Dec 23, 2008 -- About a year and a half ago a landmark conference was held at George Washington University in Washington, D.C. which -- for the first time -- linked the obviously related crises of climate change and Peak Oil. I was one who celebrated that belated bridge as I boarded a train from Manhattan to DC with my right thumb aching from six externally fixated pins holding shattered bones in place, my arm in a sling. (The thumb works fine now.) While the conference was a great milestone it was, in my opinion, a checkpoint that should have been passed much earlier. At the time I was convinced that the milestone was a bit like the French army in 1939 which was perfectly prepared to fight the First World War. Already the clear cracks were emerging that signalled the start of economic collapse. As I had said in my speech at NY's Cooper Union in May of 2006, there was a clear possibility, even a likelihood, that economic collapse would trump everything... and indeed it has. Throughout 2005 and 2006 I warned as
loudly as I could that all eyes needed to be first on the economy. Peak Oil would remain the ultimate cause of collapse but the first blows striking at the legs of a three-legged stool would be economic ones, rendering effective response to address the other two legs, extremely difficult and possibly impossible.
In my last public interview in early July of 2006, just weeks before I left for Venezuela, I made clear statement that I thought the economy would get us first and that it might be a death blow. This is almost certainly the best interview -- out of maybe 200 TV, film, radio and print interviews I have ever given. It was certainly the most comfortable and relaxed, even though FTW's office computers had been smashed just a week before. I spoke as clearly and unguardedly as I ever have. A great deal of credit went to my comfort with the interviewer, Janaia Donaldson, and the fact that Megan Quinn (now Megan Quinn Bachman) of Community Solutions was sitting just a few feet away. I had flown her into Ashland for a presentation on
sustainability at Southern Oregon University that day.
I just watched this 27-minute interview on YouTube again and it was so compelling in terms of recent events that I thought I'd recommend it.
It is now abundantly clear that the economic collapse is a global one and occurring much faster than almost anyone anticipated. There just isn't going to be any one region that escapes.
PIRACY AND THE GULF OF ADEN
More pieces of the landscape are emerging with respect to piracy. It's not possible yet to say that I have the full landscape but I am very concerned. One of the alternative futures that all of us in the Peak Oil movement saw was that economic and social tensions arising for the effects of Peak (the loss of cheap energy) would result in nuclear war. It's not a stretch to say that a nuclear exchange would render issues of climate change and Peak Oil moot. Recent development vis a
vis piracy have my antenna extended to the max. I cannot draw any conclusions yet but there are clear grounds for worry and to keep our eyes fixed on the Gulf of Aden.
It was just announced that Iran is also sending warships to the Gulf. Apparently an Iranian ship has been seized also. (It's very helpful to look at a map while analyzing this.) That makes the U.S., Russia, India, China and Iran (along with NATO countries) heavily deployed in a relatively small body of water which lies just outside the Straits of Hormuz (Iranian and international waters) through which about 30% of the world's oil passes. Now if you go back and look at this blog's main page you see the quote that if there's a gun on the table in Act One of a play it's a sure bet that someone's going to get shot. Either the involved powers have agreements for safe operations in these waters or they don't. If they have an agreement we do not know either how solid or shaky it may be. I do strongly see that a rapprochement of sorts is already underway between the U.S. and Iran but have no idea how solid it is. Like George W. Bush, Ahmadinejad is on his way out. His tenure was guaranteed by having the enemy of Bush to rally his domestic base. For years I have been (correctly) saying that there was never going to be either a U.S. or Iranian attack on Iran. And, in another one of those far-forward looking pieces, I predicted a
rapprochement between the two countries. Here's the link:
I'm no Polyanna on this. We have no idea what kinds of communications exist between the major powers. I would like to think that concentrating this much naval power in a relatively small and totally strategic body of water can be done without incident. But as the economic collapse continues, desperation will increase in like measure. So, the nightmare scenario is that with all those tankers and all those warships in a small body of water, it might be only a matter of time...
