posted September 13, 2009 06:30 PM         

2009 is going to be colourful, with lots of pink slips, bank statements printed in mostly red, people feeling blue and hair turning prematurely grey. Blame the difficult economic times.

I grew up in such a time. I was born before the Great Depression, which ingrained frugality in me, something reinforced by five years of wartime experience in occupied Holland.

My earliest memories go back to two events: as a three-year-old, I snatched a 2.5 guilders piece -- called a 'rijksdaalder' and having the value of one U. S. dollar then -- from the kitchen table, the weekly pay for our live-in help, and went to the store to buy candies. My mother discovered my childish capitalistic venture when the merchant knocked at the door to bring back the change. My second recollection was when, at the North Sea, I was thirsty but unable to drink from the salty water, and suggested to my father to throw in a piece of wood, as Moses did when the Israelites were confronted with brackish water.

So, two things were drilled into me early in life: money and the Bible, and I have maintained that interest. I also remember that, as a 10 year old, in those pre-penicillin days, I was ordered to stay in bed for six weeks to cure a bladder infection, where I read 100 books. That too has remained an abiding passion.

One of the books I treasure is Yale historian Paul Kennedy's "Preparing for the Twenty First Century." The 1993 book ends with a timely warning: "Nothing is certain except that we face innumerable uncertainties; but simply recognizing the fact provides a starting point, and is, of course, far better than being blindly unaware of how our world is changing."

This point is affirmed by the "The Age of Extremes, the Short Twentieth Century -- 1914-1991," by Eric Hobsbawm, another historian. This 600-page best seller also ends on a sombre note: "We live in a world captured, uprooted and transformed by the titanic economic and techno- scientific process of development of capitalism, which has dominated the past two or three centuries. We know that it cannot go on ad infinitum. The future cannot be a continuation of the past and there are signs that we have reached a point of historic crisis."

Hobsbawm correctly stated that the 20th century ended with the fall of the Berlin Wall, which didn't mean that at that point the 21st century started. The interim from 1991 to 2008, those 17 years of unprecedented profligacy, can be seen as its introduction. I have observed that the rain is always heaviest just before it stops; my chainsaw always has an extra burst of power just before the fuel runs out: that's how I see the time-span of 'irrational exuberance' to quote Alan Greenspan out of context.

We now have reached the point of historic crisis Hobsbawm referred to. The end is here: the end of the age of abundance, the age of subdivisions and two cars and supermarkets and big box stores and drive-to and drive-through whatever, the age of unnecessary upgrading, the age of 'shop till we drop.'

Welcome to a belated start of the real 21st century, an era that will rule the rest of our lives as cruelly as the age of abundance spoiled us rotten. Welcome to ever greater scarcity and ever more necessary restraint. No market magic will remedy this malaise. No government stimulus will turn the tide. We have arrived at 'The Limits of Growth" the title of a book that appeared some 35 years ago under the auspices of the Club of Rome.

Capitalism is defined as the perennial gale of creative destruction. Its goal: to maximize personal consumption, and was designed for a world with some one billion people and abundant natural resources. We now are approaching seven billion of ever more greedy customers with shortages of arable land, fish, oil, water and trees.

The future of limits is here; the age of capitalism is over.

There are simply not enough resources left to satisfy the needs of a rapidly growing population. If all of the world's nearly seven billion people consumed as much as we do in North America, we'd need five Earths to support us all. Earth's 27.7 billion acres of biologically productive land and water can support only about 1.2 billion people at our standard of living and consumption.

I'll make it through all right in the coming age of scarcity, having learned a few things in life. But I worry deeply about our five kids -- all in their first marriage -- and 13 grandchildren. At the very least, they will have less, a lot less.

Kennedy ends his insightful volume with an appeal for spiritual renewal. I believe that all spiritual activity and renewal starts with creation caring.

posted September 13, 2009 06:33 PM         

and reiterates something i have been thinking, about how we have run out of frontiers and how long can capitalism last when expansion has become unrealistic?

posted September 13, 2009 06:46 PM         

That plays for me.
For me it is difficult to not have apocalyptic thoughts lately
I like your phrase much better though.

This will require some mulling, with my Taurus Merc muddler.

