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Page added on November 11, 2014
If Everything Is Just Fine, Why Are So Many Really Smart People Forecasting Economic Disaster?
The parallels between the false prosperity of 2007 and the false prosperity of 2014 are rather striking. If we go back and look at the numbers in the fall of 2007, we find that the Dow set an all-time high in October, margin debt on Wall Street had spiked to record levels, the unemployment rate was below 5 percent and Americans were getting ready to spend a record amount of money that Christmas season. But then the very next year the worst economic crisis since the Great Depression shook the entire planet and everyone wondered why most people never saw it coming. Well, now a similar pattern is unfolding right before our eyes. The Dow and the S&P 500 both hit record highs on Monday, margin debt on Wall Street is hovering near record levels, the unemployment rate has ticked down a little bit and Americans are getting ready to spend more than 600 billion dollars this Christmas season. The truth is that the economy seems pretty stable for the moment, and most people cannot even imagine that an economic collapse is coming. So why are so many really smart people forecasting economic disaster in the near future?
For example, just consider what the Jerome Levy Forecasting Center is saying. This is an organization with a tremendous economic forecasting record that goes all the way back to the Great Depression. In fact, it predicted ahead of time the financial trouble and the recession that would happen in 2008. Well, now this company is forecasting that there is a 65 percent chance that there will be a global recession by the end of next year…
In 1929, a businessman and economist by the name of Jerome Levy didn’t like what he saw in his analysis of corporate profits. He sold his stocks before the October crash.
Almost eight decades later, the consultancy company that bears his name declared “the next recession will be caused by the deflating housing bubble.” By February 2007, it predicted problems in the subprime-mortgage market would spread “to virtually all financial markets.” In October 2007, it saw imminent recession — the slump began two months later.
The Jerome Levy Forecasting Center, based in Mount Kisco, New York, and run by Jerome’s grandson David, is again more worried than its peers. Its half-dozen analysts attach a 65 percent probability of a worldwide recession forcing a contraction in the U.S. by the end of next year.
Could they be wrong?
It’s certainly possible.
But I wouldn’t bet against them.
John Hussman is another expert that is warning of financial disaster on the horizon. He believes that we are experiencing a massive stock market bubble right now and that stocks are approximately double the value that they should be…
If you look at corporate profits and especially corporate profit margins, they’re one of the most cyclical and mean-reverting series in economics. Right now, we have corporate profits that are close to about 11% of GDP, but if you look at that series you will find that corporate profits as a share of GDP have always dropped back to about 5.5% or below in every single economic cycle including recent decades, including not only the financial crisis but 2002 and every other economic cycle we have been in.
Right now stocks as a multiple of last year’s expected earnings may look only modestly over valued or modestly richly valued. Really if you look at the measures of valuation that are most correlated to the returns that stocks deliver over time say over seven years or over the next 10 years the S&P 500 in our estimation is about double the level of valuation that would give investors a normal rate of return.
Could you imagine the chaos that would ensue if stocks really did drop by 50 percent?
Well, Hussman says that this is precisely what must happen in order for stock prices to return to historical norms…
Right now, like I say, we are looking at stocks that have been pressed to long-term expected returns that are really dismal. But more important than that, in every market cycle that we’ve seen with the mild exception of 2002, we’ve seen stocks price revert back to normal rates of return. In order to get to that point from here, we would have to have equities dropby about half.
If that does happen, it will make the crisis of 2008 look like a Sunday picnic.
Meanwhile, other very prominent thinkers are also warning that an economic nightmare is rapidly approaching.
Economic cycle theorist Martin Armstrong foresees major economic problems in 2015 which will ultimately lead to “civil unrest” in 2016…
It looks more and more like a serious political uprising will erupt by 2016 once the economy turns down. That is the magic ingredient. Turn the economy down and you get civil unrest and revolution.
And of course there are a whole lot of other economic cycle theorists that are forecasting that we are about to experience a massive economic downturn as well. For much more on this, please see this article andthis article.
What is truly frightening is that we have never even come close to recovering from the last economic crisis. One poll that was taken just prior to the recent election found that only 28 percent of Americans said that their families were doing better financially. In addition, here are some more survey numbers about how Americans are feeling about the economy…
According to voter exit polls conducted by CNN, 78% said they are worried about the economy, with 69% saying that, in their view, economic conditions are not good. 65% responded that the country is on the wrong track vs. only 31% who believed that it is headed in the right direction.
