Tuesday, July 28, 2009

The Abandoned House Syndrome

Recently, the following houses caught my eye:

House #1, Lake Oswego, OR. This house has been abandoned for several months.

House #2, Lake Oswego, OR. This house has been abandoned for a year. The bank that owns it attempted an auction, but it failed.

House #3, East Portland. See the lockbox on the front door, as well as the trash and weeds in the front yard.

House #4, East Portland, OR. Note the broken rear window. It looks like someone kicked it in.

House #5, East Portland, OR. This house has been abandoned for a year. The City had recently put a ticket on the house for weeds and "public nuisance." When I took the picture, however, someone from a property management company was mowing the lawn. This house was the subject of another failed auction.

Four of these houses are in various stages of tracing out the same trajectory of history. They were all offered for sale by homeowners who found themselves in trouble of one kind or another and who could no longer pay their mortgages. None of the owners was able to sell at the desired asking price. All these homes fell into foreclosure and became bank-owned. All are now abandoned.

House #3 does indeed have a lockbox on the front door, indicating that it may have been purchased by a new owner who simply hasn't arrived yet. But in that case, where is the realtor's sign with a big “SOLD” sticker on it? Also, notice the signs of abandonment here as well – the trash in the unkempt front yard, for instance.

I didn't go intentionally searching for houses like these; rather, I noticed them as I was going about my daily business. However, I am sure that searchers could find many houses like these by now, not only in Portland and Lake Oswego, but in many other cities.

These houses illustrate a few interesting trends. First, at the very beginning of the present economic collapse, there were some writers on the subject of collapse and preparation who suggested that it might be possible for homeowners in trouble to negotiate more lenient loan payment terms with their lenders, because it was assumed that banks really don't want to own homes. But while it may or may not be true that banks don't look forward to owning homes, it has definitely proven to be true that banks are quite willing to take homes away from people who are unable to pay their home loans under terms originally negotiated.

Why are banks taking houses? Because the assets counted on the balance sheets of most banks consist of interest-bearing loans made to supposedly credit-worthy borrowers. When those loans became worthless due to the default of the debtors, the only other assets banks could carry on their balance sheets were the items of collateral used to secure the original loans. Such collateral included the houses of people who could no longer make their house payments.

Why are the banks holding these houses for such a long time? Because a huge gulf has arisen between the prices that banks and other holders of real estate would like to charge for their assets versus the actual price that most people can afford. Yet these houses and other real estate are still being carried on the banks' books at the price that they would have commanded near the height of the recent real estate bubble, when prices were high. For banks to sell foreclosed and repossessed properties at a price that would actually work in our present market, the banks would have to admit that their so-called assets had lost a huge percentage of their notional value. This would shrink the balance sheets of banks to such an extent that many more of them would fail.

The recent government bailouts of the banking system should have allowed more banks to remain solvent even as these banks either negotiated more merciful loan payment plans with homeowners or as the banks sold repossessed homes for a more reasonable price. Yet the bailout money was not used by the banks to enable mercy and fair play. Rather, it was used to increase shareholder dividends and CEO bonuses. Now, therefore, the banks hold “auctions” in which they try to sell foreclosed properties for inflated prices. When no one is willing to submit a satisfactory bid, these houses are taken off the market in the hope that one day, market conditions will magically improve, at which point another auction or sale will be attempted. Some banks, desperate to raise homebuyer demand by limiting supply, are now paying demolition crews to bulldoze abandoned homes, including recently built or nearly built McMansions. (Sources: http://www.cnbc.com/id/30580830; http://blog.mlive.com/flint-city-beat/2009/07/kildee_a_smaller_flint_equals.html; and this - http://www.jsonline.com/watchdog/watchdogreports/50548282.html for a slightly different twist.)

Meanwhile, the weeds and moss grow, the trash piles up, the paint peels, the banks must pay a property management company to look in on their properties and clean up the places, and the occasional window gets kicked in...

