The Druid has got it right! Well, there you go!

The restructuring of the world boils down to yet another manifestation of the eternal struggle for the ownership and control of resources. While I'm extremely optimistic long term(because massive savings in energy use are possible and all the alternate and in particular solar type technologies not only avoid the bottlenecks and waste and rising costs of current systems, they provide a solution that empowers communities with benefits from the bottom up) the getting from here to wherever looks rocky. The head honcho Yankee tree lover nails it in regard to the main problem which is in the minds of men, as usual...


I trust my readers won’t be unduly distressed by an extended safari through the tangled jungles of the “dismal science” of economics. As suggested in several recent Archdruid Report posts, economic factors have played a massive role in putting the industrial world in its current predicament, and an even more substantial role in blocking any constructive attempt to get out of the corner into which we’ve painted ourselves. There’s all too real a sense in which, if modern industrial civilization perishes, it will be because the steps necessary for its survival weren’t cost-effective enough.

Mind you, this can be interpreted in at least two different ways, and both of them are relevant to the crisis of the industrial world. Like any other science, economics is a set of hypothetical models that reflect, with more or less exactness, the observed behavior of the world. Too often the models get confused with the reality, and understanding suffers.

In a different context, that of the physics of vacuum tubes, Philip Partner commented in his classic textbook Electronics (1950): “The theory speaks of ions, atoms, and electrons, and of collisions between them; but these are figments of the mind, props for its understanding. [...] The electron, like the atom, is a concept; it is part of a mental shorthand which we have invented to summarize our knowledge of Nature. So when we say, for example, that an electron collides with an atom, we should bear in mind that we have never seen it happen. The use of the present indicative does not turn hypothesis into fact” (p. 569). Unfortunately this level of clarity is hard to achieve and harder to maintain.

This has to be kept in mind when trying to make sense of the economic dimension of industrial civilization’s decline and fall, because both sides of the equation – the models and the reality – throw up challenges in the way of constructive action, and so do economic policies that are based on the models, and thus function at a second remove from the reality. It’s true, and will be a central theme of future posts, that current economic theory has lost touch with reality in critical ways, and a revision of some of the basic ideas of modern economics is essential if we’re to make sense of our predicament and do anything constructive in response to it. It’s equally true that government policies based on today’s misguided economic notions have become massive liabilities to societies struggling to deal with today’s crisis, and even this late in the game, changes in these policies might still do a great deal of good. Still, it’s also true that economic factors in the real world, independent of theory, impose hard limits on what can be done.

The classic example has to be the plethora of projects for “lifeboat communities” floated in recent years. The basic idea seems plausible enough at first glance: to preserve lives and knowledge through the decline and fall of the industrial age, establish a network of self-sufficient communities in isolated rural areas, equipped with the tools and technology they will need to maintain a tolerable standard of living in difficult times. The trouble comes, as it usually does, when it’s time to tot up the bill. The average lifeboat community project I’ve seen would cost well over $10 million to establish – many would cost a great deal more – and I have yet to see such a project that provides any means for its inhabitants to cover those costs and pay their bills in the years before industrial civilization goes away.

The unstated assumption seems to be that as soon as the intrepid residents of such a community move into their solar-heated cohousing units, start up the wind turbines and the methane generators, and get to work harvesting tree crops from the permacultured landscaping all around, industrial civilization will disappear in a puff of smoke and take its taxes, debts, and miscellaneous expenses with it. Pleasant though the prospect might seem, I am sorry to say that this isn’t going to happen. The residents of any lifeboat community founded today will not only have to come up somehow with the very substantial sums needed to buy the land, build the cohousing units, wind turbines and so on, and plant all that permaculture landscaping; they will also have to earn a living during the long transitional process that leads from the world we inhabit today to the conditions that will pertain at the bottom of the curve of decline. Some awareness of these difficulties may go a long way to explain why, of the great number of lifeboat communities that have been proposed over the last decade or two, the number that have actually been built can be counted on the fingers of one foot.

Economic forces constrain the future in more global ways as well. Not many people seem to have noticed, for instance, that the grim scenario traced out in the seminal 1973 study The Limits to Growth – still the most plausible map of the future ahead of us, and thus inevitably the most bitterly vilified – is driven by simple economics. As resources deplete, that study pointed out, the cost of keeping resources flowing into to the economy will increase in real terms, as more labor and capital have to be invested to extract a given amount of each resource; as pollution levels rise, in turn, the costs of mitigating their impacts on public health, agricultural productivity, and other core economic factors go up in the same way, and for the same reasons. Those costs have to be paid out of current economic output, leaving less and less for other uses, until economic output itself begins to fall and the industrial world begins its terminal decline.

Now it’s easy to insist, if you ignore the economic dimension, that a society facing this sort of crisis can save itself by launching a massive program to build nuclear reactors, solar thermal power plants, algal biodiesel, or what have you, and of course this sort of claim has seen endless rehashing over the last couple of decades. The problem is that massive programs of this sort pile additional demands on an already faltering economy. Any such program has to be paid for, after all, and by this I don’t mean that money has to be found for it; in today’s mostly hallucinatory economic climate, conjuring money out of thin air is easy enough. No, it has to be paid out of current economic output, which is much less flexible, and already has to cover the rising costs of resource depletion and pollution. This is the trap hidden in the limits to growth; once those limits begin to bite, the spare economic capacity that would be needed to build one’s way out of trouble no longer exists.

Thus there are limits hardwired into our situation by the inflexible realities that surround us, and we have already strayed far enough over those limits that the payback will inevitably be harsh. At the same time, other forces pushing us in the same direction are a product of economic misunderstandings, and in the way these misunderstandings are reflected in public policy. Those could conceivably be changed in time to matter.

Resource depletion and pollution, the driving forces behind the Limits to Growth scenario, are particularly vexed issues in today’s economic thought. As we’ve seen, both of these factors impose costs, potentially drastic ones, on the economy. Under current economic arrangements, however, those costs are not charged to the people who benefit from the activities in question. The owner of an oil well gets the economic benefits of pumping oil out of the ground, but does not have to pay for the impact today’s extraction will have on tomorrow’s economy. (For many years, in fact, government policies in most of the world’s industrial nations have actually rewarded oil well owners for accelerating the depletion of this nonrenewable resource and imposing massive costs on the future.) In the same way, the owner of a smokestack that dumps pollution into the atmosphere gets the economic benefits of whatever activity produces the pollution, but does not have to pay for the costs incurred as a result of the pollution. This asymmetry has at least two results. First and most obviously, neither the oil well owner nor the smokestack owner has any incentive to decrease the negative impacts of his or her activities. Still, the second and in some ways more important result is that the long-term economic burdens of depletion and pollution are not included in measures of the relative economic costs and benefits of the well or the smokestack.

The result is a massive distortion in our understanding of the realities that shape our lives. It’s generally not considered a viable business plan – outside of the financial industry, that is – to make large profits in the short term by running up debts so large the business will have to declare bankruptcy in the not too distant future. Yet this is exactly what an economic system that ignores the cumulative costs of resource depletion and pollution mitigation is doing, and on an even larger scale. The future costs of extracting resources from depleted reserves and mitigating the impacts of a polluted environment have the same effect as the future costs of debt service on excessive borrowing; they buy temporary prosperity in the near future at the cost of impoverishment or collapse further down the road.

Garret Hardin’s famous essay “The Tragedy of the Commons” addressed this issue some years back. Hardin showed that in a situation where the benefits from exploiting a resource went to individuals, but the costs were spread throughout the community, individuals intent on maximizing their own individual benefit would overexploit the resource and suffer drastic losses in the longer run. His logic was impeccable, and there are plenty of real-world examples of resource exhaustion driven by this very process, but it has been pointed out by his critics with equal relevance that resources held in common have in fact been managed sustainably in countless cases around the world and throughout history. The question that has to be asked is where the difference comes in.

This is where the divide pointed up earlier in this essay – the gap between economic realities and the models our society uses to understand them and predict their effects – comes into play. Hardin was quite correct that when individuals got the benefits of resource exploitation without paying their fair share of the costs to the community, exhaustion of the resource follows. Those societies that have managed resources in common successfully, in turn, found ways to make those who gained the benefits of resource exploitation pay a commensurate share of the costs. The collective understanding of economics in these societies, in other words, and the social policies that shaped economic behavior, took the tragedy of the commons into account and adjusted the customs and laws governing economic exchanges accordingly.

As we make the transition from what I’ve called the abundance economies of the first half of the industrial age to the scarcity industrialism of the near and middle future, it’s entirely possible that such adjustments could be put into place in our own societies. The accumulated burdens of past mistakes weigh heavily enough on the future that changes of this sort won’t stave off a great deal of trouble and suffering, but it’s entirely possible that a shift to saner policies backed by more realistic economic ideas could cushion the descent into the deindustrial age, and make it easier to allocate resources to projects that will actually do some good, instead of pursuing policies which – like nearly all the economic policies currently in place in the industrial world – will simply make matters worse.


http://thearchdruidreport.blogspot.com/2009/06/survival-isnt-cost-effective.html

Appointment in Yekaterinburg ~ Hudson

The Ending of America's Financial-Military Empire

By MICHAEL HUDSON

The city of Yekaterinburg, Russia’s largest east of the Urals, may become known not only as the end of the road for the tsars but of American hegemony too; as the place not only where US U-2 pilot Gary Powers was shot down in 1960, but where the US-centered international financial order was brought to ground.

Challenging America is the prime focus of extended meetings in Yekaterinburg, Russia (formerly Sverdlovsk) today and tomorrow (June 15-16) for Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai Cooperation Organization (SCO). The alliance is comprised of Russia, China, Kazakhstan, Tajikistan, Kyrghyzstan and Uzbekistan, with observer status for Iran, India, Pakistan and Mongolia. It will be joined on Tuesday by Brazil for trade discussions among the so-called BRIC nations --Brazil, Russia, India and China.

