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Keeping our eyes on the ball

By Brian Bloom | Tue, 13 October 2009 22:40 | 0

Question: Can the debt mountain keep on growing to the sky or will we eventually see a landslide collapse?

Answer: The evidence in the USA (continuously rising unemployment levels, ongoing home foreclosures, unusually high savings rate, falling velocity of money) suggests that the debt mountain is unstable. Given this, every dollar of debt that is added to it will increase the probability of a landslide.

The following link will take the reader to a website which records – on a week by week basis – some selected news items which were published during the passing days in 1930. http://newsfrom1930.blogspot.com/

It gives the reader a feel for the state of mind which prevailed within US society leading up to the Great Depression.

Here are some selected quotes:

October 11, 1930:
“J. Schenck, United Artists Pres., says “business depression definitely is ending,” announces increased production schedule.”

Oct. 10 1930:
“F. Corley, Marshall Field VP, says inventories have been cleaned up, general business and industry on eve of recovery.”

Oct. 9 1930:
“W. Procter, Pres. Procter & Gamble: "In our opinion we have passed the bottom of the curve and business is slightly but unmistakingly better and in our opinion will continue to improve slowly."

“Pres. Hoover speech marking 150'th anniversary of battle of King's Mountain [major Southern battle in American Revolution]: One test of our system of govt. is the practical results: US has more youth in higher education than rest of the world combined; compared to the most advanced European countries, US has double the rate of homeownership per capita, consumes 4 times as much electricity, has 7 times as many cars, etc. Equally important is intangible qualities - sense of freedom, security, confidence in future progress. Sees govt. involvement in business except in emergency as destructive of equal opportunity and tyranny through bureaucracy; business practices which would dominate the country for selfish purposes likewise destroy equality of opportunity.”

Analyst comment: The most likely reason why all these influential people were so optimistic about the future and yet failed to see the Depression coming was that they did not have their eyes on the ball. By way of analogy, to be a great sportsperson you have to be able to filter out from your peripheral vision everything that is extraneous to the ball and you need to focus your concentration fiercely on the ball. The “ball” in this analogous case (in 2009 as it was in 1930) is “the debt mountain” in the USA. Here is some evidence of instability of the debt mountain: Source: http://www.foreclosurepulse.com/blogs/mainblog/Default.aspx

FHA May be Setting Up Repeat of Housing Bubble, Lawmakers Worry

October 8, 2009, Los Angeles Times
The percentage of FHA loans that are delinquent or in foreclosure climbed to nearly 8% at the end of June, from about 5.5% in early 2006, according to the Mortgage Bankers Assn. And in the weeks ahead, its reserves for loan losses are projected to slip below federally mandated limits.
Reporting from Washington - In the wake of the mortgage meltdown, the Federal Housing Administration has emerged as a pillar of the still wobbly housing market -- providing vital insurance that enables borrowers to qualify for loans with as little as 3.5% down.

Firms are Getting Billions, Yet Aren't Averting Foreclosures October 5, 2009, Star-Telegram
The federal government is engaged in a massive mortgage modification program that's on track to send billions in tax dollars to many of the very companies that judges or regulators have cited in recent years for abusive mortgage practices. The firms, called mortgage servicers, have been cited for badgering, manipulating or lying to their customers; sticking them with bogus fees, or improperly foreclosing on them.

At the end of the day (in this analyst’s view), Western society has succumbed to a disease of the mind called “excessive greed”. We came to believe that, via debt and leverage, we could extract wealth out of the economic system ad infinitum without unduly concerning ourselves about the ongoing viability of the system itself. That was “someone else’s” problem. But there is no such thing as a free lunch. Whilst leverage works for those who are playing the game according to the rules set out by the US Federal Reserve, the game eventually reaches a point of overshoot: The core driver of the economy (increasing market penetration by technologies based on the prevailing energy paradigm/s) eventually reaches market saturation and the technologies which are based on newly emerging energy paradigm/s are too commercially immature to allow for a smooth transition to a new economic driver. When that happens, it doesn’t matter how much money you throw at “shovel ready” projects, the economy will inevitably begin to contract. When you hit overshoot and the economy begins to contract, leverage works against those who play by the rules as set out by the US Federal Reserve. When you hit overshoot, every additional dollar of debt represents an additional nail in the financial coffin – except if that new debt is directed at nurturing the emergence of new energy paradigm/s.