Friday, July 24, 2009

Ten Thousand Low Fat French Fries

I am planning some more in-depth analyses for future posts on this blog, and I am also trying to line up some interesting and informative interviews with people in my area who are involved in activities that foster neighborhood and community resilience. However, there is research to be done and there are appointments to be made, so these things won't hit the blogosphere for a while yet. Please stay tuned.

In the meantime, I'll be publishing a few essays and light posts, the ideas for which have been kicking around in my head (and/or on my digital camera) for the last several weeks. Today we'll talk a bit about food.

I have a (fictitious) friend named Jones, who's been trying to battle excessive weight caused by an excessive lifestyle. One of Jones' favorite foods is French fries. In fact, he can put away five hundred Fred's Famous French Fries in one sitting. (Fred's is a (fictitious) fast-food joint a block away from Jones' house.)

Jones' doctor had recently begun to warn him about the dangers of his lifestyle, telling him that he'd better quit his munching and straighten out. But Jones resented his doctor's words, being unwilling to endure the pain of denying his munchies. Because he was a rich man, Jones therefore hired a team of doctors, agronomists, chefs and nutritionists to invent a low-fat French fry that would enable him to munch away without guilt. After several months of intense research, his team finally presented him with a low-fat, low-calorie French fry every bit as decadently salted and flavored as the fries he was accustomed to munching at Fred's.

Cool!!” Jones exclaimed, after the first bite. “Now I don't have to stop at 500 fries. Now I can munch 10,000!!!”

Jones is a metaphor for the “non-negotiable” American way of life, a symbol of the American attitude toward the call to learn to live on less. And the mindset embodied in Jones' low-fat fries can be seen in vehicles like the all-new Chevy Tahoe hybrid:

The salesman who let me take this picture told me that it gets 20 mpg in the city and 20 mpg on the highway. Impressive! How many miles per gallon does it get when stuck in traffic? When one considers the energy embedded in manufacturing one of these, how much energy does the hybrid technology actually save? By the way, Chevy even has a full-sized hybrid pickup truck!

Maybe someone should tell Jones that eating ten thousand low-fat French fries will kill a man just as surely as eating five hundred regular fries. At least here is an example of an un-hypocritically, honestly sinful regular “French fry”:

(It is also, unfortunately, an example of why Chrysler went bankrupt.)

But look here! Has Peak Oil actually brought us back to this?!

I saw this woman and her horse next to a tire shop while on the way home from work. It seems that her horse trailer had some problems and the mechanics were repairing it. Yet I know that if the mechanics had been unable to fix it, she'd still have had a ride home.

Here, lastly, is a guy who's doing things right...

Tuesday, July 21, 2009

Airlines And Moral Systems Failure

Soon after returning home from my last trip to Southern California, I got into a short conversation with a married couple who are my next door neighbors about my trip. They too had recently traveled to So. Cal., not for work, but to visit relatives. Whereas they flew there and back, I drove. I think they have come to the conclusion that I'm a slightly peculiar character, so they saw my choice to drive as just one more proof of oddity. When they asked if I would be returning anytime soon, I told them that I wouldn't be going back for a couple of months, and that when I returned, it would only be to visit family. One of them asked, “Are you going to fly this time?” “No way,” I said. “Planes crash!” “So do cars,” they both chuckled.

But in all seriousness, I have given up flying for the time being. It's not because of an “irrational fear of flying.” Rather, as I have said before, it's because during the last oil price super-spike, we all witnessed the death of several airlines and the consolidation and extreme cost-cutting measures of several of the survivors. I also know that the surviving airlines are still being squeezed by rising oil prices and falling revenues caused by the general economic collapse. This is hindering their ability to maximize profits. Knowing how big business operates nowadays, I expect that their cutbacks have extended far beyond such visible things as carry-on luggage charges and elimination of in-flight snacks, and that they have been cutting back on things essential to keeping their planes safe in the sky. I therefore expect that as our economic collapse progresses and oil prices go through further spikes, there will be a significant increase of in-flight safety incidents (including crashes).