The attendees have assured American diplomats that it is not their aim to dismantle the financial and military empire of the United States. They simply want to discuss mutual aid – but in a way that has no role for the United States, for NATO or for the US dollar as a vehicle for trade. US diplomats may well ask what this really means, if not a move to make US hegemony obsolete. After all, that is what a multipolar world means. For starters, in 2005 the SCO asked Washington to set a timeline to withdraw from its military bases in Central Asia. Two years later the SCO countries formally aligned themselves with the former CIS republics belonging to the Collective Security Treaty Organization (CSTO), established in 2002 as a counterweight to NATO.

Yet the Yekaterinburg meeting has elicited only a collective yawn from the US and even European press despite its agenda -- nothing less than the replacement of the global dollar standard with a new financial and military defense system. A Council on Foreign Relations spokesman has said he hardly can imagine that Russia and China can overcome their geopolitical rivalry, suggesting that America can use the divide-and-conquer that Britain used so deftly for many centuries in fragmenting foreign opposition to its own empire. But George W. Bush (“I’m a uniter, not a divider”) built on the Clinton administration’s legacy in driving Russia, China and their neighbors to find a common ground when it comes to finding an alternative to the dollar and hence to the US ability to run balance-of-payments deficits ad infinitum.

What may prove to be the last rites of American hegemony began already in April at the G-20 conference, and became even more explicit at the St. Petersburg International Economic Forum on June 5, when Mr. Medvedev called for China, Russia and India to “build an increasingly multipolar world order.” What this means in plain English is: We have reached our limit in subsidizing the United States’ military encirclement of Eurasia while also allowing the US to appropriate our exports, companies, stocks and real estate in exchange for paper money of questionable worth.

The artificially maintained unipolar system,” Mr. Medvedev spelled out, is based on “one big center of consumption, financed by a growing deficit, and thus growing debts, one formerly strong reserve currency, and one dominant system of assessing assets and risks.” At the root of the global financial crisis, he concluded, is the fact that the United States makes too little and spends too much, particularly its vast military outlays, such as the stepped-up US military aid to Georgia announced just last week, the NATO missile shield in Eastern Europe and the US buildup in the oil-rich Middle East and Central Asia.

The sticking point for all these countries is the ability of the United States to print unlimited amounts of dollars. Overspending by U.S. consumers on imports in excess of exports, U.S. buy-outs of foreign companies and real estate, and the dollars that the Pentagon spends abroad all end up in foreign central banks. These banks then face a hard choice: either to recycle these dollars back to the United States by purchasing US Treasury bills, or to let the “free market” force up their currency relative to the dollar – thereby pricing their exports out of world markets and hence creating domestic unemployment and business insolvency.

When China and other countries recycle their dollar inflows by buying US Treasury bills to “invest” in the United States, this buildup is not really voluntary. It does not reflect faith in the ability of the U.S. economy to enrich foreign central banks for their savings. Nor does it represent any calculated investment preference. It is simply a matter of a lack of alternatives. U.S.-style “free markets” hook countries into a system that forces them to accept dollars without limit. Now they want out.

This means creating a new alternative. Rather than making merely “cosmetic changes as some countries and perhaps the international financial organisations themselves might want,” said Mr. Medvedev at the end of his St. Petersburg speech, “what we need are financial institutions of a completely new type, where particular political issues and motives, and particular countries will not dominate.”

When foreign military spending forced the US balance of payments into deficit and drove the United States off gold in 1971, central banks were left without the traditional asset used to settle payments imbalances. The alternative was to invest their subsequent inflows of US dollars in US Treasury bonds, as if these still were “as good as gold.” Central banks now hold $4 trillion of these bonds in their international reserves. These loans have financed most of the US Government’s domestic budget deficits for over three decades now! Given the fact that about half of US Government discretionary spending is for military operations – including more than 750 foreign military bases and increasingly expensive operations in the oil-producing and transporting countries – the international financial system is organized in a way that finances the Pentagonand also US buyouts of foreign assets expected to yield much more than the Treasury bonds that foreign central banks hold.

The main political issue confronting the world’s central banks is therefore how to avoid adding yet more dollars to their reserves and thereby financing yet further US deficit spending – including military spending on their borders.

For starters, the six SCO countries and BRIC countries intend to trade in their own currencies so as to get the benefit of mutual credit that the United States until now has monopolized for itself. Toward this end, China has struck bilateral deals with Argentina and Brazil to denominate their trade in renminbi rather than the dollar, sterling or euros, and two weeks ago China reached an agreement with Malaysia to denominate trade between the two countries in renminbi. Former Prime Minister Tun Dr. Mahathir Mohamad explained to me in January that as a Muslim country, Malaysia wants to avoid doing anything that would facilitate US military action against Islamic countries, including Palestine. The nation has too many dollar assets as it is, his colleagues explained. Central bank governor Zhou Xiaochuan of the People's Bank of China put an official statement on the bank’s website, explaining that the goal is now to create a reserve currency “that is disconnected from individual nations.” This is the aim of the discussions in Yekaterinburg.

Aside from no longer financing the U.S. buyout of their own industries and the U.S. military encirclement of the globe, China, Russia and other countries would no doubt like to enjoy the same kind of free ride that America has been getting. As matters stand now, they see the United States as a lawless nation, financially as well as militarily. How else to characterize a nation that proclaims a set of laws for others – on war, debt repayment and treatment of prisoners – but flouts them itself? The United States is now the world’s largest debtor yet has avoided the pain of “structural adjustments” imposed on other debtor economies. U.S. interest-rate and tax reductions in the face of exploding trade and budget deficits are seen as the height of hypocrisy in view of the austerity programs that Washington forces on other countries via the IMF and other Washington vehicles.

The United States tells debtor economies to sell off their public utilities and natural resources, raise their interest rates and increase taxes while gutting their social safety nets to squeeze out money to pay creditors. And at home, Congress blocked, on grounds of national security, China’s CNOOK from buying Unocal, much as it blocked Dubai from buying US ports and blocked other sovereign wealth funds from buying into key infrastructure. Foreigners are invited to emulate the Japanese purchase of white elephant trophies such as Rockefeller Center, on which investors quickly lost a billion dollars and ended up walking away.

In this respect the US has given China and other payments-surplus nations no alternative but to find a way to avoid further dollar buildups. To date, China’s attempts to diversify its dollar holdings beyond Treasury bonds have not proved very successful. For starters, Hank Paulson of Goldman Sachs steered its central bank into higher-yielding Fannie Mae and Freddie Mac securities, explaining that these were de facto public obligations. They collapsed in 2008, but at least the U.S. Government took over these two mortgage-lending agencies, formally adding their $5.2 trillion in obligations to the national debt. In fact, it was largely foreign official investment that prompted the bailout. Imposing a loss for foreign official agencies would have broken the Treasury-bill standard then and there, not only by utterly destroying US credibility but because there simply are too few Government bonds to absorb the dollars being flooded into the world economy by the soaring US balance-of-payments deficits.

in late 2007, seeking more of an equity position to protect the value of their dollar holdings as the Federal Reserve’s credit bubble drove interest rates down, China’s sovereign wealth funds sought to diversify. China bought stakes in the well-connected Blackstone equity fund and Morgan Stanley on Wall Street, Barclays in Britain, South Africa’s Standard Bank (once affiliated with Chase Manhattan back in the apartheid 1960s) and in the soon-to-collapse Belgian financial conglomerate Fortis. But the US financial sector was collapsing under the weight of its debt pyramiding, and prices for shares plunged for banks and investment firms across the globe.

Foreigners see the IMF, World Bank and World Trade Organization as Washington surrogates in a financial system backed by American military bases and aircraft carriers encircling the globe. But this military domination is a vestige of an American empire no longer able to rule by economic strength. US military power is muscle-bound, based more on atomic weaponry and long-distance air strikes than on ground operations, which have become too politically unpopular to mount on any large scale.

On the economic front there is no foreseeable way in which the United States can work off the $4 trillion it owes foreign governments, their central banks and the sovereign wealth funds set up to dispose of the global dollar glut. America has become a deadbeat –a militarily aggressive one -- as it sruggles to hold onto the immense power it once earned by economic means. The problem for the rest of the world is how to constrain its behavior. Yu Yongding, a former Chinese central bank advisor now with China’s Academy of Sciences, suggested that US Treasury Secretary Tim Geithner be advised that the United States should “save” first and foremost by cutting back its military budget. “U.S. tax revenue,” he said, “is not likely to increase in the short term because of low economic growth, inflexible expenditures and the cost of ‘fighting two wars.’”

At present foreign savings are what finance the US budget deficit by buying most Treasury bonds. The consequence is taxation without representation for foreign voters as to how the US Government uses their forced savings. It therefore is necessary for the financial diplomats to broaden the scope of their policy-making beyond the private-sector marketplace. Exchange rates are determined by many factors besides “consumers wielding credit cards,” the usual euphemism that the US media cite for America’s balance-of-payments deficit. Since the 13th century, war has been a dominating factor in the balance of payments of leading nations – and of their national debts. Government bond financing consists mainly of war debts, as normal peacetime budgets tend to be balanced. This links the war budget directly to the balance of payments and exchange rates.

