Hitting the Wall 2:

At some point I will learn to stick with one font.  But that point will not be today.  This post will eventually be topical to  Greatest Generation 2, from a couple of days ago, as I have attached a continuation of that subject on the next part of this series.

I wrote about the economic stagnation of our economy previously (Hitting the Wall).  Where you set the turning point will vary depending on which set of data you care to look at, and what particular axe you haveto grind.  In my opinion, most economists have some form of the “where we will be in the future will be some form of continuum from where we are today.”  They take this viewpoint even thought their methods have proven to be extremely poor predictors of future economic reality.  None the less, if you understand their point of view, they can show some interesting results when they start crunching the numbers.

An excerpt from Tyler Cown’s new e-book The Great Stagnation: How America Ate All The Low-Hanging Fruit of Modern History,Got Sick, and Will (Eventually) Feel Better.

The setup:

I’m also persuaded by the median income numbers because they are supported by related measurements of other magnitudes. For example, another way to study economic growth is to look not at median income but at national income, gdp, or gross domestic product, the total production of goods and services.  Charles I. Jones, an economist at Stanford University, has “disassembled” American economic growth into component parts, such as increases in capital investment, increases in work hours, increases in research and development, and other factors…

The alarming conclusion:

Looking at 1950–1993, he found that 80 percent of the growth from that period came from the application of previously discovered ideas, combined with heavy additional investment in education and research, in a manner that cannot be easily repeated for the future. In other words, we’ve been riding off the past. Even more worryingly, he finds that now that we are done exhausting this accumulated stock of benefits, we are discovering new ideas at a speed that will drive a future growth rate of less than one-third of a percent (that’s a rough estimate, not an exact one, but it is consistent with the basic message here). It could be worse yet if the idea-generating countries continue to lose population, as we are seeing in Western Europe and Japan.

You can order the eBook; the Amazon link is here, Barnes & Noble here, $4.00.  information on the book is  here.

Mr. Cowen does not believe that the current economic stagnation will continue forever, but that it will last 37 years.  I agree that it might last 37 years, but I believe I am of the opposite opinion as to where it will go at the end of this intermediate period.

Taking Down America

At the moment, within the United States, it is the political right that is the loudest purveyors of a coming doom and gloom.  However, there are actually quite a few voices on the left.  Coming from TomDispatch: Taking Down America

A soft landing for America 40 years from now?  Don’t bet on it.  The demise of the United States as the global superpower could come far more quickly than anyone imagines.  If Washington is dreaming of 2040 or 2050 as the end of the American Century, a more realistic assessment of domestic and global trends suggests that in 2025, just 15 years from now, it could all be over except for the shouting.

Despite the aura of omnipotence most empires project, a look at their history should remind us that they are fragile organisms. So delicate is their ecology of power that, when things start to go truly bad, empires regularly unravel with unholy speed: just a year for Portugal, two years for the Soviet Union, eight years for France, 11 years for the Ottomans, 17 years for Great Britain, and, in all likelihood, 22 years for the United States, counting from the crucial year 2003.

Alfred W. McCoy offers for scenerios:

• Economic Decline: Scenario 2020
• Oil Shock: Scenario 2025
• Military Misadventure: Scenario 2014
• World War III: Scenario 2025

Some of these are, within prepper parlance, slow and some of them are fast collapse.  None of the scenarios seem to offer much guidance other than an idea that a limited retreat now is better than a cataclysmic one later.

I do not have any huge problems with the scenarios.  The idea that our problems started with Bush W. is in my opinion more polemic than substantive.  Also, the assumption that the United States is the only large country on a collision course with disaster strikes me as having a rather blinkered view of reality.  How China is supposed to maintain its growth with a population 4 times larger than the United States, and not suffer major problems from an oil disruption is also a bit mysterious.

R/P Values

I have been reading Laurence C. Smith's The World in 2050:  Four Forces Shaping Civilization's Northern Future.

He comments on the R/P value of many natural resources important to our current world economy.  The R?P value is the reserve to production ratio.  It is how long, in annual terms, we will use up our current reserves at our current production rate.  He notes that the price of the commodity does not seem to reflect in any way its R/P value.

