[phaster]

Dropped in to see what the doomers had to say about drought in my neck of the woods (i.e. california)

For what its worth, since its a new year thought I'd share my own thoughts on how the economy and peak oil will play out over the next 50 years and hopefully get some feed back from ya all.

As I see it unfunded "debt" for government pension programs will have a greater effect on societies around the world than "peak oil." This is because in the developed world government pension programs have not taken into account ever increasing life spans and lower overall birth rates. In the developing world the trend has been to aspire to the consumer based lifestyle, BUT because of first mover economic advantage of developed economies in the USA, Europe and Japan the developing world in Mexico, Brazil, China, etc., has to not only contend with economic development, but also deal with social issues associated with greater over all population growth rates w/ much lower funds per capita.

In the developed world, society is being bifurcated between those with those who have education, ambition, been fortunate to have "inherited" some wealth or lucky enough to have been born in a region with some kind of economic engine, are in general pulling ahead and are not looking back!

As I see it, its an 80/20 split! In other worlds the top 20% of the population in the developed world have 80% of the wealth, political connections, etc. And over the next 50 or so years society in the developed world as a whole will become even more bifurcated.

FWIW there was a wealth survey of the USA just released a few days ago, that ya all might find interesting.

http://www.washingtonpost.com/blogs/govbeat/wp/2014/01/16/which-states-have-the-most-millionaires-per-capita/

My own opinion is the traditional deep chasm typical in the developing world between the have and have nots, will narrow BUT overall it will still be an 80/20 split!

The biggest economic problem the world now faces IMHO is Japan. This is because the population is aging and will be eligible for government pension programs. Further more since japan does not have a history of "foreign" immagration, has vowed to itself of nuclear power plants and has no significant natural energy resources (i.e. oil or coal), IMHO its a "dead man walking!"

A Japanese Crisis Nears (IMHO w/in 5 years)

http://www.forbes.com/sites/jamesgruber/2013/08/10/a-japanese-crisis-nears/

As far as the USA, its been blessed with significant natural energy resources (i.e. oil or coal), has a history of "foreign" immagration, and is lucky to manage the worlds "reserve" currency (i.e. the dollar). Note because all around the world oil prices are quoted in dollars, so for the time being there is a build in demand for currency from the USA.

Sadly the biggest problem political leadership and the general public does not want to acknowledge is as it stands, social welfare programs like social security for "pensions" and medicare/medicade along with the "affordable health care act" (aka obama care), are economicaly unsustainable. As a matter of fact since 2010 Social Security has been paying out more than its been taking in.

http://www.nytimes.com/2010/03/25/business/economy/25social.html

But on the bright side, social security can coast on "wealth" accumilated by previous generations of american workers for 20 or so years. The various state and city governments are IMHO going to fail long before social security fails because of mismanagement. FWIW here is a website that lists "Unfunded Pensions by State"

http://www.usrbs.com/unfunded.html

IMHO california is screwed, my timeframe 5-10 years MAX

The good news is that those in top 20% (around the world) need not worry (as much) about peak oil issues because political leaders who are in general economic dumbshits and are morally bankrupt, will have destroyed the world as we have know it for the past 50 or so years. Because the top 20% will have the resources, political connections, etc., to deal with ever incresing energy costs. Basically the era of "cheap" energy that we in the developed world have enjoyed for the past 50 or so years is over.

Welcome to the new world...

[Loki]

Yes, we're hurtling towards a full-blown two-tier society. This is a long-term trend exacerbated by economic spasms like the Great Recession. Our future will be more feudal than most like to think.

You underestimate the importance of energy, particularly oil, to the American economy. We're bleeding money to maintain stagnation, when production declines it'll be far worse.

And yes, California is fooked. Too many damn people, thanks in large part to uncontrolled immigration.

[SilentRunning]

You're right, and the top 20% of the USA owns over 80% of the wealth. (I'm actually in that 20%).

Interestingly, the bottom 20% of the population has negative net-worth.

[lasseter]

... thought I'd share my own thoughts on how the economy and peak oil will play out over the next 50 years...

government pension programs will have a greater effect on societies around the world than "peak oil."

As I see it, its an 80/20 split! the top 20% of the population in the developed world have 80% of the wealth, political connections, etc.

You ask what we all think phaster, well here is what see, similar to your senario but gloomier. It's obvious that if we had lots of $5 oil we wouldn't have a pension problem on the doorstep, so the 2 (oil price/availability and Pension obligations) are in a sort of feedback loop, the mechanics of which I will add as a footnote.

I think 20% is far too high a figure. It may be the current figure? But in 10 or 20 years time the wealthy/poor divide will probably be in the ballpark of 1:99 Once the entire system breaks down, and I see no way to avoid that because of things like the complexity built into sub-systems like the electricity grid, All those income streems the 20% rely on will vanish.