Is there any evidence to support such an expectation? I haven't done a rigorous statistical categorization and analysis of airline in-flight incidents over the last few years. Such an analysis, while valuable, would take a significant amount of effort, and I don't have the time right now to undertake such an effort. But it is interesting to note that over the last month and a half, during the time when I drove to Southern California twice, there have been at least five crashes of planes used either for passengers or cargo.

One particular crash that caught my attention is the loss of Air France Flight 447, an Airbus A330 that fell out of the sky into the Atlantic Ocean on 1 June 2009. According to initial reports, the plane was in international airspace under the watch of Brazilian air traffic control when it flew into a band of thunderstorm activity. As it entered the storm zone, it experienced a rapidly cascading failure of its highly complex, computer-controlled avionics, leaving the pilots with progressively less information about flight attitude and speed, and less ability to control the plane. There came a point when something critical happened, and the plane fell out of the sky.

What's interesting is how independent investigators drew certain initial conclusions from the crash data, how the French corporation Airbus Industrie responded to these conclusions, the French oversight of the debris recovery operation and their inability to find the plane's “black boxes,” and the preliminary conclusions of the French Government's BEA (Bureau d'Enquêtes et d'Analyses pour la Sécurité de l'Aviation Civile), an agency similar to the American FAA.

Initially, the conclusion of many independent investigators was that the plane broke up in midair. The injuries seen on recovered bodies and the fact that many of those bodies were missing clothing, supported this conclusion, as well as the fact that the crash debris field was several miles long and several miles wide. Airbus spokesmen then began to blame the pilots for flying the plane in a way that exceeded its design limitations, secondarily blaming flight sensors for giving the pilots faulty speed and attitude information.

But this provoked further questions about the safety of the heavy reliance of Airbus on composite-fiber components in their aircraft, in places like wings, rudders and other control surfaces. These suspicions were amplified when the nearly intact tail of the plane was found near the extreme end of the debris field, suggesting that it had sheared from the aircraft while in flight. Such incidents had happened before with Airbus aircraft.

The voicing of these suspicions prompted many vehement assurances from Airbus that their airplanes are well-designed, and perfectly safe to fly. In this Airbus was joined by an unlikely ally, namely Boeing, who are in the process of producing a next-generation plane, the 787 Dreamliner, that will be made up of over 50 percent composites.

Why are composites so important to passenger jet manufacturers right now? It boils down to fuel prices. Those who build the lightest jetliners capture the biggest share of the market, because the person who buys and flies those jetliners can carry the most cargo or the largest number of people for the lowest operational cost.

But aircraft manufacturers have reached a point where their craft are so lightly built that they must be outfitted with extremely complex computer-controlled avionics, to prevent pilots from overstressing their aircraft while in flight. Safety margins have been shaved to the minimum, since generous margins would add weight and operational cost.

A word about composites is in order. It is well known that composites tend to delaminate and develop voids when subjected to the cyclic loading and extreme temperature variations experienced by passenger jets. While the military uses composites in many of its most advanced jet aircraft, it is also true that the military subjects its planes to very rigorous maintenance and inspection regimens. This is not true of planes maintained by airlines, whose manufacturers have convinced the operators of these planes that only visual inspection of components is necessary, or at most, a “tap test.” Hardly any airline does more extensive testing, such as ultrasound scans.

In light of these issues with composites, the outcome of the crash investigation by the BEA is quite interesting. In a report issued on 2 July 2009, the BEA concluded that Flight 447 was brought down by undetermined factors, and that it hit the ocean intact, without breaking up first in midair. They also stated that it was at least six hours from Flight 447's last known transmission before an emergency was declared. This directly contradicts the Brazilian government's assertion that it was less than half an hour after the flight's last transmission before Brazilian air traffic control issued an alert. It is also interesting to note how all the major media outlets have regurgitated the BEA report without questioning the contradictions between its conclusions and the earlier conclusions of investigators not connected to Airbus or the French government.

