The Age of Mammals
Looking Back on the First Quarter of the Twenty-First Century
By Rebecca Solnit
[For Solomon Solnit (b. Oct. 18, 2006)]
The View from the Grass
I've been writing the year-end other-news summary for Tomdispatch since 2004; somewhere around 2017, however, the formula of digging up overlooked stories and grounds for hope grew weary. So for this year, we've decided instead to look back on the last 25 years of the twenty-first century -- but it was creatures from sixty million years ago who reminded me how to do it.
The other day, I borrowed some kids to go gawk with me at the one thing that we can always count on in an ever-more unstable world: age-of-dinosaur dioramas in science museums. This one had the usual dramatic clash between a tyrannosaurus and a triceratops; pterodactyls soaring through the air, one with a small reptile in its toothy maw; and some oblivious grazing by what, when I was young in another millennium, we would have called a brontosaurus. Easy to overlook in all that drama was the shrew-like mammal perched on a reed or thick blade of grass, too small to serve even as an enticing pterodactyl snack. The next thing coming down the line always looks like that mammal at the beginning -- that's what I told the kids -- inconsequential, beside the point; the official point usually being the clash of the titans.
That's exactly why mainstream journalists spent the first decade of this century debating the meaning of the obvious binaries -- the Democrats versus the Republicans, McWorld versus Global Jihad -- much as political debate of the early 1770s might have focused on whether the French or English monarch would have supremacy in North America, not long before the former was be beheaded and the latter evicted. The monarchs in all their splashy scale were the dinosaurs of their day, and the eighteenth-century mammal no one noticed at first was named "revolution"; the early twenty-first century version might have been called "localism" or maybe "anarchism," or even "civil society regnant." In some strange way, it turned out that windmill-builders were more important than the U.S. Senate. They were certainly better at preparing for the future anyway.
That mammal clinging to the stalk had crawled up from the grassroots where the choices were so much more basic and significant than, for instance, the one between fundamentalism and consumerism that was on everyone's lips in the years of the Younger George Bush. If the twentieth century was the age of dinosaurs -- of General Motors and the Soviet Union, of McDonald's, globalized entertainment networks, and information superhighways -- the twenty-first has increasingly turned out to be the age of the small.
You can see it in the countless local-economy projects -- wind-power stations, farmer's markets, local enviro organizations, food coops -- that were already proliferating, hardly noticed, by the time the Saudi Oil Wars swept the whole Middle East, damaging major oil fields, and bringing on the Great Gasoline Crisis of 2009. That was the one that didn't just send prices skyrocketing, but actually becalmed the globe-roaming container ships with their great steel-box-loads of bottled water, sweatshop garments, and other gratuitous commodities.
The resulting food crisis of the early years of the second decade of the century, which laid big-petroleum-style farming low, suddenly elevated the status of peasant immigrants from what was then called "the undeveloped world," particularly Mexico and Southeast Asia. They taught the less agriculturally skilled, in suddenly greening North American cities, to cultivate the victory gardens that mitigated the widespread famines then beginning to sweep the planet. (It also turned out that the unwieldy and decadent SUVs of the millennium made great ecological sense, but only if you parked them facing south, put in sunroofs and used the high-windowed structures as seed-starter greenhouses.) The crisis spelled an end to the epidemic of American obesity, both by cutting calories and obliging so many Americans to actually move around on foot and bike and work with their hands.
Bush, the Accidental Empire Slayer
For a brief period, in the early years of that second decade of this chaotic century, a whole school of conspiracy theorists gained popularity by suggesting that Bush the Younger was actually the puppet of a left-wing plot to dismantle the global "hyperpower" of that moment. They pointed to the Trotskyite origins of the "neoconservatives," whose mad dreams had so clearly sunk the American empire in Iraq and Afghanistan, as part of their proof. They claimed that Bush's advisors consciously plotted to devastate the most powerful military on the planet, near collapse even before it was torn apart by the unexpected Officer Defection Movement, which burst into existence in 2009, followed by the next year's anti-draft riots in New York and elsewhere.
The Bush administration's mismanagement of the U.S. economy, while debt piled up, so obviously spelled the end of the era of American prosperity and power that some explanation, no matter how absurd, was called for -- and for a while embraced. The long view from our own moment makes it clearer that Bush was simply one of the last dinosaurs of that imperial era, doing a remarkably efficient job of dragging down what was already doomed. If you're like most historians of our quarter-century moment, then you're less interested in the obvious -- why it all fell -- than in discovering the earliest hints of the mammalian alternatives springing up so vigorously with so little attention in those years.
Without benefit of conspiracy, what Bush the Younger really prompted (however blindly) was the beginning of a decentralization policy in the North American states. During the eight years of his tenure, dissident locales started to develop what later would become full-fledged independent policies on everything from queer rights and the environment to foreign relations and the notorious USA-Patriot Act. For example, as early as 2004-2007, several states, led by California, began setting their own automobile emissions standards in an attempt to address the already evident effects of climate change so studiously ignored in Washington.
In June of 2005, mayors from cities across the nation unanimously agreed to join the Kyoto Protocol limiting climate-changing emissions -- a direct rejection of national policy -- at a national meeting in Seattle. Librarians across the country publicly refused to comply with the USA-Patriot Act, and small towns nationwide condemned the measure in the years before many of those towns also condemned what historians now call the U.S.-Iraq Quagmire.
It was the bullying of the Bush administration that pushed these small entities to fight back, to form local administrations and set local regulations -- to leave the Republic behind as they joined the journey to a viable future. And when their withdrawal was finished, so was the Republic.
Now, the thousands of tons of high-level radioactive waste that pro-nuclear-reactor Washington policies had brought into being are buried in the granitic bedrock underlying the former capital -- known as the Nuclear Arlington in contrast with the Human Arlington to the south, which will receive the remains of a few more nostalgic officers from the Gulf Wars, then close for good. The whole history of armament, radioactive contamination, disarmament, and alternative energy research is on display in the museum housed in the former Supreme Court Building, though many avoid the area for fear of radiation contamination.
In hindsight, we all see that the left-right divide so harped upon in that era was but another dinosaur binary. After all, small government had long been (at least theoretically) a conservative mantra as was (at least theoretically) left-wing support for the most localized forms of "people power" -- and yet neither group ever pictured government or people power truly getting small enough to exist as it does today, at its most gigantic in bioregional groups about the size of the former states of Oregon or Georgia -- but, of course, deeply enmeshed in complex global webs of alliances. All this was unimagined in, for instance, the dismal year of 2006.
By the time the Republican Party itself split in 2012 into two adversarial wings dubbed the Fundament party and the Conservatives, the American Empire was dismantling itself. Of course, the United States still nominally exists -- we'll pay a bow to it this year at the Decolonization Day fireworks on July 4 -- but it is a largely symbolic entity, like the British Royal Family was for a century before its dissolution in 2020.
A similar death-of-the-dinosaurs moment was at work in the mainstream media -- the big newspapers and television networks of that era. During the early years of the century, as Bush the Younger dragged the country deeper into the mire of unwinnable wars and countless lies, most of the big newspapers and television news programs lost their nerve, their edge, or even their eyesight, and failed dismally to report the stories that mattered. Some fell to scandal -- the New York Times was never the same after the Judith Miller crisis of 2005. Some were sabotaged from without, like the Los Angeles Times, undercut by its parent corporation's "cost-cutting" programs. Some withered away as younger readers fled paper pages for the Internet. But behind them, below them, in their shadow, regarded as puny and insignificant back then -- even though their scoops kept upstaging and prodding the print media -- were bloggers, alternative media such as small magazines and websites, the glorious Indymedia movement, progressive radio, even the text-messaging that had helped organize the first great Latino march of the immigrant rights movement at its beginnings in April 2006.
The Latin American Renaissance
The Latino-ization of the United States had brought some long missing civic engagement and pleasure back into public life and tied the country (and Canada) to the splendid insurgencies of the southern hemisphere. The era of post-communist revolution that would explode from Tierra del Fuego to Tijuana in the second decade of the century is usually traced back to the entrance of Mexico's indigenous Zapatistas onto the world stage on January 1, 1994.
One bold reflection of a changing continent in those years was the election of progressive leaders -- including leftist Rafael Correa in Ecuador, Hugo Chavez in Venezuela, Michele Bachelet in Chile, Luis Inacio Lula da Silva in Brazil, and Evo Morales of Bolivia, all by 2006 -- even eventually Alicia Ponce de Leon in Columbia in 2014, three years after U.S. war funding dried up (along with the America that paid for it). Chavez (president 1998-2013) termed this the Bolivarian Revolution.
As a group, they were not bad as national leaders then went, but one great blow against nationalism proved to be the British seizure of the former Chilean dictator Augusto Pinochet in 1998 for crimes against humanity and his in-absentia trial in Spain, a saga that dragged on until the blood-drenched dictator's heart failed at the end of 2006. The new world is both more transnational and more local than the one it eclipsed, and nobody will ever be so beyond the reach of justice again. (Africans, for example, recovered from Swiss and offshore bank accounts the hundreds of billions of dollars stolen by their former dictators, which gave a huge boost to the fight against AIDS and desertification.)
Whatever the names of their leaders, the real force in Latin America -- and increasingly elsewhere -- would be in the grassroots activism that the Zapatistas heralded, which, in the view from 2026, clearly signaled the fading relevancy of nation-states. Latin indigenous movements, labor movements, neighborhood groups, worker-takeovers in Argentina's factories from 2001 onward, and the Argentinean ideology of horizontalidad (or horizontalism) that went with it, were just early signs of this development.
Like the regionalist policymaking entities of the United States, these movements undermined even progressive presidents to set more radical policies and grew to include many indigenous autonomous zones across the hemisphere. For example, in late 2006, the 8,000-member Achuar tribe (whose region spans what was once the Peru-Ecuador border) took hostage and defeated Peru's main oil and gas-extraction corporation in a mode of victorious resistance that would become increasingly common. In Mexico, the stolen presidential election of 2006 that resulted in the inauguration of PAN Party candidate Felix Calderon was the straw that broke the camel's back, so to speak. In the years to follow, the Second Mexican Revolution spread from Chiapas, Oaxaca, and Mexico City, slowly dissolving that nation into a network of populist regional strongholds. Seventeen of them reinstated a local indigenous language as their official tongue.
Global Justice and the Drowned Lands
The Latin American Renaissance also created a network of communities strong enough to take in some of the climate-change refugees from Central America and Southern Mexico, who fled both north and south, along with Sunbelt -- and what came to be called Swampbelt -- émigrés from the southern United States. The great population transitions thus went more smoothly in the western hemisphere than across the Atlantic, where Europeans engaged in escalating anti-Muslim confrontations before realizing that only immigration could prop up the economies of nations whose native-born, white-Christian populations were rapidly aging and, thanks to ultra-low birthrates, declining.
The end of those bloody squabbles is generally considered to have been marked by the election in 2020 of Chancellor Amira Goldblatt Al-Hamid by what was then only a loosely federated association of German-speaking bioregional principalities. Similar crises -- and, in some cases, bloody cross-community, cross-religion bloodlettings --took place elsewhere, especially as populations moved away from increasingly desertifying, ever hotter hot zones in Africa and Southern Asia. Some historians have regarded the devastating global bird-flu pandemic of 2013 as fortunate in relieving climate-change population-shift pressures; others -- including the noted historian Martha Moctezuma from the University of San Diego-Tijuana's Davis Center on Public Luxury -- discard that perspective as callous.
Every schoolchild now knows the Old Map/New Map system and can recite the lands that vanished: half the Netherlands, much of Bangladesh, the Amazon Delta, the New Orleans and Shanghai lowlands. And who today can't still sing the popular ditties about those famed "fundamentalists without their fundamentals" -- the senators who lost the state of Florida as it rapidly became a swampy archipelago. Most schoolchildren can also cite the World Court decision of 2016 that gave all shares in the major oil companies to Pacific Islanders, mainly resettled in New Zealand and Australia, whose homes had been lost to rising oceans (a short-lived triumph as the fossil-fuel economy ebbed away).
More creative responses to climate change included the tree-traveler and polar-bear collectives. These eco-anarchist clans -- now popular contemporary heroes -- first nursed plant populations on their unnatural journeys north by means of extensive rainy-season nursery cultivation and summer planting programs that have since become huge outdoor festivals. Today, many city parks and town squares have statues of Cleo Dorothy Chan, who organized the first small tree-traveler collective in southern Oregon and is now hailed globally as the twenty-first century's Johnny Appleseed. ("You can't choose between grief and exhilaration; they are the left and right foot on which we hike onward," said the t-shirts of the tree-travelers.) As for the polar-bear folks, they were initially a group of zoologists and circus trainers who, inspired by the tree-travelers, mobilized themselves to teach young polar bears to adapt to changed habitat. They are often credited with saving that one charismatic species in the wild, even as thousands of less emblematic ones vanished.
The Principles of Change
A mature oak tree always looks significant; and, when we look at it, we're willing to respect acorns -- but the rest of the time the seeds of the next big thing are just trodden upon and overlooked. The ideas that made our era and pulled us back from the brink, the stakes that went through the hearts of the dinosaurs and the more incremental forces that rendered them extinct were all at work in the 1990s. They just didn't look very impressive yet, and people were intimidated by the heft of those dinosaurs and swayed by their arguments.
The World Court and related human rights, environmental rights, and criminal courts became more powerful presences as the sun set on the era of nation-state. Multiple changes often combined into scenarios impossible to foresee: for example, the belated U.S. recognition in 2011 that the International Criminal Court did indeed have war-crimes jurisdiction over Americans coincided with the worldwide anti-incarceration movement. This explains why, for example, former President Bush the Younger, extradited from Paraguay and found guilty in 2013, was never imprisoned, but sentenced to spend the rest of his life working in a Fallujah diaper laundry. (People who are still bitter about his reign are bitter too that the webcam there suggests, even at his advanced age, he still enjoys this work that accords so well with his skill-set.) His assets -- along with those of his Vice President, and of Halliburton, Bechtel, Exxon, and other war profiteers -- were famously awarded to the Vietnamese Buddhist Commission for the Iraqi Transition. After almost a decade of the bitterest bloodshed, Iraq, too, had broken into five nations, but by this time so many nation-states were being reorganized into more coherent units that the Iraqi transition, led by the Women's Alliance of Islamic Feminists (nicknamed the Islamofeminists), was surprisingly peaceful when it finally came.
"As I've said many times, the future is already here. It's just not very evenly distributed," said the sci-fi novelist William Gibson in 1999. In retrospect, the arrival of the Age of Mammals should have been easy to foresee. On every front -- family structure and marriage, transportation, energy and food economies, localized power structures -- everyday life was being reinvented in the late twentieth and early twenty-first centuries. From India to Indiana an interlocking set of new ideas began to emerge and coalesce, becoming in the end the new common sense that new generations of thinkers and activists were guided by. Who now thinks it's radical to advocate that decentralization is better than consolidated power, that capitalism's worldview is vicious and dishonest, that the public matters as much or more than the private, that enforced homogeneity is not a virtue either on a farm or in a society?
The basic tools were already in place long before our era; here and there, a few at a time, people picked them up and started building a better future. Some new inventions mattered, such as the super-efficient German and Japanese solar collectors and methane generators that revolutionized energy production, but much of the march toward a more environmentally sane future didn't require fancy scientific breakthroughs and technologies, just modesty. We scaled back on consumption and production. For example, the collapse of the U.S. military put an end to the world's single most polluting entity, while the near-end of recreational air travel also made a significant contribution to rolling back greenhouse-gas production.
The law of unintended consequences continued to prevail: When touristic air travel withered, so did Hawaii's tourist economy -- making the retaking of the islands by indigenous Hawaiians via the King Kamehameha Council a piece of cake. Of course sailing ships still travel the triangular trade-winds route between Latin America, Hawaii and the Pacific Northwest.
Everything was changing then, is changing now, and some years back the Principles of Change were codified. These simply recited the history of popular and nonviolent resistance from slave uprisings (Hochschild '05) and Gandhian tactics (Schell '03) to the principles of direct action (D. Solnit '09) and social change (see Marina Sitrin on horizontalism, '06) and drew the obvious conclusions about how change works, what powers civil society has, how war can be sabotaged from below, and why violence ultimately fails.