Even though we are repeating so many of the same patterns that we experienced back in 2007, we are doing so with a fundamentally weaker economy. The last crisis did a tremendous amount of permanent damage to us. For an extensive look at this, please see my previous article entitled “12 Charts That Show The Permanent Damage That Has Been Done To The U.S. Economy“.
And there are lots of signs that much of the planet is already entering another major economic slowdown. In a recent article, Brandon Smith summarized some of these. He says that we are currently witnessing “the last gasp of the global economy“…
Global exports, and thus consumer demand, are plunging. Germany, the only pillar left to prop up the failing European Union, has experienced a severe decline in exports not seen since 2009.
China, the largest exporter and importer in the world, and Chinese companies, have been caught in a number of instances using fraudulent invoices to artificially inflate their own export numbers, in some cases reporting 50% more exported goods than had actually existed.
China’s manufacturing has also declined for the past five months, exposing the nature of its inflated export stats and indicating a global slowdown.
The Baltic Dry Index, a measure of global shipping rates for raw goods, and thus a measure of demand for shipping, continues to drag along near historic lows.
The U.S. consumer (the only economic asset the U.S. has besides the dollar’s world reserve status), has seen declines in spending as well as wages.
In the meantime, long term jobless Americans continue to fall off welfare rolls by the millions, making unemployment numbers look good, but the overall future picture look terrible as participation rates dissolve into the ether of government statistics.
How is such poverty being hidden? Foodstamps. Plain and simple. Nearly 50 million Americans now subsist on food stamp programs today, and this number shows no signs of dropping. In states like Illinois, two people sign up for food assistance for every citizen that happens to find a job.
From time to time, I get accused of “spreading fear” and of being obsessed with “doom and gloom”.
But that is not the case at all.
I actually want our economy to stay stable for as long as possible. Many Americans don’t realize this, but even the poorest of us live in luxury compared to much of the rest of the world. It would be wonderful if we could all live out our lives in peace and quiet and safety.
Unfortunately, it is simply not going to happen.
And it does not take an expert to see what is coming.
Anyone with half a brain should be able to see the economic disaster that is approaching.
There is hope in understanding what is happening and there is hope in getting prepared. Millions of Americans that are willingly blind to our problems are going to have their lives absolutely destroyed when they get blindsided by the coming crisis. So please use this brief period of relative stability to get prepared and to warn others.
Once this false bubble of hope runs out, all of our lives are going to dramatically change.
68 Comments on "If Everything Is Just Fine, Why Are So Many Really Smart People Forecasting Economic Disaster?"
rockman on Tue, 11th Nov 2014 7:39 am
“…the false prosperity of 2014 …” Please let me know if there is anything of value in this article. That ridiculous line stopped me from going foreward
ghung on Tue, 11th Nov 2014 8:06 am
Rock: Take a look at “12 Charts That Show The Permanent Damage That Has Been Done To The U.S. Economy“
http://theeconomiccollapseblog.com/archives/12-charts-that-show-the-permanent-damage-that-has-been-done-to-the-u-s-economy
I’ve seen these posted at other more mainstream sites. Ridiculous? Perhaps the view from Texas is a little blurred, but it’s clear that whatever ‘prosperity’ we’re experiencing is bought (but not paid for) with exceedingly high levels of debt and funny accounting. Most of these charts are from the Fed and Treasury, and are fairly unambiguous.
Perk Earl on Tue, 11th Nov 2014 8:12 am
“…in every market cycle that we’ve seen with the mild exception of 2002, we’ve seen stocks price revert back to normal rates of return. In order to get to that point from here, we would have to have equities drop by about half.
If that does happen, it will make the crisis of 2008 look like a Sunday picnic.
One poll that was taken just prior to the recent election found that only 28 percent of Americans said that their families were doing better financially.
Anyone with half a brain should be able to see the economic disaster that is approaching.
Millions of Americans that are willingly blind to our problems are going to have their lives absolutely destroyed when they get blindsided by the coming crisis. So please use this brief period of relative stability to get prepared and warn others.”
Millions of Americans willingly blind…well, their patriotic followers accepting what the MSM reports on behalf of TPTB. It takes less energy to follow, but the end result can be disastrous.
My take on the current situation is the US stock market leader of all other world markets, tanks, and the others fall with it. Then QE4 is rolled out by the Fed on a scale never seen before, with the suggested idea that we just need a threshold amount of stimulus to finally put the recovery into a high enough gear that it cannot falter.
Next stop will be the debt bubble bursting, the mother of all bubble pops in the history of slowlyboilingfrogkind.
Mike999 on Tue, 11th Nov 2014 8:33 am
Answer: Because they’re not smart.
