Guest post by Luke Eastwood from his articles found at http://www.lukeeastwood.com.
Buzzwords or rather buzzphrases like ‘peak oil’, ‘climate change’, ‘global warming’, ‘food crisis’, ‘peak water’ and even ‘peak everything’ have been bandied about everywhere over the last decade thus create a sense of drama and impending doom amongst those who can tear themselves away from the soap operas.
There has been much fear-mongering, mis-representation or mis-interpretation of empirical data and scientific opinion for both commercial and political reasons as well as impartial warnings from the scientific community(1). Contradictory viewpoints at many levels of society has lead to the current situation – a malaise or crisis saturation point that results in apathy or, put another way, impotent retention of the status quo.
In truth, the data speaks for itself, whether it’s climatic or economic. Whatever spin clever people wish to present on behalf of vested-interests, the statistics over time clearly show that the world is in bad shape economically, climatically and in sheer terms of resources per head of population.
Where we find ourselves now is unique in human history, simply because we have reached or nearly reached the limits of what formerly appeared to be an inexhaustible supply of resources. This problem was inevitable given that not all of the earth’s resources are recyclable or replaceable. However, the exponential growth curve of the human population over the last 2000 years(2) has undoubtedly rapidly accelerated the rate at which multiple factors have become a problem for us.
The first and most fundamental problem for any organism is the supply of energy. In the case of most organisms the sole energy forms required are food, water and sunlight. Humans are unique in that we have become dependent on other forms of energy, first animal labour and then mechanical labour. In the case of the former, food and water powers this additional labour harnessed by man. In the case of the later we have had to find mineral or electrical energy sources to provide the necessary power.
Obviously in the early days of mechanical labour the power sources were seemingly omnipresent – tar pits, open cast coalmines etc were common and easily tapped, but as we all know, this is far from the case today. Worry over the supply of oil, gas and coal (and from this electricity) has reached fever pitch since the 70s oil crisis and has led to the term ‘peak oil’ that most intelligent people are familiar with.
Now, in the twenty-first century, we are dealing with not just what appears to be ‘peak oil’, where demand is roughly at parity with the practical rate of supply(3), but the beginnings of ‘peak everything’(4). Water shortages are common enough in many parts of the world, but this is a problem that historically has not affected the developed world greatly – due to technological innovation and the availability of sufficient resources to overcome such problems. This is no longer the case, particularly in California and mid-west USA, which has been struck by prolonged drought in recent years.
‘Peak water’ is increasingly a problem all over the globe, not only due to rising human populations but also as a result of erratic weather patterns, attributed to ‘climate change’(5). Higher or lower precipitation can cause dramatic effects on the landscape and as a result on local or national economies too. For instance, food production in California is horribly affected by water scarcity but it also has had its effect on the timber industry, tourism and all water-hungry manufacturing. Competition for water will increase, it is in fact a reality already(6).
Of course problems of water and food supply feed into the overall cost of production and hence the general price of goods. With currency wars in full swing, inflation problems experienced by both producers and consumers are only exacerbated by unpredictable decreases in supply caused by chronic and acute weather anomalies.
The current ‘economic recovery’ is somewhat fragile at best, or if we are truly honest – is non-existent(7). What little ‘recovery’ there is seems to be based on ill-conceived confidence and not on any real change in the economic fundamentals. In fact there is a good case for arguing that the fundamentals are in fact worse than in the last recession, which would indicate that the ‘recovery’ is an illusion akin to ‘The Emperor’s New Clothes’ fairy tale.
Given the true state of the world’s economic system, it is hardly in a state to withstand any shocks – ‘peak oil’, ‘peak water’, ‘peak food’, or infrastructure and environmental calamities etc. brought on by ‘climate change’ events such as hurricanes, droughts, flooding and the like.
Even if one were to ignore the possibilities of ‘climate change’ havoc, the world economy could collapse at any moment given that it seems to be entirely sustained by confidence and the continuous creation of debt. In ‘normal’ conditions, continued expansion of debt and endless money printing would not inspire confidence in the financial system, but there has really been nothing normal about the world economy since the abandonment of the gold standard(8).
At this current time personal debt levels in the developed world (and also developing nations such as China) are at frighteningly high levels(9). For a multitude who are ‘maxed-out’ already and struggling with their overleveraged burden there is no possibility of further borrowing. Therefore financial institutions are left with taking risks on younger people who have yet to realise their earning potential, on older people who may not live to the end of the term, or on people who they would usually dismiss as too risky.
In the commercial end of things there is still so much toxic debt kicking around the system that the financial institutions are desperate to negate potential losses but are often too afraid to lend to many viable businesses(10).
In a system that is still awash with debt from the last ‘recession’ of 2008 and with fewer financially healthy applicants to lend to, the financial institutions are ripe for another collapse. Bailouts and quantitative easing have kept a multitude of zombie institutions afloat for years now, but in doing so governments have beggared their taxpaying populations. So now the average person has less to spend as a result of high real inflation(11) (forget the phoney CPI) and stealth bailout/QE taxation, which of course means they have less money to actually spend in the real economy, thus making the system even weaker.
The whole thing is like a barrel of gunpowder waiting for a spark, waiting for what people have called a ‘black swan’ event or perhaps a ‘perfect storm’ of several calamitous events happening at the same time(12).
If it’s not war, disease or some financial anomaly then ‘climate change’ is likely to provide the necessary trigger to the loss of confidence that will drag the whole system into a massively destructive correction. As climatic events become more extreme, more violent and more frequent the chances of ‘peak everything’ become more likely. If ‘peak everything’ becomes a reality then the out of kilter, fantastically inflated world economy is absolutely guaranteed to collapse. When this systemic correction finally does happen, maybe tomorrow or maybe years from now, it will not be a ‘clean break’, it will be a bloodbath(13).
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of The Duran.