Why the US is Headed for Global Bankruptcy (and lose our ability to buy oil on the foreign markets)

Yes, there will be deflation in assets massively inflated by the easy money(as experienced by the rest of the world) but the US will then go into hyperinflation and be priced out of the foreign markets.(including and especially oil) When we can no longer afford to buy 25% of the oil produced, there will be plenty for the rest of the world. When you are 862 trillion dollars in debt and no one will take a check anymore, you're pretty much screwed.

http://cid-yama.livejournal.com/29250.html

Another truth respecting the vigilance with which a free people should guard their liberty, that deserves to be carefully observed, is this--that a real tyranny may prevail in a state, while the forms of a free constitution remain.

Which is why I expect Bush/Cheney to come out of the "Peak Oil Closet" and admit that the US is in Iraq to maintain control of (or "safeguard") Middle East oil reserves. Whether we can maintain said control is another matter.

WT,

You really think that will help them?

I think that most people would be surprised at the number of Americans who think that it is a swell idea for us to seize foreign oil fields--at least until they or their family members are sent to fight and die to keep the oil flowing.

A conservative editorial writer for the Dallas Morning News has been becoming more and more critical of the Bush administration--but he really started unloading on the Bushies after his brother-in-law, who is in the reserves, was recently sent to Iraq. I wonder if his wife "encouraged" his continued change in his position on Iraq.

I think shrub/vader are getting closer to 'coming out' about Iraq and our oil woes. Yesterday I saw a portion of an ad on CNN for the military and written across the ad was the phrase 'We Must Win.' First time I have seen that one but as usual I had the sound muted. Even if this administration did come out and say that 'we must have Iraqi oil' I dont believe that shrub/vader are competent enough to eliminate the insurgents and get huge quantities of oil flowing from Iraq to US ports.

I can't imagine any administration ever "coming out" about oil & Iraq. It would be as if today's administration said "we killed the Native Americans to take their land." Everyone knows it's a fact, but no administration will ever say it in public, because it makes us feel guilty. :(

America's goal in Iraq, by the way, is not to eliminate the insurgents. The goal is to let them fight each other for control of the non-oil-producing provinces.

With no strong central government, the Iraqi people have less bargaining power over oil.

This is strange stuff.

I agree that many Americans have an abberrant sense of entitlement. This raw greed is always linked with noble ideas asbout American Exceptionalism -- we are the ones who know how to do things and can be trusted to be fair.

This American Exceptionalism is never far from the idea that we are chosen by God to lead the world into either a Utopian (pre?)Kingdom of Heaven future or into a Dystopian Apocalypse.

The US Military recently cancelled or altered a "Military Crusade" by a Christian Fundamentalist group that obviously offended many Americans as well as any Muslim who would have heard of it.

American Fascism requires a meta-narrative with which to conduct Resource War in drag. The meta-narrative must hook enough people in to provide political momentum for the increasing brutality with which the war is carried out, and also to cover increasingly oppressive policies at home.

Ultimately, "we the people" must be persuaded that we are in a long emergency which requires that we suspend -- or transcend? -- all of the old notions embodied in the US Constitution and in agreements like the Geneva Convention.

I think that oil will be a very big overt issue, but it will be clothed in arguemnts that fuse the oil war with a reliouss and cultural narrative to expand the powers of the political Establishment which dominates both big paties in the USA.

"Maintaining control" will be an increasingly brutal and essential matter.

You certainly hit that nail on the head. I don't like having a doomsday cult driving our foreign policy.

Beggar, I really think you've got a handle on it. You can see the constant probing for a narrative that will sell, as the excuses and explanations twist and change. There are plenty of people who would be fine with "look, we need the oil, it's us or them", but probably not quite enough - or it is still too soon. It either needs a tastier icing put on, or life will have to get a lot harder before enough people willingly take the final step (final step, because most of the changes are already complete). But I have no doubt we will. I just cannot see us turning back now - what could happen that would drive it?

Right. And as SCT noted, this amounts to being run by a "doomsday cult" whether the NeoCons are secularists or religious fanatics. Ain't nobody going to win another world war.