Mike999 on Tue, 11th Nov 2014 8:35 am
Keeping Track of Republican Loses: Gold, Bitcoin, and Austerity Budgets world wide put economies into recession and made Business Lose Money.
Now they want you to invest in online schools, that have the worse graduation rates, with unqualified teachers.
It it comes from a Republican: RUN.
Mike999 on Tue, 11th Nov 2014 8:36 am
And then there’s Coal: Going Bankrupt World Wide.
DeCarbon Your Investments NOW and let the Republicans Ride the Loses into Bankruptcy.
ghung on Tue, 11th Nov 2014 8:38 am
“Millions of Americans willingly blind…”
Many have a pathological attraction to growth and risk, especially when the risk is largely not their own. I showed similar numbers and charts, such as the ones in the “12 Charts” link above, to a number of my type ‘A” friends @2006-2007 and, virtually every one loudly explained to me why these things don’t matter. One was my boss at the time, who eventually defaulted on over $30 million in “investments” (mostly other peoples’ money). The golf course development he bought for $17 million was sold last month to the property owners association for $1.25 million by the bank.
The realestate crash here of 2008-2009 has yet to fully unwind, while developers and realtors have been busy re-inflating that bubble (again, with other peoples’ money). Meanwhile, one of my former bosses flew away to California and is flipping foreclosures (with other peoples’ money) and has been posting evidence of his success on Facebook; most recently pictures of his new $40k+ custom motorcycle. He has yet to pay back a penny to those who lost their savings and property here, locally.
Mike999 on Tue, 11th Nov 2014 8:49 am
Here’s your problem:
http://www.economist.com/blogs/graphicdetail/2014/11/daily-chart-2?fsrc=scn/fb/te/bl/ed/somearemoreequalthanothers
bobinget on Tue, 11th Nov 2014 9:23 am
I hope no one is shocked to learn its possible to make big bucks in a falling market.
Actual shorts, naked shorts, electronic criminals, have infested markets in this digital free for all loosely called ‘day trading’. Rules forcing traders to hold stocks for one or two minutes were shot down long before take-off. In point of fact, computers are programed to process millions of trades in 60 seconds.
What could go wrong?
The most important piece of trading advice I offer;
don’t even try. This market, like an economy made up of such uneven wealth distribution is out to screw you. No, I mean really screw you.
Articles like the one featured above are the tattered
(but effective) remnants of what we used to call
“yellow journalism”. Everything in the ‘popular press’ out there today has ‘fear’ as #1 agenda.
If oil prices remain high ($80/$100) you will read how many jobs are being created (in the energy sector). If oil prices were brought down for some reason, we read how many jobs are created in the public sector, before Christmas.
Davy on Tue, 11th Nov 2014 9:28 am
Perk, QE4, may be the start of hyperinflation because of the deflation currently flipping to a panic shortly. All those digital dollars but few paper dollars nor physical dollar assets. It will be a big sound of a train coming.
Banks will close and ATMs will have nice messages instead of dollars. This will be global so there is nowhere to hide.
The piper has to be paid. We must laugh at those who think something for nothing from nothing works long term. It is a Ponzi scheme. The question is how much economic momentum is there to keep confidence and liquidity alive? I have no clue because 2008 blew me away.
Mike999 on Tue, 11th Nov 2014 9:28 am
It’s not good enough to look just at the graph, Read the October Report on the page. Backlog at the ports is hurting shipments.
http://www.cassinfo.com/Transportation-Expense-Management/Supply-Chain-Analysis/Cass-Freight-Index.aspx
The economy looks good.
Mike999 on Tue, 11th Nov 2014 9:30 am
Anyone that says “hyperinflation” is an uneducated fool. Inflation hasn’t seen 4% in 7 years.
The Right Wing Nuts need to go help their Grandkids Homework, and get a Modern Education.
Davy on Tue, 11th Nov 2014 9:36 am
Oh Mike your so mean.
Please tell me what hyperinflation is Chief. It is not inflation it is a complete loss of confidence in a fiat currency.
So, if you think that is not possible at this point you have bought into the Ponzi scheme. We call folks like you suckers and a sucker is born everyday. That’s how these schemes last so long until they don’t.
