GLOBAL FUTURE ANALYSIS
INTRODUCTION | LETTER
This is an online copy of the first version of the Global Future Analysis report for review (made easy accessible by a shortened and an extended index). The GFA report has been released September 23 in Washington. The GFA report covers the interfacing/interaction between the Energy Crisis and Credit Crisis, which both have taken the lead in the daily news worldwide.
The report analyses/describes the causes/consequences/effects of both the Credit Crisis and the Energy Crisis and analyses the each other enforcing powers (1 + 1 = 4) of both. Additionally also the Water Crisis and its severe effects on food prices are analyzed.
The Global Future Analysis report has already got a load of testimonials from many economic/politic/scientific leaders around the world (some of them can be found on http://www.planck.org/testimonials).
The Energy Crisis has two huge effects: Energy will become much more expensive and no longer abundantly available. This is severe: we use energy for almost everything, so this has an effect on all facets of life. First it will give a reach/distance contraction within the economy (less transport and less mobility, due to high energy prices). Second it will (due to the fact that energy is used for everything), make everything more expensive.
The resources prices based type of inflation grows and given the fact that the economy doesn't grow, stagflation (also called recession, but that's the political failure word we don't like to use) occurs. This was the trigger of the Credit Crisis: rising energy price that started to eat out the fragile payment power of households. By this the increasing home price engine stopped.
Big cars equal big gas bills. Big houses equal big heating oil bills. Big becomes more and more uneconomic. The heating bills of this winter will punch another hole in the mortgage payment capacity. Big houses give not only big mortgage payments, but also big energy bills. Our economies are build on $ 10 per barrel oil. High oil prices certainly give stagflation. We're moving gradually to recession since the unstoppable rise of the oil price since 1991, anything since than was just build on credit.
We're living in a decade in which 3 billion new customers with substantial purchase/payment power are entering the global resources/energy market. A never before seen event, which not only has speed up PeakOil, but rather has given us PeakX. Resources will never become cheap again, caused by both declining supply and increasing demand. The economic effects of the Energy Crisis are severely underestimated.
The Credit Crisis has a capital contraction effect within the economy (as in: significant less market capital available). Less capital equals always less economy. So the Credit Crisis gives additional stagflation once again (added to the already by Energy Crisis caused stagflation). Additional the Credit Crisis causes a deleveraging of the money market: people/companies/investors turn their back to currencies, stocks and banks and flow to static/safe harbors like gold. The Global Future Analysis contains a lot of easy accessible/readable information and data on the Credit Crisis concerning both money creation and economic turbulence and stagnation.
The Water Crisis is still unknown in 2009. But in the Midwest of the USA, the South of Europe, China, large parts of Africa, the Caucasus and the Middle East is the Water Crisis becoming a huge facet of the economy. Water shortages in this regions certainly increase their food prices severely (Food Production = Water Irrigation), which has direct effects on the global food prices.
I give you some quotes from the first pages of this report: "It has been said that there are three types of people: Those who make things happen. Those who watch things happen. Those who wonder what happened." - "You need to understand Currency, Credit, Minerals, Energy and Water. Watching the news without some basic knowledge of those five is useless. Knowledge of those five make History, Present and Future clear to you." - "Food = Soil + Carbon Energy + Water. Economy = Production + (Currency * Credit) – Cost (Minerals + Energy + Water). Wealth = Economy * Geopolitics." - "What people need to hear, loud and clear, is that we're running out of energy in America. (George W. Bush, May 23, 2001)".
The Global Future Analysis is very up to date. It even covers the current very dynamic credit and energy situation. Also the governmental bail-out fund of former Treasury Secretary Paulson for bad bank assets that has no value any more. In this plan banks can deposit any in value declined CDO (currently only worth between 6% of their purchase value) and get paid almost the full 100% purchase value for it. Of course at expense of the value of the dollar. As in 'bring any by your own drunk behavior crashed car to Paulson and he will give you a new one for free'. The fund is an emergency legislation and therefore without any the causes addressing regulation attached.
First deregulation was the main market signal: the government was not allowed to enforce healthy/simple/obvious financials regulations. Now the government must cover the damage caused by this lack of regulation. A strange combination of free market ideology and governmental interfering behavior.
Governments try to solve the problems caused by oversupply of money, by bank concentration, by lack of transparency (but also by lack of regulation, by bad incentives and by multi corporation governance of companies), by even more money creation, even more concentration and even less transperancy. And banks and governments wonder why nobody in the real economy want to buy bank stocks (and later on government bonds) anymore.
Don't blame the bankers for being greedy; that's there job/function in an economy, they need to be greedy, otherwise we would not have an economy. Blame the governments for the absence of serious/obvious/simple/tight regulations of the (off)balance sheets, equity ratios, bonuses, over-liquidity supply, auditing and rating of financials that hold other peoples (persons/households/companies/organizations) savings/pensions/reserves.
Blame the governments that were/are apparently too open for financial industry lobbyists and thereby dramatically have forsaken their duty in protecting private capital in financials. Freedom is certainly the main goal of society/economy, but the freedom to 'can artist' (off)balance sheets with other people's money don't give freedom. Financials need regulations. Otherwise this is what happens. A sliding currency, a weak economy, a lack of stability and an on other issues too strong government (DHS/FEMA etc). Just some obvious regulation for financials ensures a stable society/economy for free. We need sustainable transparency.
But the real economy was in pain due the Energy Crisis and now even more by the Credit Crisis, so most people have enough of the fairytales of banks and governments for a while. After the banks were gone drunk, governments now have joint them, and the gap between the drunken banks and governments and the hard working real economy starts to widen fast. The real economy just wants low inflation, save deposits and tight regulation for financials and going as soon as possible further with their life/company in making a buck while dealing with and adjusting to the effects of Energy Crisis and PeakX.
You can't have a well performing economy without free markets, free communication and international stability. Good economies grow on these three. The 20th century has clearly shown that to the world. Governments are no markets and markets are no governments. Then economies can adjust to the new reality on the price of energy and other resources.
Freedom in communication gives a continuous flow of innovation, something the former Stasi in the DDR or its modern variant DHS can't give at all and even will repress. No freedom, no innovation. And we need innovation more than ever due PeakX. Repression of freedom combined with governments that act as markets are the recipe for economic stagnation. Governments should protect freedom (not restrict it) and protect free markets (by fair regulation), not intervene in markets, because governments are the worst entrepreneurs ever and doing that become the worst governments ever. Governments should regulate freedom in communication and freedom/fairness of markets. Lazy regulators are heavy interveners. Double bad luck for the economy.
