Archive for the ‘Coming Bad Years’ Category

Twenty years onward: the coming bad years

February 25, 2019

Sometimes I wish I could live for 20 more years to see what the future brings.  Most of the time I’m glad I’m 82 and almost certainly won’t.

I envision a USA very different from today—one shaped by a catastrophic climate change that can’t be averted, and by an economic collapse that can be averted only by drastic economic and political reforms that seem highly unlikely today.

If you want a picture of the future, imagine New York City during the Great Depression being hit by Superstorm Sandy.

Catastrophic climate change is usually discussed as a doom that will full upon us unless we accomplish X things by the year Y.  In fact, catastrophic climate change is already upon us.

We can by our actions influence how bad things are going to get, but existing greenhouse gasses will produce increasing numbers of floods, droughts, heavy snow storms and power outages.

We the citizens of Rochester N.Y., located as we are on the southern shore of Lake Ontario, are fortunate. Cities such as Miami and New Orleans will meet the fate of Atlantis, but we have a good chance to survive.

We’re not in danger of tidal waves.  We have had relatively few severe storms compared to other regions.  We have access to a relatively abundant supply of fresh water which, however, we are not caring for.

Climate crisis is likely to be combined with financial crisis.  Starting with the Reagan administration and especially since the Clinton administration, the U.S. government has turned over management of the economy to the financial markets.

There have been a series of financial crisis, each one worse than the one before.  The response of the U.S. government has been to rescue failed financial institutions, and allow the cycles to continue.

At some point, there will be a financial crisis too big to resolve.  Instead of financial institutions being “too big to fail,” they will be “too big to bail.”

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I’ll be gone, you’ll still be here

December 14, 2017

I’m 81 years old today.  I don’t come from a long-lived family, and I have what they call a pre-existing medical condition, so I don’t expects decades more of life ahead of me.

I sometimes regret I won’t see what the future holds in store.  But the more I think about the future, the more I’m relieved that I won’t.

The odds are good that I will win what Ian Welsh calls the death bet – the bet that I will have enjoyed the good things the world has to offer and die before I have to pay the price.  If you are 60 years old are younger, the odds are that you will lose.

THE FINAL CRASH

Right before the financial crash of 2008, there was a saying among Wall Street speculators about when the financial bubble would burst.  “I’ll be gone, you’ll be gone.”

In fact none of them suffered any bad consequences from their actions, up to and including financial fraud.  President Obama and Treasury Secretary Timothy Geithner arranged to have the big banks and investment firms bailed out of the consequences of their mistakes, and Attorney-General Eric Holder declined to prosecute financial fraud by heads of companies deemed “too big to fail.”

The Federal Reserve Board and Treasury Department prioritized reviving the stock market, to the great benefit of owners of stocks and bonds, including investors in mutual funds such as myself.   But then, even under Franklin D. Roosevelt’s New Deal, the financial markets recovered before the job markets did.

Now the U.S. economy is in another bubble, just like the last one—overhangs of debt that can’t be paid, increasing concentration of wealth at the top, the decline of the mass consumer market and the failure of either corporations or the government to invest for the future.

It’s probable, but not certain, that the government will succeed in bailing out the big players, just like the last time.  What is certain is that this can’t go on forever.   Without big changes in the financial system, there will be a final crash in which the institutions are not too big to fail, but are too big to rescue.

NUCLEAR ROULETTE

For more than 60 years, the United States government’s policy toward nuclear war was deterrence.  The theory is that the best way to be safe from war is to have nuclear weapons and be willing to use them if necessary.  In other words, if you want peace, be prepared to go to war.

So far this policy has worked.  We’ve gone to the brink of war a couple of times, sometimes knowingly and sometimes unknowingly, but we’ve always pulled back in time.   There have long been factions in the U.S. government that wanted to pre-emptively use nuclear weapons, but they’ve always been sidelined or disregarded.

I think it is likely to work—right up until the time it doesn’t work, and it only has to fail once.  If you play a game of Russian roulette, you’re likely—although not certain—to win.  If you continually play Russian roulette, you’re certain to someday lose.

I don’t expect nuclear war with North Korea, although the chances are more than zero.  I don’t expect nuclear war with Russia, although the chances are greater than war with North Korea.   But unless our policy changes, both concerning armaments and our foreign policy in general, there will be a war in which we and everybody else will be the loser.

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Why do we discount the future?

January 7, 2014

Ian Welsh wrote on his blog (one of my favorites on my Blogs I Like page) that we Americans don’t care about the future any more.

The men and women who lived through the Great Depression always planned for the future. They built power plants which produced more power than needed, bridges which could handle more traffic, water purification plants which produced more water than needed. They made sure infrastructure would last for decades, and then built it so well it outlasted even their specifications.

Their heirs, the Silents and the Boomers, thought this was absurd.  Why not party now, and let the future take care of itself?

Call this the “death bet”. In its pure form, the death bet is just that, a bet that when the bill comes do, you’ll be dead.  If you live a good life and die owing millions, well, what do you care?

But someone will pay that bill.  Maybe it will be your creditors, who might even go out of business, unable to collect what they are owed.  Perhaps it will be your heirs, if the millions adhere to property.  Perhaps it will be someone you don’t even know.

But someone will pay.  The good life, bought by debt, is always paid for.

The death bet is why we are not dealing with climate change, even though we know that it is coming and we know it will kill hundreds of millions and might even destroy our entire society.  The death bet is why our governments make huge tax cuts today knowing that either taxes will have to be increased in the future or spending will have to be drastically cut because the spending is not used for investment.  But in the meantime the government can borrow, or print money, so who cares?  The politicians who make the tax cuts won’t be in power, and many of the people who receive the cuts will be dead, so what do they care?

The death bet is why America had a 2.4 trillion dollar infrastructure deficit as of 2009. It is why Californians voted in 1978 to disallow property tax increases of more than 2% per year. And it is why tuition rates have increased by hundreds of percentage points more than inflation in many countries.

A death bet always come due. It just isn’t always paid by those who made it.

via The Death Bet.

Why is this?  I think it is reinforced by a philosophy that says pursuit of self-interest in a free market is sufficient to produce a good society, and moral values just get in the way.  This is not a question of liberalism vs. conservativism per se.  You can believe in individual self-reliance and oppose the welfare state, and still be concerned about your neighbors and those who will come after you.   The house I live in was built in the 1920s, before anybody dreamed of a New Deal.  Yet it is more solidly built than many of the houses built in the 1950s and 1960s.

Another factor is that American society since its beginning has been continually transformed by rapid technological change.  Why make an automobile or a computer that will last 25 years when it will be replaced by a better model in five years?  We become habituated to focusing on the new at the expense of maintaining the old.

Some of our problems seem so intractable that it is easier to try to postpone the day of reckoning rather than to solve them.  While it would be perfectly feasible and economically beneficial to launch a public works problem to repair America’s crumbling bridges, dams and water and sewerage systems (what Welsh calls the infrastructure debt), it is much harder to face up to the need for sustainable energy and the problem of global warming.  These would require daunting transformations of society that I, for one, find it virtually impossible to face up to.

That is why apocalyptic religion, and apocalyptic fiction and movies are so popular.  If we are living in the End Times, if civilization is going to collapse anyway, why bother to invest in infrastructure, education or scientific research.

At age 77, I probably will win Welsh’s “death bet.”  I expect to fall apart before American society does.  I guess that makes me part of the problem.