GregT on Tue, 11th Nov 2014 10:00 am
Anyone that believes the ‘official’ inflation numbers is an uneducated fool. A simple google search will reveal the truth. Get educated, and stop spouting nonsense.
shortonoil on Tue, 11th Nov 2014 10:05 am
The crash you are suggesting will occur when the Petrodollar loses its relevancy. Since the Bretton Woods agreement of ’71 the US has been swapping IOUs for oil. The US has been importing energy in the form of petroleum, and printing currency in exchange for it. This scheme worked as long as oil had a high enough energy value to cover both the production costs, and the US demand. Depletion has now reduced the energy value of oil (by increasing the energy needed to produce it) to the point that US demand can no longer be satisfied at the current price. Thus, this graph:
http://www.thehillsgroup.org/depletion2_022.htm
depicts the outcome. When the price of oil falls to the cost of production, producers will have to find other means of transacting business than the dollar. After that the US will have to exchange real goods, and services for its oil imports. How much of the current banking, and financial system will remain afterwards is the real question.
http://www.thehillsgroup.org/
Perk Earl on Tue, 11th Nov 2014 10:12 am
“Anyone that believes the ‘official’ inflation numbers is an uneducated fool.”
Absolutely, as inflation is a government construed stat, much like unemployment or GDP (which now includes billions in estimated illegal street drugs). In Italy they include in GDP prostitution and illegal drugs. Anything to pull the wool over people’s eyes.
It’s not possible to print money ad infinitum without running into the problem of people losing faith in the currency. Hyperinflation takes hold very quickly once it begins. We aren’t there yet, but if the printing presses keep churning, we’ll get there sure enough.
action on Tue, 11th Nov 2014 10:52 am
Shortonoil,
“The Maximum Consumer Price curve is curtailed at 2020 at $11.76/ barrel.”
First, II did not check your numbers. Whenever I see you on here youre backing up everything you say with a thermodynamic type approach which I applaud. The statement you make quoted above if Im interpreting correctly indicates after a supply demand tug of war between the strength of the economy and ability to extract oil will render oil, and thus the economy, unfeasible by 2020. And this I add myself, with MUCH economic hardship getting down to that price which we are currently experiencing. Am I interpreting your conclusion correctly?
Davy on Tue, 11th Nov 2014 11:04 am
Short message is clear as day to me but I think the use of dollar prices reflects a BAU environment that may or may not be. The thermodynamic economic relationship will not change per the laws of nature but the economy is only partly law driven.
I see the economy as much emotion as law driven. With the economy it is confidence that counts first because human nature may or may not act rationally.
penury on Tue, 11th Nov 2014 11:07 am
I agree completely with Short that the dath of the petro-dollar will be a sign that the fall of the dollar is rapidly approaching. I have been trying for over a year to get people to understand that real threat to the hegemony of the U.S. is completely dependent upon the petro dollar. Every time I post people here are sure to remind me that the deals are small ones and will not affect us. Well Canada has joined the ranks of the others, just another raindrop, not serious but as someone famous once said “Apre moi, le deluge”
Davy on Tue, 11th Nov 2014 11:16 am
I have been trying to dimminishing all this talk of the death of the dollar with a normal BAU outcome. Systematically the dollar is too interconnected and inclusive in the global system I.e the dollar death is the global systems death.
The petrodollar is a different animal but it does point to a collapse coming for reasons not appreciated here on PO mainly the problems of excessive debt represented by dollars. The real risk in the system is in foreign exchange markets. That is where the contagion will propagate.
Northwest Resident on Tue, 11th Nov 2014 11:18 am
Every empire in human history has ended in financial disaster. Why should this time be any different.
Think about it. The universe is 13.8 billion years old. Homo Sapiens has been walking planet earth for about 7 million years. The Age Of Oil began around 1800. And the Age of Oil will end quite possibly any day now, but probably by 2030 at latest. In other words, the age of oil will have lasted about 200 or so years, which is an infinitesimally insignificant amount of time when compared to either the age of the universe or the time that humans have walked the earth in their current “advanced” state.
We live during that infinitesimally small, infinitesimally insignificant period of time.
The only thing keeping the age of oil from ending today is the financial systems that are in place. Those financial systems marshal labor and resources to extract the last remaining drops of accessible oil, oil which is in turn absolutely needed to keep the financial system going.
Neither will last much longer. Both are distorting and collapsing in tandem. Neither can exist without the other. Together they have lived, and together they will die.
And those of us alive today have the privilege of living in the time when mankind’s most spectacular attempt to conquer nature and become like the Gods will have utterly failed in the most spectacular and horrific way possible.
Sit back. Enjoy the show. Remember that what you do in this life echoes in eternity.
Davy on Tue, 11th Nov 2014 11:27 am
NR, that was some heavy spiritual doom man. I like it. Makes me feel heroic to preach doom. Be prepared for a counterattack of the corn people. Some corns believe we are moving on to Mars with this bullshit.
