POSTED: 24 SEPTEMBER 2008 - 7:00pm HST

Adieu, Stage 1 Collapse!

image above: "Roman Ruins with Figures" by Giovanni Paulo Panini (1730's)

by Dmitry Orlov on 23 September 2008 on

In February of this year, I wrote The Five Stages of Collapse, connecting each stage of collapse – financial, commercial, political, social and cultural – with a specific mental milestone, where faith in some aspect of our status quo is shattered in the face of dramatically altered circumstances. Here is what I had to say at the time about Stage 1: Financial Collapse:

"Financial collapse, as we are currently observing it, consists of two parts. One is that a part of the general population is forced to move, no longer able to afford the house they bought based on inflated assessments, forged income numbers, and foolish expectations of endless asset inflation. Since, technically, they should never have been allowed to buy these houses, and were only able to do so because of financial and political malfeasance, this is actually a healthy development. The second part consists of men in expensive suits tossing bundles of suddenly worthless paper up in the air, ripping out their remaining hair, and (some of us might uncharitably hope) setting themselves on fire on the steps of the Federal Reserve. They, to express it in their own vernacular, 'fucked up,' and so this is also just as it should be.

The government response to this could be to offer some helpful homilies about 'the wages of sin' and to open a few soup kitchens and flop houses in a variety of locations including Wall Street. The message would be: 'You former debt addicts and gamblers, as you say, 'fucked up,' and so this will really hurt for a long time. We will never let you anywhere near big money again. Get yourselves over to the soup kitchen, and bring your own bowl, because we don't do dishes.' This would result in a stable Stage 1 collapse - the Second Great Depression.

However, this is unlikely, because in the US the government happens to be debt addict and gambler number one. As individuals, we may have been as virtuous as we wished, but the government will have still run up exorbitant debts on our behalf. Every level of government, from local municipalities and authorities, which need the financial markets to finance their public works and public services, to the federal government, which relies on foreign investment to finance its endless wars, is addicted to public debt. They know they cannot stop borrowing, and so they will do anything they can to keep the game going for as long as possible.

About the only thing the government currently seems it fit to do is extend further credit to those in trouble, by setting interest rates at far below inflation, by accepting worthless bits of paper as collateral and by pumping money into insolvent financial institutions. This has the effect of diluting the dollar, further undermining its value, and will, in due course, lead to hyperinflation, which is bad enough in any economy, but is especially serious for one dominated by imports. As imports dry up and the associated parts of the economy shut down, we pass Stage 2: Commercial Collapse.

So far so good. In terms of mental milestones, we can tease apart financial collapse into a number of psychological levees that are being breached one by one. The first one to go was people's faith in home equity: that the value of their homes will serve as a nest egg to sustain them in retirement. What we have been witnessing for the past week or so is the demise of people's faith that their investment portfolio will sustain them.

It is still easy to find investment advisers who will tell you to 'go long on equities' because, you see, 'eventually the economy will recover,' but their reassuring words are starting to sound like a death rattle to all those whose retirement savings suddenly look laughably inadequate.

Eventually, faith in the magical, mystical properties of the US Dollar will be lost, but it seems very important to all concerned to make the process gradual. It seems safe to assume that in the limit, as time goes to infinity, the value of the US Dollar goes to zero.

It also seems safe to assume that it is negligible even for finite, foreseeable exents forward in time. The problem is making it look like a continuous function. If the value of any given type of dollar-denominated garbage jumps to zero suddenly (because it cannot be sold at any price) then that produces a discontinuity: a rift in the fake financial space-time continuum.

This is what the current bailout plan is generally about. It is not about making anyone here happy: the fascists think that smells of socialism, the socialists think that it smells of fascism, and everyone (except for Bush, Paulson and Bernanke) agrees that it smells. Some people would like to see some heads roll, but as Robespierre discovered in the course of the French revolution, that just puts you knee-deep in headless aristocratic corpses, still with neither bread nor cake to feed to the peasants.

