IN THIS SECTION

A Look Back – A Look Ahead: 1929 vs 2009

When the Great Depression started in the early 1930s America was a very different place. Largely agrarian, there were many more small towns and farms, as suburbia had not yet been built out. People had modest incomes, but still maintained a higher savings rate than today. Few owned their own automobile, and freeway driving did not exist. People did not buy common goods and services on credit as much as today. There were no credit cards. The excesses in the stock market that triggered the crash aside, most people saved up and paid cash for the things they needed. Transportation over long distances relied on a fairly robust rail system, not diesel driven trucks. Our river transport system was still a vital industry. Energy (oil) was cheap and abundant. Industry and manufacturing was the core of the economy, as the “service sector” had not yet been born. People also had real skills in areas that would produce goods with value. There were cobblers, welders, steelworkers, masons, farmers, carpenters aplenty. All the information age jobs, the pixel pushers of our era, were as yet unheard of. People could build things, fix things, grow things. They could hunt, fish, garden, smoke and dry meats, can vegetables and fruits, and had a lot of skill with simple hand tools. This chart outlines the major differences.

	1930s	Now
Living situation	Agrarian: Small towns & farms	Urban: Cities & Suburbia
Energy	Cheap and Abundant	Expensive and Declining
Autos	Few Privately Owned	Autotopia
Transportation	Robust Rail & River Transport	Diesel Trucks and Air Cargo
Manufacturing	Strong Mfg Base & Steelworks	Weak MFG - all off shore
Trade Balance	Net Exporter	Net Importer
Dollar	Backed by Gold/Silver	Backed by thin air
Employment	Produced real goods	Largely "Service" oriented
Safety Nets	Weak to None	Unemployment, FDIC, SS
Savings	Positive Savings Rate	Negative Savings Rate
Personal Debt	Managable Until Market Crash	Exceeds Great Depression
Personal Credit	Seldom Used	$2.56 trillion in consumer debt
Basic Survival Skills	Many & practical	Few practical crafts or skills
Temperament	True Grit and Character	Never Experienced Adversity
Life Style	Growers & Builders	Consumers and Dreamers
National Debt	Managable	Staggering
Debt to GDP Ratio	160%	300%
Average leverage	10 to 1	30 to 1

How do you rate yourself in those life skill categories? Can you grow your own food and preserve it? How about modern skill sets? Ask the average person to try and fix an ailing computer today and you will see that they have few practical skills compared to the Depression era folks. That may be so, but we still have lots of creativity, and innovation has spurred the computer and Internet revolution to create a new economy based on ideas and information. While these qualities cannot be underestimated, you cannot eat information to survive in times of severe hardship.

We have no manufacturing base to speak of, and must import all basic necessities except food. Instead we deal in ideas. Much of our “wealth” was the product of  investment strategies, once clever ideas that have now been shown to be completely foolhardy. As a result, we have more than twice the per capita and national debt load of the Depression era. Our energy situation is much worse as we look ahead. While the price of oil has declined on diminishing world demand, the fact remains that we still use most every barrel of oil produced, and all the world’s major fields are now in decline. The small farms are largely gone now, with much of our topsoil, and our food is mostly delivered by large centralized conglomerates. When something goes wrong in the food chain, it can have dramatic consequences--like the salmonella outbreak in peanut products that was traced to one large supplier.

We have one advantage that is clear. The Depression era did not have the social security safety nets beneath people today, like unemployment benefits, FDIC insurance on their bank deposits, and social security itself.  In its place, however, there was an inner toughness and grit that allowed people to make do and pull through, and also a willingness to care for others when the hard times came. Families moved in with parents, grandparents, or went out to weather the storm on the farm. In so many ways, that generation was better prepared to endure a crisis as grave as the one they actually faced. WWI and the flu pandemic that followed it were well remembered. Almost no one alive today has experienced anything close to such a crisis. It remains to be seen whether today’s population, accustomed to instant gratification, can take on a level of suffering equivalent to that experienced in the Great Depression. How would typical middle class people handle circumstances grave enough to put them in a bread line today... day, after day, after day?

