Best Essay of the Decade


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So good, so accurate, that I reproduce it in full...

Submitted by James H Kunstler of Kunstler.com, courtesy Zero Hedge


"Any American influence left in Iraq should focus on rebuilding the credibility of national institutions."

– Editorial, The New York Times

Gosh, isn’t that what we spent eight years, 4,500 lives, and $1.7 trillion doing? And how did that work out? The Iraq war is just like the US financial system. The people in charge can’t imagine writing off their losses. Which, from the policy standpoint, leaves the USA pounding sand down so many rat holes that there may be no ground left to stand on anywhere. We’ll be lucky if our national life doesn’t soon resemble The Revenge of the Mole People.

The arc of this story points to at least one likely conclusion: the dreadful day that ISIS (shorthand for whatever they call themselves) overruns the US Green Zone in Baghdad. Won’t that be a nauseating spectacle? Perhaps just in time for the 2014 US elections. And what do you suppose the policy meeting will be like in the White House war room the day after?

Will anyone argue that the USA just take a break from further operations in the entire Middle East / North Africa region? My recommendation would be to stand back, do nothing, and see what happens — since everything we’ve done so far just leaves things and lives shattered. Let’s even say that ISIS ends up consolidating power in Iraq, Syria, and some other places. The whole region will get a very colorful demonstration of what it is like to live under an 11th century style psychopathic despotism, and then the people left after the orgy of beheading and crucifixion can decide if they like it. The experience might be clarifying.

In any case, what we’re witnessing in the Middle East — apparently unbeknownst to the newspapers and the cable news orgs — is what happens in extreme population overshoot: chaos, murder, economic collapse. The human population in this desolate corner of the world has expanded on the artificial nutriment of oil profits, which have allowed governments to keep feeding their people, and maintaining an artificial middle class to work in meaningless bureaucratic offices where, at best, they do nothing and, at worst, hassle their fellow citizens for bribes and payoffs.

There is not a nation on earth that is preparing intelligently for the end of oil — and by that I mean 1) the end of cheap, affordable oil, and 2) the permanent destabilization of existing oil supply lines. Both of these conditions should be visible now in the evolving geopolitical dynamic, but nobody is paying attention, for instance, in the hubbub over Ukraine. That feckless, unfortunate, and tragic would-be nation, prompted by EU and US puppeteers, just replied to the latest trade sanction salvo from Russia by declaring it would block the delivery of Russian gas to Europe through pipelines on its territory. I hope everybody west of Dnepropetrovsk is getting ready to burn the furniture come November. But that just shows how completely irrational the situation has become… and I stray from my point.

Which is that in the worst case that ISIS succeeds in establishing a sprawling caliphate, they will never be able to govern it successfully, only preside over an awesome episode of bloodletting and social collapse. This is especially true in what is now called Saudi Arabia, with its sclerotic ruling elite clinging to power. If and when the ISIS maniacs come rolling in on a cavalcade of YouTube beheading videos, what are the chances that the technicians running the oil infrastructure there will stick around on the job? And could ISIS run all that machinery themselves? I wouldn’t count on it. And I wouldn’t count on global oil supply lines continuing to function in the way the world requires them to. If you’re looking for the near-future spark of World War Three, start there.

By the way, the US is no less idiotic than Ukraine. We’ve sold ourselves the story that shale oil will insulate us from all the woes and conflicts breaking out elsewhere in the world over the dissolving oil economy paradigm. The shale oil story is false. By my reckoning we have about a year left of the drive-to-Walmart-economy before the public broadly gets what trouble we’re in. The amazing thing is that the public might get to that realization even before its political leadership does. That dynamic leads straight to the previously unthinkable (not for 150 years, anyway) breakup of the United States.

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Interesting town he moved to.

Have not looked into his website deeply yet.

The interruption of the free flow of oil at competitive prices is potentially survivable.

The economic crash will certainly break a few windows.

I wonder what his suggested solutions, actions are?

A...

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Interesting town he moved to.

Have not looked into his website deeply yet.

The interruption of the free flow of oil at competitive prices is potentially survivable.

The economic crash will certainly break a few windows.

I wonder what his suggested solutions, actions are?

A...

How about Iranian and Pakistani nukes passed out to terrorist groups like party favors? Is that something we can ignore?

Ba'al Chatzaf

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How about Iranian and Pakistani nukes passed out to terrorist groups like party favors? Is that something we can ignore?

I don't think the defense of North America is at issue, although we'll have to shut the Mexican border and tighten immigration.

FBI, DIA, NSA, DHS, CIA should be able to round up and neutralize foreign and domestic enemies, if they work together.

"Israel can fend for itself, unless they wish to apply for admission to the Union, which would entitle them

to the protection of the United States, no different than Idaho or New Jersey." [Laissez Faire Law, p.2]

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So good, so accurate, that I reproduce it in full...

Submitted by James H Kunstler of Kunstler.com, courtesy Zero Hedge

"Any American influence left in Iraq should focus on rebuilding the credibility of national institutions."

