Financial topics

[vincecate]

Not sure I understand this. With real estate prices falling, and the value of these securities at 60% of peak level, the only way I can see the Fed being able to sell these is if they paid less than 60 cents on the dollar for them. But my understanding was they paid close to market value. Anyone know what is going on here?

With the ability to print money the Fed is not as worried about profits and losses as a normal organization. They may feel that "withdrawing liquidity" is necessary and even if they can only take out 60% of the cash they put in that they should do so.

Another way to look at it is they need to come up with $100 billion per month to buy up the new debt from the Federal government (at these interest rates the money will not come forward from other sources) and it may be better to sell off some of their other assets, even at less than they paid, than to just keep printing new money for everything. If they just keep printing the hyperinflation might start a bit sooner. So this could be kicking the can down the road a bit.

However, when the Fed buys stuff for $100 and then sells it for $60 they then have dollars in the wild that can not be taken back even if they wait till all their debt comes due and it were all paid. So this is inflationary.

Another possibility is that there are many difference slices of sub prime and maybe they have some that are now selling at close to 100% of face value. They may feel that selling these does not hurt them (I assume they are still using "mark to fantasy" so that selling things much less than the fantasy price would look bad).

[vincecate]

In effect he is saying that it is easier to trick labor into working cheap by reducing the value of money than by lowering peoples wages. This is the big Keynesian economic plan. Make people poor by printing money. People should not be surprised when that is what happens, but most will be.

And Vince, that's the question. How do you avoid deflation if no one can afford to buy? If business has to cut costs to as near zero as possible, if there are no sales, if they lay off workers, how do they push prices upwards? A business with no sales is just another empty store front.

Imagine that right now people spend 10% of their budget on food and 10% of their budget on energy (transportation, heating, electric). Then imagine food and energy go up by a factor of 4. People will still buy food. They can make some substitutions that let them eat a bit cheaper, so their food budget will not be 4 times, but it will be much higher. But they must eat, so most of the cutback comes in other parts of their budget. They still need to get to work, so energy costs hurt too. They can adjust the thermostat some, and cut back on some trips, but some energy price rises must be paid. But the rest of the budget will be very drastically cut. If they have to abandon their house and move in with parents they may do so. Food is not optional in the way other monthly expenses are.

So what we end up with is inflation in the necessities and deflation in the optional things people are buying less and less of. This has already started. An inflation index that looked at what people are really buying each month would show inflation.

Another way to look at this is that wages in China and India are going up, and they will be buying more and more of the stuff they produce. So they are the "increasing demand".

Sure, it's possible to imagine scenarios where the US dollar is worthless, but is that the most likely scenario? No, it's far more likely the country will simply withdraw the most expensive part of the US government from its huge and constant attempt to enforce peace on the world, IOW, the US military will pull back and bases will close world wide, as they are doing right now. Nationalism will push the US back into its shell, IMHO, and that's the biggest cost cutting measure imaginable. What happens next as war breaks out without the US presence to keep things down? The money of the fighting countries drops in value and we sell them weapons as they scurry about borrowing at inflated interest rates.

The deficit is like $1.5 trillion and total military spending is $664 billion. I agree that one of the measures that will be forced on them is to cut the military way back. Let us imagine that they pulled out of the 3 wars they are in and closed all foreign bases. We might imagine them cutting the military in half (given how dangerous the world is starting to look they might pull back and not even cut spending though). Perhaps they cut $332 billion. If interest rates on the $14 trillion debt go up 2% that is an additional $280 billion. At best cutting defense is just a tiny dent in the deficit. It may not even cover the initial increase in interest rates. It certainly does not solve the deficit problem.

http://en.wikipedia.org/wiki/Military_b ... ted_States

And arms are flying out the door.

http://www.defencetalk.com/global-arms- ... ion-32250/

One thing the US does still manufacture is arms. So selling arms to the rest of the world does help America's balance of trade. I expect they will be selling more and more arms just to "help the economy".

BTW, the only map to that theoretical scenario where some states might seize federal tax monies, would be for the states to no longer get ANYTHING from the federal coffers. That could well be coming.

Right now the Federal Government bribes the states with printed money. This is the main control over them. If that printed money becomes worthless, or the other parts of the Federal budget are just too demanding, they will lose control of the states.

I don't expect the states to seize federal tax monies. I think that it will go like the Soviet Union, the Federal Government will just collapse. States will go back to being states in the original meaning of the term.

There are many "states rights" things going on. So I think the Federal Government is already starting to lose control.

http://www.caivn.org/article/2010/03/19 ... ss-america

[OLD1953]

Vince, one of the problems with using anything but treasury numbers is that EVERYONE has a desire to obscure the truth about the budget and how it has been handled for the last ten years to obscure or promote various agendas.

The fact is simply this, the Iraq/Afghan wars were funded with "emergency supplemental" bills and so was the Bush bank bailout and the Obama recovery act. All the "conservative" stuff I've read tries to conceal the military spending, blame the banks on Obama and just talk about "total budget" and no details. The "liberal" stuff tries to say there isn't any problem with SS or medicare. Well, both sides are lying. (I get irritated over SS just because it's in trouble due to being messed with, no other reason. COLA was NOT in the original, and that's why there are budget problems, any increase had to be voted on by Congress prior to COLA. Payouts would be lower but there'd not be anyone claiming SS was the problem.) COLA is the problem with Social Security, and the military budget has a lot of obscuration built into it by design.

Now, a point here, not one penny of the deficit can be laid to Social Security. There is no reduction in the deficit (at this time, who knows what Congress will do in the future) to be had by reducing Social Security, unless you want to use "congress" accounting, which claims that any surplus collected by SS is "mad money" but any lack of surplus is a deficit disaster. Neither is true. Doubtless it WILL be reduced, but the reduction in payroll withholding will be offset by increased taxes. And the longer we play "Dr. Feelgood" and wait, the higher that tax increase will be. (Tax increases are actually being discussed in Congress now, a hopeful sign IMHO.)

So what's the actual total spending by federal govt in the USA, DISCOUNTING Social Security (separate payroll with holding, you get a pay stub same as I do, you know this), which would be the correct question to ask? By the wiki link you offered, on the side is a graphic of the "federal budget" so we'll use those crude figures and look a bit.

Federal income was 2163 billions, outgo was 3456 billions. However, the US GDP in 2010 was 14700 billions. So the federal income was 14.7% of the GDP, but outlay was 23.5%, outlays were a bit higher than historical norms, but hardly a shock when you figure in the cost of two wars.

So let us look at the UK, held up as a model by several pundits recently.

http://en.wikipedia.org/wiki/Taxation_i ... ed_Kingdom

In the fiscal year 2007-08, total government revenue was 39.2 per cent of GDP, with net taxes and National Insurance contributions standing at 36.9 per cent of GDP[1]—approximately £606,661,000,000 (using 2008 nominal GDP measured in dollars, and converting using 2009 conversion rate).

