Sunday, July 5, 2015

Why Are People Overlooking the Collapse?

Ran had a thoughtful post (June 30) about how his thoughts on collapse have changed over the years. In it, he says:
"The reason I'm no longer a doomer is simply that I got tired of being wrong. And I started to feel contempt for other doomers who shamelessly made the same wrong predictions year after year."
I can  understand that; I've tried to call out what I call "peak oil derp" over the years.

But I think it's less about being wrong than the fact that people misunderstood what collapse was and how it unfolds. Ran's right when he says people's predictions about what would happen were all over the map and hard to pin down. But were the kollpasniks really wrong? Surveying the global scene just now, it seems like they should be taking a victory lap instead.  Bringing this to mind was this article yesterday in The Guardian using the 'C' word: Greek economy close to collapse as food and medicine run short
The survival of the Syriza coalition, formed just over five months ago to repudiate five years of austerity programmes, was in doubt as Greece started to suffer shortages of basic provisions, including the sale of vital drugs in pharmacies nationwide. 
Food staples, such as sugar and flour, were also fast running out on Friday as consumers started to feel the effect of the restrictions. 
“We have shortages,” said Mary Papadopoulou, who runs a pharmacy in the picturesque district of Plaka beneath the ancient Acropolis. “We’ve run out of thyroxine [thyroid treatment] and unless things change dramatically we’ll be having a lot more shortages next week.” 
Greek islands, where thousands of holidaymakers headed this week, have also been hit, with popular Cycladic destinations such as Mykonos and Santorini reporting shortages of basic foodstuffs. More than half of Greece’s food supplies – and the vast majority of pharmaceuticals – are imported, but with bank transfers now banned, companies are unable to pay suppliers. 
Queues were reported at every cash machine in Athens on Friday night and business groups warned that the economic shutdown in the week since Tsipras called the referendum had already caused lasting damage to the economy. 
“Imports, exports, factories, firms, transport – everything is frozen,” said Vasilis Korkidis, who heads the national Confederation of Hellenic Commerce. “The only sectors in demand are food and fuel.”
For another take on the ground, see this: Grexit Crisis (June/July 2015): What hardships are Greek citizens facing under the ongoing economic crisis? (Quora):
Believe me, that is a big difference: young greeks today are put in front of an immigration decision, which is surprisingly attractive for *skilled workers*, the very people that the country needs to increase its competitiveness. Please, take a note of this.

Surprisingly, this immigration wave is sustained by the very aid that is provided to the country by its EU partners; unfortunately, that aid pays back for the country's past (hello German taxpayers, please check that line out, because much of the expenses are for french & german banks) rather than the country's future. This is more serious than it appears at first sight: a continuous recession has increased (registered) unemployment to 27% and completely drained economic activity in so many forms. If you walk central streets in Athens, you might be shocked to find more than half of the shops being closed (yes, that kind of closed) in a major commercial street.

The only reason that society still holds together (whatever it holds) is due to family ties - other europeans could be surprised about how many people may be assisted by an old-ager's pension... that's why that is a battleground.

Now, focusing on the hardships, here's a list of what I've seen evidence of:
* wages compression (this is the "better" outcome, really)
* living below poverty line (choose electricity or bread)
* unemployment
* missing mortgage payments, due to any of the above
* losing a house due to the above, even after several years of faithful pay
* people who maintain businesses have to make the arduous decision of "choosing" between paying their obligations and firing an experienced employee. It might seem like a rational choice but it's not that simple in a country that provides inadequate unemployment benefits.

I kept the worst for last:

You might have seen homeless people in many other countries and have become familiar to the view, but this was not the Greece in which I grew up...back then, there was NO chance a homeless would ever be seen in daylight approaching a garbage bin for food. People would jump from all corners to prevent such thing happening. Unfortunately, the preventive forces of society are no longer functioning since quite a while, due to massive poverty...
The latter picture stands in sharp contract with the (technically, more poor) Greece in which I grew up, which has been a jewel under the sun, when it came to social cohesion.