Foreign nations see themselves stuck with unpayable IOUs under conditions where, if they move to stop the US free lunch, the dollar will plunge and their dollar holdings will fall in value relative to their own domestic currencies and other currencies. If China’s currency rises by 10 per cent against the dollar, its central bank will show the equivalent of a $200 million loss on its $2 trillion of dollar holdings as denominated in yuan. This explains why, when bond ratings agencies talk of the US Treasury securities losing their AAA rating, they don’t mean that the government cannot simply print the paper dollars to “make good” on these bonds. They mean that dollars will depreciate in international value. And that is just what is now occurring. When U.S. Treasury Secretary Geithner assumed an earnest mien and told an audience at Peking University in early June that he believed in a “strong dollar” and China’s US investments therefore were safe and sound, he was greeted with derisive laughter.

Anticipation of a rise in China’s exchange rate provides an incentive for speculators to seek to borrow in dollars to buy renminbi and benefit from the appreciation. For China, the problem is that this speculative inflow would become a self-fulfilling prophecy by forcing up its currency. So the problem of international reserves is inherently linked to that of capital controls. Why should China see its profitable companies sold for yet more freely-created US dollars, which the central bank must use to buy low-yielding US Treasury bills or lose yet further money on Wall Street?

To steer round this quandary it is necessary to reverse the philosophy of open capital markets that the world has held ever since Bretton Woods in 1944. On the occasion of Mr. Geithner’s visit to China, Zhou Xiaochuan, minister of the Peoples Bank of China, the country’s central bank, said pointedly that this was the first time since the semiannual talks began in 2006 that “China needed to learn from American mistakes as well as its successes” when it came to deregulating capital markets and dismantling controls.

So an era is winding to its end. In the face of continued US overspending, de-dollarization threatens to force countries to return to the kind of dual exchange rates common between World Wars I and II: one exchange rate for commodity trade, another for capital movements and investments, at least from dollar-area economies.

Even without capital controls, the nations meeting at Yekaterinburg are taking steps to avoid being the unwilling recipients of yet more dollars. Seeing that U.S. global hegemony cannot continue without the spending power that they themselves supply, governments are attempting to hasten what Chalmers Johnson has called “the sorrows of empire” in his book by that name – the bankruptcy of the US financial-military world order. If China, Russia and their non-aligned allies have their way, the United States will no longer live off the savings of others in the form of its own recycled dollars, nor have the money for unlimited military expenditures and adventures.

US officials wanted to attend the Yekaterinburg meeting as observers. They were told No. It is a word that Americans will hear much more in the future.

Michael Hudson is a former Wall Street economist. A Distinguished Research Professor at University of Missouri, Kansas City (UMKC), he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire (new ed., Pluto Press, 2002) He can be reached via his website, mh@michael-hudson.com

US exporting Gold bigtime....

Over the course of 2007 / 2008 – more than 5,000 metric tonnes of “Gold Compounds” have been exported from the United States of America representing more than 62 % of reported sovereign U.S. gold reserves or about 24 times annual U.S. mine production.


5000 metric tonnes = 160 753 733 troy ounces [$128 billion+ at today’s prices]



The fact that industry funded trade groups like the World Gold Council and other professional gold consultancies, who shall remain nameless, have not reported these facts negates their credibility and illuminates them as dupes or willing shills. These fraudulent or ignorant organizations deserve to be shuttered and disbanded.





U.S. Trade Data Is Bogus



The value of these bullion exports significantly “skew” the doctored U.S. Trade numbers [coincidentally, also prepared by the U.S. Census Bureau] in an attempt to convey a picture that the U.S. financial position is improving.



The reality is this, when gold exports are backed-out, the U.S. Trade picture is decidedly worse.



The United States of America claims to possess a little more than 8,100 metric tonnes of sovereign gold stored principally at Fort Knox, Kentucky, West Point, N.Y., the Denver Mint and The New York Fed. The sovereign U.S. gold reserve has not been independently audited since the 1950’s during the Eisenhower Administration. GATA’s freedom of information requests are all about ensuring that the 8,100 metric tonnes of U.S. sovereign gold is still owned by the U.S.



In April, 2008 the Federal Reserve responded to GATA’s request, releasing hundreds of pages of worthless information with significant portions redacted. They also claimed that they were withholding hundreds of additional pages of documents. The status of the withheld documents is currently under appeal.



These stonewalling tactics – withholding details - are eerily similar to those employed by Messer’s Bernanke, Paulson and Geithner refusing to divulge frank details as to “who” the beneficial recipients were of TARP and TALF funds.

No credible audit of the Sovereign U.S. Gold Reserve will EVER be allowed – because the gold is simply not there.

Hope you have some.


Rob Kirby is proprietor of Kirbyanalytics.com and sales agent for Bullion Custodial Services.

http://news.goldseek.com/GoldSeek/1243605552.php

There will be slim pickings if China loses its appetite for Western debt

This is not a liquidity crisis, its an insolvency crisis for the dollar system which has been recklessly driven with only US domestic advantage in mind since 1964. As the right always remind us, welfare without strings is evil. The american empire was an easy street, easy street causes rot, and that kind of rot starts at the top.

The only question is how it will end. My guess is a hyperinflationary blow off when the west turns to other measures to fund its borrowing. There is no savings glut to borrow because all thay ever was the flip side of the US trade deficit.

Depression, war and climate mayhem will make the business of laying blame difficult but it goes like this; its the cycle of history, people build civilisations, the structure of the civilisation seems so strong and eternal that it is taken for granted, once that has happens it gets loaded up until it fails..

Failure has arrived. How it plays out is the only question.

http://www.telegraph.co.uk/finance/comment/liamhalligan/4741093/There-will-be-slim-pickings-if-China-loses-its-appetite-for-Western-debt.html

"But I have to admit that China, with its massive 1,400m population, isn't doing badly. Retail sales remain strong – up 17pc in real terms. Growth has slowed, but GDP still expanded by a pretty spectacular 6.8pc during the fourth quarter of last year.

Japan – that other Asian giant – continues to suffer. Tumbling exports have sparked the worst slump in 35 years. Japanese GDP contracted 3.3pc during the last three months of 2008 – equivalent to a 12.7pc annualized drop. The Nikkei 225 index of leading Japanese shares is down 16pc since the start of 2009. Chinese shares, in contrast, have gained 25pc this year – the best return of any stock market in the world. London's FTSE-100 shed 12pc over the same period, with New York's S&P 500 down 15pc.

Optimism in China has been boosted by the government's Rmb4,000bn (£405bn) support package. Unlike Japan and the cash-strapped Western nations, China is funding its fiscal stimulus using reserves, not extra borrowing.

As the West's predicament has worsened, and China's relative strength has punched through, the political mood music has changed. Just a few weeks ago, in his first speech as US Treasury Secretary, Timothy Geithner accused Beijing of "manipulating" its currency. So what if the renminbi has appreciated more than 20pc against the dollar since 2005, undermining Chinese exports? Wanting to appear tough, "Tiny Tim" attacked China.

Last week's G7 Finance Minister's meeting in Rome produced far more measured tones. "We welcome China's fiscal measures and continued commitment to move to a more flexible exchange rate," purred the post-Summit communiqué.

Hillary Clinton also perfected her "China bashing" rhetoric as she bid for the White House. But now, as US Secretary of State, and on a visit to China, she insists "a positive co-operative relationship" between Beijing and Washington "is vital to peace and prosperity, not only in the Asia-Pacific region, but worldwide".

So, what's different – apart from US politicians no longer being in election mode? Well, behind the scenes, the Chinese government has started demanding guarantees for the $700bn of US Treasury bills on its books.

China has been keeping the States afloat for the best part of a decade, buying up vast quantities of T-bills to fund America's enormous budget and trade deficits. At any point, China could seriously damage the world's largest economy – by refusing to lend more money. So reliant is America on funding from Beijing that, by turning off the cash taps, China could spark an instant run on the dollar.

The Chinese haven't done that as it would harm their dollar-based holdings and they understand we live in an inter-dependent world.

But the ever-greater use of Asian savings to fund the "advanced" economies' deficits is unsustainable. And, as such, we're reaching the point where it will not be sustained. With Western governments intent on printing money and debauching their currencies, the big emerging market creditors – not only China, but Taiwan, Russia, South Korea and others – are now privately raising doubts about their future appetite for Western debt.

This demand drop-off will happen just as the West's dependence on such credit peaks. America and the UK are starting to issue sovereign paper like confetti, to fund highly-irresponsible "recovery programs".

The "rush from risk" that followed the Lehman collapse last September caused the repatriation of billions of dollars invested in emerging markets back to the "safe haven" of the West. That has so far allowed the US and UK authorities to get their larger debt issues away.

But the upcoming volumes are simply enormous. Last year, the US sold bonds to cover its $460bn deficit – around $200bn to foreigners, with China taking the lion's share. But America is on course to issue a staggering $2,000bn of debt in each of the next two years.

Over the same period, the UK will be flogging three times more gilts annually than during 2008. Right across the Western world, crisis-ridden governments will be issuing more and more debt.

Worried about falling currencies and rising inflation, the emerging markets – not least the Chinese – are demanding better returns to buy Western sovereign bonds. This is entirely justified. The debtor governments are weak, confused, and piling loans on top of loans with little sign of future growth. "

But how will the Western world react when the creditor countries finally refuse to buy? How will America respond – with resignation, understanding, or aggression? That's the crucial question the world faces over the next three to five years. Just what happens when China stops buying US government debt?

Getting Prepared for the Great Collapse: Dmitry Orlov

The following talk was given on February 13, 2009, at Cowell Theatre in Fort Mason Center, San Francisco, to an audience of 550 people. Audio and video of the talk will be available on Long Now Foundation web site.

Good evening, ladies and gentlemen. Thank you for showing up. It's certainly nice to travel all the way across the North American continent and have a few people come to see you, even if the occasion isn't a happy one. You are here to listen to me talk about social collapse and the various ways we can avoid screwing that up along with everything else that's gone wrong. I know it's a lot to ask of you, because why wouldn't you instead want to go and eat, drink, and be merry? Well, perhaps there will still be time left for that after my talk.