Now, I admit that is comparing apples and oranges, since that figure includes local taxes, but honestly that comparision is between the country that has the world's most powerful military and is in two wars, and one that is not - and the one with lower taxes is the one in two wars. So how about the rest of the world?

http://en.wikipedia.org/wiki/List_of_co ... age_of_GDP

 Kiribati[4] 69.7
 Denmark 50
 Zimbabwe 49.3
 Sweden 47.9
 Belgium 46.8
 France 46.1
 Cuba 44.8
 Finland 43.6
 Norway 43.6
 Austria 43.4
 Lesotho 42.9
 Italy 42.6
 Bosnia and Herzegovina 41.2
 Germany 40.6
 Iceland 40.4
 Swaziland 39.8
 Netherlands 39.5
 Slovenia 39.3
 United Kingdom 39
 Brazil 38.8
 Ukraine 38.1
 Hungary 37.3
 Spain 37.3
 Portugal 37
 Russia 36.9
 Israel 36.8
 Cyprus 36.6
 New Zealand 36.5
 Luxembourg 36.4
 Czech Republic 36.3
 Botswana 35.2
 Malta 35.2
 Bulgaria 34.4
 Serbia 34.1
 Ireland 34
 Moldova 33.8
 Mongolia 33.8
 Poland 33.8
 Greece 33.5
 Canada 33.4
 Barbados 32.6
 Turkey 32.5
 Seychelles 32
 Guyana 31.9
 Estonia 31.1
 Australia 30.5
 Latvia 30.4
 Dominica 30.3
 Switzerland 30.1
 Slovakia 29.5
 Macedonia 29.3
 Namibia 28.8
 United States (all levels) 28.2

Even counting ALL levels of government taxation, the US is lower than just about any country that's developed enough to notice, and lower than quite a few that aren't. If that figure was raised to 38.2% (between Brazil and the Ukraine's level) what would happen? Ok, that's 10% of GDP of 147000, so you get additional income of 1.47 trillion. And guess what, you just not only balanced the FEDERAL budget, you balanced out the states as well, and that is during two wars and a recession!

Bluntly, there is NO solution to the budget problem that does not involve raising taxes. Back to the main subject.

Ok, let us suppose we go the compromise route, we cut SS payroll contributions to 6% rather than 6.7% and dump the .7% into the general fund. SS gets corrosponding cuts, and the seniors howl. Then we go on a program of controls on medical costs, coupled with removing a lot of authority over state medical boards from the AMA and taking it over by a federal board that wants to open the doors of the medical schools and create more doctors rather than creating a shortage. OFC, the AMA is now your bitter enemy, but ignore that, you've started the country down the road of reduced medical costs. We shorten patent times for drugs and disallow patents for new "formulations" that don't meet the actual purpose of innovation as a "new" discovery. And go through the current patents and toss about 5000 that don't meet it either. Plus, we tax hell out of any doctor who travels to any medical "vacation" conference, and set up a special IRS committee to look for exactly that. Yes, you really cut drug costs there. And now the drug companies hate you. That all takes care of the medical, let us now go to the military.

So, start with weapons development, we cut the Raptor. That's a trillion off the top over the procurement time for that plane, zip! And a lot of jobs gone, but whatever. And WTH, we'll just go across the board and cut defense to 450 billion total.

So what about that "other" mandatory column? That's unemployment mostly, nobody needs that, cut it in half. (seriously, the unending extensions are NUTS)

So now I've gone further than any ten politicians you ever heard of in your life, I've cut over 200 billion from the military, over 200 billion from unemployment (in the middle of the worst job market since the Great Depression), I've cut at LEAST 100 billion from Medicare/Medicaid, at least that much from SS and transferred it to the general fund, and just for giggles I'll cancel the entire ethanol program for another 100 billion give or take (tricky accounting on that one). And what did I accomplish in this spectacular feat of political suicide (and dead for real, likely, soon as someone saw me without guards). I've totaled up about HALF the federal deficit. There is NO responsible answer that does not include massive tax increases. If the USA does fall apart as you keep predicting, it will be for lack of proper taxation. Period.

Advanced countries with advanced infrastructure require a lot of money for maintenance and upkeep. We have not kept up anything but the military, and I could tell a lot of stories about where we are falling down on that as well. And the purpose of the above was to illustrate WHY it won't get better until things really break down, because the pols simply won't be able to muster the guts to change it UNTIL things break down, and people start throwing bricks through windows of companies and individuals who cry about how much tax they have to pay. (Fun fact, when I was born, corporate income tax paid for a little under 1/2 the federal budget. Now it is a barely noticable line item. Times do change.)

[vincecate]

So now I've gone further than any ten politicians you ever heard of in your life, I've cut over 200 billion from the military, over 200 billion from unemployment (in the middle of the worst job market since the Great Depression), I've cut at LEAST 100 billion from Medicare/Medicaid, at least that much from SS and transferred it to the general fund, and just for giggles I'll cancel the entire ethanol program for another 100 billion give or take (tricky accounting on that one). And what did I accomplish in this spectacular feat of political suicide (and dead for real, likely, soon as someone saw me without guards). I've totaled up about HALF the federal deficit. There is NO responsible answer that does not include massive tax increases. If the USA does fall apart as you keep predicting, it will be for lack of proper taxation. Period.

One thing I am sure of: There is no painless way out at this point.

[Higgenbotham]

With the ability to print money the Fed is not as worried about profits and losses as a normal organization. They may feel that "withdrawing liquidity" is necessary and even if they can only take out 60% of the cash they put in that they should do so.

Another way to look at it is they need to come up with $100 billion per month to buy up the new debt from the Federal government (at these interest rates the money will not come forward from other sources) and it may be better to sell off some of their other assets, even at less than they paid, than to just keep printing new money for everything. If they just keep printing the hyperinflation might start a bit sooner. So this could be kicking the can down the road a bit.

However, when the Fed buys stuff for $100 and then sells it for $60 they then have dollars in the wild that can not be taken back even if they wait till all their debt comes due and it were all paid. So this is inflationary.

Another possibility is that there are many difference slices of sub prime and maybe they have some that are now selling at close to 100% of face value. They may feel that selling these does not hurt them (I assume they are still using "mark to fantasy" so that selling things much less than the fantasy price would look bad).

The net effect is: Pre-crisis there were MBS out there worth $100. Now there wil be MBS out there worth $60 plus another $40. Whether it turns out to be inflationary or not will depend on what happens to the value of the MBS from here. At present, I would say the net effect of these QE1 shenanigans was to neutralize deflation. If the Fed gets rid of all their MBS then they will be allowing free market forces to take over again. With the country still being in the mood to speculate or at least condone speculation, though, QE2 has been inflationary. I believe you're right that the Fed would now like to look at how to dial back the inflation. I'm looking at the billion price index and inflation on that index has been running at a 7% annual rate over the past week.

I think this is also about the Fed throwing in the towel and admitting they cannot drive real estate prices back up, nor should they try any further. I read a Plosser speech a couple months ago to that effect. They probably think this is as good as it gets and it's time to sell their MBS for whatever they can get. Plus with the possibility of being audited down the line, it's better to hide the losses now so there won't be a lot of discussion about these items later. As we saw, the Fed has used these MBS to collateralize Federal Reserve Notes and with real estate falling, that's a dangerous game to play.

[Lily]

Yipe, sorry this took me so long.

