NickBlack.com

It was a very peculiar experience these last few days to live without a computer. The old mac’s transformer popped and she died, sudden as a heart attack. None of the gradual dementia of malware decaying OS, just goodnight. Naturally there followed the reincarnation ritual of data transfer to the gleaming new imac. And the new printer because the perfectly serviceable HP isn’t supported by OSX 10.6. When is the computer industry going to get off its disposable styrofoam cup version of tech? But it doesn’t matter really. Because by the time I got it all sorted Europe was having a nervous breakdown.

Old Europa is crumbling. That EU lobbyist, self-congratulatory ‘end of history’ marketing speak never could quite paper over the cracks of language and ancient wars. They wanted it to be a rerun of American history, but the history of Europe is a different beast. Free trade? Sure, I like olive oil and German cars as much as anyone. But a puzzle palace in Brussels making laws for all, accountable to none? Not really.

There is something splendid about the fact that it’s Greece where the end began. Go tell the Spartans, stranger passing by, that here obedient to the laws of finance we lie. That’s what we need: 300 sweaty men in leather jock straps to hold the bond market at bay. Will the Germans really be willing, or able, to support 11 million Greeks? So who will take care of the Portuguese, the Spanish, the Italians, the Irish…the British? Because that’s a lot of people and a lot of money. How the euro zone survives this without default is anyone’s guess, but I’d expect people in the streets before too long.

What no one seems willing to bring up is the possibility that growth may not be possible while oil is near $80/barrel. According to the Independent on the 11^th of February, soon we’ll be looking back at $80 with nostalgia. All that’s left to do is watch as the people who’ve grown used to cheap money and oil learn to live with expensive money and oil.

Suppose it’s not about the bankers wondering how to get out before the roof caves in. Suppose it’s about the fact that the EU happened to be one of those ideas that came to be popular during the era of cheap oil, and now it’s obsolete because it belongs to a resource environment that no longer exists. I’m sure that some sort of smoke and mirrors deal will be figured out to keep it going for a while. But in the event of a major oil spike it will simply be impossible to find all the money needed to bail out 5, 6 countries. Who will be buying all this new sovereign debt: China? And this is just at the moment when all the headlines were trying to buck everyone up on the idea we were headed out of recovery because all the subprime mortgage lending in the US had been handled. Do you believe that the problems in Greece and Portugal were the direct result of mortgage dealers misbehaving in Cleveland?

Meanwhile I’ve been wondering about the numbers on the “recovery.” It seems as if more than half of the supposed growth over the last quarter is inventory rebuilding, which is normal, but the next part that has to happen is that the new inventory has to be bought. But consumer spending isn’t improving, it’s declining. So the businesses that are buying inventory will adjust to new lower levels of consumption. People are busy paying down debt and looking for work. If people in Europe and the US aren’t buying then China isn’t selling. China’s manufacturing miracle was based on transport being cheap. Now it isn’t, and it’s unlikely that it will ever be again. It looks as if the price of fuel will reverse 3 decades of trade liberalization. In the absence of a new technology boom, and with unemployment staying high and growing, and governments still trying to borrow their way out of a debt crisis it looks like a fake recovery to me.

What’s happening is that the service economy which has been the central mythology of the cheap oil era in Europe and the US is done. But like all our favorite myths, it takes a while to wake up to the truth. There is simply not enough productive capacity left in Europe to support the population at current standards without cheap oil and gas. The income from Tourism and coffee bars just isn’t going to crack it.

In the new local world Europe has to figure out how to get its hands on energy. Because the good folk of Venezuela, Saudi Arabia and Russia are using their own oil and gas at unprecedented rates. At a time when the bank vaults of Europe are full of bad paper we need a massive and immediate wartime level energy infrastructure mobilization. An intelligent HVDC Europe wide grid for a start, with inputs from all over, including French nukes. It’s the only way that the Europeans are going to keep things running.

It’s an unfortunate fact of human history that this kind of paradigmatic change seldom, if ever, comes without blood in the streets.

There is a chance we can make a break with history here. We’re at a critical juncture. We cannot afford to allow ourselves the luxury of civil war and social breakdown because our model of global capitalism is obsolete. One of the things we’ve done in our race to build this Utopia is use up or waste a good portion of the world’s rare resources. Sir David King, who knows a thing or two about this business, is trying to get people to understand that we are going to be running short of Helium, Platinum, Copper, Tin, Neodymium, and a host of rare earth metals, before mid century. Contrary to the economist’s idea of substitution, there are some things that we can’t substitute for. It reminds me of that Fred Hoyle quote from 1964:

“It has often been said that, if the human species fails to make a go of it here on the Earth, some other species will take over the running. In the sense of developing intelligence this is not correct. We have or soon will have, exhausted the necessary physical prerequisites so far as this planet is concerned. With coal gone, oil gone, high-grade metallic ores gone, no species however competent can make the long climb from primitive conditions to high-level technology.

This is a one-shot affair. If we fail, this planetary system fails so far as intelligence is concerned. The same will be true of other planetary systems. On each of them there will be one chance, and one chance only.”

What a shame it would be if it turned out we had blown our one chance at developing intelligence for this entire solar system because we were too busy swanning around in luxury cars right before the lights went out.