Believers in authoritarian power had prophesied a globalized world of corporate nation-states (and indeed the 2012 Olympics featured teams identified by branding rather than nation, such as the Dasani and Nokia track teams and the Ikea Decathaletes); but even as the polar bears survived, a different kind of change in the global climate doomed most of the large corporations. The outlawing of corporate personhood was launched in Porter Township, Pennsylvania, in December of 2002 and gradually became the law of the land.
By 2015, the "human rights" U.S. courts had given to corporations in the 1880s had been globally stripped away from them again. Of course, there were revolts against the new world -- just as the Republican dinosaurs led a long rearguard movement against women's rights, queer rights, the rights of the environment, and science education, so there were corporations that resisted the new order, most spectacularly when Arkansas was taken over wholesale by Wal-Mart for seventeen months in the early teens.
The heavily armed Arkansans rose up, Wal-Mart's private army changed sides, and what was once the world's biggest corporation joined the dung-heap of history along -- most famously -- with Monsanto, derailed by the Schmeiser verdict, the precedent-setting World Court decision to award all assets in the genetic-engineering corporation to small farmers previously terrorized for not paying royalties on crops contaminated by Monsanto's genetically altered strains. Failed presidential candidate Hillary Clinton, who had been appointed ambassador to the United States from the Republic of Wal-Mart, was sentenced to three years as a sweeper at an Arkansas farmer's market and became locally beloved in the role.
In the American Middle East (known as the Midwest until modern geographers pointed out that the west starts at the Continental Divide), sectarian feuding, which kept the region in a state of subdued civil war for almost a decade, still flares up occasionally. Periodic sorties by the Fundaments against new programs and lifestyles are considered part of normal life, though Kansas's John Brown Society provides a degree of protection against them.
The Republic of Northern Idaho was another outpost of different-sex-only marriage laws and creationism, but the need to work with downriver communities on salmon restoration and dam removal eventually dissolved the breakaway half-state into the Columbia River Drainage federation. Other historians claim that the tattooed love freaks of the Seattle region, who found common ground with the ex-truckers and elk-hunters of Idaho, dissolved the Idahoan Republic via bicycle races and beer fests. Some also say the same-sex desires of elk hunters were legendary and led to negotiations for a direct rail link to San Francisco and Los Angeles.
In 1996, the Pentagon prepared imaginary scenarios describing five potential futures by 2025. Most of them were based on the belief that a better world was one dominated by American military power -- which is to say, by the threat of state violence. That they came up with five possible futures demonstrated, at least, how wide-open the next two decades seemed, even to a Tyrannosaurus-Rex bureaucracy that thought it was soon to own the planet.
Some of their technological, corporate, and militaristic futures could have come to pass. Had people not come to believe strongly enough in their own power, in a horizontalist society, and in a planet-wide ability to work with the environmental changes the Industrial Age had loosed on us, we might be living in a very different, unimaginably catastrophic world -- one in which the mammals would never have proliferated. They might even have breathed their last without ever emerging from under the fern fronds and out of the grasses.
The future, of course, is not something you predict and wait for. It is something you invent daily through your actions. As Mas Kodani, a Buddhist in Los Angeles, said in the early twenty-first century: "One does not stand still looking for a path. One walks; and as one walks, a path comes into being." We make it up as we go, and we make it up by going, or as the Zapatistas more elegantly put it, "Walking we ask questions." What else can you do?
Perhaps respect the power of the small and the mystery of the future to which we all belong.
Rebecca Solnit lives in and loves the peninsular republic of San Francisco, where she is working on a new book. Her most recent books are still Hope in the Dark and A Field Guide to Getting Lost.
Copyright 2006 Rebecca Solnit
Wednesday, December 13, 2006
MORTGAGE INDUSTRY CRATERING UNDER FRAUD REVELATIONS
Alex S. Gabor
December 8, 2006
The inevitable is happening. After millions of fraudulent loan applications being processed, closed and then resold to unwary and unsuspecting foreign investors through U.S. government sponsored institutions such as Fannie Mae and Freddie Mac, and other major financial houses including banks, S&L’s and large publicly traded mortgage companies, foreign central banks are shying away from fueling further liquidity in the U.S. housing market which has impacted the value of the dollar while Europe and Britain raise or maintain their interest rates respectively to prevent global financial panic.
The Feds new chairman, Ben Bernanke is caught between a rock and a hard place. He is not instilling much foreign confidence with his recent remarks that the bottom of the housing market is near, echoed by Realtors, Builders and inside the industry paid economists and analysts.
Bernanke justifiably keeps harping on inflation fears but a raise in interest rates would only accelerate the collapsing mortgage industry in America. It may be the slipperiest slope facing the banking industry in American history.
Inflation fears are well founded as the dollar has lost over 15% of its purchasing power in 2006 against the Yen, Euro and British Pound, and 99.9999% since the Fed was incorporated in 1913.
A devalued dollar creates enormous inflation which is skewed by false government statistics on the jobless rate and other false economic news echoed by heads of publicly traded homebuilders whose nightmares are just beginning to see the light of day.
Public statements made by people whose vested conflicts of interest contradict facts surrounding the current shrinking demand for new homes, rising inventories, fewer new home permits, huge increases in initial default notices, rising mortgage company failures and over 110,000 homes around the nation currently in foreclosure with no end in sight.
One analyst predicts that by the end of 2007 there will be over a million foreclosures and unsold housing inventory on the market and an increasing wave of new personal bankruptcies setting new all time records.
British, Japanese, European and Chinese bankers are not standing around scratching their heads as news of Fannie Mae’s $6 billion restatement of earnings was recently announced. They already knew it was coming, they just didn’t know exactly when.
They have been quietly selling off dollar reserves for the past year knowing that America’s economy was being fueled by an artificially inflated housing boom led by Greenspans’ watch which ended last February.
We won’t know how bad Fannie Mae is doing for several more years, a fact that is obfuscated by relaxed rules being made in its’ favor – under New York Stock Exchange financial reporting rules Fannie should have been delisted several years ago - but now won’t have its’ 2005 results until September 2007 according to its Chairman Daniel Mudd.
London based Hong Kong Shanghai Banks’ (HSBC) Finance Director Douglas Flint, who works for the third largest bank in the world, says “data coming in shows signs of weakening in loan portfolios in North America”.
That means that banks will need to increase their reserve capital requirements in 2007, adding further tightening to lending conditions, which in turn will domino the real estate market, spilling over into commercial transactions.
HSBC generated 31% of its global profits from home loans last year but is experiencing 65% of its’ bad loans this year from the same market. The actual numbers will not arrive for another 30 to 60 days as almost every bank in the country has experienced major drops in loan originations and increased defaults but won’t report their total financial results until January of 2007.
H&R Block has put its’ Option One mortgage unit up for sale with no real buyers in sight because it is hemorrhaging from a 40% drop in sales, a $39 million second quarter loss, and has shuttered a dozen offices around the nation.
This past week, once high flying Ownit Mortgage Solutions announced it has completely closed down all its operations, putting more than 700 people out of work, and costing investors more than $50 million in equity.
Ownit, headquartered in California, was jointly owned by Merrill Lynch and a private equity group led by Bill Dallas, once boasted of how it was one of the 15th largest lenders to homedebtors (anyone with a mortgage doesn’t really own their homes so they should not be falsely labeled “homeowners”) grew at an unusually high rate of 800% during just two years when its loan originations increased from $1 billion a year to over $8 billion in 2005.
In 2005, Bill Dallas was quoted as saying, "Underwriting guidelines developed in the 1950s don't address the needs of today's homebuyers and brokers, loans that met the needs of Ozzie and Harriet were not intended to fill the needs of Desperate Housewives."
Calls from the media and regulators to Dallas’ offices in Agoura Hills, California were being referred to his lawyers as 50,000 square feet of office space at the company headquarters may soon be found empty.
Another company in Texas, Sebring Capital Partners, shut its doors this week and more than 350 people are out of work there. The number of people in the real estate industry, including home construction, real estate lenders and brokers, who are seeing their incomes evaporate has quadrupled in the last nine months. Most of those people have mortgages.
Atlanta-based NetBank last month closed its subprime lending unit and transferred most of its employees to another company. Key Corp. is trying to sell its subprime Champion Mortgage business without much success.
Many people in the industry cannot claim unemployment because they were on commission only jobs. Many of them were treated as self employed or independent contractors thus they are not reflected in the real unemployment numbers.
They may not even show up in poverty statistics but many are slowly going broke if not broken already. Some may not be able to file bankruptcy because they cannot afford it. The average cost of filing bankruptcy through an attorney is around $1,500 nationally.
If collection agencies don’t collect money after four years on debts owed, Federal law precludes any further obligation to pay, so most of the fallout from this wave will last at least another four to five years as the credit scores of those caught up in the mess preclude them from jumping back into the game any time soon.
So far very few mortgage brokers or fraudulent borrowers have gone to jail relative to the multi-trillion dollar fraud foisted upon the market over the past several years. The FBI says they don’t have the manpower.
Many realtors who got caught up in the game wound up owning two or more rental properties and are now struggling to make their own mortgage payments, as rents in some areas are being raised in an attempt to cover higher mortgage payments, forcing tenants to find cheaper housing elsewhere, a harbinger of even greater default and foreclosure volumes.
According to European bankers at Union Bank of Switzerland, default rates on home mortgages in America have doubled in the last two quarters, while liquidity in the secondary market is shrinking due to higher investor concerns about credit and loan quality.
Large institutional hedge funds and global investors are bracing for what is probably going to be the biggest drop in real estate values in the history of the world as more than $5 trillion is lopped off the hyper inflated froth of the home lending and mortgage industry.
That $5 trillion evaporation into thin air of value which was created out of thin air in the first place includes home equity that may make the amount owed on homes, particularly those that were financed with 100% loans, more than the present market values. It also includes lower stock prices on mortgage banking companies, builders, escrow companies, title companies and all real estate industry related publicly traded stocks.
Where these savvy investors are now playing with other people’s money is in the stocks of troubled industry related companies. Shorting home builders has generated billions in profits for large groups of hedge fund investors managed by smart money managers.
One analyst, who predicts we may see several $50 billion dollar deals next year says the only thing that can fuel any growth in stocks and equities on Wall Street is increased lending by commercial banks to private equity groups which may lead to record leveraged buyouts in 2007.
There is now more than $1 trillion invested in private equity hedge funds operating from tax free havens around the world. They are eagerly awaiting more fallout in the real estate sector and have their bets very well hedged said another hedge fund analyst.
To the keen eye, these forms of economic development are just more smoke and mirrors in a real estate market that is cratering.
Another analyst says that in 2007 we are going to see at least two large publicly traded homebuilders file bankruptcy as their credit lines are cut off by major banks, and two others will merge just to survive the downturn.
One retired old time mortgage broker who has criticized his modern peers over the past few years has indicated that some public prosecutors are beginning to take notice of increasing default rates and lenders are being more scrupulous when it comes to verifying information on borrowers loan applications because of the rising rates of default on such loan programs as 100% stated income, stated asset loans.
“The Fed has been trying to do away with these types of loans for years but doesn’t want to send the market into shock and awe.”
“They are either going to put the screws to the borrower for United States Code violations, or they are going to get the borrowers to turn in the brokers and bankers who put them into loans they really didn’t qualify for in the first place.” It would appear that new waves of prosecutions are on the near horizon.
An increasing number of lenders are being forced to ask borrowers who have now defaulted how their incomes could have plummeted so rapidly after refinancing which allowed them to live off the cash they borrowed on the equity in their homes.
One smug mortgage broker in Woodland Hills, California was quoted as saying, “they can’t touch me, the borrower’s are the one’s that signed the loan applications, none of my contracts with lenders require that I buy back loans from them if they default or if they later discover fraud”.
With revelations resulting from recent studies showing that 2% of the worlds population owns 50% of its assets, that 12% of the population or 36 million Americans are living in poverty, with huge increases in houseless people migrating to suburbia, it appears that the building, mortgage lending and banking industries have saturated the market with over inflated properties and their monopoly games are about to be put on the shelf, at least until all the dust settles, and those without “get out of jail free” cards are brought to justice.
Alex S. Gabor is the author of “Bonanza – Profiting During the Real Estate Depression – How to Make a Killing During the Real Estate Bust”, an electronic book being readied for release in 2007. He is a freelance writer living in Hollywood. He spent 25 years investigating and working in the mortgage banking industry and is the inventor of zero interest mortgages. He is a major proponent of changing the current tax laws to eliminate mortgage interest deductions and replace them with principal reduction credits to encourage debt free home ownership and affordable housing.
Copyright © 2006 by Alex S. Gabor. All Rights Reserved.
Alex S. Gabor
December 8, 2006
The inevitable is happening. After millions of fraudulent loan applications being processed, closed and then resold to unwary and unsuspecting foreign investors through U.S. government sponsored institutions such as Fannie Mae and Freddie Mac, and other major financial houses including banks, S&L’s and large publicly traded mortgage companies, foreign central banks are shying away from fueling further liquidity in the U.S. housing market which has impacted the value of the dollar while Europe and Britain raise or maintain their interest rates respectively to prevent global financial panic.
The Feds new chairman, Ben Bernanke is caught between a rock and a hard place. He is not instilling much foreign confidence with his recent remarks that the bottom of the housing market is near, echoed by Realtors, Builders and inside the industry paid economists and analysts.
Bernanke justifiably keeps harping on inflation fears but a raise in interest rates would only accelerate the collapsing mortgage industry in America. It may be the slipperiest slope facing the banking industry in American history.
Inflation fears are well founded as the dollar has lost over 15% of its purchasing power in 2006 against the Yen, Euro and British Pound, and 99.9999% since the Fed was incorporated in 1913.
A devalued dollar creates enormous inflation which is skewed by false government statistics on the jobless rate and other false economic news echoed by heads of publicly traded homebuilders whose nightmares are just beginning to see the light of day.
Public statements made by people whose vested conflicts of interest contradict facts surrounding the current shrinking demand for new homes, rising inventories, fewer new home permits, huge increases in initial default notices, rising mortgage company failures and over 110,000 homes around the nation currently in foreclosure with no end in sight.
One analyst predicts that by the end of 2007 there will be over a million foreclosures and unsold housing inventory on the market and an increasing wave of new personal bankruptcies setting new all time records.
British, Japanese, European and Chinese bankers are not standing around scratching their heads as news of Fannie Mae’s $6 billion restatement of earnings was recently announced. They already knew it was coming, they just didn’t know exactly when.
They have been quietly selling off dollar reserves for the past year knowing that America’s economy was being fueled by an artificially inflated housing boom led by Greenspans’ watch which ended last February.
We won’t know how bad Fannie Mae is doing for several more years, a fact that is obfuscated by relaxed rules being made in its’ favor – under New York Stock Exchange financial reporting rules Fannie should have been delisted several years ago - but now won’t have its’ 2005 results until September 2007 according to its Chairman Daniel Mudd.
London based Hong Kong Shanghai Banks’ (HSBC) Finance Director Douglas Flint, who works for the third largest bank in the world, says “data coming in shows signs of weakening in loan portfolios in North America”.
That means that banks will need to increase their reserve capital requirements in 2007, adding further tightening to lending conditions, which in turn will domino the real estate market, spilling over into commercial transactions.
HSBC generated 31% of its global profits from home loans last year but is experiencing 65% of its’ bad loans this year from the same market. The actual numbers will not arrive for another 30 to 60 days as almost every bank in the country has experienced major drops in loan originations and increased defaults but won’t report their total financial results until January of 2007.
H&R Block has put its’ Option One mortgage unit up for sale with no real buyers in sight because it is hemorrhaging from a 40% drop in sales, a $39 million second quarter loss, and has shuttered a dozen offices around the nation.
This past week, once high flying Ownit Mortgage Solutions announced it has completely closed down all its operations, putting more than 700 people out of work, and costing investors more than $50 million in equity.
Ownit, headquartered in California, was jointly owned by Merrill Lynch and a private equity group led by Bill Dallas, once boasted of how it was one of the 15th largest lenders to homedebtors (anyone with a mortgage doesn’t really own their homes so they should not be falsely labeled “homeowners”) grew at an unusually high rate of 800% during just two years when its loan originations increased from $1 billion a year to over $8 billion in 2005.
In 2005, Bill Dallas was quoted as saying, "Underwriting guidelines developed in the 1950s don't address the needs of today's homebuyers and brokers, loans that met the needs of Ozzie and Harriet were not intended to fill the needs of Desperate Housewives."