I would like to thank the Long Now Foundation for inviting me, and I feel very honored to appear in the same venue as many serious, professional people, such as Michael Pollan, who will be here in May, or some of the previous speakers, such as Nassim Taleb, or Brian Eno ¬ some of my favorite people, really. I am just a tourist. I flew over here to give this talk and to take in the sights, and then I'll fly back to Boston and go back to my day job. Well, I am also a blogger. And I also wrote a book. But then everyone has a book, or so it would seem.

You might ask yourself, then, Why on earth did he get invited to speak here tonight? It seems that I am enjoying my moment in the limelight, because I am one of the very few people who several years ago unequivocally predicted the demise of the United States as a global superpower. The idea that the USA will go the way of the USSR seemed preposterous at the time. It doesn't seem so preposterous any more. I take it some of you are still hedging your bets. How is that hedge fund doing, by the way?

I think I prefer remaining just a tourist, because I have learned from experience ¬ luckily, from other people's experience ¬ that being a superpower collapse predictor is not a good career choice. I learned that by observing what happened to the people who successfully predicted the collapse of the USSR. Do you know who Andrei Amalrik is? See, my point exactly. He successfully predicted the collapse of the USSR. He was off by just half a decade. That was another valuable lesson for me, which is why I will not give you an exact date when USA will turn into FUSA ("F" is for "Former"). But even if someone could choreograph the whole event, it still wouldn't make for much of a career, because once it all starts falling apart, people have far more important things to attend to than marveling at the wonderful predictive abilities of some Cassandra-like person.

I hope that I have made it clear that I am not here in any sort of professional capacity. I consider what I am doing a kind of community service. So, if you don't like my talk, don't worry about me. There are plenty of other things I can do. But I would like my insights to be of help during these difficult and confusing times, for altruistic reasons, mostly, although not entirely. This is because when times get really bad, as they did when the Soviet Union collapsed, lots of people just completely lose it. Men, especially. Successful, middle-aged men, breadwinners, bastions of society, turn out to be especially vulnerable. And when they just completely lose it, they become very tedious company. My hope is that some amount of preparation, psychological and otherwise, can make them a lot less fragile, and a bit more useful, and generally less of a burden.

Women seem much more able to cope. Perhaps it is because they have less of their ego invested in the whole dubious enterprise, or perhaps their sense of personal responsibility is tied to those around them and not some nebulous grand enterprise. In any case, the women always seem far more able to just put on their gardening gloves and go do something useful, while the men tend to sit around groaning about the Empire, or the Republic, or whatever it is that they lost. And when they do that, they become very tedious company. And so, without a bit of mental preparation, the men are all liable to end up very lonely and very drunk. So that's my little intervention.

If there is one thing that I would like to claim as my own, it is the comparative theory of superpower collapse. For now, it remains just a theory, although it is currently being quite thoroughly tested. The theory states that the United States and the Soviet Union will have collapsed for the same reasons, namely: a severe and chronic shortfall in the production of crude oil (that magic addictive elixir of industrial economies), a severe and worsening foreign trade deficit, a runaway military budget, and ballooning foreign debt. I call this particular list of ingredients "The Superpower Collapse Soup." Other factors, such as the inability to provide an acceptable quality of life for its citizens, or a systemically corrupt political system incapable of reform, are certainly not helpful, but they do not automatically lead to collapse, because they do not put the country on a collision course with reality. Please don't be too concerned, though, because, as I mentioned, this is just a theory. My theory.

I've been working on this theory since about 1995, when it occurred to me that the US is retracing the same trajectory as the USSR. As so often is the case, having this realization was largely a matter of being in the right place at the right time. The two most important methods of solving problems are: 1. by knowing the solution ahead of time, and 2. by guessing it correctly. I learned this in engineering school ¬ from a certain professor. I am not that good at guesswork, but I do sometimes know the answer ahead of time.

I was very well positioned to have this realization because I grew up straddling the two worlds ¬ the USSR and the US. I grew up in Russia, and moved to the US when I was twelve, and so I am fluent in Russian, and I understand Russian history and Russian culture the way only a native Russian can. But I went through high school and university in the US .I had careers in several industries here, I traveled widely around the country, and so I also have a very good understanding of the US with all of its quirks and idiosyncrasies. I traveled back to Russia in 1989, when things there still seemed more or less in line with the Soviet norm, and again in 1990, when the economy was at a standstill, and big changes were clearly on the way. I went back there 3 more times in the 1990s, and observed the various stages of Soviet collapse first-hand.

By the mid-1990s I started to see Soviet/American Superpowerdom as a sort of disease that strives for world dominance but in effect eviscerates its host country, eventually leaving behind an empty shell: an impoverished population, an economy in ruins, a legacy of social problems, and a tremendous burden of debt. The symmetries between the two global superpowers were then already too numerous to mention, and they have been growing more obvious ever since.

The superpower symmetries may be of interest to policy wonks and history buffs and various skeptics, but they tell us nothing that would be useful in our daily lives. It is the asymmetries, the differences between the two superpowers, that I believe to be most instructive. When the Soviet system went away, many people lost their jobs, everyone lost their savings, wages and pensions were held back for months, their value was wiped out by hyperinflation, there shortages of food, gasoline, medicine, consumer goods, there was a large increase in crime and violence, and yet Russian society did not collapse. Somehow, the Russians found ways to muddle through. How was that possible? It turns out that many aspects of the Soviet system were paradoxically resilient in the face of system-wide collapse, many institutions continued to function, and the living arrangement was such that people did not lose access to food, shelter or transportation, and could survive even without an income. The Soviet economic system failed to thrive, and the Communist experiment at constructing a worker's paradise on earth was, in the end, a failure. But as a side effect it inadvertently achieved a high level of collapse-preparedness. In comparison, the American system could produce significantly better results, for time, but at the cost of creating and perpetuating a living arrangement that is very fragile, and not at all capable of holding together through the inevitable crash. Even after the Soviet economy evaporated and the government largely shut down, Russians still had plenty left for them to work with. And so there is a wealth of useful information and insight that we can extract from the Russian experience, which we can then turn around and put to good use in helping us improvise a new living arrangement here in the United States ¬ one that is more likely to be survivable.

The mid-1990s did not seem to me as the right time to voice such ideas. The United States was celebrating its so-called Cold War victory, getting over its Vietnam syndrome by bombing Iraq back to the Stone Age, and the foreign policy wonks coined the term "hyperpower" and were jabbering on about full-spectrum dominance. All sorts of silly things were happening. Professor Fukuyama told us that history had ended, and so we were building a brave new world where the Chinese made things out of plastic for us, the Indians provided customer support when these Chinese-made things broke, and we paid for it all just by flipping houses, pretending that they were worth a lot of money whereas they are really just useless bits of ticky-tacky. Alan Greenspan chided us about "irrational exuberance" while consistently low-balling interest rates. It was the "Goldilocks economy" ¬ not to hot, not too cold. Remember that? And now it turns out that it was actually more of a "Tinker-bell" economy, because the last five or so years of economic growth was more or less a hallucination, based on various debt pyramids, the "whole house of cards" as President Bush once referred to it during one of his lucid moments. And now we can look back on all of that with a funny, queasy feeling, or we can look forward and feel nothing but vertigo.

While all of these silly things were going on, I thought it best to keep my comparative theory of superpower collapse to myself. During that time, I was watching the action in the oil industry, because I understood that oil imports are the Achilles' heel of the US economy. In the mid-1990s the all-time peak in global oil production was scheduled for the turn of the century. But then a lot of things happened that delayed it by at least half a decade. Perhaps you've noticed this too, there is a sort of refrain here: people who try to predict big historical shifts always turn to be off by about half a decade. Unsuccessful predictions, on the other hand are always spot on as far as timing: the world as we know it failed to end precisely at midnight on January 1, 2000. Perhaps there is a physical principal involved: information spreads at the speed of light, while ignorance is instantaneous at all points in the known universe. So please make a mental note: whenever it seems to you that I am making a specific prediction as to when I think something is likely to happen, just silently add "plus or minus half a decade."

In any case, about half a decade ago, I finally thought that the time was ripe, and, as it has turned out, I wasn't too far off. In June of 2005 I published an article on the subject, titled "Post-Soviet Lessons for a Post-American Century," which was quite popular, even to the extent that I got paid for it. It is available at various places on the Internet. A little while later I formalized my thinking somewhat into the "Collapse Gap" concept, which I presented at a conference in Manhattan in April of 2006. The slide show from that presentation, titled "Closing the Collapse Gap," was posted on the Internet and has been downloaded a few million times since then. Then, in January of 2008, when it became apparent to me that financial collapse was well underway, and that other stages of collapse were to follow, I published a short article titled "The Five Stages of Collapse," which I later expanded into a talk I gave at a conference in Michigan in October of 2008. Finally, at the end of 2008, I announced on my blog that I am getting out of the prognosticating business. I have made enough predictions, they all seem very well on track (give or take half a decade, please remember that), collapse is well underway, and now I am just an observer.

But this talk is about something else, something other than making dire predictions and then acting all smug when they come true. You see, there is nothing more useless than predictions, once they have come true. It's like looking at last year's amazingly successful stock picks: what are you going to do about them this year? What we need are examples of things that have been shown to work in the strange, unfamiliar, post-collapse environment that we are all likely to have to confront. Stuart Brand proposed the title for the talk ¬ "Social Collapse Best Practices" ¬ and I thought that it was an excellent idea. Although the term "best practices" has been diluted over time to sometimes mean little more than "good ideas," initially it stood for the process of abstracting useful techniques from examples of what has worked in the past and applying them to new situations, in order to control risk and to increase the chances of securing a positive outcome. It's a way of skipping a lot of trial and error and deliberation and experimentation, and to just go with what works.

