Damned if you do, doomed if you don't

SUBHEAD: All we can do is "minimize the suffering of the herd". Our way of life is over. For good. We’ll have to find other ways.

 By Raul Ilargi Meijer on 4 March 2011 for The Automatic Earth - (http://theautomaticearth.blogspot.com/2011/03/march-4-2011-damned-if-you-do-doomed-if.html)

Image above: "The Silk Road" by Hing Nian Zhang. From (http://worldhistoryto1500.blogspot.com/2010/10/networks-of-communication-and-exchange.html).  

It's somewhat darkly funny, isn’t it: rising food prices are, as we all know, a major factor in the protests in the Arab world, and these protests in turn, according to the FAO, lead to higher food prices (oil being a main driver, for one). Irony, unintended consequences? No shortage of either these days, is there? Damned if you do, doomed if you don't.  

You need look no further than Geithner and Bernanke "saving the US economy" (look at those markets!) in the face of persistent mile-high unemployment, with a fast growing percentage of new jobs paying $10 an hour or less with no benefits. 

Then again, are those consequences really unintended? As the real economy is being gutted to the bone, the rising markets are nothing but a mirage, a talk-to-the-hand scheme devised by the spin masters who know what all of you like to hear and who feed you exactly that. Until their masters decide the time has come when they can't squeeze enough money out of you anymore to justify keeping the game going.  

And then it will all vanish into thin air. And you won't even know what hit you. You’ll be left with a whole load of nothing. No services, no benefits, no jobs, no homes, just a huge bunch of empty bags. Don't let the markets fool you, look at the situation on the ground. That reflects the future much better. We will probably see another set or two of positive numbers for jobs, and the stock markets may not have reached their highest peak. 

But it's all the hot air of false optimism: the economy is irreparably broken. For a while, you can delay debt payments by creating more debt, but that is a dead end street, and the piper waits at the other side. Richard Russell, who's about as old as Noah now, writes about Mary Meeker et al.'s USA Inc. report :
Dead Nation Walking
[..] Mary writes, "Imagine no Army, Navy, Air Force, Marine Corp or Coast Guard, no federal courts or prisons, no national park service, no food and drug administration, no embassies, no salaries for Congress. That's what it would take to finance the budget by 2025 and still pay interest on America's debts, without either raising revenues or reducing entitlement growth. That's certainly not a recognizable America." Later in the article, Meeker notes that the nation's problem is not a revenue problem, it's a SPENDING problem. She writes, "Simple math says that balancing the budget purely by raising taxes would require doubling rates across the board, which would kill growth." So as I see it, what's coming up is a massive cut-back in federal (plus states and municipalities and cities) spending. This is the stark and painful picture of the years ahead.[..] But what about the markets? What of the Dow and the S&P which have been rising steadily for two successive years? As I see it, investors are taking it "one step at a time." Corporate earnings on a year-over-year basis have surged. And that's what investors have tuned in to. As far as the coming cut-backs, investors' attitudes are "We'll worry about that when the time comes. In the meantime, hasn't the 'good ol' USA come out of every tight problem with ringing bells and confetti. We'll do it again, and the hell with the deficits." Recently and rather ironically, I read that consumer confidence was at its highest level in three years. The history of America has been perpetual optimism, or that well-known expression -- "What, me worry?"
Here I'm wondering where that consumer confidence number comes from that Russell talks about. A newly published poll done by NBC and the Wall Street Journal tells a different story. Neil King Jr. and Scott Greenberg write in the Journal:
Poll Finds Support Lacking for Entitlement Reductions
Overall, the new poll found deepening pessimism about the future of the economy and the country's direction. Only 29% thought the economy would get better over the next year, a dip of 11 points since last month and the lowest since August. "This is a country that refuses to feel better," said Mr. McInturff.
What'd they do? Talk to a different set of Americans? And what's that about "A country that refuses to feel better"? Do Americans not want to feel better? Or are they just finding it hard on the back of job losses, eroding pensions and benefits, full frontal attacks on collective bargaining, and all the other blanks anyone amongst you can fill in? There's one line in the article on that poll that's really got to be the money shot of the day:
[..] more than half [of poll respondents] favored bumping the retirement age to 69 by 2075.
See, that's really a great idea: to have people today voice their opinion on the retirement age, 64 years from now, of kids that are 5 year-olds. It says a great deal about the folks who posed the questions, as well as about those who actually responded to such an absurd proposition, and of course about the entire discussion regarding the economy that's pretty much not taking place at all in any serious way, shape or form. 

Whenever you see predictions or polls that include dates like 2050 or 2075, please do realize that you're very simply being punked. The overall message of the poll is that a large majority of Americans don't want significant cuts to entitlement programs. Unfortunately, as Richard Russell indicates, those cuts will come anyway, and soon. 

American leadership has decided that saving banks trumps saving people, and once you're on that road, it’s very hard to get off it. The die is cast, les jeux sont faits, there's no way back. Again unfortunately, there are very few people out there who understand what must of necessity lie ahead.

 The sort of things we hear all over the place is: Buy stocks! or Buy gold! But that's not what we should be listening to, because it's simply not all that simple. Yes, gold is a good investment, but only after you’ve covered your "basic bases", when food and shelter and access to water are taken care of. And when you can afford to sit on it for 5-10 years, or even longer. That will work for some of us, but not for most. 

Sitting on gold when you're hungry, cold, or thirsty doesn't make a lot of sense. Our point of view at The Automatic Earth is that in the near future there will be far too many people who hold gold, but will have to sell to cover losses and/or necessities, and into a buyer's market to boot, to keep the price of gold up. Not a popular view, we know.  

Where and how do we differ from the 'priests of gold'? It all comes down to the extent to which the world as we know it today is going to change. That extent is in our view greatly underestimated. In the world of finance, there is hardly any recognition of even the mere possibility that owning stocks, bonds, or even gold may not necessarily be the best way to go forward. The main thought remains that if you have enough of something "fungible", you can always trade it and buy whatever it is you need. 

But that's not necessarily true. It may be the model we have grown up in, but it's by no means universal. Besides, even if you own a ton of gold, and you have water and food covered, but those around you where you live have not, what exactly is it that you have bought yourself? A prison?

 Our western economic thinking is Flatland 1- (or maybe 2-) dimensional, in the sense that we think we can always buy what we don't have or can't make. That's not how it works, though. In Sri Lanka, or Guatemala, or some small town in the US in the future, you can't just come into a community and offer them a bunch of gold in return for the scarce or only water they have. There are circumstances in which water trumps gold, hard as that may be to believe living in Flatland. 

In a world in which water purification plants are ever more energy extensive and that energy ever more hard to come by, communities even in locations (think cities) in the US will find it increasingly harder to maintain them. The money used to save our zombie banks, and with them the entire mortgage and finance systems, could have been used to save things like water purifying plants, and roads, bridges, sewer systems, and don't let's forget jobs, and, ultimately, people. 

But it wasn't. And that will turn out to be a fatal mistake for many. But before we get there, we’ll have to negotiate a major number of steep speedbumps on the way. Like: what will happen to the US dollar in the near future? We at the Automatic Earth are convinced that reports of its imminent demise are greatly exaggerated. 

