The dawning of suburbia

Could it be that we have it all wrong? It seems trends that have developed in our society don’t often reverse themselves, they just continue to evolve. Link The suburbs spread out in the 50’s and with super highways to commute to our jobs we had a quasi country home and the means to pay for it. As this sprawl continued to widen and as more and more commuters were sharing the highways the morning commute quickly became a nightmare and we found ourselves trapped in our idyllic lifestyle. Today, the size of the suburbs, the state of our infrastructure and the general frantic pace of our society has pushed the whole system to the breaking point. The cost to provide highways to our cities might shock some people. For a basic two lane road the costs run about $10,000/mile, to widen and improve a superhighway …$20,000,000/mile. Yes that’s 20 million per mile. Given these costs, it will come as no surprise this trend cannot continue. Originally the thinking was the population would have to move closer to cities and some utopic ideas were floated around regarding super green high-rises for everyone to live complete with self generated spring water and organic gardens on every terrace. A mixture of the Jetsons with Ma & Pa Kettle. This idea is quickly fading as crime rates continue to rise due to unemployment and poverty. The real trend is businesses moving to the people and we will see the suburbs evolve to mini cities concentrating on a few specialized product/service areas. Workers will commute on foot/bike or share a ride with a neighbor that works at the same business. People will begin to meet each other again and with shared interests, might actually get along. Small farming operations will sprout up around these mini-cities and local production will be the prevalent trade. The economic downturn will turn our cities into poverty ridden, hollowed out crime zones. Link The poor who cannot adjust will be left to fend for themselves in an ever increasing urban hell. In 2001, Argentina suffered an economic collapse that gives much insight into how populations will respond. Gangs of thugs roomed the cities looking for anything to steel and anyone to exploit. Link The police and emergency services were horded by the wealthy and the poor were left to the wolves. There is another startling lesson the argentine crisis showed us, namely that living a self sustaining/isolated country way is not a safe choice. Even the well armed rural residents were constantly attacked by roving gangs that were merciless once they overpowered their prey. With little risk of police or neighbors interfering these gangs spent days occupying rural homes robbing, vandalizing and severely abusing the homesteaders. As a similar crisis unfolds here at home the thin veneer of safety and security will begin to peel away. The future for a safe and sustainable lifestyle is the suburbs. Having a local specialized workforce with supporting farmers, handymen clerks and clergy living in support of each other is the safest and most practical evolution of our society. People you know and share a common bond. People willing to support your needs as your wellbeing will affect the community as a whole. This lifestyle will not be idyllic, actually knowing and interacting with your neighbor will provide the backdrop for drama that will make the antics on Desperate Housewives look mundane. But we must accept the reality of things to come and be ready to adjust. There is a lot of preparedness information being provided to help people get ready for these changes. Most of this information is helpful and practical but let’s not forget the most important item to add to our survival kits; …friends and family.

Jacket and Tie

A retail pound of coffee in 1980 was around $3. Today we pay around $6 for a pound and adjusted for inflation, retail coffee prices have fallen 10 to 20% in the past 25 years. Farmers producing coffee are getting a small fraction of the retail price. The trend in past years has been to organic growing practices and fair trade for growers to mitigate this disparity and improve coffee quality. During this period global trade had boomed and new coffee growers have entered the market from developing Asian markets forcing price competition and keeping improvements in sustainability at bay. Growers in new markets have no regard for environmental concerns and live in such poverty any price is acceptable. Coffee importers and traders have increased their profits over the years at a steady rate of return by exploiting emerging market poverty. Profit is paramount and all other concerns are secondary and subject to publicity. Larger and larger corporations form conglomerates or cooperate in back-room deals to play the growers off the consumers to maintain their supply chain and thus control of profits from the coffee trade. Globalism is fast becoming one large controlling company dictating the markets and supply and demand forces are becoming irrelevant. This is happening across all sectors and markets, domestic and foreign and is why real wages have declined worldwide when adjusted for inflation while corporations have continued with steady growth. So where is coffee with the current economic crisis and can we expect to have our morning fix in the future? Corporations will continue their control of the market in the face of new challenges. Climate change is lowering yields in traditional growing areas. The pace of change is making it hard to keep production levels up as new more suitable areas have to be cleared and planted. Ideas of sustainability and environmental responsibility have been shelved as governments are trapped in their own budgets and seeking desperate means for real tangible wealth. Today world shipping has declined because lines of credit for trade are untrustworthy however; in the near future world shipping will suffer from devastating energy costs raising coffee prices. Finally, an increased rate of domestic inflation to cover all the bailouts will reduce your purchasing power; all tolled coffee prices will rise dramatically. A good cup of coffee will be equated with a fine glass of wine and gone will be the days of the commune office coffee pot. The idea that Juan Valdez will come to your home with a fresh brew in the morning will be more fleeting than your 401k. Link This drive-thru is jacket and tie only….

