The State of the World, 2011

Huh? There's a lot of changes going on this year in the world and the USA, and I'm worried about our energy situation, but I don't think we're on the verge of collapsing (transformation, perhaps, but not collapse). We were close in 2008 and early 2009, when there was a lot of uncertainty, but it's not that bad anymore. If we can become energy independent and shift away from fossil fuels by mid-century then I think our technology will be able to solve most of our current problems (probably create a few new moral debates, but that's for another discussion).

 

Michael Ruppert is the gloomiest of all gloomy doomers. An old man barely making ends meet who became a well known doomsday blogger and eventually had a documentary made about him and his theory. I've discussed "Collapse" before in the forum and Ruppert's character.

Here's the hard core reality if you filter out the doomsday talk. If you're American or western European, it doesn't matter when absolute peak oil occurs and what kind of disaster it brings for global civilization, because if you're living in the United States or Europe, you're already living in a relative post peak oil world. The U.S. is slowly being priced out of the market for imported oil. We are no longer the country that has 5% of the world's population but can consume a quarter of the resources. Every year since 2008 the U.S. has consumed less oil despite our growing population. The per capita energy decline in the U.S. has actually been very steep. The high level "purpose" of our stagnant economy is to free up energy and other commodity resources to fuel Asian growth.

The first stage in this process was shipping manufacturing to Asia so that consumer goods could be delivered cheaply to the U.S.

The second stage of this process is unwinding U.S. economic leadership and moving those consumer goods increasingly to Asians as high energy prices and high unemployment force Americans to consume less and less. We are becoming a poorer, less energy-intensive economy relative to the growing economies of the world.

The third stage in this process will be when the U.S. and Europe cede leadership of the global financial system to Asia. The dollar will lose its importance relative to a "basket of currencies" dominated by growing market currencies.

The fourth stage in this process will come as the U.S. is forced to abandon its military posts around the world, contract its armed forces to bring military spending in line with its declining share of the global economic pie.

Long before the earthquake, Japan was the "sick man of Asia," the Ottoman Empire of the Asian 21st century. The earthquake/tsunami/nuclear disaster isn't going to bring down the global economic system. All it's going to do is accelerate the transition of economic leadership to the Asian mainland as China and South Korea pick up the slack caused by Japan's misfortunes.

It's natural from the U.S. and European point of view, and particularly for someone like Ruppert who grew up in the post war boom years of the U.S., for this process to look like the end of the world. Really all we're talking about, at least for now, is the end of the 500 year cultural, military and industrial hegemony of western European culture over global civilization.

The conservative strategy for fighting this ongoing process in the U.S. over the last quarter century has been to abandon the commitment to a strong American middle class as an unaffordable luxury in a globally competitive world. But that strategy has failed. I'm not convinced any strategy would have worked to prevent America's relative decline and the ultimate passing of the torch of global cultural leadership back to Asia. The progressive European strategy seems to be failing just as hard as the poorer countries teeter on the brink of defaulting on debt and the richer countries suffer from a demographic pyramid that is collapsing under the weight of the aged as the top.

 

Jabba, great analysis!

Do you ever read Porter Stansberry's research? It would be right up your alley.

I will say, though, that technological breakthroughs will likely alter the future in such a way that it does not mirror the past. For example, I don't see China morphing into the US as the "world's policeman", or the standard of living in the West transforming the First World into something less than that. Rather, I agree that the welfare state system will likely collapse, leading to a more plutocratic society than we currently have in places like the US.

Eventually, there will likely be some type of breakthrough in the energy sector that will make cheap energy available for all (although it might take decades), and depending on where this occurs, it could potentially reverse the fortunes of places like China. If the US develops a cheap fuel cell that can run on ordinary water, it would blow away anything China could possibly match, since it's expansion is still based on a carbon economy. Steps to protect America from having to cede position as an energy consumer are already underway, especially in the field of natural gas.

I think what's more likely (given that Americans are not going to want to see a sharp decline in their standard of living simply to elevate China) is that we will go through a period of extreme hardship in which America's economy shifts back to production, likely of alternative energy sources, culminating in a "self-sufficiency" phase which better positions the US to resume it's place as a leader in the global economy, albeit on more equal footing with nations like China, rather than in a sharp competition. The transition period will very painful, however, and likely fraught with stagflation, as well as poor capital growth, for a decade or more. I believe we are in that period now, as all the gains in the stock market have still been made under a very fragile and ailing economic system.

Watch the markets when QE2 ends in June. That will say a lot.

Peace,

V-03

 

While not a resource-themed story-it's more of a doom and gloom one, but has anyone been following the story of the brutal riots that are taking place in Australia's Villawood detention center, known as one of "Australia's Gitmos," near Sydney?

Over 100 detainees engineered an uprising during a protest. Center personnel were then overpowered and 9-10 buildings withing the complex were burnt down. It looks like the Australian government contracts out the staffing of their detention centers to the lowest bidder, and the company who has the bid-SerCo- is being criticized for cutting corners on training and security, although this would also be dependent on how much funding the government gives them.

The danger is that the riot at Villawood is spreading to other detention centers, as protests also broke out at Curtin immigrant detention center in response. Australian Federal Police quelled a similar outbreak by using tear gas, flash-bang grenades, and rubber bullets. The Federal Police are also augmenting security at the other detention centers. It's interesting stuff.