In organizations, especially large organizations, "best practices" also offer a good way to avoid painful episodes of watching colleagues trying to "think outside the box" whenever they are confronted with a new problem. If your colleagues were any good at thinking outside the box, they probably wouldn't feel so compelled to spend their whole working lives sitting in a box keeping an office chair warm. If they were any good at thinking outside the box, they would have by now thought of a way to escape from that box. So perhaps what would make them feel happy and productive again is if someone came along and gave them a different box inside of which to think ¬ a box better suited to the post-collapse environment.

Here is the key insight: you might think that when collapse happens, nothing works. That's just not the case. The old ways of doing things don't work any more, the old assumptions are all invalidated, conventional goals and measures of success become irrelevant. But a different set of goals, techniques, and measures of success can be brought to bear immediately, and the sooner the better. But enough generalities, let's go through some specifics. We'll start with some generalities, and, as you will see, it will all become very, very specific rather quickly.

Here is another key insight: there are very few things that are positives or negatives per se. Just about everything is a matter of context. Now, it just so happens that most things that are positives prior to collapse turn out to be negatives once collapse occurs, and vice versa. For instance, prior to collapse having high inventory in a business is bad, because the businesses have to store it and finance it, so they try to have just-in-time inventory. After collapse, high inventory turns out to be very useful, because they can barter it for the things they need, and they can't easily get more because they don't have any credit. Prior to collapse, it's good for a business to have the right level of staffing and an efficient organization. After collapse, what you want is a gigantic, sluggish bureaucracy that can't unwind operations or lay people off fast enough through sheer bureaucratic foot-dragging. Prior to collapse, what you want is an effective retail segment and good customer service. After collapse, you regret not having an unreliable retail segment, with shortages and long bread lines, because then people would have been forced to learn to shift for themselves instead of standing around waiting for somebody to come and feed them.

If you notice, none of these things that I mentioned have any bearing on what is commonly understood as "economic health." Prior to collapse, the overall macroeconomic positive is an expanding economy. After collapse, economic contraction is a given, and the overall macroeconomic positive becomes something of an imponderable, so we are forced to listen to a lot of nonsense. The situation is either slightly better than expected or slightly worse than expected. We are always either months or years away from economic recovery. Business as usual will resume sooner or later, because some television bobble-head said so.

But let's take it apart. Starting from the very general, what are the current macroeconomic objectives, if you listen to the hot air coming out of Washington at the moment? First: growth, of course! Getting the economy going. We learned nothing from the last huge spike in commodity prices, so let's just try it again. That calls for economic stimulus, a.k.a. printing money. Let's see how high the prices go up this time. Maybe this time around we will achieve hyperinflation. Second: Stabilizing financial institutions: getting banks lending ¬ that's important too. You see, we are just not in enough debt yet, that's our problem. We need more debt, and quickly! Third: jobs! We need to create jobs. Low-wage jobs, of course, to replace all the high-wage manufacturing jobs we've been shedding for decades now, and replacing them with low-wage service sector jobs, mainly ones without any job security or benefits. Right now, a lot of people could slow down the rate at which they are sinking further into debt if they quit their jobs. That is, their job is a net loss for them as individuals as well as for the economy as a whole. But, of course, we need much more of that, and quickly!

So that's what we have now. The ship is on the rocks, water is rising, and the captain is shouting "Full steam ahead! We are sailing to Afghanistan!" Do you listen to Ahab up on the bridge, or do you desert your post in the engine room and go help deploy the lifeboats? If you thought that the previous episode of uncontrolled debt expansion, globalized Ponzi schemes, and economic hollowing-out was silly, then I predict that you will find this next episode of feckless grasping at macroeconomic straws even sillier. Except that it won't be funny: what is crashing now is our life support system: all the systems and institutions that are keeping us alive. And so I don't recommend passively standing around and watching the show ¬ unless you happen to have a death wish.

Right now the Washington economic stimulus team is putting on their Scuba gear and diving down to the engine room to try to invent a way to get a diesel engine to run on seawater. They spoke of change, but in reality they are terrified of change and want to cling with all their might to the status quo. But this game will soon be over, and they don't have any idea what to do next.

So, what is there for them to do? Forget "growth," forget "jobs," forget "financial stability." What should their realistic new objectives be? Well, here they are: food, shelter, transportation, and security. Their task is to find a way to provide all of these necessities on an emergency basis, in absence of a functioning economy, with commerce at a standstill, with little or no access to imports, and to make them available to a population that is largely penniless. If successful, society will remain largely intact, and will be able to begin a slow and painful process of cultural transition, and eventually develop a new economy, a gradually de-industrializing economy, at a much lower level of resource expenditure, characterized by a quite a lot of austerity and even poverty, but in conditions that are safe, decent, and dignified. If unsuccessful, society will be gradually destroyed in a series of convulsions that will leave a defunct nation composed of many wretched little fiefdoms. Given its largely depleted resource base, a dysfunctional, collapsing infrastructure, and its history of unresolved social conflicts, the territory of the Former United States will undergo a process of steady degeneration punctuated by natural and man-made cataclysms.

Food. Shelter. Transportation. Security. When it comes to supplying these survival necessities, the Soviet example offers many valuable lessons. As I already mentioned, in a collapse many economic negatives become positives, and vice versa. Let us consider each one of these in turn.

The Soviet agricultural sector was plagued by consistent underperformance. In many ways, this was the legacy of the disastrous collectivization experiment carried out in the 1930s, which destroyed many of the more prosperous farming households and herded people into collective farms. Collectivization undermined the ancient village-based agricultural traditions that had made pre-revolutionary Russia a well-fed place that was also the breadbasket of Western Europe. A great deal of further damage was caused by the introduction of industrial agriculture. The heavy farm machinery alternately compacted and tore up the topsoil while dosing it with chemicals, depleting it and killing the biota. Eventually, the Soviet government had to turn to importing grain from countries hostile to its interests ¬ United States and Canada ¬ and eventually expanded this to include other foodstuffs. The USSR experienced a permanent shortage of meat and other high-protein foods, and much of the imported grain was used to raise livestock to try to address this problem.

Although it was generally possible to survive on the foods available at the government stores, the resulting diet would have been rather poor, and so people tried to supplement it with food they gathered, raised, or caught, or purchased at farmers' markets. Kitchen gardens were always common, and, once the economy collapsed, a lot of families took to growing food in earnest. The kitchen gardens, by themselves, were never sufficient, but they made a huge difference.

The year 1990 was particularly tough when it came to trying to score something edible. I remember one particular joke from that period. Black humor has always been one of Russia's main psychological coping mechanisms. A man walks into a food store, goes to the meat counter, and he sees that it is completely empty. So he asks the butcher: "Don't you have any fish?" And the butcher answers: "No, here is where we don't have any meat. Fish is what they don't have over at the seafood counter."

Poor though it was, the Soviet food distribution system never collapsed completely. In particular, the deliveries of bread continued even during the worst of times, partly because has always been such an important part of the Russian diet, and partly because access to bread symbolized the pact between the people and the Communist government, enshrined in oft-repeated revolutionary slogans. Also, it is important to remember that in Russia most people have lived within walking distance of food shops, and used public transportation to get out to their kitchen gardens, which were often located in the countryside immediately surrounding the relatively dense, compact cities. This combination of factors made for some lean times, but very little malnutrition and no starvation.

In the United States, the agricultural system is heavily industrialized, and relies on inputs such as diesel, chemical fertilizers and pesticides, and, perhaps most importantly, financing. In the current financial climate, the farmers' access to financing is not at all assured. This agricultural system is efficient, but only if you regard fossil fuel energy as free. In fact, it is a way to transform fossil fuel energy into food with a bit of help from sunlight, to the tune of 10 calories of fossil fuel energy being embodied in each calorie that is consumed as food. The food distribution system makes heavy use of refrigerated diesel trucks, transforming food over hundreds of miles to resupply supermarkets. The food pipeline is long and thin, and it takes only a couple of days of interruptions for supermarket shelves to be stripped bare. Many people live in places that are not within walking distance of stores, not served by public transportation, and will be cut off from food sources once they are no longer able to drive.

Besides the supermarket chains, much of the nation's nutrition needs are being met by an assortment of fast food joints and convenience stores. In fact, in many of the less fashionable parts of cities and towns, fast food and convenience store food is all that is available. In the near future, this trend is likely to extend to the more prosperous parts of town and the suburbs.

Fast food outfits such as McDonalds have more ways to cut costs, and so may prove a bit more resilient in the face of economic collapse than supermarket chains, but they are no substitute for food security, because they too depend on industrial agribusiness. Their food inputs, such as high-fructose corn syrup, genetically modified [foods], various soy-based fillers, factory-farmed beef, pork and chicken, and so forth, are derived from oil, two-thirds of which is imported, as well as fertilizer made from natural gas. They may be able to stay in business longer, supplying food-that-isn't-really-food, but eventually they will run out of inputs along with the rest of the supply chain. Before they do, they may for a time sell burgers that aren't really burgers, like the bread that wasn't really bread that the Soviet government distributed in Leningrad during the Nazi blockade. It was mostly sawdust, with a bit of rye flour added for flavor.

Can we think of any ways to avoid this dismal scenario? The Russian example may give us a clue. Many Russian families could gauge how fast the economy was crashing, and, based on that, decide how many rows of potatoes to plant. Could we perhaps do something similar? There is already a healthy gardening movement in the United States; can it be scaled up? The trick is to make small patches of farmland available for non-mechanical cultivation by individuals and families, in increments as small as 1000 square feet. The ideal spots would be fertile bits of land with access to rivers and streams for irrigation. Provisions would have to be made for campsites and for transportation, allowing people to undertake seasonal migrations out to the land to grow food during the growing season, and haul the produce back to the population centers after taking in the harvest.

