Monday, January 28, 2013

The Center Cannot Hold, Part 2

by Stephanie Osborn

And the 4th installment from Sarah Hoyt's blog today. There are those of you who may not be interested. However, I think these are things that are important to consider in today's economic situations, and the new year is definitely the time to be considering them. I don't always agree with Sarah on some things, though we are friends. (Hey, friends don't have to agree all the time. But we still get along. That's why we're FRIENDS.) But like I said, it makes some thoughtful reading. And as someone born and raised in Portugal, she brings a fascinating perspective to the topic.


The Center Cannot Hold, Part 2

by Sarah A. Hoyt

The idea of creating inflation to get out of a disastrous debt situation is neither unknown nor rare. Countries like Greece and Portugal coasted on it for years (and we could go on about what losing that ability has done to them) partly because as “touristic countries” they thrived on being “cheap” by keeping their currency devalued.

You borrow high-value currency and pay the same nominal amount of low-value currency. Fine. That makes sense. But if you don’t let the savings and assets people have appreciate at the same rate, via high interest rates, (which in turn pushes company assets and – usually – salaries up, even though not in real value) you’re going to have people who don’t make enough to eat or to buy…anything. (Look, ALL intervention in economics is stupid, ultimately, because economics is not something someone can CONTROL. It is instead a playground for the law of unintended consequences. It's as if we developed an ability to control the weather and were in shock when keeping it pleasant in Iowa buried NYC in ice or something.)

It seems to me we’re headed there. Most of my friends are beyond pinched this Christmas, and that’s the ones who still have jobs.

If I had to guess I’d say this strategy was cooked up to get us out of the real estate collapse. The inflation is supposed to catch up so that real estate assets never “devalue” in numbers, just in real value. And the interest rates are kept forcibly low so that people will soak up the bad assets and so that those in marginal positions can refinance. (We know how well that last part is working – not.)

Mind you, if that really is the idea, this gang is dumber than dirt. First because if people's money holdings and salary stay the same, buying a house is still difficult, no matter how low the interest rates. Second, because they’re not taking in account that those of us working as contractors and getting paid on contracts made years ago, will end up destitute and not be able to afford...not just houses, but anything. I don’t know how many of us there are, but the fact salaries aren’t going up means salaried employees, of which there are a lot, will end up in the same fix.

In Portugal there was an enormous “soak up” of completely paid off real-estate, a lot of it inherited over generations. In fact, it might have been the norm. Having a mortgage back then was odd. This meant that your property appreciated massively and if you got in real trouble, you could sell it and move on. (Various restrictions on selling rented out places, and rent control made this more difficult than it sounds, but…still. You weren’t talking about people having to meet mortgage payments, house repairs, food, fuel, etc, with salaries that remain static and depreciating currency reserves while a lot of the rest goes up. On the food side, too, most people back then had at least some gardens and some "creation" – chickens, goats, etc.)

On the other hand, it’s entirely possible I’m attributing to stupidity that which is more easily explained by malice: they want to turn us into beggars, because beggars are easy to please. No, wait, that still means stupidity, because what can’t go on, won’t, and like with price fixing, when you make it impossible for people to live, people find extra-legal means.

Okay – another way in which we’re different: we’re the world’s charity [fund]. We still give financial aid to most of the world, and have for close on to a century. (We might that way have enabled tyranny, but that’s something else.) We’re the world’s grantor of peace.

If we withdraw, even well short of a total collapse, will the world finally grow up? Or will it go back to the long wars of the 18th and 19th century everywhere, to the point commerce can’t take place?

Make no mistake, whatever bad things happen in the US will be ten times worse in the rest of the world. And don’t say, “Who cares?” Some – if not most – of those people are much better at WMDs than at feeding their people and will consider knocking the “old champ off” a much greater priority than actually taking care of their starving population.

(A friend of mine said, “Whatever happens now, we’re going to lose at least one major city.” I’d like to say he was wrong, but I have the same feeling.)

Other ways we’re different: we have more guns per capita than anywhere except those places that encourage/enforce gun ownership, like Switzerland. This is not a bad thing because:

Even in the milder of the “things go wrong” scenario, where things go bad first are the people who are marginal now, living at the edge of both society and often legality. Where you see any crackup first in society is higher crime rates – we’re seeing that – and lack of safety on the streets. The fact that a lot of people have guns will probably hold some of that (at least) down.

