Saturday, May 24, 2008

something's fishy

Crow here with another report from the perch in susan's kitchen. Since it's Friday and she's a bit of a traditionalist I just got reminded of a weird story.

For two years, Larry West's company trucked fuel directly from Mississippi River barges to convenience stores between Houston and Corpus Christi, Texas. He didn't pay a penny in tax, claiming he was distributing "petroleum distillates,'' not gasoline.

The judge didn't buy it and now Mr. West is in jail.

"With the price of fuel going up and people getting more desperate for it, everything we've been finding since the mafia days, we're going to see that again,'' says a motor-fuels tax associate who represents state revenue agencies in Washington.

It could be argued Mr West is just trying to make a moderately dishonest living but he has nothing on the real criminals our society tolerates. I'm talking about the corporate types who have a charming facade but are basically socially inadequate sharks whose real place in life is mugging pensioners by jumping out of the commercial equivalent of dark alleys. Never get beholden to people like that because they will piss on you and then charge you irrigation fees.

My friend James Howard Kunstler says it better so I'll just paraphrase his excellent Alternet article which you can read if you want:

Personally, my theory has been that the specter of peak oil pretty clearly implies the inability of industrial economies to continue producing real wealth in the customary way. In the face of this, either consciously or at a more mystical level, the worker bees in banking recognize that, in order to maintain their villas in the Hamptons, money has to be loaned into existence some other way (than in the service of industrial productivity).

We've tried just about everything. There was the so-called service economy, an attempt to replace manufacturing with hamburger sales. Then there was the information economy, in which work would be replaced with knowing about stuff. Then there was the tech thing, which was about bringing internet companies that existed only on the back of cocktail napkins to the initial public offering stage of capitalization -- which allowed a few hundred or so 30-year-old smoothies to retire to vineyards in the Napa Valley while hundreds of thousands of retirees lost half the value of their investment portfolios. Then there was the housing boom, which was all about the creation of more suburban sprawl under the theory that houses (or "homes," in the jargon of the Realtors) represent an obvious sort of wealth, and therefore that using houses as collateral would allow humongous sums of money to be loaned into existence -- along with massive fees for structuring the loans into bundles of bond-like thingies.

This has all failed now because the racket went too far. Every possible candidate for a snookering got snookered.The important part of this is that the money is gone. What makes matters truly eerie is that the "bubble" in suburban houses has occurred at exactly the moment in history when the chief enabling resource for suburban life -- oil -- has entered its scarcity stage.

Certainly the political fallout of all this will be awesome. But it's not about politics, really. It's about the entire society's inability to form a workable new consensus of reality.


Randal Graves said...

If I may steal a favorite phrase from the sharks, we need a civilization-wide paradigm shift.

They're certainly clever enough to come up with more 'get rich quick while screwing everyone else' schemes, but I can't help but think of the garbage episode of the Simpsons. Homer, needing a massive influx of cash, took the crap from other towns and stuffed it in abandoned mines. He was hailed as a hero by Quimby. Then the garbage started coming to the surface and Springfield had to move.

The garbage will someday come to the surface. Problem is, we have nowhere else to move to.

Guess I better start practicing my bartering skills.

Anonymous said...

This is a brilliant description of how we've gotten here. Now I wish I knew how to get back to some sort of economic sanity.

Signed -

Snookered, many times over

Seraphine said...

I love the drawing of the pilsner sharks. That's beautiful Susan.