Will all our accumulated financial assets and wealth protect us? Let’s take a look at the folks who might seem to have the best chance of weathering the storm in terms of assets—the Baby Boomers who have had a lifetime to accumulate wealth in housing, 401ks, and other investments. Luck may have run out for the people who presently hold most of the middle class wealth in this country. The Baby Boom generation, of which I am a proud member, was perhaps one of the most gifted and graced generations of all time—and also pampered and spoiled in many ways as well. They were, after all, the children of “The Greatest Generation,” an intrepid lot who weathered the first Great Depression in their childhood and teenage years, and then took on half the world in WWII as they entered adulthood, bringing home a decisive victory in four years time. They then built the great “Pax Americana” that their children lived in, giving them a much better life than their own. The Boomers lived in what may seem like the eye of a storm, where the leading edge were these tumultuous events of depression and world war, followed by the waning squalls of Korea and Vietnam. Then the calm, pacific eye settled over their lives as they completed college, married, started families, and worked out their careers. They lived a privileged and spoiled life, building out the unsustainable suburbia most people now live in, but also gave rise to the “information era,” with former nerds becoming the titans of the computer industry, and the subsequent development of the Internet transformed the world with the “Dot Com” boom. Along the way they  accumulated a great deal of wealth.

The Boomers, and successive generations, lived their lives within the peaceful domain of this eye in the storm clouds of history. It has been a life of instant gratification, cheap and abundant energy, easy access to credit and capital, unheard of freedom of expression and personal movement, an explosion of technology and exponential access to information, a bountiful harvest of food, and a never ending cascade of consumer products, each aimed at making the world a tad more convenient and comfortable. No matter what might ail you in this country, there is a product or a pill to offer immediate relief.

Yet, with the coming of 9/11, the first swelling winds of the trailing edge of the storm began to reassert themselves, ushering in renewed war and a calamitous collapse of our banking system, markets, and general economy. James Quinn of “Seeking Alpha” wrote about this time of cyclical crisis now coming to the Baby Boomers and had this to say about their initial response after 9/11: “President Bush urged Americans to spend to defeat terrorism, while Alan Greenspan lowered interest rates to historically low levels. This was like waving a red cape in front of a bull. The materialistic, self actualizing, individualistic Boomers went on the grandest borrowing and spending spree in the history of the world. Their mission: Save the world from terrorism by buying a 6,000 sq ft McMansion, the largest HDTV, the biggest Hummer, and most expensive Rolex. Boomers running Wall Street were happy to oblige with loans and complex derivatives to finance the Mardi Gras like celebration of capitalism.”

Indeed, Boomers never saw a boom they didn’t like. It does indeed look like the Baby Boomers will be now be treated to a taste of what it feels like to go through a Depression. But while their parents faced their economic crisis in the fullness of youth, the Boomers will all face this current crisis in the years of waning strength and health, the graying years. The retirement they hoped would be padded by thick retirement accounts, abundant home equity, and a well diversified portfolio of stocks is literally slipping from their grasp. They have been shocked to see a steady erosion in all three, with housing losing nearly 45% all across the nation, destroying their equity, their 401Ks down nearly as much, and the stock market suffering severe declines. The S&P 500 just turned in the worst 10 year decline in its history, but the real crash was sudden and swift at the end of 2008. Yahoo Finance reported: “The Dow Jones industrials, in what amounted to a slow-motion crash, plunged 2,400 points over eight straight trading days in October. By late November, retirement accounts were cut almost in half.”