In Aurum Nos Fides

Watching a shell game is quite amazing. The sleight of hand is difficult to detect even in the novice magician. Just when you’re sure the ball is under that shell, you discover there is no ball at all. New regulations will begin next week for the NY Mercantile Exchange to adjust their reserve policy of gold in a futures contract. What is this improvement to their policy? Well they can engage in a gold futures contract without actually having any gold. If you want delivery then you must settle for cash. All together now… Gold Bubble! Where is the Commodities Exchange Commission on this? First we have paper assets not backed by assets and now we have paper commodities not backed by commodities. The economic shell game is becoming so blatant I cannot understand how the population has not taken to the streets. Are we all on Prozac? It’s time we filtered the fluoride out of our drinking water and wake up to these tricks. Beware the magician but In Gold We Trust…

Walking the plank

If you have toxic waste to dispose of and want to save money where can you dump it? During the 90’s the best place was off the coast of Somalia. Link As Somalia fell into civil war, the population lost their international voice. Dumping of heavy metal, nuclear waste and biohazards of all kinds began off the coast of Somalia with little fear of being caught. Oil tankers swerved into the coast to flush their ballasts of crude to save the cost of doing it at port. Local fishermen were horrified and began buzzing ships that were dumping waste in an effort to chase them away. Ignored, the fisherman took their complaints to whoever would listen and warlords began supplying them with arms in an effort to be taken more seriously and tax ships to compensate for lost fisheries and pay for the weapons needed to confront the ships. These facts never seem to make it on the mainstream news. We never get a balanced perspective about any issue that might threaten our status quo and the population is too stupid to question reports of ‘the sudden scourge of pirates on the high seas’. Mesmerized and hypnotized by cable news and reinforced by bigotry and ignorance, people imagine gangs of wild and savage black thugs raping and pillaging innocent shipping companies just going about their business. Lost in the sensational headlines is the fact the hostages are catered to in the best manner afforded by the circumstances and most importantly the root cause of it all, the total decimation of the Somalia fisheries by illegal dumping. During the tsunami, large amounts of toxic waste was washed ashore and was easily identifiable as coming from as far away as medical facilities in Europe. The locals suffered a variety of strange ailments and birth deformities soon followed. The headlines now reassure us that naval forces are on their way to sweep the seas clean of pirates. We are meant to be reassured and most will be. Not me. We are all sailing on the same ship, our earth. We have forced the Somali fisherman to walk the plank of resource depletion and while they turned to fight at the last step, they will be pushed over. We will follow our captain’s course to illusionary riches treating any caution or critique as mutiny …Just who are these pirates?

Bubbling Crude

As bad as this financial crisis is, there is a far greater danger just bubbling under the surface. The fundamentals of our economy come down to tangible products and tangible resources. Things we can see and touch. Services, especially financial services, provide no benefit to the fundamentals of the economy and are luxuries afforded because of healthy goods production and proper resource management. The most important of all, above even gold, is crude oil. Contrary to popular belief, crude oil does not grow in the ground. It was formed millions of years ago at a time of intense global warming. Algae growing on the surface of the ocean took advantage of the warm climate covering vast areas and sucking up all the atmospheric carbon. As this algae died it sank to the ocean floor and over time with heat and pressure, became crude oil. This process took millions of years to complete and when the carbon from the atmosphere was trapped in this oil the climate cooled and life rebounded. So here we are, living in the age of oil, using all the stored solar energy in the oil and releasing the carbon back to our atmosphere. The genie is now out of the bottle and it is unlikely, given human nature, it can be put back. Climate change will ‘change’ at an exponential rate. Most people have heard of peak oil and some even tout it as the saviour of climate change. This is false. We will use supper straws to suck and burn the last half of our oil in the next several years. Conflict and social unrest are inevitable as the general public come to realize the dependence we have on oil for food, transport, clothing, electricity and yes, lipstick. There simply are no alternatives to oil to support 7 billion people. Saudi Arabia is lying about its oil reserves. Their output will decline. All other large oil fields are declining with particular concern to the US is declines at Cantrell in Mexico. Smaller fields produce short burst of oil that will not mitigate the losses from the larger fields. And if all this isn’t bad enough the current price for crude has slowed investment in searching and developing oil supplies. Is anyone out there suggesting tar sands? The truth of the matter is tar sands are what their called. Tar mixed with sand. The only reason it is economical at the moment to extract oil from sandy tar is the presence of natural gas at the deposits which is used to boil water to extract the oil. This is really the energy from the natural gas converted to liquid and when the gas is gone it will take more energy to get the oil than the oil will provide. Governments know all this; they just don’t want you to know because there simply is no practical solution. I’m sure if Jed Clampett was alive today he would put an old piece of plywood over his oil well and stick with his organic farm. Link