At this point in human history (from the perspective of society’s leaders) the economic ball on which they should have been keeping their eyes, is “energy”. When the old energy paradigm/s started to become increasingly impotent from an economic perspective (in the mid-late 1970s), society’s leaders should have moved to pave the way for the new energy paradigm/s to emerge. Instead of doing this, they created obstacles. Kowtowing to vested interests of the fossil fuel lobbies, they zigged when they should have zagged. They had too much faith in the system of Private Enterprise to address systemic issues. They failed to understand that the players in the Private Enterprise system will have zero interest in systemic issues until the decaying system threatens them at a personal level. At that point, the banshee screams of outrage of the self-serving Private Enterprise players can be heard by the dead.
Specifically, the US (and Australia) failed to ratify the Kyoto Protocols in 1998 – thereby delaying the march-to-market of the new energy paradigm/s that might have replaced fossil fuels before the debt mountain imploded.
Contrary to what Mr. Al Gore would have us believe, the issue had nothing to do with CO2. The issue was purely economic in nature. I believe history will come to show that this single decision not to ratify the Kyoto Protocols will turn out to have been one of the most damaging errors of human judgment in all of human history.
From the perspective of this author – who has been applying his mind since the 1980s looking for alternative energies to replace fossil fuels – there appear to be a few technologies which warrant our laser-like focus of attention:

1. High Lipid Algae might provide an alternative source of carbon based raw material to produce the synthetic materials previously extracted from coal and oil; and might also provide an alternative source of food in an environment of climate change which, the evidence suggests, is not being caused by high CO2 levels in our atmosphere. (See: http://www.warwickhughes.com/icecore/ and http://joannenova.com.au/2009/09/breaking-news-cherry-picking-of-historic-proportions/ ). Having said this, High Lipid algae can be grown anywhere, even in the desert – and it is carbon neutral. We need to stop wasting our intellectual energy on debating the merits and demerits of carbon dioxide and we need to stop kowtowing to the “demands” of the fossil fuel industries. This focus on Emissions Trading Schemes is likely to be more destructive than constructive. The very idea is a nonsense and it is causing us to take our eyes off the ball. The legacy fossil fuel industries are cash cows. Stop treating them like spoiled children. Stop sheltering them. Stop handing out freebies and tax breaks to selected corporations which populate these industries. Cash cows are for milking. Enact bipartisan legislation to increase their taxes. End of discussion.

2. Nuclear Fission might replace coal for the purpose of electricity generation but there are some serious philosophical questions associated with the wisdom of any decision to embrace this technology. Most technical problems associated with nuclear fission appear to be soluble. For example, it has been recently discovered that a strain of the Escherichia-coli bacteria can be used to “eat” radioactive nuclear waste and thereby neutralize it. (See: http://www.inhabitat.com/2009/09/22/e-coli-cleans-up-nuclear-waste-cheaply-efficiently/ ). However, it happens that ingestion of E-coli is potentially extremely debilitating to human health. The point of principle is this: Nuclear Fission might be nothing other than an attractive bauble which will allow us to trade one set of problems for another set. In an era of “sound bites” we have become predisposed to want “quick fix” solutions. Nuclear Fission may or may not offer a solution but it will be a serious error of judgment to just rush at nuclear fission like a bull at a gate.

3. On-board production of hydrogen in motor vehicles can augment the efficiency of the gasoline combustion engine by up to 33%. (See: http://ntrs.nasa.gov/archive/nasa/casi.ntrs.nasa.gov/19770016170_1977016170.pdf ). Conceptually, if all 600 million legacy motor vehicles across the planet were fitted with this technology it would lead to up to a 33% reduction in carbon emissions from motor cars. Conceptually, given its current pricing and the current price of oil, this technology can pay for itself within 3 years by the savings it facilitates at consumer level. Conceptually, embracing this technology will also open the R&D door to solving the core technical problems associated with hydrogen, namely that production of hydrogen is an “energy sink” (for the moment) and that hydrogen is (at this point in time) difficult to store because it leeches through the walls of most containers.