Carl Denninger of Market Ticker has an even more dire view of this: “We stand on the edge of the failure of all of American's retirement assets.  Literally all of them. Buried in some of the earnings reports of the last quarter are the fact that half of the market capitalization of some firms was wiped out in the last year due to pension fund shortfalls as a consequence of the stock and credit market swoon. If the Treasury and Stock market both sell off as I believe both can… if the current policies are continued essentially ALL American Retirement Assets will be destroyed – 401Ks, IRAs, and both private and public pension systems. Total losses through these systems is likely to reach 80-90%, and the Boomers start retiring "en-masse" just a few years from now.”

So, with all the things they worked a lifetime for to shelter them in their golden years slipping away, the gold looks like it will be turning to tin, and for some that will be a begging cup, for an astounding 40% of all Baby Boomers have no retirement savings at all! They will have to keep working to survive, competing with younger generations in a time of severe unemployment. How will they face the coming years of hardship? Statistics show that 60% of people over 65 years old end up needing some kind of long term care, and the average cost of a year in a nursing home is now $73,000. has the government even begun to think about this while they shovel money at the banks. Got Milk?

The Crash - Then and Now

Let’s look at how each crisis played out as a way of anticipating how this one might resolve itself. Both were preceded by a speculative boom, stocks and bonds in the late 1920s, and housing and credit  in the years preceding our crisis. In both cases buying on margin, or excessive over leveraging, created a dangerous imbalance. The market crash of ’08 was largely in response to the already deflating housing crisis, which was caused by reckless lending and leveraging into securities on the part of the banks. A look at these two charts will show that the market crash, in each crisis, was remarkably similar. Both markets suffered a 47% decline in the short run.

The DOW was at 7850 on Feb 12, below the 8K line in the chart above, or about 45% off its high. (Note: And we have also formed a similar post-crash rally in the spring of ‘09. If the pattern holds, the market is headed for another plunge.) After the markets crashed, the subsequent loss of confidence became a panic and started bank runs, though they were quite different in the way they played out. When bank runs started in the 1930s they were severe and unchecked, and spread through towns and cities all across the nation. There was no FDIC, and when a bank ran out of vault cash it was toast. People lost their savings and deposits, some rendered destitute overnight. But our situation was equally dire, though largely hidden from the public. When the Fed came to congress for TARP they had been stunned to see, in just two hours time, a withdrawal of over $550 billion from the money markets on Sept 18, 2008. Even the injection of over $100 billion into the system failed to bring the electronic bank run under control, forcing the Fed to simply shut the markets down. The same fear, rumor mill, and panic psychology that started bank runs in the Depression was at work, only now it could wreak havoc at the speed of light.

It took some time for the bank failures to ripple through the Depression era economy. In just a few months, however, we’ve lost institutions like Fannie & Freddie, AIG, Bear Stearns, Lehman, Merrill Lynch, Morgan Stanley, WaMu, Wachovia, all needing some rescue plan, and these last two banks had thousands of branches, something that was not the case when a bank failed in the 1930s. Back then a small town may have only been served by one or two local banks. Today our large banks have branches in thousands of cities. Pundits often minimize the impact of our banking crisis today by asserting that we have only had a relatively small number of  bank failures to date, 69 as reported by bankimplode.com, and 13 in 2009. They compare this to the thousands of bank failures during the depression, and  though just over 10,000 banks failed in the 1930s, WaMu alone had 5400 branches in our era. Wachovia had 5800 branches. These banks failed, in every sense of the word. They had to be seized by the FDIC and/or merged into another institution to prevent their imminent collapse. What if JP Morgan Chase and Wells Fargo had not absorbed them? For that matter, JP Morgan Chase, Citigroup and BofA, and Wells our largest remaining banks, are all technically insolvent today! Their securities exposure is ungodly, and they could not function now without massive infusions of government money. While WaMu and Wachovia were “saved,” the institutions that came to their rescue are floundering on stormy seas as well.

