Not Your Grandma's Depression

    This isn't so funny anymore. Intimations of a July banking collapse rumbled though the Internet this weekend while mainstream news orgs like The New York Times and CNN pulled their puds over swift boats and Amy Winehouse's performance technique. Something is happening, and you don't know what it is, do you Mr. Jones...? to quote the master.
     What's happening is that American society is sliding into a greater depression than the one Grandma lived through. On the technical side, there has been unending controversy as to whether we're gripped by inflation or deflation. It's certainly deceptive. Food and gasoline prices are rising faster than the rivers of Iowa. But the prices of assets, like houses, stocks, jet-skis, GMC Yukons and pre-owned Hummel figurines are cratering as America turns into Yard Sale Nation.
     We're a very different country than we were in 1932. In that earlier crisis of capital, few people had any money but our society still possessed fantastic resources. We had plenty of everything that our land could provide: a treasure trove of mineral ores and the equipment to refine it all, a wealth of oil and gas still in the ground, and all the rigs needed to get at it, manpower galore (and of a highly disciplined, regimented kind), with fine-tuned factories waiting for orders. We had a railroad system that was the envy of the world and millions of family farms (even despite the dust bowl) owned by people who retained age-old skills not yet degraded by agribusiness. We had fully-functional cities with operating waterfronts and ten thousand small towns with local economies, local newspapers, and local culture.
     We had a crisis of capital in the 1930s for reasons that are still debated today. My own guess is a combination of a bad debt workout that sucked "money" into a black hole (since money is loaned into existence, but vanishes if the loans are not systematically paid back) plus a gross saturation of markets, meaning that every American who had wanted to buy a car or an electric toaster had done so and there was no one left to sell to. (The first round of globalism -- 1870 - 1914 -- had shut down after the fiasco of World War One.)
      Our debt problems today are of a magnitude so extreme that astronomers would be hard pressed to calculate them. By any rational measure our society is comprehensively bankrupt. From the federal treasury down to the suburban cul-de-sacs so much loaned money is either not being paid back, or is at risk of never being paid back, that the suckage of presumed wealth has passed through an event horizon out of the known universe into some other realm of space-time, never to be seen again in this realm. This would seem to be the very essence of monetary deflation -- money defaulted out-of-existence.
      This condition is partly disguised by both the loss of credibility of US currency and real-world scarcities of oil and food, but the upshot will be something at least twice as bad as the Great Depression of the 1930s: people with no money in a land with no resources (with manpower that has no discipline), hardly any family farms left, cities that are basket-cases of bottomless need, comatose small towns stripped of their assets and social capital, an aviation industry on the verge of death, and a railroad system that is the laughingstock of the world. Not to mention the mind-boggling liabilities of suburbia and the motoring infrastructure that services it.
     The banks have been doing their death dance for an entire year now, pretending that their problems are those of mere "liquidity" (i.e. cash-on-hand) rather than insolvency (no cash either on hand or in the vault and nothing else to sell to raise cash except worthless "creative" securities that nobody would ever buy). But the destruction of money (resulting from loans not paid back) is now so intense that the game of pretend has reached its terminal point. The question for the moment is exactly who and what will be crushed as these institutions roll over and die.
     Complicating matters is a global oil predicament that is really not hard to understand, but which the organs of news and opinion have obdurately failed to explicate for an anxious public. Call it Peak Oil. There are only a few elements of it you need to know. 1.) that demand has now permanently outstripped supply; 2.) that new discoveries are too meager to offset consumption; 3.) That under under the circumstances, the systems we rely on for daily life are crumbling. I've called this situation The Long Emergency.
     Our chances of mitigating this, and of continuing our current way-of-life is about zero. I've tried to promote the idea that rather than waste remaining resources in the futile attempt to sustain the unsustainable (i.e. come up with "solutions" to keep suburbia running), that we should begin immediately making other arrangements for daily life -- mainly by downscaling and re-scaling everything from farming to commerce to the way we inhabit the landscape -- but my suggestions have proven unpopular even among the "environmental" elites, who are too busy being entranced by new-and-groovy ways to keep all the cars running.
      So where we are at now is the equivalent of standing in the slop by the ocean shore under a gathering hundred-foot-high wave that is about to come crashing down on our heads. Since I sure don't know everything, I can't say how this will all play out in the months ahead, especially with the presidential election coming at the exact moment that voters will be turning on their furnaces for the cold and dark winter beyond. I would venture to say that so far our society as a whole has done a piss-poor job of comprehending the situation. But there is still the possibility, with four months of politicking left, that the nature of our predicament can be articulated in a way that few can fail to understand, the way Mr, Lincoln articulated the terms of the Civil War on the eve of its fateful outbreak.

(Not) Keeping Up with Our Parents: Just Being Middle Class Is Becoming out of Reach

By Nan Mooney, Beacon Press
Posted on May 20, 2008, Printed on May 21, 2008
http://www.alternet.org/story/85858/

The following is an excerpt from "(Not) Keeping Up with Our Parents" by Nan Mooney (Beacon, 2007).

Since the 1950s, what we've considered the American experience -- be it sock-hopping, suburban living, or SUV buying -- has been largely dictated by the professional middle class. In her 1989 social critique, Fear of Falling: The Inner Life of the Middle Class, Barbara Ehrenreich defined this mainstream population in terms of education, occupation, lifestyle and tastes, but also in terms of income. "Middle class couples," she wrote, "earn enough for home ownership in a neighborhood inhabited by other members of their class; college educations for the children; and such enriching experiences as vacation trips, psychotherapy, fitness training, summer camp and the consumption of 'culture' in various forms."

