I've long been convinced that we (America and really the World at large) were living on borrowed time and that eventually all of the excess of the past half century would finally catch up with us. As little as a couple of months ago, I didn't really think that the current economic crisis would be the big "IT" that so many have been worried about. I actually did believe that this thing could be controlled and that after a year or so of slow economic growth, we'd rebound for a few more years and get to continue "partying on". Evidently I was wrong.
Whether anyone really wants to admit it, and judging by the way most people seem to be going about their happy ways, they don't, it's becoming increasingly clear to those who are actually paying attention that the wheels have fallen off and we are careening out of control into unchartered territory. You can see on Wall Street as the market just can't quite figure out what to do. Helicopter Ben drops some money their way, stocks go up for a day, and then reality sets in again and billions more simply disappear. Meanwhile, commodities are at record highs as a genuine food shortage takes shape and global oil production peaks. Food and gas prices are soaring, retail sales are falling, credit is increasingly difficult to come by and the housing market has completely collapsed.
Americans are leveraged to the max, as deep in debt as they have ever been and the sad thing is, there may be no way out. When one looks at the staggering debt burden that America is under, it begins to sink in that there will never be a way to pay it all back. We are increasingly owned by Chines and Middle Eastern consortiums that for the time being are willing to do their part to prop up their biggest consumer of cheap plastic goods and expensive liquid petroleum. How long that will last is anyones guess, but signs are out there that it might not be much longer.
As I've mentioned many times before, the two biggest threats to modern civilization are runaway climate change and peak oil. That they are happening concurrently will only make matters worse. For nearly three full years, we've been on an undulating plateau of global oil production, unable to surpass the May 2005 production. We still might see a brief increase in production this year, but by this time next year, we'll begin the long and very, very painful decline that will finally bring the world to it's knees.
Energy Use in Human History. Notice Anything?
I have absolutely zero doubt that future historians will consider the Industrial Revolution, of which everyone alive has always been a part of, to be a historic aberration. For all of human history, save for the past 200 hundred years, humans have lived in a low energy, low growth and low subsistence world. Oil, coal and natural gas changed all of that and the past two centuries saw unprecedented population, economic and standard of living growth. We are now entering the final phase of that brief window of prosperity and this time, the ride won't be nearly as fun as the one going up was.
ONE LAST THING TO LEAVE YOU WITH:
The boom in housing is what propelled the past two decades of US economic growth as the manufacturing base that sustained us for most of the 20th century disappeared to China and other havens of cheap labor. There really is no way to sugar coat this so I'll just let the facts speak for themselves. Remember, don't hurt the messenger.
1. US Existing Home Sales- For February, sales were down 23.8% from the previous year.
2. US New Home Sales- For February, sales were down 29.8% from the previous year.
3. American Home Owners lost an average of $338 a week in the value of their home. That comes to $17,576 lost in just one year in the value of ones home. At this rate, I'll be using my mortgage payment coupons as toilet paper in a year or so, so worthless will my house be.
4. If you happen to live in California, it's even worse as home prices fell by an average of $2788 a week or $144,976 total.
As Ilargi says, "Do numbers like that make it easier to understand what is going on? If not, what else can I do to make you wake up?"