When things get really tough, the Religious and Cultural Meta-narrative gets easier to sell, because people are more desperate to believe that "we" are really in the right.

Many may know at some level what is going on already, but always many people will need a story to tell themselves that rationalizes atrocities into necessary acts of heroism.

beggar,

I'm as left wing as they come and protested the Iraq war 8 times before the war of conquest started. But, realisticly, the conservatives are right about the troops being necessary. They made it that way. After the torture at Abu Ghraib, and the kidnapping of "terrorists" so they can be tortured and "disappeared" in foreign prisons, do you really expect the US to be able to get back in the Persian Gulf after the US withdraws? If you were moslem, would you reguard the threats against Iran as proof that the US government hates Islam? I know I sure would.

If we leave I expect an immediate embargo by the oil producers of the US. We import 68% of the oil we use, and without oil the US military will collapse in a few months, so its a non-violent way to stop the U.S.. That's why Hillary Clinton supports the war, IMHO, plus Bill Clinton will be tried as a war criminal too after 2 million Iraqi's died in the invasion and air strikes between the two Persian Gulf Wars. That means with the 800,000 dead according to the British medical journal, the Lancet, we have killed close to 3 million people for this.

I still think we have to end the war, but we already have a huge Karmic debt to pay. The only hope is to start mitigation now, on a personal basis or we will all have huge personal problems.

So get a hybrid, and start work for Alan Drake's electrification of rail program right now. Its the only hope any of us has to survive this with any kind of prosperity. Bob Ebersole

Bob,

Even if we left Iraq, CENTCOM would have overwhelming military presence in the Persian Gulf. Here's a map:

http://www.globalsecurity.org/military/facility/centcom.htm

Every Iraqi tanker of oil leaving the Persian Gulf floats past about a dozen U.S. Navy and Air Force coastal bases before it reaches the ocean. None of these bases is in Iraq.

If The Middle East embargoed U.S.-bound oil (the U.S. only gets 15% from there) we could easily blockade, sink, or pirate their tankers.

If The Middle East embargoed U.S.-bound oil (the U.S. only gets 15% from there) we could easily blockade, sink, or pirate their tankers.

Sounds to me like the actions of a "rogue state".

I am doubtful that the US$ could retain its status as the world's reserve currency under that scenario. And once it is no longer the reserve currency and its value has plunged, then there would be little downside left for the rest of the world to punish us by imposing a total trade embargo on the US (until we cease and desist, pay reparations, and offer up our political and military leadership to the ICC - which won't happen). It woudn't be 100% effective, but it wouldn't have to be. We don't have a big enough military to engage in enough piracy to grab everything we would need to import. Besides, some of those other countries do have navys of their own and would start shooting back.

No, I think if we go down that path then we really are looking at WWIII in our future, followed by NO future worth thinking about.

Sounds like you've been reading "Myths America Lives By" by Richard T. Hughes.

There are always many threads in these big narratives. I wonder if one idea has been that nudging Americans along the path of heavy dependence on oil will make them more willing to back military action in the ME when the time comes. If we had viable alternatives (solar supported PHEVs, solar powered water heaters, solar and wind powered homes), even just enough to offset most of the oil imports, Americans might be inclined to look to those solutions rather than a military solution. By keeping solar, wind, tidal energy, etc. as future solutions it leaves us dependent on oil.

If we started getting a substantial portion of our energy from the sunshine landing on our rooftops and on our deserts their is much less need for adventurism in the ME. No war profits in that.

I have little doubt that Bush/Cheney have full knowledge of Peak Oil. However, this factoid in a very roundabout way runs contrary to my settled opinion:

One of the first bits of advice pretty much any personal finance guru gives is to cut out the $5.00 a day latte habit to get one's expenses under control. (I've always thought that Starbuck's fortunes would be a leading indicator of the coming economic crash.)