The intense de-leveraging of overblown “assets” is what caused the Great Depression, and it is what is causing the havoc in our economy today as well. Our big banks have watched the market pass judgment on their long term health, with a staggering loss of market value over the last 90 days. All the government TARP I and II plans that have pledged Fed and taxpayer money to the rescue of the banks have been about finding ways to try and manage the de-leveraging that will be necessary before these banks can be deemed solvent again. They continue running now only because of trick accounting that refuses to mark the massive securities hidden on their books  to current market value, and because the FDIC guarantee on deposits has prevented any massive popular run on their deposit base. (Though I note it failed to stop customers from withdrawing $12 billion in a few days time when WaMu toppled, and there were similar runs on the Wachovia deposit base as well). Can the bad securities bets can be hidden in “the other set of books” indefinitely? One day they will have to come out and face the light of reality—and that light is called the free market, shunned, held in contempt these days by these rescue policies, but still there, and passing severe judgment on banks like Citigroup and BofA as their stock price is now worth less than a cup of coffee.

The banks know they are insolvent, which is why they have frozen lending and credit to try and rebuild or preserve their shaky capital base, and it is this action that has had such a dramatic effect on Main Street, freezing credit, killing off consumer spending, causing businesses to pronounce mass layoffs and nearly bringing the real economy to a complete standstill. This has caused a dramatic and precipitous decline in production across the whole world. In fact, production declines are dwarfing those of the Great depression in both scope and time. The chart below shows declines for major countries in just five months compared to declines for the first three years of the great depression. Again, our collapse is far deeper, and it is happening much faster.

It should come as no surprise, then, that our employment picture will be every bit as bleak as during the Great Depression, no matter how the government tries to sugar coat their “official” numbers. While things are not yet close to the suffering of the Depression era, there is no doubt they are heading that direction.  Unemployment continues to rise at an alarming rate. Look at this graph showing the plunge.

We have decisively broken through what the chart analysts would call “a line of resistance” when it comes to unemployment. Most recessions would reach a bottom in job loss at this level, and start back up, but data shows we are headed for more unemployment. Instead of bottoming and starting a gradual decline, the bottom seems nowhere in sight. The clever doctoring of the official number of 7.4% is just wishful thinking at best, pure deception at worst. Statistics are like bathing suits: they reveal just enough to be interesting while concealing that which is essential. And the essential truth is this--real unemployment, (U-6), is now around 13.6% in this country. It is well on its way to reaching the 25% mark that characterized the 1930s Depression, but accelerating much faster than in the 1930s. Here’s a look at how unemployment built in the years following the 1929 market crash, through 1939.

Notice how the unemployment numbers did not peak for three to years after the crash?  In real terms, then, we could say that our present situation sees us on a pace to equal or exceed those depression era unemployment numbers, in real terms, not the sugar coated government  U-1 or U-3 stat that really has no meaning, but the U-6 figure that gets us closer to reality on the street, which was already 13.5% in Dec of 2008, 13.9% in January of 2009, and 14.8% by the end of February 2009. The Depression did not reach this level until June of 1931, or seven quarters (21 months) after the market crash of 1929! We are there already, before a single quarter has elapsed! What does this bode for our long term unemployment picture in the months ahead? Let us hope that the government stimulus can stop job loss as a top priority , for this is where the real pain will be felt. Heavy unemployment will keep spending down and hamper the recovery more than anything else.

If, however, the stimulus does not have any immediate effect, job losses will continue to mount, and it is difficult to see where they can recover at the moment. Education and Health Care are two areas holding up fairly well, though cash strapped states are already getting pink slips ready for teachers. These will hit in June when current teaching contracts end and people are not offered new positions. Schools will compensate by increasing class sizes. The money in the stimulus plan for remodeling schools may help the construction trades a bit, but it won’t put laid off teachers back to work for some time. The money in the stimulus package for modernizing health care records will add jobs to an already stable category, but people who take them will need computer skills, and some retraining may be required.