This still doesn't yet look like a full blown generational crisis period. I found an interview with Neil Howe (linked below) where he seems to indicate we're still on the cusp of the generational crisis era. He seems to think we're a little further along than I do, but not by much, and perhaps the dividing line between the unravelling and crisis might be best placed at 2008.

Strauss and Howe also found no unraveling period during the Civil War saeculum, which I think kind of discredits almost anything they say on the topic. They hit upon a good idea, but their dates are off and they have nothing even close to the specificity in the definintions of the theory they'd need prove them one way or another.

I guess to really argue this topic in detail, we'd want to have very precise definitions of when one period slips into another. John's use of crisis wars to divide the saeculums was genius, I think, but the rest of the periodization probably still needs some work to add precision before we have a very solid theory on our hands. The only way I can see to do that is many more very in-depth studies of many many more cycles in as many cultures as possible, to get a larger sample size.

I think Neil Howe is incorrect if he doesn't think we're in a crisis period now in the US. Maybe the world doesn't look too bad yet from his Ivory Tower, but it is doubtless the case that the destruction of the old social order and its replacement by a new one, which to mind my mind is the clearest hallmark of a crisis period, is today quite well advanced. Why do we necessarily need a 'catalyst event' to switch from one period to the other? Couldn't it just be a gradual process of accelerating social change? Isn't that what we see around us now?

My understanding is that the best way to divide the eras is to look at what is happening to the social fabric in the society under study. After a crisis, the survivors rally around their newly reconstituted social order, drawing ideologically close, and reacting against what they consider alien. This close-mindedness sets the stage for the awakening, when some new ideas about how to order society are generated, germinate, and come into conflict with the old order. After the awakening peters out or is crushed, the unraveling happens as the old order tries to reverse the progress of the challenger new order. During this period, the old order decays inside even as it reestablishes its dominance. During the crisis period, all of the conflicting ideas come into physical conflict, establish secure power bases, and battle for dominance.

It's hard to find anything that counts for evidence one way or another, but compared to what I know of history over the last 500 years and how the periods all compare to one another, I am pretty sure that we are now a little more than halfway through our crisis period, which started in 2000 or 2001. Bush didn't fight the unraveling-era Culture War the same way Regan and Clinton did; he simply acted as if the war was over and his side had won, and proceeded to smash his enemies, sieze tons of powers, and remodel society in his ideological image. This strikes me as similar to the behavior of Roosevelt, Lenin, Mao, Hitler, and other crisis-era leaders who forged a new social system by means of deft political manuevering. To preserve the old order against challengers and outmanuever domestic competetors, Bush took a lot of aggressive action, including military adventures and kicking off the boom, which distorted and unbalanced the economy. He essentially defeated his domestic competition, but also hollowed out the foundation of the old order in the process. Thus, to survive, the older order now has to change and evolve, which is what we see happening now.

Don't the new crop of Republicans in congress seem to have a different flavor than the old? Constitutionally, they are trying to shift us from the old order of a parliamentary nation-state - posthumously championed by the democrats - to a pseudodemocractic imperialist market-state along the lines of Putin's Russia, Berlusconi's Italy, and Ahmadinejad's Iran. They are most of the way there already.

Generally it seems to me that you can mark the middle of a crisis period as the point when societies are forced to change and adapt to deal with the consequences of their changed social order. For Nazi Germany, this meant going to war with its neighbors, but for the Soviet Union, it just meant collapse. For our somewhat more complex society, the results are more complex - but no less forced by events during the previous decade or so.

If you think that what is going on today is anything resembling "buisiness as usual," look more closely and be more skeptical. The way things are today is totally out of wack and unnatural even from the perspective of recent American history. The econonmy is essentially completely destroyed, our military prowess is fatally hollowed out, the former middle classes now depend directly or indirectly on state largesse to maintain their standard of living, our body politic is utterly riven with schism, and corporate plutocratic shadow rulers are consolidating their hold on power. The change is already well-underway. I beg of you, look closer, and be much, much more worried than you are.

Ok, I tried to open up your first set of links and they don't open. These web pages no longer exist. I read some of the other links and I don't see anything earth shattering that isn't known. There's an old link about the Chinese post bipolar shift. And another to a book describing one of 7 potential war senarios which involves China taking Taiwan back.

The links work fine for me and the sites are definitely in existence; not sure what the problem is. Maybe the ellipses in the url are causing the problem? Avoiding that, the first url is
http://www.au.af.mil/au/awc/awcgate /ndu/chinview/chinapt1.html
without the space in the middle. The other articles just vary the number at then end from one to three.

The book I mentioned is about a lot of different military scenarios, and it dicusses Chinese military preparations in some detail. Its specific predictions may not be spot on, but you can't beat the guy for detailed military knowledge on the global powers.

I guess I can't make you see the immediate danger from China if you don't see it now. I won't try too hard to convince you on this one, since the data are limited by the Chinese attempt at a cover-up. But there is a ton of evidence of their plans for aggression and what will drive them to this; it repays study.

One recent article (Seeking Alpha) said the amount of arable land in China was decreasing a lot, but since 2006 has leveled off just above the minimum requirements to feed their population and they are now working to manage the situation. That doesn't look to be a rapidly deteriorating situation.

Haha. I was wondering how you'd interperet that graph. Either the Chinese finally found a way to stop the destruction of their arable land, WITHOUT changing any of their agrcultural practices in a major way and WITHOUT halting or even slowing the massive acceleration of their drive towards industrialization....OR they're lying. If I was a Chinese communist autocrat and my croplands were in a very desperate and rapidly decling situation due to my own mismanagement, I'd definitely post a reasonable figure and then just keep the number at that level indefinitely. Well, I might at least vary the figure for plausability. But I certainly wouldn't tell people! So whether you percieve the evident danger in that graph depends on whether you think the Chinese government is trustworthy...

Wouldn't China use the surplus funds they've accumulated from their positive trade balance with the US to buy the wheat they need? Or am I missing something? Any idea how much this will cost them?

You mean how much does it cost to feed all of China? Umm, well, a lot. It's not just wheat we're talking about, it's basically all crops, including rice and feed for livestock.

Perhaps a thought experiment will give a clue to the magnitude of the problem. If you think they could all live on a dollar a day, then I guess it'd cost 1.3 billion dollars per day to feed them.

If you instead assume that China can continue to feed 50% of its people after the agricultural collapse - and the actual number will probably be more like only 33%, given the very extensive destruction of fertile land because of desertification, soil degradation by pollution, and deforestation, but let's be conservative - and you then continue assuming a dollar a day, which is way too low, then you have $650,000,000 a day or about $19.5 billion a month or ~$234 B a year.

Realistically, it's much much worse than those numbers would indicate. The majority of Chinese people are no longer eating diets that cost so little - the actual cost of feeding that many people would almost certainly be more like $3-$5 per day. At those prices, they could burn through a trillion dollars a year trying to feed half of their people. (The closer to complete the collapse is, the closer they are to having to burn all their cash for one year of food at today's prices.) But remember too that food is scarce and expensive globally, and will be much more so soon. Wheat costs already went up 40% between August 2010 and Febuary 2011. They might double after another bad harvest or two.

Here's the last kicker - if the Chinese start unloading hundreds of billions of dollars, it's going to cause a run as increase in the supply of dollars drives down the value and other dollar holders race to convert their dollars to something with a stable value before the dollar's value erodes completely.