I believe that Flight 447 and the handling of its aftermath is an indicator of the sorts of things we will see as high-value systems and providers of high-value services are stressed and squeezed by oil depletion and economic collapse, and as these providers struggle to maintain profits. Meanwhile, here are some links for you to enjoy (or maybe not, if you have to fly somewhere anytime soon).

For Further Reading...

Sunday, July 19, 2009

Involuntary Part-Time, Part 2

One of the dangers of covering the news of a particular place at a particular time is that the reporter doing the coverage may wind up being part of the news himself if he stays too long in a place where news is happening. I'm not a professional journalist, but I have been trying as best I can to give an accurate account of the unfolding economic collapse that has resulted from the passing of the worldwide peak of crude oil extraction. Now it seems that this collapse is about to touch me personally.

Our company's local office has been shrinking steadily over the last several months, as departments representing various design disciplines have run out of work. Some parts of our leased space are now more than half empty. The office management has offered to put the remaining employees of several departments on part-time schedules in order to avoid further layoffs. Within the last two weeks, our department's turn has come. Even though we get to choose whether or not we want to work part time, it seems to be a Hobson's choice, as the likely alternative is to be shown the door.

This comes at an interesting time for the engineering profession nationwide; it seems that employment for electrical and electronic engineers is shrinking, and that many EE's are being shown the door during this economic downturn. (Source: http://news.softpedia.com/news/Engineering-Jobless-Rates-Are-Sky-High-116168.shtml) Of course, if any engineering jobs are being created, they are increasingly to be found in “low-cost centers” overseas, or they involve significant overtime and extensive, mandatory travel.

This trend in engineering job availability brings up an important question for those who are collapse-aware. Given what we know and the trends we see, should we take the disappearance of our employment as a signal to jump clear of the breaking system of the official economy? If you were laid off tomorrow, would you take it as a signal that you should start your own business or make some of the other radical readjustments commonly known to collapse-aware people? Or would you try as hard as possible, for as long as possible, to cling desperately to the official economy, in order to continue meeting your needs via that economy?

To cling to the official economy when one knows that it is breaking seems unwise to me. There is an opportunity cost involved, if one is working 60+ hours a week and traveling one or two weeks a month for a paycheck in order to prolong, for a little while, a certain lifestyle. One who lives such a life has very little time to prepare the necessary adaptations of self-reliance for the day when the official economy breaks. If my office shows me the door, there are some jobs for which I will not apply.

But I have a friend who has taken an engineering assignment in a faraway foreign country for a few years. The pay is very, very good (although the country itself is not the sort of place most tourists would like to visit), and my friend needs the money because of a large mortgage. I only hope his company doesn't go out of business while he's overseas. Such an event might make it extremely difficult to get back to the U.S. again. Such a possibility should not be taken lightly; much stranger things have happened within the last couple of years.

Wednesday, July 15, 2009

California Prison Reform Opportunity

Some readers of this blog may have followed my posts on private prison abuse and the prison-industrial complex. The posts are these: Money and Filthy Hands, Our Least Resilient Neighborhoods, Tarnish On The Golden State, Homeboy Culture And The Solari Index, and The Replacement of Petroleum Slaves. For those unfamiliar with this subject, these posts drew on a number of sources who documented how the prison lobby and the private prison “industry” have pushed for harsh sentencing of nonviolent offenders in order to boost the incomes of prison guards and private prison corporations. This lobbying, and “targeted enforcement” by police, have resulted in a disproportionate number of minorities who are locked up in prison.

