Image from Mumbai

Mumbai after the smoke has cleared – The Big Picture – Boston.com

Moshe Holtzberg, the 2-year-old orphan of the rabbi and his wife slain in the Mumbai Jewish center

Moshe Holtzberg, the 2-year-old orphan of the rabbi and his wife slain in the Mumbai Jewish center, cries during a memorial service at a synagogue in Mumbai, India, Monday, Dec. 1, 2008. Holtzberg will fly to Israel Monday on an Israeli Air Force jet with his parents' remains and the Indian woman who rescued him, an Israeli Foreign Ministry spokesman said. (AP Photo) #

via Scott Williams

Who Do We Believe / Trust?

Stoneleigh at The Automatic Earth raises some tough questions. These questions are unpleasant to consider, but ignoring them puts us in the same boat as the executives in the investment banks.

Link: The Automatic Earth: Debt Rattle, December 1 2008: Trying to avoid the unavoidable, but at what cost?.

It was recently revealed that Citigroup's analysis of their credit default swaps deliberately ignored the risk of a declining housing market. These are all indicative of the same reasoning, exactly the kind of reasoning Nouriel Roubini has been talking about – raving about – on TV panels for the last few weeks. This is exactly the kind of reasoning that all of the now-failed financial institutions have been relying upon and that has driven the derivatives bubble. If the risk of failure is minimal, this reasoning went, then it need not be accounted for, nevermind that the consequence is of catastrophic and systemic collapse. This debt crisis should teach us many things, only one of which is that risk assessment must include an assessment of the consequences of failure, however remote the likelihood of occurrence may be. The final irony, of course, is that the choice to systematically ignore those risks is what made their occurrence inevitable.

The financial industry bought into the ridiculous idea that risk which is low probability can be safely ignored. Now the federal government, whose advisors and actors come from the same blinkered pool, is doing the exact same thing. Is it lunacy to say that these hundred-billion dollar guarantees against balance sheets with unknown assets are in fact bluffs at serious risk of being called? In addition, now every big company is coming hat-in-hand to the government. States and municipalities are also at the door. But the only thing going on here is debt being shifted around. Privatize the profits, socialize the losses – a familiar refrain lately.

One might ask, why bail Citigroup and not American Auto? A cynical answer might be that because the people doling out the money are white collar Wall Street banksters, they don't care about blue collar workers, and because the people helping them dole out the money are government cronies, they don't like unionized blue collar workers. Can it go deeper than that? This Grand Theft America isn't just about class divisions and distaste for unions, as real as those motivations may be. This is about continuing the failed prescriptions of a consumer fantasy – that money could be made from money ad infinitum without the need to actually produce anything. Unfortunately, money chasing its own tail generated a mountain of debt large enough to threaten the integrity of the system.

The Energy Planning Dilemma

John Michael Greer describes the difficulty of planning a society without cheap energy supplies. Excerpts below.

The bottom line: Unless we have a technological breakthrough that provides cheap energy without polluting, the post-industrial society of the future will look very different than an extension of today's world.

Link: The Archdruid Report: Looking for Roong Thisdara.

There are two widely held beliefs these days about how we can deal with the end of the age of petroleum. The first claims that we simply need to find another energy source as cheap, abundant, and concentrated as petroleum, and run our society on that instead. The second claims that we simply need to replace those parts of our society that depend on cheap, abundant, concentrated energy with others that lack that dependence, and run our society with them instead. Most people in the peak oil scene, I think, have caught onto the problem with the first belief: there is no other energy source available to us that is as cheap, abundant, and concentrated as petroleum; the fact that we want one does not oblige the universe to provide us with one, and so we might as well plan to power our society by harnessing unicorns to treadmills.

The problem with the second belief is of the same order, but it’s much less widely recognized. Toss aside the parts of our society that depend on cheap, abundant, concentrated energy, and there’s nothing left. Nor are the components needed for a new low-energy society sitting on a shelf somewhere, waiting to be used; we’ve got some things that worked tolerably well in simpler agrarian societies, and some promising new developments that have been tested on a very small scale and seem to work so far, but we have nothing like a complete kit. Thus we can’t simply swap out a few parts and keep going; everything has to change, and we have no way of knowing in advance what changes will be required.

The core fact of the matter, after all, is that what we are trying to invent here – a society that can support some approximation of modern technology on a sustainable basis – has never existed on Earth. We have no working models to go by; all we have, again, is a mix of agrarian practices that seem to have been sustainable, on the one hand, and some experiments that seem to be working so far on a very small scale, on the other. Our job is to piece something together using these, and other things that don’t exist yet, to cope with future challenges we can only foresee in the most general terms.