Peak oil and the housing bust are a
mutually- reinforcing clusterfuck.
James Kunstler -- Clusterfuck Nation
March 31, 2007 -- The fiasco in real estate and mortgage lending seems finally to be
breaking through the reality shield of the mainstream media. Last week,
for example, NPR's nightly Marketplace show actually ran a
segment saying that the production homebuilders were choking on unsold
houses and that (as if NPR had just discovered this) the mortgage
industry was rife with irregularities in lending standards! And that
this seems to have led to a lot of mischief! And that it may actually
have repercussions throughout the financial sector and maybe even the
economy in general! Golly!
It's been a long slog for the dullards at NPR, and elsewhere in the mainstream media.
Meanwhile, also last week, the General Accounting Office came out
with a report that acknowledges some problems ahead on the
world energy scene -- oil in particular -- with possible adverse
implications for the United States. It's the first time that any responsible party
in the executive branch has acknowledged the situation, but the tenor
of the report was -- how shall I say -- fucking unbelievably stupid and
craven -- insofar as it suggested global oil could top out somewhere
around the year 2030 (possibly sooner!). The poor grinds in the GAO
didn't want to stick their necks out too far on that one.
Independent researchers studying the global oil situation -- including
retired geologists for major oil companies -- have established a pretty
firm consensus that we are already in the zone of the global
oil production peak -- meaning that whether we are just past, passing
now, or passing imminently, the effects are already thundering through
the complex systems we depend on to maintain advanced industrial
societies. For instance, the crashing of Mexico's Cantarell oil field
(60 percent of Mexico's production) means that inside of five years the
US will receive no more imports from what has been its third leading
source. Being in the zone means that the world's oil
exporters in the aggregate will see their exports drop seven to eight
percent this year -- because nations like Saudi Arabia, Iran,
Venezuela, and even Norway are using more of their own oil and have
less to send out. Being in the zone means that new pricing
arrangements will be made, taking the power away from the spot futures
markets in New York and London, and shifting that power to long-term
deals made by nationalized producers like Russia and Iran, who may
decide to embargo consuming nations who don't dance to their tune.
Being in the zone
The more interesting point in all this, for the
moment, is that the media has still not put together the collapse of
the housing bubble and the permanent oil crisis. These events will be
happening simultaneously. The housing industry, so-called, will never
recover because the oil crisis spells the end of the suburban build
out. The cycle is over. The big production homebuilders will go down
and never come back. We won't need any more retail, either. We won't be
building any more WalMarts and Target stores, and the thousands now
running will die off just as the giant Baluchitherium of the Asian
steppes crapped out in the early Miocene epoch.
The end of
the suburban build-out will be a stupendous trauma for the United
States because, unfortunately, we have made it the basis of our economy
for a generation, as well as our living arrangement. Not only will
incomes and livelihoods be lost on the grand scale, and never come
back, but, as the global oil predicament deepens, the existing fabric
of our vast suburbs will become increasingly useless and worthless. The
people stuck in them will lose whatever wealth they have accumulated
and our arrangements for daily life will become increasingly
nightmarish.
This is the part of the story that the mainstream
media still can't put together. Peak oil and the housing bust are a
mutually-reinforcing clusterfuck.
means that people in poorer nations will
starve because so much of the corn grown in North America will go to
ethanol distilleries instead of the dirt-floor kitchens in the Third
World.
LINK: Clusterfuck Nation