It’s mildly reassuring when another analyst is suicidal about the future. It reassures me that I am not totally alone.
I disagree with Faber on two points however.
First, it’s unlikely we will see hyperinflation and the “pure” monetisation of the trillions in US debt. No hyperinflationist thinks through the precise mechanism of monetisation. To increase the budget deficit by even more, the US govt will have to increase its own debt levels. Bonds yields will likely spike at some point. Then the Fed will try to buy the bonds to keep prices up (yields low). This will allow relatively limited leakage of money to the US govt’s friends, but in no way plug the hole left by the collapse in the housing bubble. Not only will govt spending not replace the hole left by Peak Credit, govt spending further distorts the economy, resulting in more failed private businesses the further away you get from the US govt’s largesse.
You’ll end up with millions of debt-slaves sycophantically praying to the bankers and the Fed govt, running around doing the bidding of their Masters, and economic chaos and widespread starvation beyond the tiny green gated communities of bankers and govt employees.
Kabul is a good future model for the major Western economies (especially the US): There are some massive luxury (tasteless!) villas going up in Kabul. I’ve seen them. They are the houses for the govt ministers and associated hangers-on from the opium trade. Nearby are the hotels the UN employees frequent. Beyond these few blocks, hundreds beg for food from aid agencies and there’s complete chaos. But within these tiny communities connected close to the corrupt govt, the opulence is incredible. Govt banquets are frequent, whilst literally right outside the banquet halls, local Afghanis are starving.
That is our future. Kabul is our future.
And remember – Kabul is a city now created by the US. It is what the US govt “wanted” to create (or at least what it did create after taking over).
So that’s the best the US and UK govts can do today when “creating” a city. That’s the proof regarding what they are capable of. Sad, but true.
So that’s what they will continue to produce at home.
“Kabul” does not spell hyperinflation to me. It spells stag-deflation with a possible sudden depreciation of the US dollar at some point – but not hyperinflation. So I still think US govt bonds and gold are a better bet than US stocks if I was forced to choose. Of course, long-term, farmland, security services, and govt jobs will all be highly sort after. But I wouldn’t be buying canned food just yet. You don’t want it to go out-of-date before you need to eat it.
Second, there will be war, but it won’t be to distract people from their debt problems. It will be over the rapidly diminishing supply of food and water and oil. The malinvestments caused by the decade-long low-density housing boom in the West have actually caused massive environmental destruction as well as financial chaos. Literally millions of acres of fertile arable land across the US and Australia and other countries has been re-zoned and “redeveloped” (destroyed) for what is euphemistically termed a “more intensive use” (i.e. “for speculative property development”) – just at the time when unprecedented climate change has destroyed many “food basins” around the world (Myanmar, Thailand, Cambodia, Australia, China, Europe and the US have all experienced tsunamis, typhoons, hurricanes or drought in their vital farming areas).
CCD is also a massive threat to our food supply. It is still a problem that no media organisation wants to talk about. The cause is unknown (I suspect GM crops, but who knows?).
No one seems to have connected up the housing boom and bust with massive unprecedented and irreversible environmental destruction.
But they will. Eventually.
The tragic loss of farmland and livelihoods in central NSW is NOT a natural disaster.
The NSW government has stemmed the flow of the Lachlan River, so farmers around Lake Cargelligo are dying just as much as the Lake is dying.
This is too important to treat lightly. My heart is heavy seeing these pictures in my own State:
To quote directly from SMH:
Lake Cargelligo, a settlement of 1300 in the geographical heart of NSW, was once a holiday haven for swimmers and waterskiers. Now empty shops line the street and even the post office is for sale.
On Tuesday hundreds of those who are still here gathered to listen to a travelling roadshow of water bureaucrats about what was going to be done with the little bit of water that remains in the dam upstream.
The Lachlan River, muse of Banjo Paterson and lifeblood to tens of thousands in the region, is being cut off at Condoblin, with only small flows being released below. Towns further south-west will go without.
If they did not do this, State Water staff told the meeting, the dam would be sapped by February.
The plan was met with uproar.
”Why are we expected to take the pain for the whole valley?” one man yelled. ”You’ve forgotten a whole section of the river,” a woman said through tears.
In splitting the river, the State Government has split the people of this region. It is not the first time water has been held back to conserve what is left. A similar plan involving controlled releases is in place for the Namoi River.
But since the Water Minister, Phil Costa, made a decision to restrict the river earlier this month, tempers have flared among those downstream.
Farmers with thirsty cattle want to know why people upstream in Forbes are still allowed to put sprinklers on their lawns, and why fruit farms still receive water, albeit at reduced rates.