This thriving middle class didn't develop by accident. It emerged with the introduction of government and social policies designed to lift the country out of the Great Depression and sustain economic health in the postwar era. By the 1950s, a combination of social programs including Social Security, unemployment insurance, the GI Bill, and federal housing loans helped middle class salaries stretch. Employers supplied health insurance and pensions. A surge in suburban building made housing widely accessible. You no longer had to be a doctor or a businessman to afford a two-story Colonial with a dishwasher and a color TV. For a white male supporting a family -- the typical middle class profile at the time -- it was possible to work in an array of professions whereby you didn't necessarily get rich, but you could count on being fairly comfortable. A house, a job, a car or two in the garage, a fun summer vacation, these were absolute indicators of middle class success.

Economic realities have undergone seismic shifts since our parents' and grandparents' generations. Education and housing cost more. Incomes have leveled off for all but a small minority. Employers and the government supply few social safety nets, cutting health insurance and pensions and replacing them with new "benefits" like 401(k)s and health savings plans that benefit only those with income to set aside. But many of those middle class expectations set in place back in the '50s still hold.

Alongside our schooling in philosophy and economics, today's college-educated professionals have been conditioned to see ourselves as among the financially stable, mainstream haves. Many of us attended what are considered strong academic institutions. Others come from families with comfortable financial backgrounds. Our childhood friends, our college roommates, the couple we met at that holiday party are those same lawyers and financiers who've hit the financial jackpot, driving multiple Mercedeses and buying $2 million starter homes. We know we aren't like them. We've aspired to different career and financial goals, those more rooted in education, the arts or public service. But, given our often-similar backgrounds and educations, it's clear we aren't entirely unlike them either. This rising and dramatic economic inequality among college-educated professionals, leaving so many of us to struggle while a select few enter the strata of the "super rich," was not supposed to be part of the package.

When we read about the middle class squeeze, we tend to think blue collar -- the machinist who used to make $25 an hour now making $15, the vocationally trained worker whose job just got cut. But what about the social worker who makes $30,000 a year, the environmental scientist who makes $40,000, the college professor who makes $50,000? The rules of the game have changed. The educated professional middle class experience no longer guarantees two cars in every driveway, or even the driveway itself. Instead we face relatively low-paying jobs in fields requiring a high-cost education, increasing mortgages, student-loan and credit card debt, less employer or government help with health care, retirement, education and child care, and an overall higher cost of living. As the gap between the rich and the middle class widens, a huge segment of that once-comfortable center section is finding that reality means plummeting financial and emotional security and lack of control over our lives.

Difficult times

Diana, 36, is a licensed psychologist with a PhD in clinical psychology. She splits her four-day workweek between two jobs: maintaining her own private practice and working as an assessment director for a nonprofit where she supervises and helps place school counselors. Though her income varies, she typically earns about $35,000 a year. Her husband, Byron, who has a BA in engineering, makes $40,000 as a technical writer for a patent attorney. They're both contract workers, getting paid on a per-project or per-client basis, so the size of their paychecks fluctuates from month to month. On months when the money coming in doesn't stretch quite far enough, they turn to credit cards to pay bills and buy groceries. They're currently carrying $17,000 in credit card debt.

Before the birth of their son five years ago, Diana worked 80-hour weeks as a clinician at a major research hospital in Cincinnati. "I was making $38,000 a year and working nonstop," she recalls. "The administration promised me raises and promotions, but they never came through. Instead, they demoted me when I came back from maternity leave. So I cut back to part-time work and opened my own practice."

The couple now has two children, a 5-year-old son and a 5-month-old daughter, plus a third on the way in the spring.

"This child was unplanned," Diana admits. "And I'm terrified how we're going to afford her. We haven't even recovered from the financial hit we took on my last maternity leave."

Both Diana's previous pregnancies were difficult, and she anticipates having to cut back her work hours as this one advances. In addition, her son suffers from a kidney disease that requires occasional hospital stays. The family has health insurance through Byron's job, but any days her son spends in the hospital are days Diana has to take off work.

Up until a month ago, the family paid $1,200 a month for child care, which included preschool for her son and day care for the baby. But when the day care shut down -- the family who owned it sold the building to real estate developers -- Diana and Byron decided the most economically feasible choice was to keep the kids home, hopefully until her son starts kindergarten in the fall.

"I'm only in the office two days a week and my husband works at home, so it's the best option right now," she explains. "We're saving on the child care bill, but we're also getting less work done, which means less money coming in. Until I had kids, I had no idea how insanely expensive child care would be. We'll see how long we can keep this up."

Though they own their house in a Cincinnati suburb -- a fixer-upper they bought six years ago and "put back together piece by piece all by ourselves" -- it currently contains very little equity. They pay $1,150 a month on a 30-year fixed-rate mortgage, and two years ago they maxed out their home equity line of credit to purchase the condominium that houses Diana's office space, plus two offices she rents out to other therapists. The 15-year mortgage on that property, plus condo fees, come to $750 a month. Diana also still pays $450 a month in student loans, a graduated plan that will go up to $550 next year, when their new baby is 6 months old.

"We're definitely not doing as well as my working-class parents did," Diana tells me. "My father owned his own garage for 30 years, and my mother worked for him. They raised seven kids on what he made, and though we didn't live extravagantly, we never wanted for anything. I was the first one in my family to go to college."