Yes, the dollar will eventually die. But it won't be first in line to perish. And that's where many analysts and experts get it all wrong. As I said before, there are very few who understand what goes on. Mike Shedlock is in many aspects an exception, as he proves once more here, addressing precisely that issue:
US Dollar About to Lose Reserve Currency Status - Fact or Fantasy?
A number of sites are commenting on a Bloomberg video in which El-Erian, PIMCO Co-CEO says "Dollar could lose its reserve currency status".
Bloomberg: "Mohammad what does a weak dollar signal to you, a dollar that can't jump up here on a day like we've seen today?" El-Erian: "It is a warning shot to America that we cannot simply assume flight to quality, flight to safety. That people are starting to worry about the fiscal situation in the U.S. They are starting to worry about the level of debt. They are starting to worry about what they hear about states and municipalities. So, I would take this as a warning shot that we cannot assume that we will maintain the standing of the reserve currency as we have in the past."
Fact and Fantasy The first part of what El-Erian said is factual. Here it is again for convenience. "People are starting to worry about the fiscal situation in the U.S. They are starting to worry about the level of debt. They are starting to worry about what they hear about states and municipalities." Those are true statements. Unfortunately, his "warning shot" regarding reserve currency status is fallacious.[..] Global Beggar-Thy-Neighbor Policies It is pretty pale to suggest the end of the US dollar as a reserve currency when countries hold dollars as a function of math, then hold still more dollars to suppress their currencies, hoping to keep their exports up to "stimulate growth". Mathematical Impossibility Another mathematical relationship says the dollar, the pound, the Yen, and the Yuan cannot all be weak at the same time (relative to each other). Yet that is precisely what every country wants. It's mathematically impossible. You can see the effect in rising commodity prices. If commodity prices were a function of the US dollar alone, then they would be rising in US dollar terms alone. Instead there is upward pressure on commodities in all currencies. At some point the desirability to hoard commodities will peak.[..] Will Another Fiat Currency Replace the Dollar? [..] The Canadian and Swiss economies are simply not big enough for them to be global reserve currencies. In regards to the Euro, is Europe in a better fundamental situation than the US? Would it matter even if it was? To answer the second question, please remember trade deficit math. As for the Yuan, it is complete silliness to suggest the currency of a command-economy dictator-led country that will not even float its currency will be some sort of major reserve currency. To the extent that China trades with Russia, South Korea, etc., local reserves in varying currencies can happen (and are happening already), but the global significance of it is wildly overstated. The amounts in question are tiny, as a simple function of math. Will the dollar remain the global reserve currency forever? Of course not. However, it is highly unlikely any of the presumed leading Fiat candidates including the Yuan and the Keynesian wet-dream IMF SDRs (Special Drawing Rights), will take the dollar's place. SDRs are essentially a basket of currencies. The concept of trading in baskets of currencies backed by nothing is even more ridiculous than the existing setup. People do not buy goods and services in baskets of currencies. What can replace the dollar? Gold, or a mechanism like gold that would impose hard restrictions on perpetual deficits is what it takes to restore sanity. However, we may not see a significant move towards gold until there is a massive currency crisis or revolt against fiat currencies in general, not just the US dollar.
And Mish is not the only one who agrees with us on the dollar, as Erik Schatzker and Sree Vidya Bhaktavatsalam write at Bloomberg:
BlackRock's Fink Says He's a 'Big Buyer' of Dollars That Gross Says Avoid
BlackRock Inc.'s Laurence D. Fink, chief executive officer of the world’s largest asset manager, said he’s a "big buyer" of the U.S. dollar, which rival Bill Gross has urged investors to avoid. [..] "I’m a big buyer of the U.S. dollar," as the sovereign- debt crisis in Europe will cause volatility in the region, Fink said [..]
In other words, for the near to medium term future the US dollar is the place to be. Don't forget that we have started to see volatility rear its rising head in many places. It may still be in far away lands for now, but that won't last. 

Once it becomes clear, as in when the markets start falling for real, that there will be no pensions for the boomers and no jobs for their children, we’ll see people in the streets all over the western world too. And the US dollar will be the first flight to safety haven. Gold will have its day, but that day is a long time away, and when it arrives, the world will be a very different place. And there is no perfect reaction or preparation for it. All we can do is "minimize the suffering of the herd". Our way of life is over. For good. We’ll have to find other ways.


Vote for KIUC Board

SUBHEAD: Something worth voting for this time? Perhaps a turning point for KIUC. By Susan Dixon on 5 March 2011 in The Garden Island - (http://thegardenisland.com/news/opinion/mailbag/article_784673ca-46f3-11e0-9f6c-001cc4c03286.html) Image above: Detail of cover of February issue of KIUC Current showing new solar photovoltaic array in Kapaa that recently went online and that KIUC is buying power from. From (http://www.kiuc.coop).

Anyone who gets an electric bill from the Kaua‘i Island Utility Cooperative should receive another post from the utility company in early March. This is not another bill. It’s a ballot listing candidates for the KIUC board.

The idea is to vote. Most people don’t bother. Why? Inconvenience can’t be the problem. You can vote in minutes by mail, online or over the phone. Or are we so accustomed to being run at the whim of off-shore corporations and interests — Borders being the latest casualty — that we fail to see the value of KIUC, a dying breed that is a wholly owned and operated by the people of this island.

Decisions made by the KIUC board are crucial to Kaua‘i’s sustainable future, environmentally and economically. But since the cooperative’s inception, many board members have found it difficult to accept the certainty of change, and act with the urgency necessary to secure the island’s future.

It’s not that they’re doing nothing. It’s just that they tend to move too slowly and hesitate too often.

In recent years, the mix on the board has shifted from a largely timid approach to a more forward-thinking attitude. But that mix needs to shift still more to encourage the often discouraged voice of cooperative members, and include stronger, more contemporary, knowledgeable and open-minded board members.

There are four new candidates running for the board, some with a lot of experience in alternative energy solutions and sustainability. Please don’t throw that ballot in the trash without considering what a well-balanced and informed board might mean to your future.

Take the time to vote, it could mean a brighter future to Kaua‘i and to you.

By Ken Stokes on 27 February 2011 in SusHI - (http://kauaian.net/blog/?p=1633)

A 'green' majority is possible, and new KIUC Board leadership* could help our island finally turn away from 'business-as-usual'.

So, this 2011 Board election is not just another voting moment-- it could be a turning point.

Do we 'get' how BIG this is?

With this prospect and at the urging of friends and colleagues, I feel compelled to run again** this year, so that our Co-op members have a clear choice.

Now, we must ensure that our neighbors and networks grasp this opportunity!

We have three weeks (until March 19) to deliver on our voting potential. The ballots will be in the mail this week, or co-op members (i.e., anyone with a utility bill) can vote online or by phone.

My intentions are made clear in my candidate statement and my comments at the public forum (where my intro comes about 23 min. in).

I am grateful for the parallel efforts of so many island leaders, and I know we can count on each other as we navigate our island's sustainability transition.

We are turning!

* building on trail-blazing efforts by Carol Bain, Ben Sullivan and Jan TenBruggencate ** running with Ben 3 years ago, we fell short by a few hundred votes

By Pat Gegen on 26 February 2011 in e-mail -

Hello Friends: I am writing to humbly request your assistance. I am running for a Director position at KIUC and I need your vote and as many others as I can get. If you believe that KIUC needs to: ~ be more aggressive in pursuing alternative and renewable forms of energy, ~ assist the member / owners decrease their energy usage in smart ways ( demand destruction), and ~ engage members in meaningful discussions regarding Kauai's energy future and be more transparent in the actions of the Board, Then I am the candidate for you. I am asking that if you believe we need the KIUC Board of Directors to embrace the ideas above I humbly request you vote for me and that you share this email with your friends and let them know you support me and my positions. If you would like more information about my positions as well as the other candidates please look at any of the following resources: KIUC's voter's guide: http://www.kiuc.coop/election_candidates_2011.htm The candidates forum held at KCC: http://hawaii.ezstream.com/play/index.cfm?fuseaction=embstay&id=1D22EEFCC1 3 Minute statements recorded by KIUC on Hoike channel 52: 5:18pm on Sat the 26th, 9:09pm on Sun the 27th, 8:31 am and 6:29pm on Mon the 28th, and 8:37am on Tue the 1st of March.

See also: http://thegardenisland.com/news/local/article_44fd3072-3801-11e0-9532-001cc4c002e0.html , http://thegardenisland.com/news/local/article_ce3f6738-3bf8-11e0-ad03-001cc4c002e0.html If you have any questions, feel free to email me back or give me a call. And please, cast your vote for the KIUC Board of Directors (no matter who you choose to vote for) when you get your Ballot. .

Fascism Has Come to America

SUBHEAD: Yes, we tortured Manning, but we can't tell you why -- because we want to protect his privacy! By Chris Floyd 5 March 2011 in Empire Burlesque - (http://www.chris-floyd.com/component/content/article/1-latest-news/2099-a-nation-stripped-bare-fascism-has-come-to-america.html) Image above: A conversion of Obama 2008 campaign poster. From (http://larryswire.blogspot.com/2010/07/obama-is-no-socialist_01.html)