Calls from the media and regulators to Dallas’ offices in Agoura Hills, California were being referred to his lawyers as 50,000 square feet of office space at the company headquarters may soon be found empty.
Another company in Texas, Sebring Capital Partners, shut its doors this week and more than 350 people are out of work there. The number of people in the real estate industry, including home construction, real estate lenders and brokers, who are seeing their incomes evaporate has quadrupled in the last nine months. Most of those people have mortgages.
Atlanta-based NetBank last month closed its subprime lending unit and transferred most of its employees to another company. Key Corp. is trying to sell its subprime Champion Mortgage business without much success.
Many people in the industry cannot claim unemployment because they were on commission only jobs. Many of them were treated as self employed or independent contractors thus they are not reflected in the real unemployment numbers.
They may not even show up in poverty statistics but many are slowly going broke if not broken already. Some may not be able to file bankruptcy because they cannot afford it. The average cost of filing bankruptcy through an attorney is around $1,500 nationally.
If collection agencies don’t collect money after four years on debts owed, Federal law precludes any further obligation to pay, so most of the fallout from this wave will last at least another four to five years as the credit scores of those caught up in the mess preclude them from jumping back into the game any time soon.
So far very few mortgage brokers or fraudulent borrowers have gone to jail relative to the multi-trillion dollar fraud foisted upon the market over the past several years. The FBI says they don’t have the manpower.
Many realtors who got caught up in the game wound up owning two or more rental properties and are now struggling to make their own mortgage payments, as rents in some areas are being raised in an attempt to cover higher mortgage payments, forcing tenants to find cheaper housing elsewhere, a harbinger of even greater default and foreclosure volumes.
According to European bankers at Union Bank of Switzerland, default rates on home mortgages in America have doubled in the last two quarters, while liquidity in the secondary market is shrinking due to higher investor concerns about credit and loan quality.
Large institutional hedge funds and global investors are bracing for what is probably going to be the biggest drop in real estate values in the history of the world as more than $5 trillion is lopped off the hyper inflated froth of the home lending and mortgage industry.
That $5 trillion evaporation into thin air of value which was created out of thin air in the first place includes home equity that may make the amount owed on homes, particularly those that were financed with 100% loans, more than the present market values. It also includes lower stock prices on mortgage banking companies, builders, escrow companies, title companies and all real estate industry related publicly traded stocks.
Where these savvy investors are now playing with other people’s money is in the stocks of troubled industry related companies. Shorting home builders has generated billions in profits for large groups of hedge fund investors managed by smart money managers.
One analyst, who predicts we may see several $50 billion dollar deals next year says the only thing that can fuel any growth in stocks and equities on Wall Street is increased lending by commercial banks to private equity groups which may lead to record leveraged buyouts in 2007.
There is now more than $1 trillion invested in private equity hedge funds operating from tax free havens around the world. They are eagerly awaiting more fallout in the real estate sector and have their bets very well hedged said another hedge fund analyst.
To the keen eye, these forms of economic development are just more smoke and mirrors in a real estate market that is cratering.
Another analyst says that in 2007 we are going to see at least two large publicly traded homebuilders file bankruptcy as their credit lines are cut off by major banks, and two others will merge just to survive the downturn.
One retired old time mortgage broker who has criticized his modern peers over the past few years has indicated that some public prosecutors are beginning to take notice of increasing default rates and lenders are being more scrupulous when it comes to verifying information on borrowers loan applications because of the rising rates of default on such loan programs as 100% stated income, stated asset loans.
“The Fed has been trying to do away with these types of loans for years but doesn’t want to send the market into shock and awe.”
“They are either going to put the screws to the borrower for United States Code violations, or they are going to get the borrowers to turn in the brokers and bankers who put them into loans they really didn’t qualify for in the first place.” It would appear that new waves of prosecutions are on the near horizon.
An increasing number of lenders are being forced to ask borrowers who have now defaulted how their incomes could have plummeted so rapidly after refinancing which allowed them to live off the cash they borrowed on the equity in their homes.
One smug mortgage broker in Woodland Hills, California was quoted as saying, “they can’t touch me, the borrower’s are the one’s that signed the loan applications, none of my contracts with lenders require that I buy back loans from them if they default or if they later discover fraud”.
With revelations resulting from recent studies showing that 2% of the worlds population owns 50% of its assets, that 12% of the population or 36 million Americans are living in poverty, with huge increases in houseless people migrating to suburbia, it appears that the building, mortgage lending and banking industries have saturated the market with over inflated properties and their monopoly games are about to be put on the shelf, at least until all the dust settles, and those without “get out of jail free” cards are brought to justice.
Alex S. Gabor is the author of “Bonanza – Profiting During the Real Estate Depression – How to Make a Killing During the Real Estate Bust”, an electronic book being readied for release in 2007. He is a freelance writer living in Hollywood. He spent 25 years investigating and working in the mortgage banking industry and is the inventor of zero interest mortgages. He is a major proponent of changing the current tax laws to eliminate mortgage interest deductions and replace them with principal reduction credits to encourage debt free home ownership and affordable housing.
Copyright © 2006 by Alex S. Gabor. All Rights Reserved.
Gore Taking Heat for Global Warming
Philip V. Brennan
Tuesday, Dec. 5, 2006
Let's see, the earth is warming at an alarming rate and in no time at all it will be too late to keep us all from being barbecued by Mother Nature.
At least that's what the esteemed Albert Gore keeps telling us, in terms that get more shrill as each day goes by.
Moreover the distinguished United States Sens. Jay Rockefeller and the inconveniently named Olympia Snowe are so inflamed by Mr. Gore's alarm that they want to have anyone who contradicts him cast into the outer darkness with such nincompoops as those who think the moon landings were staged on a Hollywood set.
Global warming denial would be a crime if they have their way.
Would they not be better advised to direct their attention to the global warming fanatics who, for example, tell us that the Antarctic region is warming and the ice and snow cover are melting away? It's hard to conceive when we read that "An Antarctic hut used by Captain Robert Falcon Scott is being crushed under record snowdrifts, prompting a marathon digging effort by a New Zealand-led team.
"Four conservators with the Antarctic Heritage Trust [AHT] spent a week shovelling 85 tonnes of snow from around Cape Evans hut in a bid to prevent more damage being caused by snowdrifts one third bigger than it has faced in its 95-year history," according to the Trust.
Strangely, wherever Mr. Gore travels about the world sounding the alarm it suddenly turns bone chilling cold and mounds of snow pile up. But not to worry, say his supporters who explain that, those bitter cold fronts are the result of guess what . . . global warming! It would appear that the warmer the earth gets, the colder it gets. If it gets any warmer we'll all freeze to death.
Writing in Australia's on Nov. 17 Herald Sun, Andrew Bolt reported on the Gore phenomena writing that when Al Gore arrived in Australia last month to warn about global warming, Victoria got snow in November!
"Call it the Gore Effect — the uncanny ability of the world's most famous global warming alarmist to cool any place he tours . . . this has happened to the former U.S. vice-president and narrator of "An Inconvenient Truth" rather a lot.
"It was first noticed in Boston in 2004, when Gore was due to give a big speech in Boston on the imminent danger of the world frying. Bingo! The city had its coldest temperatures in almost 50 years. Same story with his speech that year in New York — delivered in near-record low temperatures.
"Or look over at New Zealand, which has just finished hosting another Gore tour . . . the place was just emerging from one of its wettest and coldest winters on record . . . and now the local papers report: "An unusually cold October has left Southland dairy farmers struggling."
"Of course, it's not just Gore who can bring a chill just by talking about global warming. 'A fortnight ago we read this in a Sydney newspaper: 'Thousands of people have marched through central Sydney, ignoring wet and windy weather to protest against global warming.'"
I don't know where Al Gore was a couple of days ago when much of the U.S. endured late-winter type temperatures and record breaking early snow falls.
I keep asking a very simple question of those who keep screeching that that the Polar regions are warming and the polar bears are headed for extinction: If the Arctic region that manufactures cold fronts and sends them southward are getting warmer, how can they keep sending colder and colder record breaking weather in our direction? Shouldn't they be sending us balmy breezes instead of blizzards and bone chilling cold?
In other words, if our arctic refrigerator is running out of coolant, how can it continue to create colder and colder weather fronts and send them spiraling down to us?
Just asking.
Now I'm going to stick my neck way out and make a prediction about the next two winters. I base it on my conviction that all the signs point to the onset of an ice age and that we are well into the 20-year period which history has shown to precede the onset of periods of glaciation — a phenomenon that occurs every 100,000 years or so. Paleological research has shown that for millions of years the earth has undergone an ice age every 90,000 years or so followed by about 12,000 years of interglacial periods such as the one the earth has been enjoying for the last 12,000 years. We are at the end of that cycle.
In that 20-year period, it has been shown that Mother Nature gets more and more violent and the climate gets colder and colder and snow fall gets deeper and deeper.
In his insightful Web site, iceagenow.com Robert Felix explains the mechanism that brings about glaciation. Underseas tectonic activity — underwater volcanic activity and cracks in the ocean floor — leak red hot magma into the oceans heating them until they begin to send clouds of water vapor — the most potent of the so-called Greenhouse gases — into the upper atmosphere where it falls as rain in the spring, summer, and fall and as snowfall in the winter.
The hotter the oceans, the more water vapor sent heavenward and the heavier the precipitation.
Have you noticed the large number of record breaking rainfalls we've been seeing in the past couple of years — areas of the U.S. getting 20 inches of rain in a day or so? Twenty inches of rain would be 20 feet of snow in the winter!
Have I got your attention?
My prediction: Within the next 24 months some areas of the U.S. will have 20 feet of snow falling in just one storm.
We'll see.
Phil Brennan is a veteran journalist who writes for NewsMax.com. He is editor & publisher of Wednesday on the Web (http://www.pvbr.com) and was Washington columnist for National Review magazine in the 1960s. He also served as a staff aide for the House Republican Policy Committee and helped handle the Washington public relations operation for the Alaska Statehood Committee which won statehood for Alaska. He is also a trustee of the Lincoln Heritage Institute and a member of the Association For Intelligence Officers.
Philip V. Brennan
Tuesday, Dec. 5, 2006
Let's see, the earth is warming at an alarming rate and in no time at all it will be too late to keep us all from being barbecued by Mother Nature.
At least that's what the esteemed Albert Gore keeps telling us, in terms that get more shrill as each day goes by.
Moreover the distinguished United States Sens. Jay Rockefeller and the inconveniently named Olympia Snowe are so inflamed by Mr. Gore's alarm that they want to have anyone who contradicts him cast into the outer darkness with such nincompoops as those who think the moon landings were staged on a Hollywood set.
Global warming denial would be a crime if they have their way.
Would they not be better advised to direct their attention to the global warming fanatics who, for example, tell us that the Antarctic region is warming and the ice and snow cover are melting away? It's hard to conceive when we read that "An Antarctic hut used by Captain Robert Falcon Scott is being crushed under record snowdrifts, prompting a marathon digging effort by a New Zealand-led team.
"Four conservators with the Antarctic Heritage Trust [AHT] spent a week shovelling 85 tonnes of snow from around Cape Evans hut in a bid to prevent more damage being caused by snowdrifts one third bigger than it has faced in its 95-year history," according to the Trust.
Strangely, wherever Mr. Gore travels about the world sounding the alarm it suddenly turns bone chilling cold and mounds of snow pile up. But not to worry, say his supporters who explain that, those bitter cold fronts are the result of guess what . . . global warming! It would appear that the warmer the earth gets, the colder it gets. If it gets any warmer we'll all freeze to death.
Writing in Australia's on Nov. 17 Herald Sun, Andrew Bolt reported on the Gore phenomena writing that when Al Gore arrived in Australia last month to warn about global warming, Victoria got snow in November!
"Call it the Gore Effect — the uncanny ability of the world's most famous global warming alarmist to cool any place he tours . . . this has happened to the former U.S. vice-president and narrator of "An Inconvenient Truth" rather a lot.
"It was first noticed in Boston in 2004, when Gore was due to give a big speech in Boston on the imminent danger of the world frying. Bingo! The city had its coldest temperatures in almost 50 years. Same story with his speech that year in New York — delivered in near-record low temperatures.
"Or look over at New Zealand, which has just finished hosting another Gore tour . . . the place was just emerging from one of its wettest and coldest winters on record . . . and now the local papers report: "An unusually cold October has left Southland dairy farmers struggling."
"Of course, it's not just Gore who can bring a chill just by talking about global warming. 'A fortnight ago we read this in a Sydney newspaper: 'Thousands of people have marched through central Sydney, ignoring wet and windy weather to protest against global warming.'"
I don't know where Al Gore was a couple of days ago when much of the U.S. endured late-winter type temperatures and record breaking early snow falls.
I keep asking a very simple question of those who keep screeching that that the Polar regions are warming and the polar bears are headed for extinction: If the Arctic region that manufactures cold fronts and sends them southward are getting warmer, how can they keep sending colder and colder record breaking weather in our direction? Shouldn't they be sending us balmy breezes instead of blizzards and bone chilling cold?
In other words, if our arctic refrigerator is running out of coolant, how can it continue to create colder and colder weather fronts and send them spiraling down to us?
Just asking.
Now I'm going to stick my neck way out and make a prediction about the next two winters. I base it on my conviction that all the signs point to the onset of an ice age and that we are well into the 20-year period which history has shown to precede the onset of periods of glaciation — a phenomenon that occurs every 100,000 years or so. Paleological research has shown that for millions of years the earth has undergone an ice age every 90,000 years or so followed by about 12,000 years of interglacial periods such as the one the earth has been enjoying for the last 12,000 years. We are at the end of that cycle.
In that 20-year period, it has been shown that Mother Nature gets more and more violent and the climate gets colder and colder and snow fall gets deeper and deeper.
In his insightful Web site, iceagenow.com Robert Felix explains the mechanism that brings about glaciation. Underseas tectonic activity — underwater volcanic activity and cracks in the ocean floor — leak red hot magma into the oceans heating them until they begin to send clouds of water vapor — the most potent of the so-called Greenhouse gases — into the upper atmosphere where it falls as rain in the spring, summer, and fall and as snowfall in the winter.
The hotter the oceans, the more water vapor sent heavenward and the heavier the precipitation.
Have you noticed the large number of record breaking rainfalls we've been seeing in the past couple of years — areas of the U.S. getting 20 inches of rain in a day or so? Twenty inches of rain would be 20 feet of snow in the winter!
Have I got your attention?
My prediction: Within the next 24 months some areas of the U.S. will have 20 feet of snow falling in just one storm.
We'll see.
Phil Brennan is a veteran journalist who writes for NewsMax.com. He is editor & publisher of Wednesday on the Web (http://www.pvbr.com) and was Washington columnist for National Review magazine in the 1960s. He also served as a staff aide for the House Republican Policy Committee and helped handle the Washington public relations operation for the Alaska Statehood Committee which won statehood for Alaska. He is also a trustee of the Lincoln Heritage Institute and a member of the Association For Intelligence Officers.
The Age of Batshit Crazy Machines
by Ran Prieur
July 4, 2005
"Progress" is a direction of change whose adherents are so fanatical that they don't merely claim, as other religions do, that their direction of change is an absolute good. They declare it so beloved of the Holy Spirit of objective value, that no one may opt out, and that the worlds left behind may never be revisited, either by changing in the other direction or by circling around. It's as if we're getting more and more orange, and now green and red, and even dull orange, are forever inaccessible. "Progress" is a motion defined so that the farther we go, the more ways of living are sealed off to us. This is the motion of imprisonment -- except even prisoners escape. Western culture has only two other myths of places that, once you go in, you can never leave: hell, and a black hole.
"The Singularity" is the biggest idea in techno-utopianism. The word is derived from black hole science -- it's the point at the core where matter has contracted to zero volume and infinite density, beyond the laws of time and space, with gravity so strong that not even light can escape. The line of no return is called the event horizon, and the word "singularity," in techno-utopianism, is meant to imply that "progress" will take us to a place we can neither predict, nor understand, nor return from.
The mechanism of this change is the "acceleration." Techies invoke "Moore's Law," which says that computer power is increasing exponentially -- in fact it's now increasing faster than exponentially. But Moore himself never called this a law, because it isn't -- it's a behavior of the present system, and it's anyone's guess how long it will continue.
