Recent travels have taken me to Las Vegas, New Orleans, and of course my home city, Santa Rosa, California. The economies of these places are faring quite differently. House prices in Las Vegas have nosedived, and the urban landscape that stretches away from casino theme parks on the strip is starting to look desperate, with empty storefronts everywhere in evidence. In Santa Rosa, the big indoor shopping mall close to my home is now about one-third empty, with one huge, recently remodeled retail space sitting vacant while a neighboring giant department store sells off the last of its inventory before shuttering for good. Housing prices in Santa Rosa are way down and still dropping fast—now about half what they were three years ago. Meanwhile in New Orleans, an upscale shopping mall I visited had no vacancies (though the shoppers appeared alarmingly few), and house prices are holding up fairly well. Unsurprisingly, folks I spoke to in Louisiana were less worried than ones in California and Nevada.
Differences in perspective are easy to find also within each community. Talk to a person who still has a job and didn’t have much invested in the stock market and you’ll hear a mostly upbeat view of the economy’s prospects; but talk to another person who was recently laid off, or whose retirement savings have shrunk by half or more, and their outlook is decidedly darker.
Are we at the beginning of an epic Depression, or at the bottom of a nasty recession with brighter days only months away? It would seem to be a matter of perspective. Recent bank earnings reports and stock market activity have led many analysts to claim that the economy has indeed reached the bottom of the trough, and that while the recession is not over the worst has passed.
Statements emanating from the White House, the Treasury, and the Fed are ambiguous but generally upbeat: president Obama says dark days still await us, but foresees a return to growth; and secretary Geithner and chairman Bernanke are careful not to talk the market down.
The indicators to which I pay attention lead me to a different conclusion. We are indeed seeing a let-up in the frighteningly rapid financial collapse that began to unfold late last summer. That’s to be expected: all the trillions that are being spent on bailouts and stimulus packages must have some effect—though ultimately it will only be to provide a brief interlude before the storm returns in far greater force.
Why such a bleak forecast?
Real estate prices, and especially prices for commercial real estate, have much further to fall. And that means that mortgage-backed derivatives have further to unwind. The toxic assets that caused so much grief to bankers and investors during the last six months have not really been dealt with, and therefore comprise a time bomb that’s still ticking.
As a result, the banks are still not lending. TARP bailout funds are merely being used to clean up balance sheets while the credit crunch continues unabated. And until the toxic assets are fully and finally dealt with, many of the biggest banks remain functionally insolvent even if they happen to be posting quarterly (bailout-based) profits.
But these reasons for concern pale in importance before the deeper, more profound and systemic problems of our time.
Looming first among the latter is of course the global energy picture. World oil production has hit its ceiling, and though demand and prices are now down, further economic growth will push against energy limits that will constrict further with every passing year. But energy is just one of a spate of limits to growth—a list that includes renewable resources (fish, forests, fresh water) as well as non-renewable ones (phosphorus, zinc, indium). And there are crucial limits not only to sources, but also to environmental sinks (including the atmosphere and oceans) that must absorb the waste outputs of industrial society—most notably, the CO2 emitted by our burning of fossil fuels.
At the same time, the economic crisis is contributing to a fundamental realignment of global finances and power on a scale greater than anything seen since World War II. The neoconservative imperial over-reach of the past eight years created a nexus of problems that cannot be sorted out and solved one by one; at best, a few of the nastiest (having to do with Iraq, Afghanistan, Iran, and Pakistan) can be kept at bay while the world watches the curtain-closing finale of US hegemony. It would be nice to think that all of this can happen in an orderly, gradual way, but with China’s exports down by over a quarter and domestic unrest welling up within that nation and scores of others around the globe, there is no reason to assume that it will.
In short, while surface appearances could lead one to think that not much has changed from the status quo ante, in fact the beams, rafters, and studs that hold up the façade of normal everyday existence in modern industrial society are rotting and crumbling. In essence, we are witnessing the shift from a century of unprecedented growth to a century of contraction. Cheap, abundant energy led to an expansion of population, consumption, and financial leveraging based on a belief in the inevitability of further growth (Colin Campbell puts this so well: “Banks lent more than they had on deposit, confident that Tomorrow’s Expansion was collateral for Today’s Debt” Read more). Fossil fuels represent 85 percent of world energy, and the total amount of energy annually supplied by fossil fuels has almost certainly rounded its inevitable summit and begun its terminal slide.
The down-slope will be long and rough: even though momentous episodic events are no doubt in store, it is probably better to think of this as a “Long Descent” (John Michael Greer) or a “Long Emergency” (James Howard Kunstler) than as complete and sudden dissolution.
I’m tempted to use downhill skiing as a metaphor here in order to convey some morsel of advice as to what we should do to avoid hitting symbolic trees or otherwise coming to unnecessary grief. But in skiing, the downhill bit is the easy and fun part of the experience; getting up the hill takes time and effort (or a powered ski lift). Ironically, for modern society to get to the point of maximum population and consumption was as easy as rolling down a grassy slope. But finding our way peacefully to a lower, sustainable level of population and consumption will be a rocky, uphill march.
If we want to accomplish that march successfully, we need to put ourselves in the proper frame of mind.
We all want some “good” news from time to time. But what’s “good” news and what’s “bad”? Obviously, losing one’s job or home is painful. The media and the government understandably see the preservation of the status quo as good, and anything threatening it as bad. But if we adopt that outlook, we condemn ourselves to a future of endless bad news. In order to make our way through the decades of transition ahead, it’s important that we adopt a longer view, and devote much less effort to preserving a beguiling veneer of normalcy. The more of us who have a long view, the better. Without it, people (including world leaders) will get scared or unrealistically, giddily optimistic and do foolish things.
That’s why it’s important to keep educating one and all about what’s really happening and why. Ultimately we can indeed live perfectly satisfying lives if there are fewer of us, each using much less energy and less stuff. That’s how our species has spent nearly all of its existence on this planet. That’s the true “normal.” If that is our goal, we can chart a course and certainly arrive back in that condition in due time, much the wiser for our high-energy industrial interlude.
The danger comes when those who are making decisions on our behalf don’t realize what is normal, don’t see that as a necessary goal, and try instead to restart the sputtering engine of growth.
How totally last century.