It is a question that has sparked much debate, at least in certain rare quadrants where the unvarnished reality of the American imperium is recognized. But surely now the debate is over. Question it no more; the supposition, the fear, the heartbreaking intimation is a fact. It is real. It is here. Fascism has come to America. And no, it didn't come in jackboots. It didn't come in massed, marching ranks. It didn't come in greasy-haired frothers ranting on a stage. It came with cool. It came with savvy. It came wearing the mask of past evils redeemed by the image of a persecuted minority elevated to power. It came spouting scripture, hugging bright children, quoting pop music, sporting pricey leisure threads. It came on Facebook, it came with 269 cable channels blazing, with I-Pad apps offering Catholic confession and YouTube porn. It came with the Super Bowl, with de la Renta gowns on the Oscar carpet, with 36 brands of dips and chips on the bulging shelves of your local Wal-Mart. It came right in the midst of your ordinary life, as you went to work -- or looked for work -- as you partied, as you courted, as you watched TV, as you worshiped, as you studied, as you played, as you went about the business of being human. As you went about the business of being human, this inhuman thing has come. It has come in your name, wrapped in your flag, claiming your security as its raison d'etre. And in the guise of a young, hip, educated progressive, it has just now declared that anyone who reveals any hidden evil committed by the fascist state is subject to prosecution for a capital crime. That's right. It has revealed that you -- you American citizen, you patriot, you believer in goodness and justice and genuine democracy -- you can be killed by the government if you tell the truth. This is what the administration of President Barack Obama has demonstrated -- indeed, has proudly proclaimed -- in its treatment of the young man it is avowedly, openly torturing for telling the truth about American war crimes, Bradley Manning. There can be no mistaking the meaning, implications and import of Barack Obama's actions. Corporal Bradley Manning has been charged with leaking "classified material," including a video posted on WikiLeaks that showed American forces gleefully shooting up Iraqi civilians with helicopter gunships. Manning is also alleged to have obtained thousands of other files detailing crimes, corruption, cover-ups, lies and deceit by American forces and American diplomats around the world. Although American officials have repeatedly said that none of leaks attributed to Manning and to WikiLeaks have caused any bodily harm to any agent of American imperial power around the world, Manning is being accused of "threatening national security" and "aiding the enemy." And who, pray tell, is the "enemy" being aided by the expression of truth? On Thursday, the Pentagon very helpfully spelled it out to the New York Times:

The charge sheet did not explain who “the enemy” was, leading some to speculate that it was a reference to WikiLeaks. On Thursday, however, the military said that it instead referred to any hostile forces that could benefit from learning about classified military tactics and procedures.

It could not be clearer. The release of any information that the American government declares might be of any use whatsoever to any possible "hostile" force -- real, imagined, or possibly run by American provocateurs -- somewhere in the world at some point in time is a crime that can be punishable by death. Thus any person or any entity that reveals embarrassing or criminal facts that the government wishes to keep hidden now stands in the shadow of death. If that is not fascism, there has never been such a thing on the face of the earth. To be sure, American officials say that they will seek only life imprisonment for Manning -- who they are now subjecting to hours of forced nakedness in front of video cameras. But the military judge who will oversee Manning's court martial is entirely free to disregard the prosecutor's stated intention and impose the full penalty for aiding the "enemy." But again, who is the "enemy"? You are the enemy -- if you speak a truth that the government does not want you to reveal. (Of course, if you are an approved and coddled courtier, an eager, scurrying scribe like Bob Woodward, for example, you can reveal all the most secret "classified material" that you like, as long as it comes from savvy insiders "authorized" to praise their bosses and make their rivals look bad.) If you speak this unwanted truth, the government, the president -- the cool, savvy, modern, hip, educated progressive president -- can throw you in jail, subject you to torture, deprive you of sleep, and finally strip you naked in front of cameras to break you down and humiliate you in their efforts to dehumanize you, to grind you down into a piece of meat. 2. Here is the New York Times report on Manning's treatment -- a small, brief story which did not make the front page of the print edition and within a few hours disappeared from the dozens of stories on the front page of the on-line edition:

A lawyer for Pfc. Bradley Manning, [David E. Coombs], the Army intelligence analyst accused of leaking secret government files to WikiLeaks, has complained that his client was stripped and left naked in his cell for seven hours on Wednesday. ... The soldier’s clothing was returned to him Thursday morning, after he was required to stand naked outside his cell during an inspection, Mr. Coombs said in a posting on his Web site. “This type of degrading treatment is inexcusable and without justification,” Mr. Coombs wrote. “It is an embarrassment to our military justice system and should not be tolerated. Pfc. Manning has been told that the same thing will happen to him again tonight. No other detainee at the brig is forced to endure this type of isolation and humiliation.” First Lt. Brian Villiard, a Marine spokesman, said a brig duty supervisor had ordered Private Manning’s clothing taken from him. He said that the step was “not punitive” and that it was in accordance with brig rules, but he said that he was not allowed to say more. “It would be inappropriate for me to explain it,” Lieutenant Villiard said. “I can confirm that it did happen, but I can’t explain it to you without violating the detainee’s privacy.”

This is rich; this shows a devilish irony at work in the PR boiler rooms of our fascist state. Yes, we tortured Manning, but we can't tell you why -- because we want to protect his privacy! We are very concerned about his sacred right to privacy! "I'm sorry," said Sgt. Heinrich Schultz, spokesman for the Auschwitz-Birkenau detention facility. "I can confirm that Mr Shlomo Stern, formerly of Krakow, was indeed stripped naked by guards here, but it would be inappropriate for me to explain why, because it would violate the detainee's privacy." And as Glenn Greenwald reports, Manning was indeed stripped naked again the following night. Coombs himself notes:

PFC Manning was forced to strip naked in his cell again last night. As with the previous evening, Quantico Brig guards required him to surrender all of his clothing. PFC Manning then walked back to his bed, and spent the next seven hours in humiliation. The decision to require him to be stripped of all clothing was made by the Brig commander, Chief Warrant Officer-2 Denise Barnes. According to First Lieutenant Brian Villard, a Marine spokesman, the decision was "not punitive" and done in accordance with Brig rules. There can be no conceivable justification for requiring a soldier to surrender all his clothing, remain naked in his cell for seven hours, and then stand at attention the subsequent morning. This treatment is even more degrading considering that PFC Manning is being monitored -- both by direct observation and by video -- at all times. The defense was informed by Brig officials that the decision to strip PFC Manning of all his clothing was made without consulting any of the Brig's mental health providers.

What is happening here -- as Arthur Silber foretold long ago -- is that Barack Obama is codifying the worst abuses of the Bush Administration (and its predecessors) -- which had usually been committed on the side, in the dark, in secret, behind many layers of "plausible deniability" -- into the open, declared law of the land. This too is facism in action. Indeed, rarely has there been a regime more legalistic than Nazi Germany, where jurists, legislators and civil servants adhered strenuously to the "law" as determined by the will of the ruling clique. And for all those who make a fetish of the "rule of law," here is the end result: law being used by brutal Power to "justify" inhuman treatment of truth-tellers. As we noted here some months ago:

A conversation during Civil War. (From work-in-progress Bright, Terrible Spirit): "But in days past, I was a lawyer. Yes, a lawyer, can you believe it? It seems….ridiculous now, doesn't it? An orderly system meant to govern human society, to establish justice, to advance the progress and enlightenment of the human race. Yet that system, that civil cosmos – to which I was so passionately committed – embraced and protected the most wretched evils, entrenched the powerful in their unjust privilege, oppressed the poor and weak most relentlessly and wickedly, yet at every step – at every step – sang hosannas to itself as some kind of divinity. The "Law" – oh, what a hush of reverence surrounded that word, how deeply that reverence and respect penetrated the heart. Well, my heart, anyway. But in these last few years we have seen – in intense, concentrated, microscopic view – the truth about the law, a truth which too often escaped us in the slow unrolling of peacetime. The truth that there is no law, no Platonic Form out there to which we give paltry representation. There is only power: power in conflict with power, power seeking to drive out power, to establish its dominance, maintain its privilege. Power…acquiesces to law – sometimes – but it never, never bows to it. Power goes along with the law when it is convenient to do so, when it is not too restrictive, when it demands little more than the occasional sacrifice – for the powerful are certainly not above throwing one of their own to the mob when circumstances require. But when it comes to the crisis, power shreds the law like a filthy rag and has its own way. And then you see that the law is nothing but a rag, to be torn and patched and fitted to power's aims. The worst atrocities I have seen or heard of in this war have been committed wholly and completely under the law. This thing I held in such reverence was, is, nothing but a scrap soaked with blood and shit."

This is what the administration of President Barack Obama has brought to open fruition in the United States of America. The debate is over. The question is answered. Facism has come.

Why Growth Won’t Return - Water

SUBHEAD: Users of water, and uses of water, compete for access to dwindling supplies. By Richard Heinberg on 4 March 2011 in Post Carbon Institute - (http://www.postcarbon.org/article/269759-earth-s-limits-why-growth-won-t-return) Image above: water jugs are lined up for 6 hour wait at pump in Abu Shouk camp in Darfur. From (http://postconflict.unep.ch/sudanreport/sudan_website/index_photos_2.php?key=water%20supply).

This article is the third excerpt from Chapter 3 of Richard Heinberg's new book 'The End of Growth', which is set for publication by New Society Publishers in September 2011. In the previous installments, RIchard discusses various factors external to financial and monetary systems that are effectively choking off efforts to restart growth. Below, Richard discusses the impacts of WATER on economic growth.