Diana and Byron have no savings left to raid and no equity, except for the $10,000 invested in Diana's office space. Though she had a 401(k) from her hospital job, Diana cashed it out last year to float them through her maternity leave. Neither she nor Byron have room for raises or promotion in their current jobs, save an annual cost-of-living increase, so the only way to boost their income is for Diana to add hours in her private practice.

"I feel like we've cut every corner we can cut," she says. "We don't take vacations. We never go out. Right now, I just keep my fingers crossed that nothing breaks. We need a new roof and new tires for the car. And we're going to get hit hard by taxes this year, because we haven't been able to set anything aside."

She wonders if she and Byron made some sort of crucial mistake along the way, if they should have sought out more lucrative and less personally rewarding careers, moved to a bigger or smaller city, invested less of their money in real estate or more. She sees neighbors buying a third car and remodeling their kitchens and worries what it will be like for her children growing up among kids who have everything, when they're struggling each week just to pay their bills.

"I'm scared," she tells me, her voice cracking. "I'm scared we'll never be able to retire. I'm scared we won't be covered for health care. I'm scared we won't be able to send our kids to college. We've never had much, but before, I always felt like we were doing our time. We were working our way toward a more comfortable future. That doesn't seem true anymore. At this point, I see no way out at all."

In the past few decades, this country has seen a dramatic economic polarization between educated professionals, dividing them into the very few very rich, and the many like Diana and Byron whose financial lives are chronically unstable and insecure. We're discovering that college or even graduate school is no longer enough. Having a full-time job is no longer enough. You can do everything you're supposed to do to "make it" in America and still wind up scrambling and scared.

The financial insecurity that's come to haunt so many educated professional middle class lives provides a powerful wake-up call about the extent of compromised choices in America today. It's pushing us away from many of the lower-paying public service professions that are essential to a well-functioning society like teaching, social work, and careers in the nonprofit sector, it's making us question whether we can afford to have families, and it's increasing the number of economic crises -- like bankruptcies and home foreclosures -- striking the middle-class population. Such insecurity obliterates the standard fallback that if only every worker had access to an education and a job they too could achieve the American dream. And it speaks to a shift that runs far deeper than just our financial state.

The economics

Why this dramatic change? The economics are simple and well documented. We're earning less and having to pay for more. Earnings for college graduates have remained stagnant for the past five years, but the costs of housing, health care and education have all risen faster than inflation. The share of family income devoted to "fixed costs" like housing, child care, health insurance, and taxes has climbed from 53 percent to 75 percent in the past two decades. Though a college degree still earns you a bigger paycheck than a high school one, the price of a four-year education has grown increasingly dear. Between 2000 and 2004, tuition rose 32 percent at four-year public colleges and 21 percent at private colleges, requiring the majority of students to take out loans to fund their educations.

Once we hit the workforce, those rising numbers do an about-face. Real earnings for those with four-year college degrees have flattened out since 2003, not even rising to keep pace with inflation.

Graduates quickly discover that many careers requiring a high level of education don't come with equally high-level salaries. Even the money we do make tends to arrive under tenuous circumstances, with middle class incomes subject to the dramatic peaks and dives economists refer to as income volatility. A typical annual drop has gone from 25 percent to as high as 40 percent. That means a couple like Byron and Diana, earning $75,000, could dip to just $45,000. In a single year. To add discomfort to discomfort, long-term unemployment is also booming, and the long-term unemployed are older, better educated, and more likely to be professionals than the general unemployed population.

When it comes to supporting a family, those numbers start climbing once again. Raising one child through age 18 costs a middle-income family roughly $237,000. Child care alone runs, on average, between $3,803 and $13,480 a year per child, with accredited care facilities charging as much as $5,000 more per child than their nonaccredited counterparts. And despite the surge in dual-income households since the 1970s, there has been no accompanying double-up on discretionary income. Once we cover all the major fixed-cost expenses, we're now relying on two incomes to support a lifestyle that used to require one.

"(Not) Keeping Up with Our Parents" by Nan Mooney (Beacon, 2008). Read more about the book and her work at Nan Mooney.com.

When Change Is Not Enough: Seven Steps to Revolution

By Sara Robinson, Campaign for America's Future
Posted on February 22, 2008, Printed on February 22, 2008
http://www.alternet.org/story/77498/

"Those who make peaceful evolution impossible make violent revolution inevitable." -- John F. Kennedy

There's one thing for sure: 2008 isn't anything like politics as usual.

The corporate media (with their unerring eye for the obvious point) is fixated on the narrative that, for the first time ever, Americans will likely end this year with either a woman or a black man headed for the White House. Bloggers are telling stories from the front lines of primaries and caucuses that look like something from the early 60s -- people lining up before dawn to vote in Manoa, Hawaii yesterday; a thousand black college students in Prairie View, Texas marching 10 miles to cast their early votes in the face of a county that tried to disenfranchise them. In recent months, we've also been gobstopped by the sheer passion of the insurgent campaigns of both Barack Obama and Ron Paul, both of whom brought millions of new voters into the conversation -- and with them, a sharp critique of the status quo and a new energy that's agitating toward deep structural change.