Speaking of peasants, everyone continues to repeat that the bailout is being financed by 'the taxpayer,' although it is unclear why our soon-to-be jobless and destitute taxpayer should be expected to cough up an extra trillion or more. The taxpayer may soon need a bailout too. If this mythical taxpayer actually tried to borrow her share of a trillion dollars against her future earnings, what sane person would want to give her that loan? Clearly, the gratuitous mention of the taxpayer is just a ruse designed to hide the rather obvious truth.

The bailout is actually going to be financed by foreign interests that hold US Dollar assets. Yes, the value of their holdings will go to zero, but they do not want this to happen suddenly. They wish to continue redeeming their US Dollar holdings for all manner of things of value, from capital equipment and intellectual property, which can be expatriated, to farmland and other means of production, which can be used in situ to grow food, mine ore, and so forth, which are then expatriated. There is some optimal function for this great unwinding, which will allow foreigners to expropriate the maximum amount of value in the minimum amount of time before their efforts to redeem their remaining US Dollar holdings stop paying for themselves in terms of the value of the available stuff.

As this process runs its course, the US will lose access to imports. Most significantly, it will find it more and more difficult to obtain the 2/3 of the transportation fuels that come from abroad, which are needed to keep the economy functioning. And that will bring on Phase 2: Commercial Collapse. That is probably what we are getting for Christmas this year, or shortly thereafter.
In the meantime, enjoy Stage 1. You will miss it once it's over.




POSTED: 17 SEPTEMBER 2008 - 7:00pm EST

Collapse of Wall Street precedes
complete disintegration of system

image above: detail of cartoon page from "The Survivor" at

by Jan Lundberg on 16 September 2008 in

[Attention: due to the loss of my mother yesterday, there's been a slight delay in bringing you Culture Change articles. I must travel soon for both personal and Culture Change reasons, so there’s the chance for hiatuses or delays in bringing you reports, essays and alerts. The cure for this is another volunteer webmaster or the funding to pay existing volunteer webmasters. Your ideas and support hold the key. Thank you. - JL]

Do not be distracted by the hysteria of the news-media circus regarding the “credit crunch” and the other names given the process of collapse. The monster under the bed is real, but most of us are hiding under the covers. By embracing our fears we can roll with the changes. At the same time look at who and what are propping up a hopeless, destructive system, and take action. It’s not difficult.

The “progressive” or alternative press mostly subscribes to the constant corporate media/government lie that things will get back to “normal.” Hope for a good transfusion of fresh blood from a new president is periodically based on misplaced faith in the handmaidens of the status quo, Democrats or Republicans. Regardless of this quandary, we had best understand better the fact of collapse.

A big-picture analysis includes the loss of cheap, abundant energy that cannot be replaced. The news media studiously ignores this while pretending to present real news on energy and the environment. This policy is followed also by the mainstream or Establishment Environmentalists who are paid publicists for the technofix. Some of their work on pointing out problems and brushfires is invaluable, but you don’t hear a car-free-lifestyle message from them, and you probably won’t -- until that’s everyone’s only option.

From Orion magazine’ new interview of James Gustave Speth we see how radical Establishment-environmentalism can ever get:

“We’re going to grow phenomenally. At the current rates, the world economy will be twice as big as it is today in seventeen years. That carries the potential for enormous additional destruction. The environmental movement has a lot of wonderful things about it, and it’s accomplished a lot. But it’s not up to this challenge of dealing with this amount of environmental loss and destruction. The fundamental thing that’s happened is that our efforts to clean up the environment are being overwhelmed by the sheer increase in the size of the economy. And there’s no reason to think that won’t continue.” [Really? Hello Gus, peak oil? – JL]