An even simpler approach has been successfully used in Cuba: converting urban parking lots and other empty bits of land to raised-bed agriculture. Instead of continually trucking in vegetables and other food, it is much easier to truck in soil, compost, and mulch just once a season. Raised highways can be closed to traffic (since there is unlikely to be much traffic in any case) and used to catch rainwater for irrigation. Rooftops and balconies can be used for hothouses, henhouses, and a variety of other agricultural uses.

How difficult would this be to organize? Well, Cubans were actually helped by their government, but the Russians managed to do it in more or less in spite of the Soviet bureaucrats, and so we might be able to do it in spite of the American ones. The government could theoretically head up such an effort, purely hypothetically speaking, of course, because I see no evidence that such an effort is being considered. For our fearless national leaders, such initiatives are too low-level: if they stimulate the economy and get the banks lending again, the potatoes will simply grow themselves. All they need to do is print some more money, right?

Moving on to shelter. Again, let's look at how the Russians managed to muddle through. In the Soviet Union, people did not own their place of residence. Everyone was assigned a place to live, which was recorded in a person's internal passport. People could not be dislodged from their place of residence for as long as they drew oxygen. Since most people in Russia live in cities, the place of residence was usually an apartment, or a room in a communal apartment, with shared bathroom and kitchen. There was a permanent housing shortage, and so people often doubled up, with three generations living together. The apartments were often crowded, sometimes bordering on squalid. If people wanted to move, they had to find somebody else who wanted to move, who would want to exchange rooms or apartments with them. There were always long waiting lists for apartments, and children often grew up, got married, and had children before receiving a place of their own.

These all seem like negatives, but consider the flip side of all this: the high population density made this living arrangement quite affordable. With several generations living together, families were on hand to help each other. Grandparents provided day care, freeing up their children's time to do other things. The apartment buildings were always built near public transportation, so they did not have to rely on private cars to get around. Apartment buildings are relatively cheap to heat, and municipal services easy to provide and maintain because of the short runs of pipe and cable. Perhaps most importantly, after the economy collapsed, people lost their savings, many people lost their jobs, even those that still had jobs often did not get paid for months, and when they were the value of their wages was destroyed by hyperinflation, but there were no foreclosures, no evictions, municipal services such as heat, water, and sometimes even hot water continued to be provided, and everyone had their families close by. Also, because it was so difficult to relocate, people generally stayed in one place for generations, and so they tended to know all the people around them. After the economic collapse, there was a large spike in the crime rate, which made it very helpful to be surrounded by people who weren't strangers, and who could keep an eye on things. Lastly, in an interesting twist, the Soviet housing arrangement delivered an amazing final windfall: in the 1990s all of these apartments were privatized, and the people who lived in them suddenly became owners of some very valuable real estate, free and clear.

Switching back to the situation in the US: in recent months, many people here have reconciled themselves to the idea that their house is not an ATM machine, nor is it a nest egg. They already know that they will not be able to comfortably retire by selling it, or get rich by fixing it up and flipping it, and quite a few people have acquiesced to the fact that real estate prices are going to continue heading lower. The question is, How much lower? A lot of people still think that there must be a lower limit, a "realistic" price. This thought is connected to the notion that housing is a necessity. After all, everybody needs a place to live.

Well, it is certainly true that some sort of shelter is a necessity, be it an apartment, or a dorm room, a bunk in a barrack, a boat, a camper, or a tent, a teepee, a wigwam, a shipping container... The list is virtually endless. But there is no reason at all to think that a suburban single-family house is in any sense a requirement. It is little more than a cultural preference, and a very shortsighted one at that. Most suburban houses are expensive to heat and cool, inaccessible by public transportation, expensive to hook up to public utilities because of the long runs of pipe and cable, and require a great deal of additional public expenditure on road, bridge and highway maintenance, school buses, traffic enforcement, and other nonsense. They often take up what was once valuable agricultural land. They promote a car-centric culture that is destructive of urban environments, causing a proliferation of dead downtowns. Many families that live in suburban houses can no longer afford to live in them, and expect others to bail them out.

As this living arrangement becomes unaffordable for all concerned, it will also become unlivable. Municipalities and public utilities will not have the funds to lavish on sewer, water, electricity, road and bridge repair, and police. Without cheap and plentiful gasoline, natural gas, and heating oil, many suburban dwellings will become both inaccessible and unlivable. The inevitable result will be a mass migration of suburban refugees toward the more survivable, more densely settled towns and cities. The luckier ones will find friends or family to stay with; for the rest, it would be very helpful to improvise some solution.

One obvious answer is to repurpose the ever-plentiful vacant office buildings for residential use. Converting offices to dormitories is quite straightforward. Many of them already have kitchens and bathrooms, plenty of partitions and other furniture, and all they are really missing is beds. Putting in beds is just not that difficult. The new, subsistence economy is unlikely to generate the large surpluses that are necessary for sustaining the current large population of office plankton. The businesses that once occupied these offices are not coming back, so we might as well find new and better uses for them.

Another category of real estate that is likely to go unused and that can be repurposed for new communities is college campuses. The American 4-year college is an institution of dubious merit. It exists because American public schools fail to teach in 12 years what Russian public schools manage to teach in 8. As fewer and fewer people become able to afford college, which is likely to happen, because meager career prospects after graduation will make them bad risks for student loans, perhaps this will provide the impetus to do something about the public education system. One idea would be to scrap it, then start small, but eventually build something a bit more on par with world standards.

College campuses make perfect community centers: there are dormitories for newcomers, fraternities and sororities for the more settled residents, and plenty of grand public buildings that can be put to a variety of uses. A college campus normally contains the usual wasteland of mowed turf that can be repurposed to grow food, or, at the very least, hay, and to graze cattle. Perhaps some enlightened administrators, trustees and faculty members will fall upon this idea once they see admissions flat-lining and endowments dropping to zero, without any need for government involvement. So here we have a ray of hope, don't we.

Moving on to transportation. Here, we need to make sure that people don't get stranded in places that are not survivable. Then we have to provide for seasonal migrations to places where people can grow, catch, or gather their own food, and then back to places where they can survive the winter without freezing to death or going stir-crazy from cabin fever. Lastly, some amount of freight will have to be moved, to transport food to population centers, as well as enough coal and firewood to keep the pipes from freezing in the remaining habitable dwellings.

All of this is going to be a bit of a challenge, because it all hinges on the availability of transportation fuels, and it seems very probable that transportation fuels will be both too expensive and in short supply before too long. From about 2005 and until the middle of 2008 the global oil has been holding steady, unable to grow materially beyond a level that has been characterized as a "bumpy plateau." An all-time record was set in 2005, and then, after a period of record-high oil prices, again only in 2008. Then, as the financial collapse gathered speed, oil and other commodity prices crashed, along with oil production. More recently, the oil markets have come to rest on an altogether different "bumpy plateau": the oil prices are bumping along at around $40 a barrel and can't seem to go any lower. It would appear that oil production costs have risen to a point where it does not make economic sense to sell oil at below this price.

Now, $40 a barrel is a good price for US consumers at the moment, but there is hyperinflation on the horizon, thanks to the money-printing extravaganza currently underway in Washington, and $40 could easily become $400 and then $4000 a barrel, swiftly pricing US consumers out of the international oil market. On top of that, exporting countries would balk at the idea of trading their oil for an increasingly worthless currency, and would start insisting on payment in kind ¬ in some sort of tangible export commodity, which the US, in its current economic state, would be hard-pressed to provide in any great quantity. Domestic oil production is in permanent decline, and can provide only about a third of current needs. This is still quite a lot of oil, but it will be very difficult to avoid the knock-on effects of widespread oil shortages. There will be widespread hoarding, quite a lot of gasoline will simply evaporate into the atmosphere, vented from various jerricans and improvised storage containers, the rest will disappear into the black market, and much fuel will be wasted driving around looking for someone willing to part with a bit of gas that's needed for some small but critical mission.

I am quite familiar with this scenario, because I happened to be in Russia during a time of gasoline shortages. On one occasion, I found out by word of mouth that a certain gas station was open and distributing 10 liters apiece. I brought along my uncle's wife, who at the time was 8 months pregnant, and we tried use her huge belly to convince the gas station attendant to give us an extra 10 liters with which to drive her to the hospital when the time came. No dice. The pat answer was: "Everybody is 8 months pregnant!" How can you argue with that logic? So 10 liters was it for us too, belly or no belly.

So, what can we do to get our little critical missions accomplished in spite of chronic fuel shortages? The most obvious idea, of course, is to not use any fuel. Bicycles, and cargo bikes in particular, are an excellent adaptation. Sailboats are a good idea too: not only do they hold large amounts of cargo, but they can cover huge distances, all without the use of fossil fuels. Of course, they are restricted to the coastlines and the navigable waterways. They will be hampered by the lack of dredging due to the inevitable budget shortfalls, and by bridges that refuse to open, again, due to lack of maintenance funds, but here ancient maritime techniques and improvisations can be brought to bear to solve such problems, all very low-tech and reasonably priced.

Of course, cars and trucks will not disappear entirely. Here, again, some reasonable adaptations can be brought to bear. In my book, I advocated banning the sale of new cars, as was done in the US during World War II. The benefits are numerous. First, older cars are overall more energy-efficient than new cars, because the massive amount of energy that went into manufacturing them is more highly amortized. Second, large energy savings accrue from the shutdown of an entire industry devoted to designing, building, marketing, and financing new cars. Third, older cars require more maintenance, reinvigorating the local economy at the expense of mainly foreign car manufacturers, and helping reduce the trade deficit. Fourth, this will create a shortage of cars, translating automatically into fewer, shorter car trips, higher passenger occupancy per trip, and more bicycling and use of public transportation, saving even more energy. Lastly, this would allow the car to be made obsolete on the about the same time scale as the oil industry that made it possible. We will run out of cars just as we run out of gas.

