[Joe0Bloggs]

It seems to be accepted wisdom that worldwide Peak Oil is to be followed by what can be summed up as 'the sh*t hitting the fan'.

I have based my worldview on just such an assumption, but recently I'm wondering more and more why this should be so.

I'm going to put forth three arguments that there will be no global 'TSHTF event'.

1. The first vs the second derivative
2. Perception
3. History (past collapses) and the trend hidden in noise

1. The first vs the second derivative
Peak Oil is the point where the trend of oil production turns from increasing to decreasing, i.e. the first derivative of oil production against time goes from positive to negative. Now this may seem like a big deal--but what about the second derivative?

On this bell curve of oil production, there is a time where the rate of increase in oil production changed from increasing to decreasing. I don't know when exactly this happened, but it must have been a long time ago.

Now, from what little I know about stock markets, it seems that the 2nd derivative has as much effect on the price of a stock as the 1st--i.e. a growth in profit does not guarantee a rise in stock; if a quarterly report shows that the growth is less than expected, i.e. the growth rate is slowing down, that is enough to get the stock dumped.

Similarly, it would seem to me that global 'Peak Growth' had already taken its toll back in the day--but it seemed to coincide with actual Peak Oil of many individual countries, not least the US, so it may be hard to find out which effects were due to Peak Oil and which were due to Peak Growth.

2. Perception
One of the theories of how Peak Oil causes TSHTF is as follows: Peak Oil->end of economic growth->more bad debts than good debts (because most business ventures would fail)->banking system implodes.

Well, to that, first I would say: 'what about taking collaterals on loans? I know it seems like an alien concept in this time of creative genius to rival Picasso in financing, but taking collaterals is something banks SHOULD do for loans, and WILL do when they find that it is necessary to cover the increasing risk... so perhaps banks in the future will find themselves selling houses and factories more often than getting their investment repaid in cash, but that's just another way of making money...'

The next thing I'd say is that whether the market survives or bombs is largely a matter of perception--if people still think that the economic system is worth the trouble, it will be sustained despite losses.

And this leads me to...

3. History

Historically, it had always been very hard for people to see that a certain way of doing things is a dead end. I can only imagine that this would be even more so if the only alternative is 'the shit hitting the fan'!

One common reason is that the long-term downward trends are hidden in big up-and-down fluctuations. Even more so when politicians are pointing at the positive spikes in some departments to distract the masses from the negative trends that are showing at any given time. So this year gasoline prices are over the top, but the employment and stock market figures have never looked better. Next year there may be a stock market crash, but hey, the gas prices went down.

So we'll still get pay rises and promotions once in a blue moon, but won't notice that work hours keep getting longer and longer, and more and more people are unemployed and lying out in the street, and more and more places are fighting their little wars...

[Gerben]

$this->bbcode_second_pass_quote('Joe0Bloggs', 'O')n this bell curve of oil production, there is a time where the rate of increase in oil production changed from increasing to decreasing. I don't know when exactly this happened, but it must have been a long time ago.

Now, from what little I know about stock markets, it seems that the 2nd derivative has as much effect on the price of a stock as the 1st--i.e. a growth in profit does not guarantee a rise in stock; if a quarterly report shows that the growth is less than expected, i.e. the growth rate is slowing down, that is enough to get the stock dumped.

Similarly, it would seem to me that global 'Peak Growth' had already taken its toll back in the day

[Ludi]

I agree with Shannymara, it is already happening and has been for awhile, in the US anyway.

[benzoil]

The Long Emergency scenario then? A long descent, interrupted by various crises du jour sounds about right. As interconnected as the many systems are that make up modern society, most are somewhat adaptive. The first steps down will probably be big ones and in the long run entropy will win out, but the speed of the slide will be mitigated as people and systems adapt.