First the home prices had to be deflated (the CDO problem, current CDO value of the top 50-100% slice of all mortagages is < 10% of the purchase value). Last months the stock markets are deflated (too high prices in relation to risks and dividends) as company profits has disappear. Those who has trade on credit are have double (or even triple) loses. Hedge funds that are not based on insider trading are hit very hard. As the recession goes deeper the stocks will go even lower and major loses on debtpaper and CDSs (credit insurance positions) due the bankruptcy tsunami that will come. Non-transparant companies/financials won't be able to recapitalize by stocks.
Soon the debtpaper and the attached CDS markets will go in fire, starting with the lease companies, who see the foundation on their business model (residential object value) slipping away. CDSs are insurances that are sold on third party payment power on debt. As financials will go bankrupted debtpapers primary will become worthless and secondary actual insurance claims will come to the surface. The first CDS claim is regarding the collapse of Lehmann and $ 111 billion has to be paid by the CDS insurance issuers.
The simple word CDS is why governments don't let banks fail: it not only will destroy bad banks, but also all the CDS gamblers. Stock prices has already no value any more, so preserving the value of stock assets (of pension funds) is already not actual any more. But governments need to understand that the value/capital already has been lost/gone and can't be recovered (not even in case when the dollar slides to very low levels), failures just can be postponed. The only valid solution is not throwing good money to bad money, but in using good money to realize energy transition (than banks can earn income on that). This model gives financials huge real market driven profit again. Not funding the past, but funding the future. This model is described further below.
The collapse of banks give current deposit loses, stock value loses, debtpaper loses and insurance claim loses for any financial globally. CDSs on transport/mobility (airlines, plane/car/truck manufacturers, car importers/distributors) will explode as these three industries will be hurt severely (and direct double) by the Energy Crisis and the Credit Crisis. Volvo Trucks has sold worldwide in Q3 2008 not 41,970 (as they did in Q3 2007), but only 115 trucks, a 99.7% decline. All car industries have stopped their production temperately in parts of December 2008 and January 2009 as sales really has tumbled down, but that has not helped enough. Hedge funds will become shadows of the past and will go under with huge debts (as they have gambled with borrowed capital: multiple up will become fast down). CDSs issuers will realize that easy money will become quick and huge losses, just in times they can't have more losses.
Many huge capital drains for any high risk operated 'artificial profit' focused financial. And of course this has more impact on the quick buck / high risk financials. Many of the last decades reported huge profits will become fake numbers at the end. Both the bubbles as the 'solutions' will lead to economic 'lost decades' (1981 till 2011) in historical perspective. All presidents since 1981 (Reagan, Bush Sr, Clinton and Bush) has addressed the energy issue if oil was not a finite resource and/or we could fight to get it. We haven't solved the energy problems, but just used Cantarell, Prudhoe Bay and the European Continental Shelf, our foreign politics and even conducting war for powering one huge unsustainable prosperity experiment. The greatest misallocation of resources ever (James Howard Kunstler). We mortgaged our future and the future has now begun (also J.H. Kunstler).
We're now on the end of both credit and energy, without having build solutions for both. We could have used credit for our energy transition, but we haven't, we don't have read the oil supply signs of the '70ties and just have danced for three decades on the vulcano. They same way we've treated the credit issue, we treat the energy issue: we only notice it when the house is already too much in fire to save it. We underestimate both credit and energy problems. Dominique Strauss-Kahn, chairman of the International Monetary Fund (IMF) has said on October 11, 2008 that the worldwide financial system is on the edge of collapsing, than you know things are severely derailed. When the national debt clock on Times Square has got one digit too short, you know something has gone severely wrong. It tells you that debt has grown to irresponsible levels and that money it losing its value at high speed.
The reason Wall Street is in trouble is that Main Street is broke due to energy prices rises. Stephen Roach of Morgan Stanley said it this way: "The American consumer is toast, done, finished." This is the underlying problem. Just a new paint for a sinking ship is useless. Blowing more air in a leak balloon is also useless. A rare new capitalistic type of socialism where 'profits are privatized and losses are socialized' is without sustainable future and even more without economic legitimacy, it has only negative effects. When the 'tent cities' due foreclosures grow in the neighborhood of each American city you know that there are no differences between the 'first' and the 'third' world anymore. The world really has become 'flat' (Thomas Friedman, columnist New York Times).
We can't save the banks, they're on deadrow. Saving the banks just by giving them money is wasting governmental budgets and purchasing huge inflation and just delaying social unrest at the cost of the health of currencies. Some severe changes need to be made in the financial world, otherwise it is throwing good money to bad money. This is what the Global Future Analysis report is all about. The banks can't be saved and the dollar can't be saved and trying to save them is going under with them. The only solution for both the banks and the dollar is focus them both on energy transition investments. Than banks can make profit again and the dollar can stay the main global currency.
Nations that will prevent banks from falling by funding their loses, will be faced with the fall of their currency. The loses are too big to fund. The derivatives market is worth more than $51.6 trillion, roughly the value of the entire world's year output: it is been called the "ticking time-bomb". Not for nothing did Warren Buffett call them the real 'weapons of mass destruction'.
Iceland is number one in this currency fall queue and can only be rescued by a capital rich nation that can (partial) pay-off their creditors. Banks exposures are more huge than nations GDPs. Attaching the nations currency to the sinking banks is drowning a nation. Governments doesn't understand one bit of the current situation in the banking industry. They fight fire with fire, thinking they are heroes of today, but gambling against odds with their nation's future perspectives and the losers of the future.
In Iceland the stores are empty, imports can't be done anymore due a currency that lost its value. A well performing nation is drowned by its own banking industry. Russia has faced (caused by totally other issues) also currency crisis 10 years ago, the effects were severely. But they have grown strong since than. Switzerland, Hungary, Ukraine are Iceland's successors. Multiple broke nations in 2009. Forgotten to develop themselves sustainable, they majorly invested in the USA its bubbles. And of course the Energy Crisis also has fuelled the trade deficit of Iceland, under mining the currency by this and helped creating the Credit Crisis, just like it did in the USA.
Consolidation to big financial conglomerates in the financial industry was not a good idea, it was risk concentration instead of risk spreading. Further consolidation is madness, but yet the way governments move these days. Bad banking practices must be shut-off, not further fuelled and concentrated. The banking industry must change. The reason why pensionfunds don't trust banks anymore is because they know the (off)balance sheet situation of the banks. Liquidity problems is not a trust problem, it is a market shut-off of financial mal-functioning financials. Governments don't see that, they still think the banks books are not severely inflated.