Which is to say, in answer to your question - yes, the Chinese can use their surplus funds to buy enough food to get them through at least a 3-6 months or more if they're crafty. But if they do, the dollar will collapse because of it. Because of course it wouldn't just be actual dollars they were selling, but mostly T-bills.

After they run out of money, they'll have to sieze resources from their neighbors, like Vietnam. Before they can do that, they must eject the US from the region. That is why they have such extensive plans to do just that.

Wheat averages 36 bushels per ton, so the cost is minor (for the Chinese) at about $250 million per million tons.

http://www.commodities-now.com/news/agr ... alyst.html
Well, Russia will likely have to import about 5 million tons of wheat this year, at a cost at those prices of 1.25 billion. Nothing to sneeze at, but not too bad for Russia.

That amount of wheat, however, isn't a lot compared to how much food China will need. Wheat consumption per capita in China is around 159 pounds per person per year, (http://www.nationmaster.com/graph/agr_g ... per-capita) so the total requirement is around 104 million tons. If they had to import 2/3 of that, that's 69 million tons or 17.3 billion dollars on wheat, at today's prices. You can probably double or triple that to get the amount they'll actually have to spend. Add to that all the other food they're going to need, and it gets to some pretty big numbers. It is not a minor cost.

You're right that that article from The Atlantic basically agrees with you about China. My point, though, is that the US in its newly degraded state would never be able to pursue that kind of complex regional strategy, and that the Chinese know this. We don't have the logistical, technological, capital, or intellectual resources to pull it off. Our military is nowhere near as powerful and adaptable as the author of that article believes.

On the flip side, if the Chinese just chip away at us for another ten years, or even the next five or six, they'll miss their chance at a breakout to global superpower status, because their social system is too unbalanced to last that long without input of additional resources that are currently unavailable except by coming into conflict with the US-controlled global order. Their society needs massive inputs of foreign capital and resources even to sustain itself; now that the US and Europe can not really provide those any more, and China's own land is largely and horribly despoiled and its resources depleted, it will have to embarq on an aggressive foreign policy. They have no choice; it's either that or revolution.

A favorite article of mine gives some insight into the changing conditions of the Chinese economy, by comparing it with perhaps the closest analog - Japan pre-1985. http://www.foreignpolicy.com/articles/2 ... n_syndrome

When Japan's economy reached its inflection point, it let its currency appreciate, saw its industry decline, and fell into a depression because its ineffecient 'protected' local markets, common througout Asia, could not create a thriving service sector to replace the lost manufacturing jobs. If that happened in China, because of the massive internal tensions, the result would be revolultion, civil war, and chaos, not just depression. So the Chinese economy will have to morph in a different way than the Japanese. The Communists can't expand domestic consumption to take up the slack from manufacturing without expanding a free market, empowering citizens and thereby endangering their own hold on power. So instead, they have to find some other kind of dehumanizing, backbreaking work for thier people to do. Militarizing and fighting a series or wars to attain badly-needed resources seems like just the thing to drain off the surplus population and keep the rest under the whip, not to mention a great way to distract from internal troubles.

The reference to the oil drum was kind of funny in a way, given that at least one of their basic documents, the Hirsch report on peak oil and mitigation strategies actually came originally from my own personal store of data that I don't want to lose. A regular over there happens to be a personal friend, and he was griping that the Hirsch report was hard to come by, so I gave him copies. I was working for SAIC at the time, and the Hirsch report is in the company archive, like all their govt funded scientific data that isn't classified. My issue with the oil drum is they tend to take the worst outlook possible. Peak oil by the old definition (actual liquid oil pumped from the ground by pumps) in terms of potential production will probably occur in 2012, (sans production drops due to civil unrest and war, that is, which could either hasten peak oil or delay it)

http://www.eia.doe.gov/steo/ (The important paragraph is a bit in, where they admit that non OPEC sources will be falling off after 2012. OPEC keeps oil figures as top secret, so that's as close as you'll ever get to an admission that peak has passed from an official source. And if you ask monkeyfister - more on him later - you'll find that I pegged 2012 as the likely date for peak traditional oil production with an estimated fuzziness of +- 3 years back about 2005 or 2006 and have stuck to it ever since. That's because all the good data was slowly dropping towards 2012 and the bad data was rising towards it over time, as people corrected their errors. It's a goofy sounding technique, averaging others errors against each other, but it works for me.)

The peak of actual production may occur a few years before or after that date due to economics, which is all pretty much on the same timeline due to the "fuzziness" introduced by actual demand vs potential top production. IOW, right now there is about 3 or 4 million BPD that could be pumped that is not being pumped because of the destruction of demand due to high prices. It is hardly beyond imagining that this reserve capacity could drop to near zero before the demand recovers. There are however, good reasons to believe the "tail" will be a good bit longer than some expect, most of the figures aren't properly adding in improved recovery techniques, I don't believe they are handling the math properly on adding a large number of curves that rapidly peak, rapidly drop and then slowly tail off (it's complex math, really), and demand destruction will happen much faster than projected in a crisis era - which is responsible for that drop in production noted in your links - people do not travel as much under economic stress. However, I do expect to see government rationing of transportation fuels in the not distant future, first military, then agriculture, then business and the ordinary citizens can fight it out over what's left for them - which may not be much.

So, you're super-well informed about peak oil and its dangers, but yet you don't think that leaving the entire agricultural system dependant on scare and expensive fossil fuels is dangerous? That's kind of a big vulnerability, isn't it? If the Shit Hits the Fan, how are regular people going to get enough fossil fuel to feed themselves? If only there was some way of raising food without petroleum products...oh, wait.

Ok, my issue with Gore. Let me put it this way, if I was sitting on the board of a large coal company, and I got to pick the person I wanted to be the spokesperson for reducing carbon emissions, I could not have done better than Gore. He makes terrible mistakes, to the point of being called down at conferences by scientists who tell him he's misrepresenting their data. He's shown slides in public meetings that try to connect all natural disasters with global warming (on pressure from actual scientists, he's removed those). He loves it when the press calls him a scientist, and he's no way qualified to be called anything like that, he's got a BA in government. Good grief, back years ago I actually had a paper on lunar atmospheres accepted for publication in the Journal of the British Interplanetary Society, and that was based on and referenced Vondrak's work on atmospheres that forms the basis of all the global warming models! By no means do I consider myself qualified to call myself an atmospheric scientist (though far more qualified than Gore), but I AM qualified to tell when someone is way out of line and full of crap, and Gore qualifies for that. He was a very good Vice President, but he's a horrible front person for getting anything done about carbon emissions.

Okay? I agree. Gore is full of crap.

Don't bother mentioning Beck or O'Reilly or Limbaugh or Gore or Maddow to me, they are all in the same pot as far as I'm concerned, polarizing figures that are used to distract the public from important issues.

I apologize for comparing you to them, then. It's just that your argument seemed to be "past predictions of harm from climate change and environmental problems turned out to be wrong, therefore we can discount evidence indicates those things are becoming problematic again." I've heard this so many times it makes me want to reach for my gun.

