Book of the Month

Donal's picture

Doom is Normal


I don't know who dubbed me "dag's doomer" over the masthead last week, but I had to laugh because I think of doomers as those guys that are predicting an imminent meltdown of society (or its cheese) but will gladly sell gold, shotguns and freeze-dried food to all comers. We're in the time of year when radio stations replay the classic songs, tv stations replay the classic movies, newspapers tally celebrity deaths, and doomers tell us just how lucky we were this year but just how bad next year will be. I'm sure James Kunstler, Dr (Doom) Nouriel Roubini, et al, will not disappoint us in the doomsaying department, but let's face it, folks, things are already bad right now. As Joseph Stiglitz writes in Vanity Fair:

It has now been almost five years since the bursting of the housing bubble, and four years since the onset of the recession. There are 6.6 million fewer jobs in the United States than there were four years ago. Some 23 million Americans who would like to work full-time cannot get a job. Almost half of those who are unemployed have been unemployed long-term. Wages are falling - the real income of a typical American household is now below the level it was in 1997.

I have to stress that I personally am doing well. I'm not wealthy, I've been laid off in past recessions, but I have good health, a supportive wife and in this awful recession I still have a steady job that I enjoy. My children, stepchildren and siblings are all mostly doing well, too. I am thankful for all of that, but you don't have to sleep in an Occupy tent to see people that are struggling. John Michael Greer has a piece up, This Is What Peak Oil Looks Like, which resonates with me:

The point that has to be grasped just now, it seems to me, is that this is what peak oil looks like. Get past the fantasies of sudden collapse on the one hand, and the fantasies of limitless progress on the other, and what you get is what we're getting - a long ragged slope of rising energy prices, economic contraction, and political failure, punctuated with a crisis here, a local or regional catastrophe there, a war somewhere else - all against a backdrop of disintegrating infrastructure, declining living standards, decreasing access to health care and similar services, and the like, which of course has been happening here in the United States for some years already. ... those of us who still have jobs will be struggling to hang onto them, those who have lost their jobs will be struggling to stay fed and clothed and housed, and those crises and catastrophes and wars, not to mention the human cost of the broader background of decline, will throw enough smoke in the air to make a clear view of the situation uncommonly difficult to obtain.

Greer is describing the difference between a growth economy, with new opportunities for all, and a gradually declining economy, which looks more like a long, long game of musical chairs. Federal Reserve statistics show mild growth, but as described in a New York Times article, In the Forecasting Fog, It’s Wise to Slow Down, there is a lot of disagreement as to the actual state of the economy: 

... the Economic Cycle Research Institute, an organization with an excellent track record, says the United States is actually heading into another recession, if it isn’t in one already.

In a statement at the end of the Federal Open Markets Committee meeting last week, it said the housing market — usually an important component of a recovery — remains moribund. Moreover, it said, economic growth will be too anemic to have a low unemployment rate anytime soon. In this vulnerable time, “strains in global financial markets” — read, turbulence in the euro zone — pose a serious threat, it added. A financial shock could darken the outlook immediately. 

In, This slump won’t end until 2031, Matthew Lynn of MarketWatch sounds Kunstler-grade gloomy:

I have been researching that episode for my new e-book ”The Long Depression: The Slump of 2008 to 2031.” The parallels with our own time are fascinating. German unification, and the adoption of the gold standard, had led to a boom in that country, and cheap German money had flooded Europe. Greece had just joined the Latin Currency Union, an ill-fated attempt to merge currencies across Europe. Banking had been deregulated, which was partly why so much German money was invested on the Vienna bourse. The telegraph created instant communications, allowing the European crash to spread to New York. The U.S. was industrializing, transforming the global economy as much as China has transformed the present era’s economy in the past decade.

All those factors came together to create an almighty bubble, followed by an even worse crash. The slump that followed — although it is hard to measure these things precisely — lasted more than two decades. If the slump following the crash of 2008 is anything like that one, then this one is going to last until 2031.

And in, IMF warns that world risks sliding into a 1930s-style slump, Christine Lagarde sounds Roubini-grade gloomy:

"There is no economy in the world, whether low-income countries, emerging markets, middle-income countries or super-advanced economies, that will be immune to the crisis that we see not only unfolding but escalating.

"It is not a crisis that will be resolved by one group of countries taking action. It is going to be hopefully resolved by all countries, all regions, all categories of countries actually taking some action."

Even if growth was guaranteed, it is hard to put much faith in statistics when such a small percentage of the population benefits. In addition, as I noted on Oxy's post, the economy is increasingly rewarding banks and corporations that can influence government and/or game the markets, while sending a larger and larger percentage of the middle class into permanent unemployment. 

Predictably, the people that have lost ground have protested the changes, like the Tea Party, Occupy or Indignados trying to get back what they've lost, or Arab Spring protestors trying to get what they've never had. But after the figureheads tumble and nothing really changes, after so many elections where nothing really changes, how will the key people around us adjust their ideals, adapt to the new realities and play their part in a declining world? I mean those people that affect us most directly. Will police, bosses, inspectors, principals, teachers, store clerks, bank tellers, repairmen, etc. that we rely on and deal with be fair - or will they become the sort of venal and impersonal characters we associate with hopelessly corrupt societies?  