There's something implacable, earnest, and righteously angry in the air. And it raises all kinds of questions for burned-out Boomers and jaded Gen Xers who've been ground down to the stump by the mostly losing battles of the past 30 years. Can it be -- at long last -- that Americans have, simply, had enough? Are we, finally, stepping out to take back our government -- and with it, control of our own future? Is this simply a shifting political season -- the kind we get every 20 to 30 years -- or is there something deeper going on here? Do we dare to raise our hopes that this time, we're going to finally win a few? Just how ready is this country for big, serious, forward-looking change?

Recently, I came across a pocket of sociological research that suggested a tantalizing answer to these questions -- and also that America may be far more ready for far more change than anyone really believes is possible at this moment. In fact, according to some sociologists, we've already lined up all the preconditions that have historically set the stage for full-fledged violent revolution.

It turns out that the energy of this moment is not about Hillary or Ron or Barack. It's about who we are, and where we are, and what happens to people's minds when they're left hanging just a little too far past the moment when they're ready for transformative change.

Way back in 1962, Caltech sociologist James C. Davies published an article in the American Sociological Review that summarized the conditions that determine how and when modern political revolutions occur. Intriguingly, Davies cited another scholar, Crane Brinton, who laid out seven "tentative uniformities" that he argued were the common precursors that set the stage for the Puritan, American, French, and Russian revolutions. As I read Davies' argument, it struck me that the same seven stars Brinton named are now precisely lined up at midheaven over America in 2008. Taken together, it's a convergence that creates the perfect social, economic, and political conditions for the biggest revolution since the shot heard 'round the world.

And even more interestingly: in every case, we got here as a direct result of either intended or unintended consequences of the conservatives' war against liberal government, and their attempt to take over our democracy and replace it with a one-party plutocracy. It turns out that, historically, liberal nations make very poor grounds for revolution -- but deeply conservative ones very reliably create the conditions that eventually make violent overthrow necessary. And our own Republicans, it turns out, have done a hell of a job.

Here are the seven criteria, along with the reasons why we're fulfilling each of them now, and how conservative policies conspired to put us on the road to possible revolution.

1. Soaring, Then Crashing

Davies notes that revolutions don't happen in traditional societies that are stable and static -- where people have their place, things are as they've always been, and nobody expects any of that to change. Rather, modern revolutions -- particularly the progressive-minded ones in which people emerge from the fray with greater rights and equality -- happen in economically advancing societies, always at the point where a long period of rising living standards and high, hopeful expectations comes to a crashing end, leaving the citizens in an ugly and disgruntled mood. As Davies put it:

"Revolutions are most likely to occur when a prolonged period of objective economic and social development is followed by a short period of sharp reversal. The all-important effect on the minds of people in a particular society is to produce, during the former period, an expectation of continued ability to satisfy needs -- which continue to rise -- and, during the latter, a mental state of anxiety and frustration when manifest reality breaks away from anticipated reality ...

"Political stability and instability are ultimately dependent on a state of mind, a mood, in society...it is the dissatisfied state of mind rather than the tangible provision of 'adequate' or 'inadequate' supplies of food, equality, or liberty which produces the revolution."

The American middle class was built on New Deal investments in education, housing, infrastructure, and health care, which produced a very "prolonged period of objective economic and social development." People were optimistic; generations of growing prosperity raised their expectations that their children would do even better. That era instilled in Americans exactly the kind of hopeful belief in their own agency that primes them to become likely revolutionaries in an era of decline.

And now, thanks to 28 years of conservative misrule, we are now at the point where "manifest reality breaks away from anticipated reality;" and the breach is creating political turbulence. The average American has seen his or her standard of living contract by fits and starts since about 1972. This fall-off that was relieved somewhat by the transition to two-earner households and the economic sunshine of the Clinton years -- but then accelerated with the dot-com crash, followed by seven years of Bush's overt hostility toward the lower 98 percent of Americans who aren't part of his base. Working-class America is reeling from the mass exodus of manufacturing jobs and the scourge of predatory lending; middle-class America is being hollowed out by health-care bankruptcies, higher college costs, and a tax load far heavier than that of the richest 2 percent. These people expected to do better than their parents. Now, they're screwed every direction they turn.

In the face of this reversal, Davies tells us, it's not at all surprising that the national mood is turning ominous, from one end of the political spectrum to the other. However, he warns us: this may not be just a passing political storm. In other times and places, this kind of quick decline in a prosperous nation has been a reliable sign of a full-on revolution brewing just ahead.

2. They Call It A Class War

Marx called this one true, says Davies. Progressive modern democracies run on mutual trust between classes and a shared vision of the common good that binds widely disparate groups together. Now, we're also about to re-learn the historical lesson that liberals like flat hierarchies, racial and religious tolerance, and easy class mobility not because we're soft-headed and soft-hearted -- but because, unlike short-sighted conservatives, we understand that tight social cohesion is our most reliable and powerful bulwark against the kinds of revolutions that bring down great economies, nations and cultures.

In all the historical examples Davies and Brinton cite, the stage for revolution was set when the upper classes broke faith with society's other groups, and began to openly prey on them in ways that threatened their very future. Not surprisingly, the other groups soon united, took up arms, and rebelled.

And here we are again: Conservative policies have opened the wealth gap to Depression levels; put workers at the total mercy of their employers; and deprived the working and middle classes of access to education, home ownership, health care, capital, legal redress, and their expectations of a better future for their kids. You can only get away with blaming this on gays and Mexicans for so long before people get wise to the game. And as the primaries are making clear: Americans are getting wise.