Let Them Eat Cake

What do you do when your empire’s population has lost their purchasing power because of low wages? Why let them have credit. Link As this linked commercial emphasizes, actuality having real money just holds up the economy! Having real tangible assets is just too hard to liquidate. Herding sheep, carrying sacks of gold dust or shuffling through pieces of paper and coins just cannot keep pace with our expanding economy. Increase the rate of transactions and you increase the profit rates. If you’re running a Ponzi scheme Link this ever increasing purchasing fervor helps deflect attention from the sustainability of the inflationary bubble. Unfortunately the entire credit card sector is as I’m sure you’ve heard, a house of cards just waiting to collapse. Just as the main economy relies on a steady growth rate to maintain services, pensions and reinvestment, consumer credit companies must have an ever increasing base from which to profit and high unemployment rates are a death sentence to this industry. We can expect a lessening of credit limits and increases on service fees and interest rates as companies try to mitigate losses. It’s a fact that many people are falling back on their credit cards to help bridge the gap in these hard time not realizing this gap is more of a canyon. They will crash before they reach the other side. I’m sure many have discovered a sobering fact not covered in most media circles; you cannot absolve credit card dept by going bankrupt. How could this be true? Large companies and corporations who acted irresponsibility or just couldn’t make it can declare chapter 7 or 11. Why can’t I? Answers could come from Vice President Joe Biden. Link But they won’t. The dawning fact here is that we cannot have our cake and eat it too. While we likely will not be herding sheep to market any time soon, a slower pace of consumerism will happen. All is not lost for credit card holders though, credit cards are quite rigid and well constructed, they are ideal for jiggering the sheriff’s lock on your foreclosed home….

Space Invaders

I remember playing Space Invaders for hours and hours. Link It was a great game when it came out in the late 70’s I think. I had an Apple computer and my friends and I would take turns defending ourselves from an ever increasing crescendo of blips raining down from above. In recent months we have been confronted with many blips that seem difficult to zap away. The complexity of the financial contrivances of powerful people connected with wall street is so hard to unravel any hope of a G20 photo-op actually fixing any fundamental problems is remote. These powerful people are dangerous right now because just as your economic future is in turmoil so it theirs. South America and Russia have closed their doors to economic cooperation, Eastern Europe is hopeless and China has resisted any infiltration of their banking system. They have expanded as far as they can go and desperate people will take desperate measures. To continue this economic dreamtime I feel we can expect unusual occurrences to shock and subdue any changing of the financial guard. I have always felt uncomfortable with the sharp rise in terrorism articles and reports just before 9/11 and even more so with the out of the blue warning of anthrax attacks a week before anything happened. Link All too coincidental for my book. During the great depression a world war was undertaken with Germany who looked financially very much like what the US may resemble in the near future. Is history repeating itself? A world war today would last all of 10 minutes and the result would be dire. What alternative options do the power brokers have to create a diversion of the magnitude of WWII without the destruction of nuclear weapons? I can only think of one. We shall watch the news reports as the commercial real-estate bubble deflates and the credit card companies get their bailouts and as this fiasco worsens we will see the beginnings of first contact of the hostile kind. From an investment perspective tinfoil should be a hot commodity and aluminum futures would seem prudent. Have a great weekend all and with the nicer weather arriving it may be time to get outside and do some stargazing…

