, except for those who conspired to make it happen.

Since the sole motivation for these masters of the planet earth is greed, they are operating with tunnel vision. That distorted vision includes an entire world of cheap, temporary labor with no benefits, no democracy, no accountability, and no thought of the consequencies of their actions. As a result, welcome to the world economic meltdown.

Just a few years ago, when the ruling class was operating under the illusion of prosperity, the globalized world moved goods and people around based on cheap oil. Cheap oil, cheap labor and easy credit for consumers would let the CEOs “grow their business” for ever and ever. There was, and still is, no thought of running out of resources, no concern with over population, or the recipe for disaster that a multicultural, multi-lengual society would bring to a sovereign nation. The “peasants” would fall in line under the new order.

There is one factor waiting in the bullpen. though, that will destroy globalization and shatter the world we know. That factor is the end of cheap oil, and in many cases, no oil at any price.

Before the financial crisis hit the United States, the demand for oil was on the rise and the supply was projected to fall short as nations such as China and India rapidly developed and hundreds of millions of their citizens became consumers over the next few decades. If the economy rebounds, that scenario will happen.

Vehicles will be a big purchase item among the population. These two giants are Unlike the gas rationing of 1973-74 there will not be a light at the end of the tunnel.predicted to use more oil in one year than the whole world used last year. Prices for oil are expected to rise to several hundred dollars per barrel as supply starts lagging behind demand. Four dollars a gallon will be considered a time of cheap gas.

A study of the problem was sponsored by the Department of Energy 2005, “Peaking of World Oil Production: Impacts. Mitigation, & Risk Management.” An executive summary included this statement:

“The peaking of world oil production presents the U.S and the world with an unprecedented risk management problem. As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented. Viable mitigation options exist on both supply and demand sides, but to have sustantial impact, they must be initiated more than a decade in advance of peaking.”

Some conclusions:

  • “The problems associated with world oil production will not be temporary…”
  • “Oil peaking will create a severe liquid fuels problem for the transportation sector…”
  • “Peaking will result in dramatically higher oil prices, which will cause protracted economic hardship in the United States and the world.”
  • “In the developed nations, the problems will be especially serious. In the developing nations peaking problems have the potential to be much worse.”
  • “Mitigation will require a minimum of a decade of intense, expensive effort…” That effort should have started at least ten years ago-my comment.
  • “Interventions by governments will be required, because the economic and social implications of oil peaking would otherwise be chaotic.”

The U.S. Census Bureau last year predicted that the U.S will have a population of 439 million people, mostly from immigration, by 2050. They also predict 100 million more will be added by 2039, primarily from third world immigration and a high birth rate.

As is happening now, this next batch of poorly educated, non English speaking immigrants will continue to drain our resources. The 20 million illegals currently in our country will receive amnesty soon and will be able to claim Social Security for themselves and family members. They are using our welfare system and causing  hospitals to close in California because no one can pay their medical bills. A significant percentage of these illegals are in our prison. And the Mexican drug cartels are operating freely in 230 U.S. cities. But the new government is afraid to act because of pressure from illegal alien amnesty groups and corporations who want the border to remain open for cheap labor and commerce.

Someone needs to tell the Governor of California that if the illegals went home and all of the American middle class taxpayers that fled the state over the last 15 years were still there, you would not have this problem. But no one there wants to go near the truth. That’s why California’s problem will get much worse. See thelastgringo, archives, January 14, 2009, ‘Americans Abandoning California.’

Large parts of America are in the midst of a water shortage. How will adding 100 million more people in 3 decades help the problem. How will they help the coming oil shortage by being here? The fact is, we are at the limits of sustainability. If these population forecasts take place, a catastrophe is guaranteed.

The global pipeline will not function as designed. What’s left of the middle class will disappear. Jobs of all kinds will disappear. Manufacturing will drop dramatically due to shortages of resources. Crude oil, for example, is necessary for the production of over 4,000 products, including medicine, and there are no substitutes.

‘”Global warming will add a layer of futher desperation to the political turmoil ensuing from contests (wars) over dwindling oil supplies. It will aggravate the environmental destruction in China, where massive desertification and freshwater depletion are already at crisis levels, in a nation grossly overpopulated and attempting to industrialize just as the means for industrialization worldwide are diminishing. Global warming will contribute to conditions that will shut down  the global economy.” [1]

In the 2005 book, ‘The Long Emergency’, by James Howard Kunstler, the world as we know it will end as oil and other resources become scarce. He describes how this will happen and what the drastic changes will be for America’s long emergency.  In an interview on September 8, 2005, he addressed the mortgage problem:

“If fewer suburban houses are sold because of higher energy prices, the creation of false liquidity in the form of mortgages spun out of thin air will cease. If this stream of false liquidity ceases, the government-sponsored entities who bundle all this debt into tradable instruments will find themselves in trouble. If they go off the rails, the American finance sector will follow like a choo-choo train.”

In another 2005 interview, Kunstler gave a time frame for a significant destabilizing of our society:

“In the next three years (by 2008) we are going to be feeling the pain. Our lives are going to be noticeably beginning to be disrupted. In the next 10 years, you will see the beginning of a major collapse of suburbia.”

As the the world economy rebounds and the demand for oil goes up, the price will rise. In So far, America does not have a plan B. a booming economy, coinciding with peak oil, the supply will start to decline, prices will shoot up and wars for oil will occur. The United States, under Bush, began setting up forward bases in the Middle East. These bases and depots are storing weapons and supplies for a rapid response force to react immediately to such a crisis. Some of these bases are located in Iraq, Kuwait, Qatar, United Arab Emirates, Bahrain and Oman. See archives, thesigintreport, June 14, 2008, Bush and Permanent Iraqi Bases: A Police Station to Protect Middle East Oil?

For America, the oil crisis will mean that it must undergo a transformation:

“Globalism will wither. Life will become profoundly and intensely local. The consumer economy will be a strange memory. Suburbia–considered a birthright and a reality by millions of Americans–will become untenable. We will struggle to feed ourselves. We may exhaust and bankrupt ourselves in the effort to prop up the unsustainable. And finally, the United States may not hold together as a nation.” (The Long Emergency)

Just something to consider.

1. James Howard Kunstler, The Long Emergency, 2005.

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