Regarding being snookered: I sometimes wonder who snookers whom.
Even the brightest minds at Citigroup and Merrill Lynch (and countless other firms) couldn't help themselves out of the mess they got themselves into. Management got massive compensation based on short-term performance and there is no penalty for failure, so of course they took too much risk.
I thought evolution weeded out stupid, but stupid is alive and well.
I'm an optimist. Really. Things will get better eventually.
But in the meantime, there's a lot of pain to be shared. When things get bad, there's a risk everything gets worse.
What happens when there's nobody left to snooker?

susan said...

randal - We do indeed. A couple of weeks ago we watched Mike Judge's movie 'Idiocracy'.. a devastatingly funny take on where this all could be going. Simpson's episode plus one.

dcup - I'm glad you enjoyed it but kudos for the bad tempered hilarity all belongs to James Howard Kunstler.

signed - Snookered Too..

sera - Michael Sowa is a wonderful artist as well as prescient (the picture was painted at least ten years ago and in Germany too).

Yeah, there's a lot of mutual snookering going on as the ignorant continue trying to climb over one another while grinding lots of ordinary people deeper into the mire of debt and dismay.

Overall, big picture-wise, I'm optimistic too but Crow gets very distressed sometimes. Maybe I should stop putting newspapers in the bottom of his visiting cage.

lindsaylobe said...

It’s a good article which sums up the position well. Its true we should have looked for alternatives when peak oil was fist mooted in the seventies and dire changes in consumption and lifestyle were then predicted as necessary and urgent.

Oil spiked at $25 a barrel in the seventies which is the equivalent to day of $126 after you adjust for inflation. So oil is not expensive, we have just become used to living off very cheap unsustainable oil which, although it will never run out it will become inordinately too expensive to extract. The 200 year inflation adjusted graph tells the same story. This time around however you have over 40% of the world (China, India & Brazil) growing at rates of 8-10%, who need energy and oil which could be either be a world blessing or a nightmare dependant upon what policies are followed. But I noticed the are some encouraging signs, London has already adopted a statregy to reduce it emissions by 70 % by 2020 and the signs are that those emerging economies want to act much differently and learn from history. Best wishes

susan said...

lindsay - I'm still hoping Management in this country will rethink the policies of oil consumption and environmental degradation before too much more time has passed. Although it's excellent news that other countries are making bold attempts to revise their requirements based on a new paradigm it remains essential that the US also joins in and ceases to simply deny the obvious. As you well know there is a large, well educated population here many of whom have either lost jobs or are under-employed. There is an overall feel of hopelessness caused by the swift changes in economic security and the continued lack of affordable health care as well as the guilt of knowing we're part of a pariah society that has perpetrated yet another illegal war of terror and torture. Many of us understand we should be working in cooperation toward sustainable lifestyles for everyone on the planet but there's also a significant part of the population who presume that being born in this country gives them an innate right of ownership with all that implies.

It's a complicated situation to say the least. James Howard Kunstler wrote a book called 'The Long Emergency' a few years ago as a dystopian polemic about the possible worst we might suffer if we continue to ignore the real changes you discussed. He wrote it and others of a similar vein because he loves the country and the world it's only a part of and hopes, as all good people do, that we'll learn to share and expand our knowledge into a mature future.

Gary said...

Hi Susan - you got it. There's a theory out there thought that money will flow and grow soon, into the biggest bubble yet - with a boom fueled by speculators, the stock market promoters, investors and fear. Guess what's coming? The green market.

Just watch the start ups, the rapid growth (beyond value), the government boondogles. So you can take the greenbacks out from under the bed and make a quick pile... or hide even more and wait for the kaboom!

We are adaptable I think, but right now free market capitalism has no real challengers in the field...

lindsaylobe said...

That’s all true Susan but the difficulty being faced by many Americans (who have long complained that average incomes have been stagnant) is they remain too engrossed in the struggle to make ends meet to seriously campaign and or co operate in community energy savings ideals. All presidential campaigners have complained about the lack of questions from reporters and the public about the environment and what policies they are going to implement going forward. As far as I can gather all have excellent policies, if that be the case than change could not come sooner, but the danger is politicians once elected are not going to be crusaders for causes which rate lowly with voters. One often-quoted statistical comparison suggests that in real terms the median full-time salary in America is no higher now than it was in the 1970s and with rising food and gas; will soon be well below that figure. At the top end of the salary scale it’s a different story. And across the border currency movements indicate a different story in Canada, reflected in the currency differentials, one appreciating while the US dollar declines. Hopefully the environmental will soon move to a higher rating going forward and there will be more taking up the cause of James Howard Kunstler. In fact the USA with its depth of knowledge could be leading light, but at the momement as you suggest there are many yet to be convinced.
Best wishes

Anonymous said...