They also want to know if this is the future of water management in a state where almost 74 per cent of the land is in drought, and hotter and drier conditions are on the way.
”If this is the Government’s climate change policy,” said Patti Bartholomew, a cattle farmer, ”then God help NSW.”
The Lachlan River winds from Wyangala Dam, through Cowra, Forbes, Condoblin and almost to the Victorian border. It is a region heavy with grain, cattle and sheep that has endured three devastating droughts in the past century.
”Just now there is a howling drought. That pretty near has starved us out,” wrote Paterson more than 100 years ago of Boolilgal, a town at river’s end.
But this is a dry like no other.
Ten years ago Wyangala Dam was at 99 per cent, a wall of water 25 storeys high licked the top of its wall. Since then the inflows have been the lowest on record, less than half of what they were during the Federation drought. The dam is now less than 5 per cent full.
As water disappears, cracked creek beds and muddy embankments are left exposed. Animals searching for water are getting bogged up to their necks.
The Herald saw a farmer crawl out on logs and sink his hands deep into the thick mud to wrench out his neighbour’s sheep. Most of the people the Herald spoke to are sceptical about climate change, but according to CSIRO and other climate models, they are some of the hardest hit. ”Certainly the southern part of the Murray-Darling Basin, which includes the Lachlan, [is] looking at hotter and drier projections in the future,” a senior research fellow at the Climate Change Research Centre at the University of NSW, Dr Jason Evans, said.
Upstream, at a meeting in Forbes on Monday, scenes were very different. There were no interjections from the floor. People stayed for tea and sandwiches. One man, who asked not to be named, said he would be voting Labor for the first time at the next state election.
Ian Smith, a cattle farmer, has bores on his property that provide him with a secure water supply. ”I can’t really see they’ve mismanaged anything,” he said. ”There’s just been no rain.”
Bores are being sunk all along the Lachlan as towns such as Boolilgal and Oxley look to shore up their supply of water. But it is not an option for many Lake Cargelligo farmers. Some have invested heavily only to discover the water is salty and useless.
Rod Middleton and his wife Leanne live with their three sons on a cattle and grain farm.
The creek that has been their water source, a tributary of the Lachlan, is dry. The pump sits on the exposed creek bed. ”I think the worst thing about it is the mines and fruit trees still getting water and we’re not,” Mr Middleton said.
The young farmer, whose parents came to the area 30 years ago, said he would have preferred to see the river run its course, whatever the consequences. ”The fairest thing would’ve been to let it run till everyone’s out, rather than have the top end get themselves through till next year and us being out now.”
Let history record that this is not a natural disaster, that this was and is perfectly predictable, that this is one of the worst cases of government negligence in the long history of government stupidity and insane zoning and planning, that this is comparable to the loss of the Aral Sea in Central Asia due to EXACTLY the same idiotic short-term government planning!
First, maps showing average rainfall are now available for all of NSW (indeed for the whole country). We all know these areas are subject to drought. This is a once-in-a-hundred year drought – but these droughts should occur once in a hundred years, so they are going to happen. You have to plan for them.
What is the obvious solution?
The obvious solution was never to grant farming leases and farming rights on areas of NSW land that would be subject to sustained drought or over-farming.
Farming land should have been retained in areas of high rainfall, close to the population centres of NSW, so that food security for the NSW population was maximised. Areas in Dural, in Hornsby, in Penrith, in Southern Sydney… all these outer “suburbs” of Sydney should have had their zoning as farmland preserved. Farmers should be on this land – not on land in drought-striken central NSW!
Why are they way out there and not close to the cities? Zoning decisions of a NSW govt bureaucrat!
The “natural market” would have prevented this if there were no zoning laws arbitrarily imposed by govt. Farmers on marginal land (without drought assistance) would have given up on farming in central NSW decades ago and focused on farming in more productive high rainfall areas. Most farmers in these productive areas would never have sold their land to residential developers, because the returns from farming would have been strong.
You don’t believe me? Go to Europe. Before insane govt bureaucrats took over zoning, people “naturally” organised themselves. In old European cities you can still see farms within 20 kms of major metropolitan areas. There are farms within a 20 minute drive from Paris! A 15 minute drive from Amsterdam!
Why? Because these “plans” were not drawn up by a NSW govt bureaucrat, but by God. This could be considered “anarchic” – but it works! Farms are still close to cities. People can still buy farm-fresh produce produced locally.
In Australia, as a young, highly bureaucratised nation, local govts wanted to squeeze every last drop of money out of surrounding land so re-zoned ALL the land around cities as either residential, or industrial/commercial. There is no mix of residential and rural anywhere in Australia close to our major cities.
