People have been struggling to explain what is happening to our economy. Is it the Great Recession? The Greater Depression? Are we having this bit of nonsense known as a jobless recovery, a euphemism for restoring asset inflation, which is a great benefit to corporations but of little use for humans.
I think it’s a little grimmer than that; we’re in the midst of a Fossil Fuel Zombie Apocalypse.
Look at Wall Street. What do you see? The investment banks scampered for the protection of being bank holding companies, providing them direct access to the U.S. Treasury. Today, instead of moaning for brains (which they clearly lack given the condition our credit markets are in) they roam the halls of Congress, plaintively moaning for relief from the mess they themselves made. Loans ... loans ... *uuurrrgggghhhhh
Look at Detroit. What do you see? They were obviously going bankrupt many months before the final blow fell, and they too scampered for the cover of Congress’s skirt. Now we have the immensely popular cash for clunkers, in which personal transportation zombies are sucked in, ground up, and their remains fed to the parent in order that it might stagger forward a few more steps.
Look at any piece of commercial real estate in your area. What do you see? Blank, staring faces, unloved and unleased. Herein hide zombie loans, ready to rip to shreds any local bank that wanders too close with an idea on estimating these properties’ true value. The bank health wonks over at The Automatic Earth are saying a minimum of 15% of our FDIC insured banks are doomed. That’s roughly 1,300 of the 8,500 members of the herd. I keep count – only about 120 have been seized since the troubles began in 2007.
Dig deeper. How did we get here? You’ll find the Friedmanite free market ideology, lacking in merit for many of the situations to which it has been applied, yet its followers continuing howling that we ought to let the market decide, marketwide credit constipation be damned. The handmaiden of this foolishness, Rand’s objectivism, provides the ideological zombie virus that created many of the Freidmanite ideology’s true believers.
Deeper still. Manifest destiny, American exceptionalism, Eliminationism – it goes by many names, but the idea that the white European settlers are somehow special still dominates our world view. We slaughtered Indians, enslaved blacks, demonized and murdered Chinese, and interned the Japanese. The same behavior is coming for Hispanic immigrants – a ‘illegal’ isn’t a person, and that’s the first step toward objectification and it leads to things like Abu Ghraib if left unchecked. A murderous zombie philosophy and no idle theory – it’s claimed tens of millions of victims at a bare minimum.
The American expansion within the continent roared forward on rail freight driven with coal powered locomotives at first, and then escaped across oceans both east and west with the fossil fuel of the Texas oil patch. The second World War made us truly a global power, local oil won it and fueled the first third of the Cold War, and our mastery of seas and skies made us the global guarantor of oil supplies for the last two thirds. Global oil production plateaued in 2005 and the final peak arrived in July of 2008; our zombie empire stands for the moment, but no amount of blood and treasure can guarantee the flow of oil when none exists.
So here we stand, just like the young lady in the Thriller video, the awful realization crashing into our conscious. What hope do we have as a nation? Zombie movie aficionados already know – the creatures can’t tolerate the light. We need a full sunrise, philosophical, moral, ethical, and economic in order to sweep the world clean of this ongoing nightmare.
Banks first. The language of investing gave way to the language of gambling long ago. You can’t pick up a financial trade rag without reading about this bet or that being placed. The sensible allocation of capital for long term gain? Why do that when you can roll the dice and win big? The entire banking sector needs to be reformed – incremental improvements to a bad idea still leave a bad idea in place.
Detroit has been on a crash diet but it’s going to get an oil crash diet before too long. Global oil production peaked in July of last year and any time we try to stand up, economically speaking, we’re going to bang our heads into the ever lowering ceiling of available liquid fuels. The government playing in the debtor in possession financing market for the American auto industry was a given even if the banking sector wasn’t toast – they’re simply too darned big for even the largest DIP provider even when times were good. The failure to aggressively reform our transportation modes at the juncture of Detroit’s bankruptcy is going to haunt us; the sooner light shines on the true nature of our liquid fossil fuel dependency the sooner we can make sensible policy for what is coming.
Peak oil theorists have indicated that gasoline will reach a certain price point and then increases will be geometric rather than linear. $4 goes to $8 to $16 and we’re in total chaos as a civilization. Real estate value has always depended on location but now it more specifically depends on proximity to employment, services and shopping, and whatever mass transit we can cobble together, having failed at our chance to reform with Detroit’s bankruptcy. The hints of this are already seen – remote housing prices crash while those closer in retain their value or in some cases actually appreciate. This is one case where Friedman’s market will do all of the illuminating required – those who buy with the underlying assumption that a gallon of gas costs 1/4th of an hour of minimum wage labor are going to have a terrible surprise.
A national moral inventory is in order after the horror of Iraq; may the light from this inquiry shine into the furthest corners of our national psyche. We rob, rape, and murder as a matter of course. The collective national karma from this is going to ripen in your lifetime and mine – far better that we find and punish the worst instigators of such behavior than continuing to stagger along with this infection coursing through the body politic.
Shot through all of our transportation, real estate, and banking problems is the concept of peak oil. We lack the energy necessary to reignite the cancer of growth, but sunlight will both reveal and heal what we can save of our civilization.
All renewable energy is solar – did you know that? The direct creation of electricity from sunlight is but one method; water evaporates from the sun warmed Earth, falling as rain to drive hydroelectric facilities. That same solar driven climate provides steady winds in lucky parts of the world, potentially driving a renewable energy based renaissance for our nation. Biofuels? Photosynthesis is solar energy, too.
We're going back to the solar maximum - the sum of the wind, water, and sun of this world will be all that we have. We can't get started adapting to this new reality soon enough.