In future posts, Richard analyzes the impact of FOOD, METALS, CLIMATE CHANGE, POLLUTION, ENVIRONMENTAL DECLINE and NATURAL DISASTERS and more on global economic growth.
Access previous chapters here.


Limits to freshwater could restrict economic growth by impacting society in four primary ways: (1) by increasing mortality and general misery as increasing numbers of people find difficulty filling basic and essential human needs related to drinking, bathing, and cooking; (2) by reducing agricultural output from currently irrigated farmland; (3) by compromising mining and manufacturing processes that require water as an input; and (4) by reducing energy production that requires water. As water becomes scarce, attempts to avert any one of these four impacts will likely make matters worse with regard to at least one of the other three.
There is now widespread concern among experts and responsible agencies that freshwater supplies around the world are being critically overused and degraded, so that water scarcity will increase dramatically as the century wears on. Rivers and streams are being overdrawn, aquifers are being depleted, both surface water and groundwater are being polluted, and sources of flowing surface water—snowpack and glaciers—are receding as a result of climate change.[36]
According to the UN’s Global Environment Outlook 4 (2007), “by 2025, about 1.8 billion people will be living in countries or regions with absolute water scarcity, and two-thirds of the world population could be under conditions of water stress—the threshold for meeting the water requirements for agriculture, industry, domestic purposes, energy and the environment. . . .” [1]
A recent study by a team of researchers at the University of Utrecht and the International Groundwater Resources Assessment Center in Utrecht in the Netherlands estimates that groundwater depletion worldwide went from 99.7 million acre-feet (29.5 cubic miles) in 1960 to 229.4 million acre-feet (55 cubic miles) in 2000.[2] When groundwater is withdrawn and used, it ultimately ends up in the world’s oceans, resulting in rising sea levels. However, the contribution of groundwater to sea-level rise will probably diminish in the decades ahead because, in the words of water expert Peter H. Gleick of the Pacific Institute, “as groundwater basins are depleted, there won’t be as much water left to send through rain clouds to the oceans.”[3]
In the U.S., the Colorado River—which supplies water to cities such as Phoenix, Tucson, Los Angeles, Las Vegas, and San Diego, as well as providing most of the irrigation water for the Southwest—could be functionally dry within the decade if current trends continue.[4] The snowpack in the headwaters of the Colorado River is decreasing due to climate change and is expected to be at 40 percent below normal in the coming years. Meanwhile, withdrawals of water continue to increase as population in the region grows.
It is important to distinguish between water withdrawal and water consumption. Water withdrawal represents the total water taken from a source while water consumption represents the amount of that water withdrawal that is not returned to the source, generally lost to evaporation. [5]
Three billion inhabitants of southern Asia (nearly half the world’s population) face a similar crisis: they depend for their water on the great river systems that flow from the melting glaciers and snow of the Himalayas—the Ganges, Indus, Brahmaputra, Yangtze, Mekong, Salween, Red River (Asia), Xunjiang, Chao Phraya, Irrawaddy, Amu Darya, Syr Darya, Tarim, and Yellow River. Here again, climate change is reducing the amount of snowpack and shrinking ancient glaciers, while growing populations and expanding economies are making ever-increasing demands on these key waterways.[6]
Life-threatening water shortages have already erupted in parts of Africa. In 2009, Somaliland was gripped by a drought that left thousands of families and their livestock seriously weakened for lack of drinking water. Many water wells dried up altogether, and those that still had water had to serve very large populations, including about 100,000 people displaced by the drought.[7]
Agricultural irrigation accounts for 31 percent of freshwater withdrawals in the U.S., according to the USGS.[8] The impacts of increasing water shortages on agriculture are illustrated by the dilemma of farmers in California’s Central Valley, one of the most productive agricultural areas in America in terms of crop output value per acre. In 2009, in the throes of yet another punishing drought, farmers in Kern County (located in the southern portion of the Central Valley) received less than half their normal water allotment from Federal and state water projects. The local agriculture is highly water-intensive: for Kern County farmers to produce a single orange requires 55 gallons of water, while each peach takes 142 gallons. As a result of the drought, tens of thousands of acres of Kern County farmland were idled.
As snowpack disappears, farmers, ranchers, and cities make up for the loss of running surface water by pumping more from wells. But in many cases this just trades one long-term problem for another: depleting aquifers. The prime example of this trend is the Ogallala aquifer, a vast though shallow underground aquifer located beneath the Great Plains in the United States, which is being drained at an alarming rate. The Ogallala covers an area of approximately 174,000 square miles in portions of eight states (South Dakota, Nebraska, Wyoming, Colorado, Kansas, Oklahoma, New Mexico, and Texas), and supplies water to 27 percent of the irrigated land in the United States.[9] The regions overlying the aquifer are used for ranching and for growing corn, wheat, and soybeans. The Ogallala also provides drinking water to 82 percent of the people who live within the aquifer boundary.[10] Many farmers in the Texas High Plains are already turning away from irrigated agriculture as wells deepen. In most areas covering the aquifer the water table has dropped 10 to 50 feet since groundwater mining began, but drops of over 100 feet have been recorded in several regions.
In the U.S., only about five percent of freshwater withdrawal is for industrial uses.[11] But these uses support industries that produce, among other things, metals, wood and paper products, chemicals, and gasoline. Industrial water is used for fabricating, processing, washing, diluting, cooling, or transporting products, or for sanitation procedures within manufacturing facilities. Virtually every manufactured product uses water during some part of its production process.
As water becomes scarce, more effort on the part of industry must go toward providing in some other way the same service as cheap water currently provides, almost always at a higher cost. This can mean redesigning industrial processes, or paying more for water brought from further distances.
But moving water takes energy. In California, for example, water pumps use 6.5 percent of the total electricity consumed in the state each year.[12] Desalinating ocean water for industrial, agricultural, and home use also takes energy: the most efficient desalination plants, using reverse osmosis, consume about 2.5 to 3.5 kilowatt hours of energy per cubic meter of fresh water produced.[13]
But if more energy must be used to obtain water as water becomes scarce, more water must be used to obtain energy as energy resources become scarce. Let’s return to our earlier example of Kern County, California. In addition to a vital agricultural economy, the county is also host to a $15 billion oil and gas industry—which likewise happens to be very water-intensive. The heavy oil extracted from Kern County oil wells can only flow into and up boreholes when drillers inject enormous amounts of water and steam—320 gallons for every barrel pumped to the surface. Farmers and oil companies must compete for the same dwindling water supplies.[14]
Electricity production requires water, too. About 49 percent of the 410 billion gallons of water the U.S. withdraws daily (if saline water is included) go to cooling thermoelectric power plants, and most of that to cooling coal-burning plants.[15] Nuclear power plants also need substantial amounts of water to cool their reactors. Even the manufacturing of photovoltaic solar panels requires water—in this case, water of exceptionally high purity (though of relatively very small amounts compared to other energy technologies). According to Circle of Blue, a network of journalists and scientists dedicated to water sustainability, “. . . the competition for water at every stage of the mining, processing, production, shipping and use of energy is growing more fierce, more complex and much more difficult to resolve.”[16]
Most nations have been getting steadily more productive with water—that is, water use per unit of GDP has been going up. This is largely due to the shift from agricultural to industrial water use, and also to boosts in efficiency. There is much more that could be done in terms of the latter: water productivity in most sectors could easily double, triple, or more.
Still, across the world conflicts over scarce freshwater resources are multiplying and intensifying. There are many potential flashpoints; for example: A coalition of countries led by Ethiopia is currently challenging old agreements that allow Egypt to use more than half of the Nile’s flow. Without the river, all of Egypt would be desert.[17] As users of water, and uses of water, compete for access to dwindling supplies, many nations will find continuing economic growth increasingly put at risk.
By itself, water scarcity is not likely to be an immediate limiting factor for economic growth for the U.S., at least for the next couple of decades. But it is already a serious problem in many other nations, including much of Africa and most of the Arab world.[18] And water scarcity subtly tightens all the other constraints we are discussing.
1. United Nations Environment Program, Global Environment Outlook 4 (Malta: Progress Press Ltd., 2007).
2. Yoshihide Wada, et al., “Global Depletion of Groundwater Resources,” Geophysical Research Letters 37 (October 26, 2010).
3. Felicity Barringer, “Rising Seas and the Groundwater Equation,” Green: A Blog About Energy and the Environment, The New York Times, posted November 2, 2010.
4. Tim P. Barnett and David W. Pierce, “When Will Lake Mead Go Dry?” Water Resources Research 44 (March 29, 2008).
5. National Energy Technology Laboratory, Innovations for Existing Plants Program, “Water-Energy Interface,” http://www.netl.doe.gov/technologies/coalpower/ewr/water/power-gen.html.
6. “The United Nations Intergovernmental Panel on Climate Change famously predicted [the Himalayan glaciers] could disappear as soon as 2035. It turns out that guesstimate was based on misquoting a researcher in a 1999 news article—not a result from any kind of peer-reviewed scientific study. The incident reflects a breakdown in the IPCC process but it doesn’t undercut the reality that glacier loss, particularly in what are technically tropical regions such as the Andes and Himalayas, continues to accelerate in the 21st century. Though they likely won’t disappear entirely for centuries, losing the glaciers will eventually be bad news for the billions around the world who rely on meltwater to survive.” David Biello, “How Fast Are the Himalayan Glaciers Melting?” Scientific American podcast, posted January 21, 2010, http://www.scientificamerican.com/podcast/episode.cfm?id=how-fast-are-himalayan-glaciers-mel-10-01-21. Actual melt rates are a matter of ongoing study, but there is general agreement that, on the whole, the glaciers are retreating rapidly. In the Indian Himalaya, the Chhota Shigri Glacier has retreated 12 percent in the past 13 years and the iconic Gangotri Glacier, where the River Ganga originates, has retreated 12 percent in the past 16 years. See Richard S. Williams, Jr., and Jane G. Ferrigno, eds., Glaciers of Asia, U.S. Geological Survey Professional Paper 1386–F (Washington, DC: U.S. GPO, 2010), online at http://pubs.usgs.gov/pp/p1386f/.
7. “Desperate Water Shortage in Somaliland,” Inside Somalia, posted August 4, 2009.
8. Nancy L. Barber, “Summary of Estimated Water Use in the United States in 2005,” U.S. Geological Survey, 2009, http://water.usgs.gov/watuse/.
9. Kevin F. Dennehy, High Plains Regional Groundwater Study, U. S. Geological Survey Fact Sheet FS-091-00, 2000, http://co.water.usgs.gov/nawqa/hpgw/PUBS.html.
10. Paul D. Ryder, “High Plains Aquifer,” in Groundwater Atlas of the United States: Oklahoma, Texas, U.S. Geological Survey publication HA 730-E, 1996, http://pubs.usgs.gov/ha/ha730/index.html.
11. Barber, “Summary of Estimated Water Use in the United States in 2005.”
12.“Industrial-Agricultural Water End-Use Efficiency,” California Energy Commission website, http://www.energy.ca.gov/research/iaw/industry/water.html.
13. “Membrane Desalination Power Usage Put in Perspective,” American Membrane Technology Association, April 2009,
14. Jeremy Miller, “California Drought is No Problem for Kern County Oil Producers,” Circle of Blue, posted August 24, 2010.
15. Barber, “Summary of Estimated Water Use in the United States in 2005.”
16. Peter Boaz and Matthew O. Berger, “Rising Energy Demand Hits Water Scarcity ‘Choke Point’,” IPSNews.net, posted September 22, 2010, http://ipsnews.net/news.asp?idnews=52939.
17. “Ethiopia and Egypt Dispute the Nile,” BBC News, posted February 24, 2005.
18. Alistair Lyon, “ Arab World to Face Severe Water Scarcity By 2015,” Ottawa Citizen, November 4, 2010.