Construction trades will get a boost in the infrastructure projects, but probably not until 2010. Other areas of the economy don’t hold out many new job prospects. Housing construction is dead in the water, and real estate will only continue to lose jobs. This was an area that doubled in just five years time during the boom. Now the contraction and job loss here will be equally severe. There are, in fact, scores of “realtors” who haven’t sold a home in a year. They are effectively unemployed, though they don’t show up in the government stats. Retail and service sectors, particularly in travel, tourism and the restaurant business will continue to lose jobs as small businesses fail.

Where will the new 4.5 million jobs President Obama wants to create come from? If we had heavy investment in light and high speed rail we could create a lot of jobs, but the money allocated to that in this new stimulus is insignificant, (about $10 billion). Instead we will rebuild roads, freeways and bridges, many in need of repair to be sure, but this is another offering at the altar of the almighty automobile. We have to start “moving about the country” differently in the long run. Auto use will continue to experience price shocks in the years ahead due to ever declining oil inventories. Prices are low now, and we have plenty of oil in the system because of the slowdown, but we must plan for recovery and look decades ahead, not simply a few fiscal quarters. The personal auto has had a long and glorious reign, but its glory is fading. While cars will be around for many decades, we need to revitalize our rail system, which is much cheaper and more efficient than diesel trucks for the movement of freight. Yes, the trucking industry is also facing  hard realities ahead.

Alternative energy may be another area that we can look to for new jobs, but at the moment investment here is negligible. So we really aren’t “stimulating” anything that is going to offset the tremendous layoffs in housing, real estate, finance, sales, retail, or help small business. And the stimulus plan also relies a great deal on tax breaks and incentives, things that take a long time to kick in and have any real effect. You get to write off your sales tax if you buy a car, a benefit you won’t realize until April of 2010 when you file your 2009 tax return. How does that help people without cash or credit buy today? This bodes ill for employment prospects for at least the next three years.

In the last 90 days we have lost 1,750,000 jobs, and the layoff rate seems to accelerate each month, now doubling “normal” recessions in it ferocious pace.  It’s not just low end service sector or retail jobs, Bloomberg, quoting the Labor Department, reported: “not even an education can shield you from losing your job. The unemployment rate among workers with college degrees rose to 3.8 percent, the highest level since records began in 1992.” Wall Street Journal reported: “The Labor Department’s official unemployment rate hit 7.6% in January, and its jump from 4.9% a year earlier marks the largest annual increase in the unemployment rate since 1975. But the government’s broader measure of unemployment hit a more stunning level: 13.9%, up from 13.5% in December. The figure, which largely accounts for people who have stopped looking for work or can’t find full-time jobs, is the highest since the Labor Department started the data series in 1994.”

Of all things, it is this rising unemployment that will bring the Depression home to Americans. And if past history is any guide, it looks like we cannot look for a recovery for many years to come. But perhaps the greatest fallacy in our thinking is the belief that any “recovery” would simply be a return to our old ways of buy now pay later; a return to rising house prices and the never ending revolving credit game; a return to the slicing and dicing of securities on Wall Street. I believe that recovery will be much different than we expect, and it will involve great changes in the way we live, work, buy, sell, trade and generally manage our lives. In effect, as James Kunstler is fond of saying, we will simply have to “make other arrangements.”

Change Ahead

Every economic crisis is a transformative period for the nation. Sean McCabe of the Atlantic.com describes it this way: “By what they destroy, what they leave standing, what responses they catalyze, and what space they clear for new growth, most big economic shocks ultimately leave the economic landscape transformed.” President Obama campaigned on change, and he is likely  to see just that in the years ahead. This crisis will not be easily fixed. All indications are that this is just the beginning of what looks ominously like the onset of another…well, let’s call a spade a spade, shall we? It’s a Depression—Capital D. But even if I have the honesty to face this reality, it does not mean that hope is gone and we only have despair in its place. As I have argued before, the world is not ending, it’s changing, and this does not mean that the changes coming are necessarily all bad. I believe that there will be pain, suffering and dislocation as our old life style dies and we are forced to build another way of life in this nation.