Ok, back to the land movements. I've got two problems with this, one simple math, one is in the observed execution. The observed execution problem is simple enough, I spent years watching em' come and go, and I've seen maybe TWO of dozens that stuck it out and actually farmed. Most yell "OMG, this is hard work" and run back to the city. The net effect was simply to take land out of production for a time, and build over part of it. Typical was the guy who wanted "rich farm land" which is what he asked for. So somebody sold him about 30 acres (don't really remember exactly, long time ago) of prime river bottom land. Nobody asked him where he intended to build a house and he didn't ask questions. He built that sucker right in the exact middle of the plot. Of course, it flooded in the spring, that being in the definition of prime river bottom land. So he was all shocked, moved out and waited for the water to go down, and got it fixed up to live in just before the fall rains, when it flooded again, of course, just as it did every year in that field. He finally went to the neighbors and asked why nobody told him that land flooded twice a year, and everyone said the same thing, that's what river bottom land does. Just a suggestion, ask about problems before you build. Or maybe just observe that every house on that road was on a hill, not in the bottoms? That's typical, really typical.

I'll readily admit that the average city dweller is not at all prepared to function as a gardener or farmer. But with a little training and commitment, anyone can do it.

CIA World Factbook says the USA has 9,161,966 sq km of land. Arable land is listed at 18.01% of the total. Therefore, we have 1650070 sq km of arable land.

So you're saying that 80% of the land area in the US is totally unsuitable for farming? Sez who? Why should we trust the CIA on this? All that 'non-arable' land might be unsuitable for your industrialized, mechanized, pesticide-soaked version of agriculture, but in general you can raise enough food organically almost anywhere.

If a substantial amount of green plants grow somewhere, you can grow crops there. You can't necessarily grow wheat, barely, or soybeans, or support big herds of cattle, but who cares? It wouldn't kill us to have our argicultural production match the climate more, anyway.

Surely hemp could grow on far more than 18% of the land in the US, and you could actually get all the nutritional inputs you need just from that if you absolutely had to. Cultivatable area for that kind of crop is really anywhere other than deserts or high mountains; 60% would be a very conservative estimate. It's probably more like 70%-75% or higher. The same is true for many other hardy, climatically more-appropriate crops like potatoes, carrots, peanuts, beans, amaranth, squash, etc. The places that are too cold for temperate-zone crops can use things like quinoa that are adapted for cooler temperatures.

As long as there's enough sun and rain and good soil in a place, you can support yourself there. Almost all the area of the US has those characteristics - we just assume that it isn't fertile because most of us are too soft and citified to go out there and farm it, and the people who control the farming industry insist on using destructive and inappropriate techniques.

I agree that you'd need more space for living, access roads, etc. I was thinking something along the lines of 2 or 3 acres per homestead. This can be brought down a little with clever passive architecture and off-grid living technologies, but it can't be taken too low. But if we are talking about organic argiculture, the total arable land increases by a factor of three or four from your number. I also don't imagine that 50% will leave the cities even given all the freedom in the world; I was imagining maybe more like a third of people would actually consider switching to a different lifestyle, perhaps less. In this case we have more like 26 million homesteads and more like 4,950210 square kilometers (assuming 54% arable land, which is probably somewhat low) leaving .19 square kilometers or or about 40-50 acres per homestead, which is more like it. This leaves plenty of space for infrastructure, and each homestead should be able to grow a nice surplus to sell to the remaining city dwellers.

Sustainable agriculture GENERALLY is taken to mean more people farming, less machinery, if that's not what you meant, Ok, explain a bit more clearly, and I'll listen.

I do mean more people and less machinery. But I'm not a luddite; I have no issue with machinery provided it doesn't damage the earth or depend on fuels I wont't be able to get a hold of once the Shit Hits The Fan. Once I get my algae biodiesel system running, I won't be too concerned about the fuel; my main objection to conventional mechanized monoculture farming is just that it degrades the land heavily and fast, produces a lot of difficult-to-dispose-of waste, doesn't yield that much more than organic, and doesn't produce a very balanced diet. Basically I'm just saying that it's way unhealthy, for the plants and the people. It's no accident that farming that way directly results in desertification and destruction of arable land.

If the current agricultural system were sustainable, I'd have a lot less of an issue with it. But it just isn't.

PS: In so far as I'm aware, all current global warming models predict increased rainfall worldwide. The "weather" will be more uncertain as is natural in a thermal system with increased input, but overall the climate will be wetter. Which is what I was referring to. In fact, the models are being worked over to modify them to show a greater increase in rainfall than they were showing previously, as they've fallen short in predicting the observed rainfall over the last decade.

Well, rainfall will increase. Part of that is coming from melting glaciers. But a lot of that water comes from the breaking of the hyrdological cycle due to pavement, soil destruction, and water waste, which means that when it comes back down as precipitation, it won't go back into the land, it will just run off and destroy more land still. This will leave the area overall dryer than it was before. So even though we'll have more rain for a while, in most places it will actually be drier.

http://www.edf.org/documents/3566_Abrup ... Change.pdf

For me, the big question about WWIII is whether or not the USA will join in at the beginning, or wait it out until someone attacks the US or a US base directly. We waited it out in WWII, as the US was simply tired of war. The "end" date of the Spanish American War was hardly the "end", fighting continued in the Philipines until the US simply pulled out for WWII, then we sailed right back into it and I personally know people who were involved in putting down Moro uprisings in the 90's. The US economy did pretty well supplying weapons and so forth for the allies up to the point where Japan attacked the US, which changed everything.

I'd argue that it's a question of whether China will attack us before we invade Iran. Pressure to do that will become really strong after the next election, so it's really up to the Chinese if they want to start the fight while the US still has a weak, confused, indecisive leader or whether they want to wait until it has a blustering, paranoid, 3rd-world style tin-pot tyrant. Since Trump is auditioning so convincingly for that later role, if I were the Chinese, I think I'd much rather fight Obama than Trump.

Ya, but many of us have thought so for some time now. I got March and June puts on the S&P and the March expired worthless.

I think interest rates are going to go up and the P/E ratios will have to go down. The most recent interest rate trend is up again, but we are not reaching new highs yet.

Well, by 'crashy' I just meant that it looks like it has to crash *soon*. The volataility is getting worse and worse every day, and it seems like we are watching the psychological unraveling of market actors. At the same time, QE2 in and oil prices are in overdrive and are putting a huge amount of pressure on the market to shoot up fast, which it is having a lot more difficulty doing because of the spread of perceptions of risk. It feels like the run-up to a panic. Perhaps I'm reading too much into it, but it does feel like the bottom can hardly avoid falling out sometime in mid-to-late April - not completely, but enough to notice.

I can't tell how many people like me there are but I'd like to say to all who post here how much I enjoy reading all this.

There isn't a snowflake's chance in hell that the (hyper)inflation
scenario that you and others fantasize will actually occur.

Ah. I see. Well, at least you're polite about it when people challenge your beliefs.

As I've said several times, show me a country that experienced
hyperinflation during the Great Depression, and then you'd at least
have a valid comparison and something approaching a valid argument.