Build a Self-Watering Container

SUBHEAD: Construct your own reliable waterer with a few easily scavenged materials and about an hour’s worth of time.  

By Kelly Coyne and Erik Knutzen on 21 February 2011 in Mother Earth News - (http://www.motherearthnews.com/do-it-yourself/self-watering-container-ze0z11zhir.aspx)

Image above: Illustration of Self Watering Container design. From (http://www.motherearthnews.com/multimedia/image-gallery.aspx?id=2147493501&seq=1).
The following is an excerpt from The Urban Homestead by Kelly Coyne and Erik Knutzen (Process Media, 2010). Homesteading from their bungalow two blocks off of Sunset Blvd. in Los Angeles, Coyne and Knutzen offer up scores of tips and step-by-step projects for sustainable, self-reliant living in a bustling metropolis. With more and more urbanites looking to become farmers and gardeners, Coyne and Knutzen’s fantastic guidebook couldn’t be timelier, and the duo’s lighthearted, thrifty approach to self-sufficiency shows there is greater power and happiness in creating than in spending. This excerpt is from Chapter 2, “Essential Projects.”
These containers make it easy to grow vegetables in pots. They are ideal for apartment gardening, but are so useful that everyone should consider using them to maximize their growing space.

The problem with growing food in pots is that pots dry out quickly and it’s all too easy to forget to water. Irregular watering causes all sorts of problems for sensitive fruits and vegetables. Container gardening is also water-intensive. During a heat wave it may mean visiting the plants with the watering can two or even three times every day — obviously not a practical scheme for someone who works away from home, or someone with any kind of life at all.

An elegant solution exists in the form of self-watering containers. Rather than having a hole in the bottom of the pot, a self-watering container (SWC) has a reservoir of water at the bottom, and water leaches upward into the soil by various mechanisms, keeping it constantly moist. The top of the pot is covered with a layer of plastic that discourages evaporation. Depending on how deep the water reservoir is, it’s possible to go about a week between fill-ups. This arrangement, combined with the plastic layer, prevents both over-watering and under-watering that can occur with conventional pots. In other words, it takes the guesswork and anxiety out of watering.

Kelly says: I’m going to tell you right now that you can buy yourself a self-watering container at earthbox.com. It’s great to make SWCs with found materials and all, but if these instructions make your eyes cross, or if you just don’t have time, there is no shame in trotting off with your credit card and ordering a couple of these ready-made. They start at about $40.

Erik says: Au contraire, ma petite amie! All it takes is two 5-gallon buckets, a few other easily scavenged items and about an hour’s worth of time. Those Earthboxes are damned expensive and my time is cheap.

A few years back, an Internet hero named Josh Mandel figured out several different techniques for building DIY self-watering containers out of old buckets, soda bottles, storage tubs, etc. His plans are widely disseminated online, and you’ll find links to his instructional PDF files on our website.
Inspired by Mandel’s methods, we started making our own self-watering containers. Each SWC is a little different, because each one, being made of found materials, is an improvisation. We’re going to show you how to make a simple SWC out of two 5-gallon buckets. (See several of these 5-gallon self-watering containers in use on a Chicago rooftop garden.) After you have the basic principles down, improvising future containers on your own out of whatever you have on hand should be easy.

The 5-gallon size described is good for one big plant. Try a basil plant in it, especially if you like pesto. Basil thrives with the steady moisture, as does Italian parsley, so both herbs grow huge in SWCs. Or plant a tomato, but be sure it is a small tomato. Look for types designated “patio” or “basket” tomatoes. These are bred to perform well in tight conditions. A 5-gallon container may seem big, but tomatoes have some of the deepest roots of all vegetables. If you plant an ordinary tomato in a SWC, its roots may find their way into the reservoir, and then it would become waterlogged.

For your next project, we recommend that you visit Josh Mandel’s PDFs for instructions on how to construct a larger, slightly more complex container out of 8- to 10-gallon storage tubs. That size SWC is good for growing a little salad garden, a stand of greens, a patch of strawberries or even a blueberry bush.

5-Gallon Self-Watering Container Instructions

It all starts with providing a water reservoir at the bottom of your container. You can do this either by nesting two containers together (the top one holds soil, the bottom one water), or by making some kind of divider that sits toward the bottom of a single container and holds the soil above the reservoir. However you construct it, the barrier between the soil and water should be full of small holes for ventilation.

The water is pulled up from the reservoir and into the soil by means of something called a wicking chamber. This can be a perforated tube, a basket, a cup or anything full of holes that links the soil to the water. The soil in the chamber(s) becomes saturated, and it feeds moisture to the rest of the soil.
The reservoir is refilled by means of a pipe that passes through the soil compartment down to the very bottom of the container.

The last essential element is a hole drilled into the side of the container at the highest point of the reservoir. This is an overflow hole that prevents you from oversaturating your plants.

2 food-grade, 5-gallon plastic buckets (if possible, one of them should have a lid) 

1 16-ounce plastic drink cup, or a 32-ounce plastic yogurt container, or anything similar that you can punch holes in (a plastic bucket of similar size would work, too) 

1 bucket lid (can substitute a plastic garbage bag in a pinch) 

Plastic twist ties 17 inches of 1-inch-diameter 

PVC pipe, copper tubing, a bamboo tube or anything similar 

A big bag of potting mix
Drill Keyhole saw, safety knife or saber saw
Find two food-grade, 5-gallon plastic buckets. A good source is behind restaurants and doughnut shops. If they once held food, you know they aren’t going to be toxic (but do wash them). Don’t source your buckets off of construction sites!

