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China is basically screwed...they're running out of water and food.

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May 05, 2009 – Comments (14) | RELATED TICKERS: V , WFC , GS

Kustler's The Bottom

Euphoria managed to out-run swine flu last week as the epidemic-du-jour, with "consumer" confidence jumping and the big bank stocks nudging up. The H1N1 virus fizzled for now, at least in terms of kill ratio, though we're warned it might boomerang in the fall with a vengeance. No one was surprised to see Chrysler roll over like a possum on a county highway, but the memory of their muscle cars will linger on like a California surfing song. Here in the northeast, where Sundays are not spent at the Nascar oval, the spring foliage reached the tenderly explosive stage and it was hard to feel bad about anything.

For now, the "bottom" is in -- that is, the bottom of this society's ability to process reality. It may continue for a month of so, even after the "stress test" for banks is finally let out of the massage parlor with a "happy ending." But events are underway that are beyond the command of personalities. We're done "doing business" in all the ways that we've been used to, but we just can't get with the new program. Let's count the ways: 1. The revolving credit economy is over. It's over because we can't increase energy inputs to the system, which is one way of saying "peak oil."

Of course hardly anybody believes this right now because the price of oil crashed nine months ago, along with global manufacturing and trade. But nothing has changed on the peak oil scene -- except perhaps that ever more new oil projects have been cancelled for lack of financing, which will boomerang on us (even if swine flu doesn't) in the form of much lower future oil production. In any case, the credit fiesta is over, and the "consumer" economy with it, because industrial growth as we have known it is over. It's over globally, too, though all regions of the world will not experience its demise the same way at the same rate. The Asian nations may swap things around a while longer but China is basically screwed. They have less oil left than we have (which is saying, not much at all) and they won't corner the rest of the global oil market without starting World War Three. Meanwhile, they're running out of water and food. Good luck becoming the next global hegemon. Oh, and Japan imports 90 percent of its energy; India over 80 percent. Fuggeddabowdit.

Credit will not vanish everywhere overnight -- even in the USA -- because it is not distributed equally everywhere. But it will vanish in layers, and here in the USA a very broad layer of the lower and middle classes are now losing their access to it in one way or another -- personally, in small business -- and they will never get it back. Anyone who intends to thrive in the years just ahead had better plan on doing it on the basis of accounts receivable -- and what they receive might not even necessarily come in the form of US dollars. It may come in the form of gold or silver or in the promise of reciprocal services rendered. This has enormous implications for two of the items in which our credit-dispensing operations are most deeply vested: houses and cars. Unfortunately, these are exactly the things that economic life has been based on for decades in our nation, which leads to the next categories:

2.) The suburban living arrangement is over, along with all its accessories and furnishings. Taken as "all of a piece," the suburban expansion was one sixty-year-long orgasm of hypertrophy. We did it because we could. We won a world war and threw a party. We had lots of cheap land and cheap oil. It made lots of people lots of money and all its usufructs have become embedded in our national identity to the dangerous degree that the loss of them will provoke a kind of national psychotic breakdown. In fact, it already has.

The completely unrealistic expectation that we can resume this way of life is proof of it. The immediate problem is that we can't build anymore of it. The next problem will be the failure of the stuff that already exists. The first stage of that is now palpable in the mortgage foreclosure fiasco and, just beginning now, the tanking of malls, strip centers, office parks and other commercial property investments. The latter will accelerate and become visible very quickly as retail tenants bug out and weeds start growing where the Chryslers and Pontiacs once parked. The next stage, which involves large demographic shifts in how we inhabit the landscape, has not quite gotten underway.

3.) The Happy Motoring fiesta is over. You'd think that with Chrysler crawling into the bankruptcy court, and GM just weeks away from the same terminal ceremony, the news media would begin to suspect that the foundation of everyday life in this country was cracking. Instead, all we hear is blather about "market share" shifting to Toyota. News flash: not only will we make fewer automobiles in the USA, but Americans will buy far fewer cars made anywhere. We'll keep the current fleet moving a while longer, but when it's too beat to repair, we won't be changing it out for a new fleet -- despite all the fantasies about hybrids, plug-and-drive electrics, and so on. The masses will be too broke to buy these things. What's more, they will be very resentful of the shrinking economic "elite" who can afford them. And, anyway, our roads and highways are destined to fall apart very quickly because there is no way we can sustain the necessary rate of normal maintenance. Meanwhile, we remain completely un-serious about public transit -- even about fixing the vestiges that still exist. The airline industry, of course, will be toast inside of five years.

4.) Our food production system is approaching crisis. There's no way we can continue the petro-agriculture system of farming and the Cheez Doodle and Pepsi Cola diet that it services. The public is absolutely zombified in the face of this problem -- perhaps a result of the diet itself.

The rest is here: 

http://jameshowardkunstler.typepad.com/

14 Comments – Post Your Own

#1) On May 05, 2009 at 11:51 AM, TDRH (99.68) wrote:

China is basically screwed. They have less oil left than we have (which is saying, not much at all) and they won't corner the rest of the global oil market without starting World War Three. Meanwhile, they're running out of water and food. Good luck becoming the next global hegemon.