There is an upcoming opportunity to remedy this situation. On 5 August 2009, the California Rehabilitation Oversight Board will hold a hearing on expanding the Honor Program now operating at California State Prison, Los Angeles County (CSP-LAC). The Honor Program has yielded impressive results in reducing prisoner violence and boosting prisoner rehabilitation, as well as saving taxpayers at least several hundred thousand dollars. A program that heals offenders and sets them straight is a boon to society, even if it means a loss of revenue for private prison corporations and prison guard pensions. Such interests will of course oppose programs that help people escape the prison system. Prison industry lobbyists seem to have a friend in Governor Schwarzenegger, who vetoed a 2007 bill that would have mandated expansion of the Honor Program, and whose proposed 2009 budget would increase California's use of private prisons (Sources: http://www.youthradio.org/news/schwarzenegger-talks-private-prisons-and-budget-cuts; and http://reason.org/blog/show/solving-the-ca-budget-governat)

However, not all Californians (or ex-Californians like me) are so evil that they want to profit from breaking the lives of others. Therefore, supporters of the Honor Program will be out in force at the meeting on the 5th of August. Their goal is to expand the Honor Program to all California prisons.

I was invited to go, but I don't know if I'll be able to make it. If any readers are available on that date, feel free to attend and help make a positive difference. Here is a link to the Honor Program website: http://www.prisonhonorprogram.org/. I have also included the invitation e-mail below:

Dear Honor Program Supporter:

We are closer than ever to achieving official support of the Honor Program by the CDCR. In recent months, we have been very successful in gaining the attention of CDCR Secretary Matthew Cate and Inspector General David Shaw, who have indicated their interest in the program. There are very positive signs that the CDCR plans to take action in the near future to fully support and implement the program.

However, we need your help to ensure this actually happens! Especially at this time of fiscal crisis, when so much attention is being given to California's state budget (to the exclusion of other important matters), we must remind Secretary Cate of the importance of the Honor Program.

Please plan to attend the upcoming C-ROB (California Rehabilitation Oversight Board) meeting in Sacramento on Wednesday, August 5, 2009. Secretary Cate attends these meetings, which are a perfect opportunity to advocate directly with the decision maker.

We want to see as many Honor Program supporters as possible attend the August 5 meeting to provide public testimony and encourage Secretary Cate to follow through on his plans to support the program. (If you are not comfortable with public speaking, your physical presence alone will send a message to Secretary Cate of the degree of public support for the program.) Please reply to this e-mail if you would like to attend the meeting and have questions or need more information.

For more information on the C-ROB meeting, go to http://www.oig.ca.gov/pages/c-rob.php.

Thank you very much for your support.



Friday, July 10, 2009

Reckoning A Living Wage

The last few posts of this blog have covered the key role of local businesses and local economies in promoting neighborhoods and communities that are resilient in the face of Peak Oil, climate change and economic collapse. Local businesses that have the greatest chance of early success will be those that make or repair necessary or highly beneficial material goods, or that provide essential or highly beneficial services, for market niches that cannot be easily serviced by the global “official” economy due to incompatibilities of scale. By incompatibilities of scale I mean that these market sectors are small enough and/or scattered enough that they can't be served by the mass-produced, mega-chain store approach that is typical of large-scale businesses. Of course, as economic contraction and collapse proceeds, an ever-expanding number of markets and people will be abandoned by the official economy, leaving more room for the rise of local businesses and local economies.

One key question for someone seeking to start his own local business is how much to charge for goods produced or services rendered. A big part of this question is for the prospective small businessman to figure out how much income he needs to live on, and this in turn is influenced by the state of the prospective market – that is, how much the businessman's customers are willing and able to pay for the goods and services rendered. The calculation of the businessman's required income can be stated another way: he must calculate what constitutes a living wage for himself and his dependants and employees.

The calculation of a living wage can be influenced by any number of factors. Many people start with a picture of a desired lifestyle, and by means of simple mental arithmetic they come up with the income required for that desired lifestyle. Our uniquely American problem is that almost everyone who watches TV (and a sizable number of people who don't) has been trained to imagine a very lavish lifestyle, and to want an income to match. Most of the celebrities and influential figures in our country are afflicted with this disease, and they will resort to desperate measures when their income doesn't match their desired lifestyle. Names like Donald Trump, Bernie Madoff, and Kim Basinger come to mind.