However, if TPTB are aware of coming doom, why would they invest in a chain of fancy coffee shops? Using the Carlyle Group as proxy for TPTB, then why did the Carlyle Group buy the Dunkin' Donuts chain last year? Now, Dunkin' Donuts announced this week that they plan on tripling the number of their stores to 15,000 by 2020! (In case you haven't been to one in a while, Dunkin' Donuts is relying more and more on the coffee drinks than on the donuts.)

If I thought we would be reduced to eating rice and beans in 2020, I wouldn't make a big investment to sell more flavored lattes. Or is latte now the opiate of the masses?

I had a coworker who's spouse was a beer salesman. During a recession or hard times, the sales of the more expensive brands went up.

You may not be able to buy a new car or tv, but pricey beer and coffee are a relatively inexpensive treat for those beat down by circumstance.

Of course, a recession is not a depression.

There are going to be both winners and losers. The losers will have guessed wrong. We are seeing lots of future losers in the process of guessing wrong now. Beware of making future forecasts based upon just a few data points.

The coffee and donuts are for all the additional police the US will need. ;)

Another truth respecting the vigilance with which a free people should guard their liberty, that deserves to be carefully observed, is this--that a real tyranny may prevail in a state, while the forms of a free constitution remain.

Coffee is probably an excellent investment. Workers who are exhausted and stressed out will be very unwilling to cut back on caffeine intake. There's a reason why it's the most given advice - it's also the hardest to take.

the coming police state will need lots and lots of donut shops. the latte is only a cover.

If I thought we would be reduced to eating rice and beans in 2020, I wouldn't make a big investment to sell more flavored lattes. Or is latte now the opiate of the masses?

Who knows, they may want to buy it, improve it, then sell it for a profit before TSHTF.

There is also a global market for these things that you may not know of. Dunkin Donuts recently opened their first stores in Taipei, Taiwan. Young Taiwanese are very eager to spend money on Dunkin Donuts because it is a cosmopolitan and worldly thing to do, comparatively speaking.

The "fast crash" that is possible by 2020 would relate to crashing oil exports as explained by westexas. This would be so horrible, that anyone who really grasps the idea today is likely to quit their job with TPTB and go live in the mountains. So even TPTB have a limited ability to comprehend the scope of the problem.

Oh, I agree this is very possible. I was once browsing a book by a right wing lawyer with a bunch of talking points for arguing with liberals, something like that. He quotes Ann Coulter to the effect that the war is not about oil -- BUT -- if it were, what would be wrong with that? There was a pro-war letter in the local paper a few years ago: it said, yep, it's about oil, let's go get it.

It has been my fear that once the economy tanks and people are really hurting, the endless war will be presented as the solution to several problems. It worked in Germany, although the timing of events there was different.

It worked in Germany, although the timing of events there was different.

If I remember correctly, that did not end well. All their cities turned into rubble, their women raped by Russians.

Another truth respecting the vigilance with which a free people should guard their liberty, that deserves to be carefully observed, is this--that a real tyranny may prevail in a state, while the forms of a free constitution remain.

This is where you end up when the philosophy of "the ends justifies the means" becomes dominant and unquestioned. Any means become justifiable in the pursuit of any ends.

It didn't used to be that way. I can remember a time when school children were taught that America isn't like that. "The ends justifies the means" was the mistaken philosophy of dictatorships like Nazi Germany and the Communist USSR, and that was why they did terrible things. The US was different. We were supposedly governed by laws rather than by men - laws based on an absolute standard of right and wrong. Thus, there were things that the US simply did not do, because they were wrong.

It was all a fiction, of course. We never were THAT good. There were plenty of counter-examples where we failed to live up to that standard.

My point is, though, that at a certain basic level the standard still held true. If you asked the average person on the street if the ends always justified the means, if that was a good way to run a society, they probably would have said "no". Thus, while we didn't always live up to that standard, the standard was still there.

Now, apparently, it is totally history. Now we are in a country that is totally governed by the principle of the ends justify the means. Poland/Iraq have territory and resources that you need? That end justifies the means of invasion and conquest. Need to eliminate people opposing your regime? That end justifies locking them up in concentration camps and torturing them. Need to keep a lid on people spreading disloyal and seditious thoughts? That end justifies spying on your own citizens by any technical means possible.