Truthout is a major outlet for news that, like its bigger competitors, does not recognize collapse and refuses to air it. Sans sports and celebrity gossip, Truthout epitomizes the best of the liberal and progressive online press, and is dependable for its convenience and occasional excellent finds. But almost every day Truthout’s offerings reflect mainstream assumptions about the continuation of politics, economics and social relationships as we know them. Take this example from their Sept. 15th dispatch regarding the “top news story” (i.e., the Great Collapse, or the historic unraveling): in its article “Big Banks Go Bust: Time to Reform Wall Street” Dean Baker writes,

'With the demise of Fannie Mae, Freddie Mac, IndyMac, Bear Stearns and now Lehman Brothers, we've been treated to the failure of more major financial firms than during any year since the Great Depression. The sight of rich bankers getting the boot might be lots of fun if it were just a spectator sport. Unfortunately, we are in the game with these clowns.'

Mr. Baker, count me out. The clowns are indeed prominent, but the future right up ahead will be different. How different and how soon depends in part on our rejecting untenable and unsustainable institutions and practices destroying us. Mr. Baker wants to 'restore sanity to the salaries paid on Wall Street.' Oh, that'll save the planet?

We may be wondering if this is really it: general collapse, or a major hiccup for the system resulting in mere recession. Some of us activists privately admit we want collapse now, because it will only be worse the longer it’s delayed, and the planet’s climate further compromised. We look forward to Humpty Dumpty going all the way down -- not because we like to see anyone suffer, but we see clearly that the continuation of predation on the ecosystem and on exploited humanity have no future except everyone’s extinction. Ah, but radical thoughts like this are to be marginalized and hidden from the people, by reformers playing politics.

Here is how the economic landscape will look, with attendant unraveling of the already frayed and twisted social fabric. Let’s summarize in terms of (A) coming days and weeks, (B) then perhaps months for the intense phase of collapse, and (C) post collapse:

The coming days and weeks

More bank failures. Government default as well. Revaluing the currency. Shortage of fuel, food and jobs. Otherwise, things are still working as to turning the tap and getting water, throwing the switch and getting electricity, and we see the various officials and cogs in the machine at their posts.

During the buildup to the collapse as seen by price increases, bankruptcies and bailouts, the elite’s careful top-down selection of commentators and officials’ pronouncements keep assuring us that a recession and a shake-out are possibly underway, but that the economy -- globally corporate and guzzling energy that costs more due to (hush!) depletion -- is of course going to always be with us and eventually rebound. The resumption of growth is a given, like believing in gods in heaven forever.

Height of collapse

“The revolution will be televised” only up to a point. Then the workers at the controls will head for their homes or head for the hills. As Republican Congressman Roscoe Bartlett told me, studies show that police and firemen bail after fives days of riots and other chaos, to protect their own homes. The height of collapse will be seen, felt and experienced, rather than documented (whether with commercials or thanks extended to the so-and-so foundation).

Overpopulation may be finally considered to be obvious, but what's the difference by then? Die-off will be underway, for the simple reason that petroleum for food production and delivery (and storage, packaging and cooking) has been curtailed for various reasons, chiefly depletion. The violent desperation in the streets and fields may appear to some to just be a breakdown in order. Some loud voices may promise to restore it, but on a national level in the huge U.S. it’s not likely.

Post collapse and a new world paradigm

When the dust settles, out of rubble come the survivors. “Hi, remember me, we were neighbors but for some reason never met.” The petroleum infrastructure has collapsed, negating the promise of alterative energy across the board. But small, decentralized mini-systems will be jury-rigged, and the bicycles will be traveling and hauling whatever. Food gardens and other essentials will be done through our evolutionary cooperation making a comeback. The family will again be the basis of (previously lost) community. Tribes will form for common defense and solidarity.

What’s your tribe? Are you living in an actual community yet? You will be, if you survive collapse. Is it the vague future when you will learn those basic skills your grandparents knew?

When society reconstitutes itself after the Great Collapse, I predict that greed-schemes and domination will be unattractive and seen as anti-social. With lower population the status of the common man and woman is much higher, as history has shown.