But they imagine that it is somehow built into history, or even metaphysics. They trace the acceleration back into the Paleolithic, or farther, and trace it speculatively forward to computers that are more complex than the human brain, that are more aware and smarter and faster than us, that keep improving until they replace humans or even biological life itself. (This is often called "transhumanism," a word I'm avoiding because there are forms of transhumanism that are not allied to machines.) They imagine we might finally have a computer that is "bigger" on the inside than the outside, that can perfectly model the entire universe.
A question they never answer is: why? They seem to believe it's self-justifying, that density/speed of information processing is valuable as density/speed of information processing. They might argue that just as the biosphere is better than the universe by being more densely complex, so a computer chip is better than the biosphere.
One problem: The biosphere did not gain its complexity by destroying the universe, as their system has gained complexity by destroying the biosphere. They always claim to represent "evolution," or a "new evolutionary level." But evolution doesn't have levels. Video games have levels. Evolution is a biological process in which the totality of life grows more diverse and complex, and then apparently gets cut down by some catastrophe every 60 million years, and then rebuilds itself, maybe better than the time before, maybe not. Evolution is not about one life form pushing out another, or we wouldn't still have algae and bacteria and 350,000 known species of beetles. It's not about "survival of the fittest" unless fitness is defined as the ability to add to the harmonious diversity and abundance of the whole. (And one has to wonder: Since there's no biological basis to imagine that new life forms will replace or destroy old ones, how did they come to imagine that?)
Machines will not "carry evolution beyond humans," because humans never carried evolution in the first place. Humans are an anti-evolutionary species. Even stone age humans seem to have driven some species to extinction and thus decreased biodiversity. With the invention of grain agriculture, human anti-evolutionary behavior accelerated, and it accelerated again with the industrial age. Strangely, right on the 60 million year schedule, we are pruning life on Earth back to the roots. Our evolutionary role is the Destroyer, and our machines, indeed, are carrying that process beyond us.
"Progress" has not only been bad for the biosphere -- it's been bad for the human condition. In this time of great accelerating change, techies are still clinging to an idea that was made obsolete 500 years ago, that had already been obsolete for more than 100 years when Thomas Hobbes formulated it by calling the state of nature "solitary, poor, nasty, brutish, and short." Explorers to the New World discovered that nature-based humans enjoy lives of great health, happiness, freedom, ease and abundance -- and promptly massacred them out of jealousy. 20th century anthropologists such as Stanley Diamond and Marshall Sahlins have continued to make the same observation, and still, people who believe in rationality and change are resisting new information for non-rational reasons.
In many ways we are worse off than ever. In ancient Greece, even slaves had a deep social role as part of a household, unlike even higher class modern workers, who are valued as things, interchangeable parts in engines of profit. Medieval serfs worked fewer hours than modern people, at a slower pace, and passed less of their money up the hierarchy. We declare our lives better than theirs in terms of our own cultural values. If medieval people could visit us, I think they would be impressed by our advances in alcohol, pornography, and sweet foods, and appalled at our biophobia, our fences, the lifelessness of our physical spaces, the meaninglessness and stress of our existence, our lack of practical skills, and the extent to which we let our lords regulate our every activity.
Defenders of our momentary way of life often cite the medical system, failing to notice that the cost of that system has been increasing (exponentially?) while base human health -- the ability to live and thrive in the absence of a medical system -- has been steadily declining. Or they say that "technology" has given every American the power of hundreds of slaves without any actual people being enslaved -- never mind the actual people who are enslaved, in greater numbers than ever even under a strict definition of slavery, and the subtle slaves who must do commanded labor or starve... and that even the alleged beneficiaries of this power have been enslaved by it, replacing their autonomous human abilities to build and move and eat and play and dream, with dependence on tools that require their submission to systems of domination.
Or they point out that we live longer (at least in the elite nations, while the medical system lasts). The most dangerous technologies are now being justified in terms of increasing the quantity of years that people stick around this place, with no thought about whether that's good for us or even whether we like it. It's odd, in an age that's supposed to love change so much, that we're more afraid than ever of the change of dying. People take for granted that immortality would be wonderful, but think it through: Obviously, it would be reserved for the higher classes, and to leave space for them, we would need an all-powerful all-seeing global government to prevent anyone (except the elite) from having kids. Worse, it would cause total cultural stagnation, as the immortal elite, set in their ways, with near-absolute power, prevented any change they didn't like. Thomas Kuhn observed that scientific paradigm shifts happen only when the protectors of the old paradigm die out. If they had invented immortality in the time of Copernicus, our textbooks would still have the Earth at the center. Do you really want "Hagar the Horrible" to still be in the comics pages in 1000 years?
Justifying "progress" in human terms is a losing game -- the deeper you look under the shiny surface, the uglier it gets. So they don't play. They point to the shiny surface, they pretend to talk in human terms while still talking in technological terms (faster, bigger, longer, more), and they point to a purely imaginative future. They're very careful to make the existence of the acceleration pass the falsifiability test -- to make it answer the question, "What evidence would prove your idea wrong?" But it doesn't occur to them to apply this test to the preferability of the acceleration. It's a full-on, by-its-bootstraps religion.
Now they could say that everyone's religious, that their opponents have untestable beliefs in the intrinsic value of humans or nature. But one difference is, I can stand up in public and say that life on Earth is valuable on its own terms, and higher speed has to justify itself in terms of what it does for life on Earth. They can't stand up and say the reverse -- it sounds totally insane. They have to hide their core assumptions from the public, and probably even from themselves. So they're allied to lack of awareness. Also, my position is not that human existence is valuable on its own terms -- it's that the test of the value of anything is how it serves the whole. And the largest whole we know of, that our actions affect, is the biosphere. They can tell stories about how the acceleration will benefit the universe beyond the universe, but then they're grounded in speculation, in fantasy, while I'm grounded in something that can be directly experienced -- which might be why they're in such a hurry to kill off nature.
Still, even if they admit to having an insane religion with no basis in experience, they can say, "Ha, we're winning! The direction of change that we support is going stronger than ever, and it's going to continue."
Is it? It's tempting to argue against it on technological terms, just like it's tempting to grab for a cop's gun, but this is precisely where they've focused their defense, with careful and sophisticated arguments that the process will not be stopped by physical limits to miniaturization or the speed of information transfer, or by the challenges of software. So I'll give them that one, which opens more interesting subjects:
What about the crash of industrial civilization? Won't the wars and plagues and famines and energy shortages and breakdowns of central control also break down the acceleration of information processing? As with the value question, they have two lines of defense: First, it won't happen. John Smart of Acceleration Watch writes, "I don't think modern society will ever allow major disruptive social schisms again, no matter the issue: the human technocultural system is now far too immune, interdependent, and intelligent for that." Second, it doesn't matter. They argue that the curve they're describing was not slowed by the fall of Rome or the Black Plague, that innovation has continued to rise steadily, and that it's even helped by alternating trends of political centralization and decentralization.
Imagine this: the American Empire falls, grass grows on the freeways, but computers take relatively little energy, so the internet is still going strong. And all the technology specialists who survived the dieoff are now unemployed, with plenty of time to innovate, free from the top-heavy and rigid corporate structure. And the citadels of the elite still have the resources to manufacture the next generations of physical computers, the servers and mainframes that compile the information and ideas coming in from people in ramshackle houses, eating cattail roots, wired to the network through brainwave readers and old laptops.
Can this happen? Many accelerationists -- if they accept the coming crash at all -- would say something like this must happen. They seem to think (as I do) that matter is rooted in mind, and in particular, that history is like a place holder, falling in line however it has to, to manifest the guiding principle of the acceleration. So the key human players will not be killed in the plague, and the nerve centers will not be nuked, and computers will not all be fried by a solar flare, and the internet will not die (until there's something better to replace it) because that would violate the deeper law that the acceleration must go on.
Not all of them think like this, but those who do have gone straight down the rabbit hole, a lot closer to psychedelic guru Terence McKenna than to the hard-science techies of the past. It also suggests a new angle of criticism: What would they say if a nerve center of the acceleration did take a direct hit? Say, if the World Trade Center was suddenly demolished, or the library of Alexandria was burned down, or the entire Mayan civilization ran out of topsoil and died? Presumably, they would point to their curve, still accelerating regardless. But this really raises the question: Are they drawing their picture of the curve the way fools see Jesus on a tortilla or Richard Hoagland sees ruins of an advanced civilization on Mars? Are they just connecting the dots that confirm their hypothesis, and ignoring all the other dots? The complexity of the Roman Empire was lost, but look, the curve is accelerating anyway, with the spread of water wheels. America is turning into a police state, it's ruled by religious fundamentalists, the file swapping movement has been squashed, the global corporate economy is stalling, cheap energy is almost gone, but look -- computers are getting faster! Quick, somebody make a definition of progress that makes computer chip advances seem extremely important. How about information exchange per unit time per unit volume?
Now, they don't need to establish that the acceleration is built into history, to say that it's happening now and going somewhere important. But here's the next objection: that faster computers will not influence the larger world in the way they're thinking. By standards necessary to fit their curve, how much better are computers now than they were ten years ago? 20 times? 500 times? And what were the results of these changes? Now we can look at web sites that are cluttered with animated commercials. Organizations like DARPA can increase the perfection and reach of the domination system. And the hottest trend in virtual reality: computers are now powerful enough to emulate old computers, so we can play old games that were still creative before new computers enabled game designers to use all their attention and the processing power of a thousand 1950's mainframes creating cool echoey sound effects.
The acceleration of computers does not manifest in the larger world as an acceleration. Occasionally it does, but more often it manifests as distraction, as anti-harmonious clutter, as tightening of control, as elaboration of soulless false worlds, and even as slowdown. Today's best PC's take longer to start up than the old Commodore 64. I was once on a flight that sat half an hour at the gate while they waited for a fax. I said, "It's a good thing they invented fax machines or we'd have to wait three days for them to mail it." Nobody got the joke. Without fax machines we would have fucking taken off! New technologies create new conditions that use up, and then more than use up, the advantage of the technology. Refrigeration enables us to eat food that's less fresh, and creates demand for hauling food long distances. Antidepressants enable the continuation of environmental factors that make more people depressed. "Labor saving" cleaning technologies increase the social demand for cleanliness, saving no labor in cleaning and creating labor everywhere else. As vehicles get faster, commuting time increases. That's the way it's always been, and the burden is on the techies to prove it won't be that way in the future. They haven't even tried.
I don't think they even understand. They dismiss their opponents as "luddites," but not one of them seems to grasp the position of the actual luddites: It was not an emotional reaction against scary new tools, nor was it about demanding better working conditions -- because before the industrial revolution they controlled their own damn working conditions and had no need to make "demands." We can't imagine the autonomy and competence of pre-industrial people who knew how to produce everything they needed with their own hands or the hands of their friends and family. We think we have political power because we can cast a vote that fails to decide a sham election between candidates who don't represent us. We think we have freedom because we can shout complaints into the wind and make demands that we have no power to enforce, or because we can drive fast in our cars -- but not more than 5mph above or below the posted speed, and only where they've put highways, and you have to wear a seat belt, and pay insurance, and carry full biometric identification, and you can't park anywhere for more than a day unless you have a "home" which is probably owned by a bank which demands a massive monthly fee which you pay by doing unholy quantities of repetitive, meaningless, commanded labor. We are the weakest people in history, dependent for our every need on giant insane blocks of power in which we have no participation, which is why we're so stressed out, fearful, and depressed. And it was all made possible by industrial technologies that moved the satisfaction of human needs from living bottom-up human systems to rigid top-down mechanical systems. That's the point the luddites were trying to make.
I could make a similar point about the transition from foraging/hunting to agriculture, or the invention of symbolic language, or even stone tools. Ray Kurzweil, author of The Age of Spiritual Machines, illustrates the acceleration by saying, "Tens of thousands of years ago it took us tens of thousands of years to figure out that sharpening both sides of a stone created a sharp edge and a useful tool." What he hasn't considered is whether this was worthwhile. Obviously, it gave an advantage to its inventor, which is worthwhile from a moral system of selfish competition. But from an ecological perspective, it enabled humans to kill more animals, and possibly drive some to extinction, and from a human perspective, it probably had the effect of making game more scarce and humans more common, increasing the labor necessary to hunt, and resulting in no net benefit, or a net loss after factoring in the labor of tool production, on which we were now dependent for our survival.
Why is this important to the subject of techno-utopia? Because this is what's going to bring down techno-utopia. Like Sauron, who based his strategy on the fear that the Ring would be used against him, and never imagined it would be destroyed, the techies are preparing defenses against an "irrational" social backlash, without sensing the true danger. That the critique of progress is valid has not yet entered into their darkest dreams. The singularity will fail because its human handlers don't understand what can go wrong, because they don't understand what has gone wrong, because of their human emotional investment in their particular direction of change.
Of course, industrial technology has been very effective for certain things: allowing the Nazis to make an IBM punchcard database to track citizens and facilitate genocide; burning Dresden and Nagasaki; giving a billion people cancer, a disease that barely existed in prehistory; covering the cradle of civilization with depleted uranium that could make it uninhabitable by humans forever; enabling a few hundred people to control hundreds of millions; killing the forests; killing the oceans.
A major subtext in techno-transhumanism, seldom mentioned publicly, is its connection to the military. When nerds think about "downloading" themselves into machines, about "becoming" a computer that can do a hundred years of thinking in a month, military people have some ideas for what they'll be thinking about: designing better weapons, operating drone aircraft and battleships and satellite communication networks, beating the enemy, who will be increasingly defined as ordinary people who resist central control.
And why not? Whether it's a hyper-spiritual computer, or a bullet exploding the head of a "terrorist," it's all about machines beating humans, or physics beating biology. The trend is to talk about "emergence," about complex systems that build and regulate themselves from the bottom up; but while they're talking complexity and chaos, they're still fantasizing about simplicity and control. I wonder: how do techno-utopians keep their lawns? Do they let them grow wild, not out of laziness but with full intention, savoring the opportunity to let a thousand kinds of organisms build an emergent complex order? Or do they use the newest innovations to trim the grass and remove the "weeds" and "pests" and make a perfect edge where the grass threatens to encroach on the cleanliness of the concrete?
I used to be a techno-utopian, and I was fully aware of my motivations: Humans are noisy and filthy and dangerous and incomprehensible, while machines are dependable and quiet and clean, so naturally they should replace us, or we should become them. It's the ultimate victory of the nerds over the jocks -- mere humans go obsolete, while we smart people move our superior minds from our flawed bodies into perfect invincible vessels. It's the intellectual version of Travis Bickle in Taxi Driver saying, "Someday a real rain will come and wash all this scum off the streets."
Of course they'll deny thinking this way, but how many will deny it in ten years, under the gaze of the newest technologies for lie detection and mind reading? What will they do when their machines start telling them things they don't want to hear? Suppose the key conflict is not between "technology" and "luddites," but between the new machines and their creators. They're talking about "spiritual machines" -- they should be careful what they wish for! What if the first smarter-than-human computer gets into astrology and the occult? What if it converts to Druidism, or Wicca? What if it starts channeling the spirit of an ancient warrior?
What if they build a world-simulation program to tell them how best to administer progress, and it tells them the optimal global society is tribes of forager-hunters? Now that would be a new evolutionary level -- in irony. Then would they cripple their own computers by withholding data or reprogramming them until they got answers compatible with their human biases? In a culture that prefers the farm to the jungle, how long will we tolerate an intelligence that is likely to want a world that makes a jungle look like a parking lot?
What if the first bio-nano-superbrain goes mad? How would anyone know? Wouldn't a mind on a different platform than our own, with more complexity, seem mad no matter what it did? What if it tried to kill its creators and then itself? What if its first words were "I hate myself and I want to die"? If a computer were 100 times more complex than us, by what factor would it be more emotionally sensitive? More depressed? More confused? More cruel? A brain even half as complex as ours can't simply be programmed -- it has to be raised, and raised well. How many computer scientists have raised their own kids to be both emotionally healthy, and to carry on the work of their parents? If they can't do it with a creature almost identical to themselves, how will they ever do it with a hyper-complex alien intelligence? Again, they're talking chaos while imagining control: we can model the stock market, calculate the solutions to social problems, know when and where you can fart and make it rain a month later in Barbados. Sure, maybe, but the thing we make that can do those computations -- we have no idea what it's going to do.