Northwest Resident on Tue, 11th Nov 2014 11:31 am
Davy — Counter attacks of corn people are to me like gnat kisses on the elephant’s ass. Slight tingling sensation, a little wind, easily crushed. 🙂
Davy on Tue, 11th Nov 2014 11:34 am
Get me bad boy!
ghung on Tue, 11th Nov 2014 11:57 am
NR – “Homo Sapiens has been walking planet earth for about 7 million years.”
For clarity, Wikipedia:
“Anatomically modern humans first appear in the fossil record in Africa about 195,000 years ago, and studies of molecular biology give evidence that the approximate time of divergence from the common ancestor of all modern human populations was 200,000 years ago.”
So it’s only taken a couple of hundred thousand years for our species to bring about its very own extinction-level collection of behaviors. Those who think we’ve achieved some perpetual state of progress and prosperity, or that we can even keep an economic system viable for more than a few decades, have a fundamental misunderstanding of (disconnect from) nature.
Davy on Tue, 11th Nov 2014 12:11 pm
Knowledge is an evolutionary dead end. It was great while it lasted said the rich man at the bar on the Titanic when his drink tipped over and the lights went out.
Northwest Resident on Tue, 11th Nov 2014 12:13 pm
ghung — Thanks for that correction. I actually got the “7 million” from Wikipedia when I did a search on Google. But as usual, I’m deep into writing code and trying to figure out how to make shit work and just squeezing a minute or two for reading/commenting on peakoil.com as time permits. Every once in a while my multi-tasking engine fails and I screw up. At times like that, I appreciate the factual correction. But yeah! Even more “infinitesimally insignificant”. Heavy stuff.
Northwest Resident on Tue, 11th Nov 2014 12:20 pm
It was the hominins that lived in Africa about 7 million years ago. Hominins. Humans. Both just evolutionary youngsters, immature, ignorant and primitive in the grand scheme of things. I wonder what comes after humans in the next big evolutionary jump, or if that evolutionary jump will ever occur. Could be that humans are an evolutionary dead end, and the way we’re acting right now, that wouldn’t surprise me at all.
shortonoil on Tue, 11th Nov 2014 12:34 pm
action said:
“The Maximum Consumer Price curve is curtailed at 2020 at $11.76/ barrel.”
The price can not be less than the cost of production for very long; solely lifting costs are less, but we don’t know exactly what that is. But somewhere, from its present price to $11.66, the Petrodollar will cease to exist. Producers can not operate at a loss unless they incur further debt, which is now not available in the quantity they would need. My best “guess” is that it will be in the $30 range that the producers will leave the dollar. But this really depends on OPEC, and Saudi Arabia is the kingpin there. When they decide to leave the dollar the impact will be immediate. There can be little doubt that it will cause great hardship all over the globe.
The oil age could stagger on for another 10 to 15 years past 2020, but it is going to be a very, very difficult time without the stability, and easy flow of money that the Petrodollar has provided. Depletion has cut into the value of petroleum to the point that the world can no longer support its production, and the US’s desire for its energy. The day of free oil for the US is drawing to a conclusion.
Davy on Tue, 11th Nov 2014 12:55 pm
Ok short, you think a petro ruble or yuan will work. Why not say petro-fiat instead of petro dollar. The thermodynamic economic effects of oil on all currencies will be in effect. This is important because economic realities may eliminate the petrodollar before the energy effects. So we need to establish this condition or there will be those who think a new currency will take the dollars place. I see no currency ready for that job.
Northwest Resident on Tue, 11th Nov 2014 12:55 pm
Do wealthy people know that doomsday is approaching?
Answer: Yes, many and I suspect most of them do. Otherwise, why would they be buying luxury doomsteads?
Luxury missile silo condos promise more than mere survival in apocalypse
SOLD OUT!! Starting price $3 million. No financing available. While your petro dollar is still worth a shit and you’ve got a few million of them laying around with nothing to do, why not get in line for one of these luxury doomer hangouts before shortonoil’s words of wisdom become true and your pile of greenbacks become last-choice toilet paper?
https://homes.yahoo.com/blogs/spaces/luxury-missile-silo-condos-apocalypse-preppers-doomsday-survivalists-survival-191440628.html
Northwest Resident on Tue, 11th Nov 2014 1:02 pm
BTW, that link above is on front/top page Yahoo. Do you think that people might be starting to realize that the sh*t is getting ready to hit the fan?