How can you possibly know for a fact that nothing that didn't happen during the Great Depression can't possibly happen now? Doesn't that seem a little dogmatic? The two situations are very different, not least, as Vince pointed out, because we have a fiat currency now. Besides, our economy and markets are a lot more controlled now compared to then, as well as infinitely more complex, so why do you assume that they must behave in the same manner that they did 80 years ago? That isn't a 'Generational Dynamics' prediction; that's just you being stubborn and refusing to listen to contradictory evidence.

Inflation or deflation is probably a moot point as far as the average American is concerned. What I see is that our grocery bills are up 40-50% in the past 6 months,
Gas is almost $1 per gallon higher and that increases the cost of EVERYTHING in this country. Packaged food is getting smaller and the quantity per package is being reduced in weight/volume etc; also raising the cost per unit.

He's totally right. Prices are going up drastically, and there is no clear mechanism for this to stop, because prices of goods in the US are only very weakly tied to wages. They are much more strongly tied to circumstances outside of our borders.

Those of you who are talking about inflation aren't thinking ahead.

The increases in food and energy prices are causing enormous
hardship, but they don't indicate inflation, because people spend
less on other things. This morning's jobs report included the
crucial fact that wages are not going up. Until people have more
money to spend, there won't be inflation.

Even if there were a little inflation today, then it wouldn't matter
because I'm not talking about the world was it is today, with the
stock market overpriced by a factor of 2, huge bubbles in China, and
huge and growing debts in the US and Europe.

I'm talking about a world where:

The stock market has fallen 50% or more
Unemployment is sharply higher
The housing shadow inventory is thrown on the market
A couple of European countries have defaulted
The US has defaulted or is close to default
Labor unrest is spreading across Europe and across America
Unrest is growing in the Mideast
Unrest is spreading through China

In that world, the Fed will try all kinds of things, including QE3,
QE4, QE5, etc., but it won't keep up with the deflationary shock,
and it won't weaken the dollar against the euro because the euro
will be in worse shape.

You have to think ahead and take the long view. You can't assume
that what's true today will continue to be true, especially in
times like these.

John

For my part at least, I agree with your predictions that those things you list will happen - except one. The US government will NOT default. They don't dare. No country with a fiat currency has EVER done this, like Vince pointed out. They will print money to cover their enourmous obligations, instead. This is the central point. Can you support your argument that the US government will intentionally choose to default, thereby destroying itself immediately, instead of printing money and hanging on to power?

There will indeed be a deflationary shock as people have less and less money to spend, but that won't bring down prices. See, some people will indeed have very much more money to spend - in China. This especially will send hugenourmous cost increases down the line on every kind of good.

A harsh reality right now is that millions of Americans "REAL" income (meaning spendable income) is dropping quickly.
Increases in health insurance costs, increases to retirement contributions etc. are reducing the size of peoples paychecks.
People have less spendable money to buy goods and services that are increasing in price daily. You can believe the figures coming out of the Feds neverland ranch all you like. Just go to a grocery store or gas station and you will very quickly see that Prices aare going up up up up up. Sure some items are stable or even dropping but they tend to discretionary items not
necessities.
Nero is reported to have played a fiddle while Rome burned; are people going to be arguing about Inflation/deflation while they walk around the grocery store wondering why the shelves are bare?

He's totally right again. We're caught between the shears; real wages are falling substantially AND prices are shooting up. Who says the two are mutually contradictory?

Fred - I think your analysis is spot on. Thanks. I'm not sure if Japan is likely to have hyperinflation before the US, though; can you link to any articles supporting this assertion?

If the banks have trillions of garbage they want to turn into the Fed and the Fed takes it, that wil be more inflationary. On the other hand, if the Fed holds the line and refuses to take it, then there will be a lot of defaults.

I think this is right. But why would the Fed refuse to take it? 100% of their behavior to date supports the idea that they will take the garbage like they've taken all the other garbage, which means inflation. I would be astonished if the Fed did something that caused the big banks the slightest discomfort.

Not sure I understand this. With real estate prices falling, and the value of these securities at 60% of peak level, the only way I can see the Fed being able to sell these is if they paid less than 60 cents on the dollar for them. But my understanding was they paid close to market value. Anyone know what is going on here?

Vince's explation of this was good, but to put it perhaps a little more sucinctly - The Fed is going to lose a shitload of money of stupid toxic 'investments'. The banks keep the difference, and after they finish glutting themselves the leftover lquid currency dribbles into the real world, where it contributes to inflation. Basically, it's a really complicated way for them to steal an awful lot of cash from the American public before anyone catches on.

How do you avoid deflation if no one can afford to buy? If business has to cut costs to as near zero as possible, if there are no sales, if they lay off workers, how do they push prices upwards? A business with no sales is just another empty store front.

If you're selling food and energy, you can keep pushing the prices up until people start rioting. If you're selling anything else, you'll go broke. There will indeed be a whole lot of empty storefronts...

No, it's far more likely the country will simply withdraw the most expensive part of the US government from its huge and constant attempt to enforce peace on the world, IOW, the US military will pull back and bases will close world wide, as they are doing right now. Nationalism will push the US back into its shell, IMHO, and that's the biggest cost cutting measure imaginable.

Are you kidding me? The US is just going to unilaterally withdraw from its empire? That will not happen! I'd challenge you to show any example in history of an imperial power, democratic or not, that pulled out of its empire without being forced to by a war, ever. If the US pulled out the Middle East, we wouldn't be able to guarantee the flow of oil, which would be even more dangerous after the economy is toast. Those in power in the US would never, ever permit this to happen. We might have to leave the Middle East after losing a war, but there is absolutely no way that we would voluntarily give up world hegemony. I wish we *would* do this, and I think it'd benefit us immensely, IF we did it intelligently.

But at this point, the empire is the only thing that's keeping this economy alive. If we didn't have some control over oil resources, we'd immediately be in a much, much darker situation, with attendant social unrest. If you think that the US regime would ever permit this to slip out of our fingers, you're nuts. Only a political revolution in the US that fundamentally changes the character of the regime could have that result. Otherwise, the US is unfortately inexorably dedicated to maintaining our hegemony is whatever form we can, no matter who we have to kill, imprison, bankrupt, or impoverish. And as some insufficiently suspicious people learned with Obama, getting real political change in the US is a damn sight harder than it looks.

So which pieces are lining up to match that future? Closing US military bases worldwide - yes, ongoing. Fighting in many places with potential for civil war or external war - yes. Serious fights in Congress about raising taxes and cutting costs - yes. Nationalism on the rise and people yelling for the US to let the foreigners kill each other - growing trend. Stimulus for states set to expire - yes.

Sure, we're closing US military bases in perhiperal areas - but only to cut costs so that we can afford to keep the bases we 'really' need forever. And since when in the last 10 years have people yelling in the US had any effect on foreign policy whatever? Can you imagine the hew and cry from the Republicans and Fox News if the US started uniliaterally withdrawing from Saudi Arabia and Afghanistan and reducing support for Israel? Never in a million years would they allow your scenario. Unless there is a (hopefully peaceful!) revolution and the government changes, US foreign policy will definitely not change.

The grassroots call for no more foreign bases is loud enough to spark arguements against it. But "save money" will win out.

Really? You think the neocon Masters of the Universe will simply give up their world domination dreams just because they cost too much of other people's money? I promise you that will not happen. They'll rip up civil liberties, destroy entitlements and starve everyone in the country to death before they'll give up their empire. That should be obvious.

