Archives: 2008 June

What happens to an America built on cheap energy when energy is no longer cheap? It’s a question that most Americans do not want to confront. Especially the slick talking politicians.

The fact is most of the way America was built depends upon cheap energy supplies. The love for the automobile, the vast suburbs that surround America’s majors cities, the neglect of a high speed railway system, huge suburban shopping malls and office parks, American agriculture with its dependence upon fertilizers, pesticides, and massive diesel fuel driven combines and tractors, the aviation industry, and the trucking industry, all were constructed on the back of cheap energy.

Now that energy is not cheap what will happen to the American lifestyle? Optimists look towards the development of alternative energy sources. Some of these possible aids to the energy crisis will be helpful, such as solar and wind power, and some will be counterproductive, like ethanol production using corn as the energy source. However, in time the optimists will learn that we are nowhere near to replacing a significant percentage of our total energy needs with alternative energy sources. Time is already up. We are going to have an energy shortfall and the energy that we do have will be very expensive.

We live in a world designed for cheap energy inputs and energy is no longer cheap. We are already transferring hundreds of billions of Dollars a year to oil producing nations with no end in sight. America is going broke. American citizens will be feeling the pain of this fact for a long time to come, perhaps from now on as the American standard of living drops as expensive energy pricing takes its toll.

Byron King writing for The Daily Reckoning picks up this point…

I saw a CNN special presentation last night that had as its title, “We Were Warned - America Out of Gas. The same holds true for the airline industry. They were warned but except for Southwest Airlines and perhaps one or two others, like Jetblue, the highly paid executives were too busy enjoying their perks to listen up. Now, they are in fact paying through the nose for jet fuel with no end in sight.

And how about the American automotive industry? Did they heed the warnings? Just look at all of the suddenly unwanted SUV’s and trucks now accumulating at dealerships. It took gas prices near $4.00 a barrel to wake the public up and to cut into that SUV demand. The executives produced a lot of SUV’s because they were high profit models and the nearly mindless public could be convinced that they just had to have one to stand out from the crowd. Then as gas prices mover ever higher the SUV buyers found that they had purchased a vehicle that the crowd no longer wanted.

In the CNN special there was a very interesting segment featuring Sir Richard Branson, the founder of Virgin Airlines. Sir Richard was quite straightforward in his assessment of the energy situation. He stated that the shocks to the world financial system will be greater than the combined effects of World Wars One and Two combined. To try to save the day he thinks that, quite correctly in my opinion, it will take a huge emergency effort on the part of world governments, by industry and the public. He is not at all sure that we will have enough time to move to alternative energy sources before time runs out and we are at nearly empty.

Lara Logan appears on Comedy Central with Jon Stewart and slams American Media’s coverage of the wars in Iraq and Afghanistan. She feels even with the American public tired of the wars after five longs years that is no excuse.

She uses the recent battles in Sadr City as an example. According to Lara there were 12 to 15 hour pitched battles in heavily populated urban areas that hardly got a mention in the American media.

Yes, Americans may be tired of hearing about the war but how much do they really know about what is going on in Iraq and Afghanistan? And how much do they really want to know?

What is needed is for every member of the Bush administration and all members of congress to spend a month in Iraq and Afghanistan. And not in a highly protected cushy hotel in the Green Zone but embedded in an American combat unit. After a few weeks of making the rounds with the soldiers and marines perhaps a few accurate stories of how our troops really spend their nights and days would make it back to the American media.

War is a dirty, brutal business. If more of our leaders and public truly realized just how brutal and dirty perhaps we would be less inclined to engage in war.

Bankers, who benefit from our fractional reserve system, never criticize the Fed, especially since it’s the lender of last resort that bails out financial institutions when crises arise.

This year the Fed even extended its bailout provisions to Wall Street brokerage firms, like Bear Sterns, but the Fed’s aggressive actions in trying to avoid a recession may well make matters only worse. The mismanagement of the spend, spend, spend federal government and the unofficial US policy over many years of letting the US Dollar lose value has unleashed inflationary forces that Ben Bernanke is going to find exceedingly difficult to control. Unleashing a flood of additional liquidity when excessive debt is already a major part of the problem will surely backfire on the Fed chairman.

It is true that special interests and bankers do benefit from the Fed, and may well get bailed out – just as we saw with the Long-Term Capital Management fund crisis a few years ago. Bankers own the earth; take it away from them but leave them with the power to create credit, and, with a flick of the pen, they will create enough money to buy it all back again. Take this power away from them and all great fortunes will disappear. Perhaps then this world would be a happier and better world to live in.

The present economic analysis is grim. Until very recently it appeared that the leaders of the world’s major central banks — Fed, ECB, Bank of Japan — all seemed comfortable with a further decline in the dollar. Unlike previous dollar decline periods, the Bank of Japan shows little interest in propping up the dollar, and the ECB, despite signs of moderating growth in Europe, is not sending monetary easing signals.

If you hate politics, you aren’t alone. In his book The American Lie: Government by the People and Other Political Fables (Paradigm Publishers, July 2007), Johns Hopkins political scientist Benjamin Ginsberg suggests that embracing one’s inner cynic is important for keeping political rhetoric at bay.

Politics is not about truth, justice and principle, Ginsberg asserts. Rather, he says, it’s about money, power and status. Ginsberg argues that politicians pretend to fight for principle in order to conceal their true selfish motives. Ginsberg encourages citizens to become “realistically cynical” in their participation in the 2008 election process, to think outside the ballot box and find new ways to act on behalf of their own individual interests and the greater public good. And if voters do make it to the polls, Ginsberg’s advice is, “When in doubt, vote them out.”

Racial tolerance is still an issue in America as we are discovering this year as Michelle Obama is attacked by the far right. Racial tolerance in America has increased steadily over the years but there are still manifestations of discrimination as evidenced by voters comments in a number of primary states exit polls and by attacking the wife of an African American candidate. I don’t think that the US as a whole is too far away from overcoming it, though, and Obama’s strong and positive showing is unquestionably speeding the process up and is encouraging.

America has blue states, red states and all kinds of divisions, but we need someone to bring them all together. America must return to it’s principles, or it will fail. If you believe this is the last you’ll hear of Ron Paul, you are mistaken. Ron Paul, who recently suspended his campaign, was the only candidate who really understands how far America has slipped away from its principals and has some ideas about how to repair the damage. Unfortunately, Americans are too dumb and set in their brainwashed ways to vote for freedom via a non-major party candidate.