– Editorial, The New York Times

Gosh, isn’t that what we spent eight years, 4,500 lives, and $1.7 trillion doing? And how did that work out?

Like Wolf, James Kunstler has a gift for exploding state-manufactured mythology in light, seemingly effortless prose. I highly recommend his novel World Made by Hand. Not a libertarian, Kunstler does exhibit an unfortunate blind spot now and then. The article above, for example, reveals his weakness for peak oil theory. But like many great political writers, he's always fun to read, even when terribly wrong.

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The article above, for example, reveals his weakness for peak oil theory.

Not theory, fact.

Kunstler was correct in saying peak cheap, affordable oil which is documented and widely understood by oil industry insiders (despite apparatchik happy talk by Yergin at Cera IHS and Leonardo Maugeri at Eni). Proved recoverable oil reserves at the majors peaked in 2007. Saudi Arabia is producing as much formation water as they are light sweet crude from Ghawar (Twilight in The Desert - video).

Kunstler was also correct in discounting shale. Horizontal frackers are $50 billion in the red. Much of what they are producing is low-energy condensate and NGLs. See Gail Tverberg's analysis linked here http://www.objectivistliving.com/forums/index.php?showtopic=14539

If ISIL knocks out Iraq and Kuwait, we'll see $200 Brent.

F%5B1%5D.%2BWorldwide%2BDiscoveries%2Bby

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Wolf --

Given current and near-term technologies, there is no realistic alternative to a hydrocarbon technology base.

Americans have already proven to be the only ones who have the tech to contain a nuclear meltdown, and even that was "iffy". A nuclear world, even with the portable low-yield Korean nuclear plants, is neither desirable nor yet possible.

Widespread spray-on solar coatings being developed at the University of Florida are many years away from commercial application.

Environmental concerns of wind fields (massive wildlife kills, ELF) are not even being addressed. Not to mention the astroturf protests stifling these projects and the research to improve them.

There are not enough known tech metal reserves to even consider battery power. There is only enough lithium to replace 4-10% of the world's current energy needs, let alone those of the future. Even if we look at vanadium to telescope the efficiency of lithium, most of the known reserves are in China (which has put an embargo on tech metal exports) and Greenland (which mining is illegal under Danish law, due to the admixture of uranium and radium in all known tech metal deposits). There is a little in South Africa, but not enough to be used as anything but a local solution for South Africans. And there is a little in Australia & outlying islands, which carries an entirely different significance. I will get to that.

More importantly, since the beginning of recorded history, there have been "climate shifts" on average of every 650 years. Ocean currents change, jet streams change, and the weather changes. These are natural changes due to sun cycles, rather than anthropogenic. When these occur, there are droughts, food sources dry up in one area or another, and the people affected move on to greener pastures. When these migrations occur, if there's someone already there, to where they are moving, it accounts for most wars and movements of history. There are victor & vanquished, and a new phase begins. This change is a natural cycle, of which the last one occurred around the year 1300. We are overdue.

There are doom-and-gloom prophets, decrying rising oceans and the destruction of civilization. Within the group, there are many contradictions in their assertions. This is because not one of them truly wishes to address any "problems", but each seeks to profit from a manufactured crisis. If you don't have the greenies and their coercive government programs, you have Gazprom stockholders trying to trash-talk the competition. Either way, they play to the same false narrative of "peak oil".

And it IS a false narrative. And I say this , because it is true. There is no shortage of fossil fuels. Actually, except for (maybe) coal, there is no such thing as fossil fuels at all.

We're all taught in elementary school about the ancient tropical paradise of the dinosaurs and ferns and palm fronds, and ponds, and sudden death, and tar pits, and continental folds, and sedimentation, and all that other happy horse pucky. And we are told that this is the cause of oil and gas deposits. The thing is, these things are NOT the source of petroleum and natural gas. (I honestly haven't paid much attention to coal.)

Petroleum and natural gas are the natural byproduct of anaerobic bacteria that consume crustal methane (which is continually being released due to geologic activity), and they excrete petroleum and natural gas. These bacteria have been isolated; there are companies under contract with the US government to produce part of the fuel for our armed forces, duplicating this natural process. As this is an ongoing process, there is actually more petroleum and natural gas available today than there was at the beginning of the industrial revolution.

At this point, current known US hydrocarbon reserves, if extracted, would be enough to provide energy (at projected levels) to the whole world for the next c.800 years (200-250 years coal, 450-500 years oil/gas). As those deposits would be GROWING during that time, it would be expected that the US could power the whole world for the next millenium -- 1000 years.

But that is predicated on having a functional US economy. This is where it gets interesting.

In the '70's President Richard Nixon took the US off the international gold standard, established at Bretton Woods during WW II, to prevent inflationary wardollars and petrodollars from bankrupting Fort Knox. (Whether he was successful is another story.) A negotiated agreement among developed nations included concept of a "basketful of currencies", convertible into US Federal Reserve dollars. As smaller national economies grew, they joined into the group that endorsed this agreement, making the dollar the world's reserve currency. The fact is, all members to this agreement must make their currencies convertible into Federal Reserve dollars.