 

Al Qaeda is over
By Fareed Zakaria, CNN

In the wake of Osama bin Laden?s death, a number of people are saying that this does not mean that al Qaeda has been destroyed. Some argue that the organization may, in fact, be thriving. Front-page articles in both The New York Times and The Washington Post make this claim. Many officials from Obama downward are saying this.

I understand why officials have to say this. They want to be cautious. They don?t want to overpromise.

But the truth is this is a huge, devastating blow to al Qaeda, which had already been crippled by the Arab Spring. It is not an exaggeration to say that this is the end of al Qaeda in any meaningful sense of the word.

Al Qaeda is not an organization that commands massive resources. It doesn?t have a big army. It doesn?t have vast reservoirs of funds that it can direct easily across the world.

Al Qaeda was an idea and an ideology, symbolized by an extremely charismatic figure in Osama bin Laden. Bin Laden was this Saudi prince-like figure who had gone into the mountains of Afghanistan forsaking the riches of a multibillion-dollar fortune, fought against the Soviets, demonstrated personal bravery and then crafted a seductive message about Islam and Islamic extremism as a path to destroy the corrupt regimes of the Middle East.

History teaches us that the loss of the charismatic leader - of the symbol - is extraordinarily damaging for the organization. It is very difficult to keep such an organization together, particularly in the absence of great power backers.

In the case of al Qaeda, this is a virtual organization held together by its message and the inspiration it provided. A large part of that inspiration was bin Laden. Ayman Zawahiri may have been the brains behind the outfit, but he did not excite people. When people volunteered for jihad, they were volunteering to be bin Laden?s foot soldiers, not Ayman Zawahiri?s or Khalid Sheikh Mohammed?s. The loss of bin Laden?s personality is hugely important because it was so much part of al Qaeda?s appeal.

In addition, we must remember that the death of bin Laden is not occurring in a vacuum. The Arab Awakening has already crippled the basic rationale of al Qaeda. Al Qaeda existed because bin Laden argued that the regimes of the Arab world were dictatorial and oppressive. He argued that the United States was supporting those regimes and, as a result, Muslims had to engage in terrorism against the United States and those regimes. He claimed that the only way to achieve change was through violence, terrorism and Islamic extremism.

In the past few months, we have seen democratic, peaceful, non-Islamic revolutions transform Egypt and Tunisia. We are seeing these forces changing almost every government in the Arab world. Al Qaeda is not in the picture. So when you combine the Arab Spring with bin Laden?s death, you have a very powerful one-two punch to al Qaeda.

Certainly, there are groups of terrorists around the world, some of which now call themselves al Qaeda. These groups are loosely affiliated in some sense. But gangs of bad guys have always been around.

With the death of bin Laden, the central organizing ideology that presented an existential seduction to the Muslim world and an existential threat to the Western world is damaged beyond repair. We?re left with free-lance terrorists who will, of course, be able to inflict some harm. But the Somali pirates are able to inflict harm on civilians, and that doesn?t turn them into an existential threat to the Western world.

That existential threat is gone.

I think he said exactly what I've been trying to express over the last few days to the people who are downplaying Osama's death and the impact that will have on the United States, the Muslim world, the wars, and the entire world. His death could not have come at a better time. This double-blow against Al Qaeda an

 

File that with this:

... right over there in the bin, that's it, thanks.

 

You mean the bin where pro-democracy movements are breaking out across the Arab world, where three out of the five BRICS are full-on democracies, and where even China is starting to admit that it won't remain under one party rule forever? That bin?

 

You're... retconning!

 

The state of the world in 2011 so far is bleak. The upheavals in North Africa and the Middle East are sure to do one thing-Leave Israel with enemies on all borders. The fuse to the powder keg is being lit before our eyes. Days after the ousting of Mubarak one of the young leaders/organizers of the revolution said in speaking of Israel-" if a thief enters your house do you make piece with him." He also stated that the 32year old peace accord between the two countries has no guarantees under a newly elected regime. The only thing keeping the peace was Mubarak, who kept to Sadat's vision; who had been on the losing side in '67 and '73. A new regime in Syria may chose to retake the Golan Heights. Since Israel gave the Sinai back to Eygpt their border is no longer protected by waterway to the east. As bad as it may sound I felt safer when those countries were kept in line by despots. Bin Laden's form of radical Islam may fall to the way side as it tends to kill more Muslims than anyone else, but his idea of Islam and Shia law from pole to pole and the eradication of the state of Israel has not gone away and unfortunately likely never will.

The destruction in Japan shows how we are but ants to the elemental world. No one seems to take into account that the reactor in question was built in 1971. The codes it was built to were to the Richter Scale of the time. The scaling for Earthquakes ,as well as hurricanes has changed in the 1980-90's. What was once a Magnitude 9 is now a 7. The scale is logarithmic so the difference between a magnitude 1(31.6) to 2(1000), I don't even want to think about the difference from a 7 to 9. The only good thing about it was its location had it been on the other side the devastation would be far worse, especially for China and both Koreas; the water level would have been higher as it moved up the East China Sea creating more damage and death on both sides.

As the year moves on all we can do is hope and pray. Sting once said at the height of the Cold War "Lets hope the Russians love their children too". I am positive that we have the ability and will to solve the energy problems, but the greed of the few cause hardship and deaths to the many. The 2004 Tsunami showed to the world that the U.S. Navy is probably the greatest humanitarian apparatus ever devised by man, and that the USA is able and willing to help those in need. Unfortunately it causes scorn and envy to often.