The results? The last two bubbles that are due to be deflated are the Treasuries and the Dollar. Unfortunately the Euro and the Yen are attaching themselves tight to the sinking Dollar. People will lose their savings and pensions and thereby will lose their trust in big and not transparent completely. The future of banking/saving/investment is local banking: seeing is believing, not seeing will be equal with being can-artisted by far away people/companies. The local based Raiffeisen model of banking will become the mainstream way of banking. Extra enforced by the increased localization economic movement that will be caused/stimulated by high energy prices.
Nations should not waste the health/value off their currencies on the banking crisis. The Credit Crisis is beyond their power in size. Nations should make energy emergency plans and stimulate economies only out off energy perspective. Then they solve two crises: the Credit Crisis and the Energy Crisis. If not, economies will not survive the second smash against the wall caused by the currently (like the Credit Crisis first also was) severely underestimated Energy Crisis. Underestimation has deepened the impact of the Credit Crisis severely and will also deepen the impact of the Energy Crisis.
The solutions now put in place for solving a problem of the past should be used for solving a problem of the near future: energy price rises and energy shortages. The financial master plan had to be the energy master plan. With failing banks we can work/eat/earn, but without energy we even can't live. Governments use their ammunition for the Credit Crisis, leaving them with no bullets left to address the Energy Crisis.
The solution for the Credit Crisis is not pushing even more printed money in a defaulting system (unless the whole current financial system is bankrupted, than it can be seen as the last possible action). Sending the FBI in was a good decision/starter: possible fraud cases with these huge sized consequences must be investigated. Cooking the books is a nasty crime at expense of others who can no more do than trust the regulators/auditors. The solution is certain cleaning the system. We must reinvent fair capitalism and free/open/honest markets. Free/fair markets and tight regulation on bank (off)balance sheets regulation are not contrary at all. They even enforce each other.
The Paulson $ 700 billion governmental Bail-Out-Fund proposal was mend as a not longer incidental fire extinguishing treatment, but as final cause treatment. But it doesn't fix any cause and is way too small for solving the problem. Paulson even doesn't sees/understands the causes of the Credit Crisis, at least he hasn't talk about it. He has already admitted that the (huge size) is just a snowball in the sun and will not make any substantial difference. The problem is too big, but we underestimate it till today still structural.
Additional to his Fund, Paulson demanded in his last days as Treasure Secretary also absolute power on financial affairs. He demanded a full/unlimited mandate, something which always has lead to monolithic/narrowed views of the single/mono ruler. In his last days in office he has unload his friends of their toxic assets. Leaving the liabilities this cause to his successor. Above that: the Prompt Corrective Action Law (passed on January 3, 2007, to prevent further system failures like the Saving and Loan crisis) requires by US domestic law to force capitalized institutions into receivership (instead of funding them or nationalize them).
In Europe all governments has decided to guarantee interbanking loans because 'they believe in the banks'. They have done this with even bothering a quick (basic asset valuation policy) audit per bank. They believe in all banks, there are no malfunctioning banks according to the European Administrations. Governments bind themselves tight to the sinking ships of the banks. Believing that the problem of the banks are not their (off)balance sheets, but the 'financial weather'. Governments don't understand the cause banking problems, the size of the banking problems and connect their future with the future of the banks.
If the banks sink, governments that have connected themselves to them, go under with them. They even not understand financial engineering and the way the management of banks thinks. On this guarantee based designed three party bank deals gives everybody guarantee and nobody risk (A > B > C > A). It only enforce malfunction and fake Tire One capital statements. A governmental guarantee covered loan can be noticed as Tier One (equity) capital in (off)balance sheets. Shareholders know this and will not stop selling bank shares and bank bonds. Bank (off)balances sheets are cooked and will be cooked even further by this.
Giving a blank check to banks equals giving your kid your a creditcard to buy 'something' 'sometimes' in Toys"R"Us, they overdraw it severely in no time and by the blank guarantee model there is not even a meter/counter attached to it. This is no problem addressing, this is problem multiplying. Fighting fire with even more fire. Due this blank guarantee the banking crisis, now will give also a governmental crisis as unwanted attached bonus. One huge problem becomes two huge problems. Stopping bank failures equals ordering inflation. The money is already gone, that's something governments don't understand. This is just ordering total collapse of everything, the end of civilization. Collapse of a bank is just attaching (off)balance sheets with reality. That's something governments don't understand. No value is lost in failing of banks, value destruction has already happened earlier.
Governments certainly can regulate markets (they certainly should do concerning the (off)balance sheets of public companies like financials), but never power markets (as the real economic power is in markets). Markets and governments are two completely different models. Mixing these two (regardless from which direction) is certainly getting low quality economic output/performance. History has proved it. Both markets and governments should (in separate functions/targets/methods) clean the economic system of bad behavior.
Urgent bad situations always lead to high speed bad legislation. That was after 9/11 the case (the Patriot Act that puts the Constitution and the Bill of Rights in the trash bin) and that's now the case again. Due to the 9/11 caused Patriot Act there was already a big freedom deficit in the US, due this Paulson legislation a financial czarship was realized. The USSR (the government was the economy) was certainly not the best performing economy: stagnation was everyday's reality. That's something Paulson unfortunately apparently quite don't understand. Congressman Burgess (R-TX) asks the Speaker of the House to post the bailout bill on the internet for at least 24 hours instead of passing the largest piece of legislation in US financial history in the "dark of night". Unfortunately this wise RFC (Request for Comments) move isn't been taken. Congresswoman Kaptur (D-OH) also has said some severe wise things on "in the night" forced legislation.
The Paulson Plan was an insult to the free press and journalists (ban on research). The Paulson Plan was an insult to share-owners of the financials (total legalization of complete fake -on or off- balance sheet assets). The Paulson Plan was an insult to justice (total immunity for the operators, the best illustration that we're one inch away from an authoritarian government). The Paulson Plan was a definitive goodbye to the free/open/fair and best performing market driven economic system. The Shock Doctrine of Naomi Klein is becoming a scary real facet of government.
