end_of_suburbia (![[info]](http://l-stat.livejournal.com/img/userinfo.gif){kind=small} end_of_suburbia) wrote,@ 2006-09-05 15:33:00 |
|
Refuse to lose
I've been pondering peak oil preparations a lot lately - specifically financial preparations. Like most people, one of my personal concerns is personal debt. The last thing I want to do is enter The Long Emergency dragging any kind of liability behind me. Already a lot of people are now past the point of no return. North American "consumers" are more indebted than any time since the last Great Depression, with consumer credit in the US totalling almost 2.2 trillion dollars. How will 2.2 trillion in debt get paid off in a shrinking economy once we pass the peak of global oil production?
Today I stumbled over an article at Safehaven.com by Jas Jain entitled Peak Debt! He writes:
While I don't concur with the author's belief that the price of oil will fall quite as low as $25 a barrel, I do agree that debt is a more immediate concern than oil depletion. I've often said that the collapse of the housing bubble, and therefore the global economy in general, will put us into a hole, and it's peak oil, and the lack of economic growth, that will keep us from ever getting out of that hole.
So what's the ultimate strategy for preparing financially? Well, I'm not a financial advisor, so I can't give anyone advice. But I can tell you what I might have done if my circumstances were different.
The first step was to take stock of my existing living arrangement. I'm lucky to be living in a modest-sized, new home that has slightly-better-than-average energy efficiency. Although it's heated with natural gas, I have a high-efficiency woodburning fireplace insert as a backup. The layout of the house takes advantage of passive solar energy. The large yard already produces a couple hundred pounds of food annually, with more capacity being developed every year. I live on the edge of a small town, with rail service and two rivers, surrounded by an abundance of farmland. I think that the assets of my arrangement outweigh any foreseeable liabilities in a post-carbon world - assuming my crystal ball is working correctly. And upon consideration, my debt load is not unmanageable. For now.
If I evaluated my situation and came to the conclusion that I was living in the wrong place, I would have considered selling my home. Thanks to a real estate bubble that was inflated on cheap and easy credit, at this point in history my house will sell for more than it ever will again in my lifetime. Unfortunately, in an inflated real estate market, it would be difficult to find anything more suitable that I would be able to afford. Instead of trading up, I would store some furniture and household items and move into a small apartment, while waiting for the housing market to collapse. The income from the sale of the house would be invested in physical precious metals. Not stocks, but physical metals. Once the bubble bursts, the value of those metals will increase substantially, while house prices plummet, and I would be able to buy whatever I needed: property, tools and materials. Apparently, I'm not the only one thinking this way. Check out Peak Oil Solution Theory by Tate Ulsaker.
Yes, it's a bold strategy. But the world we are about to experience is going to require some big changes in thinking - and calculated risks. As James Kunstler predicts, there are going to be a lot of "economic losers" out there. Refuse to be one of them.
Barry
I've been pondering peak oil preparations a lot lately - specifically financial preparations. Like most people, one of my personal concerns is personal debt. The last thing I want to do is enter The Long Emergency dragging any kind of liability behind me. Already a lot of people are now past the point of no return. North American "consumers" are more indebted than any time since the last Great Depression, with consumer credit in the US totalling almost 2.2 trillion dollars. How will 2.2 trillion in debt get paid off in a shrinking economy once we pass the peak of global oil production?
Today I stumbled over an article at Safehaven.com by Jas Jain entitled Peak Debt! He writes:
I am no expert on Peak Oil, but Peak Oil is not the urgent problem that the world faces, economically, or politically. The problems of the supply-demand of oil will play out over a longer period and its effects would be spread over a longer period of time than that of the Peak Debt, which are lot more immediate. As a matter of fact, it has been the rapidly rising debt (racing towards the peak), which in turn has "fueled" a worldwide construction boom, that has resulted in the high prices for oil over the past 4 years and not the realization of the problem of Peak Oil. During the coming global depression, within this decade, the price of crude oil should fall below $25 a barrel and there will be glut due to sharply falling demand. I realize that these are not the concerns that people have today as long as the American consumer keeps borrowing. But, for how long?
While I don't concur with the author's belief that the price of oil will fall quite as low as $25 a barrel, I do agree that debt is a more immediate concern than oil depletion. I've often said that the collapse of the housing bubble, and therefore the global economy in general, will put us into a hole, and it's peak oil, and the lack of economic growth, that will keep us from ever getting out of that hole.
So what's the ultimate strategy for preparing financially? Well, I'm not a financial advisor, so I can't give anyone advice. But I can tell you what I might have done if my circumstances were different.
The first step was to take stock of my existing living arrangement. I'm lucky to be living in a modest-sized, new home that has slightly-better-than-average energy efficiency. Although it's heated with natural gas, I have a high-efficiency woodburning fireplace insert as a backup. The layout of the house takes advantage of passive solar energy. The large yard already produces a couple hundred pounds of food annually, with more capacity being developed every year. I live on the edge of a small town, with rail service and two rivers, surrounded by an abundance of farmland. I think that the assets of my arrangement outweigh any foreseeable liabilities in a post-carbon world - assuming my crystal ball is working correctly. And upon consideration, my debt load is not unmanageable. For now.
If I evaluated my situation and came to the conclusion that I was living in the wrong place, I would have considered selling my home. Thanks to a real estate bubble that was inflated on cheap and easy credit, at this point in history my house will sell for more than it ever will again in my lifetime. Unfortunately, in an inflated real estate market, it would be difficult to find anything more suitable that I would be able to afford. Instead of trading up, I would store some furniture and household items and move into a small apartment, while waiting for the housing market to collapse. The income from the sale of the house would be invested in physical precious metals. Not stocks, but physical metals. Once the bubble bursts, the value of those metals will increase substantially, while house prices plummet, and I would be able to buy whatever I needed: property, tools and materials. Apparently, I'm not the only one thinking this way. Check out Peak Oil Solution Theory by Tate Ulsaker.
Yes, it's a bold strategy. But the world we are about to experience is going to require some big changes in thinking - and calculated risks. As James Kunstler predicts, there are going to be a lot of "economic losers" out there. Refuse to be one of them.
Barry