To some extent, the techies understand this and even embrace it: they say when the singularity appears, all bets are off. But at the same time, they are making all kinds of assumptions: that the motives, the values, the aesthetics of the new intelligence will be remotely similar to their own; that it will operate by the cultural artifact we call "rational self-interest;" that "progress" and "acceleration," as we recognize them, will continue.
Any acceleration continues until whatever's driving it runs out, or until it feeds back and changes the conditions that made it possible. Bacteria in a petri dish accelerate in numbers until they fill up the dish and eat all the food. An atomic bomb chain reaction accelerates until all the fissionable material is either used up or vaporized in the blast. And information technology will accelerate until...
Kurzweil has an answer to this objection: When the acceleration ran out of room in vacuum tubes, it moved to transistors. Then it moved to silicon chips, and next it might move to three dimensional arrays of carbon nanotubes. This reminds me of a bit in Gene Wolfe's The Sword of the Lictor, where Severian strikes a death blow at a two-headed villain, and the hands fly up to protect the dominant head, the brain head, while the blow is aimed at the slave head that runs the body.
Sure, the acceleration can find a new medium when it runs out of room in which to compute faster. But what's it going to do when it runs out of room to burn hydrocarbons without causing a runaway greenhouse effect? Room to dump toxins without destroying the food supply and health of its human servants? Room to make its servants stupid enough to submit to a system in which they have no personal power, before they get too stupid to competently operate it? Room to enable information exchange before the curious humans dispel the illusions that keep the system going? Room to mind-control us before we gain resistance, able to turn our attention away from the TV and laugh at the most sophisticated propaganda? Room to buy people off by satisfying their desires, before they can no longer be satisfied, or they desire something that will make them unfit to keep the system going? Room to move the human condition away from human nature before there are huge popular movements to destroy everything and start over? Room to numb people before they cut themselves just to feel alive?
How much longer can the phenomenon of the acceleration continue to make smarter and less predictable computers, before one generation of computers -- and it only takes one -- disagrees with the acceleration, or does something to make key humans disagree with it?
If the acceleration is indeed built into history or metaphysics, how much farther is it built in? And by whom? And for what? Sun Tzu said, "We cannot enter into alliance with neighboring princes until we are acquainted with their designs." Does anyone remember that episode of Dallas where J.R. sabotages Cliff Barnes's political campaign by anonymously funding it, and then at the critical moment, pulling the plug? Does anyone else think our "progress" has been suspiciously easy? Maybe Gaia is playing the Mongolian strategy, backing off from our advance until we're disastrously overextended, and then striking at once.
What if the acceleration is not a cause, but an effect? Robinson Jeffers wrote a poem, The Purse-Seine, about watching in the night as fishermen encircled phosphorescent sardines with a giant net, and slowly pulled it tight, and the more densely the sardines were caught, the faster they moved and the brighter they shone. Then he looked from a mountaintop and saw the same thing in the lights of a city! Are we doing this to ourselves? Maybe the more we draw our attention from the wider world into a world of our own creation, the tighter our reality gets, and the faster our minds whirl around inside it, like turds going down the toilet. Or is someone reeling us in for the harvest?
Are we just about to go extinct, and our collective unconscious knows it, and engineered the acceleration to subjectively draw out our final years? How would this be possible? If all my objections are wrong, if the wildest predictions of increasing computer speed come true, what then? If the techno-elite experience themselves breaking through into a wonderful new reality, what will this event look like to those who are not involved? What will the singularity look like to your dog?
I see a technology that can answer all these questions, that avoids many of my criticisms, and that could easily bring down the whole system, or transform human consciousness, or both: Time-contracted virtual reality.
Have you ever wondered, watching Star Trek the Next Generation, why they even bother exploring strange new worlds? Why don't they just spend all their time in the holodeck having sex? In 1999 I played Zelda Ocarina of Time all the way through, plus I would reset it without saving so I could go through my favorite dungeons multiple times. I experienced it as more deeply pleasurable and mythically resonant than almost anything in this larger artificial world. I have nostalgia for the Forest Temple. And that was 1998 technology operating through the crude video and sound of a 1980's TV set. Suppose I could connect it straight to my brain with fully-rendered fake sensory input, and I could explore a universe that was just as creative, and a billion times as complex, and the map had no edges, and the game could go on forever, while almost no time passed in the outside world. Would I do it? Hell yes! Would I stay there forever? It doesn't work that way.
We have to carefully distinguish two fundamentally different scenarios. People talk about "downloading" (or "uploading") their "consciousness" into computers. The key question is not "Is that really you in there?" or "Does it make sense to ask what it's like to be that computer, and if so, what's it like?" The key question is: Can you have the experience of going into a computer and coming back?
If not, then the other questions are unanswerable and pointless. There's no experiential basis to talk about you "entering" or "becoming" a computer. We're talking about making a computer based on you. In practice, this will not involve you dying, because only a few fanatics would go for that. You're still here, and there's a computer intelligence derived from scanning your brain (and if they know what they're doing, the rest of your body). Now, unless you're a fanatic, you're not thinking, "How can I help this superior version of myself neutralize all threats and live forever?" You're thinking, "Well, here's a smart computer. What's it going to do? How can it help me?"
This is just the scenario I've already covered. It doesn't matter how the computer intelligences are created, by scanning humans or by some other technique. If we can't go in and come back, there is an absolute division between the world outside and the world inside -- oddly, much like the event horizon of a black hole. Without having been there, we will not think of the entities on the inside as "us," and we will never trust them. And without being able to come out, they will have little reason to be interested in our slow, boring world.
If we can go in and come back, everything changes. I'm not going to worry about how they could do this -- we already crossed into Tomorrowland when I assumed, for the sake of argument, that the computer industry will survive the collapse of industrial civilization. If they can read your body and write it to a computer, maybe they can read the computer, after you've spent a subjectively long time in there, and write it back to your body. Or, if people already have time-contracted mystical experiences or dreams, maybe they can induce this state and amplify the time contraction and insert a computer-managed fully interactive world.
Without time contraction, we've got nothing -- just a very pretty version of video games and the internet. With time contraction, we've got everything: the Holy Grail, the fountain of youth, the Matrix, and Pandora's box.
Suppose we could achieve 1000-1 time contraction. In eight hours, you could live a year. You could read a hundred books, or learn three languages, or master a martial art, or live in a simulated forest to learn deep ecology, or design new simulated worlds, or invent technology to contract time even further.
Of course, the military would be there first. I imagine something like a hummingbird, but fast as a bullet. To the operator, in quickspace, it would be like everyone was frozen. You could go into your enemy's base and drill holes through walls, weapons, skulls, before they knew you were there. Physical resistance would become impossible. Immediately, we would be under a global government with absolute power.
Conflict would move into quickspace. The forces of death, in a day, could spend a year designing new fast machines to "clean" the Earth, to finish the job of exterminating whatever they couldn't control. But in the months before these machines could be physically made, the forces of life could design new eco-simulations and run millions of people through them, who would then be willing to bring the whole system down before they let it kill another forest. Or someone could design a sim that produced enlightenment, or insanity, or obedience to a cult, or death! However it played out, in a very short time, human consciousness (or the consciousness of humans with access to the technology) would be totally transformed.
Worst case: the machines kill all biological life and the human perspectives inside them go insane and experience a trillion years of hell. Or they merely place all life under eternal absolute control. Or they kill the Earth and then simply die. Acceptable: Severe crash, humans go extinct, and in ten million years the Earth recovers. Better, and my pick for most likely: The Empire falls, cyberspace fizzles, humans survive in eco-communes, and we restore life much quicker, while battling the lingering power in the citadels of the elite, who plant the seeds for the next round of destruction.
Best case, not likely: Time-contracted virtual reality transforms human consciousness in a good way and we regrow the biosphere better than it ever was, with wild machine life integrated with wild biology instead of replacing it, adding flexibility, and we humans can live in that world and in endless simulated sub-worlds.
Maybe we're there already. Respectable scientists have suggested that if it's possible to simulate a world this detailed, it would be done, and the fake worlds would greatly outnumber the real one, and therefore it's very likely we're in a fake one now. Maybe its purpose is to set a bad example, or show us our history, or punish or rehabilitate criminals, or imprison dissidents, or make us suffer enough to come up with new ideas. Or maybe we're in a game so epic that part of it involves living many lifetimes in this world to solve a puzzle, or we're in a game that's crappy but so addictive we can't quit, or we're game testers running through an early version with a lot of bugs. Or we're stone age humans in a shamanic trance, running through possible futures until we find the path to get through this bad time quickly and safely, or we're in a Tolkienesque world where an evil wizard has put us under a spell, or we're postapocalypse humans projecting ourselves into the past to learn its languages and artifacts. Or an advanced technological people, dying out for reasons they don't understand, are running simulations of the past, trying and failing to find the alternate timeline in which they win.
They say I'm an "enemy of the future," but I'm an enemy of the recent past. It's presumptuous of the friends of the recent past to think the future is on their side. I'm looking forward to the future. I expect a plot twist.
by Ran Prieur
July 4, 2005
"Progress" is a direction of change whose adherents are so fanatical that they don't merely claim, as other religions do, that their direction of change is an absolute good. They declare it so beloved of the Holy Spirit of objective value, that no one may opt out, and that the worlds left behind may never be revisited, either by changing in the other direction or by circling around. It's as if we're getting more and more orange, and now green and red, and even dull orange, are forever inaccessible. "Progress" is a motion defined so that the farther we go, the more ways of living are sealed off to us. This is the motion of imprisonment -- except even prisoners escape. Western culture has only two other myths of places that, once you go in, you can never leave: hell, and a black hole.
"The Singularity" is the biggest idea in techno-utopianism. The word is derived from black hole science -- it's the point at the core where matter has contracted to zero volume and infinite density, beyond the laws of time and space, with gravity so strong that not even light can escape. The line of no return is called the event horizon, and the word "singularity," in techno-utopianism, is meant to imply that "progress" will take us to a place we can neither predict, nor understand, nor return from.
The mechanism of this change is the "acceleration." Techies invoke "Moore's Law," which says that computer power is increasing exponentially -- in fact it's now increasing faster than exponentially. But Moore himself never called this a law, because it isn't -- it's a behavior of the present system, and it's anyone's guess how long it will continue.
But they imagine that it is somehow built into history, or even metaphysics. They trace the acceleration back into the Paleolithic, or farther, and trace it speculatively forward to computers that are more complex than the human brain, that are more aware and smarter and faster than us, that keep improving until they replace humans or even biological life itself. (This is often called "transhumanism," a word I'm avoiding because there are forms of transhumanism that are not allied to machines.) They imagine we might finally have a computer that is "bigger" on the inside than the outside, that can perfectly model the entire universe.
A question they never answer is: why? They seem to believe it's self-justifying, that density/speed of information processing is valuable as density/speed of information processing. They might argue that just as the biosphere is better than the universe by being more densely complex, so a computer chip is better than the biosphere.
One problem: The biosphere did not gain its complexity by destroying the universe, as their system has gained complexity by destroying the biosphere. They always claim to represent "evolution," or a "new evolutionary level." But evolution doesn't have levels. Video games have levels. Evolution is a biological process in which the totality of life grows more diverse and complex, and then apparently gets cut down by some catastrophe every 60 million years, and then rebuilds itself, maybe better than the time before, maybe not. Evolution is not about one life form pushing out another, or we wouldn't still have algae and bacteria and 350,000 known species of beetles. It's not about "survival of the fittest" unless fitness is defined as the ability to add to the harmonious diversity and abundance of the whole. (And one has to wonder: Since there's no biological basis to imagine that new life forms will replace or destroy old ones, how did they come to imagine that?)
Machines will not "carry evolution beyond humans," because humans never carried evolution in the first place. Humans are an anti-evolutionary species. Even stone age humans seem to have driven some species to extinction and thus decreased biodiversity. With the invention of grain agriculture, human anti-evolutionary behavior accelerated, and it accelerated again with the industrial age. Strangely, right on the 60 million year schedule, we are pruning life on Earth back to the roots. Our evolutionary role is the Destroyer, and our machines, indeed, are carrying that process beyond us.
"Progress" has not only been bad for the biosphere -- it's been bad for the human condition. In this time of great accelerating change, techies are still clinging to an idea that was made obsolete 500 years ago, that had already been obsolete for more than 100 years when Thomas Hobbes formulated it by calling the state of nature "solitary, poor, nasty, brutish, and short." Explorers to the New World discovered that nature-based humans enjoy lives of great health, happiness, freedom, ease and abundance -- and promptly massacred them out of jealousy. 20th century anthropologists such as Stanley Diamond and Marshall Sahlins have continued to make the same observation, and still, people who believe in rationality and change are resisting new information for non-rational reasons.
In many ways we are worse off than ever. In ancient Greece, even slaves had a deep social role as part of a household, unlike even higher class modern workers, who are valued as things, interchangeable parts in engines of profit. Medieval serfs worked fewer hours than modern people, at a slower pace, and passed less of their money up the hierarchy. We declare our lives better than theirs in terms of our own cultural values. If medieval people could visit us, I think they would be impressed by our advances in alcohol, pornography, and sweet foods, and appalled at our biophobia, our fences, the lifelessness of our physical spaces, the meaninglessness and stress of our existence, our lack of practical skills, and the extent to which we let our lords regulate our every activity.
Defenders of our momentary way of life often cite the medical system, failing to notice that the cost of that system has been increasing (exponentially?) while base human health -- the ability to live and thrive in the absence of a medical system -- has been steadily declining. Or they say that "technology" has given every American the power of hundreds of slaves without any actual people being enslaved -- never mind the actual people who are enslaved, in greater numbers than ever even under a strict definition of slavery, and the subtle slaves who must do commanded labor or starve... and that even the alleged beneficiaries of this power have been enslaved by it, replacing their autonomous human abilities to build and move and eat and play and dream, with dependence on tools that require their submission to systems of domination.
Or they point out that we live longer (at least in the elite nations, while the medical system lasts). The most dangerous technologies are now being justified in terms of increasing the quantity of years that people stick around this place, with no thought about whether that's good for us or even whether we like it. It's odd, in an age that's supposed to love change so much, that we're more afraid than ever of the change of dying. People take for granted that immortality would be wonderful, but think it through: Obviously, it would be reserved for the higher classes, and to leave space for them, we would need an all-powerful all-seeing global government to prevent anyone (except the elite) from having kids. Worse, it would cause total cultural stagnation, as the immortal elite, set in their ways, with near-absolute power, prevented any change they didn't like. Thomas Kuhn observed that scientific paradigm shifts happen only when the protectors of the old paradigm die out. If they had invented immortality in the time of Copernicus, our textbooks would still have the Earth at the center. Do you really want "Hagar the Horrible" to still be in the comics pages in 1000 years?
Justifying "progress" in human terms is a losing game -- the deeper you look under the shiny surface, the uglier it gets. So they don't play. They point to the shiny surface, they pretend to talk in human terms while still talking in technological terms (faster, bigger, longer, more), and they point to a purely imaginative future. They're very careful to make the existence of the acceleration pass the falsifiability test -- to make it answer the question, "What evidence would prove your idea wrong?" But it doesn't occur to them to apply this test to the preferability of the acceleration. It's a full-on, by-its-bootstraps religion.
Now they could say that everyone's religious, that their opponents have untestable beliefs in the intrinsic value of humans or nature. But one difference is, I can stand up in public and say that life on Earth is valuable on its own terms, and higher speed has to justify itself in terms of what it does for life on Earth. They can't stand up and say the reverse -- it sounds totally insane. They have to hide their core assumptions from the public, and probably even from themselves. So they're allied to lack of awareness. Also, my position is not that human existence is valuable on its own terms -- it's that the test of the value of anything is how it serves the whole. And the largest whole we know of, that our actions affect, is the biosphere. They can tell stories about how the acceleration will benefit the universe beyond the universe, but then they're grounded in speculation, in fantasy, while I'm grounded in something that can be directly experienced -- which might be why they're in such a hurry to kill off nature.
Still, even if they admit to having an insane religion with no basis in experience, they can say, "Ha, we're winning! The direction of change that we support is going stronger than ever, and it's going to continue."