But if you blindly support your president without question because he claims to have God on his side, are we talking about a democracy or theocracy? In the Texas county in which I live (which is comprised of over 70% fundamentalist Christians), I think it is fair to say it is a theocracy, not a democracy. I was repeatedly told I was unpatriotic based on my views that we should not be going to war. While walking around the block one day, I realized one of my neighbors was moving and I asked her where she was going. She claimed she was one of the last surviving democrats and they were getting out before they were killed. She was joking but there was a certain seriousness about it, too. I’d only lived there a few months when I met her so hadn’t yet realized that being a Democrat was a crime but it didn’t take long to catch on. I met a vibrant conservative African-American woman who told me she believed a dark cloud resided over our neighborhood. I resisted her notions at the time, too. But all these years later I think both she and the Democratic exodus may have been right about their assessment. There is something very off about a democratic society that flatly denies one side of that democracy.

CDP said...

Bubbles always burst, don't they? Great post.

susan said...

gary - If a money 'bubble' comes along I still won't have any chips to lay on the table - bluff or no bluff. Kaboom, indeed.

The problem I've always seen with free market capitalism is the underlying assumption that resources are infinite. We live in a closed ecologic system and like randal says 'the garbage will one day come to the surface'. That day may not be very far off.

lindsay - It's true that most people have too many practical concerns to be able to afford the luxury of considering the environment - other than making sure somebody cuts the grass so the lawn police don't fine them. The US could be a leading light on the way to sustainability but I don't see it happening in the short term. When your medical insurance policy has a $2000 deductible before it covers anything, then pays at 80% with you paying the other 20% until you've reached your annual out of pocket maximum of an extra $5000.. even the necessity of waging war on poor innocents goes to the back burner.
(btw: That's considered a good med ins deal here.)

minddance - My advice is that unless you're stuck in Texas without hope of reprieve it would be a good idea to look for an alternative somewhere in the othe 49. Although there are small enclaves of sanity there it's generally known to be the home of born again Zionist Baptists. Theocracy is a terrible idea no matter what Theo is being sold to the masses.

cdp - It must be because they're filled with nothing but air - which longs to be free.

Seraphine said...

No, rather than removing it,
another layer of newspaper on
the bottom of Crow's cage is
surely desirable. Unless, of
course, Crow is wearing underpants
(which Crows seldom do).

Seraphine said...

I googled Michael Sowa. Wikipedia calls him "whimsical" which is a great complement indeed.

susan said...

sera - I'm not sure if Crow wears underpants or not since he's usually dressed in a morning coat and nicely pressed pin-stripe trousers when he comes by - unless, of course, he's in disguise.

Whimsical is an excellent word, isn't it?

Seraphine said...

Whimsey is better than mirth, I think. It sounds youthful and carefree. Mirth seems responsible in comparison.

susan said...

sera - Yes, mirth is a little hard-edged. Whimsey, however, is fleeting and means only itself.

Anonymous said...

Susan - great post and I see the signs of the bubble bursting all around me. The "For Sale" signs are everywhere, and there are far fewer house construction projects going on. But for the many suburban homeowners who purchased their homes for the purpose of living in them, there are few alternatives but to ride things out.

susan said...

spartacus - It's true that it's always ordinary, hard working people who get hurt the worst. I think that was Crow's (and Kunstler's) point.

gfid said...

dear old crow. do you think we could start a Crow Party and hit the campaign trail? he makes more sense than so many of the other options.