Something is wrong with finance in the modern world, that's pretty clear; and, something is seriously wrong with persistence to fix the numbers, when the humanitarian aspects are left on their own. It's simply called inhumane?
I wonder how many and who of other Europeans think alike in this.
I've just been rereading Dmitry Orlov's Five Stages of Collapse, and it's eerily spot-on to what the Greeks are experiencing right now.

Sounds like collapse to me, doesn't it? And many experts are saying that it's only a matter of time before much of Southern Europe will follow suit.

I wrote What If A Collapse Happened and Nobody Noticed? a couple years ago now. My predictions have held up pretty well. Back when I wrote that, Greece and the Levant were arguably in better shape than they are now. Back then, I didn't mention ISIS because it wasn't even a thing (at least not in the news) and now look at it. Japan continues to stagnate and shrink; the reason the crisis in Greece is as acute as it is is because Greece happens to be in the uncomfortable position of not having its own currency (compare also to the U.S. and Great Britain).

A few weeks ago I wrote about Nigeria which was undergoing something that looked an awful lot like the Peak Oil predictions that the doomers made for America. And similar to the Middle East, this week has seen a pretty bloody spate of attacks in Nigeria by the Muslim fundamentalist Boko Haram movement.

Boko Haram attack caps week of bloodshed in Nigeria (BBC)

Greece, Nigeria, Syria, Iraq. And those are just the most acute cases. The list of failed states has grown since 2005-6 (Peak Petroleum)

Even China, the bright, shining example of prosperity through globalized capitalism, has been hit by a stock market slide which has been almost entirely unreported in the West for some odd reason:

China share slump: Dealers to spend $20bn to halt slide (BBC)
I am, of course, anxiously awaiting the results of Greferendum, although the next few days in Greece will be terrible whoever wins. But we shouldn’t lose sight of other risks facing the world. Some of us have been worrying quite a lot about China — an economy that at market exchange rates is 40 times the size of Greece, and is severely unbalanced. And in the past month, mainly in the past few days, the Shanghai stock index has fallen almost 30 percent. This doesn’t necessarily mean that the feared crisis has come, but it’s definitely not a good sign.
Meanwhile in China (Paul Krugman)

Closer to home, Puerto Rico, a U.S. territory, is also on the verge of default. Many people have had to leave to find work, even though the rich are doing just fine.* Meanwhile, in the U.S. "recovery":
Here is the reason to be somewhat happy with today's jobs report: In June, U.S. employers added 223,000 workers to their payrolls, according to the Bureau of Labor Statistics...Also, the unemployment rate fell to 5.3 percent, from 5.5 percent...Here are the reasons to be less happy with today's jobs report: pretty much everything else. The labor-force participation rate suddenly dropped to a new post-recession low of 62.6 percent, after holding more or less steady for roughly a year. (That's part of why the unemployment rate fell—a smaller fraction of people in the job market.) The last time participation was this low was 1977, when women were still entering the workforce.
Today’s Jobs Report: Cloudy With a Chance of Labor Market Slack (Slate)

It's worth noting that the peak oil movement was out front in arguing that debt defaults were going to wrack the global economy as the ability of the global economy to grow could not keep pace with the exponential growth of debt. I've expressed skepticism that the underlying cause is Peak Oil rather than just the regular crashes of capitalism that happen for a variety of reasons (elite greed, bubbles and manias, economic shocks, debt repudiation, etc.). I could be wrong though, and others like Ugo Bardi make a case that it is related.

What's wrong weren't predictions of collapse, just what it would look like.

People underestimated the ability of extend and pretend. People underestimated the ability of elites to suck wealth into imperial centers even as the living standards of most people deteriorate. People underestimated how normal it all looks from one day to the next. It's less of a wildfire than a glacier. It's like walking across a minefield - if you're not the one who steps on the mine, you just keep pressing forward, and avoid looking too hard to what's going on around you.

But does anyone doubt it *is* happening. How many years have we been waiting for "recovery," at least seven or so?

Greece has rejected the harsh austerity terms offered by the banking cartel. This could mean an exit from the Euro. If the Euro goes down, this could be the end of the many-century long march toward larger and more unified systems, and the beginning of the breaking up and disunification that is one of the harbingers of the breakdown of the existing centralized social order, along with movements around the world toward separatism and secession. As Orlov points out, the nation-state is a very recent creation with a fairly shallow track record historically.