Paulson has worked for 30 years as an executive in the financial industry (Goldman Sachs). He hardly can be called objective. Trickle 'just' huge loads of capital down is not the way, the capital will not reach it designed destination. A bailout is certainly not the only solution, although it is 'sold' to us that way. It is even no solution at all, it is just a temperately bandage. It doesn't clean out the system, doesn't fix any courses, it extends only mal-function. The bail-out with out cleaning-out is quite an illusion, and just will maintain the problems we have. We are taking backwards the risk out of the marketplace, destroying the cleaning system of free/open market capitalism. Why is AIG saved and Lehmann not? Open fair healthy capitalism and closed selective bailouts doesn't go well together.
It is a total underestimation of the problem and thereby misconception that someone out of the financial industry can clean up the economic mess this industry has caused. They should choose a CEO of a production and/or energy company to do this, than they now it would be a real clean-up. Paulson fights fire with fire, only causing more fire.
An other facet of the Paulson Plan is that the government by this plan further (even more) consolidation of the financial industry stimulates, while this is just the problem. Most European countries have banks within their borders that have bigger liabilities than the GDP of their nations. We don't need companies that are too big to fall. Big equals not good functioning, bad managed, not controllable and totally not auditable. We need a fair comparative market with thousands of market players. And if then one fails, we let that one fail and ensure the savings by the FDIC guarantee system. To big to fall institutions are a real threat to free/open market capitalism. The 21st century will say goodbye to big as the 20th century said goodbye to communism.
Of course we must guarantee the savings/pensions of households/companies who have build our economy by working really hard to earn it. Of course there was a problem with rare mortgage constructions that were only based on increasing house prices, but the problem is far beyond sub-prime. The basic problem is declining payment power in the US economy. That we must try to solve. Severe higher costs of living/production due the Energy Crisis, automatically gives a Credit Crisis. Costs/profits are the real problem, subprime was just the first weak part that came to the surface. We must reinstall payment capacity of the US households/companies. This earned money must percolate up, that's the way. But we must not reward speculators, by bailing them out.
The real problems are both payment power and weak regulation (off-balance/balance sheet, equity ratios, auditing and ratings). Governments can only regulate, but never empower markets. Paulson looks too much to China. China doesn't perform well due its strong government, but China has started to perform very well since the market was put in place as economic engine. The financial system just/only needs strong (off)balance sheets regulations. Without simple transparent (off)balance sheets regulations it is one big Las Vegas industry on other peoples/companies/nations expenses.
Kerviel the SG trader who lost $ 7 BN, (what was just some months ago still a huge number, but now considered just a small amount as we have switched from billions to trillions, without even knowing the beyond imagination size of a trillion) is only a small town player compare to Paulson. This big figure gambling can only lead to a disconnection with the rest of the world economy for the US, UK/Europe and Japan.
The Euro and the Yen have today the highest possible dollar reserves ever. Certainly since their massive support of the dollar of the last month. The Central Banks of Europe and Japan thought that they could fix the US problems overnight in buying lots of dollars since mid July till mid September 2008. Quite an underestimation of the width/size/dept of the US problems and also a threat to the health of the Euro and the Yen.
Paulson has just only helped his friends in Wallstreet to recover their loses in the last days of this Administration and has left without realizing any structural change. President Obama inherits just a broke federal situation and a totally disappeared global goodwill by the lost of savings/pensions worldwide, in a by energy prices in stagflation severe down-turned economy. Only smart and honest politics can create a way out of this: building vibrant local low energy based prosperous economies with new élan. Unfortunately neither both the two candidates don't understand both the Credit Crisis and/nor the Energy Crisis. Otherwise the next President could be the last President of the USA. If he can't solve the budget problems, the dollar will fall and federal USA will be history: all the States will become independent nations.
The US economy is for almost 35 years each years more powered by consumer spending than by production. Credit was the name of this game. Take an average of $ 10 trillion as GDP on only the last 20 years, take a minimal 10% overspending percentage. This 10% is low, in 2007 the US economy was 72% consumer driven, instead of 40% consuming and 60% producing as it should be. So the problem is 20 years long at least 10% GDP big, as in 20 * 10% * $ 10 Trillion is $ 20 Trillion. A huge problem even by taking only 20 instead of 35 years in this calculation and taking only 10% GDP too much consumption instead of the actual 30% GDP too much consumption in this calculation.
The cause of the current problems is not a load of worthless CDO assets on the (off)balance sheets of the banks. Nor it was the fact that the house prices could not rise for ever (those who aspect this were not very intelligent), nor the non-fixed-rate interests (was guaranteed asking for problems, but was 'covered' by the unreal believe in never ending house prices rise).
The main cause of the Credit Crisis is not having a production based economy anymore, but a credit based economy. Too much money by too low interests in combination with too less regulation (as off balance equals off sight). A good benchmark for the depth of the problems: a nice standalone house in the USA can be bought for $ 30,000, just 2 years ago this was five till ten times more. This illustrates the fact that CDOs covering the area from 50% till 100% of the mortgage doesn't have much value anymore. Payment power was based on house price rise. This 'payment power' is gone.
The making consumption more important than production road was not a very long lasting road. It never is. It can't be. Someone somewhere has to pay eventually. Too less production (related to severe consumption) is the real problem of the US economy. Building short sighted economic not sustainable on credit based prosperity, that has finally found its dead ended street and crashed into a wall(street). And than the Energy Crisis came also to the surface, eating out company/governmental/household budgets/payments power severe in MainStreet by the high energy prices.
But the problems of the Credit Crisis are much, very much bigger than the limited size of TARP Fund and also are originated much more deeper than 'some' huge bad CDO assets. The problem is beyond sub-prime and/or alt-a/near-prime. Paulson will go into the history books as 1) someone who don't understand the real size and causes of the problem and 2) someone who want to be the most rogue trader ever of the biggest governmental funded hedge fund ever (Max Keiser) and 3) someone who don't saw the effects of the Energy Crisis on the Credit Crisis (less payment power everywhere). Ronald Reagan's favorite laugh line was telling audiences that: "The nine most terrifying words in the English language are: 'I'm from the government, and I'm here to help.'".
The future economic damage of the combination of both the Credit Crisis and the Energy Crisis will hit the economy even more severe. The already weak (mainly on credit based) payment power gets even worse. Due the combination of the Energy Crisis and the Credit Crisis the $ 20 Trillion damage score of the Credit Crisis gets even more.
America is not only addicted to oil (G.W. Bush in his State of the Union address in 2006), but also addicted to credit (something the next president certainly will say in his State of the Union address in 2009). It is sad that governments doesn't understand the huge impact of the Energy Crisis (they still plan new roads/airports/harbors, without seeing that fossil energy on which transport and mobility both depending is running out) and Credit Crisis (they don't see the causes -consumption instead of production and more expensive energy/minerals- and thereby they don't oversee the scale of the problem and think some buckets of water will extinguishing this massive fire they don't overlook at all).