We have a military that is more in the tradition of service than of machismo. We’re probably the last of the Western powers with a military tradition and our military tradition is…odd, built on winning hearts and souls, more than on, “Shoot them all and let G-d sort them out.” Yes, I know, sometimes the rules of engagement (ROEs) are stupid (Okay the ROEs are mostly stupid) but still, it has a built in, “you don’t kill unless you need to.” This makes us different from, say, the various Latin American countries that have had crack ups.

Will the US military fire on the populace if things get bad enough? Some places. Some populace. As someone said, behavior means a lot.

BUT the US military are also generally a force for good and order, and given a central collapse, might hold things together long enough for things to coalesce in another form. Might. One can hope. (Of course, I keep thinking of Starship Troopers, “And then the veterans had had enough.”)

All of these together, particularly the economic thing, added to the chaotic force of changing technology and the decentralization that tech has been forcing on industry and commerce even as our politics and education and other…non-commercial enterprises have got more centralized, has the effect of making us a particularly unpredictable juggernaut.

It won't be like movies or books, because those move on logic. Real people aren't logical. They're cranky, emotional and ornery. A group of one or the other some place can send things spinning out of control. [I'm reminded of one of my favorite lines from the first Men in Black movie, “A person is smart. People are dumb, panicky, dangerous animals and you know it.” -Steph]

In the best of all possible worlds, you’re going to hit a point where the answer to, “Are things getting better or worse?” will have to be, “Yes.” And then things start smoothing off, if we’re lucky in 25 or so years, so that I can still see it. (Or maybe faster. We’re Americans. We go fast. Hey, look, I’m Heinlein’s kid. The glass is not half full. It’s brimming over.)

On the other hand, it’s unpredictable, and I don’t think the people in charge know that, just like the people in charge of publishing don’t seem to be aware that ebooks aren’t just a “novelty fad.” There is a certain type of credentialed-not-brilliant (but thinks he/she is, because...credentialed) individual for whom knowledge is what exists in books and what your professors passed to you. If reality disagrees, then you deny reality as hard as you can.

Most of the people in charge most places are busy denying reality. Which makes the rest of us real nervous.

Hope for the best. Prepare for the worst. Stay informed. Keep moving. Keep working.
Or as my grandmother used to say, "Hope for the best, prepare for the worst, and take whatever God sends."
-Stephanie Osborn

Monday, January 21, 2013

The Center Cannot Hold, Part 1

by Stephanie Osborn

This is the follow-on post to Sarah Hoyt's "Preparing for the Long Rains" blog. Once again I am splitting it into two halves due to her blog formatting versus mine.


The Center Cannot Hold, Part 1
by Sarah A. Hoyt

I was thinking this morning that there are other things that make this path we’re on uniquely dangerous in terms of preparing for bad stuff, because it’s simply impossible to guess what form the horrible stuff will take.

Here’s a grab bag at random – just off the top of my head.

We’re the largest country organized on non-authoritarian lines (yes, I know, but we’re not organized for it)…I was going to say “to risk collapse” but now that I think about it we’re just the largest country in history organized on non-authoritarian lines. For those who will protest that, go look at the constitution of the European Union. When we organize under a constitution that classifies the curvature of a banana, then we’ll be in the running. (Yes, there are a series of abuses, and we’ve been trending authoritarian and centralized since the civil war – not arguing the rightness or justness of the war, just saying it centralized and strengthened los Federales and their power – but I don’t think it’s got into the DNA of the nation, yet. Having lived here and in Europe and traveled a bit all over, Americans are still likely to tell authority to take a hike.)

I have massive faith in the American spirit. 9/11 happening anywhere else in the world would have turned NYC into well, something out of the movie "Escape from New York", instead of a place where people helped each other get through, which by and large it was. Yeah, I know there are spots where this fails, but by and large Americans look at what needs done and go, "I'll do it," instead of waiting for the duly constituted authorities.

We are being treated to a very weird financial combination. I think I know what the idiots in power are trying to do, but if it REALLY is what they’re trying to do, they are some sort of unique in the realm of dumb.

Look, I was thinking about this yesterday, in terms of what an economic collapse looks like. Portugal [Sarah was born and raised in Portugal. -Steph] sailed dangerously close to it in the mid-seventies, with inflation going insane and people panicking and buying supplies months in advance, and then hysteria about hoarders being drummed up when supplies failed to materialize. (We also had price controls then. An absolute boon for the black market.)