 Cut a hole right in the center of the bottom of one of the buckets. The yogurt container or whatever you are using is going to sit in this hole, so it hangs down into the water reservoir below (the bottom bucket), and act as your wicking chamber. Do this by tracing an outline of the cup on the bottom of the bucket, and then cutting a little inside the line. Use a safety knife, or a keyhole saw for this. It doesn’t have to be pretty.

All you have to make sure of is that your wicking chamber will fit in that lower bucket. If the chamber is too tall, you won’t be able to fit the two buckets together. This is something that is easy to adjust as you go, but just keep it in mind from the beginning.

To give you an idea of sizes, we have one SWC made from two 5-gallon Kikkoman soy sauce buckets. For that one the wicking chamber is a 32-ounce yogurt container, and it hangs down 3 1/2 inches into the reservoir.

 Cut another hole in the bottom of the same container, anywhere near the outside edge (anywhere but the center). This hole is for the pipe that will refill the reservoir and should be sized accordingly. Again, just trace around one end of your pipe and cut.

Now drill a bunch of 1/4-inch holes in the remaining real estate on the bottom of this same bucket. The exact number or spacing does not matter; these are ventilation holes. Go for a Swiss cheese effect, but don’t get too carried away. Leave the other bucket intact.

Now turn to your wicking chamber — the drink cup or yogurt container. Punch or drill a bunch of random 1/2-inch holes all over the sides of the cup, but not the bottom (the soil would fall out if the bottom were open). These big holes will allow water to seep into the soil in the chamber and thus be drawn into the soil above.

Attach the wicking chamber to the bottom of the top bucket. This is a very loose affair, consisting of four twist ties. Just drill holes at the 12, 3, 6 and 9 o’clock positions just below the top edge of the cup, and drill corresponding holes near the edge of the large hole you cut in the middle of the bucket. Thread plastic twist ties through these holes to secure the wicking chamber so that it hangs beneath the holey bucket.

If necessary, cut the pipe that feeds the reservoir to a good length. You want it to poke out of the top of the container for easy watering. Seventeen inches is just about right for this project. Cut one end of the tube on the diagonal, and put this end down in the bucket. The angled end will allow water to flow freely out of the tube and into the reservoir.

Place the bucket fitted with the suspended wicking chamber into the untouched bucket.

Make your overflow hole. Figure out where the bottom of the top bucket sits in relation to the bottom bucket. Try holding it up to strong light, or employing a ruler. Drill a 1/4-inch hole in the side of the lower bucket (the previously untouched bucket), placing the hole just a little beneath the bottom edge of the inside bucket. This hole will serve to spill off overflow from the reservoir chamber. You want the top bucket to be wicking water, not sitting in water.

Finally, insert the watering pipe through the hole you drilled in the bottom of the inner bucket. Be sure to put the pointy end in the bucket. The flat end will stick out the top.

Fill your new container with potting mix. Note that you must use potting mix because regular garden soil doesn’t work very well in SWCs. Fill the container all the way to the top, moistening the soil as you go.

Plant your plant, dead center.

Make a circular, shallow trough around the perimeter of the plant, and sprinkle about a cup dry organic fertilizer in the trench. Then cover the trench up with a little soil so the fertilizer is just slightly buried — don’t work the fertilizer into the soil. You must be careful with fertilizers and SWCs because they are closed systems. Excess fertilizer doesn’t drain away. So always keep it at the top off the container, where it will work its way down gradually.

If you’ve got a lid for the bucket, and your plant is small enough, go ahead and cut a hole in the center of the lid for the plant to poke through, then ease the lid into place, threading the plant’s leaves through the hole. The lid will help retain moisture.

If you don’t have a lid, or if your plant is too big, cut an X in a plastic garbage bag and lay it across the top of the pot, securing it around the sides with a length of tape or string, or if you have a lid for the bucket, you can cut out the center and use the rim to secure the plastic. A how-to video can also be found on our website, Root Simple.

Video above: Quick film on building SWC. From RootSimple.com (http://www.youtube.com/watch?v=aZUCxBHeq04).

See also:
Ea O Ka Aina: Kauai Bucket Gardening 4/14/10


Fate of the Petrodollar

SUBHEAD: The revolutions came at the worst possible time for the empire and are threatening the financial system guaranteeing the Almighty Dollar.  

By Zainab Cheema on 3 March 2011 in Media Monitors - 

Image above: Fuel oil distribution in Asia set against chart of estimated demand by region. From (http://www.zerohedge.com/article/guest-post-peak-denial-about-peak-oil).

 As revolution fans across the Middle East, there are reams of commentary on the reasons behind the spectacular conflagration. Some are sage, such as Shahid Alam’s insightful analysis of the “dignity deficit” that the Muslim world suffers from. Others verge on doomsday comic, pinning the blame on unruly natural causes than self-evident political ones, such as Paul Krugman’s warnings of natural disasters and their impact on world food supply. Even Hillary Clinton, who is usually so serenely autocratic, struck a somber note in a recent Munich visit, declaring that “the status quo is not sustainable.”

Certainly, things will not remain the same. This much is inevitable. However, the motor driving the Middle Eastern revolutions lies elsewhere from long-suffering nature or the shadowy militants that Muammar Qaddafi of Libya or the Khalifa family in Bharain are so desperately trying to pin the tail on. If we really want to hear the Phantom singing in the basement of the Opera House, we should hearken to the tale of the US petrodollar, which has bankrolled the financial and military extravagances of US Empire Inc. from the 1970s.

The Vietnam War brought on a hefty debt crisis (yes, it is expensive to kill villagers in a far off land, as Afghanistan has proven). Under the pressures of Vietnam, combined with the “greed is good” hedonism of the emerging neo-conservatives, Nixon’s government entirely abandoned the gold standard and pinned the dollar’s value on the petroleum guzzling up from Middle Eastern soil. Thus, the petrodollar was born and life was good.

As long as the US leveraged control over the Middle East’s glistening black crude, and the worldwide supply and distribution networks, the Treasury could print dollars without needing to back it up with gold reserves, jobs, trade exchanges, or other material indices of economic health. The petrodollar meant that oil had to be bought and sold in US currency, forcing countries to buy dollars in order to purchase the energy demanded for agriculture, transportation, industry — really, every facet of modern life. As countries worldwide were obliged to purchase dollars for oil, the dollar itself became the US’s biggest export.

The Almighty Dollar indeed! Petrodollars bound the world into the US financial regime, making it impossible to resist what John Perkins calls “economic hit-men” from knocking on countries’ doors and selling “neoliberal reforms” that sold off the country’s assets under the guise of sacral privatization. Modernity came to the third world as a poisonous martini, the flush of dollars in their economies balanced with the bitter after-taste of servitude. What monopoly over oil gave the US was a credit-card without any limits.

The US could simply print the dollars for OPEC oil, while other countries had to trade their goods, services, and resources to the US for the dollars to buy crude. This enabled the US to run on deficit spending, engaging in ballooning consumption under a debt that was essentially shunted on to other countries in Empire Inc. As Wall Street speculated on their control of the world currency flow, the arms manufacturers reaped benefits by the political instability fostered in the Middle East.

As Henry Kissinger noted with typical Lord Voldemort flair, “who controls the energy can control whole continents; who controls money can control the world.” The US economy was a gasoline fueled Disneyland threatened by two specters. First was Peak Oil, the peak production point of existing oil fields in Africa and the Middle East, after which production would decline in the face of growing demand. The second was posed by movements for political and economic independence in the energy producing countries, who had the temerity to believe that they had authority over their natural resources.

Case in point — the 1979 Islamic Revolution in Iran, which significantly disturbed US dominance of Persian Gulf Oil. Iran’s move towards energy independence has actually attracted a significant customer base, including the EU countries, who publicly kowtow to the US but are privately exploring options for breaking the petrodollar.

In fact, economist William Clark believes that US belligerence towards the Iranian nuclear program is a cover for the deeper threat posed by Iranian oil to the gluttonous petrodollar. He writes:
 “Despite the ongoing subterfuge the US and the UK establishment are far more concerned about Iran’s upcoming internet-based oil exchange, or 'oil bourse,' which over time could undermine the petrodollar system, and thus the global supremacy of the US dollar. The decline of the petrodollar means the shift to a multipolar world, the crumbling of American hegemony."
Other threats to the petrodollar abound. Besides Iran, Russia has emerged as a major energy trader, vaulting its oil reserves and access to Central Asia’s fabulous gas fields into political influence. Russia has quietly worked on the sidelines to undermine the exclusiveness of the petrodollar and shift to a basket of currencies for oil trading.