There are better solutions. All the options and the consequences are listed in the Global Future Analysis in the Proposal section. Solving the problems, not deepening them. Financial chaos is something almost nobody wants, because then there will be many losers and only a few winners. Any solution that doesn't support the US her production (but deepens the US debt) is just a temperately solution: like a boomerang it will come back if the solution not the production of the US parallel will increase (which is the only real solution, not a covering bandage). The combination of solving credit problems, responding to energy problems and restoring US production are the three characteristics of the Planck Proposal: voluntary convertibility of bad debts against 'Made in the US' production.
Only production gives real payment power, that's something the US economy now learns the hard way. Increasing production is not easy in these new times of expensive energy, But 1 to 1 combining the bail-out with production increasing (voluntary convertibility of debt against 'Made in the US' production) could do the job. Otherwise it is just more money creation and thereby oxygen for the inflation fire (that already burns very heavily due to energy/mineral price rises). Inflation is the daily silent thief in the night, the invisible tax, the savings/pension crusher, the future decliner. You don't fight fire with fire, that's something firefighter Paulson didn't understand. He has made things worse.
One huge bright spot in this all: The Energy Crisis certainly will 'bring the jobs back home'. The on globalization based production model is designed in times of a $ 10 per barrel oil price and doesn't work in a $ 100 or even $ 150 (or higher) per barrel oil price. Also long distance travel will decline (stimulating the national leisure industry). Air travel, air transport, road transport and commuting are the 4 facets where we will see the effects of high oil prices instantly. Local is the king of the 21st century.
The current debt/credit situation is very bad for the US position/image on the global markets. From strong, leading, free and envied by all nations, to debtful, weak and a huge debt/currency problem for all nations. From cheerleader to drop-out, in just a decade. The commentary in the overseas edition of the People's Daily, which is the official newspaper of China's ruling Communist Party wrote September 17, 2008: "Threatened by a 'financial tsunami', the world must consider building a financial order no longer dependent on the United States. The collapse of Lehman Brothers Holdings Inc may augur an even larger impending global 'financial tsunami'."
The debt is not good for America, nor for the Americans, it is the end of the positive empire. The USA has had a head start never seen before in history, due the fact that the dollar was the global reserve currency and our leadership. The best example of our leadership can be found on http://exchanges.state.gov/ivlp/alumni.html: we have educated 66 of the current world leaders and they understood our principles and interests. "Sixty-six (66) Chiefs of State and Current Heads of Government are International Visitor Leadership Program Alumni."
The Western World had it very well, but it wasn't enough, so we've overplayed it severely. Our not sustainable greed has undermined our long term prosperity. We had tailwind and power. Both needs wisdom, not rogue greed. When the losses of foreign banks/pensionfunds are determined by their US/UK and/or dollar/pound exposure/assets, you know the US Empire and also the UK have lost their glory.
The Western World is going literally broke in high speed. Caused by a strange combination of 30 years cheap oil (that feed long distance production) and self-over-estimation (or others-under-estimation). The neo-colonial arrogance that has feed the illusion that the 'other' people not only were cheap and certainly more stupid, respect for the 'other' people (Asia and Russia) was absent.
The West thought they had 'a knowledge driven economy', but this has proven to be a misconception. A late but huge price on colonial thinking. The 'other' people were as smart as us, worked harder than we, and were satisfied with 25% of our wages. The West for sure has lost the technology and the banking sector (ask any official of Cisco or Philips, just ask any banking official). The two pearls that made us think we're better than 'them'. We have hurt our current situation and our future by our arrogance. The only bright spot is our individuality. That's an unique asset caused by the Age of Enlightenment that certainly feeds innovation. The only head start we have left. All other head starts we ruined ourselves.
We don't need JSFs and aircraft carriers or other warfare for our achiving energy security/continuity. We need the build/invest in LNG carriers for achiving energy security/continuity, and yes, there should be military personel stationed on each of these carriers. We need a complete change of mind of what is really important for us. Bully behavior has cost us already our relation with the other Americas (and their resources). We need to install broadband to make videocalling and teleworking possible. Taking care of our future has some severe actual investment demands. The answers to the 20th century callenges will as response to the 21st century callenges.
Furthure more there is always somewhere an end to any debt stretch capacity. And that end is a gigantic inflation that just blows-up savings, pensions and currencies. Huge debts are not solved by creating even bigger debts. Or we think that we never have to pay our debt, or we dislike our own children in giving them the burden of our spending.
Financials holds other people's savings/pensions. If they can't trust the reported (off)balance sheets of financials, they're left in de dark and abandoned by their government. The problem is a severe lack of transparent (off)balance sheet regulation, bonus regulation and independent/objective auditing, and independent/objective rating. Banking is about mutual greed. No problem: greed is ok: it drives our economy, gives us prosperity, gives us return on our savings. Financials and their management must be greedy, that's what drives/powers the economy. But governments must ensure (off)balance sheets, bonuses, auditing, rating by regulation, that's what gives economy stability. Than we have the best of both worlds: profit and stability.
The bonuses of the financial executives are a story on their own. Their current bonus structures act as a severe risk magnet. There is a need of a new bonus system with a long term (more decade than quarter based) structure. That keeps the management's focus completely on sustainable business practices, than they don't take risks that will harm their own payments. When Grosso as CEO of a public exchange give his self a $ 187 million bonus, we should know that the system severely was derailed. Money has less value, billions has become small numbers.
We must certainly not extent the life time of wrong systems by expensive bail-outs. Capitalism is about success and failures. Capitalism is self-cleaning. Giving failures chances is creating more failures. There is no benefit at all in keeping the problems longer alive and give them the chance of even growing bigger. We must prioritize the cleaning of the system. Than maybe we can bail-out where needed. Ensuring peoples savings/pensions is good, starting with good regulation. With out a cleaning of the system, the problems only will get bigger than they are today. Pushing the pain to tomorrow is tempting, but certainly will make the pain only bigger/longer/deeper.
By fair/open capitalism the best performers win, by closed/not-fair capitalism some white shirt can artists take the savings/pensions from the real wealth creating companies/people/households. Financials really needs fair/transparent/objective (off)balance sheet, bonuses, auditing and rating regulation. The people who take the risk of putting their money in a financial should be protected, not reversed too late by governmental bail-outs, but just by a good (as in simple but effective) regulation.