Nuclear Confusion

The cold fusion types are warming up their hands again. Link The trick with cold fusion seems to be the detection of extra neutrinos from the experiment. The methods the researchers are taking seem to dwell on making ever more complicated detection devices instead of making more neutrinos. Do you ever notice all the cold fusion experts dote about their experiments, tapping on their beakers and peering in as though looking at a goldfish in a bowl? I don’t know about you but if I had any expectations of a fusion reaction I would be hiding behind a lead shield with my head in my lap. Could it be the researchers are more expectative of government grants than any viable reaction? What we need here is for some unfortunate genius to pour one liquid into another, spontaneously creating harmless goo and subsequently being rushed to the hospital with severe radiation burns. Unlikely. A recent attempt using sound bubbles at first seemed promising but alas, aside from the researcher, no ‘experts’ found a reaction. Hot fusion seems more promising. The Russians created a clever chamber to hold the plasma reaction and the European Union is aggressively pursuing this route. In the meantime we must face the fact that nuclear power is practically of the fission variety and the near future will depend heavily on fission for power generation. Thousands of plants will have to be built and the current state of the industry is very much lacking in planning, investment and commitment. Breeder reactors will extend uranium reserves and glass storage technologies will mitigate some of the waste issues. These developments make nuclear fission a lesser of two evils given the state of the environment, unemployment levels and fossil fuel reserves. I’m sure some readers are getting hot under the collar about now and are screaming at the screen that, as a matter of fact, nuclear fusion power is available today. Well your right, we just have put up our solar panels and see for ourselves…. Source

Getting Down to Brass Tacks

What is it with all these peaks? Well a few minutes watching Dr. Bartlett’s explanation will sum it up nicely. Link Gold extraction hit a peak around 1997-99 and with a feverous scramble reserves were added to the mix to push the gold production peak to 2001. Does this really matter to the economy, after all we cannot burn gold in our cars. Gold has no nutritional value and unless you’re a king, walking around adorned with gold is just asking for trouble. I think it makes a startling point that seems to be lost in the peaking of lackluster commodities such as oil, gas and soybeans. All our resources are becoming harder to extract and produce. They inevitably will become more expensive and their rarity will change the way we live our lives. This cheap access to ‘stuff’ cannot be taken for granted any longer. Peak gold posed another serious problem. As you may know, Russia and China are starting to insist the world go back to a currency system based on gold. Is there enough gold to do this? Not unless gold was over $5000.00/ounce. If we think about making sacrifices in these times of hardship perhaps we should consider moving to a bronze standard. Bronze is made of copper and tin so if we extract all the copper piping from the foreclosed housing market and recycle all the tin roofs we would be poised to create a stable dolor backed by bronze. The automotive industry is down, the service sector is failing, the smart move here is manufacturing and I can in vision, if done correctly, the United Stated fast becoming the largest exporter of brass tacks. We can only pray… Source

Better Red than Dead

A commune is a group or community in which workload and resources are shared amongst its members. Idealism is a philosophy that exalts concepts and ideas whereas realism exalts the practical aspects of materialism. It is therefore obvious that we in the west are all living under commune-realism. The question is, are we headed for commune-idealism. President Obama is faced with a terrible dilemma. Should he continue to pour money into failing banks, automotive companies and the like or let them fail and allow the ‘free markets’ to correct the underlying faults. Idealism or realism. The idealism for the west is the fundamental belief that privately owned enterprise is more efficient at delegating resources and allows for creativity and expansion of a society while this for the most part true, the realism is that during a ‘correction’ the human cost of homelessness and unemployment cause an unbearable burden to the citizens and run the risk of unrest and riots that can lead democratic societies to elect radical fascists. FDR is criticized for extending the depression however the result of his policies (and winning the war) was the republic came through with democratic institutions intact. People who are hungry and destitute turn first to governments for help, the ideal choice, then they turn to themselves, a realistic possibility. So are we headed for commune-idealism? Well just when I thought we might hit a middle ground of socialism, Tom fife’s claims started to get some exposure. Link Who is this guy and is he actually credible? I just can’t imagine, for if he is, we can all cast our votes to the wind…