The EU for its part has tried to convert the euro into the world’s reserve currency for oil trading, only to be stymied by the US. In addition, Brazil, Russia India, and China (BRIC) are creating an alternative trading block to the EU, one capable of promoting another reserve currency. All of these “big four” developing countries are significant players in the world’s emerging energy routes. Significant competition, to be sure, but has the US game plan for defending the petrodollar’s role been at the world’s energy-economic nexus?

Given the fact that Peak Oil is widely believed to have already hit Saudi Arabia and other oil producing states, the US is racing against time to cement over its feet of clay by expanding into the Central Asian gas fields. Originally, the race was determined by US’s ability to construct the TAPI gas pipeline across Afghanistan, Pakistan and India, before the Middle Eastern Oil fields became quiescent. The gas fields of Kazakhstan and Azerbaijan are earmarked as the substitute for Arabian and Persian Gulf energy.

However, the cost of destabilizing Pakistan and Afghanistan and subjugating populations along the pipeline route has proved rather steep. Not withstanding the US media’s broadcasted epiphany of American power “waking up” to the democracy as an inalienable right of the Arabs, the recent developments are hardly good news for US economic survival.

The fact that black crude underwrites the free-floating US economy makes clear that any disturbance to the global oil geography signifies an existential threat for American empire. We can track White House reactions to sound out the scale of the crisis.

While the Tunisian Revolution evoked Obama’s noble sloganeering, Egypt began to splotch his pristine white shirts with sweat. The Suez Canal after all, is still the heartline of the global oil transit system. Bahrain, a major oil producer and a strategic piece of real estate at the mouth of the Persian Gulf, began to elicit stammering from the White House Press Secretary.

Libya, the largest oil producer in Africa, has accelerated this palsy into a terse silence, occasionally broken by irrelevant comments about the need to “stop violence.” The US’s refusal to take the military option itself in the current revolutions is perhaps an overt sign of empire’s critical weakness. Before, the US unhesitatingly played the military card at the slightest hint of a threat to its Middle Eastern oil properties.

After all, the Iraq War was sparked by Saddam Hussein’s decision in 2000, to switch to the euro as Iraq’s energy trading currency. George Bush’s triumphal mandate for war contrasts with the wavering and indecision demonstrated by the Obama White House caught between its rhetoric and the material need to dominate a geography that has bankrolled its extravagant prosperity over the past six decades. US power is over-stretched, trembling on the verge of implosion, and the political leaders know it too. The practice of dangling democracy before the Arab world as both a reprimand and a fantasy yanked out of reach by US-funded dictators has paid back a somber coin.

The revolutions came at the worst possible time for empire, when a diversifying energy landscape is threatening the US’s role as prime energy controller and by extension, the very financial system guaranteeing the Almighty Dollar. And then the bill for its $14.13 trillion dollar deficit will finally be stamped and addressed to a US that is already taking stock of its derelict house.


Environmentalist going to prison

SUBHEAD: Climate activist Tim DeChristopher convicted on two felony counts for disrupting a Bush rigged federal land auction.  

By Brian Merchant on 3 March 2011 for Treehugger - 

Image above: Photo of Tim DeChristopher. From (http://www.publicbroadcasting.net/kuer/news/news.newsmain/article/184/0/1499538/RadioWest/42909.Civil.Disobedience).
I'm hanging out at the Garrison Institute this week, bracing myself against a stream of provocative ideas about the intersection between climate change, the human brain, and individual behavior. But this news, needless to say, broke the flow: Famed environmental activist Tim DeChristopher has been convicted on two felony counts, and now faces up to 10 years in prison and fines up to $750,000.

Here's the AP:
An environmentalist has been convicted of making $1.8 million in false oil and gas drilling bids at a federal auction in a case that became a cause celebre among activists and Hollywood stars. Authorities say 29-year-old Tim DeChristopher made the bids to run up the price of 13 oil-and-gas leases near Utah's Arches and Canyonlands national parks but lacked the ability to pay.
A federal jury reached its verdict Thursday, finding DeChristopher guilty of two felony counts of interfering with and making false representations at a government auction ... A University of Utah economics student at the time, he offered to cover the bill with an Internet fundraising campaign, but the government refused to accept any of the money.
This is truly unfortunate -- recall that it was later ruled that the auction that DeChristopher disrupted was improperly conducted, and possibly illegal. DeChristopher engaged in a sort of nonviolent peaceful civil disobedience that's all too rare in the modern era of tepid online blog activism.

The only solace we should take with this is that DeChristopher going to prison will only raise his profile -- and drive his message, that the need for climate action is worth self-sacrifice, further into the mainstream. As Bill McKibben noted in a tweet after hearing the news, ""The government should give him a medal, not a sentence."

Join the growing movement to help DeChristopher on Twitter with the tag #bidder70. .

Collapse of the Old Oil Order

SUBHEAD: Consider the recent rise in the price of oil just a faint and early tremor heralding the oilquake to come.  

By Michael T. Klare on 3 March 2011 in TomDispatch - 

Image above: Awbari lakes in Fezzan, Libya. From (http://landsgenre.webs.com/thecosmiclandscape.htm).
Whatever the outcome of the protests, uprisings, and rebellions now sweeping the Middle East, one thing is guaranteed: the world of oil will be permanently transformed. Consider everything that’s now happening as just the first tremor of an oilquake that will shake our world to its core.

For a century stretching back to the discovery of oil in southwestern Persia before World War I, Western powers have repeatedly intervened in the Middle East to ensure the survival of authoritarian governments devoted to producing petroleum. Without such interventions, the expansion of Western economies after World War II and the current affluence of industrialized societies would be inconceivable.

Here, however, is the news that should be on the front pages of newspapers everywhere: That old oil order is dying, and with its demise we will see the end of cheap and readily accessible petroleum -- forever.

Ending the Petroleum Age
Let’s try to take the measure of what exactly is at risk in the current tumult. As a start, there is almost no way to give full justice to the critical role played by Middle Eastern oil in the world’s energy equation. Although cheap coal fueled the original Industrial Revolution, powering railroads, steamships, and factories, cheap oil has made possible the automobile, the aviation industry, suburbia, mechanized agriculture, and an explosion of economic globalization.

And while a handful of major oil-producing areas launched the Petroleum Age -- the United States, Mexico, Venezuela, Romania, the area around Baku (in what was then the Czarist Russian empire), and the Dutch East Indies -- it’s been the Middle East that has quenched the world’s thirst for oil since World War II.

In 2009, the most recent year for which such data is available, BP reported that suppliers in the Middle East and North Africa jointly produced 29 million barrels per day, or 36% of the world’s total oil supply -- and even this doesn’t begin to suggest the region’s importance to the petroleum economy. More than any other area, the Middle East has funneled its production into export markets to satisfy the energy cravings of oil-importing powers like the United States, China, Japan, and the European Union (EU). We’re talking 20 million barrels funneled into export markets every day. Compare that to Russia, the world’s top individual producer, at seven million barrels in exportable oil, the continent of Africa at six million, and South America at a mere one million.

As it happens, Middle Eastern producers will be even more important in the years to come because they possess an estimated two-thirds of remaining untapped petroleum reserves. According to recent projections by the U.S. Department of Energy, the Middle East and North Africa will jointly provide approximately 43% of the world’s crude petroleum supply by 2035 (up from 37% in 2007), and will produce an even greater share of the world’s exportable oil.

To put the matter baldly: The world economy requires an increasing supply of affordable petroleum. The Middle East alone can provide that supply. That’s why Western governments have long supported “stable” authoritarian regimes throughout the region, regularly supplying and training their security forces. Now, this stultifying, petrified order, whose greatest success was producing oil for the world economy, is disintegrating. Don’t count on any new order (or disorder) to deliver enough cheap oil to preserve the Petroleum Age.

To appreciate why this will be so, a little history lesson is in order.

The Iranian Coup
After the Anglo-Persian Oil Company (APOC) discovered oil in Iran (then known as Persia) in 1908, the British government sought to exercise imperial control over the Persian state. A chief architect of this drive was First Lord of the Admiralty Winston Churchill. Having ordered the conversion of British warships from coal to oil before World War I and determined to put a significant source of oil under London’s control, Churchill orchestrated the nationalization of APOC in 1914. On the eve of World War II, then-Prime Minister Churchill oversaw the removal of Persia’s pro-German ruler, Shah Reza Pahlavi, and the ascendancy of his 21-year-old son, Mohammed Reza Pahlavi.

Though prone to extolling his (mythical) ties to past Persian empires, Mohammed Reza Pahlavi was a willing tool of the British. His subjects, however, proved ever less willing to tolerate subservience to imperial overlords in London. In 1951, democratically elected Prime Minister Mohammed Mossadeq won parliamentary support for the nationalization of APOC, by then renamed the Anglo-Iranian Oil Company (AIOC).