Here we are, only a year or so later, and I am most heartened to see that the US auto industry has taken my advice and is in the process of shutting down. On the other hand, the government's actions continue to disappoint. Instead of trying to solve problems, they would rather continue to create boondoggles. The latest one is the idea of subsidizing the sales of new cars. The idea of making cars more efficient by making more efficient cars is sheer folly. I can take any pick-up truck and increase its fuel efficiency one or two thousand percent just by breaking a few laws. First, you pack about a dozen people into the bed, standing shoulder to shoulder like sardines. Second, you drive about 25 mph, down the highway, because going any faster would waste fuel and wouldn't be safe with so many people in the back. And there you are, per passenger fuel efficiency increased by a factor of 20 or so. I believe the Mexicans have done extensive research in this area, with excellent results.

Another excellent idea pioneered in Cuba is making it illegal not to pick up hitchhikers. Cars with vacant seats are flagged down and matched up with people who need a lift. Yet another idea: since passenger rail service is in such a sad shape, and since it is unlikely that funds will be found to improve it, why not bring back the venerable institution of riding the rails by requiring rail freight companies to provide a few empty box cars for the hobos. The energy cost of the additional weight is negligible, the hobos don't require stops because they can jump on and off, and only a couple of cars per train would ever be needed, because hobos are almost infinitely compressible, and can even ride on the roof if needed. One final transportation idea: start breeding donkeys. Horses are finicky and expensive, but donkeys can be very cost-effective and make good pack animals. My grandfather had a donkey while he was living in Tashkent in Central Asia during World War II. There was nothing much for the donkey to eat, but, as a member of the Communist Party, my grandfather had a subscription to Pravda, the Communist Party newspaper, and so that's what the donkey ate. Apparently, donkeys can digest any kind of cellulose, even when it's loaded with communist propaganda. If I had a donkey, I would feed it the Wall Street Journal.

And so we come to the subject of security. Post-collapse Russia suffered from a serious crime wave. Ethnic mafias ran rampant, veterans who served in Afghanistan went into business for themselves, there were numerous contract killings, muggings, murders went unsolved left and right, and, in general, the place just wasn't safe. Russians living in the US would hear that I am heading back there for a visit, and would give me a wide-eyed stare: how could I think of doing such a thing. I came through unscathed, somehow. I made a lot of interesting observations along the way.

One interesting observation is that once collapse occurs it becomes possible to rent a policeman, either for a special occasion, or generally just to follow someone around. It is even possible to hire a soldier or two, armed with AK-47s, to help you run various errands. Not only is it possible to do such things, it's often a very good idea, especially if you happen to have something valuable that you don't want to part with. If you can't afford their services, then you should try to be friends with them, and to be helpful to them in various ways. Although their demands might seem exorbitant at times, it is still a good idea to do all you can to keep them on your side. For instance, they might at some point insist that you and your family move out to the garage so that they can live in your house. This may be upsetting at first, but then is it really such a good idea for you to live in a big house all by yourselves, with so many armed men running around. It may make sense to station some of them right in your house, so that they have a base of operations from which to maintain a watch and patrol the neighborhood.

A couple of years ago I half-jokingly proposed a political solution to collapse mitigation, and formulated a platform for the so-called Collapse Party. I published it with the caveat that I didn't think there was much of a chance of my proposals becoming part of the national agenda. Much to my surprise, I turned out to be wrong. For instance, I proposed that we stop making new cars, and, lo and behold, the auto industry shuts down. I also proposed that we start granting amnesties to prisoners, because the US has the world's largest prison population, and will not be able to afford to keep so many people locked up. It is better to release prisoners gradually, over time, rather than in a single large general amnesty, the way Saddam Hussein did it right before the US invaded. And, lo and behold, many states are starting to implement my proposal. It looks like California in particular will be forced to release some 60 thousand of the 170 thousand people it keeps locked up. That is a good start. I also proposed that we dismantle all overseas military bases (there are over a thousand of them) and repatriate all the troops. And it looks like that is starting to happen as well, except for the currently planned little side-trip to Afghanistan. I also proposed a Biblical jubilee ¬ forgiveness of all debts, public and private. Let's give that one. half a decade?

But if we look just at the changes that are already occurring, just the simple, predictable lack of funds, as the federal government and the state governments all go broke, will transform American society in rather predictable ways. As municipalities run out of money, police protection will evaporate. But the police still have to eat, and will find ways to use their skills to good use on a freelance basis. Similarly, as military bases around the world are shut down, soldiers will return to a country that will be unable to reintegrate them into civilian life. Paroled prisoners will find themselves in much the same predicament.

And so we will have former soldiers, former police, and former prisoners: a big happy family, with a few bad apples and some violent tendencies. The end result will be a country awash with various categories of armed men, most of them unemployed, and many of them borderline psychotic. The police in the United States are a troubled group. Many of them lose all touch with people who are not "on the force" and most of them develop an us-versus-them mentality. The soldiers returning from a tour of duty often suffer from post-traumatic stress disorder. The paroled prisoners suffer from a variety of psychological ailments as well. All of them will sooner or later realize that their problems are not medical but rather political. This will make it impossible for society to continue to exercise control over them. All of them will be making good use of their weapons training and other professional skills to acquire whatever they need to survive. And the really important point to remember is that they will do these things whether or not anyone thinks it legal for them to do be doing them.

I said it before and I will say it again: very few things are good or bad per se; everything has to be considered within a context. And, in a post-collapse context, not having to worry whether or not something is legal may be a very good thing. In the midst of a collapse, we will not have time to deliberate, legislate, interpret, set precedents and so on. Having to worry about pleasing a complex and expensive legal system is the last thing we should have to worry about.

Some legal impediments are really small and trivial, but they can be quite annoying nevertheless. A homeowners' association might, say, want give you a ticket or seek a court order against you for not mowing your lawn, or for keeping livestock in your garage, or for that nice windmill you erected on a hill that you don't own, without first getting a building permit, or some municipal busy-body might try to get you arrested for demolishing a certain derelict bridge because it was interfering with boat traffic ¬ you know, little things like that. Well, if the association is aware that you have a large number of well armed, mentally unstable friends, some of whom still wear military and police uniforms, for old time's sake, then they probably won't give you that ticket or seek that court order.

Or suppose you have a great new invention that you want to make and distribute, a new agricultural implement. It's a sort of flail studded with sharp blades. It has a hundred and one uses and is highly cost-effective, and reasonably safe provided you don't lose your head while using it, although people have taken to calling the "flying guillotine." You think that this is an acceptable risk, but you are concerned about the issues of consumer safety and liability insurance and possibly even criminal liability. Once again, it is very helpful to have a large number of influential, physically impressive, mildly psychotic friends who, whenever some legal matter comes up, can just can go and see the lawyers, have a friendly chat, demonstrate the proper use of the flying guillotine, and generally do whatever they have to do to settle the matter amicably, without any money changing hands, and without signing any legal documents.

Or, say, the government starts being difficult about moving things and people in and out of the country, or it wants to take too much of a cut from commercial transactions. Or perhaps your state or your town decides to conduct its own foreign policy, and the federal government sees it fit to interfere. Then it may turn out to be a good thing if someone else has the firepower to bring the government, or what remains of it, to its senses, and convince it to be reasonable and to play nice.

Or perhaps you want to start a community health clinic, so that you can provide some relief to people who wouldn't otherwise have any health care. You don't dare call yourself a doctor, because these people are suspicious of doctors, because doctors were always trying to rob them of their life's savings. But suppose you have some medical training that you got in, say, Cuba, and you are quite able to handle a Caesarean or an appendectomy, to suture wounds, to treat infections, to set bones and so on. You also want to be able to distribute opiates that your friends in Afghanistan periodically send you, to ease the pain of hard post-collapse life. Well, going through the various licensing boards and getting the certifications and the permits and the malpractice insurance is all completely unnecessary, provided you can surround yourself with a lot of well-armed, well-trained, mentally unstable friends.

Food. Shelter. Transportation. Security. Security is very important. Maintaining order and public safety requires discipline, and maintaining discipline, for a lot of people, requires the threat of force. This means that people must be ready to come to each other's defense, take responsibility for each other, and do what's right. Right now, security is provided by a number of bloated, bureaucratic, ineffectual institutions, which inspire more anger and despondency than discipline, and dispense not so much violence as ill treatment. That is why we have the world's highest prison population. They are supposedly there to protect people from each other, but in reality their mission is not even to provide security; it is to safeguard property, and those who own it. Once these institutions run out of resources, there will be a period of upheaval, but in the end people will be forced to learn to deal with each other face to face, and Justice will once again become a personal virtue rather than a federal department.

I've covered what I think are basics, based on what I saw work and what I think might work reasonably well here. I assume that a lot of you are thinking that this is all quite far into the future, if in fact it ever gets that bad. You should certainly feel free to think that way. The danger there is that you will miss the opportunity to adapt to the new reality ahead of time, and then you will get trapped. As I see it, there is a choice to be made: you can accept the failure of the system now and change your course accordingly, or you can decide that you must try to stay the course, and then you will probably have to accept your own individual failure later.

So how do you prepare? Lately, I've been hearing from a lot of high-powered, successful people about their various high-powered, successful associates. Usually, the story goes something like this: "My a. financial advisor, b. investment banker, or c. commanding officer has recently a. put all his money in gold, b. bought a log cabin up in the mountains, or c. built a bunker under his house stocked with six months of food and water. Is this normal?" And I tell them, yes, of course, that's perfectly harmless. He's just having a mid-collapse crisis. But that's not really preparation. That's just someone being colorful in an offbeat, countercultural sort of way.