But no one starved and by the end of it several people were better off than they’d been, (though not those who owned real estate, due to rent freeze and not those who’d failed to acquire saleable skills – more on that later.) People who owned gold or had money in the bank, for instance. (Though how much the future prosperity came from America I don't know. I know in the eighties we joked our GDP was made in America.)

HOWEVER to my knowledge – and I’m not as exhaustively well read on it as I’d like to be, because for the last five or six years work/kid stuff has kept me from reading economics as much as I used to. (Shut up. It’s a hobby.)

I don’t know any other country where currency has been printed like ours, and yet the interest rates are held artificially low. The combination is at best daft. Inflation is already showing up, though they keep doing weird stuff to how it’s calculated. (No, I’m not going to argue that. If you buy food, you know inflation has shown up – but beyond that, because the price of fuel goes up {being paid for in devalued dollars} it pushes everything else up, because fuel is used to MAKE everything.) [Or transport it. -Steph]

A lot of the places that can, and where it’s direct, they are already raising prices/lowering sizes – restaurants; food packaging; services; prices for minor stuff like mini-golf courses.

But the lack of employment is holding salaries down. And for those of us like me, who work at a job with irregular pay and who therefore of necessity have “savings” – i.e. a big paycheck goes in bank and is slowly drawn out to supplement my husband’s salary which is our main support – are seeing those savings eaten away. By the time we need to use them, we need more of them, which we're not getting because interest rates are low.

Part 2 next week.

-Stephanie Osborn

Monday, January 14, 2013

Preparing For The Long Rains, Part 2

by Stephanie Osborn
Last week we read part 1 of Preparing For The Long Rains. Today we pick up with the rest.


Preparing For The Long Rains, Part 2

by Sarah Hoyt


So, what will the collapse look like?

I don’t know. And you don’t either. All we know, because we can feel it, like sand grains shifting on a dune in the first movements of something that is not even fully visible, but which will suddenly remake the landscape, is that we’re already in the process of collapsing. For a definition of collapsing.

What I’m betting on, of course, is a collapse that collides full-on with the catastrophic innovation of tech. What this will look like is like an accelerated version of what we have right now, and, to an extent, of what Portugal had in the seventies. The old ways and those in control of them at all levels – from education to production; from politics to news – will be collapsing but at the same time they’ll be each day less relevant, as they get replaced.

This is sort of – if you need a visual – like making a train into an airplane while it is running. It’s chaotic, very scary and not painless. Some people will get crushed as gears get moved, and some people will fall out by the wayside and die as the shell is changed. And some others will fall from great height, even, as the plane takes off.

Or, to leave the overstretched metaphor behind:

It won’t be pretty, and I advise to have prep stuff on hand – you know, guns and canned, and such. Whether to move to the city or rural is something else. Yes, I know what you guys hear – and the instinct to “go and hide.” But I’ve read accounts of Argentina’s collapse, and the worst stuff happened in the countryside, where isolated farmhouses were raided. If you were in the city, for the most part, you were all right. (Which I’d say was more likely if your city has military presence.)

But again, there is no way of KNOWING. All you can do is sort of guess and sort of prepare, and of course, ideally you’d have a town residence with a rural getaway, or vice versa, but not if you’re as broke as I am.

HOWEVER because you expect the new to emerge from the old, with preparing for the collapse of the old, for interruptions of supplies, for disruptions in electricity, etc., if you believe this is the sort of collapse that’s coming, you’ll be doing what you can to prepare your profession for the new order. In my case, this means getting up electronic as much as I can, so I might have at least some income should paper distribution collapse. I don’t know what it would be for your profession, but if I were a computer-person, I’d be trying to establish the ability to have different contracts on the side. (If your current employment contract allows it.) As we’ve spoken of before, what you should be trying for is as many and as varied streams of income as you can. If you’re a writer not making much, yet, married to someone in a traditional industry that’s going to get whacked, I urge you to do what I’m doing, and write like mad and put it up as much as you can, in as many genres as you can. (Though I’ll note, for me at least, bubblegum seems to sell best.)

I’m doing this because I don’t believe we’ll collapse totally. Can we? Well, sure. Again, as I said, we’ve never seen anything QUITE like what we’re starting on.