Our current plutocratic nobility may soon face the same stark choice its English, French, and Russian predecessors did. They can keep their heads and take proactive steps to close the gap between themselves and the common folk (choosing evolution over revolution, as JFK counsels above). Or they can keep insisting stubbornly on their elite prerogatives, until that gap widens to the point where the revolution comes -- and they will lose their heads entirely.

Right now, all we're asking of our modern-day corporate courtiers is that they accept a tax cut repeal on people making over $200K a year, raise the minimum wage, give us decent health care and the right to unionize, and call a halt to their ridiculous "death tax" boondoggle. In retrospect, their historic forebears might have counseled them to take this deal: their headless ghosts bear testimony to the idea that's it's better to give in and lose a little skin early than dig in and lose your whole hide later on.

3. Deserted Intellectuals

Mere unrest among the working and middle classes, all by itself, isn't enough. Revolutions require leaders -- and those always come from the professional and intellectual classes. In most times and places, these groups (which also include military officers) usually enjoy comfortable ties to the upper classes, and access to a certain level of power. But if those connections become frayed and weak, and the disaffected intellectuals make common cause with the lower classes, revolution becomes almost inevitable.

Davies notes that, compared to both the upper and lower classes, the members of America's upper-middle class were relatively untouched by Great Depression. Because of this, their allegiances to the existing social structure largely remained intact; and he argues that their continued engagement was probably the main factor that allowed America to avert an all-out revolution in the 1930s.

But 2008 is a different story. Both the Boomers (now in their late 40s to early 60s) and Generation X (now in their late 20s to late 40s) were raised in an economically advancing nation that was rich with opportunity and expectation. We spent our childhoods in what were then still the world's best schools; and A students of every class worked hard to position ourselves for what we (and our parents and teachers) expected would be very successful adult careers. We had every reason to believe that, no matter where we started, important leadership roles awaited us in education, government, the media, business, research, and other institutions.

And yet, when we finally graduated and went to work, we found those institutions being sold out from under us to a newly-emerging group of social and economic conservatives who didn't share our broad vision of common decency and the common good (which we'd inherited from the GI and Silent adults who raised us and taught us); and who were often so corrupted or so sociopathic that the working environments they created were simply unendurable. If wealth, prestige, and power came at the price of our principles, we often chose instead to take lower-paying work, live small, and stay true to ourselves.

For too many of us, these thwarted expectations have been the driving arc of our adult lives. But we've never lost the sense that it was a choice that the America we grew up in would never have asked us to make. In Davies' terms, we are "deserted intellectuals" -- a class that is always at extremely high risk for fomenting revolution whenever it appears in history.

Davies says that revolutions catalyze when these deserted intellectuals make common cause with the lower classes. And much of the energy of this election is coming right out of that emerging alliance. The same drive toward corporatization that savaged our dreams also hammered at other class wedges throughout American society, creating conditions that savaged the middle class and ground the working class toward something resembling serfdom. Between our galvanizing frustration with George Bush, our shared fury at the war, and the new connections forged by bloggers and organizers, that alliance has now congealed into the determinedly change-minded movements we're seeing this election cycle.

4. Incompetent Government

As this blog has long argued, conservatives invariably govern badly because they don't really believe that government should exist at all -- except, perhaps, as a way to funnel the peoples' tax money into the pockets of party insiders. This conflicted (if not outright hostile) attitude toward government can't possibly lead to any outcome other than bad management, bad policy, and eventually such horrendously bad social and economic outcomes that people are forced into the streets to hold their leaders to account.

It turns out there's never been a modern revolution that didn't start against a backdrop of atrocious government malfeasance in the face of precipitously declining fortunes. From George III's onerous taxes to Marie Antoinette's "Let them eat cake," revolutions begin when stubborn aristocrats heap fuel on the fire by blithely disregarding the falling fortunes of their once-prosperous citizens. And America is getting dangerously close to that point now. Between our corporate-owned Congress and the spectacularly bad judgment of Bush's executive branch, there's never been a government in American history more inept, corrupt, and criminally negligent than this one -- or more shockingly out of touch with what the average American is going through. Just ask anyone from New Orleans -- or anyone who has a relative in the military.

Liberal democracy avoids this by building in a fail-safe: if the bastards ignore us, we can always vote them out. But if we've learned anything over the last eight years, it's that our votes don't always count -- especially not when conservatives are doing the counting. If this year's election further confirms the growing conviction that change via the ballot box is futile, we may find a large and disgruntled group of Americans looking to restore government accountability by more direct means.

5. Gutless Wonders in the Ruling Class

Revolution becomes necessary when the ruling classes fail in their duty to lead. Most of the major modern political revolutions occurred at moments when the world was changing rapidly -- and the country's leaders dealt with it by dropping back into denial and clinging defiantly to the old, profitable, and familiar status quo. New technologies, new ideas, and new economic opportunities were emerging; and there came a time when ignoring them was no longer an option. When the leaders failed to step forward boldly to lead their people through the looming and necessary transformations, the people rebelled.

We're hard up against some huge transformative changes now. Global warming and overwhelming pollution are forcing us to reconsider the way we occupy the world, altering our relationship to food, water, air, soil, energy, and each other. The transition off carbon-based fuels and away from non-recyclable goods is going to re-structure our entire economy. Computers are still creating social and business transformations; biotech and nanotech will only accelerate that. More and more people in the industrialized world are feeling a spiritual void, and coming to believe that moving away from consumerism and toward community may be an important step in recovering that nameless thing they've lost.