This diseased state of mind isn't confined to the rich and famous, as events of the last few years have shown how many Americans lived far beyond their means. And this mindset is a hindrance to the correct process of reckoning a living wage. The correct process begins, not by formulating a picture of a desired lifestyle, but by figuring out how much customers are willing and able to pay for the goods and services offered by a prospective local business. If a woman opens a shoe repair shop in a rural town in Kentucky, and hopes to have ten customers a day and gross $50 for each repair job, she's likely to be disappointed if the town's residents are so poor that they can only afford $5 or $10.

I'd like to suggest that those Americans who want to start local businesses should reckon their figure for a living wage downward, because the ability of most people to pay for goods and services is decreasing. This is due to three factors:

  1. First, the global economy (and the large-scale American economy) is now contracting, due to constraints in the availability of natural resources necessary to supply the economy. It is becoming more evident that the world has passed the peak in global oil production, and that oil production is now beginning to fall. We have already seen peaks in other resources including metals and rare-earth elements. Peak coal is not far away. The availability of fresh water is also declining, due to overuse of rivers and drought-induced climate change. Some analysts say that the world experienced Peak Phosphorus (especially inorganic phosphates) in the 1980's. (Source: http://phosphorusfutures.net/index.php?option=com_content&task=view&id=16&Itemid=30) Phosphorus is a key ingredient of agricultural fertilizers. Resource constraints and exhaustion mean a shrinking economy, and a shrinking economy means less income for each member of that economy.

  2. Second, the concentrated wealth of the United States, as well as the lavishness of the American lifestyle, have been built on a foundation of military conquests, trade agreements and treaties that facilitated the concentration of the world's wealth in this country, and in the hands of the ruling elites of this country. Thus, for instance, the U.S. has only five percent of the world's population, yet uses over 40 percent of the world's oil. Now those complex arrangements of military might and slanted treaties are starting to unravel. Net oil imports to the U.S. have been declining for the last few years as oil rich nations have become wealthier and have begun to use more of their own oil. Foreign nations are becoming much less willing to buy U.S. debt, and are turning away from the U.S. dollar as the world's reserve currency, due in part to the huge debts for which the U.S. government is already liable.

  3. The collapse of credit worldwide which precipitated our present economic crisis has also resulted in the loss of access to credit for ordinary people, who are now forced to live within their means. The means of ordinary people are shrinking as companies, stung by failing revenues and their own lack of access to credit, lay off ever larger numbers of employees. The increasing layoffs and downward pressure on living standards are the evidence of a shrinking global economy and shrinking American access to the goods and services provided by that global economy.

A word about point #2 above is in order. Some analysts and “collapse thinkers” have voiced the possibility of a sudden, near-term collapse of the arrangements which underlie the American lifestyle – perhaps through a massive sell-off of foreign-held U.S. debt, or a Federal default on U.S. debt, or a sudden crash in oil production or oil exports. If that happens, there will be a swift and sudden decline in the standard of living of most Americans, since we depend on imported goods for so many things. To cite just one example of the scale of this decline, consider what would happen if the American five percent of the world's population that now uses 40 percent of the world's oil woke up one day to find that they now had access to only five percent of the world's oil. On a per capita basis, this would be roughly equivalent to each American finding out that his or her income had suddenly been cut to one-eighth its former value.

Now a per capita estimate of the effects of such a collapse is necessarily flawed, as wealth is not equally distributed in this country. Nor is access to wealth. In the event of such a crisis, it follows that some people would hardly be affected, while a large number of people would be thrown into grinding poverty. Yet it seems quite likely that whether this happens suddenly or gradually, our nation is moving toward a condition in which we have access only to our fair share of the world's resource base – and that the non-renewable part of that base will be continually shrinking. Under these conditions, the sort of small businesses that survive will be those whose proprietors offer necessary goods and services at an affordable price, and who are able to stay in business because they have scaled their own needs back to a level that's sustainable over the long haul.