Debt is/has no future. Debt is a failure. Debt has its price: becoming a second grade nation. Capitalism needs to revitalize itself, get out debt, not by new tricks, but by production. What is a more obvious illustration than the fact that the Communist Party of China has become the largest financer of the gigantic US debt: capitalism consumerism kept artificial alive by 'inferior' communism production. Just hoping/praying that China's ruling Communist Party tomorrow will pay the bill off our consumerism focused party again: that's the 'power' of US capitalism in 2008. Russia that bails out Iceland. Quite a situation and an outlook. We have faced (besides PeakEnergy, PeakX and PeakSize) PeakCredit in the Western World. A severe change of geopolitical power fields caused by debt.
We all thought that the decline of the West and the rise of the East would go gradually and would take a period of 20 years. The reality is that the Old West has celebrated a big prosperity farewell party initiated/hosted by the USA. The new (totally overlooked) global players will be India (software and officework), China (software and technology), Brazil (food), Gulf (energy) and Russia (food and energy). Real production is real/sustainable power. Credit is just short term driven policy. Credit can be used to build production, but when it is used to consume, it is certainly purchasing deep trouble.
The current Chinese Government (which has funded this western economic party) severely will not survive a $ 2 trillion foreign asset meltdown. China than certainly will fall apart. Without this capital drain threat already 40% of the Chinese Nation is influenced by independent movements. The central Chinese Administration will collapse as the dollar collapses. But the Chinese Regions will survive on their own. There is no other region in the world that has such a comparative technological Research and Development power as China. China is intelligent, hard working and has lower costs. Trade in technology will survive the PeakEnergy period.
Capitalism need to catch up in real economic strength (less tricks, more production) and not go any further on this wrong debt driven way. Debts limit our future. We need production based prosperity. Inflation free prosperity. Based on the new 2008 settings of expensive energy/minerals/food due to PeakX (due to the fact that 3 billion new consumers want also prosperity). The 21st century needs new concepts, pretending we can go on this way is not only stupid, it is simple not possible.
Capitalism in de developed world surely needs to leave the fractional banking based system of money creation. This as this system only can exist by endless growth. Fractional banking needs on macro level a continuous low of new loans to create the money to pay interest on the old loans, as the money to pay the interest on the loan is not created on the moment of loan creation. We've reached the limits of growth in both credit and energy/resources. Stable high wealth levels and fractional banking are mathematically not compatible. We need to learn that prosperity is not only GDP, but also has an immaterial facet. In a world with material limits, well-being will become as much important as GDP. Endless growth economics on a finite planet is not an on situation/economics reality based option. Exploring/using the potential of one finite/limited world for maximal prosperity will be the slogan of the 21st century.
It is not a pity that less governments/administrations understand both the Credit Crisis and the Energy Crisis, nor has any clue of policy to address it. These two developments that will shape the next decade of the USA, are still developing 'in open space' further/wider without any presidential policy/leadership.
The Global Future Analysis describes solutions for the Energy Crisis, the Credit Crisis and the Water Crisis. The current bail-out will not solve the Credit Crisis, it is just throwing 'a little' good money into a huge bad money swamp. The problem is the wrong direction of the American economy, and that's something that will not change by this bail-out, the economic health of the USA even will be worse by this bail-out. It is giving a heavy coughing smoker just more cigarettes. It is like paying the guys who has kicked out all the glass out of all the windows. Bail-outs without any structural change it will lead to nothing than more problems. And yes, Obama has a point when he said that mortgage bail-outs during the '30ties has proven to be successful. But that were other days than today: Back then there was no Energy Crisis that put restrictions to growth, something we certainly has now.
The Global Future Analysis describes concerning the Credit Crisis also a final bail-out (better said: a final 21st century economic blueprint) that combines tight and transparent financial (off)balance sheet legislation, massive FBI investigations on fraud by financials, an end to fractional based banking (as no longer valid in a world with growth limits), abandoning of the FED (as it is just a wrong a private cartel of 12 stakeholders, that only has a federal label, but isn't more federal than say Federal Express and never has been audited once, which has a license to create money out of nothing and lend it with interest to the government), back to full federal state owned 'fiat based' dollar (as the dollar already is), a yearly budget limitation amendment to Constitution, abandoning by legislation of all fancy statistics and the conversion of old foreign USA debt to actual 'Made in the USA' products.
On other issue is that there are too much houses anywhere in the USA. House prices are 100% connected to local market demand. So maybe some (smart/rich/hard-working) immigration will make the housing market healthy again (as it will push up the demand for houses). Towns/villages should have the right to 'import' the kind of inhabitants they need. Than America can have its second 1908 boosting period again. But unfortunately the image of the USA in the world is currently severe damaged.
Freedom accumulate directly innovation, it needs to be restored first in the USA. Less DHS-Big-Brother-in-the-USA, more Freedom-in-the-USA. One single act of terror can't be the cause of state based/originated freedom-limitation. There is a brain drain out of the USA, similar as the one that happened in the '30ties in Germany. Great brains don't like a climate of freedom restrictions. Freedom has always attracted the great brains of the world. Freedom limitation equals economic/innovative decline. The roots of the USA are one 100% based on freedom desire.
The USA can maybe also be diagnosed as addicted to war. But war is just 'old-school' 20th century economics. War is only beneficial for some companies, while the rest of the nation pays the price by less exports, less tourism, inflation and blood (and as bonus: the counterparties start hating the US severely for generations to come). These war beneficiary companies have a way to huge influence on the US administrations. First making a profit in demolishing everything and than making a profit in rebuilding everything. Conducting two wars (Afghanistan and Iraq) the same time was maybe not the wisest decision of this Administration. Stopping both wars lowers the oil price instant with at least $ 15 per barrel. That's something every American household and business profits from directly. War put upward pressure on global resources prices (the first price of war).
Destroying property (the second price of war) by expensive weapons (the third price of war) is double negative economics that tax the wealth of the world severely. The by local contractors build border control posts in Iraq are build for $ 30,000 and are all quite a time finished, the by international contractors build ones have cost $ 300,000 and are still half finished. The US administration should reconsider its war addiction and the corporate influences that stimulate this war addiction. These mainly governmental contracting focused companies are too bad in performance for functioning in a free open comparative market. These war stimulating companies are just the robbers/parasites of global prosperity/stability.
War also doesn't give much real friends (the fourth and most severe price of war). When resources become scare and therefore the granting distribution model is put in place above the price based distribution model, the USA will need real friends. Friends by choice/heart, not friends by force/repression. Friends by force are not real friends.
