This morning, I started my day with a coffee cup and DailyKos, intrigued by the internicene conflict between the estimable bonddad (who has informed me countless times), and bobswern (who has also informed me countless times), each of whom posted diaries disagreeing with each other (Bonddad, bobswern) about whether we are seeing "the bottom" of the recession, and whether a gloomy or merely less-gloomy future awaits us).
Their analysis was fascinating; less fascinating was the implicit and explicit sniping between adherents (and authors) to the different philosophies and assumptions of the others.
But in both analyses, there was something seriously lacking.
Both presume that "the economy" is something human-created, and independent of world-scale limits. Both presume that the realities of the current mess (and implicitly, the likelihoods of the next five years) have a relationship to the past's realities, either by their use of graphs, or their use of employment rates.
What I've been learning over the last couple of years, as one of the two ApocaDocs gathering and bequipping stories about five likely collapse scenarios (climate chaos, species collapse, biology breach, infectious disease, peak resources -- oh, and recovery too) is that nothing is happening as expected.
Scientists and specialists within all these topical arenas are saying "more than we thought," "faster than expected," "alarming," "unanticipated," "recently realized," "worse than we thought."
The great migrations themselves are becoming extinct, from salmon to elk to butterflies to tuna. Bats in the Northeast are suffering catastrophically from white-nose syndrome, at die-off rates of 90%. Pollinators are suffering dramatically. Top-of-the-food-chain predators everywhere are collapsing. All marine mammals have high levels of PCBs, and flame retardants, and a broad array of other human-made toxins coursing through their bodies.
The waste-processed effluent from our cities contains the prozac and viagra and hormone replacement runoff, that we flush down the toilet, which makes fish hermaphroditic. That water mixes with the pesticide, herbicide, and fertilizer runoff from our factory farms -- creating a dead zone the size of New Jersey at the base of the Mississippi, joining other dead zones around the world.
In between California and Hawaii there is a gumbo of plastic gyring in the Pacific that's at least the size of Texas. Plastic does not biodegrade, but breaks down into particles that fish consume.
And most estimates indicate we have already overfished between 85 and 90% of the raw biomass out of the ocean in the last century, and every day, we continue to hoover up four times more ocean biomass than is reborn. "Peak ocean" happened a long time ago, but our ever-more-efficient factory fishing has let us ignore it for a time.
Coal power belches heavy metals and incredibly massive amounts of extra carbon dioxide into the atmosphere. Global warming is not a theory, it is a given.
CO2 does something much worse. While we bicker with global-warming deniers, the ocean is getting more acidic. Excess CO2 plus ocean produces carbonic acid. Ocean acidification is a clear and present danger. A slight rise in acidity dramatically affects calcium-carbonate-based lifeforms, like most plankton, shellfish, and coral, the cornerstones of the ocean biosphere. They are unable to form calcium carbonate shells, exoskeletons, or other structures.
We're also reaching, in the very near-term, limits on oil, fresh water (as reported magnificently yesterday in the diary "Water Bankruptcy"), topsoil, lithium, phosphorus, and plenty more.
Worst of all, nearly everything (and more) on the above list is happening "faster than expected."
Now: almost any of the above could radically disrupt the economy (and should). Sometime soon, fish prices will skyrocket as overfishing's legacy creates radical scarcity. Sometime soon, the impact and risk of ocean acidification will be recognized by society, and radical steps will need to be taken to prevent our rich, biodiverse ocean from becoming an acidic, jellyfish- and algae-filled cesspool, in our lifetimes. Sometime soon (and the next five years are likely to be exceedingly warm) we will see a serious drought in a major food-producing belt. Sometime soon we will see explosions of unintended consequences: unexpected blooms of dead zones, collapses of shellfish and coral, and the complex ecosystems they support.
Each of these would have dramatic economic consequences. If even 1/4 of what I describe above is the emergency I think it is, then there's what might be called "a disruptive economic force."
The present is not what the past was; the near future is by no means what the recent present was. We have reached a tremendously complex, tremendously traumatic point in human history.
Economists try to predict the future. Few economists have grappled with the limits we are confronting.
What bonddad and bobswarn both did is useful, in that they are mirroring the mindset of many traders, analysts, pundits, and economists.
I think there's plenty of evidence that that entire community is based on a failed model: a failed economic model, a failed environmental model, a failed energy model, a failed sustainable-lifestyle model.
It seems to me we are likely to be entering the era of "converging emergencies."
It's the problem of, say, the 90% deathrate in bats in the Northeast, causing a rise in crop pests, causing a drastic rise in pesticide use, causing a general decline in pollinators and other beneficial species, while also causing reproductive problems in freshwater fish downstream.
It's the problem of, say, topsoil depletion and aquifer pollution in the Midwest, compounded by climate-chaos drought and a monoculture of soy and corn, causing increasing use of fertilizer, causing the depletion and rapid rise in prices of phosphorus, while also causing the farm runoff to create algal blooms in rivers and lakes and outlets.
It's the problem of, say, rising oceans drastically devaluing private and commercial property that is 20 feet "above (the former) sea level," including city infrastucture, homes, and businesses, while the costs of energy are rising, ports are having to reconfigure, and shipping costs treble, as we confront the costs of CO2 realistically.
I could go on. Converging emergencies will be the realities of the next three to ten years, and oddly, most economists, traders, policy-makers, and the rest, have only the haziest of notions that things might be "off."
"Gloomy" or "Not-so-gloomy" seems to me rather silly.
A radical economic and societal restructuring will happen in the next five to ten years. I have no idea how it will affect our 401ks, or our TIAA-CREFs, or our cost-to-goods ratio. The selling price of houses may depend on their south-facing land, and proximity to small farms. The valuation of a stock may depend on its relationship to emergency response. The employment numbers may depend on what FEMA requires. The next three to ten years (presuming that it becomes ever more clear to the financial markets just how bad things are) will be wacky, and not at all like the previous three to ten years.
In the end, my fascination with the bonddad/bobswern discussion is similar to that of my fascination with, say, photovoltaic cell technology development. It may make a difference to me, personally, and for an industry, and might impact the converging emergencies.... but until it becomes a key part of society's proactive response to the converging emergencies, then it's just an interesting datapoint to my personal investment strategy.
"The Economy" is, as we are seeing, far more like an ecosystem than like a predictable, plottable system. The "financial system" is based on a prediction of a stable future -- and I'm pretty sure that stability is not in our future.
So what happens to the financial system when the past is utterly no predictor of future performance, and all bets are off?
Update: first Rec list. Glad it was one I was proud of.