Coal 133 years
Oil 42 years
Copper 35 years
Zinc 24 years
Lead 22 years
Nickel 21 years
Tin 24 years
Silver 14 years
Gold 17 years
Indium 8 years

While we are certainly not "stuck" with our current reserve levels, it is also important to note that the projected future growth is expected to come from developing countries  who currently have the currently the lowest per capita usage.  The world currently uses 85 million barrels of oil today, even taking into account the current recession,   by 2030 this is projected to reach 106 million barrels.  Other resources in varying proportions will follow suite.

Chinese Collapse

The idea that China is in a bubble economy has been a back sheet story for some time.  I could go back and dig out an amazing number of very details stories.  Although it is hard to remember it now, Japan also seemed like very much the same type of juggernaut back in the 1980s.  The dystopian movie Blade Runner (trailer) had Los Angelos covered with Japanese signs and people.  Today with and aging and shrinking population they might consider borrowing some of our Latin American emigres.

Although it is not clear that this is the exact dynamic here, the boom and bust cycles are likely to start coming at a much more rapid pace as the multiplier of world populating and consumption intersects with available remaining resources (per capita usage x total population versus existing resources + newly found resources).

Chinese Collapse NYT

For nearly two years, China’s turbocharged economy has raced ahead with the aid of a huge government stimulus program and aggressive lending by state-run banks.

But a growing number of economists now worry that China — the world’s fastest growing economy and a pillar of strength during the global financial crisis — could be stalled next year by soaring inflation, mounting government debt and asset bubbles.

Chinese Unemployed Graduates NYT

BEIJING — Liu Yang, a coal miner’s daughter, arrived in the capital this past summer with a freshly printed diploma from Datong University, $140 in her wallet and an air of invincibility.

Her first taste of reality came later the same day, as she lugged her bags through a ramshackle neighborhood, not far from the Olympic Village, where tens of thousands of other young strivers cram four to a room.

Unable to find a bed and unimpressed by the rabbit warren of slapdash buildings, Ms. Liu scowled as the smell of trash wafted up around her. “Beijing isn’t like this in the movies,” she said.

More Unemployed Graduates World Socialist Web

China has a huge number of unemployed college graduates. In July, China’s ministry of education revealed that over 25 percent, or roughly 1.5 million of the 6.3 million students who had graduated this year, were unemployed. Of those who graduated last year, 800,000 remained unemployed.

These jobless graduates are part of a wider employment crisis. China’s first-ever “White Paper” on employment statistics was released on September 7. Entitled China’s Human Resources, it reported that the number of registered unemployed is 9.2 million or 4.3 percent of the urban labour force.

One example below:

China's High Tech Graduate's Ant Colony

The Chinese Ant Colony Newsweek (Picture Montage):

Economic Collapse: Heating Your Home

Will you have a warm house to come home to this winter?  If so, you should consider yourself to be very fortunate. With the United States experiencing the highest levels of long-term unemployment that it has seen since the Great Depression, millions of Americans families are simply out of money.  All across America this winter, families are going to be forced to make some heart breaking decisions.  For many, the choice will come down to either heating their home or putting food on the table.  According to the National Energy Assistance Directors' Association, more than 10 million U.S. households will not be able to afford to heat their homes this winter without assistance, which would be a new all-time record.  So, if you are in a position to easily heat your home this winter, be very, very thankful.  The number of American families that cannot even afford the basics of life is growing by the day.

As I have written about previously, millions of formerly middle class families have been absolutely ripped apart by this economy.  There simply is not nearly enough jobs for everyone, and those who have been left on the outside looking in are becoming increasingly desperate.

from Will You Be Able to Heat Your Home this Winter?  from The Economic Collapse

The post continues on to explain that Federal and State subsidies are far from adequate to cover the costs of aid.

Many homes up north use diesel fuel (although the company that sells it to you won't call it that).  In cases of fuel disruption, if the fuel is stored below grade (or below 20 degrees Celsius = 68 degrees Fahrenheit) its life can be extended well beyond a year with proper care.  Estimates vary, but most seem to say that with annual treatments a ten year life span for diesel fuel is possible.

Whole Home Ambient Heating