Here then are some good questions: Could you live on an income that's one-eighth or less of your present income? If not, what steps could you take to simplify your life so that you could live on a drastically reduced income? How much can the citizens of your locality actually afford for the goods and services you propose to sell them? Are these goods and services really so essential or beneficial that people are likely to buy them?

Sunday, July 5, 2009

Swinging Your Own Hammer

In my post, Localism And Resilient Neighborhoods, I discussed the importance of building and supporting local economies as a part of building resilient neighborhoods. Of course, building local economies means the revival of a great number and variety of local businesses that were destroyed by the rise of globalism and the concentration of massive amounts of capital in the hands of a small number of national and global elites. The revival of local businesses that actually make or repair the material goods needed for everyday life is a key element of neighborhoods and communities that can survive large-scale economic shocks caused by the failure of the global economy – a failure that is occurring right now due to the collapse of the resource base needed to sustain that global economy.

A key question is whether now is the right time to begin reviving and/or building local economies, and the necessary businesses that make up such economies. That question can be answered on two levels. On one level, the answer is “Of course this is the right time! In fact, we should have started yesterday, given our precarious, crumbling national economy and the coming economic shocks caused by our post-Peak resource base.” But I'm asking a different question, namely, whether people who are trying to rebuild a local economy in their locality can get away with it at this time.

I believe that at present, an increasing number of people are starting to resent the official economy and the conditions under which they are forced to participate in it. I believe that these people would gladly turn to alternatives if these alternatives were readily available. Yet the masters of this official economy and of the big businesses that comprise this economy are actively working to prevent the emergence of alternatives. In this they are willing to use any tools at their disposal, including the lobbying of politicians in order to make it hard for people to pursue alternatives. The sudden emergence of many local economies based primarily on large numbers of small local businesses would constitute a threat to the “official” global economy and its dominant players. Therefore I am not asking whether “we” should formulate some grand policy for reviving local economies, nor am I asking whether we should try to enlist the help of our government at the Federal or State level to promote such a policy. Rather, I'm asking, “If I want to start a local business that both makes and sells useful things, can I get away with it at this time? Or will I be driven out of business?”

To put the problem another way, the official global economy is like a huge, vicious pit bull that has suddenly shown up in the front yard of a home. Inside is a group of children who are trying to escape from the house, but they are rightly afraid of the pit bull. They have already lost a couple of their comrades who tried to make a break for it and were caught in the jaws of this evil mutt. But a Providential event has befallen them in that the pit bull has just knocked over a trash can and eaten some really gross, poisonous garbage. Now he's looking quite sick, and the children are starting to think he may die – or at least that he might be sick enough that they could outrun him and get away from that house. Yet they're not quite sure – so they converse back and forth along the following lines, “I think maybe he's dead. Wanna check it out?” “No way, man! You go first.” “Chicken!” “You see what that dog did to Jimmy's leg, don't you?” “Maybe if we throw a stick at it, we can see if it's still alive...”

Is the official economy sick? Absolutely. Those who depend on that economy for their livelihoods are being jettisoned from that economy in staggering numbers. The “official” unemployment rate in the United States is now 9.1 percent, although if you check out Shadowstats (http://www.shadowstats.com/alternate_data), the actual rate is over 20 percent. Is the Government, the enabler of that official economy sick? One way to answer that is to note that the Federal government depends heavily on debt, and foreign nations have grown increasingly reluctant to buy U.S. debt. Many state governments are in much worse shape. (California is the present poster child.) Is modern industrial society feeling well? Consider that there is now abundant evidence that global oil production is past peak and in decline, and that U.S. commercial crude inventories have been falling consistently by 3 to 4 million barrels every week for the past two to three months. Oil – the original topic of this blog, as well as the cause of our present economic collapse – is about to assume a central role in our story once again.