Finally, somewhat related, I've claimed that Stoicism is the ideal philosophy for the age of unravelling that we are going thought. The BBC has an article on that very subject: Putting the Greek back into Stoicism. See also Why Stoicism is one of the best mind-hacks ever (Aeon)

*Ironically, I bumped into a former colleague recently who is moving TO Puerto Rico. He's from Wisconsin, but his wife is from P.R. and actually moved back there recently when she got a job. He's planning on selling the house and moving down there soon. So, again, everyone's circumstance is different.


  1. The crisis in Greece proves nothing about the world coming to an end, anymore than the dot-com bust 15 years ago, the Enron disaster, etc. Greece's problems would never have occurred without the combined straightjackets of the euro, government debt that cannot be defaulted upon, and the anti-property-tax mentality of the southern Europeans (as bad as Tea-baggers where property tax is concerned). Wipe the debt clean, devalue the currency to effect a 50% cut in the wage/price level for domestic goods, tax the piss out of land (10% of value/year) plus a solid tax on improvements to land (1% of value/year) while cutting income/sales taxes and the economy will be booming within two years. All the moaning and groaning about lack of social cohesion etc is by people with special interests (especially property owners) who are trying to obscure the situation.

    1. It's not about "the world coming to an end". It's about the narrative that we thought was driving the future (united Europe!) being undone and losing power. The past two weeks of Archdruid Report posts have been excellent in laying this out.

    2. I'll excerpt from Ran Prieur regarding the Archdruid report (though he didn't mention that blog by name): "Then there are writers ... who enjoy having an audience. Writers who need an audience ... can be trapped in an echo chamber where the audience and the writer prevent each other from changing their thinking."

    3. Greek leaving the euro does mean Europe is falling apart. Look at how far Greece is geographically from to the core euro countries (Germany, France, Netherlands, Belgium, Luxembourg), to speak nothing of the huge differences in the economy. They shouldn't even be in the European Union, much less the Euro until the rest of the Balkans is ready to join northern Europe. They joined because they planned to rip off Germany and France. And the wealthy in Greece did indeed steal huge amounts of the money the country borrowed from Germany and France and now the common folk in Greece have to pay it back. The right solution is for the common people to repudiate the debt while giving Germany and France carte blanche to seize assets of rich Greeks around the world (Germany and France can then impose a trade embargo on Britain and Switzerland until those countries disgorge Greek overseas wealth).

    4. I agree that the proximate cause of the crisis is debt and financial structures, not a resource shortage. But note that the solution you propose, and many people agree with you, is NOT happening. Note that it is also considered politically impossible (e.g. outside of the Overton Window). This post by Ian Welsh makes some good points:

      I don’t know, but I think it’s the winner’s curse: Neoliberalism (and austerity is part of the neoliberal project), has been winning for so long that those who came of age and rose to power during it (essentially all our central bankers, technocrats, and politicians) cannot imagine it would ever lose. The look of incredulity is that of the three hundred pound bully when a 90 pound weakling doesn’t buckle. (Again, this doesn’t mean that the technocrats don’t also think they’re doing the right thing morally.)

      If I were them, and by that I mean “not me in their position, but actually them,” I would crush Greece flat and make an example of it. If Greece comes out of this like Iceland, with a healthy economy in three years, then other populist movements (left or right) will receive proof that their policies can work. Democracy, as opposed to technocratic rule, will gain legitimacy, and so on.

      This is not a prediction; as Machiavelli observed hundreds of years ago, [people] are generally destroyed because they are unable to be either wholly good or wholly bad. Doing the right thing from day one would have been an excellent policy. Having done the wrong thing, these decision makers’ futures are intertwined with it: They will not keep their positions if Europe turns genuinely populist. Worse, that populism will almost inevitably turn against their masters, the oligarchs.