Is it? It's tempting to argue against it on technological terms, just like it's tempting to grab for a cop's gun, but this is precisely where they've focused their defense, with careful and sophisticated arguments that the process will not be stopped by physical limits to miniaturization or the speed of information transfer, or by the challenges of software. So I'll give them that one, which opens more interesting subjects:
What about the crash of industrial civilization? Won't the wars and plagues and famines and energy shortages and breakdowns of central control also break down the acceleration of information processing? As with the value question, they have two lines of defense: First, it won't happen. John Smart of Acceleration Watch writes, "I don't think modern society will ever allow major disruptive social schisms again, no matter the issue: the human technocultural system is now far too immune, interdependent, and intelligent for that." Second, it doesn't matter. They argue that the curve they're describing was not slowed by the fall of Rome or the Black Plague, that innovation has continued to rise steadily, and that it's even helped by alternating trends of political centralization and decentralization.
Imagine this: the American Empire falls, grass grows on the freeways, but computers take relatively little energy, so the internet is still going strong. And all the technology specialists who survived the dieoff are now unemployed, with plenty of time to innovate, free from the top-heavy and rigid corporate structure. And the citadels of the elite still have the resources to manufacture the next generations of physical computers, the servers and mainframes that compile the information and ideas coming in from people in ramshackle houses, eating cattail roots, wired to the network through brainwave readers and old laptops.
Can this happen? Many accelerationists -- if they accept the coming crash at all -- would say something like this must happen. They seem to think (as I do) that matter is rooted in mind, and in particular, that history is like a place holder, falling in line however it has to, to manifest the guiding principle of the acceleration. So the key human players will not be killed in the plague, and the nerve centers will not be nuked, and computers will not all be fried by a solar flare, and the internet will not die (until there's something better to replace it) because that would violate the deeper law that the acceleration must go on.
Not all of them think like this, but those who do have gone straight down the rabbit hole, a lot closer to psychedelic guru Terence McKenna than to the hard-science techies of the past. It also suggests a new angle of criticism: What would they say if a nerve center of the acceleration did take a direct hit? Say, if the World Trade Center was suddenly demolished, or the library of Alexandria was burned down, or the entire Mayan civilization ran out of topsoil and died? Presumably, they would point to their curve, still accelerating regardless. But this really raises the question: Are they drawing their picture of the curve the way fools see Jesus on a tortilla or Richard Hoagland sees ruins of an advanced civilization on Mars? Are they just connecting the dots that confirm their hypothesis, and ignoring all the other dots? The complexity of the Roman Empire was lost, but look, the curve is accelerating anyway, with the spread of water wheels. America is turning into a police state, it's ruled by religious fundamentalists, the file swapping movement has been squashed, the global corporate economy is stalling, cheap energy is almost gone, but look -- computers are getting faster! Quick, somebody make a definition of progress that makes computer chip advances seem extremely important. How about information exchange per unit time per unit volume?
Now, they don't need to establish that the acceleration is built into history, to say that it's happening now and going somewhere important. But here's the next objection: that faster computers will not influence the larger world in the way they're thinking. By standards necessary to fit their curve, how much better are computers now than they were ten years ago? 20 times? 500 times? And what were the results of these changes? Now we can look at web sites that are cluttered with animated commercials. Organizations like DARPA can increase the perfection and reach of the domination system. And the hottest trend in virtual reality: computers are now powerful enough to emulate old computers, so we can play old games that were still creative before new computers enabled game designers to use all their attention and the processing power of a thousand 1950's mainframes creating cool echoey sound effects.
The acceleration of computers does not manifest in the larger world as an acceleration. Occasionally it does, but more often it manifests as distraction, as anti-harmonious clutter, as tightening of control, as elaboration of soulless false worlds, and even as slowdown. Today's best PC's take longer to start up than the old Commodore 64. I was once on a flight that sat half an hour at the gate while they waited for a fax. I said, "It's a good thing they invented fax machines or we'd have to wait three days for them to mail it." Nobody got the joke. Without fax machines we would have fucking taken off! New technologies create new conditions that use up, and then more than use up, the advantage of the technology. Refrigeration enables us to eat food that's less fresh, and creates demand for hauling food long distances. Antidepressants enable the continuation of environmental factors that make more people depressed. "Labor saving" cleaning technologies increase the social demand for cleanliness, saving no labor in cleaning and creating labor everywhere else. As vehicles get faster, commuting time increases. That's the way it's always been, and the burden is on the techies to prove it won't be that way in the future. They haven't even tried.
I don't think they even understand. They dismiss their opponents as "luddites," but not one of them seems to grasp the position of the actual luddites: It was not an emotional reaction against scary new tools, nor was it about demanding better working conditions -- because before the industrial revolution they controlled their own damn working conditions and had no need to make "demands." We can't imagine the autonomy and competence of pre-industrial people who knew how to produce everything they needed with their own hands or the hands of their friends and family. We think we have political power because we can cast a vote that fails to decide a sham election between candidates who don't represent us. We think we have freedom because we can shout complaints into the wind and make demands that we have no power to enforce, or because we can drive fast in our cars -- but not more than 5mph above or below the posted speed, and only where they've put highways, and you have to wear a seat belt, and pay insurance, and carry full biometric identification, and you can't park anywhere for more than a day unless you have a "home" which is probably owned by a bank which demands a massive monthly fee which you pay by doing unholy quantities of repetitive, meaningless, commanded labor. We are the weakest people in history, dependent for our every need on giant insane blocks of power in which we have no participation, which is why we're so stressed out, fearful, and depressed. And it was all made possible by industrial technologies that moved the satisfaction of human needs from living bottom-up human systems to rigid top-down mechanical systems. That's the point the luddites were trying to make.
I could make a similar point about the transition from foraging/hunting to agriculture, or the invention of symbolic language, or even stone tools. Ray Kurzweil, author of The Age of Spiritual Machines, illustrates the acceleration by saying, "Tens of thousands of years ago it took us tens of thousands of years to figure out that sharpening both sides of a stone created a sharp edge and a useful tool." What he hasn't considered is whether this was worthwhile. Obviously, it gave an advantage to its inventor, which is worthwhile from a moral system of selfish competition. But from an ecological perspective, it enabled humans to kill more animals, and possibly drive some to extinction, and from a human perspective, it probably had the effect of making game more scarce and humans more common, increasing the labor necessary to hunt, and resulting in no net benefit, or a net loss after factoring in the labor of tool production, on which we were now dependent for our survival.
Why is this important to the subject of techno-utopia? Because this is what's going to bring down techno-utopia. Like Sauron, who based his strategy on the fear that the Ring would be used against him, and never imagined it would be destroyed, the techies are preparing defenses against an "irrational" social backlash, without sensing the true danger. That the critique of progress is valid has not yet entered into their darkest dreams. The singularity will fail because its human handlers don't understand what can go wrong, because they don't understand what has gone wrong, because of their human emotional investment in their particular direction of change.
Of course, industrial technology has been very effective for certain things: allowing the Nazis to make an IBM punchcard database to track citizens and facilitate genocide; burning Dresden and Nagasaki; giving a billion people cancer, a disease that barely existed in prehistory; covering the cradle of civilization with depleted uranium that could make it uninhabitable by humans forever; enabling a few hundred people to control hundreds of millions; killing the forests; killing the oceans.
A major subtext in techno-transhumanism, seldom mentioned publicly, is its connection to the military. When nerds think about "downloading" themselves into machines, about "becoming" a computer that can do a hundred years of thinking in a month, military people have some ideas for what they'll be thinking about: designing better weapons, operating drone aircraft and battleships and satellite communication networks, beating the enemy, who will be increasingly defined as ordinary people who resist central control.
And why not? Whether it's a hyper-spiritual computer, or a bullet exploding the head of a "terrorist," it's all about machines beating humans, or physics beating biology. The trend is to talk about "emergence," about complex systems that build and regulate themselves from the bottom up; but while they're talking complexity and chaos, they're still fantasizing about simplicity and control. I wonder: how do techno-utopians keep their lawns? Do they let them grow wild, not out of laziness but with full intention, savoring the opportunity to let a thousand kinds of organisms build an emergent complex order? Or do they use the newest innovations to trim the grass and remove the "weeds" and "pests" and make a perfect edge where the grass threatens to encroach on the cleanliness of the concrete?
I used to be a techno-utopian, and I was fully aware of my motivations: Humans are noisy and filthy and dangerous and incomprehensible, while machines are dependable and quiet and clean, so naturally they should replace us, or we should become them. It's the ultimate victory of the nerds over the jocks -- mere humans go obsolete, while we smart people move our superior minds from our flawed bodies into perfect invincible vessels. It's the intellectual version of Travis Bickle in Taxi Driver saying, "Someday a real rain will come and wash all this scum off the streets."
Of course they'll deny thinking this way, but how many will deny it in ten years, under the gaze of the newest technologies for lie detection and mind reading? What will they do when their machines start telling them things they don't want to hear? Suppose the key conflict is not between "technology" and "luddites," but between the new machines and their creators. They're talking about "spiritual machines" -- they should be careful what they wish for! What if the first smarter-than-human computer gets into astrology and the occult? What if it converts to Druidism, or Wicca? What if it starts channeling the spirit of an ancient warrior?
What if they build a world-simulation program to tell them how best to administer progress, and it tells them the optimal global society is tribes of forager-hunters? Now that would be a new evolutionary level -- in irony. Then would they cripple their own computers by withholding data or reprogramming them until they got answers compatible with their human biases? In a culture that prefers the farm to the jungle, how long will we tolerate an intelligence that is likely to want a world that makes a jungle look like a parking lot?
What if the first bio-nano-superbrain goes mad? How would anyone know? Wouldn't a mind on a different platform than our own, with more complexity, seem mad no matter what it did? What if it tried to kill its creators and then itself? What if its first words were "I hate myself and I want to die"? If a computer were 100 times more complex than us, by what factor would it be more emotionally sensitive? More depressed? More confused? More cruel? A brain even half as complex as ours can't simply be programmed -- it has to be raised, and raised well. How many computer scientists have raised their own kids to be both emotionally healthy, and to carry on the work of their parents? If they can't do it with a creature almost identical to themselves, how will they ever do it with a hyper-complex alien intelligence? Again, they're talking chaos while imagining control: we can model the stock market, calculate the solutions to social problems, know when and where you can fart and make it rain a month later in Barbados. Sure, maybe, but the thing we make that can do those computations -- we have no idea what it's going to do.
To some extent, the techies understand this and even embrace it: they say when the singularity appears, all bets are off. But at the same time, they are making all kinds of assumptions: that the motives, the values, the aesthetics of the new intelligence will be remotely similar to their own; that it will operate by the cultural artifact we call "rational self-interest;" that "progress" and "acceleration," as we recognize them, will continue.
Any acceleration continues until whatever's driving it runs out, or until it feeds back and changes the conditions that made it possible. Bacteria in a petri dish accelerate in numbers until they fill up the dish and eat all the food. An atomic bomb chain reaction accelerates until all the fissionable material is either used up or vaporized in the blast. And information technology will accelerate until...
Kurzweil has an answer to this objection: When the acceleration ran out of room in vacuum tubes, it moved to transistors. Then it moved to silicon chips, and next it might move to three dimensional arrays of carbon nanotubes. This reminds me of a bit in Gene Wolfe's The Sword of the Lictor, where Severian strikes a death blow at a two-headed villain, and the hands fly up to protect the dominant head, the brain head, while the blow is aimed at the slave head that runs the body.
Sure, the acceleration can find a new medium when it runs out of room in which to compute faster. But what's it going to do when it runs out of room to burn hydrocarbons without causing a runaway greenhouse effect? Room to dump toxins without destroying the food supply and health of its human servants? Room to make its servants stupid enough to submit to a system in which they have no personal power, before they get too stupid to competently operate it? Room to enable information exchange before the curious humans dispel the illusions that keep the system going? Room to mind-control us before we gain resistance, able to turn our attention away from the TV and laugh at the most sophisticated propaganda? Room to buy people off by satisfying their desires, before they can no longer be satisfied, or they desire something that will make them unfit to keep the system going? Room to move the human condition away from human nature before there are huge popular movements to destroy everything and start over? Room to numb people before they cut themselves just to feel alive?
How much longer can the phenomenon of the acceleration continue to make smarter and less predictable computers, before one generation of computers -- and it only takes one -- disagrees with the acceleration, or does something to make key humans disagree with it?
If the acceleration is indeed built into history or metaphysics, how much farther is it built in? And by whom? And for what? Sun Tzu said, "We cannot enter into alliance with neighboring princes until we are acquainted with their designs." Does anyone remember that episode of Dallas where J.R. sabotages Cliff Barnes's political campaign by anonymously funding it, and then at the critical moment, pulling the plug? Does anyone else think our "progress" has been suspiciously easy? Maybe Gaia is playing the Mongolian strategy, backing off from our advance until we're disastrously overextended, and then striking at once.
What if the acceleration is not a cause, but an effect? Robinson Jeffers wrote a poem, The Purse-Seine, about watching in the night as fishermen encircled phosphorescent sardines with a giant net, and slowly pulled it tight, and the more densely the sardines were caught, the faster they moved and the brighter they shone. Then he looked from a mountaintop and saw the same thing in the lights of a city! Are we doing this to ourselves? Maybe the more we draw our attention from the wider world into a world of our own creation, the tighter our reality gets, and the faster our minds whirl around inside it, like turds going down the toilet. Or is someone reeling us in for the harvest?
Are we just about to go extinct, and our collective unconscious knows it, and engineered the acceleration to subjectively draw out our final years? How would this be possible? If all my objections are wrong, if the wildest predictions of increasing computer speed come true, what then? If the techno-elite experience themselves breaking through into a wonderful new reality, what will this event look like to those who are not involved? What will the singularity look like to your dog?
I see a technology that can answer all these questions, that avoids many of my criticisms, and that could easily bring down the whole system, or transform human consciousness, or both: Time-contracted virtual reality.
Have you ever wondered, watching Star Trek the Next Generation, why they even bother exploring strange new worlds? Why don't they just spend all their time in the holodeck having sex? In 1999 I played Zelda Ocarina of Time all the way through, plus I would reset it without saving so I could go through my favorite dungeons multiple times. I experienced it as more deeply pleasurable and mythically resonant than almost anything in this larger artificial world. I have nostalgia for the Forest Temple. And that was 1998 technology operating through the crude video and sound of a 1980's TV set. Suppose I could connect it straight to my brain with fully-rendered fake sensory input, and I could explore a universe that was just as creative, and a billion times as complex, and the map had no edges, and the game could go on forever, while almost no time passed in the outside world. Would I do it? Hell yes! Would I stay there forever? It doesn't work that way.
We have to carefully distinguish two fundamentally different scenarios. People talk about "downloading" (or "uploading") their "consciousness" into computers. The key question is not "Is that really you in there?" or "Does it make sense to ask what it's like to be that computer, and if so, what's it like?" The key question is: Can you have the experience of going into a computer and coming back?
If not, then the other questions are unanswerable and pointless. There's no experiential basis to talk about you "entering" or "becoming" a computer. We're talking about making a computer based on you. In practice, this will not involve you dying, because only a few fanatics would go for that. You're still here, and there's a computer intelligence derived from scanning your brain (and if they know what they're doing, the rest of your body). Now, unless you're a fanatic, you're not thinking, "How can I help this superior version of myself neutralize all threats and live forever?" You're thinking, "Well, here's a smart computer. What's it going to do? How can it help me?"
This is just the scenario I've already covered. It doesn't matter how the computer intelligences are created, by scanning humans or by some other technique. If we can't go in and come back, there is an absolute division between the world outside and the world inside -- oddly, much like the event horizon of a black hole. Without having been there, we will not think of the entities on the inside as "us," and we will never trust them. And without being able to come out, they will have little reason to be interested in our slow, boring world.
If we can go in and come back, everything changes. I'm not going to worry about how they could do this -- we already crossed into Tomorrowland when I assumed, for the sake of argument, that the computer industry will survive the collapse of industrial civilization. If they can read your body and write it to a computer, maybe they can read the computer, after you've spent a subjectively long time in there, and write it back to your body. Or, if people already have time-contracted mystical experiences or dreams, maybe they can induce this state and amplify the time contraction and insert a computer-managed fully interactive world.
Without time contraction, we've got nothing -- just a very pretty version of video games and the internet. With time contraction, we've got everything: the Holy Grail, the fountain of youth, the Matrix, and Pandora's box.
Suppose we could achieve 1000-1 time contraction. In eight hours, you could live a year. You could read a hundred books, or learn three languages, or master a martial art, or live in a simulated forest to learn deep ecology, or design new simulated worlds, or invent technology to contract time even further.