Makes one wonder why we even bothered fighting WWII and doing the cold war thing in the first place. We are becoming what our enemies were.

Excellent post WNC.


Just wish your politicians were stating this in their speeches, your schools discussing it in civics classes and your TV talking heads judging the current government's actions against this standard.


That your country is "becoming what your enemies were" is exactly the reason for the growing level of concern amoung foreign friends and allies.

We have become what we despise and no mistake about that. War criminals in the Whitehouse - who'd have predicted that when we elected Bush?

I really have some doubts about economic data issued by our government. Then again, I continue to receive rediculous mortgage offers via mail and phone. Below are two tales by two Florida newspapers...

http://hosted.ap.org/dynamic/stories/W/WALL_STREET?SITE=FLDAY&SECTION=HO...
story carried in Sat edition of DB News Journal...

'In economic news, the Commerce Department said new home sales rose 2.8 percent in July, after falling 4 percent in June. The increase in July lifted sales to a seasonally adjusted annual rate of 870,000 units. A second report showed that orders for durable goods - those expected to last at least three years - jumped 5.9 percent in July, the biggest increase in 10 months.

The housing report appeared to ease concerns that the U.S. economy might tip into recession because of a skidding housing market and tightening access to credit.'

http://hosted.ap.org/dynamic/stories/M/MORTGAGE_CRISIS_VICTIMS?SITE=FLPA...
story carried in Sat edition Palm Beach Post...

Their troubles began in April 2006 when they refinanced the remaining $207,000 on a 30-year fixed loan to a two-year adjustable rate mortgage so they could pay down hefty obligations on their SUV and pickup truck.

A mortgage broker informed them just before the closing that the remaining debt would be $3,500 more than expected, but they signed anyway.

"We didn't have time to change the terms so we just signed them," Connie said.

About the time the first payment on the new loan came due, a sequence of events left them unable to keep up. First Connie's mother moved out and stopped helping out with mortgage payments. Then her husband Timothy lost his job at a mobile home factory because of the housing industry slump.

Man, those stories are heartbreaking. Especially the woman who put a $100,000 down payment down on a $300,000 mortgage. Obviously, she's not irresponsible or financially illiterate, if she put down that kind of downpayment. And she had doubts about the mortgage, and even refused to sign at first. The broker basically lied to her to get her to sign.

How do those scumbags sleep at night?

How do those scumbags sleep at night?

"On top of a pile of money, with many beautiful women."

-Rainier Wolfcastle, 1995

Cid, I didn't realize that was your blog. I will add it to my daily reading list! Debbie

Glad you liked it. :)

Another truth respecting the vigilance with which a free people should guard their liberty, that deserves to be carefully observed, is this--that a real tyranny may prevail in a state, while the forms of a free constitution remain.

I especially love the 862 trillion dollars in debt quote. Truly this discussion is rooted in pure, unaltered and unbiased facts.

Edit: That aside, people are still looking at this from the wrong angle. If the US today couldn't afford to buy another ounce of oil, that would only take off 15 million barrels of global demand. At that rate, assuming some of the more conservative decline rates of 4% per annum after 2009, the world would catch up on consumption by 2013: a gain of a whole 4 years! Clearly enough to solve everyone else problem...or not...

The single largest category of global oil use is involved in transportation. Fully 45% of global oil demand is used JUST for gasoline and diesel. Thats nearly 40 million barrels per day. If every car on the planet were to become a plugged in hybrid car tomorrow (same dream world as used above) it wouldn't be until 2030 when oil depletion 'catches up. If we cut back on air travel and fuels by packing people into just the new Dreamliners, we would save another 9 million bpd. That would push back doomsday until 2038. Doing away with a similar ratio for military uses of oil (electric tanks?) would further extend the doomsday time to 2045...

Now we're dealing with finding away to compensate safely for around 25 million barrels per day. And thats AFTER normal oil depletion is taken into account. That figure isn't so out of the question when biofuels and GTL are taken into account...

