Poverty an asset; assets a burden

Another guest post from Chris, most recently from the Outback, but now ensconced in a place that seems much more collapse-proof.

Chris writes of a paradox: lack of assets may be the greatest asset of all. I don't believe that this is a paradox: the higher you climb, the harder you fall. A place that is used to an artificially high standard of living inevitably develops artificially high standards. These standards cannot be undone overnight, as soon as the standard of living collapses, delaying commonsense adaptations until it is too late. Prosperous places have expensive infrastructure, and, once it can no longer be maintained, it becomes much worse than no infrastructure at all. Lastly, poverty takes practice, and a sudden lapse into poverty is far more traumatic than the habit of a stable but constrained existence.

I have recently moved from Australia, where Peak Oil issues are just beginning to gain traction belatedly in the mainstream press, to the Philippines, where seemingly nobody has even heard of peak oil -- yet.

I have read that the USA is leveraged up to a debt ration approaching 15/1 (1 real dollar for each dollar borrowed). I believe Australia's ratio is about 3/4 of that. The Philippines has a debt ratio of approximately 1/1. Hence when the wolf is finally at the door the Philippines may be in a better fiscal position than countries currently far richer.

However, this is all semantics. The real issue is preparedness.

I believe Australia is in a similar position to the USA and Europe in many regards, beyond financial issues.
The looming disaster in these countries is mostly to do with the feckless assumption that the status quo will somehow continue: private car ownership and food being transported over vast distances being prime among many key vulnerabilities in these societies. Other factors include simple laziness, poor health generally, and addictions to substances both legal and illegal.

Very few people in these countries under the age of about 80 remember anything about what it means to have to survive somehow in the environment, from that environment. Look to the evidence online; how many sites are telling people to stock up on guns and ammo or to stockpile massive amounts of food? The guns will attract violence, the ammo will make those using it targets for those who have less ammo; the food will perish, attract rodents and thieves. In comparison, how many are teaching how to build suburban gardens, recycle small power and methane generators, and other practical adaptations?

The Philippines, like a number of other countries, is living in a paradox of different proportions. Outside of the biggest cities here, food is growing everywhere, in the villages themselves, as well as the agricultural lands around them. Most people here can tell you how to grow a list of useful plants and to raise chickens.
They are also very much used to sharing. There is virtually no government safety net here. To become eligible for social welfare payments, one must have held the same job for ten years; this almost never happens. Yet even in the moderate-sized cities, nobody starves. Interdependence is local and regional rather than national and international. Of course, there is a degree of modernization contributing to the welfare of people. Some people work in the cities or overseas and send money home to support the extended family. But even without this money life would go on.

Most people here are very fit compared to developed nation's. I have seen hardly any overweight people, let alone obese. Washing is done by hand in water pumped by hand from the ground. "Sounds horrible," I hear the average reader murmur: but it works and it means the people are physically fit. The main diet is locally grown rice with similarly grown meats and vegetables. Fruit can be expensive because a lot of it is exported, yet whatever is in season is abundant. The fishing trade here is mostly very small boats with small crews using small nets and lines; there are very few industrial scale fishing boats. I live near a fishing village where 95% of the income is derived from fishing in these small boats; the population of over 2,000 people is the healthiest, happiest bunch I have ever met.

Transport here is a world away from that in developed nations, yet there is no problem getting anywhere. Locally, there are tricycles and jeepneys going past all the time in all directions; these and the buses are very affordable for most people. Only about 2% of households have a car, and maybe half have a private 125cc motorcycle or tricycle. These vehicles get about 100 miles to a gallon of fuel.

The paradox is this: the Philippines greatest asset in the future may be its lack of assets now. Less debt, less dependence on expensive gadgets, less laziness and complacency. More communalism, more integration.

