Friday, April 22, 2011

Closed The Shop, Sold The House...

It must be tempting sometimes for the most popular collapse-watchers and writers to wonder how others take their words – especially their advice. In this post I'll talk a bit about the effect a few collapse-watchers have had on some recent decisions of mine.

I remember several months ago how I started to become very interested in The Automatic Earth, a blog which mainly focuses on the financial aspect of the decline and contraction of our present industrial society. I learned a great deal about finance from the site (although I must admit that I can still be confused by some of the more abstruse aspects of the world of modern finance). If I had to summarize the main points of The Automatic Earth, I would state them as follows:

  • The global industrial economy dominated by the First World, particularly the United States, is in the throes of a deflationary contraction.

  • This deflationary contraction consists of the extinguishing of multiple, mutually exclusive claims on wealth and the contraction of available credit.

  • The fact that credit and multiple mutually exclusive claims on wealth are being extinguished defines this present time as a deflationary time, even though the prices of energy and many commodities are now rising.

  • The best short-term strategy for weathering the present deflationary contraction consists, among other things, of holding as much cash as possible while becoming debt free and securing the means to maintain your own existence.

There's a fair bit of wisdom in these things, as well as other strategies not mentioned here which are listed at the Automatic Earth. But whenever there is advice from a particular source, one is also likely to find somewhat contrarian advice from others.

Anyway, I found myself following the advice listed above, as well as other maxims, such as “Take care of your health,” and “Be worth more to your employer than he is paying you.” I've been working two jobs, one as a practicing engineer and one as an engineering adjunct instructor. Engineering is not the most poetic profession on earth, but then, as Chico Escuela used to say on Saturday Night Live, it's been “bery, bery good to me.” However, I've been working like a dog for nearly a year now. The cash flow has been good – if one's goal is to “preserve liquidity” in the face of a deflationary depression. And I deliberately negotiated a salary with my boss that was lower than the going rate for someone with my experience, so I believe I have been worth more to him than he's paying me.

But he's wanting more and more of me, and over the last several months, it seems that a great many aspects of my life have been put on hold while I devote myself to work and to teaching. This is not a very resilient arrangement, for if the economy suffers the sort of shocks that it experienced in 2008, my firm could lose a number of key clients. There are things I should be doing toward building a resilient neighborhood where I live, toward writing and chronicling the unfolding story of life on the downside of Hubbert's Peak, toward doing good and trying with my neighbors and friends to preserve those things that are of greatest value. The demands of my work have gotten in the way of such things. Most of my co-workers regularly put in workweeks that average between 50 and 60 hours. The only skills we seem to have are cubicle skills. And what good is the money if you die of a heart attack or stroke trying to earn more of it? Or, as the Good Book says, “For what will it profit a man, if he gains the whole world, and forfeits his soul? Or what will a man give in exchange for his soul?”

Thus, over the last few months I have come to certain conclusions. A few weeks ago, I gave my boss notice that I am quitting Although I am willing to stay on long enough to finish a couple of projects, I intend to be finished before the beginning of summer. For the next several months, I will be relying solely on my income as an adjunct professor. (This is my version of voluntary “radical cashectomy”.) I will be reducing my monthly expenses as well. Fortunately my house is paid for and I have no other debts, so debt is not an issue.

I have written out a mission statement of sorts for the next couple of years. It could be summed up in one phrase: “transforming myself (along with the people I care about) into someone who might stand a chance, given the world's assumed trajectory.” (Hat tip to Dmitry Orlov for that one.) The savings I have accumulated will provide me with a bit of “learning curve” time to accomplish this. One of my main goals is to develop a suite of post-Peak skills, with an emphasis on understanding general science and engineering and their application to a post-Peak world. Another goal is to become a competent teacher of these skills, as well as a builder of resilient enclaves and a repairer of culture.

I will also continue to write pertinent posts for this blog. Stay tuned!

Saturday, April 2, 2011

The End of Local Currencies? And, A Heist Gone Bad?

Several thinkers and activists in the “post-Peak preparedness” camp have written about how local communities can become more resilient and self-sufficient by creating their own local currencies. Those who write on this topic discuss the many advantages of local currencies in times like these, advantages which chiefly center on the ability of local currencies to keep local wealth in local communities rather than allowing the extraction of wealth from local communities by large, distant, multinational businesses.

I haven't read of any of these writers asking what the large multinational businesses think of this, but it's really not necessary. One man has found out for us. (He found out the hard way.) From the blog ClubOrlov comes this story which originally appeared via Reuters News Service, but which was largely ignored by the larger organs of U.S. mainstream media:

March 21, 2011

WASHINGTON (Reuters) – A North Carolina man was convicted for creating and distributing a counterfeit currency that was very similar to the real dollar, a U.S. Attorney said.

Bernard von NotHaus, 67, minted Liberty Dollar coins in the value of $7 million dollars. The conviction concludes an investigation that was started in 2005.

“Attempts to undermine the legitimate currency of this country are simply a unique form of domestic terrorism,” Anne Tompkins, U.S. Attorney for the Western District of North Carolina, said in a statement on Friday.

“While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country,” she said.

According to Mr. Orlov's blog, while this story has largely been ignored by the big mainstream media outlets in the U.S. (although, to be fair, it has been picked up by Wikipedia, the Wall Street Journal and a number of smaller outlets), it has not been ignored by Russian media. Seems to me that as long as the only things that can be bought via local currencies are housesitting time, feng shui lessons and foot massages, the Federales will probably not care. But if you try meeting any serious needs via such alternative arrangements, they'll be all over you like white on rice.

Ah, but the glory days of the Federales may be numbered. The attempt by the Western coalition of willing thieves (the U.S., Britain and France) to hijack Libya's oil seems to have stalled. Gaddafi's forces are dominating the insurgency which the West had hoped would quickly unseat him and open his country as an oyster ripe for the eating. Moreover, the conflict now seems set to drag on for a considerable time. This is taking its toll on OPEC oil production. According to a 1 April article in the Oil and Gas Journal, “...OPEC production for March shows sharply lower Libyan output, falling Nigerian volumes and higher Saudi production, highlighting the tight market conditions...” Note that the same article describes the effect of unrest in Yemen on its oil production as well. And according to Bloomberg, Libyan oil output is down by approximately 995,000 barrels per day. There are also rumors that Al-Qaeda and Hezbollah operatives may be among the rebel forces in Libya. The whole “revolution” is starting to look like a fight gone bad.

All of this had me thinking today as I rode my bike home past cars and SUV's stuck in traffic, and past the gas stations, many of which are now sporting prices above $4 a gallon for diesel, mid-grade and premium gasoline. I remember how in 2007, when the Oil Report of the Energy Watch Group was published, I read their conclusion that the global peak of oil production was already behind us, and that it had likely happened in 2006. It seems they were right. Saudi Arabian oil production is not keeping up with shortages engendered by conflicts in other Mideast states. As I rode my bike today, I couldn't help glancing at the drivers of shiny new Chevy and Ford and Dodge trucks and the SUV's of many brands, and thinking to myself, “Oh, that person was short-sighted, and that one over there,...and oh, that one was really short-sighted...”