Where is all this electricity going to come from? I don't think it's realistic at this juncture to expect electric production to ever be more than 50% of current levels. Go to CA and they have nuke plants all up and down the coast already. The amount of electricity generated already is simply staggering.

matt

CA canada? california? California has 3 nuclear power plants and one of them is in Arizona. The land of Bananas. You cannot produce electricity here from coal or nukes. The bananas vetoed an LNG terminal near oxnard and a windfarm just south of my town. There`s a drought currently. Californians think brownouts are caused by Enron.

RobertInKyoto

I haven`t escaped from reality. i have a daypass.

Sorry,shouldve thought more about the nukes. I do think that's good about the wind farm though. The Altamont wind farm is an absolute abomination IMO. The archetypal Steinbeckian CA landscape of rolling golden hills, completely desecrated. Windmills are cool in isolation, but I just can not get used to the look of a wind farm w/ it's mindless repetition of generating units.

Matt

We need to pick the least worst option. Is that brownouts?

RobertInKyoto

I haven`t escaped from reality. i have a daypass.

Yes. I think there is something really perverse about filling open space w/ wind farms in order power the 11th and 12 th Staples or LOng JOhn SIlver's in a given area.

Matt

Ok, you`re a banana. I like electricity and I can`t do anything about Staples or LJS. To quote Stallone in Cobra,"I don`t shop there". I got solar panels so no matter how badly you screw california, the worst thing you can do to me is make me buy batteries.

RobertInKyoto

I haven`t escaped from reality. i have a daypass.

Robert,

CA has almost 40 million people. it is screwing itself. The fact is that endless energy equals the endless expansion of the human footprint. This is neither sustainable,nor desirable. The fact is, we can either impose limits through increased costs/limited supplies or run up against inevitable limits (whatever they may be) in the future. The problem with he approach "we'll just address THOSE limitations in the future." is that the stakes just keep getting higher, ie everything else you've continued to build up depends on overcoming those future limits.

I don't shop there either but I have to coexist with them. That makes me an interested party.

Banana Matt

Matt,

They are planning on replacing the ancient turbines in Altamount with newer, more efficient, more bird friendly ones. If the bananas will let them.

I don`t mind you being anti-wind if you were pro-nuke. Pro-something. If you are another banana in the bunch, I have no time for you.

California uses 75% of the US average electricity per capita. The reasons for that include mild climate, no heavy industry, and outrageous electricity costs that scare server farms and other heavy electricity users away. They never say so but I believe google installed 200,000 sq. feet of solar panels to save themselves a ton of money. Assuming they have to do business from silicon valley. Probably cheaper to run a power line from Mountain View to Palo Alto but that probably wasn`t an option.

Of the electricity we do use, we import hydro from the Columbia river and Canada and Hoover dam. He get a lot of coal by wire. We put the coal plant in Arizona and Wyoming and just string a wire. There are transmission losses but running a coal train over the Sierra Madres takes energy too.

You are entitled to your own opinion but not entitled to your own facts.

RobertInKyoto

I haven`t escaped from reality. i have a daypass.

Partyguy,

Obviously you didn't follow the links.

https://www.cia.gov/library/publications/the-world-factbook/rankorder/21...

I actually understated the debt.

By the way, where are yours? Or did you just pull your numbers out of your angus?

Another truth respecting the vigilance with which a free people should guard their liberty, that deserves to be carefully observed, is this--that a real tyranny may prevail in a state, while the forms of a free constitution remain.

I actually understated the debt.

but you didn't count the zeros. that is 862 billion, not trillion.

Opps! You are correct. Makes me feel better, but not much. They still won't take a check. ;) I need to go amend my post. Thanks for pointing it out.

Turns out on further research, the CIA figure does not represent out total debt. Current debt is 8.98 trillion dollars.

http://brillig.com/debt_clock/

http://en.wikipedia.org/wiki/U.S._public_debt

That figure is what I was referring to, Cid :P