Some aspects of our old life will not change, in fact they will only continue to evolve. While some of our large cities are distressed, particularly in the old “Rust Belt” region, others are still growing and merging into large urban conglomerates. McCabe points to great city hubs like NY, Baltimore, D.C. or the bustling Great Lakes Region with Chicago. Even in smaller states like North Carolina we see cities weaving together into larger metro-conglomerates, like Raleigh-Durham, or the Greensboro-High-Point-Winston-Salem “Triad” as it is known to the locals there. These large cities will continue to be centers of innovation, with pools of talent and business opportunity. Other cities, like Detroit, may never recover their old vitality again. This crisis will test each region’s ability to adapt, innovate, evolve and transform. McCabe’s assessment: “While the crisis may have begun in New York, it will likely find its fullest bloom in the interior of the country—in older, manufacturing regions whose heydays are long past and in newer, shallow-rooted Sun Belt communities whose recent booms have been fueled in part by real-estate speculation, overdevelopment, and fictitious housing wealth. These typically less affluent places are likely to become less wealthy still in the coming years, and will continue to struggle long after the mega-regional hubs and creative cities have put the crisis behind them. The Rust Belt in particular looks likely to shed vast numbers of jobs, and some of its cities and towns, from Cleveland to St. Louis to Buffalo to Detroit, will have a hard time recovering.”

While the suburbia grew up around most great cities to service the old economy, something happened in the last 20 years that makes our present situation quite different. As corporations moved manufacturing off shore, the jobs lost here were replaced by a new kind of activity, one McCabe calls a “Creative Metabolism.” The computer era and the rise of the Internet have transformed the way many people work. Its growth was one of creativity, innovation, and ideas, and not muscle, steel, and manufacturing. Many people today can work virtually anywhere using the Internet, and do not need to be located in a suburb close to a major urban center as in previous decades. As McCabe explains it: “The economy is different now. It no longer revolves around simply making and moving things. Instead, it depends on generating and transporting ideas. (And to this I add “information”-JS) The places that thrive today are those with the highest velocity of ideas, the highest density of talented and creative people, the highest rate of metabolism. Velocity and density are not words that many people use when describing the suburbs. The economy is driven by key urban areas; a different geography is required.”

This new geography will retain the best of our vital city centers, but connect them to new islands of activity in the surrounding suburban rings, by rail, not smog choked freeways. McCabe argues for more mixed use zoning, development of smaller economic zones within residential areas that would not require someone to drive to get to needed services. James Kunstler, author of “the Geography of Nowhere” would agree that our living arrangements must be made more walkable, with better public transport, and less reliance on automobiles. McCabe describes this new geography this way:

“What will this geography look like? It will likely be sparser in the Midwest and also, ultimately, in those parts of the Southeast that are dependent on manufacturing. Its suburbs will be thinner and its houses, perhaps, smaller. Some of its southwestern cities will grow less quickly. Its great mega-regions will rise farther upward and extend farther outward. It will feature a lower rate of homeownership, and a more mobile population of renters. In short, it will be a more concentrated geography, one that allows more people to mix more freely and interact more efficiently in a discrete number of dense, innovative mega-regions and creative cities. Serendipitously, it will be a landscape suited to a world in which petroleum is no longer cheap by any measure. But most of all, it will be a landscape that can accommodate and accelerate invention, innovation, and creation—the activities in which the U.S. still holds a big competitive advantage.”

Hard times force innovation, toughness, frugality. Companies get leaner and more efficient. Populations migrate to find new centers of activity. People will also adapt to adversity in any number of interesting ways. We will see innovation, cooperation and care-taking from some, and opportunism and scamming from others. Some will join with groups of like minded souls to build and renew, others will prey upon their neighbors, or devise ways to cheat them. We are already seeing both. With new car sales dead, the used car trade is seeing an uptick. Yet every day some shyster posts a scam offering a great car at an unbelievable price. Anyone who answers the post soon learns the car is in another city, being sold cheap because the owner is shipping out to Afghanistan. The seller wants to handle payment through a third party escrow, and even agrees pay for shipping the car to the buyer--fat chance. It’s a simple scam that persists, like spam, because once in a great while someone is stupid enough to fall for it. Why do people cheat and steal? It depends on the character of each individual. We will see both Angels and Demons in the years ahead.