For those of you too lazy or otherwise not inclined to click the link, here’s the text (below):
But, please note, these luxury doomer hangouts are nothing more than elite death traps. Why? Because, the raging masses with their pitchforks and torches (and millions of guns and tons of ammo) will eventually find the air intake vents that circulate air down into the luxury condos. And after several weeks of holding the trapped elites hostage and tormenting them by eating beans daily and farting enmasse into the air vents, the masses will then toss a few canisters of poison gas or simply pile dirt over the air intakes. So long elites. Not the public hanging or head chopping that the angry masses would prefer, of course, but good enough:
*****
It’s the end of the world as we know it.
But you’ll be fine.
That’s the implicit message of the Luxury Survival Condo, which offers a “life assurance” policy to those who can afford it.
That policy comes in the form of a living unit in a decommissioned Kansas missile silo, along with survival training (mandatory), a five-year food supply per occupant, two floors of hydroponic gardens and an aquaculture system to farm fish, a swimming pool, an indoor shooting range, a dog “park,” a gym, a game arcade and a “minor surgery center,” among other features.
It’s all encased in up to 9 feet of special concrete, a “nuclear-hardened” space that plunges 14 stories underground.
A full-floor unit has about 1,800 square feet of living space, costs $3 million and can accommodate six to 10 people, according to the company. A half-floor unit has about 900 square feet, costs $1.5 million and houses three to five people.
Don’t bother asking about a mortgage, though; you’ll need cash, because most banks won’t extend a loan “due to the nature of the project,” the company says.
The main condo complex is already sold out, but more than half of a second, under-construction complex is still available, including penthouse units that start at $4.5 million. “These units will be sold out well before they are completed,” the company warns, “so do not hesitate to get a unit under contract.”
You never know what could happen.
steve on Tue, 11th Nov 2014 1:05 pm
Davy….I think about the hyperinflation versus deflation a lot….wouldn’t you have to have confidence in the system to have inflation? A loss of confidence will mean that everyone will pull back spending causing a deflation spiral and then when the FED marches out again everyone will be laughing at them or stoning them because they will have seen that they have been lying…thus anything they try to do won’t work because they will have lost the illusion of control….I like the idea of inflation because that might mean there is still some system left but unfortunately everything will happen too fast….If only we had cheap easily available energy and another planet to pull resource metals from….
Davy on Tue, 11th Nov 2014 1:13 pm
Steve, if you ever get the feeling all those Benjamin’s under the mattress are going to be nothing but fire starter are you maybe going to run out and spend them. IOW, it is a panic of value and confidence. In a way hyperinflation may be a poor choice of words but that is what is recognized now as the official term.
david russ on Tue, 11th Nov 2014 1:45 pm
Scary times we live in, but as we progress in our energy extrapolation the pop. of this planet keeps growing and so are the amt of people moving into the economic class of buying things like cars that use energy. As for inflation vs deflation, we still live in a “Groupon” economy, nobody buying things unless it is a need or extremely cheap! Until we see real wage growth, I’d still bet on a deflationary spin as the govt. has turned off the liquidity faucet!
Perk Earl on Tue, 11th Nov 2014 2:34 pm
“Because, the raging masses with their pitchforks and torches (and millions of guns and tons of ammo) will eventually find the air intake vents that circulate air down into the luxury condos.”
NWR, the special on TV I saw a while back on underground silo’s for survival they had a machine gun turret that could be operated from the silo. I suppose as long as someone is manning it they could defend the intakes. If the people can get to the intakes all they would have to do is plug them up and eventually the air would get stale with too much CO2 and the occupants would have to come up for air. If they’re impatient to get them out they can mix 50/50 ammonia and bleach to make a real nasty toxic fume generating concoction and pour it down.
The stores will empty quickly but cleaning products will probably still line the shelves.
Instead of a silo I want to get a place up in the hills above the Calif. coast up north where it is still relatively remote. I don’t want to be underground – I want to see what is approaching and have multiple fight or flight options available. Best to have a few people to rotate security shifts and fight off any intruders, but not so many the food/water run out quick.
shortonoil on Tue, 11th Nov 2014 2:35 pm
@Davy,
“Ok short, you think a petro ruble or yuan will work. Why not say petro-fiat instead of petro dollar.”
The point of my post is that the world can no longer afford to subsidize US petroleum consumption. Depletion has removed the surplus energy that it was historically able to provide. A petro ruble or yuan would be no better. Oil producers will soon have to receive a BTU for a BTU. That may be in the form of embedded energy in goods, and services, or some means of barter that allow it. Dollars are pieces of paper (or less) that provide no energy in return for the energy received. They are promissory notes to pay back that energy in the future, which is never repaid because we just consumed it – and pile on the debt.