4. Gold (Au) may have has some physical properties at nano-particle level which might allow it – in modified format – to become electrically superconductive. This is a high speculative proposition and there is very little evidence to support the proposition. However, if true, it might facilitate a new form of energy storage which, in turn, will render PV Solar and Wind both more practical and more effective as means of scavenging energy from the environment. In this analyst’s view it is certainly justifiable that the proposition be seriously investigated. Here is a link which leads to a patent that was registered by Mr. David Hudson on December 28th 1989. http://www.rexresearch.com/ormes/ormes.htm . Of course, there has been a lot of extraneous “noise” that has grown up around this invention (ball). But we need to filter out all the noise and focus on the ball.

5. Another highly speculative proposition flows from claims by some inventors that they have found alternative (exotic) ways of scavenging energy from the environment. There is one particular claim that the energy that resides within an atom might be released from that atom by harnessing and applying the physical properties of magnetism. Whilst Maxwell’s Equations enable us to fully understand the behaviour of magnetism, we do not yet fully understand what “drives” this behaviour. It has been this analyst’s experience that the claims of inventors of so-called “over-unity” energy technologies are typically met with knee jerk reactions of derision on the part of mainstream physicists. Over-unity energy claims appear to fly in the face of at least two of the laws of thermodynamics. The author hereof is not predisposed to either accept or reject any claim based on personal prejudice. What one needs in the current environment of burgeoning crises is an open mind and a propensity to investigate thoroughly the claims of anyone who is making a prima facie case for over-unity energy technology/ies. But “prima facie” needs to incorporate three things:

a. Energy output must be demonstrably measurable as being greater than external energy input. Explanation: We need to remember that if we are scavenging energy from the environment, then the appearance of greater energy output than is input may flow from the sum total of (less than) external energy input and energy scavenged. Those who would argue that this is theoretically impossible – and who would justify this argument by pointing to that law of thermodynamics which states that everything in the Universe is tending towards entropy (decay) – are willfully ignoring the demonstrable fact that a larger amount of energy is released from an atom of uranium or thorium by nuclear fission technology than is required as an input to cause that uranium or thorium atom to release its energy. In this sense Nuclear Fission is in itself an over-unity energy technology. Are mainstream physicists going to reject nuclear fission technology based on the second law of thermodynamics? Can we stop taking the intellectual high ground on over-unity energy technology claims long enough to investigate these claims? Look up “Leo Szilard” on the internet and think in terms of chain reactions. http://en.wikipedia.org/wiki/Leó_Szilárd

b. The inventor needs to be able to explain why his/her claims are true from a theoretical perspective, regardless of whether we believe a priori (prejudicially) that this theoretical explanation is true or false. Conceivably (in all humility) we might find that whilst our current understanding of physical principles may be correct, it is also inadequate. As the legal profession has taught us: There is “the truth” and then there is “the whole truth”. In this analyst’s view, any mainstream physicist who would reject anything on the grounds that he/she is in possession of “the whole truth” is being demonstrably subjective against a backdrop where “science” is/should be all about objectivity.

c. There should be an absence of paranoid secrecy on the part of the inventor, subject to signing by the technical assessors of appropriately worded Confidentiality Undertakings with penalty clauses which are drafted for the purpose of protecting the interests of the inventor.
In my recently published novel, Beyond Neanderthal, I examine items 4 and 5 above in some detail. A copy of the novel may be ordered via Amazon or via the web link below.

Brian Bloom
Author, Beyond Neanderthal
www.beyondneanderthal.com

Beyond Neanderthal
Once in a while a book comes along that ‘nails’ the issues of our times. Brian Bloom has demonstrated an uncanny ability to predict world events, sometimes even before they are on the media radar. First he predicted the world financial crisis and its timing, then the increasing controversies regarding the causes of climate change. Next will be a dawning understanding that humanity must embrace radically new thought paradigms with regard to energy, or face extinction.

Via the medium of its light hearted and entertaining storyline, Beyond Neanderthal highlights the common links between Christianity, Judaism, Islam, Hinduism and Taoism and draws attention to an alternative energy source known to the Ancients. How was this common knowledge lost? Have ego and testosterone befuddled our thought processes? The Muslim population is now approaching 1.6 billion across the planet. The clash of civilizations between Judeo-Christians and Muslims is heightening. Is there a peaceful way to diffuse this situation or will ego and testosterone get in the way of that too? Beyond Neanderthal makes the case for a possible way forward on both the energy and the clash of civilizations fronts.

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Tue 13 October 2009
Keeping our eyes on the ball

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