I believe the beginnings of positive grass roots change are already underway. We the People have done some amazing things in our day. Collectively, we are the United States of America. It isn’t a place, from sea to shining sea, or the government and its military. It isn’t the banks. It’s us, the people, all of us in this together. This ray of hope from the blog site “Freeacre” gets at what is already happening in hamlets and hollows all across America. The old way of life may be dead but: “What is alive is just beginning to emerge. I saw it this weekend at our Grange Farmers Market. Real people producing real products from home-based enterprises are going to re-make and re-take the world. You could sense it in the air. People were talking to each other, networking, planning on bartering and sharing resources, coming up with new ideas of what could work to get us through this disaster. Chili was being sold for a dollar a bowl. Home grown eggs and meat are being traded for firewood and computer expertise. Kids are helping out and feeling good about it.”

“Forget ‘growth,’ forget ‘jobs,’ forget ‘financial stability.’ What should their realistic new objectives be? Well, here they are: food, shelter, transportation, and security. Their task is to find a way to provide all of these necessities on an emergency basis, in absence of a functioning economy, with commerce at a standstill, with little or no access to imports, and to make them available to a population that is largely penniless. If successful, society will remain largely intact, and will be able to begin a slow and painful process of cultural transition, and eventually develop a new economy, a gradually de-industrializing economy, at a much lower level of resource expenditure, characterized by a quite a lot of austerity and even poverty, but in conditions that are safe, decent, and dignified. If unsuccessful, society will be gradually destroyed in a series of convulsions that will leave a defunct nation composed of many wretched little fiefdoms.”           - Dimitri Orlov

This is the kind of cooperation, innovation, caretaking, and positive change that will see us through this crisis. We’ll see Farmer’s Markets changing the way we buy food, and the return of home gardening. We’ll see bartering for goods and services replacing cash and credit, and building trust and cooperation as well. We’ll see empty commercial real estate being used for community co-ops, flea markets, and a new “underground” economy emerging. The extended family will grow to ease the isolation that plagues so many. It will be the end of corporate dominated distribution of goods and services, as we start to build an economy on our own.

The bottom line is that we will create a new way of life, at a lower level of consumption that is sustainable. As Dimitri Orlov states in the quote to the right, the priorities will change dramatically. Our lives will no longer be about growth, equity building, accumulation of wealth. They will be entirely concerned with food, shelter, transportation and security--or as I dubbed it in an earlier article “food, fuel and freedom.” Communities that make changes along these lines will survive. In fact, states are even now looking at options for going it alone. There are numerous bills in state legislatures invoking the 10th amendment and claiming the right to sovereignty should the government overreach its constitutionally appointed powers. These bills reference any attempt to curtail the right to bear arms, to enforce involuntary national service, or declare martial law, among other things, as federal acts that would trigger the resolution of state sovereignty.

We may find that communities will form little islands within the states themselves. Some have even contemplated issuing their own currency, good at all local businesses. Changes like this are a natural response to the crisis we are now facing. What the Good Old Boyz and the government do not yet quite fathom is the depth of this change, and how sweeping it will be. But it remains to be seen if we can adopt the life saving change strategies noted above. The inverse of that coin is social unrest, rising crime, or even anarchy. The choice is up to us.

John Schettler
Feb 15, 2009
 

For more on the changes ahead, and a roadmap provided by social prophets like James Kunstler, and Dimitri Orlov, read: The Road Ahead.

For a look at how you can prepare yourself for leaner times ahead, read: Surviving Hard Times

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