So far the plutocracy, using an acquiescent media, has successfully turned half of the people against the other half. While Occupy has tried to draw a distinction between the 1% and the 99%, the rightwing and mainstream media has lumped those people dropping out of the middle class in with the usual suspects of the indigent and working poor. Hard-working people are apparently supposed to go to North Dakota, or anywhere else, seeking jobs.

So it seems to me that what some might call doomerism has gone mainstream, that we are being urged to accept it as normal, and to believe that some of us deserve it.

The news is terrible. Is the world really doomed?

The economy's bust, the climate's on the brink and even the arts are full of gloom. Has there ever been an era so bleak?

The economic and political shocks of the last five years, and of this year in particular, have changed how many westerners see the world. "The impossible is becoming possible," as [Slavo] Žižek puts it in Living in the End Times, and he doesn't mean in a good way. Gray says: "We've moved from a delusional optimism to a sense of intractable difficulties: resource scarcity and enormous debts; the erosion of bourgeois life; the inability of politicians to solve big problems; the realisation that the economic problems of the 70s weren't really solved; the realisation that the window for doing something about climate change – the next five years – will be entirely occupied with trying to restart economic growth."
...
Žižek argues that over the past five years the west has suffered a form of bereavement. To describe the resulting mindset, he uses the famous "five stages of grief" model devised in 1969 by the Swiss-American psychologist Elisabeth Kübler-Ross: denial, anger, bargaining, depression and acceptance. The current combination of public doominess and desperate-looking political summits certainly seems to feature the middle three. Gray sums up the prevailing mood more succinctly: "People are afraid – for good, practical, experientially based reasons."

What in the hell did people think the  purpose of the progressive income tax as well the estate tax was?

It does not take a graduate degree in economics to figure out what has been going on the past three decades or so.

If you are rich you can make a lot of money and pay capital gains tax.

If you are rich you can put money into scores of trusts, pay no taxes and insure that your grandchildren will never have to work.

Why bother. What we need is a new emergence of an old hero:

I've been writing a long essay that is definitely hopeful.   I've been working on it for about a month now, but it should be done in a couple of days.   I'm not sure yet where it will be posted or published, but I'll keep you all posted.

Part of the sense of doom is the feeling that A, B, C, D and E are all screwed up, but we are only permitted to work on fixing D and E.  We just need to get more ambitious.

My post made it in The Oil Drum's daily Drumbeat, and I found this article mentioned in the comments:

Why energy journalism is so bad

 ... my colleague Christopher Mims pointed up a sharp discrepancy between three recent stories by Reuters, published between November 21 and 24.

The first reported Saudi Aramco’s CEO Khalid al-Falih as saying that unconventional oil (heavy oil, synthetic oil from shale and tar sands, coal-to-liquids and so on) had eliminated global supply concerns, and would rise from 2.3 million barrels per day (mbpd) today to 8.4 mbpd by 2035. This would shift the global balance of power, he said, and reduce U.S. dependence on oil imports. Further, he expected conventional oil supply from Brazil and Iraq to rise. All of this was by way of explaining why Saudi Arabia had recently halted its ongoing $100 billion program to expand production capacity beyond its claimed 12.5 mbpd current capacity, and would not seek to expand it to 15 mbpd (a fact that was already widely assumed by most who follow the energy markets, but apparently was still considered newsworthy).

The second said that oil prices should remain high because global demand had remained strong, and would reach more than 89 mbpd this year according to the IEA. (The International Energy Agency, or IEA, based in Paris and serving at the pleasure of the 28 industrialized countries in the OECD, currently shows 88.7 mbpd for Q3 2011 under a liberal definition of “oil” which includes biofuels and certain types of natural gas liquids. The Energy Information Administration, or EIA, based in Washington D.C. and serving under the U.S. Department of Energy, shows 86.7 mbpd under a more restrictive definition, which excludes biofuels, non-associated natural gas liquids, and other components.) But while demand has been strong, the article noted that supply has been “inconsistent,” citing the loss of 1.6 mbpd from Libya, and various “hiccups in production in Russia, Britain, Norway and Nigeria.”

The third suggested that high oil prices “could strangle economic hopes,” and quoted the IEA’s chief economist Fatih Birol: “I hope that colleagues from the producing countries are also looking at the market indicators carefully, including the diminishing OECD stocks levels and the fragility of the global economic situation.” In his view, too little worldwide investment in oil supply would keep prices high enough to stifle the recovery of the global economy.

So which is it? How can three stories from a single source, published over a five-day span, simultaneously claim that supply is adequate and inadequate; and that prices would remain high due to strong demand, but would be so high that they would destroy demand?

It is always interesting to see who is reading one's posts. Some blogger has sloppily attributed Greer's quote to me so he can associate Greer's description with my title.

And the Global Warming Policy Foundation, which appears to be a climate change denial site, has reposted that article as Weasels Of Peak Oil Cult Scramble To Explain Absence Of Doom.

And so it goes.

Heh!  Don't complain, Donal.  Welcome the traffic.  You might even win over some of those deniers and such.

Latest Comments