  2. I wish the same could be done with the rich American pigs! Donald Trump and others need to be taught a huge lesson! However, I'm not holding my breath. :P

    1. Trump’s proof positive that getting rich has nothing to do with your contribution to society, or your intelligence, or ability; just luck, social connections, megalomania and thuggery. You’d think Americans would get wise to this, but the propaganda is just too thick.

  3. Thanks for reminding me of the Stock canon of writings which I need to download and study. I grew up in the kind of disintegration into deep poverty that I can't get anyone else to believe happens in this country. Apparently, as the downward slide began and we started moving every year or two, I solidified my own version of Stoicism.

    I see Stoicism in some of the long term homeless people around here. They must creep some people out simply because you can't wave money in front of them and expect them to salivate. They don't live in fear. They don't have Society's choke - chain around their neck anymore, they have learned to shift for themselves.

    1. We tend to forget there are millions (probably billions) of people around the world who have never NOT lived like this. Buddhism is similar- you can never be happy, or even content, if it is dictated by external circumstances beyond your control.

  4. Anonymous - the Archdruid's a good guy and I doubt Ran is taking potshots at him, there are far easier targets. Greer's always emphasing that the collapse is slow, we're in it, and to relax and simplify your life. Much better targets are James Wesley rawles and his nutbag followers, for instance.

    Although I admit Greer writes like he's paid by the word!

  5. Honestly, I really think that much of what's happening now in the Eurozone is in large part the result of how very, very badly designed the euro is as a currency area (for a good summary of what the problems are I like this article: ). This isn't to say that it's the only cause, but simply that very poor policy and poorly designed institutions are making things much worse than they otherwise would have been. I certainly disagree with Bardi mapping the limits to growth story directly onto the situation in Greece, and think that to an extent he's got a bit of confirmation bias there. LTG was supposed to aggregate the globe, and globally things seem far from mirroring Greece.

    However the financial crisis was, IMO, at least in part triggered by high resource costs. And they're going to continue to be an issue, and in aggregate will get worse, same with the costs of changing climate and ecological destruction. And these things will act as a gradually tightening noose around our collective necks. Maybe there'll be the odd nonlinear dislocation, but who knows? The reality is that the whole thing is a giant complex system which we have a very, very poor understanding of. However, the tendency of such systems to hit tipping points and phase changes means that I wouldn't completely write off the possibility for extremely rapid changes.

    I appreciate Prieur's writing, but at times one does wonder whether his thinking is perhaps a little clouded, due to his marijuana habit. Especially when he starts going on about living in virtual worlds the whole time. Also the whole wrong/right thing is unhelpful in the context of what we're talking about. Better to try to assign probabilities to certain types of outcome, rather than binary on/off choices. Besides, people can be wrong for the right reasons and vice versa. If you can't fault someone's reasoning given what they knew at the time, even if they later turned out to be wrong, then there's no big deal.

    1. That’s a good summary. A lot of people agree with that analysis, including Paul Krugman (monetary union without political union is a bad idea). It’s also why I’m so skeptical about Bitcoin. There are only a limited amount of bitcoins by design – how will this artificial scarcity work in a global economy? It’s just a vehicle for speculation. It seems like the idea for “stateless currencies” are even more of a bomb than what’s happening in Greece. Why would anyone upset at fiat money be excited about bitcoin? Fiat money has value because governments say it has value. Okay, sound like a scam. But Bitcoin has value only because a bunch of computer geeks say it has value. Er, um, that sounds even worse to me. It also confirms my view that the current essentially medieval finance system derived from double-entry bookkeeping is the biggest barrier to human flourishing on earth and the biggest driver of environmental and social destruction.

      As the saying goes, even a blind pig finds a truffle now and then. I’m a little more skeptical of those who claim they know what the world is going to look like, for example, we’re all going to be subsistence farmers without a hint of technology in the next twenty years (you know who I’m talking about). Financial collapses happened well before peak oil, and they will happen after it. The question is, is the overall trend going up or down? Right now, they seem down almost everywhere on earth, and the shining examples that are always trotted out (the middle classes of the BRICS, etc.) are looking increasingly tarnished. The Chinese middle classes are getting richer while dying of cancer at 40. Forgive me if I’m unconvinced.


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