Second Radio Ecoshock Interview

I recently recorded my second interview with Alex Smith of Radio Ecoshock, in which we discuss Bailout 2.0 Beta, how to find food, what to do with repatriated troops, where you can stick your money (should you still have any) to avoid being overcome by its putrid smell, and how having one's predictions come true is not necessarily a happy outcome. My first interview with him was rebroadcast by over 40 radio stations. Now that it's no longer a guessing game as to whether collapse is real, we should be able to do a lot better. Then again, the worse things get, the more of a reason people have to keep on faking it.

The Five Stages of Collapse - Presentation from Fifth Annual Community Solutions Conference

Last night I got back from the conference in Michigan. My talk was one of the two keynote addresses at the conference (John Michael Greer gave the other one). The slide show and notes can be viewed here.

Post-Soviet Lessons now available in Portuguese

José Almeida de Souza Jr., Brazil, has translated the entire article. This is a first. If you wish to translate it into another language, please do so. No need to ask me permission, as long as you agree to freely share the result and show it to me first.

New Review of RC on Dry Dipstick

Mick Winter of Dry Dipstick has just published an excellent review of my book, Reinventing Collapse. Many other reviews are available on Amazon. What more convincing do you need? Buy it, read it, and you will feel better even as your world continues to collapse all around you!

Upcoming Community Solutions Conference

The Fifth Annual conference on Peak Oil and Community Solutions will be held on October 31 - November 2 at Oakland University, Rochester, Michigan. I will be presenting on two subjects:

• The Five Stages of Collapse (Highly topical, as we are currently in the middle of Stage 1, with elements of Stages 2 and 3 plainly visible on the horizon.)
  

• Planning for a Sail Transport Network: Challenges and Opportunities

Also speaking at this conference will be John Michael Greer, John Michael Greer, Pat Murphy, Katrin Klingenberg, Peter Bane, Christopher Bedford, John Richter, and Megan Quinn Bachman.

Peak Oil in the Outback

The following is from an email from Chris, who lives and works in Alice Springs, Australia. It offers an interesting perspective on hitting the peak oil wall in resource exploitation, the scant possibilities of continuing family life as we know it post-peak, and on what it means to be a native (in the truest sense).

“Peakers” are still rare out here. I met my 1^st one here in 1972. Not in the fully developed intellectual sense; yet nonetheless prophetic.

An aboriginal school teacher at the time, a friend of my fathers. I was five years old, a migrant from the USA, I wanted to know how aboriginal people saw white people.

His response was unforgettable: “You guys say we’ve been here 40,000 years; we say since the dreamtime. You may as well call it forever. You guys got here yesterday and tomorrow, you’ll be gone. But we will still be here.”

I know some cattlemen here who 5 years ago were burning $40,000 in diesel to run split system air conditioners to keep a whole house cool through the long hot desert summer. Of course these costs are moving exponentially. This seems to be a crazy amount to be spending on micro climate control; yet the purpose is to make it livable for non native women. One farmer told me that when the generator breaks down his wife just jumps in the car and drives 400 miles to Darwin; she will stay in an air conditioned motel until the generator is fixed. Without these women, the outback white community will cease to exist.

This is just the tip of an iceberg emerging through the fog out here in the desert. A huge amount of the economy is based on speculative ventures in mining, for example, where all of the feasibility projections are assuming ridiculously low energy costs. Major negotiations are underway towards a huge boost in uranium mining, huge royalties will go to largely mal adjusted aboriginal people as cash. The Government is by far the biggest employer and spender out here, largely on programs designed to help the Aboriginal people here. Of course they are mostly designed to help make these people more like whites; generally they are a dismal failure.

In short, my father’s friend’s philosophical perspective nearly forty years ago, seems ripe fruit soon ready for harvest.

The Canadian Solution to the Subprime Credit Crisis

I just happened across this gem, excerpted from here. Solving the subprime mortgage crisis is simple; unless, that is, your country is in the process of being hijacked by a bunch of 9/11 con artists, that is.

In August 2007, it was discovered that Canada, just as the U.S., had a subprime mortgage-backed securities problem. Since the Canadian economy is more than ten times smaller than the American economy, the magnitude of the problem was also smaller, but it was nevertheless acute.