Without a fair return in kind the producers will go out of business. I don’t think they will do that; they will dump the dollar, and go to some means of exchange system that will allow them to continue operations.
You saw the graph; how long do you think the world’s petroleum industry can survive at $10 – $20/ barrel? They will be receiving that price because the are handing over 6+ mb/d to the US for no real return. That will not continue for very long!
http://www.thehillsgroup.org/
Northwest Resident on Tue, 11th Nov 2014 2:50 pm
Perk Earl — Machine gun turrets? Wow. I didn’t read that in the Yahoo article. I guess that’s in the “fine print” of the contract. I guess they better have that remote controlled machine gun turret hooked up to infrared, otherwise it won’t do much good at night. — I agree with you. Hiding in a hole underground doesn’t sound like a great doomstead option to me, for the reason you mentioned and more. I hope you get that place in the hills above the Northern California coast. That would be a great place, as long as the poison oak isn’t too thick… 🙂 Always a concern for me because I’m allergic as hell to poison oak. As for me, I’ve decided that the best place to hide and ride out the storm is in plain site — in my neighborhood house. Being way out in the country or in the hills or in any isolated place has its definite advantages. But I guess I’m hoping that being in a small town and part of a local community will have some upsides as well (once all of the zombies have been dealt with). It is the dealing with the zombies part that might end up being a little nerve wracking, to say the least.
Energy Investor on Tue, 11th Nov 2014 2:57 pm
So, summing up our impact over 200,000 years, saw our global human population take until about AD1 to reach close to 300 million and at that time we and our livestock comprised about 5-7% of all land mamals. By 1500 we hit the 500 million mark. By 1810 we reached 1 billion and then population went ballistic to about 7.2 billion today, and increasing at roughly 83 million per year (net of deaths). However us and our livestock now comprise over 97% of the world’s land mamals. Is there anyone else we can elbow out of the way?
To support the collapse scenario as an inevitability, I would say the book I enjoyed most as factually precise was Joseph Tainter’s “The Collapse of Complex Societies”.
How many more years until our industrial age of oil ends? Cheap oil is all but gone. Growth is now pretty much a credit fuelled myth.
Our society may take ten years of prevarication, wheel spinning and wealth run-down. But after that??
ghung on Tue, 11th Nov 2014 3:06 pm
Re: Deflation/Inflation – The financial system desperately needs inflation to help inflate the debt away. The other side to that coin, deflation, will require an all out debt jubilee, destroying the current system, or an all out ‘bail-in’, where those with assets have a portion seized to pay down debt; same result (who’s the buyer of last resort?). Seems central banks are failing to maintain discreet levels of inflation (see oil and ability to pay) without risking runaway (hyper) inflation. This is the trap that was set forty+ years ago when the US became a net oil importer; US crude production peaked; Bretton Woods was revoked; debt increases kicked into overdrive.
Re: Luxury Silo Condos and their conceptual flaw: Stuff a bunch of wealthy, spoiled, entitled, people down a hole, no matter how luxurious, and see how long they get along. No selection process other than ability to pay? Sure. That’s why the Navy spent thousands putting guys like me through a battery of tests before putting us on submarines, and it still could get pretty squirrelly, even with a well-established chain-of-command and non-judicial punishment likely.
What’s the plan when folks can’t get along? Banishment? The Property Owners’ Association sentences you to six months scrubbing everyone’s toilets? Even ‘planned sustainable communities’ have a high turn-over rate.
Richard on Tue, 11th Nov 2014 4:19 pm
Northwest Resident
^
You got that wrong, it isn’t seven million, more like two million.
And as for the age of crude oil that was 1859, Colonel Drake found the first well back then.
Harquebus on Tue, 11th Nov 2014 4:32 pm
Have you ever wondered why the CPI, GDP and employment numbers run counter to your personal and business experiences? The problem lies in biased and often-manipulated government reporting.
http://www.shadowstats.com/
Northwest Resident on Tue, 11th Nov 2014 4:33 pm
Thanks, Richard. I just repeated what I found on some googled links. 1859, huh? So it took us LESS THAN 200 years to get to this sorry state of affairs. I guess we’re smarter than I thought we were… 🙂
moonmac on Tue, 11th Nov 2014 4:50 pm
No! No! No! Our world was about to end just a few short years ago but now everything is Sunshine and Lollypops. Honest it is…
Perk Earl on Tue, 11th Nov 2014 5:34 pm
NWR, the special I saw on underground silos was several years ago, so might be different one’s. In the one I saw they had a wall mounted screen that was connected to a camera above ground, so even underground one could gaze at the outdoors. Of course it was just dry grass and a few cows, but kind of cool. I’ve tried to find that product on a Google search but came up snake eyes.