But here’s the thing – if we collapse totally…well…I can’t afford to buy a farm. I can’t afford to store enough food for the next fifty years. The best I can do is buy books on building log cabins and trapping animals, and supplying the kids with bows and arrows. Then if the unthinkable happens, we shall go and colonize the national forest. (No? Why not?) As long as I have some food to survive till a crop can be got in, well, it’s much like preparing for the catastrophic change – except that we never get to be civilized again and therefore all the ebooks count for nothing. Worth trying, anyway because you never know. And what else are you going to do if you’re not massively wealthy and able to prepare for the fall of civilization? Sit around knitting your total collapse blankie?

There is a third option, and for all I know it might be the most likely. It would be the most likely if we had an America to save us. It’s called the “modified hangout.” You slide and slide and slide, and there’s no ending to the slide. Africa has gone through this and Europe is heading into it (though we’re helping it by propping it up – yes, we’re still giving foreign aid to most of the world.) This is a world in which services become worse and worse starting with those the government provides, from supplemental income to mail to (where it does so) electricity. All of it becomes unreliable, untrustworthy, subject to the whims of bureaucrats and how much baksheesh you’re willing to pay. Every year is a little worse than the last. And you just…hang on.

At the end of this is the world of Heinlein’s Friday, with everyone in armored cars and people in guarded compounds, and the rest of it resembling what a total collapse would do, but crossed with the world of Mad Max.

I wouldn’t bet on this last one. It is unlikely. To get there, you need someone subsidizing you, because your society stops functioning long before this to the point where it keeps food and clothing available, much less keeping someone very wealthy. I don’t think America can keep itself on this path without outside help and – get this very carefully – there is no outside help.

At the same time, even if it happens, how do you prepare for it? Well, the best thing is to have some stuff laid by so you can protect yourself and yours and provide in case of shortages.

BUT most of all, the best thing is to be very wealthy and able to afford a private enclave.

My plan – though it’s unlikely it will bring me enough wealth – is to do exactly the same I would do in the first instances. Because if there’s any chance of my being wealthy it is to have a book (or more) hit.

So, right now, I’m very busy – which has the advantage of keeping me from fretting too much. (You should see me when I fret too much.)

The best thing to do when the rain starts falling and you don’t know if it’s just a severe shower or forty days and forty nights is build your ark.

Even if it’s just made of words and electrons.

Do go on with life – it might be important and your "peacetime activities" might yet be the most important thing in making the collapse non-permanent – but keep an eye on that rain. And prepare for any eventuality.
There is wisdom here if we choose to see it.
-Stephanie Osborn

Monday, January 7, 2013

Preparing For The Long Rains, Part 1

by Stephanie Osborn

This is a reblog of a particularly interesting post by Sarah A. Hoyt which she put on her blog in early December. As we prepare to begin a New Year, it may be worth reading. I present part 1 to you on this first Monday of the new year. Perhaps it isn't the usual celebratory sort of thing, it isn't resolutions, but the turn of the year is a time for thoughtfulness and introspection too. I think we could use a little of that this year.
Preparing For The Long Rains, Part 1

by Sarah Hoyt
As many of you know, I’m watching Foyle’s War, kind of the way I watch things these days: when I need to iron, or do something else that occupies the hands but not the eyes (much) or the mind (at all) I turn on a couple of episodes (thank heavens for Amazon prime. I remember being very much broke and not having cable – as we don’t now – and not being able to watch anything. With Amazon prime and the stuff free for kindle, I’d have had a much easier time of it.)

I’ve before talked about sudden insights, things I’ve known all along, but which suddenly seem fresh and new. Like “they didn’t know they were going to win.” It also started me reading about the World Wars again, which means eventually there will be some blogs related to that, but I need to be more “with it.” [Sarah has been ill. Nasty flu bug I think. --Steph]

The most amazing thing of all, though, is that despite all the restrictions they lived under, the rationing, the coupon books, the collecting of every piece of scrap, most people lived as though the war weren’t happening. (I’ve often considered, too, that while the idea of rationing was completely wrong-headed economically and might have FED scarcity, it might have been the right thing to do PSYCHOLOGICALLY creating that sense of unity of purpose. I’ve also wondered if the problem was that after 9/11 we weren’t asked to plant victory gardens or buy war bonds, but simply to “go shopping.” Yes, I know it was sound in many ways, but it might have made a difference psychologically if people felt they were contributing. Or perhaps not.)