So, how do you prepare, really? Let's go through a list of questions that people typically ask me, and I will try to briefly respond to each of them.

OK, first question: How about all these financial boondoggles? What on earth is going on? People are losing their jobs left and right, and if we calculate unemployment the same way it was done during the Great Depression, instead of looking at the cooked numbers the government is trying to feed us now, then we are heading toward 20% unemployment. And is there any reason to think it'll stop there? Do you happen to believe that prosperity is around the corner? Not only jobs and housing equity, but retirement savings are also evaporating. The federal government is broke, state governments are broke, some more than others, and the best they can do is print money, which will quickly lose value. So, how can we get the basics if we don't have any money? How is that done? Good question.

As I briefly mentioned, the basics are food, shelter, transportation, and security. Shelter poses a particularly interesting problem at the moment. It is still very much overpriced, with many people paying mortgages and rents that they can no longer afford while numerous properties stand vacant. The solution, of course, is to cut your losses and stop paying. But then you might soon have to relocate. That is OK, because, as I mentioned, there is no shortage of vacant properties around. Finding a good place to live will become less and less of a problem as people stop paying their rents and mortgages and get foreclosed or evicted, because the number of vacant properties will only increase. The best course of action is to become a property caretaker, legitimately occupying a vacant property rent-free, and keeping an eye on things for the owner. What if you can't find a position as a property caretaker? Well, then you might have to become a squatter, maintain a list of other vacant properties that you can go to next, and keep your camping gear handy just in case. If you do get tossed out, chances are, the people who tossed you out will then think about hiring a property caretaker, to keep the squatters out. And what do you do if you become property caretaker? Well, you take care of the property, but you also look out for all the squatters, because they are the reason you have a legitimate place to live. A squatter in hand is worth three absentee landlords in the bush. The absentee landlord might eventually cut his losses and go away, but your squatter friends will remain as your neighbors. Having some neighbors is so much better than living in a ghost town.

What if you still have a job? How do you prepare then? The obvious answer is, be prepared to quit or to be laid off or fired at any moment. It really doesn't matter which one of these it turns out to be; the point is to sustain zero psychological damage in the process. Get your burn rate to as close to zero as you can, by spending as little money as possible, so than when the job goes away, not much has to change. While at work, do as little as possible, because all this economic activity is just a terrible burden on the environment. Just gently ride it down to a stop and jump off.

If you still have a job, or if you still have some savings, what do you do with all the money? The obvious answer is, build up inventory. The money will be worthless, but a box of bronze nails will still be a box of bronze nails. Buy and stockpile useful stuff, especially stuff that can be used to create various kinds of alternative systems for growing food, providing shelter, and providing transportation. If you don't own a patch of dirt free and clear where you can stockpile stuff, then you can rent a storage container, pay it a few years forward, and just sit on it until reality kicks in again and there is something useful for you to do with it. Some of you may be frightened by the future I just described, and rightly so. There is nothing any of us can do to change the path we are on: it is a huge system with tremendous inertia, and trying to change its path is like trying to change the path of a hurricane. What we can do is prepare ourselves, and each other, mostly by changing our expectations, our preferences, and scaling down our needs. It may mean that you will miss out on some last, uncertain bit of enjoyment. On the other hand, by refashioning yourself into someone who might stand a better chance of adapting to the new circumstances, you will be able to give to yourself, and to others, a great deal of hope that would otherwise not exist.

* * * * *

Dmitry Orlov is author of Reinventing Collapse, New Society Publishers (2007). His articles on Culture Change include The New Age of Sail , The Despotism of the Image, and That Bastion of American Socialism. His website is cluborlov.blogspot.com

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THE PARTY'S OVER - LET THE GAMES BEGIN

By Linda Monk

The Crash of 2008, which is now wiping out trillions of dollars of
our people's wealth, is, like the Crash of 1929, likely to mark the
end of one era and the onset of another.

The new era will see a more sober and much diminished America .

The "Omnipower" and "Indispensable Nation" we heard about in all
the hubris and braggadocio following our Cold War victory is
history.

Seizing on the crisis, the left says we are witnessing the failure
of market economics, a failure of conservatism.

That is absolute nonsense!

What we are witnessing is the collapse of Gordon Gecko ("Greed Is
Good!") capitalism. We are witnessing what happens to a prodigal
nation that ignores history, and forgets and abandons the
philosophy and principles that made it great.

A true conservative (Rep or Dem) cherishes prudence and believes in
fiscal responsibility, balanced budgets and a self-reliant
republic. He/she believes in saving for retirement and a rainy day,
in deferred gratification, in not buying on credit what you cannot
afford, in living within your means.

Is that really what got Wall Street and us into this mess -- that
we followed too religiously the gospel of Robert Taft and Russell
Kirk?

"Government must save us!" cries the left, as ever. Yet, who got us
into this mess if not the government -- the Fed with its easy
money, Bush with his profligate spending, and Congress and the SEC
by liberating Wall Street and failing to step in and stop the
drunken orgy? For years, we Americans have spent more than we
earned. We save nothing. Credit card debt, consumer debt, auto
debt, mortgage debt, corporate debt -- all are at record levels.
And with pensions and savings being wiped out, much of that debt
will never be repaid. Our standard of living is inevitably going
to fall.

Foreign countries and foreigners themselves will not forever buy
our bonds or lend us more money if they rightly fear that they will
be paid back, if at all, in cheaper dollars. We are going to have
to learn to live again within our means.

THE PARTY'S OVER!

Up through World War II, we followed the Hamiltonian idea that
America must remain economically independent of the world in order
to remain politically independent. But this generation decided that
was yesterday's bromide and we must march bravely forward into a
Global Economy, where we all depend on one another.

American companies morphed into "Global Companies" and moved plants
and factories to Mexico , Asia, China , and India , and we began
buying more cheaply from abroad what we used to make at home:
shoes, clothes, bikes, cars, radios, TVs, planes, computers, etc.
As the trade deficits began inexorably to rise to 6 percent of GDP,
(gross domestic product), we began vast borrowing from abroad to
continue buying from abroad.

At home, propelled by tax cuts, war in Iraq and an explosion in
social spending, surpluses vanished and deficits reappeared and
began to rise.
The dollar began to sag and sink, and gold began to soar. Yet,
still, the promises of the politicians come.

Barack Obama will give us national health insurance and tax cuts
for all but that 2 percent of the nation that already carries 50
percent of the federal income tax load. John McCain was going to
cut taxes, expand the military, move NATO into Georgia and Ukraine,
confront Russia and force Iran to stop enriching uranium or "bomb,
bomb, bomb," with Joe Lieberman as wartime consigliore.

Who are we kidding?

What we are witnessing today is how empires end. The last
Superpower is unable to defend its borders, protect its currency,
win its wars, or balance its budget. Medicare and Social Security
are headed for the cliff with unfunded liabilities in the tens of
trillions of dollars.

What we are witnessing today is nothing less than a Katrina-like
failure of government, of our political class, and of democracy
itself, casting a cloud over the viability and longevity of the
system that has made this country the most envied in the entire
world..

Notice who is managing the crisis. Not our elected leaders. Nancy
Pelosi says she had nothing to do with it. Congress is paralyzed
and heading home. President Bush is nowhere to be seen. Hank
Paulson of Goldman Sachs and Ben Bernanke of the Fed chose to bail
out Bear Sterns but let Lehman go under. They decided to
nationalize Fannie and Freddie at a cost to taxpayers of hundreds
of billions, putting the U. S. government behind $5 trillion in
mortgages. They decided to buy AIG with $85 billion rather than see
the insurance giant sink beneath the waves.

Unelected financial elite is now entrusted with the assignment of
getting us out of a disaster into which an unelected financial
elite plunged the nation. We, the People, are unfortunately just
spectators.

What the Greatest Generation, (the WWII generation), handed down to
us -- the richest, most powerful, most self-sufficient republic in
history, with the highest standard of living any nation had ever
achieved -- the baby boomers, oblivious and self-indulgent to the
end, have frittered it all away.

How do WE THE PEOPLE put the villains who are responsible under
oath and sit them down at public hearings to determine whose necks
should meet the guillotine? Hypocritically, those who had oversight
responsibility such as Senator Chris Dodd [Chairman of the Senate
Banking Committee] and Barney Frank [Chairmen, House Financial
Services Committee] who helped get us into this mess are on every
TV channel voicing their righteous indignation and pompously
sitting on their elevated platform glaring down at those they are
chastising and grilling, trying to pass the blame to others. They
are disgusting.

WE THE PEOPLE should be on the elevated platform in judgment and
execution of the likes of Chris Dodd, Barney Frank and the rest of
the band of thieves and conspirators who are responsible for the
financial collapse of the USA .

To name just a few of the culprits:

Henry Paulson Jr, Secretary of the Treasury
Alan Greenspan & Ben Bernanke -- Chairman Federal Reserve
Christopher Cox, SEC Chairman.

But not to worry -- YOUR PUBLIC SERVANTS who fear being voted out
of office will take their self-awarded Golden Parachute
Congressional Retirement, give WE THE PEOPLE the finger one last
time and head for their safe havens as the World Citizens they are.

However, before they waddle off into the sunset, they will go on
record one last time denouncing corporate greed, lavish salaries,
and bonuses for their key felons at Fannie May, Freddie Mac, Lehman
Brothers & AIG.
Meanwhile, WE THE PEOPLE fiddle while Rome burns and are too lazy,
too ignorant, and too indifferent to vote the scum out of office.