The grid as an example relies on massive infusions of money for maintenance. You can't simply remove 50% of the energy users and expect it to still function and generate a profit. You would have to break it apart and site all the people who could still afford electricity in a single region near the power plant and smaller grid system. The same might apply to food distribution and other sub-systems. A lot of wealth will vanish like in the Enron and Global Crossing, Kmart collapses.

When an empire collapses, and that is what we are facing, it doesn't just slowly spool down. It collapses in a heap like a stockmarket crash. 10 years is a figure cited by some. As you well know, our empire, like all those before it, has employed slaves to do the work that made us wealthy. Without our oil slaves we revert to the old pre-oil system (after a big upheaval) where there are very few wealthy people and a great many poor. I believe our empire began with the Spanish, 400 years ago. And 400 years is the common lifespan of an empire.

I can't see any other outcome. Especially now that our societies generate most of their income from service jobs and consumption jobs. Both of which we can cheefully live without when our wallets are empty.

Footnote: ( oil pension feedback loop )
A pension obligation basically amounts to an unspent amount of future money which will of course be converted into oil, or a demand for oil, since everything we want to buy basically is made of oil or made in the oil powered economy. If oil was perpetually cheap and abundant (and had no bad side effects to the climate) we could probably go on and on until we ran out of copper or water or whatever. But oil isn't, so higher pension obligations push the price of oil up from supply/demand, and higher oil prices crush the value of pensions. Since they can buy less oil.

This as much as the accumulated debt is what will wipe out all pensions in the future I believe.

[Pops]

You mention two main trends, greater wealth disparity and greater government transfers.

What is the option? There are only two choices when the minority is afraid of the majority, keep them down or keep them placated.

History shows that "Let them eat cake" is not a wise policy vis a vie maintaining the status quo. IOW the way to keep the pitchforks pointed down and not up is to make sure the rabble is fed and occupied. "Bread and Circuses" is the operative policy.

Not that there is some grand conspiracy, if anything the grand conspiracy in the US is "let 'em starve" but we also believe "I built that.".

I predict a move toward more transfers as a policy platform this and next national election cycle if the economy doesn't really ignite. Especially if the US "Fracking Miracle" looks to be over and/or the Koch Boys are successful exporting the "Glut." Add in Russian production beginning to fall and no replacement beyond the current off-line exporting countries (Iraq/Iran/Libya/etc).

The TEAs and Hillary/Clintonomics will be out like Gordon Gekko and we'll see a turn back to protectionism, anti-corporatism and economic populism.
.

[rollin]

I'm not really a doomer and I don't like economics but I will give a go anyway.

Every stressor on society, such as long term droughts, major floods, damaging storms, earthquakes, wars ... will add cost to the operation of society. The obvious result in a non-growth, non-expansionist society is to produce more economically poor citizens, reduce services and refrain from infrastructure improvements that do not produce a large near-immediate economic return.
The government will tend to lose control to powerful private and corporate concerns.

Although the last recession was mostly forced by shysterism and fraud on the part of the financial sector, as well as long term inappropriate government policies, the next one will be mostly driven by resource, energy and land limitations. As certain countries or regions weaken and collapse, major movements into these areas will be attempted by the overpopulated countries. Energy resources will be heavily fought over as will access to resources. Wars and the failure of the global trade system will cause further collapses. The wars will be both economic and physical. Large population shifts will follow into collapsed areas as well as population diminishment of the indigenous.

Economies will re-align to a lower energy/resource level. Cities will tend to reduce as the rural areas can no longer support them. Nations will be realigned and the world map will have a lot of new lines redrawn over the next 50 years. The unceasing stressors of diminishing resources, major environmental changes and lowering energy levels will continue this process for a long time.

There will always be regions that appear to do better than others but the ones that will do best and be most stable will be the ones that adopt a lower resource and energy paradigm. Societies that no longer depend much on fossil fuels will generally do very well, whereas fossil fuel dependent societies will be in a constant state of struggle and problems (all the time thinking they are superior).

Water problems in the southwest are forecast to get worse over the next few decades. Most of the water in the southwest is used by agriculture, thus a very scary situation could result as aquifers are depleted and surface water continues to diminish.

Roll your dice as to what will happen in a given area, I would not bet on high population density regions though or ones lacking enough water and fertile land to support their own populations.