This is not natural. This is not the way it should be. Sydney has one of the highest rainfall yields of any area in NSW. People originally settled here because it was fertile land. Then govt came along and tried to squeeze every last drop of development rights from our highest yielding farmland. Millions of megalitres in Sydney gets flushed down stormwater drains, whilst farmers get pushed to the edge of the earth, pushed into marginal areas never meant to be farmed.
If I hear from one more idiotic govt spokesperson that this is a “tragic” natural disaster, I think I’m going to puke.
There is no hope for this State with idiots like this in charge of our future.
And just recently, adding to the pain, Kristina Keneally (possibly the dumbest person in politics – and that’s saying something!) took a photo opportunity beside a central NSW dam at 4% capacity, trying to show compassion to the local people for this “natural” disaster.
(1) The dam is man-made, by govt (so is its location).
(2) Govt zoned the area fit for human settlement years ago.
(3) Govt gave excessive water rights to farmers that produced the disaster.
(4) Govt zoned other areas closer to major cities as exclusively residential, so that’s why farmers are pushed out to these unsustainable areas.
This is a classic example of criminally negligent, short-term govt planning, resulting in a predictable man-made disaster.
And now a govt idiot sits there beside the dam they built, looking on forlornly as though this is an act of God.
These are the same idiots who want to tackle climate change. When these govt disasters follow them in the Co2-laden jetstream to Copenhagen.
I really can’t stand this level of stupidity any more. I just can’t take it.
Up to half of all water in Australia is sourced from aquifers, from the underground water table.
Deforestation has poisoned much of the water table with salt. Over 12 million hectares of arable land is threatened with dry land salinity, killing off the fertility of this land for generations. This desertification is occurring mainly in WA, central NSW, and in rural SA and Vic.
Further dispersed pollution is occurring through poisoned run off from farmland and land fill, further polluting the water table near urban populations (removing underground water as an option for many urban areas).
With ongoing drought in many urban areas, some cities (such as Sydney and Melbourne) are looking at energy intensive desalination plants as dam levels systematically decline, just as infrastructure and population pressures in urban areas intensify.
If energy supplies were ever interrupted, our water supplies would now be very vulnerable. “Natural” supplies (from bore water and aquifers) have been removed from many urban areas and will continue to be removed.
This unprecedented and irreparable damage is occurring with a population in Australian of around 22 million. This is planned to increase to 35 million by 2050.
Collapsing arable land = need for higher and higher food productivity = eventual catastrophic collapse in food production through excessive depletion of phosphate and water. Simple
Ever painted yourself into a corner? Well, the system of fractional reserve banking induces supernormal profits for residential housing, which in turn distorts the economy towards debt-induced housing production and against farming and agriculture (which cannot “live” sustainably in a debt-based monetary system because the returns on farming cannot compensation for the higher uses the land can be developed into via re-zoning).
We’ve only been able to feed ourselves through more and more intensive use of less and less arable land. At some point that’s going to be unsustainable. We know the world’s human population could not live on 1,000 megalitres of water a year, feeding 1000 hectares of arable land. But what is the limit? And are we reaching that limit?
With exponential growth in human population, depletion of natural habitat, exhaustion of soil and river systems, the reliance on oil for food production (at a time of peak oil production) and an aging population I can see this is not going to work out well.
We will need a miracle for it to work out well. And that already happened with the green revolution increasing farming productivity in the 1960s and 1970s. That trick ain’t gonna happen again – and may have painted ourselves into a smaller corner by allowing more arable land to be gobbled up for residential development on urban fringes when this land would have been ideal for agricultural production when peak oil hits (meaning long-distance transport of food no longer becomes feasible).
To think the likes of Monsanto are going to get us out of this whole is madness. GM foods are more likely to destroy agriculture in the long-term, not save it.
Again, the insane depletion of the world’s tuna stocks - right under the world’s collective noses, with modern, sophisticated governments apparently powerless to stop it – is the “model” for all food crises in the future.
Lots of words, lots of plans, no action, the robbing of future generations’ food supply to pay down today’s debts, with two-faced politicians deploring the desperate environmental situation on the one hand, whilst trying to give their own fishermen every hidden advantage on the other.
To think this is going to work out well is madness.
Malthus was not wrong. He was just early.
The Asian equivalent of Sin City is apparently running out of water.
How sad. Especially for anyone who invested in Hell.
Water, water…in the wrong places, in too little quantity to matter, with the world not having a clue that we have reached the point of no return on pollution and overconsumption and there is no way out.