The reverse is not the case. US dollars are not convertible to other currencies on demand. Any account denominated in dollars is on deposit with the Federal Reserve, but you can't spend it anywhere that is not under control of the Federal Reserve. { Ferenghi 1st Rule of Acquisition: "Once you get their money, you don't EVER give it back!" } And those dollars you have are just electronic "blips" in the Federal Reserve computers -- they do not represent real values. Those computers are just giant electonic "scoreboards", like at sports events, and our dollars are the "score". And the scorekeeper never runs out of points.

We've had this system in place domestically since 1933, and internationally since 1971. And that system is what has actually isolated us from the kind of harrowing economic swings experienced by countries such as Argentina and Russia. But that era could be drawing to a close.

In the last few years, a conference of 5 countries has been attempting to set up a new "basket of currencies", sponsored by economies with gold-based currencies: Brazil, Russia, India, China, and South Africa (B.R.I.C.S.). They agreed to this in principle about two to two-and-a-half years ago, naming it the "BRICS Convention". The first practical application of this was sealed this past week, when Russia and China signed a treaty to do a direct exchange of their own (gold) currencies, and to eliminate as intermediary the US dollar, which has accounted for c.75% of the trade between the two countries.

This eliminates both countries' needs to have dollars.

Rinse & repeat -- what happens a few years down the road? A few defections here, a few defections there, after a few years, the US dollar does not hold up as the reserve currency any longer. We have to start trading for goods to get foreign currencies to do our trade & keep our economy going. How? We don't produce anything besides lawyers and arbitrageurs and worthless derivative economic instruments! So, under this scenario, our nation and economy will be reduced to nothing more than a banana republic, our resources owned by foreigners. We don't even grow our own food, so the first blip in oil supplies could shut down transport, resulting in food shortages in all developed areas inside of three days, food riots, etc. etc. etc.

But I digress.

There are many who see that scenario happening, but I see it differently. Whereas there are those who regard the BRICS nations as an inexorable threat, they have chinks in their armor. (Defects, not chinese people.) The Chinese are going through their own recession right now, and are feeling the negative effects of their own policies. India is falling back into a tribal/caste mentality, and may not be able to hold the center. Brazil needs our continuing help to develop their (and Nigeria's) resources. South Africa is descending into race war. And Russia, well, they are becoming the unwitting pariah of western civ. Not exactly a coalition of giants, in spite of their current places on the world stage.

In the last two years, something has been happening in Australia. Back to Australia.

I mentioned how we could supply the whole world's energy needs for a millenium. New discoveries in southern Australuia have shown that Australia has three times (3 X) the amount of hydrocarbon deposits we do, dwarfing every country and region in the whole world. And they have no compunctions about developing these resources. They have thrown out the greenies from government, repealed the carbon tax laws, and are going full-bore on development.

Australia is about to become the world's economic and energy powerhouse.

And they are going to get everything that goes with it, including our "reserve currency" status, and control of the whole world.












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Petroleum and natural gas are the natural byproduct of anaerobic bacteria that consume crustal methane

Steve,

Thank you for a thoughtful, interesting reply that covered a lot of topics. I quote the above to note that we disagree about petroleum generation. You were on the right track when you said oil has nothing to do with fossils. Respectfully suggest you Google "kerogen."

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The Kurds should be supported. They'll effectively fight if they have the ammo.

Essentially it's shades of Vietnam all over again. Go to war. Win. Withdraw. Lose. Solution? Don't get fooled again (by yourselves).

--Brant

won't work; there's no peak for stupidity

peak oil is secondary to the steady flow of oil: if the Persian Gulf gets blocked, while the US won't be terribly affected directly off the bat, it will precipitate worldwide economic contraction and collapse--and starvation in poor countries

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  • 3 weeks later...

I am thinking there is also more at play to the keystone XL situation. Yeah everyone is up in arms about the environmental aspects but there is another thing going on here.

Let us suppose it was approved and Canada floods the US with as much oil as they can refine. What happens? Price of oil drops. Who is hit harder by high oil prices? USA who has a steady supply of it? Or China. If Keystone was approved the push in Canada to move forward with Gateway to the coast is reduced a lot! The Chinese is willing and will be paying Canada 30-40% above Brent for our shitty oil. Win for Canada (eventually). Thing is it's going to take 3-7 years to get it built after all the regulatory hoops are jumped through. So for now china is blocked. Also with ISIS raising hell in the ME china is blocked from Iraq oil. Same with Libya.

Not all wars are fought with bullets and The US is fucking china over in every way it can.

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Why would China pay more than Brent when Brent will go up and down much like all other types of oil? Oil is pretty much globally priced, unlike natural gas. What price variations there are generally come out of the refining costs and it matters not a whit if a type of crude is available--available where?--if a refinery for that crude is not. The key is sea transport and getting the desired crude to it. Tankers can go all over the world and are easily diverted.

--Brant

I say, pay a lot for Brant (my new motto)

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