[Keith_McClary]

Footnote: ( oil pension feedback loop )
A pension obligation basically amounts to an unspent amount of future money which will of course be converted into oil, or a demand for oil, since everything we want to buy basically is made of oil or made in the oil powered economy. If oil was perpetually cheap and abundant (and had no bad side effects to the climate) we could probably go on and on until we ran out of copper or water or whatever. But oil isn't, so higher pension obligations push the price of oil up from supply/demand, and higher oil prices crush the value of pensions. Since they can buy less oil.

This as much as the accumulated debt is what will wipe out all pensions in the future I believe.

I think you can take money out of the equation.

To support a growing population of retirees at the expected material standard, we need to increase real production of goods and services. This requires a proportionate increase in oil consumption unless we can use oil more efficiently. Improving efficiency is a slow process, since it means replacing vehicles and equipment that last years to decades.

[phaster]

Yes, we're hurtling towards a full-blown two-tier society. This is a long-term trend exacerbated by economic spasms like the Great Recession. Our future will be more feudal than most like to think.

You underestimate the importance of energy, particularly oil, to the American economy. We're bleeding money to maintain stagnation, when production declines it'll be far worse.

And yes, California is fooked. Too many damn people, thanks in large part to uncontrolled immigration.

I keep on gaming things, and can't buy the Medieva "feudal" scenario because modern technology has created various means of communications. The large middle class in the USA of the 50's and 60's from what I've read IMHO was actually the exception created because back then the USA had no real competition in the global manufacturing or energy production arena (and hence was THE economic superpower). In addition the USA during the 50's and 60's was a military superpower. Looking at the USSR during the same time period, we know it was a military superpower but its economy was crap (which is why it eventually failed).

As I see it human nature, specifically "vice" that thins the management gene pool is a good thing. In other words if some rich kid who inherits wealth and blows all that wealth on vices, means an economic demise. Likewise if some hard working immigrant creates a new good or service, that person should be financially rewarded.

FYI I don't think I understand the importance of energy (i.e. liquid fuels) to the US economy. We're bleeding money to prop up an unsustainable "idealistic" lifestyle sold to us by slick ads and political leadership and sheeple that buys its own BS (i.e. typical human nature that does not think critically). When production of liquid fuels decline, the market will come to a new equilibrium (i.e. when the price of transportation goes up, new "efficient" methods will be created). Like it or not, the way the economy works is biased toward the strong who dominate the weak.

As far as California and "uncontrolled immigration" ya have to realize that that california is home to hollywood which sells "the dream!" Economic refugees from what I've read in studies are a net positive for the economy because they provide cheap labor and produce more in goods and services than they use.

Public employee unions working hand in hand with political leadership on the other hand, have created an unsustainable economic system. Basically there is a positive feedback, simply stated public unions help elect political leaders who quid pro quo grant ever increasing benefits.

Basically employee unions are a bad idea because there is no economic "competition"

[Quinny]

Working people in the developed world are getting poorer every day. Without unions this side would become a suicidal leap off a cliff!

[phaster]

Working people in the developed world are getting poorer every day. Without unions this side would become a suicidal leap off a cliff!

I was referring to public employee unions (where there is no economic competition) vs something like the private employee unions (the UAW for example) where the manufacturer of the car with the best features in theory wins the biggest economic share. In other words looking at the problem in terms of economics, good ideas evolve and are suppose to be financially rewarded and bad ideas are suppose to go by the way side (but sadly IMHO this isn't happening)

Kinda came to this conclusion because of a problem I inherited which seems to be a tax fraud/mismanagement motive (in the big buck range) and is just of one of many pretty big issues the powers that be that want stuff swept under the rug, hoping things go away...

For context, there was a news story headline; "City's Development System a Major Fraud Risk, Says Auditor" where the first paragraph in the article reads...

"Imagine you’re a developer with a pal who handles permits for the city of San Diego. And say you thought the permitting fees were a little too high. Not to worry, your pal says, and he knocks down the price for you."

The article goes on to say the city auditor did not uncover any specific cases of "fraud" BUT he stated that the software used by the development services dept would not leave a trail if fraud took place. The article closes by saying the critical report issued by city auditor was contested by the development services dept head.

http://www.kpbs.org/news/2012/jul/03/citys-development-system-major-fraud-risk-says-aud/

Basically I was fortunate to have inherited from my parents a piece of real estate that really put me between a rock and a hard place.

A "new" neighbor (who bought a property nearby in 2006) was able to get the city development services dept to issue a building permit that let's say wasn't exactly kosher.

Because of a series of unfortunate events I was the target of a law suit started by the "new" neighbor. The end result of that "legal" intimidation is that to cut my losses to six figures in legal bills alone, I was forced to pay for repairs for a problem I didn't have any part in creating and adding insult to injury I needed the development services dept to sign off on the repairs completed just this past april.

