Hospitality & Design Summit 2009 - 154

- Speaker Perspectives James Kunstler’s 2009 Forecast, continued Some of these other newer projects will now never get underway— they have missed their window of opportunity with so much capital leaving the system—and so the hope of offsetting very-near-future depletions in old giant oil fields looks dimmer and dimmer._ Those depletions are very serious. For instance, Mexico’s super-giant Cantarell oil field, the second-largest ever discovered after Saudi Arabia’s Ghawar field, has shown a 30 percent depletion rate in the past year alone. (Pemex had forecast a 15 percent rate entering the year.) Cantarell provides over 60 percent of Mexico’s total production, and Mexico is America’s third largest source of imports—just after Saudi Arabia (number two) and Canada (number one). Obviously, Mexico soon will lose its ability to export oil, and as that occurs, America is going to feel more than pinch—more like a two-by-four upside the head. In short, remorseless depletion is underway and we are less likely now than even a year ago, to make up for it. At some point, then, demand, even if slightly lower, will catch up with declining supply. My prediction for 2009 is that we will see two things occur, possibly at the same time: a resumption of rising prices, and spot shortages. I say this because the global economic fiasco is sure to produce geopolitical friction, and inasmuch as America has to import almost three-quarters of the oil we use, the prospect for trouble is great. The tragic part of all this, of course, is that the temporary plunge in oil prices has prompted an incurious American public to assume, once again, that the global oil predicament is some kind of a fraud. Given the flood tide of fraud they have been subject to in banking and investment matters, I suppose you can’t blame them from thinking that everything is some kind of a scam. Given feeble car sales this season, there are reports that an increasing percentage of those sold now are trucks and SUVs. Though I give Boone Pickens high marks for stepping up to the leadership plate, I’m not altogether on board with his energy proposal for swapping natural gas for gasoline in motor fuels while we swap out wind power for natural gas in electric power generation. I don’t believe that the ballyhooed shale-gas-plays of the last few years will prove-out long-term, as some hucksters claim. They are expensive to drill and run, and they all tend to deplete very quickly—around one year. I’m not convinced we have the capital or the resources even to come up with the steel necessary to drill for it. Anyway, the last thing we need is a way to prolong our car-dependency. In the meantime, there are still those who hope (as described above) that various alt.energy systems will insure the continuation of Happy Motoring. This is an idle hope, and 2009 will be very sobering for those who imagine that hybrid cars, or electric cars, or “air” cars, or natural gas cars, or any other kind of car technology will save the day. Even if President Obama mounts an “infrastructure stimulus” program, it will not keep up with all the necessary routine road repair that our highway system requires. The extreme financial hardship faced by localities and states insures that they will have to postpone a lot of expensive highway maintenance— even if the federal government fixes a big bunch of bridges and tunnels—and so we face the interesting prospect that our roadway systems will enter their own deadly zone of systemic failure even before the whole car issue is settled. I am waiting to see whether Mr. Obama will undertake a restoration of passenger railroad service. I’ve said enough about this in the past, but it’s worth reiterating that a failure to get comprehensive passenger rail service going will be a sign of how fundamentally unserious we are as a nation. tHe SPecter oF inFlation This is the “other shoe” that a lot of people are waiting to drop. Right now we are caught up in a compressive debt deflation as mortgages stop “performing” and loans of all kinds are welshed on. Since money is loaned into existence, and a great many loans are not being repaid, then a lot of money is going out of existence. That’s what I mean when I say that capital is leaving the system. At the same time, the Federal Reserve has made good on its promise to drop money from helicopters if necessary to prevent an implosion of the banking system (as all that older money goes out of existence), and so it’s now a question as to when the amount of new money will exceed the disappeared old money. (Of course when I say money, I mean “money,” because we are dealing here in a shadow realm of assumed value.) In any case, there is bound to be a lag period between the time that the Fed’s money is dropped from the choppers and the time it actually filters through the banks and other recipients to the so-called “real economy” of people who buy and sell real things. The credible estimates I hear run between six and 18 months. I’ll only venture to guess that we could see the start of serious inflation sometime in 2009. To some extent, all currencies are now free-falling together, some at slightly faster rates than others, but the situation of the U.S. dollar is so grotesquely dire, and our structural imbalances so monumental, that it is hard to imagine that our currency will not win the international race to the bottom. Gold resumed its movement upward against the dollar a week before Christmas, and that may be an early sign. The government—and anyone badly in debt— benefits much more from inflation than deflation, so every effort will be made to avert the latter. The trouble lies in the government’s dumb incapacity to control dangerous things that it sets in motion, so that an inflationary campaign to avoid compressive deflation can so easily lead to a fiasco of super or hyper inflation—the kind that kills governments and turns societies into murderous monsters. I’ll forecast that the U.S. dollar is worth 40 percent of its current value by next Christmas. geoPoliticS Well, now, who the hell knows what’s in store. Aside from a few bombs here and there, and pirates skulking around the horn of Africa, the world scene was miraculously free of major incidents in 2008—perhaps the worst being a toss-up between the September Mumbai bombings and the fiasco in Georgia, where the U.S. prompted Georgia President Mikheil Saakashvili to send troops into the South Ossetia region and the move was answered by overwhelming force from neighboring Russia, leaving the U.S. looking feckless and retarded for our troubles. But otherwise, there wasn’t a whole lot of action out there. Until the last few days of the year, that is. I’m sure the ever-growing cohort of American anti-Semites who send me emails will be tickled when I assert that the Hamas rocket attacks against Israel of recent days guaranteed a sharp response from Israel—and now, of course, Hamas is playing the crybaby card: “ what’d we do to deserve this ?” Well, you fucking fired a bunch rockets into Israel. Did you ever hear of cause-and-effect? This matter requires no further elucidation, except that it seems to suggest a ramping back up of hostilities. I wonder if it is the beginning of a new coordinated offensive by Islamic extremism aimed at taking advantage of the West’s current economic plight (and the West’s probable aversion hospi tal i ty des i g n su m m i t 2009

Hospitality & Design Summit 2009

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