A quick thought, -yes we have them occasionally --is Pluto in Cap. The longevity of civilizations, so called empires, and the earth itself possibly breaking all of those proven 'calendars'.
There are many layers to each of the ideas you expressed.

posted September 13, 2009 07:13 PM         

my grandson has his tv privileges removed when he has "issues" that aren't resolving; that wouldn't have worked on me since i was only allowed a half-hour a day anyway - and i came from a home that was paid for by television and radio! it was still considered a luxury.

but what astonishes me is the grownups who, like me, grew up in a saner time and who are fighting with every ounce of strength not to have to give up one new toy or pill or whatever it is, even though we as a nation produce something like 40% of the world's GARBAGE already!

like jwhop, i think global warming is a farce, though i am not sure all its promoters are really as cynical as some would say. many of them really believe it. i personally think the scientifically measured and stated fact that the poles are shifting - NOT reversing(yet, anyway) - has more to do with climate change and the weird ways that some places are getting warmer and others appear to be getting cooler.

as always, adaptability is key to survival. those that cannot adapt will go by the wayside. i have every confidence the earth will continue, barring something huge hitting us and ending the game completely. the question is, will humans be able to give up what they are used to or will we be the next dinosaurs?

posted September 14, 2009 09:41 AM         

British Economist Harry Shutt has been called the Prophet of Doom, he has written many books....so I went looking for Harry quotes.

..... capitalism is a system of accumulation. Profits are made but can’t all be consumed by owners. Extra profits need to be recycled through the market. ‘The only way you can successfully recycle them is to either expand your existing business or diversify into another business,’ says Shutt. ‘It all depends on the ultimate consumer, consuming more and more. It has to grow, growth is built in.’ The problem is that as profits are invested into the market, generating more profits that in turn have to be reinvested, production expands until it reaches a level that can no longer be absorbed by consumers. The market is glutted, and recession results. But the destruction of capital and jobs creates pent up demand for the whole process to begin again in time.

That, in brief, is the business cycle. But Shutt’s argument is that western political leaders have, for years, based their economic strategy on avoiding or limiting the downside of the cycle, a doctrine encapsulated in Gordon Brown’s famous boast of an ‘end to boom and bust’. Credit expansion has been fueled, household debt recklessly encouraged, state services privatized, financial institutions subsidized and regulations banished all in order to find profitable outlets for a burgeoning ‘wall of money’ generated by the system. A high rate of growth is needed to maintain this process, but can’t be sustained because of the weakness of demand in the economy.

The consequence is that money, frustrated in its search for productive activities to invest in, has turned to speculation. ‘When you get to the point that you can’t actually make profits by producing more stuff – organic growth – profits get recycled into speculation,’ says Shutt. ‘In other words, you start placing bets that certain assets will increase in value.’ And once speculation takes hold, it becomes advantageous to bring even more money into the market, because that pushes up the value of assets. Hence, the ‘leveraging’ by speculators – the borrowing of more and more money to speculate on financial assets.

‘Over the last 30 years you’ve had a progressive postponing of the evil day,’ he says. ‘1974/5 was the first financial crisis since the second world war, then you had the 1987 crash, which was inflated away by pumping lots of money into the banks. Then it was shifted offshore. We’ve had the Mexican crisis, the East Asian crisis and the Russian crisis. The big one was the dotcom bubble eight years ago. And since then, we’ve been building up to this one.’

What the prolonged amassing of this huge surplus of capital *** fraud-driven credit bubble, means, according to Shutt, is the inevitable crash – the inexorable end of the business cycle – is going to be far more severe that it would otherwise have been. ‘I think we are looking at negative growth, for an absolute minimum of two or three years and I wouldn’t be surprised if it’s five or ten. That would be a depression,’ he says.

It’s not a cheering prognosis – a protracted downturn of several years with the likely side effects of military conflict and scapegoating of minorities. But Shutt hasn’t finished yet. There is no light at the end of the tunnel, or if there is, it’s very dim. He believes that that this slump will be much more difficult to emerge from than in previous downturns because traditional engines of growth are no longer available to drag us out. Remove debt-fueled consumption and property speculation from the equation, and you are left with anaemic subsititues such as the internet, the service sector and green technology. The arguments of centre-left Keynesian commentators that the answer lies in re-regulating the financial sector and encouraging consumer spending, ignore the fact, says Shutt, that the demand for capital – the availability of new profitable productive activities to invest in – is in long-term decline, and consumer spending power has been exhausted.

posted September 14, 2009 02:48 PM         

even wartime has it's atmosphere of purpose and decisiveness. this is perhaps as much a reason for the continuation of warlike activities as the enemy or scapegoat we are fighting...