What’s pointing the way now for a livable future:

Ecovillages, intentional communities, anarchist collectives, Community Supported Agriculture, bicycle culture, animal husbandry, natural building techniques, biochar, sail transport network, and the path of the peaceful spiritual warrior. And more, add away. If you are not a part of these things, or aren’t supporting them, then you are definitely part of the problem and will be left behind in today’s Consumer Age. Whether the latter is a good or bad memory, we'll see. I'm an optimist.

The way out from capitalism’s collapse is two-fold: (1) local-based economics without the growth syndrome. (2) Nature is the way. Nature is local; we cannot be everywhere. Nature is “the real thing,” although Coca Cola drummed it into millions of people’s heads that just anything can be the “real thing,” even a bottle of sugar and other drugs and chemicals in water. Such products, mainly for their plastic packaging, are the enemy of Mother Nature -- this means you. You are Mother Nature. If we can’t stop our addictions to soy-milk drink-boxes, who are we fooling that we are hip and green? You may ask, What’s a better local drink? Answer: Water, and bring your own cup or make one out of your hand in the stream.

“To build the new economy”?

This is dreamland, perpetrated by those who hold steadfastly to their blinders. The proponents are paid to keep up their sing-song of a promised land. They won’t tell you that a single interdependent national or therefore global economy is not only unfeasible, but highly undesirable. Yet, it is believed in by those who do not understand peak oil and those lacking in actual community. They’re cut off from their evolutionary life boat.

The Green Jobs Now campaign touts a “green economy strong enough to lift people out of poverty.” Poverty as defined by what -- not being able to buy corporate products? If people take over some land and make it productive, respecting the existing wild species, they may achieve subsistence and yet be called impoverished. But they are the survivors. The green job that gives you money to buy stuff and services from unaccountable strangers is just more wage slavery, but we are urged to embrace it as if there’s nothing else conceivable.

As long as we believe in fairy tales of a new and better America for clean, continued consumption, instead of first dismantling the present system and building true alternatives on a local scale, we are eating BS for breakfast lunch and dinner.

Instead of “greenjobsnow” it would be more accurate to say, “green-job snow job.” Is it being framed in a constant growth paradigm? Where will the training be done? What about the fast-disappearing energy to forge the green economy? A critical analysis of the work-force aspects of the green jobs promise is from the San Francisco Bay Guardian newspaper (see link below; note that the head of the Ella Baker Center for Human Rights left to head a green jobs center). Green Jobs Now “is a project of Green For All, 1Sky, the We Campaign…” Clearly, green is meant to mean dollar bills’ color, as the old expression was.

We need green (natural) living, not green jobs. Why continue to keep capitalism alive, or give away your time? Keep it personal, keep it in the community, and remember that energy is not the thing we most need, but rather the essential things that today are almost always too energy intensive.

Accept the deal right off the shelf
But I have the right to defend myself

(from “I Walk The Earth” -- click to listen to a monaural one-track demo (MP3) from 2003 for the next Depaver Jan eco-song album)

Further reading: “Greening away poverty: If green is the new black, eco-populism is the new environmentalism” by Vanessa Carr, April 30, 2008:

Gus Speth interview “Change Everything Now - One of the nation's most mainstream environmentalists says it's time to get a lot more radical”, by Jeff Goodell, September/October 2008, Orion magazine

“Big Banks Go Bust: Time to Reform Wall Street”, Truthout, Sept. 15, 2008, by Dean Baker, The Campaign for America's Future:


Green Jobs Now:

see also:
Island Breath: Last Ditch Effort 9/15/08
Island Breath: Peak Global Economy 7/29/08
Island Breath: Fannie Mae & Freddie Mac Mess 7/14/08
Island Breath: The Perfect $torm Approaches 6/28/08
Island Breath: Report from the Bank of Banks 6/28/08