Of course the biggest (fifth) price of war is that hundreds of thousands workers are redraw of our economic production. The economic effects off this are severely underestimated. And the veterans? They young guys that have gone through very impressive situations? The economic/societal price of their re-socializing to normal workers again has never been calculated (the sixth price of war). We fighting this wars on expenses of our children, that's maybe the most wrong part of this all: the loans we take for these wars must be paid back (with yearly interest) by our children (the seventh and eighth price of war).
Offensive foreign policies (also called war) is bad economics, it only can be practiced by nations that has access to too wide credit lines. The last real big war profit in history has been made by Germany as they seized all the national reserve gold of the West European nations in WW II (which the BIS then against a margin has white-washed for them). After that event, no nation ever has made any profit on war. War is just mutual destruction of capital/prosperity. From an economist's point off view: War without robbery just equals economic decline and waste of resources.
US economists have severely failed in just calculating the economic cost (and production lost) of conducting two expensive wars the same time. The reason? Because DHS could consider this un-patriotic research? Calculating costs is the only way to stay in business. DHS should honor the brave people who calculate economic impact of conflicts on the US. These economists would contribute huge to the economic facet of homeland security.
What about this CBS News address of Donald Rumsfeld on September 10, 2001 (the day before 9/11) where he literally said that the Pentagon has lost track of $ 2.3 Trillion (http://www.youtube.com/watch?v=3kpWqdPMjmo). This is 25% of all recent military budgets and $ 8000 for every American (without the yearly interest surplus). How long can we go on thinking money is so completely worthless and the world is willing to lend us as much as we needed? Or have we started printing money to fast and are we already heading towards Zimbabwe-like inflation? Is this over-printing of money the reason why the FED has stopped publishing the M3 (money creation) statistics in March 2006?
Conducting two wars the same time is a severe blood drain of US prosperity. No an anti-war feeling, but a severe we-go-broke feeling. Who is capable to teach our Federal Government just normal balanced economics? You can't lower taxes, conducting two long wars and bailing out the financials the same time. Lowering taxes is right: it gives people payment power for their home/energy payments/investments. Investments in domestic decentral energy harvesting will make the US household financial healthier. But just make some simple fair regulation for the financials and stop fighting two long wars. Then America will get payment power again. National payment power is real power. National credit lines are quick sand debt based power, on a very short leash of only 3 weeks Treasury liquidity.
On Wednesday, September 24th, right in the middle of the fight over billions of taxpayer dollars slated to bail out Wall Street, the House of Representatives passed a $ 612 billion defence authorization bill for 2009 without a murmur of public protest or any meaningful press comment at all. The New York Times gave the matter only three short paragraphs buried in a story about another appropriations measure.
The Global Resources Analysis (http://www.planck.org/downloads/Global-Resources-Analysis.pdf) describes these developments very good. South America is a perfect example: due events that happened in the past they rather sell their energy to China than to us. The USA has lost South America as supplier of scare commodities, this is not good for our future. War addiction is a big threat to the US future. Both from budgetary and resources deficit perspective. The world approves the US war focus every year less, but on the other hand they fund it by buying Treasuries. So there are more parties to blame than just the US administration.
And of course America needs to re-think severely her energy use, which has become a too heavy economic load. As only 4% of the world population uses 25% of the world energy, this 4% better has good purchase power or cut its energy use as soon as possible very severely. As national fossil resources declined, fossil energy has become the capital drain of the USA. More energy use was equal to more prosperity. This has changed. Today less energy use equals prosperity. A structural change. Maybe capitalism doesn't need reforms (just some financial (off)balance-sheet, bonuses, auditing and rating regulation), but our energy use is what needs major reforms to maintain payment power (= sustainable prosperity).
We don't need a financial focused master plan. The financials just must take a hair cut. A bank crisis we will survive, without any underestimation of the size of the problem. We need an energy generation/conservation/reduction focused master plan. Just because that without energy everything (as the whole economy at once) will stop. An energy crisis our economies will not survive.
National leaders have shown their short-sightedness once again. Laissez-faire (just let it go) of a few was considered as a bright policy in protecting huge economic interests of us all. First not regulating institutions that holds other people's money and if these institutions fail just ad-hoc bailing them out. Just addressing that what demands attention by lobbyists instead of addressing that what needs attention. We need leaders that don't address the storm of yesterday (the credit damage is already done), but address the storm of tomorrow (the energy damage can be prevented).
Governments in the developed world really face a turbulent period where their credibility is at stake (or poetically: unter siege). If people/companies will loose their savings/pensions due financial can artists with big bonuses, or due inflation caused by bail-outs they will absolutely loose their faith in national (as in: long distance) governments.
Energy prices, shortages and blackouts are the main thing governments should address in 2008. By a master plan, local, regional, national, continental and global. Geopolitical no need for any force, just a need for stimulation of each other. It is time for leaders who has a helicopter view and who are not accessible for the huge forces of lobbyists and take care of the real crucial issue: energy generation/conservation/reduction. We need to address the taxation of energy on our prosperity today, not tomorrow.
Planck Foundation supports by its Analyses, Models and Facilities a massive revitalization of local economies as the valid/best solution/response to both the Energy Crisis and the Credit Crisis. A solution that mathematically certainly has the best odds in maintaining prosperity as energy becomes expensive and global credit get scares. Vibrant Local Economies. Local Prosperity will be the Economic Model for the 21st century.
The Global Future Analysis is a shortened (actualized and not illustrated) text only version of the Global Resources Analysis | Situation 2009 (ISBN 978-94-6012-002-2). That forerunning report has had more than 350,000 downloads and more than 1,900,000 readers -due to third party forwarding- since April 2008. The Global Future Analysis (ISBN 978-94-6012-001-5) has also a commercial bookstore paperback version which is available globally. The name of the commercial version is 'the Perfect Storm: when the Energy Crisis joins the Credit Crisis'. But some national publishers has named the book "The end of globalization (as we know it)." or "Blueprinting the 21st century.".
Further build on the information/conclusions gathered for these 2 Analyses Planck Foundation is currently creating 12 Generic Models that can lead/support governments/companies in initiating the actual needed changes: These 12 Models are: the Action Model, the Communication Model, the Localization Model, the Production Model, the Mobility Model, the Transport Model, the Currency Model, the Privacy Model, the Peace Model, the Political Model, the Knowledge Model and the Finance Model.