   If the economy slows or falters the government will need to do something to keep the fires of nationalism alive.    Who will be their natural resource target?  I doubt they would have their eyes/military set on Afghanistan.

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#2) On May 05, 2009 at 11:52 AM, AGCAPS (66.90) wrote:

KustlerIs this your view of apocalypses?I like the article;But china will rise in our back; they are committed to leading the world. Remember they have active army of one million. On History of human kind every time a nation fades other will rise until the total annihilation human race.Remember we have a red phone and a red switch ready to fire. I believe the red phone is not connecting with Chinese politburo.  Am I spelling it right?   

 

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#3) On May 05, 2009 at 1:13 PM, Tastylunch (29.26) wrote:

Yeah except they will potentially have Middle Asia and Africa's food/water + they have money to burn. This is not a foregone conclusion that they "lose". They can easily co-opt many foreign governments if they play their cards right. See their free trade deal with Peru for a recent example.

Brazil I think is the potential long term winner of the BRIC foursome anyway.

Kunstler I think is someone who is overly wedded to his hypothesis. he may end up being right but he is too dismissive of alternate possibilities to be useful in many cases.

FWIW I still think he is very wrong about Big Box retail's future. The Boxes are stronger than ever now. I wish that wasn't the case but it is what it is.

 

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#4) On May 05, 2009 at 5:11 PM, jegr5347 (< 20) wrote:

Yeah they have money. A bunch of IOU's from Timmy.

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#5) On May 05, 2009 at 8:17 PM, angusthermopylae (39.58) wrote:

Heard a report along these lines with respect to Africa (though it didn't mention China specifically.)

Basically, foreign governments were leasing land in Africa for food production:  Rent the land there, run industrial farms, pay the locals a pittance to work, and ship the food back to the Motherland.

The thrust of the report was that the hard-working locals were getting little money, little food, and feeding other countries.  The local governments were caught in the middle:  hungry citizens vs. the taxes and "other compensation" (bribes) they were receiving.

Some industrious fellow could dig out the numbers on water consumption for crops (I might do that later), but if you have lots of money, this is a way to offshore your problems and save the land/water for other things...

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#6) On May 05, 2009 at 8:54 PM, mark91055 (< 20) wrote:

These are not new problems and in the past when large populations are faced with this they simply go where the resources are and take them.  For a while US tech will prevent this but sooner or later, just as Columbus began the take over of the Americas and its resources as well as the genocide of the people living there...growing populations will look to where the resources are.

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#7) On May 06, 2009 at 1:58 AM, kaskoosek (61.54) wrote:

jegr5347

 

Yes they have IOUs, but you still have to remember that they have a huge manufacturing base and a lot of expertise. That is the real resource.

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#8) On May 06, 2009 at 9:43 AM, LawfordCap (99.85) wrote:

There were 120 boys born for every 100 girls

http://www.nytimes.com/2009/04/11/world/asia/11china.html

How do you think all those extra men competing for woman will alter the culture?

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#9) On May 06, 2009 at 10:03 AM, biotechmgr (35.23) wrote:

China may have an army of one million but how far can it go if we bomb their pipeline? I thought this too until heard a story about this pinch point. China is dependent which is probably the only thing keeping them in check at least until desperation drives World War III/The Great Oil War.

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#10) On May 06, 2009 at 10:54 AM, OrdinaryGuyTommy (< 20) wrote:

Bringing balance and sustainability to a new way of global living and enterprise. In 2010 using the financial market's current value sytems, Bretton Woods III will be enacted to place a true asset value on all of our un-replaceable life-supporting assets, such as the river forming glaciers, the oceans and most critically the oxygen producing tropical rain forests. When Brazil, Indonesia and other tropical countries realise that they are the guardians of an asset whose role is the carbon scrubbing of the earth's air supply nominally rated at an annual cost of $35 Trillion, then the meek shall inherit the earth. At its core sustainable global enterprise can be based on the rest of the world paying the tropical countries to maintain their precious resources and in return those countries buying food, goods, services, entertainment and travel from the rest of us.

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#11) On May 07, 2009 at 3:41 PM, AGCAPS (66.90) wrote:

Tommy!

Do you know the major part of the CO2 is not converted by the rain forest but by plankton?

Do you know the plankton floating on sea and lakes?

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#12) On May 08, 2009 at 8:37 PM, awallejr (83.97) wrote:

Oil is still cheap.  China has been active in securing commodities, such as with Brazil and Russia.  Eventually Oil will get more expensive, but we are now at a point in technology where there really are viable options that can be deployed eventually.  That eventuality may be near but there really is no given that a war over oil is inevitable.

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#13) On May 11, 2009 at 1:49 PM, imobillc (< 20) wrote:

I really liked this post and another REC from me...

Mars 

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#14) On May 11, 2009 at 1:53 PM, imobillc (< 20) wrote:

Tastylunch

 I completely agree with your remarks about 

Brazil being the potential long term winner of the BRIC foursome. 

Mars 

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