The move was wildly popular in Iran but caused panic in London. In 1953, to save this great prize, British leaders infamously conspired with President Dwight Eisenhower‘s administration in Washington and the CIA to engineer a coup d’├ętat that deposed Mossadeq and brought Shah Pahlavi back from exile in Rome, a story recently told with great panache by Stephen Kinzer in All the Shah’s Men.

Until he was overthrown in 1979, the Shah exercised ruthless and dictatorial control over Iranian society, thanks in part to lavish U.S. military and police assistance. First he crushed the secular left, the allies of Mossadeq, and then the religious opposition, headed from exile by the Ayatollah Ruhollah Khomeini. Given their brutal exposure to police and prison gear supplied by the United States, the shah’s opponents came to loathe his monarchy and Washington in equal measure. In 1979, of course, the Iranian people took to the streets, the Shah was overthrown, and Ayatollah Khomeini came to power.

Much can be learned from these events that led to the current impasse in US-Iranian relations. The key point to grasp, however, is that Iranian oil production never recovered from the revolution of 1979-1980.

Between 1973 and 1979, Iran had achieved an output of nearly six million barrels of oil per day, one of the highest in the world. After the revolution, AIOC (rechristened British Petroleum, or later simply BP) was nationalized for a second time, and Iranian managers again took over the company’s operations. To punish Iran’s new leaders, Washington imposed tough trade sanctions, hindering the state oil company’s efforts to obtain foreign technology and assistance. Iranian output plunged to two million barrels per day and, even three decades later, has made it back to only slightly more than four million barrels per day, even though the country possesses the world’s second largest oil reserves after Saudi Arabia.

Dreams of the Invader
Iraq followed an eerily similar trajectory. Under Saddam Hussein, the state-owned Iraq Petroleum Company (IPC) produced up to 2.8 million barrels per day until 1991, when the First Gulf War with the United States and ensuing sanctions dropped output to half a million barrels daily. Though by 2001 production had again risen to almost 2.5 million barrels per day, it never reached earlier heights. As the Pentagon geared up for an invasion of Iraq in late 2002, however, Bush administration insiders and well-connected Iraqi expatriates spoke dreamily of a coming golden age in which foreign oil companies would be invited back into the country, the national oil company would be privatized, and production would reach never before seen levels.

Who can forget the effort the Bush administration and its officials in Baghdad put into making their dream come true? After all, the first American soldiers to reach the Iraqi capital secured the Oil Ministry building, even as they allowed Iraqi looters free rein in the rest of the city. L. Paul Bremer III, the proconsul later chosen by President Bush to oversee the establishment of a new Iraq, brought in a team of American oil executives to supervise the privatization of the country’s oil industry, while the U.S. Department of Energy confidently predicted in May 2003 that Iraqi production would rise to 3.4 million barrels per day in 2005, 4.1 million barrels by 2010, and 5.6 million by 2020.

None of this, of course, came to pass. For many ordinary Iraqis, the U.S. decision to immediately head for the Oil Ministry building was an instantaneous turning point that transformed possible support for the overthrow of a tyrant into anger and hostility. Bremer’s drive to privatize the state oil company similarly produced a fierce nationalist backlash among Iraqi oil engineers, who essentially scuttled the plan. Soon enough, a full-scale Sunni insurgency broke out. Oil output quickly fell, averaging only 2.0 million barrels daily between 2003 and 2009. By 2010, it had finally inched back up to the 2.5 million barrel mark -- a far cry from those dreamed of 4.1 million barrels.

One conclusion isn’t hard to draw: Efforts by outsiders to control the political order in the Middle East for the sake of higher oil output will inevitably generate countervailing pressures that result in diminished production. The United States and other powers watching the uprisings, rebellions, and protests blazing through the Middle East should be wary indeed: whatever their political or religious desires, local populations always turn out to harbor a fierce, passionate hostility to foreign domination and, in a crunch, will choose independence and the possibility of freedom over increased oil output.

The experiences of Iran and Iraq may not in the usual sense be comparable to those of Algeria, Bahrain, Egypt, Iraq, Jordan, Libya, Oman, Morocco, Saudi Arabia, Sudan, Tunisia, and Yemen. However, all of them (and other countries likely to get swept up into the tumult) exhibit some elements of the same authoritarian political mold and all are connected to the old oil order. Algeria, Egypt, Iraq, Libya, Oman, and Sudan are oil producers; Egypt and Jordan guard vital oil pipelines and, in Egypt’s case, a crucial canal for the transport of oil; Bahrain and Yemen as well as Oman occupy strategic points along major oil sealanes. All have received substantial U.S. military aid and/or housed important U.S. military bases. And, in all of these countries, the chant is the same: “The people want the regime to fall.”

Two of these regimes have already fallen, three are tottering, and others are at risk. The impact on global oil prices has been swift and merciless: on February 24th, the delivery price for North Brent crude, an industry benchmark, nearly reached $115 per barrel, the highest it’s been since the global economic meltdown of October 2008. West Texas Intermediate, another benchmark crude, briefly and ominously crossed the $100 threshold.

Why the Saudis are Key
So far, the most important Middle Eastern producer of all, Saudi Arabia, has not exhibited obvious signs of vulnerability, or prices would have soared even higher. However, the royal house of neighboring Bahrain is already in deep trouble; tens of thousands of protesters -- more than 20% of its half million people -- have repeatedly taken to the streets, despite the threat of live fire, in a movement for the abolition of the autocratic government of King Hamad ibn Isa al-Khalifa, and its replacement with genuine democratic rule.

These developments are especially worrisome to the Saudi leadership as the drive for change in Bahrain is being directed by that country’s long-abused Shiite population against an entrenched Sunni ruling elite. Saudi Arabia also contains a large, though not -- as in Bahrain -- a majority Shiite population that has also suffered discrimination from Sunni rulers. There is anxiety in Riyadh that the explosion in Bahrain could spill into the adjacent oil-rich Eastern Province of Saudi Arabia -- the one area of the kingdom where Shiites do form the majority -- producing a major challenge to the regime. Partly to forestall any youth rebellion, 87-year-old King Abdullah has just promised $10 billion in grants, part of a $36 billion package of changes, to help young Saudi citizens get married and obtain homes and apartments.

Even if rebellion doesn’t reach Saudi Arabia, the old Middle Eastern oil order cannot be reconstructed. The result is sure to be a long-term decline in the future availability of exportable petroleum.

Three-quarters of the 1.7 million barrels of oil Libya produces daily were quickly taken off the market as turmoil spread in that country. Much of it may remain off-line and out of the market for the indefinite future. Egypt and Tunisia can be expected to restore production, modest in both countries, to pre-rebellion levels soon, but are unlikely to embrace the sorts of major joint ventures with foreign firms that might boost production while diluting local control. Iraq, whose largest oil refinery was badly damaged by insurgents only last week, and Iran exhibit no signs of being able to boost production significantly in the years ahead.

The critical player is Saudi Arabia, which just increased production to compensate for Libyan losses on the global market. But don’t expect this pattern to hold forever. Assuming the royal family survives the current round of upheavals, it will undoubtedly have to divert more of its daily oil output to satisfy rising domestic consumption levels and fuel local petrochemical industries that could provide a fast-growing, restive population with better-paying jobs.

From 2005 to 2009, Saudis used about 2.3 million barrels daily, leaving about 8.3 million barrels for export. Only if Saudi Arabia continues to provide at least this much oil to international markets could the world even meet its anticipated low-end oil needs. This is not likely to occur.

The Saudi royals have expressed reluctance to raise output much above 10 million barrels per day, fearing damage to their remaining fields and so a decline in future income for their many progeny. At the same time, rising domestic demand is expected to consume an ever-increasing share of Saudi Arabia’s net output. In April 2010, the chief executive officer of state-owned Saudi Aramco, Khalid al-Falih, predicted that domestic consumption could reach a staggering 8.3 million barrels per day by 2028, leaving only a few million barrels for export and ensuring that, if the world can’t switch to other energy sources, there will be petroleum starvation.

In other words, if one traces a reasonable trajectory from current developments in the Middle East, the handwriting is already on the wall. Since no other area is capable of replacing the Middle East as the world’s premier oil exporter, the oil economy will shrivel -- and with it, the global economy as a whole.

Consider the recent rise in the price of oil just a faint and early tremor heralding the oilquake to come. Oil won’t disappear from international markets, but in the coming decades it will never reach the volumes needed to satisfy projected world demand, which means that, sooner rather than later, scarcity will become the dominant market condition. Only the rapid development of alternative sources of energy and a dramatic reduction in oil consumption might spare the world the most severe economic repercussions..