Green Acres

We all ponder the idyllic “life on the farm”. Jim Rogers has come out touting the positive future of farming and commodities in general and has plans to invest in Canadian farms. Link Food production has become one of the last manufactured items we have left it seems and with the collapse of the service sector it does look like farming will be one of a few a profitable business in the future. There are disturbing reports that farmers are not producing as much this year as in the past due to the credit crunch affecting their financing. It is a sad fact that modern farming must use third party fertilizers to grow crops and the expense of fertilizing must be paid upfront. For the rest of us, giving up new cars, new home entertainment equipment, new yoga lessons and even new socks are realities we will have to deal with in the future, but we cannot postpone the purchase of food. Farming is a hard life though, Link and I think Jim would make a great Eddy Albert for a remake of Green Acres, weed in his mouth with a straw hat and he can even keep his bowtie! Link It is unlikely we will see a collection of small organic farms financed but huge Agra business that just isn’t sustainable over the long-haul and what will really be interesting is how Jim will deal with the socialist food marketing system here in Canada. But all said, farming is one of the few businesses that have a real tangible future. We can all rest assured, …green acres is the place to be.

Bitter Sweet Symphony

You cannot appreciate music until it’s over. The first few bars of Beethoven’s 5th symphony are quite ominous and really set the tone for what’s to come. We hit those notes last September / October and the financial music has been hitting high notes and then low notes with seemingly increasing frequency since. This is causing concern in politics as the elected officials are sensing the unrest in their population’s which could hit a low note for their careers. And then of high notes, hyperinflation seems inevitable and it’s all a matter of how long it can be held off. Paul Krugman has stated he thinks the Geithner plan might well fail and there will be less chance to try again. This one-way bet as he describes it is the same plan repackaged and re-bundled just as all the derivatives this is trying to remove. Paul refers to the latest plan as zombie economics, the plan that won’t die.
http://www.nytimes.com/2009/03/23/opinion/23krugman.html?_r=1We need a new conductor and if the government is renting the hall then let them on center stage to do their antics, at least we will know who to blame when the notes go sour. Just as Beethoven’s 5th comes to an end at some point so will this mess and the banks will be stabilized and people will get back to work. While feeling more secure and hopeful for the future, we will be hit with inflation numbers never seen in a generation, if ever…….bittersweet indeed.

Off with their #@%%&!

I see the Baltic Dry Index is down again. http://www.bloomberg.com/apps/cbuilder?ticker1=BDIY%3AIND It’s a great indicator of the current state of trade in the world. Economic numbers trail the index and as we are in a mini upswing now, a few days will see the ‘official’ numbers set a gloomy tone on the markets. This will not be welcomed by Mr. Geithner who has put his faith buying toxic waste assets and in propping up a failed system by expanding the money supply there by risking the dolor. China is worried about this dolor bubble and has called for the reserve currency to be replaced. With what? They know there is no alterative and are playing kindergarten diplomacy in the hope they will mitigate Geithner’s plan and get something back for all the irresponsible loans they have made. At least China is trying to do something. Where is the public on all of this, are they blinded by the headlamp of this runaway dolor train. Speaking of which, it seems the French public is-in-fact acting and have kidnapped an executive of 3M. Laid off workers in Pithiviers France snatched their boss and are demanding … well anything I guess. It’s a blessing for the French business aristocracy that the guillotine has gone out of fashion, however, there is talk of it coming back. Max Keiser, the host of The Oracle has mentioned this device on more than one occasion. I hope Max finds a distributor for his show as the BBC seems to have dropped him. Perhaps his zany antics should parallel Monty Pythons’ for better British ratings. Just change spam to derivatives and make a new pilot. SPAM While a smaller version of the guillotine aimed a bit lower might soften the testosterone driven arrogance of some of these financial heads, it seems to me that as Max warns, gold is the only safe global currency. One past Oracle episode sees Max take out a gold coin and insist to the camera that everyone needs to have gold… in his exuberance he stormed off the set and when he came back a few minutes later he, to my surprise, unwrapped the gold coin and started to eat it! This I thought was brilliant because it demonstrated a survival strategy I had not thought of. Chocolate will keep for years and when we all find ourselves homeless, destitute and hungry we could rely on a chocolate stash. I should mention The Imperial Gold Company in the UK makes chocolates adorned with gold leaf. It would be prudent to put a few of these away for hard times and be assured that not only will you have a satisfying meal but you can pick the gold leaf out and trade it for extra insulin….