Sadly morally bankrupt San Diego officials have what can only be described as an on going management soap opera (there are not only problems w/ the mayor who is making national head lines because of sexual harassment charges), but just before that made national headlines, the current city attorney found it convenient to ignore the 1st amendment when a protester wrote anti-bank slogans in chalk outside of B of A branches - fortunately the jury found the man not guilty.

http://firstamendmentcoalition.org/2013/07/san-diego-protester-arrested-for-chalking-sidewalk/

From what I have seen with public employ unions in place, it seems there is no economic accountability because elected officials get public employee unions support to get elected (and more often than not give some kind of economic reward to the union)

In my own case being honest cost me big time because city officials did not want to investigate a problem where the law was not followed and its all about big bucks.

Long story short seems that how a property is designated is an indirect way to pay less in taxes.

What I discovered (and seems to apply to issue I inherited) is that back in 2006, the IRS mentioned facade easement were one of the dirty dozen tax abuses they had an issue with.

[url]www.irs.gov/uac/IRS-Announces-“Dirty-Dozen”-Tax-Scams-for-2006[/url]

To see exactly what transpired and when (w.r.t. my specific problem), I created a timeline web page (that is optimized for viewing on an iPad/iPhone and hyperlinks to supporting documents):

http://www.TinyURL.com/EnronByTheSea

I was screwed from the beginning because there were unanswered liability questions w.r.t. insurance fraud and how that related to individual(s) my parents and I knew falsified information on a building permit (they stated on plans that a structure "existed" and was going to be replaced, but in reality it was torn down 20 years ago after a homicide investigation).

Basically I seem to have uncovered if a party goes thru the process to obtain a "historic" property designation, in Calif its possible to reduce a property tax bill up to 70% with something called the "mills act." The other possible tax dodge involves a "facade easement" which was a tax fraud news story covered by the Washington Post (what caught my eye was a BILLION dollar range estimated for a total fraud figure given by the DOJ in a case that happened on the east coast).

http://www.washingtonpost.com/local/us-seeks-to-end-tax-break-for-facade-easement-donations/2011/07/05/gIQAFsH35H_story.html

What I also found out is a historical property designation, can also be used for another kind of perverse economic reward (by lowering property taxes)

[url]http://legacy.utsandiego.com/news/metro/20080127-9999-1n27mills.html
[/url]

Sadly it seems looking the other way is SOP for too many. In my own neck of the woods, there was a mayor that liked head locking women, and most likely used his position of power to keep victims quiet?

http://www.nbcsandiego.com/news/local/Former-Mayor-Bob-Filner-to-Be-Sentenced-Monday-234905381.html

Sadly this bad behavior (and cover up seems to be the norm) which can be proven because last year the city attorney tried unsuccessfully to have a case thrown out, after a police officer was convicted of assaulting women.

http://www.sandiegoreader.com/weblogs/news-ticker/2012/nov/09/city-to-pay-675000-to-victim-of-sexual-assault-by-/

In the comments section the reporter stated "It was surprising to see the lengths that the City Attorney's office went to try and get this case dismissed." Seems the problem I just survived is just part of fiscal mismanagement here in town on a scale much larger that I ever imagined in the 8 billion dollar range.

[url]http://www.sandiegoreader.com/news/2013/oct/24/ticker-san-diego-mayoral-debate-canceled/
[/url]

http://www.sandiegoreader.com/news/2013/oct/24/ticker-san-diego-mayoral-race-whoppers/

using the the holiday meal as a metaphor, it seems like some kind of creative "cooking" is going on to mask a sad truth

http://www.bloomberg.com/news/2012-03-02/if-stockton-is-broke-then-why-isn-t-san-diego-steven-greenhut.html

If ya look back over the years the story line seems to be the financial forecast for the city is its bad this year but in the future its going to get better... as in the 2012 news story line is rehashed in a 2013 news story line

http://voiceofsandiego.org/2012/11/20/san-diegos-sunny-budget-forecast-could-quickly-darken-fact-check/

http://www.nbcsandiego.com/news/local/5-Year-City-Budget-Forecast-Deficit-in-FY15-Then-Surpluses-231994461.html

Don't know when but its inevitable that the mismanaged system won't be able to hide the ugly truth from bond markets forever, and when the down grades come I don't think the future there after will be pretty when the investor class sees that the bonds are junk.

http://finance.yahoo.com/news/fitch-downgrades-san-ysidro-school-212100820.html

and the voting public sees that government debt for pensions is unmanageable!

On that note - I'm fortunate from an economic stand point in that I've been able to weather all these mishaps, it just pisses me off that the funds my parents wanted me to donate to the church, have been used instead WASTED to deal w/ issues not of my own making (and IMHO it is all about a system where there is no checks and balances)