And, in the teeth of this restless drift toward inevitable change, America has been governed by a bunch of conservative dinosaurs who can't even bring themselves to acknowledge that the 20th century is over. (Some of them, in fact, are still trying to turn back the Enlightenment.) Liberal governments manage this kind of shift by training and subsidizing scientists and planners, funding research, and setting policies that help their nations navigate these transitions with some grace. Conservative ones -- being conservative -- will reflexively try to deny that change is occurring at all, and then brutally suppress anyone with evidence to the contrary.

Which is why, every time our current crop of so-called leaders open their mouths to propose a policy or Explain It All To Us, it's embarrassingly obvious that they don't have the vision, the intelligence, or the courage to face the future that everyone can clearly see bearing down on us, whether we're ready or not. Their persistent cluelessness infuriates us -- and terrifies us. It's all too clear that these people are a waste of our tax money: they will never take us where we need to go. Much of the energy we're seeing in this year's election is due to the fact that a majority of Americans have figured out that our government is leaving us hung out here, completely on our own, to manage huge and inevitable changes with no support or guidance whatsoever.

Historically, this same seething fury at incompetent, unimaginative, cowardly leaders -- and the dawning realization that our survival depends on seizing the lead for ourselves -- has been the spark that's ignited many a violent uprising.

6. Fiscal Irresponsibility

As we've seen, revolutions follow in the wake of national economic reversals. Almost always, these reversals occur when inept and corrupt governments mismanage the national economy to the point of indebtedness, bankruptcy, and currency collapse.

There's a growing consensus on both the left and right that America is now heading into the biggest financial contraction since the Great Depression. And it's one that liberal critics have seen coming for years, as conservatives systematically dismantled the economic foundations of the entire country. Good-paying jobs went offshore. Domestic investments in infrastructure and education were diverted to the war machine. Government oversight of banks and securities was blinded. Vast sections of the economy were sold off to the Saudis for oil, or to the Chinese for cheap consumer goods and money to finance tax cuts for the wealthy.

This is no way to run an economy, unless you're a borrow-and-spend conservative determined to starve the government beast to the point where you can, as Grover Norquist proposed, drag it into the bathtub and drown it entirely. The current recession is the bill come due for 28 years of Republican financial malfeasance. It's also another way in which conservatives themselves have unwittingly set up the historical preconditions for revolution.

7. Inept and Inconsistent Use of Force

The final criterion for revolution is this: The government no longer exercises force in a way that people find fair or consistent. And this can happen in all kinds of ways.

Domestically, there's uneven sentencing, where some people get the maximum and others get cut loose without penalty -- and neither outcome has any connection to the actual circumstances of the crime (though it often correlates all too closely with race, class, and the ability to afford a good lawyer). Unchecked police brutality (tasers, for example) that hardens public perception against the constabulary. Unwarranted police surveillance and legal harassment of law-abiding citizens going about their business. Different kinds of law enforcement for different neighborhoods. The use of government force to silence critics. And let's not forget the unconstitutional restriction of free speech and free assembly rights.

Abroad, there's the misuse of military force, which forces the country to pour its blood and treasure into misadventures that offer no clear advantage for the nation. These misadventures not only reduce the country's international prestige and contribute to economic declines; they often create a class of displaced soldiers who return home with both the skills and the motivation to turn political unrest into a full-fledged shooting war.

This kind of capricious, irrational ineptitude in deploying government force leads to public contempt for the power of the state, and leads the governed to withdraw their consent. And, eventually, it also raises people's determination to stand together to oppose state power. That growing solidarity and fearlessness -- along with the resigned knowledge that equal-opportunity goons will brutalize loyalists and rebels alike, so you might as well be a dead lion rather than a live lamb -- is the final factor that catalyzes ordinary citizens into ready and willing revolutionaries.

"A revolutionary state of mind requires the continued, even habitual but dynamic expectation of greater opportunity to satisfy basic needs...but the necessary additional ingredient is a persistent, unrelenting threat to the satisfaction of those needs: not a threat which actually returns people to a state of sheer survival but which put them in the mental state where they believe they will not be able to satisfy one or more basic needs ... The crucial factor is the vague or specific fear that ground gained over a long period of time will be quickly lost ... [This fear] generates when the existing government suppresses or is blamed for suppressing such opportunity."

When Davies wrote that paragraph in 1962, he probably couldn't have imagined how closely it would describe America in 2008. Thirty years of Republican corporatist government have failed us in ways that are not just inept or corrupt, but also have brought us to the same dangerous brink where so many other empires have erupted into violent revolution. The ground we have gained steadily over the course of the entire 20th Century is eroding under our feet. Movement conservatism has destroyed our economic base, declared open war on the middle and working classes, thwarted the aspirations of the intellectual and professional elites, dismantled the basic processes and functions of democracy, failed to prepare us for the future, overseen the collapse of our economy, and misused police and military force so inconsistently that Americans are losing respect for government.

It's not always the case that revolution inevitably emerges wherever these seven conditions occur together, just as not everybody infected with a virus gets sick. But over the past 350 years, almost every major revolution in a modern industrialized country has been preceded by this pattern of seven preconditions. It's fair to say that all those who get sick start out by being exposed to this virus.

Hillary Clinton is failing because this is a revolutionary moment -- and she, regrettably, has the misfortune to be too closely identified with the mounting failures of the past that we're now seeking to move beyond. On the other hand, Ron Paul's otherwise inexplicable success has been built on his pointed and very specific critique of the kinds of government leadership failures I've described.