I've written so much about Saudi Arabia. I recommend all of FTW's older writing on the subject but especially this one called "Saudi Arabia: The Sarajevo of the 21st Century:
Of course you should go to "Rubicon"
In an historical context I think back to the fact that the U.S. engineered and forced the collapse of the USSR by absolutely destroying oil prices in the mid and late 1980s. Oil was the main staple for Soviet forex revenue and as the oil price collapsed (OPEC magically increased reserves with a pencil and eraser, allowing glut-production under its quotas), the Soviet Union was doomed. Without forex cash the Soviets could not compete with a massive U.S. arms buildup and military expansion. Well it looks like the same thing is happening to Saudi Arabia (whether by intent or as an unforeseen consequence). The Saudi monarchy is hopelessly corrupt. There are more princes on the dole there than raisins in a box of raisin bran. For several years I reported on how the financial corruption was so severe that, even as oil prices climbed rapidly between 2001 and 2006, the Saudi government was borrowing money to keep its social welfare programs afloat while the toyals skimmed everything else off the top.
Those social welfare programs were essential because between that carrot and the stick of a Saudi police state the undereducated, largely unemployed masses, almost all influenced by Wahabi extremism, were kep under control. Now that the price of oil has collapsed it's one of those Wile E. Coyote off-the-cliff moments. After the recent 2 mbpd OPEC production cut oil prices are still plummeting and OPEC is begging Russia to cut production as well to stabilize and raise oil prices. I think it's likely that Russian will cut production because they too are experiencing sharp declines as they pass their second peak. (The first was engineered by the collapse of the USSR and was "artificial".) This Russian peak is geologic. So is Saudi Arabia's which is standing in the middle of the town square, stark naked, just waiting for someone to "see" it and gasp.
Then just yesterday I clipped a story (thanks Rice Farmer) the said that the Saudi government will have a budget deficit in 2009.
Now I seriously doubt that all those corrupt Saudi princes have stopped their insatiable looting. As dinosaurs in the old paradigm they have the same exposure and liquidity positions as all the other dinosaurs. Consequently I am anticipating some serious upheavals throughout the Kingdom next year. We took great pains at FTW to document how the U.S. and much of the region had positioned itself starting back in 2002 to deal with an ultimately inevitable Saudi
collapse. The answer: when in doubt, Balkanize!
If this scenario is correct then my best case would be that key players might be positioning themselves to respond to such an event with some kind of coordination. Iran, by virtue of its location and critical importance would -- of necessity -- be an essential player. Saudi Arabia's life expectancy as a unified kingdom is now less than three years IMO. The instability which might follow that would be life-threatening for all of us. That threat would magnify if Pakistani warships, also close by, decided to express a vital national interests in the Gulf of Aden.
Again, these are only working hypotheses at the moment. But they are very worrisome. While I am seeing grounds for some optimism with apparent US/Sino/Russian naval cooperation in the area, Iran must be involved. But I keep going back to my analogy of a bunch of wet cats being tied in a burlap sack.
Lugar Urges Quick Action in 2009 on US-Russian Nukes
US Wants Details of Russian Purchase of Israeli Made Drones
Oligarchs Seek $78 Billion as Credit Seizure Empowers Putin
US Sets Up Diplomatic Mission in Crimea
Protests in Russia
“The authorities are like a person who has been diagnosed with cancer who refuses to believe that it’s terminal,” said Yevgeny Kiselyov, a political analyst who was ousted as director general of NTV during Putin’s presidency. [FTW Admin adds: See December 13 entry for this blog.] “Russian leaders and the media have tried to convince the public that there is no crisis at all.”
On Dec. 12, a bill was submitted proposing to expand the definition of treason to “a deed aimed against the security of the Russian Federation, including her constitutional order, sovereignty, territorial and state integrity.”
Kiselyov said these moves reminded him of 1937, the start of Josef Stalin’s Great Purge, when any public criticism of the authorities could be interpreted as high treason.Forward Thinking on Backwardation
Article on the recent unprecedented backwardation in the gold market signifying, according to the author, drastic reductions in availability.
By the renegade (let's have a moratorium on the word 'maverick') Professor Antal Fekete.
In this article I want to enumerate the reasons why I believe that permanent backwardation in gold would bring about the descent of our civilization into lawlessness similar to that following the collapse of the Western Roman Empire.
Death of Pollster Mike McConnell
Reported in mainstream media, finally, albeit in the UK.
Neo-Mercantilism and the Politics of Economic Integration
US Trade Rep Supported NAFTA Freeway
Limits To Growth and Greenwashing