BTW, the only map to that theoretical scenario where some states might seize federal tax monies, would be for the states to no longer get ANYTHING from the federal coffers. That could well be coming. I will point out that Bush effectively got rid of posse comitatus and set things up where the President can pull NG troops from one state and use them in another state. That's a big damper on a state fighting the federal govt with anything past words, IMHO.

I wouldn't be so sure of that last conclusion. Assymetrical campaigns under high-technology conditions can be astonishingly effective...

(I get irritated over SS just because it's in trouble due to being messed with, no other reason. COLA was NOT in the original, and that's why there are budget problems, any increase had to be voted on by Congress prior to COLA. Payouts would be lower but there'd not be anyone claiming SS was the problem.) COLA is the problem with Social Security, and the military budget has a lot of obscuration built into it by design.

Now, a point here, not one penny of the deficit can be laid to Social Security. There is no reduction in the deficit (at this time, who knows what Congress will do in the future) to be had by reducing Social Security, unless you want to use "congress" accounting, which claims that any surplus collected by SS is "mad money" but any lack of surplus is a deficit disaster. Neither is true. Doubtless it WILL be reduced, but the reduction in payroll withholding will be offset by increased taxes. And the longer we play "Dr. Feelgood" and wait, the higher that tax increase will be. (Tax increases are actually being discussed in Congress now, a hopeful sign IMHO.)

I think you get irritated over social security because it annoys you when people threaten benefits you feel you're entitled to. But for the majority of workers who pay into a pot that they will never recieve a dime from, it's awfully relevant. It's pretty absurd of you to claim that 20% of the Federal budget has nothing to do with the deficit just because it's stolen from everyone on a different line-item. You know full well that SSI money is just put into the same general revenue pot as income taxes. I'm not saying that we should reduce SSI payments - some people really depend on them to live- but it's silly to pretend that SSI somehow pays for itself or that it can be seperated from the total budget problem. It's paid for by taxing younger workers to pay for benefits for the old, which is totally unsustainable for economic and demographic reasons that should be obvious. Trying to ignore that problem because you don't want to mess with SSI is as foolish as the Republicans who ignore absurd military spending because they don't want to deal with it.

So what about that "other" mandatory column? That's unemployment mostly, nobody needs that, cut it in half.
(seriously, the unending extensions are NUTS)

Nobody? ReallY? Yeah, sure, 8-12% of the population is totally just faking it when they say they can't find a job. The country would definitely be better off if they were starving to death under a bridge instead of being on the dole, right? I mean, why don't they just find a job? How hard could *that* possibly be? Those silly moochers, expecting benefits to keep being extended just because the job market keeps being devastated. How do they think they are, social security recipients?

Come one, don't be ridiculous.

Perhaps if we want a serious, less off-the-cuff discussion of ways to fix the federal budget, a new topic might be the best place, since it's pretty in-depth and numbers-focused.

And one last thing before I sign off -

Hey John, were you going to address my comments on how the generational periods break up and where the dividing lines are at all, or just stubbornly ignore them? I'd be very interested to hear your opinion on that topic if you can manage to come down from you cloud and actually engage with different views for once, instead of just ignoring them and dogmatically stating your opinions as fact. You're really smart, but I think you could help a lot more people, plus feel less embattled, if you'd loosen up a little and be willing to take other people's thoughts seriously.

Vince especially has a really, really good argument that you've totally refused to engage with, and that doesn't reflect well on you as a thinker. How can Generational Dynamics theory grow into a full, accepted academic discipline if it remains only your own fiefdom?

[Higgenbotham]

I think Neil Howe is incorrect if he doesn't think we're in a crisis period now in the US. Maybe the world doesn't look too bad yet from his Ivory Tower, but it is doubtless the case that the destruction of the old social order and its replacement by a new one, which to mind my mind is the clearest hallmark of a crisis period, is today quite well advanced. Why do we necessarily need a 'catalyst event' to switch from one period to the other? Couldn't it just be a gradual process of accelerating social change? Isn't that what we see around us now?

To my way of thinking, catalyst events provide the energy required to shift the phase from unravelling to crisis. I believe they are necessary.

As far as the social order being destroyed and replaced by something new, I agree with your thesis - I've been watching something similar that hasn't been discussed here, but it's very central to the financial crisis. So we should definitely talk about that. A social order is not the same as a political order, but definitely intertwined. The old social order has as its characteristics: consumer mentality, debt is preferred over saving, home and vehicle ownership, suburbs, me first and screw everyone else, live for today and screw the future. The reasons this social order has become outmoded are things such as: degradation of resources, excess debt, congestion, pollution, crime, breakdown of family, loss of ethics.

The role of our political system for the past 5-10 years has been to attempt to preserve this old order at all costs even when it is obvious that its useful life has passed and it is no longer optimal for the country overall. That in my mind is very key as to why we are still third turning when indications are that we should be fourth turning.

Of course it's bad; it's very bad. The crisis catalysts will involve things that go hand in hand with the old order suddenly and dramatically shifting to accomodate the new order. It can't happen any other way.

If you think that what is going on today is anything resembling "business as usual," look more closely and be more skeptical. The way things are today is totally out of wack and unnatural even from the perspective of recent American history. The economy is essentially completely destroyed, our military prowess is fatally hollowed out, the former middle classes now depend directly or indirectly on state largesse to maintain their standard of living, our body politic is utterly riven with schism, and corporate plutocratic shadow rulers are consolidating their hold on power. The change is already well-underway. I beg of you, look closer, and be much, much more worried than you are.

You don't think I'm worried? What you're listing are all symptoms of attempting to maintain the old social order, which is "business as usual". Business as usual is unemployment compensation and food stamps, just more of it. Business as usual, as you've described elsewhere, is not pulling back the empire. A body politic utterly riven with schism as you say is third turning. Corporate plutocratic rulers consolidating their hold on power is occurring because of the desperate attempt to preserve the old order at all costs.

The new social order addresses the problems that arise from the old social order, some of which I listed. You've already described a lot of the problems, as well as describing what that new social order might look like. However, when the new social order arrives, it will out of necessity be eventually embraced by everyone (if the US survives as a homogeneous social and politicial unit, as it has in the past). Once the new social order can gain enough of a foothold to begin to destroy the old social order, then the crisis catalysts will occur and the phase transition will move forward. Our leaders are trying to stop this, are doing absolutely nothing to enable a new social order (as leaders in the past have), but there is nothing they can do to permanently put it off because it doesn't come from them, it comes from the people and their vision of how they want to live.

[John]

> that's just you being stubborn and refusing to listen to contradictory evidence.

You're a moron.

[Higgenbotham]

Haha. I was wondering how you'd interperet that graph. Either the Chinese finally found a way to stop the destruction of their arable land, WITHOUT changing any of their agrcultural practices in a major way and WITHOUT halting or even slowing the massive acceleration of their drive towards industrialization....OR they're lying. If I was a Chinese communist autocrat and my croplands were in a very desperate and rapidly decling situation due to my own mismanagement, I'd definitely post a reasonable figure and then just keep the number at that level indefinitely. Well, I might at least vary the figure for plausability. But I certainly wouldn't tell people! So whether you percieve the evident danger in that graph depends on whether you think the Chinese government is trustworthy...