And Barack Obama is walking away with the moment because he talks of "hope" -- which, as Davies makes clear, is the very first thing any would-be revolutionary needs. And then he talks of "change," which many of his followers are clearly hearing as a soft word for "revolution." And then he describes -- not in too much detail -- a different future, and what it means to be a transformative president, and in doing so answers our deep frustration at 30 years of leaders who faced the looming future by turning their heads instead of facing it.

Will he deliver on this promise of change? That remains to be seen. But the success of his presidency, if there is to be one, will likely be measured on how well his policies confront and deal with these seven criteria for revolution. If those preconditions are all still in place in 2012, the fury will have had another four years to rise. And at that point, if history rhymes, mere talk of hope and change will no longer be enough.

Sara Robinson is a twenty-year veteran of Silicon Valley, and is launching a second career as a strategic foresight analyst. When she's not studying change theories and reactionary movements, you can find her singing the alto part over at Orcinus. She lives in Vancouver, BC with her husband and two teenagers.

© 2008 Campaign for America's Future All rights reserved.
View this story online at: http://www.alternet.org/story/77498/

Some History

 

Barksdale Missile Number Six deserves far more public attention than it's received to date. Missile Number Six is potentially the major story of at least this year.

 

Until 1968 under the Airborne Alert Program, informally called Operation Chrome Dome, the Air Force routinely kept about a dozen strategic bombers with nuclear weapons flying at all times.

 

One predictable result was crashes and incidents. In 1968 the Department of Defense published a list of 13 serious nuclear weapons accidents that occurred between 1950 and 1968. In 1980 the list was revised to include 32 incidents through that year.

 

Notably, the Pentagon has not acknowledged any accidents since 1980. This alone highlights the importance the Pentagon is placing on the recent transportation of nuclear weapons from North Dakota to Louisiana.

 

Through 1968, several reported incidents involved plane crashes or malfunctions, beginning with the crash of a B-29 near Fairfield, California in August 1950. The resulting blast was felt 30 miles away.

 

In July 1950 a B-50 crashed near Lebanon, Ohio. The high-explosive trigger for the nuclear weapon detonated on impact. The blast was felt over 25 miles away.

 

In May 1957 a nuclear weapon fell from the bomb bay of a B-36 near Albuquerque, New Mexico. Parachutes malfunctioned and the weapon was destroyed on impact.

 

In October 1957 near Homestead, Florida a B-47 crashed. The nuclear weapon was burned.

 

In March 1958 a B-47 accidentally dropped a nuclear weapon near Florence, South Carolina. The high-explosive trigger detonated on impact.

 

In November 1958 a B-47 crashed near Abilene, Texas. The trigger of the nuclear weapon exploded upon impact.

 

In July 1959 a C-124 crashed near Bossier City, Louisiana. Both plane and nuclear weapon were destroyed.

 

In October 1959 a B-52 with two nuclear weapons was involved in a mid-air collision near Hardinsburg, Kentucky. One weapon partially burned.

 

In January 1961 a B-52 broke apart in mid-air near Goldsboro, North Carolina. Two nuclear weapons were released. The parachute on one weapon malfunctioned, and contamination was spread over a wide area. The uranium core was never recovered. Daniel Ellsberg reported that detonation was a very real risk because five of six safety devices failed.

 

In that month near Monticello, Idaho a B-52 carrying nuclear weapons exploded in mid-air. No information was made available as to the weapons.

 

In March 1961 a B-52 with two nuclear weapons crashed near Yuba City, California.

 

In January 1964 a B-52 carrying two nuclear weapons crashed near Cumberland, Maryland.

 

In January 1966 a B-52 carrying four hydrogen bombs crashed after a mid-air collision near Palomares, Spain. Two weapons exploded on impact, with resulting plutonium contamination. A months-long program was undertaken to locate and extract the other two weapons from the ocean. Major policy changes were taken under consideration.

 

In January 1968 a B-52 carrying four hydrogen weapons crashed and burned near Thule AFB in Greenland. Explosives in one bomb detonated, spreading plutonium contamination. Apparently, the other three weapons have never been accounted for.

 

Following large public protests Denmark, which owns Greenland and prohibits nuclear weapons on or over its territory, filed a strong protest. A few days later the Secretary of Defense ordered the removal of nuclear weapons from planes. After that order was issued, all aircraft armed with nuclear weapons were grounded but kept in a constant state of alert.

 

In 1991 by Presidential order, nuclear weapons were removed from all aircraft. Bomber nuclear ground alerts, during which nuclear weapons are loaded onto bombers during test and training exercises, were halted. After that time, all nuclear weapons to be delivered by plane were permanently maintained in secure storage facilities.

 

 

August 30, 2007

 

All of which makes the transport of nuclear weapons in combat position on a combat plane so newsworthy.

 

On August 30, for the first time since 1968, nuclear warheads in combat position were carried by an American bomber. Numerous international treaty provisions were violated in the process.

 

That Thursday, a B-52H Stratofortress flew from Minot AFB in North Dakota to Barksdale AFB in Louisiana while carrying twelve cruise missiles. Either five or six of those missiles were armed with nuclear warheads.

 

 

Cruise Missiles

 

The missiles on the B-52 were AGM-129 Advanced Cruise Missile units, specifically designed to be launched from wing pods of B-52H planes.

