Out of the Comfy Zone

SUBHEAD: America is in frozen state of partisan self-denial as we stumble through a haze of Fox TV breaking news alerts.

By Juan Wilson on 3 December 2010 for Island Breath -

Image above: Mashup den with Pat Buchanan on Fox talking about illegal aliens and venereal disease.

For the past couple of years oil prices have been bobbing along in a “comfy zone” that has been acceptable to OPEC. In recent months that has been between $75 and $85 a barrel.

This has represented a manipulated balance not between supply and demand but between the reality we want and reality. As a result we get to see neither. We are treading water economically. At $80 a barrel oil prices have not snuffed out FedEx, UPS, American Airlines, United Airlines, GM, Chrysler, Wal-Mart, Home Depot, etc.

But $80 per barrel does not allow America to “grow” its economy out of the Great Recession. Moreover, whether it is obvious or not, the unemployment level that has hovered at just under 10% is fixed to that cost as well. That’s because when oil prices burst the housing bubble it also burst the finance bubble and that has suppressed the raging beast at the heart of America’s economy - consumerism.

The resulting reduced demand for oil allowed the OPEC producers to pretend that were still key players on the field with all the reserves necessary keep control of the game while the the “comfy zone” on price barely kept up with the cost of their overextended debt on desalinization plants used to water lush golf courses, air-conditioned pools and indoor skiing facilities in the desert.

They are treading water too. The “Comfy Zone” allowed for two years of make believe for America. We really wanted to exit the nightmare free-fall from grace and get back to the American Dream. If we only could jump start our old clunker one more time we could get home safely. Dream on. The Comfy Zone is over.  

A New Phase
As I write this, oil futures are heading within pocket change of $90 a barrel. This number is far short of the $147 a barrel that popped the housing/financial bubble back in the summer of 2008. But it is in an area where even our limping economy cannot be supported.

We are entering an economic era where 2009-2010 will be appreciated as a safe harbor before the deluge. All the bailouts, TARPs, bank borrowing windows, quantitative easing and other herculean efforts to keep the Big Ponzi Scheme intact were founded on the idea that a recovery to pre 2008 economy was possible.

Just about all the western industrial nations have pushed the catastrophic failure of their private financial sector onto the back of the public sector. We doubled-down on a long-shot and lost. Overseas we are about to witness an economic train wreck that will possibly take down the European Union. The line-up: Greece - Ireland - Portugal - Spain - Europe - America.

No, we are far from immune.

Our political parties are in a frozen state of partisan self-denial as they stumble through a haze of Fox News breaking news alerts. They cannot cope with or even admit to our reality. The emerging economies of Asia and South America may go on with expansion for a while, but their industrial enthusiasm will soon have the same head-on collision with reality. The faster they grow the faster they will collapse.  

Little Old Kauai
 With this in mind it’s time to turn again to what we might expect here on Kauai. As we have been predicting for a while (perhaps prematurely) the tourism we rely on will face a crisis. There are converging reasons for this. Of course air fare is a primary one. An inter-island round-trip flight to Oahu I took two weeks ago cost more that $250 for coach.

Cab fare to Honolulu was about $35 one way. Another factor is Kauai’s Lihue airport is a TSA test site for enhanced security with full body porno x-ray scanning and hands on your privates groping. If you don’t think that will hurt Kauai tourism, think again. It’s my bet that Kauai tourism will suffer more than the other islands in 2011.

Another angle will be that Kauai will be virtually sovereign again as oil prices rise. State government from Honolulu will have little sway or leverage across the notorious Kauai Channel. Get used to Federal and State funded projects withering on the vine.

Being on our own will extend to the private sector as well. The shippers and big box stores will have problems carrying on normal business even before oil hits $100 a barrel. In another year or two providing pallets of California strawberries to Costco, stocking Fisher-Price electronic toys to Wal-Mart, and delivering Sears appliance replacement parts by FedEx may not be happening in a place as out of the way as Kauai.

If that’s the case you might need to make some adjustments in your shopping priorities. I would recommend a few guidelines. Assume that;
  • Your current income is as much money as you are likely to make and that in the future your buying power will be diminished. Use money you have (or can pay back in a month) to purchase things.
  • You will need to support local small retailers now so that when they’ll be there when you need them... even if it costs a little more now. Encourage them to stock thinks you want and buy them. Assume you to will be working from home, or close to it yourself.
  • Things that you buy will have to last much longer than you would have expected in the past. Things made of metal, wood, stone or organic fibers will last in a functional way the longest: For example a cast iron pan, wooden cutting board, concrete block, or sisal rug.
  • Buy reliable tools to keep your stuff running and house repaired. Have a solid set of hand tools that don’t need power. Never throw away nuts, bolts screws, washers, electrical wire, tape, and other bits you’ll need to keep things going and build your own stuff.
  • Break up big projects into small modular elements that you can afford now. Get them up and running, even if that means scaling down or adjusting the big picture plans. Think about how to provide your own water, food, power, occupation and entertainment: If not alone then with your neighbors.
Even on this short such notice there is time to prepare for a long slow comfortable glide-path down to self-sustainability in Hawaii. The sooner you start the better that glide-path will be to search for a happy landing in the Stone Age.

Ultimately that is where humanity will reside if we are to persist. The Hawaiians before European contact utilized Stone Age technology and it was an admirably rich culture with sophisticated land and ocean management. Let us hope we here today can do as well.

See also:
Ea O Ka Aina: Here's the Deal 7/5/09 

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