Of course the series is a mystery series, and there is usually something involving the war – because that’s how they sold it to the producers – but you sort of catch glimpses of people around, and you get the feeling most people were…what was it people were doing while Noah built the ark? They were marrying and being given in marriage, having babies, worrying about where to live. Even when the war affected all of those, it wasn’t the main concern. The main concern was everything else: who loved whom, who hated whom, what the crop was going to be, and why the kid was acting weird. All this without knowing if they’d win or lose, or what the next year (or month) would bring.

Right now, sometimes I feel as though this is what the whole world is doing around me. They’re making plans, getting comfy, settling down, fixing what’s wrong with their lives – or perhaps trying to survive unemployment, illness, other life stuff.

And then periodically I get together with a friend, or sit down with an old acquaintance and I hear how much more seriously they’re preparing. It’s all guns and canned food, and why am I still living in an urban area, have I gone nuts? And don’t I realize it’s time to set aside the writing/publishing thing and worry about preparing to survive the collapse?

And then I feel like it’s me who is going about everyday life, unaware that there’s something big coming down the pike.

I am aware there is something big coming down the pike. I think even those who “aren’t” or who deny it, know it at some level. There is a…tense feeling in the air, and everyone is sitting on the edge of their chairs. There is a suspended-breath feel – waiting for the next shoe to drop.

The thing is that no one knows what the next shoe will be. A light sneaker? An army boot? A baby bootie?

Each of us has a mental image of disaster, mine formed by experiences (and books, and movies) and other people’s by THEIR experiences and books and movies.

The problem is no one knows. This has never happened before.

And before you start screaming at me, that of course it has happened before, that even recently the USSR folded like a pack of cards, that we know exactly what collapse looks like…sigh. No we don’t.

Oh, sure, we can look back to say the French revolution and see what happened when the leading power of the day got buried in deficit and went mad. We can look at the collapses in Argentina, and… everywhere else in the 20th century. But the parallels aren’t right.

If you go back far enough – the French revolution – you’re dealing with a completely different state of affairs, not just mentally but also at the economic/material level.

You see, America has changed the game, both ways. I remember hearing it mentioned that the USSR still commanded loyalty because peasants STILL lived better than under the Tzars. A similar thing was said here about Scandinavia and socialism. Their life improved. And the same could be said about Portugal under its strong-man regime. People can point to how poor Portugal was, but we thought we were rich. As a child, I always wore shoes, for instance, even if the summer “sandals” were the shoes that had stopped fitting in winter strategically cut. I had winter coats. We had coal delivered. I didn’t have to do what Mom did and go, barefoot, along the train line, gleaning coal dropped by the trains. I got Christmas gifts, usually a variety of plastic stuff. It wasn’t just “we’ll have some fruit for desert and that’s how we know it’s a holiday.

This was because things that started in America – including the improvements in agriculture, the new processes and new materials – allowed a level of prosperity that was still better than anything the world had known before. Even in countries doing their best to slit their own throats, the easier ways of producing things and the abundance of food made a difference. Things got better. (And everyone got used to thinking that was the way of the world. BTW I’m aware this process didn’t start with America. It started with Great Britain and the Industrial Revolution. But then the torch got passed and things accelerated.
The other part of this – influencing all collapses in the 20th century – is that America tends to support other countries in trouble. This is a double edged blessing, btw. There is reason to wonder if the USSR would have survived nearly as long, with its dysfunctional regime, without the grain we were willing to provide at bargain basement prices…because we had it.

We don’t have an America to bail us out, and we don’t have an America to keep innovating as we collapse. We ARE America, and there is no one to pass the torch to.

Please, please, please, don’t tell me that Brazil or China stand ready…Brazil is in a pretty good place now, partly bolstered by our petro dollars, but let’s not kid ourselves. Until they fix their political culture, they’ll continue going through the boom and bust cycle in a way we can’t even imagine. As for China…China will not survive our collapse, and as it cracks it will show us what a crack up really means. All of those who are my age and were astonished that the USSR didn’t fight like a wounded bear as it died, might yet get to see this process.

By the time Great Britain started its self-inflicted decline, the US was already well on its way to moving into the lead industrially and agriculturally. There is no country in that position. There are countries that can pretend to be in that position, but not when you look at internals.

I'll present part 2 next Monday.

-Stephanie Osborn