Sorry for the lack of posts. I've been consumed by preparing our house for sale and getting ready to move across the country. Being mired in the ups and downs of the LA real estate market, the following article, from one of my regular blog reads, felt quite relevent and I wanted to share it. John Michael Greer's The Archdruid Report is a wry and smart take on TEOTWAWKI (the end of the world as we know it).
His latest post is called Scrabbling Around For Plan B
Those of my readers who have been paying attention to the financial news over the last couple of weeks may have noticed a certain weakening of the ebullient smile Wall Street likes to paste on the world. Pundits and financiers who were announcing vast profits and crowing over new stock market records a month ago are adopting a noticeably different style as they try to explain why many billions of dollars invested in hedge funds and the like aren’t there any more.
Read the rest, containing a good summary of the complex house of financial
cards now standing the breeze, here.
He points to the cause of the problems as rooted in a growing habit of choosing to be blind to risk:
In effect, the idea of risk had evaporated from the minds of the speculators. It’s understandable that banks and mortgage companies would stop worrying about risk once they learned to package their mortgages and sell them to other people. It’s less understandable that people who wanted to buy houses, to live in or (more and more often as the boom went on) to sell at a profit in a few months, lost track of the fact that if things went wrong they could be left with debts far beyond their ability to pay. It’s still less understandable that investors around the world would lose track of the fact that a high interest rate that never gets paid isn’t actually worth anything at all.
Still, the same myopia has appeared on cue in every previous speculative frenzy, too. Purchasers of subprime toxic waste can now join the long line of self-deluded gulls that reaches from the people in 1999 who bought stock in fly-by-night dotcom firms, all the way back to the people in 17th century Holland who spent hundreds of guilders buying single tulip bulbs on the assumption that they’d be able to sell them for even more in a few weeks. It’s an affliction endemic to market capitalism throughout its history, but it became pandemic in the last years of the 20th century and remains so today – and not just in the world of economic speculation.
And compares this blindness to the blindness about peak oil:
It’s worth suggesting, in fact, that blindness to risk has become one of the most widespread mental habits in contemporary society. Plenty of examples could be cited, but one discussed many times in this blog – peak oil – belongs high on the list. All through the controversies about how much petroleum the world still has, how rapidly it’s being depleted, and whether or not it can be replaced by some other set of energy resources, one constant theme has been the refusal of most people outside the extreme “doomer” end of the peak community to notice that industrial civilization could end up in deep trouble if things go badly.
Those who argue that the world still contains ample supplies of oil that just haven’t been found yet, like those who insist that innovation will take care of the problem by pulling some currently unknown technological rabbit out of a hat just in time, tend to respond to such questions as “but what if you’re wrong?” in the same tone of irritated superiority as a Wall Street financier might have done a few months ago if asked what would happen if subprime defaults got out of hand. There’s an oddly incantatory quality to this nothing-can-go-wrong rhetoric, as though it will all work out fine just as long as everybody agrees it will.
And maybe it will. But dear friends, you might want to consider having a Plan B.