Is there still some “bite” left in the jaws of this pit bull? Unfortunately, yes. Consider government, for instance. There are several “food safety” bills now making their way through the United States Congress, bills that, if signed into law, would drive small farms and food producers out of business by creating such an expensive regulatory burden that only the biggest agribusinesses could survive. It's not surprising that large food corporations like General Mills, Kraft Foods and W.M. Kellogg have endorsed this legislation. There was also the “Consumer Product Safety Improvement Act” passed earlier this year ostensibly to protect children from lead and toxic chemicals. What the law actually accomplished was to saddle small American producers of children's toys with a crushing burden of required tests on products that obviously did not contain lead in the first place. These cases illustrate the strategy of big business, when faced with a crisis caused by a lack of safety in products produced by big business. That strategy is to promote legislation that does not forbid the big business practices that lead to dangerous products, but that rather saddle all businesses with a regulatory burden so heavy that it can only be borne by big businesses. Thus they drive smaller businesses out of business.

The use of governments to promote the policies of big business is but one of the strategies of big business. There are the other strategies – economies of scale, specialization, large-scale automation and the use of cheap labor in a globalized economy. Do you want to make something for a living? How about custom handmade guitars? It is certainly possible to make a decent living as a luthier, as long as you have a good reputation for quality products. Some well-known custom and semi-custom luthiers come to mind, such as Linda Manzer, Kevin Ryan, Grit Laskin and George Lowden, and their instruments can command a price of several thousand dollars each. Yet China has recently emerged as a lutherie powerhouse, and Chinese instruments of high quality can be had very cheaply, due to low labor costs and cheap fossil fuel-based transport. Last year's oil price spike put a temporary crimp in globalism, but that spike has gone away for the present.

Okay, then, how about bicycles? China's prominence is true in spades here. Almost every inexpensive bike sold in the USA is made in China. Yet it is also becoming true that expensive, supposedly “custom” bikes are also made in “low-cost” overseas locations. Consider the offerings of Rivendell Bicycle Works, a seller of “custom” bikes that were at one time all made in the United States. The majority of their most popular models are now made in foreign countries such as Japan (for the Rivendell Atlantis) and Taiwan (for the Sam Hillborne). Now don't get me wrong. I really like Rivendell and respect the company, and I know they aren't exactly rolling in dough. But even they have been somewhat altered by globalism. My point is that making a living in the First World by making things in the First World is still fraught with difficulty, unless you're a really big player.

So what's a person to do if they want to start a local business? What should be the focus of their business? This question is no doubt uppermost in the minds of many people who see that the official globalist system is breaking and who are looking for some sort of escape. Yet such people may feel trapped, people whose education has “...prepared [them] solely for working in a large organization,” and who can't imagine earning a living otherwise, as Matthew B. Crawford says in his book, Shop Class As Soulcraft.

Crawford's book is a deliciously subversive critique of modern globalism, and of white-collar culture and all its support institutions, including schools that teach useless factoids while destroying common sense. To those looking for a localist escape from the breaking globalist system, Crawford suggests finding work that essentially requires human craft of the kind that can only be gained through experience, and that can only be handed down through apprenticeship. This sort of work can't be globalized, outsourced, automated or exploited over an Internet connection. He suggests “finding work in the cracks,” work that is not being done by the official global economy because its scale or scope does not fit the large scale suited to the organs of the global economy.

Figuring out where the “cracks” are and what sort of work can be done in the cracks is a challenge I leave to you, the reader. (It's certainly a challenge I myself am facing.) But I leave you with some suggested avenues of exploration for finding such work. These were written by Ahavah Gayle, author of the blog Shalom Bayit, and are found in a series on that blog titled, “The Collision With The Reality Train – What Can We Do?” The relevant post is here: Repost: Third and Final part. Enjoy!

(P.S. I once got to see a Rivendell Atlantis as I was coming home from work and waiting at a MAX platform. It belonged to a middle-aged lady who was also a bike commuter. I came up to her and said, “Is that a Rivendell Atlantis? Can I drool over it?!” She said, “Sure! Do you need a bib?” Those bikes are cool.)