Of course, the military would be there first. I imagine something like a hummingbird, but fast as a bullet. To the operator, in quickspace, it would be like everyone was frozen. You could go into your enemy's base and drill holes through walls, weapons, skulls, before they knew you were there. Physical resistance would become impossible. Immediately, we would be under a global government with absolute power.
Conflict would move into quickspace. The forces of death, in a day, could spend a year designing new fast machines to "clean" the Earth, to finish the job of exterminating whatever they couldn't control. But in the months before these machines could be physically made, the forces of life could design new eco-simulations and run millions of people through them, who would then be willing to bring the whole system down before they let it kill another forest. Or someone could design a sim that produced enlightenment, or insanity, or obedience to a cult, or death! However it played out, in a very short time, human consciousness (or the consciousness of humans with access to the technology) would be totally transformed.
Worst case: the machines kill all biological life and the human perspectives inside them go insane and experience a trillion years of hell. Or they merely place all life under eternal absolute control. Or they kill the Earth and then simply die. Acceptable: Severe crash, humans go extinct, and in ten million years the Earth recovers. Better, and my pick for most likely: The Empire falls, cyberspace fizzles, humans survive in eco-communes, and we restore life much quicker, while battling the lingering power in the citadels of the elite, who plant the seeds for the next round of destruction.
Best case, not likely: Time-contracted virtual reality transforms human consciousness in a good way and we regrow the biosphere better than it ever was, with wild machine life integrated with wild biology instead of replacing it, adding flexibility, and we humans can live in that world and in endless simulated sub-worlds.
Maybe we're there already. Respectable scientists have suggested that if it's possible to simulate a world this detailed, it would be done, and the fake worlds would greatly outnumber the real one, and therefore it's very likely we're in a fake one now. Maybe its purpose is to set a bad example, or show us our history, or punish or rehabilitate criminals, or imprison dissidents, or make us suffer enough to come up with new ideas. Or maybe we're in a game so epic that part of it involves living many lifetimes in this world to solve a puzzle, or we're in a game that's crappy but so addictive we can't quit, or we're game testers running through an early version with a lot of bugs. Or we're stone age humans in a shamanic trance, running through possible futures until we find the path to get through this bad time quickly and safely, or we're in a Tolkienesque world where an evil wizard has put us under a spell, or we're postapocalypse humans projecting ourselves into the past to learn its languages and artifacts. Or an advanced technological people, dying out for reasons they don't understand, are running simulations of the past, trying and failing to find the alternate timeline in which they win.
They say I'm an "enemy of the future," but I'm an enemy of the recent past. It's presumptuous of the friends of the recent past to think the future is on their side. I'm looking forward to the future. I expect a plot twist.
Wednesday, December 06, 2006
Peddling PetroProzac: CERA Ignores Ten Warning Signposts of Peak Oil
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15 November 2006 Oil
In Brief: In recent years, Daniel Yergin and his colleagues have been peddling a curious form of PetroProzac. This fall, Esser went so far as to proclaim, “Peak oil theory is garbage, as far as we are concerned.” In this newly updated article, ASPO USA responds.
Randy Udall, Energy Analyst, Co-Founder ASPO-USA
Jeremy Gilbert, Former Chief Petroleum Engineer, BP
Steve Andrews, Co-Founder ASPO-USA
At the end of World War II, the entire planet ran on ten million barrels a day, two-thirds of it produced in the U.S. Since 1950, global oil production has expanded eightfold, driving a similar expansion in economic activity. This era of exponential increase is now drawing to a close, even as the oil appetites of China, India and other developing countries grow apace.
Half the oil ever produced has been consumed since 1983. Today, Americans use 140 pounds of petroleum products per person per week. We are the Oil Tribe, consuming one-quarter of the world’s supply. We have built an entire way of life around cheap oil. Our land use patterns, agriculture, transportation systems, inefficient vehicles, and prosperity… all owe a debt to what Chevron calls “easy oil.”
A number of independent, mainstream analysts have confirmed that growth in global conventional oil production may end soon. Last week, the International Energy Agency’s Claude Mandel concluded, “On current trends we are on course for a dirty, expensive, and unsustainable energy future. Urgent government action is required. The key word is urgent.” However, a few outliers, like ExxonMobil and Cambridge Energy Research Associates, continue to insist that all is well, and that there is no immediate need for action.
Daniel Yergin’s book “The Prize” is a triumph and the companion VHS tapes should be required viewing by all teenagers. In recent years, though, Yergin and his colleagues Peter Jackson and Robert Esser have been peddling a curious form of PetroProzac. This fall, Esser went so far as to proclaim, “Peak oil theory is garbage, as far as we are concerned.” Tell it to Texas. Tell it to Norway. Tell it to the United Kingdom, whose citizens will soon be heavily dependent on imported oil and natural gas.
Declining production in individual fields is commonplace in the petroleum industry; it’s what petroleum geologists and engineers get paid to combat by developing new technologies for increasing resource recovery or by finding new fields to replace those that are aging. In its new report, CERA strikes a more conciliatory and reasonable tone, noting that this debate deserves “a rational and measured discourse.” We wholeheartedly agree. In some of his public pronouncements, however, Daniel Yergin continues to parrot an old shibboleth, saying “This is the fifth time that the world is said to be running out of oil.”
As Yergin well knows, the arrival of peak oil does not mean we will be “running out.” This is a red herring. To be fair, some peak oil commentators have been equally obtuse and shrill. It sometimes seems to us that both sides in the debate are shouting down a well. The public interest would be better served by a more intelligent discussion.
Peak oil is not the end, nor even the beginning of the end, of the Oil Age. Indeed, at peak the world will have more discovered oil available than it ever had before; to the casual observer all will appear well. No one can predict how rapidly oil production rates will fall once they have peaked, plateaued and begun to decline. Because heroic, expensive efforts will be made to reduce demand and expand supply, the plateau could last for some years, and the backside of the global production curve is likely to be less steep that the ascent. On this we agree with CERA. Eventually, however, production will fall, even as human numbers continue to climb. On a Btu basis, even a 2% annual reduction in global oil supply is equivalent to losing the energy provided by 80 nuclear power plants. The prospect of such reductions recurring year after year is most sobering.
Peak oil presents humankind with an enormous challenge. To minimize economic disruption, intelligent responses must begin years, even decades, prior to peak oil, and certainly cannot wait until the peak has actually occurred . Far better to act too early than too late. Although much of the key data which might allow more accurate identification of the timing of the peak is unavailable or unreliable, attempts to reassure politicians that “all is well” strike us as misleading, duplicitous, and dangerous.
As respected oil industry analyst Charlie Maxwell noted in a recent interview in Barron’s: “Exxon has taken out advertising saying there'll be plenty of future supplies.
“This verges on the irresponsible because it says to the government there is no problem. It says to the media there is no problem. It says to the public there is no problem.
“So we are to march with fife and drum, banners flying, into the maw of destruction… because Exxon tells us that there is no problem.”
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What evidence is there to suggest that a peak in global oil production is near? CERA seeks a sober dialogue to identify “clear signposts that will herald the onset” of either the peak or their “undulating plateau” of world oil production. Here, ten reasons why this turning point is likely between now and 2015.
1. M. King Hubbert, winner of the top award in earth sciences—the Vetlesen Prize-- was an enormously courageous, bright, and prescient man who may have done more with a slide rule than his contemporary critics can with a supercomputer, but it’s a mistake to build the peak oil case entirely around his famous curve. With some exceptions, (the North Sea, the United States, Indonesia, for example, and most of the minor producers who are long past peak) falling reserves are generally not the most important brake on efforts to increase oil production. There are numerous other constraints (including limits on financing, logistics, shortages of rigs and drilling ships, a lack of skilled manpower, extremes of weather, political or military conflict) that make it increasingly difficult to expand production. These constraints, which sometimes operate synergistically, work to restrain and delay production growth which might otherwise compensate for declines elsewhere. Iraq, for example, has sufficient reserves to support production of 5 million barrels a day. But wishing won’t make it so.
2. Globally, oil production is highly concentrated in a small number of countries and regions and is becoming more so. Twenty nations produce 83% of the world’s oil, and production in many has already peaked. As others in this top twenty gradually “roll over,” it will become increasingly difficult for the remaining members of this exclusive club to “up the ante,” increasing their own production to offset declines elsewhere. Indeed, in CERA’s forecast to 2015 published last summer, the authors acknowledge that conventional crude production will plateau around 2010; they forecast that the availability of natural gas liquids will grow as global gas production expands and compensate for declining crude oil production.
3. Production outside OPEC is forecast by most experts to peak between 2010 and 2015. Once that occurs, there is no possibility that any combination of non-OPEC countries could offset significant production declines in other parts of the world. A wide range of analysts agree on this, including PFC Energy, ExxonMobil, Cambridge Energy Research Associates, and Woods Mackenzie. Their conclusions are supported by other studies carried out by Chris Skrebowski, Tom Petrie, Henry Groppe and others.
4. The overwhelming majority of remaining conventional petroleum reserves are concentrated around the Arabian Gulf. There, they are largely off-limits to the world’s independent oil companies which tend to have the best technology and the most highly trained engineers and geoscientists. This technology and these people are increasingly essential to efficiently extract the oil from the increasingly complex reservoirs which hold most of the remaining conventional oil.
5. The Middle East region is riven by religious, cultural, geopolitical and military conflicts. It is a cauldron for conflict. Muslim governments control about two-thirds of the world’s remaining conventional oil and are increasingly bitterly opposed to U.S. government policies. In most of these key nations, the ability to expand production is larger than the current desire to do so; they are unlikely to see any benefit in early production of their oil to slake an American or Chinese thirst.
6. Increases in production from the non-Middle East OPEC member countries are unlikely to compensate for production declines elsewhere. Nigeria's production has been undercut by insurgents; Venezuela's production is falling due to mismanagement and the "Chavez factor"; Indonesia’s production appears to be in irremediable decline.
7. Unconventional petroleum resources (Canada’s tar sands, Venezuela’s bitumen and U.S. oil shales) are very large and very misunderstood. All oil is not created equal. Although they total trillions of barrels in the aggregate, expanding unconventional production is expensive, technically arduous and slow. Because these resources can not be produced at high rates, they can do little to postpone the peak in global production. For example, at forecast 2015 rates of production, it will take more than a century to produce Canada’s 175 billion barrels of tar sand reserves. (A financial analogy: Imagine having $100,000,000 in your IRA, but being forbidden to withdraw more than $100,000 per year. You are rich, sort of.) With tens of billions of investment dollars, Venezuela could expand its bitumen production, but Chavez is in no rush to do so, nor are the importing countries showing any indication of readiness to make the investments in refinery modifications which would be required to deal with the increased proportion of very heavy oil. As for oil shale, global production has never exceeded 25,000 barrels a day, has fallen by half since 1990, and now provides just 1/10,000th of global energy. Typical oil shales have the energy density of a baked potato. (In Colorado, Shell hopes to pull the sword from the stone using electricity: a dedicated 1,200 MW powerplant will be needed to produce 100,000 b/d, making this project the world’s largest electricity consumer.) Other oft-heralded types of unconventional liquids, such as gas-to-liquids and coal-to-liquids, are very capital intensive and offer abysmal energy returns. Biofuels, particularly Brazilian ethanol, will make an important contribution but only regionally. A breakthrough in the production of cellulosic ethanol is unlikely to occur before oil production peaks.
8. Production decline from producing fields is inevitable and relentless, and trees don’t grow to the sky! Not all the world’s oil fields are in decline, but the majority are. No one knows what the average global decline rate is, but assuming CERA’s conservative 5% decline rate in mature fields, the existing global production base loses more than 2.5 million barrels per day/year. This means that by 2015 we may need 20 million barrels per day of new production just to maintain current world production. Most of the world’s large fields, a few hundred of which are the main contributors to global production, have been on production for decades. Many are known to have increasing water cuts or gas-oil ratios, and are in decline. Examples of major fields which are thought to have gone into decline include Mexico’s Cantarell, Alaska’s Prudhoe Bay, Kuwait’s Burgan, and perhaps Saudi Arabia’s Ghawar – the world’s largest oilfield. (If the Saudis wish to allay wide-spread fears about the well-being of their major fields, they could do so by releasing data on their production histories. Their reluctance to do this, while perfectly understandable, is not particularly reassuring.)
9. Roughly 80% of the world’s remaining oil reserves are controlled by national oil companies such as Saudi Aramco, Pemex, Petrobras, ADNOC and NIOC. In the grand scheme of things, BP, ExxonMobil, and Shell are relatively small players and no longer have the ability to significantly expand production. (Exxon has spent $100 billion since year 2000 with no growth to show for it. Lee Raymond may not “believe” in peak oil, but his former company’s recent performance doesn’t exactly refute the idea.) In evaluating whether to invest in increasing production, the NOCs rely on a different set of calculations and motivations than the IOCs. National interests, which tend to favor ensuring that oil reserves will still exist for the current leaders’ grand-children, often trump what Westerners would define as rational economic decision-making. Recently, a number of these government-owned companies have unilaterally rewritten the terms of existing contracts, rejected joint-development proposals from IOCs, and taken various steps to further restrict access by the IOCs to their reserves. Consider Putin, who has recognized that energy is the original currency, and with it he can wage a new cold war. In short, production expansions by the NOCs are likely to take place over longer periods and to lower levels than some analysts had expected.
10. Discovery rates are falling rapidly. We are now producing two to three barrels of oil for every additional one we find. New discoveries are much smaller than those of a few decades ago. It has been 25 years since we discovered a field capable of producing 1 million barrels per day. During the 1970s, at the time of the first Oil Crises, the North Slope, North Sea, and Cantarell were standing in reserve, ready to ride to the rescue. In contrast, today, there are few, if any, large, untapped virgin fields waiting in the wings. The offshore fields that are being developed (primarily in West Africa, the Caspian, Brazil and the deepwater Gulf of Mexico) are smaller, more complex, and, in some cases, nearly prohibitively expensive to develop.
The authors, aware of CERA’s disagreement with item #10 above, will publish a more detailed response to CERA’s work later this fall.
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15 November 2006 Oil
In Brief: In recent years, Daniel Yergin and his colleagues have been peddling a curious form of PetroProzac. This fall, Esser went so far as to proclaim, “Peak oil theory is garbage, as far as we are concerned.” In this newly updated article, ASPO USA responds.
Randy Udall, Energy Analyst, Co-Founder ASPO-USA
Jeremy Gilbert, Former Chief Petroleum Engineer, BP
Steve Andrews, Co-Founder ASPO-USA
At the end of World War II, the entire planet ran on ten million barrels a day, two-thirds of it produced in the U.S. Since 1950, global oil production has expanded eightfold, driving a similar expansion in economic activity. This era of exponential increase is now drawing to a close, even as the oil appetites of China, India and other developing countries grow apace.
Half the oil ever produced has been consumed since 1983. Today, Americans use 140 pounds of petroleum products per person per week. We are the Oil Tribe, consuming one-quarter of the world’s supply. We have built an entire way of life around cheap oil. Our land use patterns, agriculture, transportation systems, inefficient vehicles, and prosperity… all owe a debt to what Chevron calls “easy oil.”
A number of independent, mainstream analysts have confirmed that growth in global conventional oil production may end soon. Last week, the International Energy Agency’s Claude Mandel concluded, “On current trends we are on course for a dirty, expensive, and unsustainable energy future. Urgent government action is required. The key word is urgent.” However, a few outliers, like ExxonMobil and Cambridge Energy Research Associates, continue to insist that all is well, and that there is no immediate need for action.
Daniel Yergin’s book “The Prize” is a triumph and the companion VHS tapes should be required viewing by all teenagers. In recent years, though, Yergin and his colleagues Peter Jackson and Robert Esser have been peddling a curious form of PetroProzac. This fall, Esser went so far as to proclaim, “Peak oil theory is garbage, as far as we are concerned.” Tell it to Texas. Tell it to Norway. Tell it to the United Kingdom, whose citizens will soon be heavily dependent on imported oil and natural gas.
Declining production in individual fields is commonplace in the petroleum industry; it’s what petroleum geologists and engineers get paid to combat by developing new technologies for increasing resource recovery or by finding new fields to replace those that are aging. In its new report, CERA strikes a more conciliatory and reasonable tone, noting that this debate deserves “a rational and measured discourse.” We wholeheartedly agree. In some of his public pronouncements, however, Daniel Yergin continues to parrot an old shibboleth, saying “This is the fifth time that the world is said to be running out of oil.”