Planck Foundation will beside these 2 Analyses and these 12 Models, also develop a wide set of digital communication based Facilities to support both the local/regional/national and the sector/technology focused Future Development initiatives. There is no doom scenario/conclusion to find in both Analyses, just realistic awaking analyses. For each recognized problem there are at least some solutions defined/researched.
Planck Foundation its final goal is the stimulation of and support for a huge/wide Global/Local Development Movement for local/city/municipal sustainable prosperity. Vibrant local prosperity is certainly the most prosperous perspective in times of expensive energy. Facilitating the businesses, inhabitants and counsels of every city/village/municipal/region/nation with these digital action/knowledge/communication Facilities. That's our 'Think Global, Act Local' response to the Credit Crisis and the Energy Crisis. At Planck Foundation we have (based on the results of our energy/credit research), chosen Global/Local Development to be our main subject for the next years. Finding not difficult to realize solutions, building knowledge networks of specialists, stimulating initiatives and creating supporting digital facilities.
Planck Foundation is dedicated to support governmental/corporate/municipal strategy in a changing world. Therefore universities, economic/political/environmental organizations, companies, schools, media publishers and website publishers may run (for example in a 2 week during subject per day run) partial chapter or subject sized copies of the Global Future Analysis texts and/or distribute the PDF files without asking for approval, if the source is mentioned and texts are not changed.
More high resolution versions of both the Global Future Analysis (http://www.planck.org/downloads/Global-Future-Analysis.pdf) and the Global Resources Analysis (http://www.planck.org/downloads/Global-Resources-Analysis.pdf) can be downloaded at http://www.planck.org.
The Global Future Analysis has a 1000 to 1 knowledge ratio: 1000 hours of research for 1 hour of writing. It also contains very actual information (as it is kept up-to-date weekly). As said: On http://www.planck.org/testimonials you can also find many testimonials of many quite important/impressive people and/or leave your own testimonial behind.
Also look into the T. Boone Pickens proposal for re-energize America: http://www.pickensplan.com. This old style Texas oil baron understands really PeakOil/Gas/Coal, the benefits of WindEnergy and wealth drain (trade deficits and foreign policy) of oil imports. Exporting wealth can't be considered a smart thing to do. They should give him the Nobel Prize for this nation/industry/economy changing effort. On the other side of the world, the Chinese government has also made in September 2008 a definitive choice for sustainable prosperity as the most wanted/economic direction for the 21st century. Vibrant local prosperity based economies have the best energy/prosperity ratio.
If you want to distribute this mail or the Global Future Analysis and/or the Global Resources Analysis: you're of course free to do so in any digital way, even by a simple forward action of this email to relations. Become part of the Future Movement in the economy/society. For yourself, your family, your community/city and your nation.
So, what's the solution? Sadly a new $ 700 BN fund (as proposed by Joseph Stiglitz) will not generate anymore a $ 7000 BN new loan capacity, which was certainly the case before PeakCredit, but now these days not anymore. Fractional reserve based banking can only facilitate capital multiplying in growing economies, fractional reserved banking needs growth (as the interest money only is created by the growth of loans). The end of growth is the end of fractional reserves banking. Mathematically with a 100% certaincy.
Due to PeakX (PeakEverything) grow capacity has/will been/be eaten by higher prices for energy/resources. Of course productivity ratios grow, but it will not deploy economic growth anymore: energy/resources will eat it out. This is why fractional reserve based banking is (at least for the Western Economies) an economic period that has passes away.
Exponential growth on a limited planet is just not possible. The main reason for PeakCredit is PeakEnergy. Al other 'causes' (sub-prime) are just the first signals, the top of the iceberg. Falling of the cliff is not an option, adjusting the behavior of financials and governments is the only option.
Planck Foundation has developed an instant applicable model that will address both the problems of the financials as the problem of slowing down economies. But if the 'good' bank concept doesn't work, what is the right solution? The one and only solution that can save the western economies is when the dollar takes the lead once again. When the FED supplies unlimited capital to the market, with the following restrictions: 25% must be used to buy US Treasuries (China will not doe that any longer, buying your own nation's treasuries is pitiable), 25% must be used to invest in energy investments in the US and 50% must be used to invest in foreign energy investments.
So a huge securization program with valid collaterals. What mechanisms can be used to keep these 3 capital streams clean and avoid abuse (so we not just repeat the problem)? The Treasuries are marked and a collateral administration can be open and 100% abuse free. The 25% energy investments in the US and the 50% foreign energy investments can be administrated by an Open Finance Platform (see the online diagram). Than all investments have an open calculation and an open financing. Nobody can hold his/her 'thumb in the soup': full transparent.
The next article on Bloomberg describes the actual main (every other issue less important making) problem for the current US administration: http://www.bloomberg.com/apps/news?pid=20601087&sid=agLiLPeFZCE4. All other problems are minor (even the huge size and variety of those problems). If they don't fix a buyer for the debt, they must buy their debt by printed money, which will result in a dollar decline and thereby a total collapse of the economic/financial world as we know.
By the above described plan it is really possible to fix the above described problems (as variant on 'we can' do it). In our perception there is no other effective alternative to address the financial/economic/energy situation comprehensive. Documents that describes and diagrams that visualize this integrated 'bank/dollar/energy' model can be found on http://www.planck.org.
The USA administration than: 1) Buys time to restructure federal budgets. 2) Enforces a new economy wave (with the required millions of jobs: payment power where it is needed) by realizing an energy transition investment wave. 3) Stops further capital/prosperity bleeding by energy export. 4) Becomes an actual on intellect/moral/courage/economic/currency based leading nation again. 5) Gets a good global imago again. 6) Make the dollar the leading currency again for decades to come.
It will give the world an equal sized economic boost in the right (sustainable) direction as the Marshall Plan did in rebuilding the postwar economy. War economy transition and fossil economy transition are not that different at all. It will give the USA and the world time to get used to a more multipolar world. It will end energy wars. It will give global sustainable prosperity (maximal use of limited resources).
PS Due the fact that technological developments can help us all in addressing the Energy Crisis and the Water Crisis, we're one of the founding funders of the Grow|OS development. Grow|OS is an open source agricultural operating system, which interfaces between greenhouse technology and greenhouse 'crop profiles' (the best technological settings for a crop: best farmers knowledge digitally caught in a digital settings file). Grow|OS is in initial/developing phase by GrowIndus (http://www.growindus.com). If you want I can send you a PDF describing this technology. Due to Grow|OS further food production can be done local (even under cities) in a low energy, low water and low space demanding setting.
Author: Gijs Graafland
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