Remember what I asked you for, though. You made some claims and I asked you for some links for further reading that support your claims. You gave me a link from Seeking Alpha and I regurgitated what's in it. Now you're telling me that the link you gave me is wrong and you're making claims that are counter to that. I'm not saying you're wrong, but are there any reputable links you have that agree with your assessment?

You mean how much does it cost to feed all of China? Umm, well, a lot. It's not just wheat we're talking about, it's basically all crops, including rice and feed for livestock.

Perhaps a thought experiment will give a clue to the magnitude of the problem. If you think they could all live on a dollar a day, then I guess it'd cost 1.3 billion dollars per day to feed them.

If you instead assume that China can continue to feed 50% of its people after the agricultural collapse - and the actual number will probably be more like only 33%, given the very extensive destruction of fertile land because of desertification, soil degradation by pollution, and deforestation, but let's be conservative - and you then continue assuming a dollar a day, which is way too low, then you have $650,000,000 a day or about $19.5 billion a month or ~$234 B a year.

Again, you gave me a link that indicates China has a wheat shortage due to drought. If they have other shortages, I'm only vaguely aware. I believe I read they are importing corn and soybeans too. Anyway, I found China, after saying the wheat harvest would be fine, is now buying wheat on the market due to being 15 million tons short of their planned harvest numbers. I don't know why they're buying less than that, but would have to assume they have about 13 million tons of old crop in storage. If they're 15% short of goals due to drought, that doesn't seem like an ominous trend unless the drought worsens.

As far as the war stuff, I'll look at it some more.

[Lily]

that's just you being stubborn and refusing to listen to contradictory evidence.

You're a moron.

Well, I'm glad to see you dealt with the substance of my claims. Very professional. I'm convinced.

To my way of thinking, catalyst events provide the energy required to shift the phase from unravelling to crisis. I believe they are necessary.

I haven't been able to find much data on this topic; do Strauss and Howe claim that there's a catalyst event at the boundary between *every* third and fourth turning? If so we should either find them reliably in every society and every cycle, or, if we can't find any in some cycles, we'll have established that they don't always necessarily occur. I'm not sure how much objective data we have on this?

The role of our political system for the past 5-10 years has been to attempt to preserve this old order at all costs even when it is obvious that its useful life has passed and it is no longer optimal for the country overall. That in my mind is very key as to why we are still third turning when indications are that we should be fourth turning.

When would you say that the 4th turning began in the US last cycle? My guess would be 1929, and about 1850 for the cycle before that. I am not sure if we are agreed on this, but that's probably a first step toward agreeing on when it began this cycle. This is a really fascinating topic but there doesn't seem to be a lot of solid information on it. If you think that the US 4th turning hasn't begun yet, does that mean you think that when it does happen it will run for another 15 or 20 years before we get to the austerity period? My thoughts have been that the constitutional issues in contention in the US will be more or less settled for good by about 2018 or so, at which point the victor will settle in and it will start to feel like the beginning of an austerity period. I can't see how we could possibly continue to operate in the current manner for more than a few more years, let alone another two decades.

Of course it's bad; it's very bad. The crisis catalysts will involve things that go hand in hand with the old order suddenly and dramatically shifting to accomodate the new order. It can't happen any other way.

Hasn't that already happened in a lot of ways? The economy has a new structure since 2009-2010, now that unemployment has become endemic and systemic. Surely if the market crashes this year or next the face of the economy will change even more radically and permanently. And if these shifts are new, aren't they nothing more or less than the result of the course we embarked on after Bush 'won' the Culture Wars? Anyway, what conditions would have to be fulfilled before you would feel like we were in a crisis period? It looks to me like the new order is at least 50% here already.

You don't think I'm worried?

Pardon me; I don't mean to imply you aren't concerned. I'm just saying that the situation is even more dangerous than it looks. The chance of a sudden phase shift to even more volatile situation seems really close at hand.

A body politic utterly riven with schism as you say is third turning.

Or a post-third turning society with deep and fundamental cultural divisions, perhaps?

However, when the new social order arrives, it will out of necessity be eventually embraced by everyone (if the US survives as a homogeneous social and politicial unit, as it has in the past). Once the new social order can gain enough of a foothold to begin to destroy the old social order, then the crisis catalysts will occur and the phase transition will move forward. Our leaders are trying to stop this, are doing absolutely nothing to enable a new social order (as leaders in the past have), but there is nothing they can do to permanently put it off because it doesn't come from them, it comes from the people and their vision of how they want to live.

I am not so sure that the new order will necessarily come from the people and our vision of how we want to live. I am afraid that it might instead come from powerful, colluding state and corporate interests and their vision of how they want us to live. If an awakening is when an idea is germinated and the crisis is when it is either established for all time or else extirpated, I'd say that the counterculture that emerged during the last US awakening is now either going to be established in some manner as the real governing paradigm, or else it will be extirpated from the idea pool more or less for good. This certainly does seem in danger of happening, given how completely the government is dominated by plutocratic and imperial interests, and how evidently little concern it has for the fates of its citizens.

I'd say that the 'default' outcome if no (perhaps deliberately induced) black swan event radically changes the circumstances is that the awakening movement will be defeated by the 'system' it originated in conflict against. This process is pretty far advanced now, and shouldn't take more than a few years to complete. And if there was indeed a period of terrible social chaos and unrest in the US for a few years, which then ended with a newly complete seizure of power by the System, it's conceivable that they could institute a system of tyranny so complete and inexorable that it would be almost impossible to break it. Once we make it to the austerity period, whatever order we wind up with will be changed only with very great difficulty; it might well gain some measure of legitimacy in the eyes of its subjects even if it was mostly against their interests, provided that it looks better than whatever horrors we're subjected to between now and then. This is how the USSR made it through its first crisis.

As long as we're on the topic of trying to figure out which turning we're in, it's worth noting that the GI generation is almost entirely gone already, and the Silent generation is largely ignored. I'd say that the cultural and political dominance of the Boomer generation is entering its second decade, wouldn't you?

Now you're telling me that the link you gave me is wrong and you're making claims that are counter to that.

Well, I'm just saying that like all numbers, they have to be taken with a heavy grain of salt. But they seem unequivocal, no? Either they magically solved the problem of desertification once and for all, or they're lying to cover up a problem.

Does the UN count as a reliable source?
http://www.nytimes.com/2011/02/09/busin ... 9food.html
The article makes it sound like the problem is pretty well under control, but I have to wonder how much of that is the Chinese government doing spin control. The situation seems pretty grave.
http://www.bbc.co.uk/news/world-asia-pacific-12606326
Not a lot of figures here, but more background. It seems really serious.
And here's some more data on the drought.
http://climateprogress.org/2011/02/24/c ... od-prices/

If they're having a wheat shortage due to overwhelming climate-change induced drought, how could that fail to harm the other crops, too?

Jared Diamond's book Collapse has a very solid chapter on China's environmental problems and how they effect food production. That's part of where I'm getting the assertion that they're covering up the extent of the damage. Data on this topic will probably continue to be sketchy, but I see enough bright warning flags that I'm not going to assume it isn't as bad as it can get, and that's pretty darn bad.