Indeed, Canada's subprime mortgage market was a smaller proportion of the total mortgage market than in the U.S. and mortgage defaults have not been as prevalent in Canada as in the United States. For instance, there has not been a housing bubble burst in Canada. Overall, risky mortgage-backed paper constituted, about 5 per cent of the total mortgage market, while in the U.S., subprime mortgage paper constitutes about 20 per cent of the total mortgage market, and mortgage defaults have been rising dramatically.

Nevertheless, there was some $32 billion (CAN) of non-bank asset-backed commercial paper in Canada. When this market became illiquid after August 2007, as a consequence of the global credit crisis that originated in the U.S., a restructuring committee was assembled in Canada by large pension plans, Crown corporations, banks and other businesses holding the bulk of $32 billion in non-bank asset-backed commercial paper (ABCP) in order to find a solution to the liquidity problem. (Large Canadian banks covered the asset-backed commercial paper that were on their books or in their money market funds). This was the Pan-Canadian Investors Committee for Third-Party Structured ABCP, chaired by a Toronto lawyer, Mr. Purdy Crawford, and created after a proposal that originated from the large Quebec pension fund, the Caisse de dépôt. This was the Montreal proposal.

The committee ended up proposing to restructure the frozen and illiquid securities into longer-term securities. It proposed that ABCP notes, initially intended as low-risk and short-term debt, be exchanged for new replacement notes or debentures that would not mature for years (seven or nine years) while earning interest originating from the underlying primary mortgages.

The plan was approved by a Canadian court last June and is scheduled to close by September 30, after Canada's Supreme Court refused to hear an appeal against the plan. The plan was designed to prevent a forced a fire sale of the asset-backed paper and to restore confidence in the Canadian financial system, especially in the money market funds. And it did all that without the government risking a penny of taxpayers' money.

Of course, those entities that had invested in what they believed to be liquid and relatively high-yield 30- to 90-day debt instruments had to accept new notes maturing within nine years, but most of them thought that this was better than the alternative of outright liquidation. Those investors can hold the newly-issued notes to maturity or they can try to trade them in the secondary market. A market for asset-backed securities was thus indirectly created where none existed before.

Reinventing the Sandwich

A new C-Realm podcast featuring me, Daniel Pinchbeck of Reality Sandwich, and, of course, our host KMO. We talk about optimism, saving the future through better design, and reinventing ourselves. Also, KMO and Daniel briefly discuss the Singularity while the electrics on my boat go on the blink and I briefly lose contact. Enjoy!

A note on timing

A lot of people commented on to the following sentences in my last post:

And that will bring on Phase 2: Commercial Collapse. That is probably what we are getting for Christmas this year, or shortly thereafter.

Some take it to mean that I have committed the cardinal sin of prognosticators in making a Specific Prediction. Actually, I was just being a bit glib, thinking that commercial collapse would make a perfectly suitable Christmas present, that being the most commercial of holidays.

Timing collapse phases is just like timing peak oil: it becomes possible to do only after each phase has largely run its course. I believe financial collapse has a while to go, and may partially overlap with commercial collapse.

When it comes to social and cultural collapse (phases 4 and 5) I am not even certain that I got the relative timing right. To wit: there is a little city park around here that is always full of people who are drunk and stoned out of their minds 24/7. There are a few police on hand who try to keep them from getting into fights, and to herd them right after sundown into a maximum security flophouse they have for them right on the square. A truck stops by periodically to hand out food to them. Clearly, cultural collapse is quite far along for these folks, but political and social collapse have not caught up with them yet.

So have a Merry Christmas, but don't be surprised or despair if you are touched by commercial collapse in some form, mild or not so mild. You might be short on gas to drive to the mall to buy presents, or the road might be impassable because there is no money in the budget for snow removal (a touch of political collapse there). Even if you do get to the mall, some of your favorite stores (Sharper Image?) might be gone, or your credit cards maxed out. I hope that that's specific enough of a prediction, but that is as specific as one should be, I believe.