As Yergin well knows, the arrival of peak oil does not mean we will be “running out.” This is a red herring. To be fair, some peak oil commentators have been equally obtuse and shrill. It sometimes seems to us that both sides in the debate are shouting down a well. The public interest would be better served by a more intelligent discussion.
Peak oil is not the end, nor even the beginning of the end, of the Oil Age. Indeed, at peak the world will have more discovered oil available than it ever had before; to the casual observer all will appear well. No one can predict how rapidly oil production rates will fall once they have peaked, plateaued and begun to decline. Because heroic, expensive efforts will be made to reduce demand and expand supply, the plateau could last for some years, and the backside of the global production curve is likely to be less steep that the ascent. On this we agree with CERA. Eventually, however, production will fall, even as human numbers continue to climb. On a Btu basis, even a 2% annual reduction in global oil supply is equivalent to losing the energy provided by 80 nuclear power plants. The prospect of such reductions recurring year after year is most sobering.
Peak oil presents humankind with an enormous challenge. To minimize economic disruption, intelligent responses must begin years, even decades, prior to peak oil, and certainly cannot wait until the peak has actually occurred . Far better to act too early than too late. Although much of the key data which might allow more accurate identification of the timing of the peak is unavailable or unreliable, attempts to reassure politicians that “all is well” strike us as misleading, duplicitous, and dangerous.
As respected oil industry analyst Charlie Maxwell noted in a recent interview in Barron’s: “Exxon has taken out advertising saying there'll be plenty of future supplies.
“This verges on the irresponsible because it says to the government there is no problem. It says to the media there is no problem. It says to the public there is no problem.
“So we are to march with fife and drum, banners flying, into the maw of destruction… because Exxon tells us that there is no problem.”
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What evidence is there to suggest that a peak in global oil production is near? CERA seeks a sober dialogue to identify “clear signposts that will herald the onset” of either the peak or their “undulating plateau” of world oil production. Here, ten reasons why this turning point is likely between now and 2015.
1. M. King Hubbert, winner of the top award in earth sciences—the Vetlesen Prize-- was an enormously courageous, bright, and prescient man who may have done more with a slide rule than his contemporary critics can with a supercomputer, but it’s a mistake to build the peak oil case entirely around his famous curve. With some exceptions, (the North Sea, the United States, Indonesia, for example, and most of the minor producers who are long past peak) falling reserves are generally not the most important brake on efforts to increase oil production. There are numerous other constraints (including limits on financing, logistics, shortages of rigs and drilling ships, a lack of skilled manpower, extremes of weather, political or military conflict) that make it increasingly difficult to expand production. These constraints, which sometimes operate synergistically, work to restrain and delay production growth which might otherwise compensate for declines elsewhere. Iraq, for example, has sufficient reserves to support production of 5 million barrels a day. But wishing won’t make it so.
2. Globally, oil production is highly concentrated in a small number of countries and regions and is becoming more so. Twenty nations produce 83% of the world’s oil, and production in many has already peaked. As others in this top twenty gradually “roll over,” it will become increasingly difficult for the remaining members of this exclusive club to “up the ante,” increasing their own production to offset declines elsewhere. Indeed, in CERA’s forecast to 2015 published last summer, the authors acknowledge that conventional crude production will plateau around 2010; they forecast that the availability of natural gas liquids will grow as global gas production expands and compensate for declining crude oil production.
3. Production outside OPEC is forecast by most experts to peak between 2010 and 2015. Once that occurs, there is no possibility that any combination of non-OPEC countries could offset significant production declines in other parts of the world. A wide range of analysts agree on this, including PFC Energy, ExxonMobil, Cambridge Energy Research Associates, and Woods Mackenzie. Their conclusions are supported by other studies carried out by Chris Skrebowski, Tom Petrie, Henry Groppe and others.
4. The overwhelming majority of remaining conventional petroleum reserves are concentrated around the Arabian Gulf. There, they are largely off-limits to the world’s independent oil companies which tend to have the best technology and the most highly trained engineers and geoscientists. This technology and these people are increasingly essential to efficiently extract the oil from the increasingly complex reservoirs which hold most of the remaining conventional oil.
5. The Middle East region is riven by religious, cultural, geopolitical and military conflicts. It is a cauldron for conflict. Muslim governments control about two-thirds of the world’s remaining conventional oil and are increasingly bitterly opposed to U.S. government policies. In most of these key nations, the ability to expand production is larger than the current desire to do so; they are unlikely to see any benefit in early production of their oil to slake an American or Chinese thirst.
6. Increases in production from the non-Middle East OPEC member countries are unlikely to compensate for production declines elsewhere. Nigeria's production has been undercut by insurgents; Venezuela's production is falling due to mismanagement and the "Chavez factor"; Indonesia’s production appears to be in irremediable decline.
7. Unconventional petroleum resources (Canada’s tar sands, Venezuela’s bitumen and U.S. oil shales) are very large and very misunderstood. All oil is not created equal. Although they total trillions of barrels in the aggregate, expanding unconventional production is expensive, technically arduous and slow. Because these resources can not be produced at high rates, they can do little to postpone the peak in global production. For example, at forecast 2015 rates of production, it will take more than a century to produce Canada’s 175 billion barrels of tar sand reserves. (A financial analogy: Imagine having $100,000,000 in your IRA, but being forbidden to withdraw more than $100,000 per year. You are rich, sort of.) With tens of billions of investment dollars, Venezuela could expand its bitumen production, but Chavez is in no rush to do so, nor are the importing countries showing any indication of readiness to make the investments in refinery modifications which would be required to deal with the increased proportion of very heavy oil. As for oil shale, global production has never exceeded 25,000 barrels a day, has fallen by half since 1990, and now provides just 1/10,000th of global energy. Typical oil shales have the energy density of a baked potato. (In Colorado, Shell hopes to pull the sword from the stone using electricity: a dedicated 1,200 MW powerplant will be needed to produce 100,000 b/d, making this project the world’s largest electricity consumer.) Other oft-heralded types of unconventional liquids, such as gas-to-liquids and coal-to-liquids, are very capital intensive and offer abysmal energy returns. Biofuels, particularly Brazilian ethanol, will make an important contribution but only regionally. A breakthrough in the production of cellulosic ethanol is unlikely to occur before oil production peaks.
8. Production decline from producing fields is inevitable and relentless, and trees don’t grow to the sky! Not all the world’s oil fields are in decline, but the majority are. No one knows what the average global decline rate is, but assuming CERA’s conservative 5% decline rate in mature fields, the existing global production base loses more than 2.5 million barrels per day/year. This means that by 2015 we may need 20 million barrels per day of new production just to maintain current world production. Most of the world’s large fields, a few hundred of which are the main contributors to global production, have been on production for decades. Many are known to have increasing water cuts or gas-oil ratios, and are in decline. Examples of major fields which are thought to have gone into decline include Mexico’s Cantarell, Alaska’s Prudhoe Bay, Kuwait’s Burgan, and perhaps Saudi Arabia’s Ghawar – the world’s largest oilfield. (If the Saudis wish to allay wide-spread fears about the well-being of their major fields, they could do so by releasing data on their production histories. Their reluctance to do this, while perfectly understandable, is not particularly reassuring.)
9. Roughly 80% of the world’s remaining oil reserves are controlled by national oil companies such as Saudi Aramco, Pemex, Petrobras, ADNOC and NIOC. In the grand scheme of things, BP, ExxonMobil, and Shell are relatively small players and no longer have the ability to significantly expand production. (Exxon has spent $100 billion since year 2000 with no growth to show for it. Lee Raymond may not “believe” in peak oil, but his former company’s recent performance doesn’t exactly refute the idea.) In evaluating whether to invest in increasing production, the NOCs rely on a different set of calculations and motivations than the IOCs. National interests, which tend to favor ensuring that oil reserves will still exist for the current leaders’ grand-children, often trump what Westerners would define as rational economic decision-making. Recently, a number of these government-owned companies have unilaterally rewritten the terms of existing contracts, rejected joint-development proposals from IOCs, and taken various steps to further restrict access by the IOCs to their reserves. Consider Putin, who has recognized that energy is the original currency, and with it he can wage a new cold war. In short, production expansions by the NOCs are likely to take place over longer periods and to lower levels than some analysts had expected.
10. Discovery rates are falling rapidly. We are now producing two to three barrels of oil for every additional one we find. New discoveries are much smaller than those of a few decades ago. It has been 25 years since we discovered a field capable of producing 1 million barrels per day. During the 1970s, at the time of the first Oil Crises, the North Slope, North Sea, and Cantarell were standing in reserve, ready to ride to the rescue. In contrast, today, there are few, if any, large, untapped virgin fields waiting in the wings. The offshore fields that are being developed (primarily in West Africa, the Caspian, Brazil and the deepwater Gulf of Mexico) are smaller, more complex, and, in some cases, nearly prohibitively expensive to develop.
The authors, aware of CERA’s disagreement with item #10 above, will publish a more detailed response to CERA’s work later this fall.
Another Quagmire
American paralysis in the face of the declining dollar could spell disaster for the country. Behold the Republicans' economic Iraq.
By Robert Kuttner
Web Exclusive: 12.04.06
Even if you are not planning an (ever more expensive) European trip any time soon, pay attention to the decline of the dollar. It could portend deeper trouble for the economy.
The dollar just hit a 20-month low against the Euro. It now costs over $1.33 to buy one Euro, and the dollar is falling against other currencies as well.
The greenback is sinking mainly because the United States runs an immense trade deficit with the rest of the world, especially East Asia. Countries like China, Korea, and Japan have an unhealthy co-dependency with the United States. Their governments help their industries capture leadership in technologies, products, and jobs. They then sell America far more then they buy. However, their central banks happily lend those dollars back to us, so that we can finance the trade deficit and keep on buying their exports.
We now owe foreigners over a trillion dollars, about half of it to central banks. Our annual trade deficit is over seven percent of one year’s Gross Domestic Product, and it keeps growing.
If any other country ran such a deficit, foreigners would lose confidence and its currency would crash. That’s what happened to Mexico, Argentina, even to Britain in the early 1990s. The United States has avoided that fate thus far, because Asian central banks keep the dollar propped up and that reassures private investors.
But this game can go on only so long. Last week’s dollar decline of a few cents against the Euro is rather like the seismic tremors that precede a major earthquake on a fault-line. We don’t know whether this is the Big One. We just know that the big one is coming sooner or later.
No less than Paul Volcker put the odds of a dollar crash at 75 percent within five years. He said that over two years ago.
The dollar fault-line keeps widening because of our tricky relations with China. Beijing deliberately keeps its currency undervalued as part of its export strategy, to make its products even cheaper in the United States, and to make U.S. exports more expensive in Chinese markets.
This strategy has the desired effect of stimulating China’s sales to the United States, and enticing U.S. manufactures to locate production in China to take advantage of the cheap labor, government subsidies, and depressed currency. Treasury Secretary Henry Paulson goes through the motions of pressuring the Chinese to let their currency trade like normal currencies, but Paulson doesn’t really want that outcome because a big jump in the value of the Chinese yuan could trigger a run on the dollar.
Paulson has repeatedly said in other contexts that a strong dollar is good for America. He says this not because a strong dollar helps U.S. exports -- it makes U.S. products more expensive in world markets -- but because he doesn’t want investors to flee the dollar and set off a stampede. Paulson’s predecessor as treasury secretary in the Clinton administration, Robert Rubin, now a senior executive at Citigroup, confirmed to me in an interview that Wall Street wants only the most modest dollar adjustment.
Due to our dependency on foreign financing of our trade imbalance, which in turn requires confidence in the dollar, we can’t behave like normal countries -- let our currency fall, and thereby make our products cheaper in world markets, which would improve the trade imbalance.
The longer an adjustment is delayed, the more serious will be the eventual crash. And if the dollar crashed, the Federal Reserve would be torn between raising interest rates to restore foreign confidence in the dollar (and creating a domestic recession) or lowering interest rates to stimulate a domestic recovery (and scaring off even more foreign lending on which we depend).
The alternative to this mess is a more assertive trade policy, so that other countries stop playing protectionist games at America’s expense. If we exported more and imported less, we would not be so dependent on foreign borrowing to finance the trade deficit. But that strategy is off the table, and in any case it would take time to work.
The precarious dollar is also weakened by the big federal budget deficits and the increasing role of hedge funds, which operate like a herd and exaggerate normal swings in currency markets. But Secretary Paulson wants even more tax cuts and more financial deregulation.
The dollar dilemma is the Republicans’ economic Iraq. It has no easy solution, and could be one more disaster on the watch of George W. Bush.
Robert Kuttner is co-editor of The American Prospect. This column originally appeared in The Boston Globe.
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American paralysis in the face of the declining dollar could spell disaster for the country. Behold the Republicans' economic Iraq.
By Robert Kuttner
Web Exclusive: 12.04.06
Even if you are not planning an (ever more expensive) European trip any time soon, pay attention to the decline of the dollar. It could portend deeper trouble for the economy.
The dollar just hit a 20-month low against the Euro. It now costs over $1.33 to buy one Euro, and the dollar is falling against other currencies as well.
The greenback is sinking mainly because the United States runs an immense trade deficit with the rest of the world, especially East Asia. Countries like China, Korea, and Japan have an unhealthy co-dependency with the United States. Their governments help their industries capture leadership in technologies, products, and jobs. They then sell America far more then they buy. However, their central banks happily lend those dollars back to us, so that we can finance the trade deficit and keep on buying their exports.
We now owe foreigners over a trillion dollars, about half of it to central banks. Our annual trade deficit is over seven percent of one year’s Gross Domestic Product, and it keeps growing.
If any other country ran such a deficit, foreigners would lose confidence and its currency would crash. That’s what happened to Mexico, Argentina, even to Britain in the early 1990s. The United States has avoided that fate thus far, because Asian central banks keep the dollar propped up and that reassures private investors.
But this game can go on only so long. Last week’s dollar decline of a few cents against the Euro is rather like the seismic tremors that precede a major earthquake on a fault-line. We don’t know whether this is the Big One. We just know that the big one is coming sooner or later.
No less than Paul Volcker put the odds of a dollar crash at 75 percent within five years. He said that over two years ago.
The dollar fault-line keeps widening because of our tricky relations with China. Beijing deliberately keeps its currency undervalued as part of its export strategy, to make its products even cheaper in the United States, and to make U.S. exports more expensive in Chinese markets.
This strategy has the desired effect of stimulating China’s sales to the United States, and enticing U.S. manufactures to locate production in China to take advantage of the cheap labor, government subsidies, and depressed currency. Treasury Secretary Henry Paulson goes through the motions of pressuring the Chinese to let their currency trade like normal currencies, but Paulson doesn’t really want that outcome because a big jump in the value of the Chinese yuan could trigger a run on the dollar.
Paulson has repeatedly said in other contexts that a strong dollar is good for America. He says this not because a strong dollar helps U.S. exports -- it makes U.S. products more expensive in world markets -- but because he doesn’t want investors to flee the dollar and set off a stampede. Paulson’s predecessor as treasury secretary in the Clinton administration, Robert Rubin, now a senior executive at Citigroup, confirmed to me in an interview that Wall Street wants only the most modest dollar adjustment.
Due to our dependency on foreign financing of our trade imbalance, which in turn requires confidence in the dollar, we can’t behave like normal countries -- let our currency fall, and thereby make our products cheaper in world markets, which would improve the trade imbalance.
The longer an adjustment is delayed, the more serious will be the eventual crash. And if the dollar crashed, the Federal Reserve would be torn between raising interest rates to restore foreign confidence in the dollar (and creating a domestic recession) or lowering interest rates to stimulate a domestic recovery (and scaring off even more foreign lending on which we depend).
The alternative to this mess is a more assertive trade policy, so that other countries stop playing protectionist games at America’s expense. If we exported more and imported less, we would not be so dependent on foreign borrowing to finance the trade deficit. But that strategy is off the table, and in any case it would take time to work.
The precarious dollar is also weakened by the big federal budget deficits and the increasing role of hedge funds, which operate like a herd and exaggerate normal swings in currency markets. But Secretary Paulson wants even more tax cuts and more financial deregulation.
The dollar dilemma is the Republicans’ economic Iraq. It has no easy solution, and could be one more disaster on the watch of George W. Bush.
Robert Kuttner is co-editor of The American Prospect. This column originally appeared in The Boston Globe.
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