Poison oak – tell me about it. I’m so allergic my sub-conscious stops me if I get near it, then my conscious mind looks around to find it. Make sure never to breathe in burned P.O. – I’ve heard the lungs react if one’s allergic.
We’re in a rural area, but it’s in a suburban development with about 4k people and a small town not far away. Kind of cool – it’s called Hidden Valley Lake, CA. Our place overlooks a man made lake. Must have used a lot of concrete for the levy at a time when it was built, 1959, concrete was much less than now. Don’t think it would be possible now. We moved here in 97 because real estate was so expensive in Marin county. Up here we got a mansion by comparison for pennies on the dollar. The houses are all different and about 2-3k sq. ft. with views of the surrounding mountains. Maybe it won’t be that bad post collapse, but really hot in the summer without AC and little likelihood of growing much in the way of crops, although some grow wine grapes.
Anyway, best of luck in your community post collapse.
MSN Fanboy on Tue, 11th Nov 2014 5:47 pm
“But I guess I’m hoping that being in a small town and part of a local community will have some upsides as well (once all of the zombies have been dealt with). It is the dealing with the zombies part that might end up being a little nerve wracking, to say the least”
I guess NR by zombies you mean starving masses. And I also guess this involves mowing down all in your way with automatic weaponry.
Hmm. Something we agree on. Still it is better to be camouflaged in your community.
Lets just say putting up solar panels on your house in a world with intermittent/no electricity may be like drawing moths to a flame.
Don’t be a moron.
Davy on Tue, 11th Nov 2014 7:12 pm
NR, we have those silos in western MO. I am not sure they are still usable they may have been filled in. When I used to fly I saw them from the air. A few you can see from the road. I think they are a novelty but I would put my money to use differently.
I would invest in a small force of skilled people with a security detachment. I would be above ground and make a big effort to integrate and invest in my local community. That way if something happens you get the pull together factor. I am talking much like the minutemen of the revolutionary war period. I would have Roger Ranger types in the woods ready to ambush the bandits and heathens.
I would keep it above board and legal. I am in with law enforcement here where I live. They fish on my place. I am a member of the state police benefit association for fallen troopers.
I do not find the castle mentality to be the right mentality in most cases. It is better than nothing though
Northwest Resident on Tue, 11th Nov 2014 8:05 pm
Perk — I don’t know how much space you have in your back yard or around your house that you could use, but it doesn’t take a lot of space to grow quite a bit of food. Did you ever see the photos I posted of my 1/16th acre backyard? It took a LOT of hard core labor to get it all set up, but I guesstimate that I could grow enough food to last three people through the year, barely. I would have to “forage” in the vineyards, fruit and hazelnut orchards to supplement what I grow, but at least it’s something. Combined with my approximate one-year stash of rice, beans, wheat berry and assorted canned goods, I could last quite a while I think, long enough for some of those “zombies” to vacate or otherwise make more front/back yards available in my immediate area for planting more wheat, oats, rye and other stuff. Not many people would have the physical stamina, financial resources and motivation combined to do what I did with my backyard. It sounds like you might have a few extra bucks. A bunch of raised planters topped off with purchased top soil and a guaranteed source of water would put you in a better position than most.
Northwest Resident on Tue, 11th Nov 2014 8:08 pm
Davy — Above ground is the place to be, definitely. Hiding in a hole is for sissies and rich people who have been suckered into thinking that will be a safe place to stash their precious metals and bling while they ride out a collapse and “open season on elites” scenario. Being in tight with the local law enforcement definitely can’t hurt. I’d personally put together a merry band of G.I. Joe’s rather than of Roger Rangers, but that’s just me… 🙂 It’s really cool to know how you and Perk and others are preparing mentally and strategically for what we all know is coming.
Northwest Resident on Tue, 11th Nov 2014 8:12 pm
MSN — Just joking around about zombies, actually. I don’t expect any, but if/when a situation arises where I do need to be concerned about them, rest assured, I have my zombie zapper ready and I know how to use it. Definitely NOT something I like to think about. The benefit of living in a neighborhood is that when a collapse scenario hits and people are scared and looking for food, there isn’t a high likelihood that they’ll choose my house out of all the others to attempt a raid on. Most “raiders” will probably be thinking that the food is out in the countryside where all the farm animals and crops are. Well, that’s my theory.