 

A total of 460 units were manufactured by Raytheon. A total of 394 units are currently maintained by the Air Force. Apparently, 38 are to be modernized and upgraded in Fiscal Year 2008 and the other 356 are to be decommissioned pursuant to the 2002 Moscow treaty.

 

Raytheon has publicly announced the AGM-129 missiles are to be modified to accomplish a "classified cruise missile mission". This has widely been interpreted to mean conversion to bunker-busters, most likely for use in Iran. This widely accepted explanation is being used to explain why armed cruise missiles are being flown in American airspace.

 

 

Nuclear Warheads

 

The AGM-129 was specifically designed to deliver a W-80 nuclear warhead. The W-80 weapon has a variable yield capability, of 5 to 150 kilotons. For comparison purposes, the bomb used on Hiroshima was 13 to 15 kilotons, or equivalent to 13,000 to 15,000 tons of TNT explosive.

 

 

News Stories and Flawed Explanations

 

The story of the B-52 flight was first reported by Army Times, owned by Gannett, on Wednesday September 5. Gannett relied on information provided by "anonymous officers". The story was picked up by Yahoo Wednesday morning, published by USA Today and The Washington Pos, and then quickly spread.

 

In response, the Pentagon quickly spread an official explanation.

 

The Air Force admitted to an inadvertent error: The intent was to transport ACMs without weapons. According to military officers, the nuclear warheads should have been removed before the missiles were mounted on the pylons under the wings of the bomber.

 

 

In the words of the Pentagon:

 

"There was an error which occurred during a regularly scheduled transfer of weapons between two bases. The weapons were safe and remained in Air Force control and custody at all times."

 

For almost the first time in the history of the nation, the military has publicly and promptly admitted it "made a mistake". This in itself is truly astounding.

 

To reinforce the military's claim that a mistake was made, a system-wide stand-down was ordered for September 14.

 

That official explanation was quickly explained away. The mistake was made intentionally, so a "deliberate leak" of a secret operation could occur.

 

The CIA and the Office of Counter-Terrorism in the State Department explained that Barksdale AFB is a "jumping off point" for re-supply of the Middle East.

 

The "deliberate leak" was intended to serve as a veiled warning to Iran. This deliberately misleading explanation is evidently intended to lead the public or Iran or both to logically conclude the missiles are bound for Iran.

 

Bluntly, State and the CIA converted a whistleblower leak by true American patriots into a deliberate leak by official Washington, to scare Iran.

 

By this means Washington has led the public to forget or overlook the real issue.

 

To begin, the multiple official explanations reek to high heaven. They collectively read suspiciously like flimsy cover stories concocted in hasty desperation. And no amount of pretty lipstick will be able to make the official explanations pretty.

 

 

Transportation Violations

 

More conflicting explanations followed. These missiles are part of a group scheduled to be decommissioned. This would explain why they were shipped out of North Dakota.

 

But the missiles were not transported on their way to decommissioning. Missiles are normally decommissioned at Davis-Monthan AFB at Tucson. Nuclear weapons are decommissioned at the Department of Energy's Pantex facility near Amarillo, Texas, accessed through Kirkland AFB in New Mexico.

 

And military policy requires minimization of the number of flights made with nuclear weapons aboard. So the weapons should not have been mounted on the missiles, flown to Louisiana, un-mounted and flown to New Mexico.

 

The mode of transportation is also a major issue not defused by official explanations. Per standard operating procedures, or SOPs, both missiles and nuclear warheads are transported primarily by air, in specially modified C-130s or C-17s. Under no peacetime circumstances do military SOPs allow transport of nuclear weapons mounted in cruise missiles mounted in combat positions on combat planes.

 

Department of Defense Directive Number 4540.5, issued on February 4, 1998, regulates logistic transportation of nuclear weapons.

 

By delegation of Commanders of Combatant Commands, movement of nuclear weapons must be approved by commanders of major service commands.

 

Commanders of Combat Commands or service component commanders must evaluate, authorize and approve transport modes and movement routes for nuclear weapons in their custody.

 

The Air Force is required to maintain a Prime Nuclear Airlift Force capability to conduct the logistic transport of nuclear weapons.

 

Under SOPs, combat planes with combat-ready nuclear weapons can only be flown on the authority of the Commander in Chief, the Joint Chiefs of Staff or the National Military Command Authority.

 

All of these transportation regulations were flagrantly violated on August 30.

 

 

Handling Violations

 

Violations of regulations concerning handling of the nuclear weapons in North Dakota are worse.

 

A sophisticated computerized tracking system is used for nuclear weapons. Multiple sign-offs are required to remove the weapons from their storage bunkers.

 

The AGM-129 Advanced Cruise Missile was designed to carry nuclear weapons. No non-nuclear warhead is available for this missile. So the only possible error could have been loading nuclear warheads on the missiles instead of practice dummies.

 

The practice warheads have standard blue and yellow signs declaring "Inert, non-nuclear". The nuclear warheads have at least three distinctive red warning signs. This error is therefore highly improbable, absent tampering with signage.

 

Nuclear weapons are transported from the storage bunker to the aircraft in a caravan that routinely includes vehicles with machine guns front and rear and guards with M-16s. All steps in the process are done under the watchful eyes of armed military police.

 

Rules require that at least two people jointly control every step of the process. If one person loses sight of the other, both are forced to the ground face-down and temporarily "placed under arrest" by observant security forces. All progress stops until inspections are made to assure the weapons weren't tampered with.

 

All nuclear weapons are connected to sophisticated alarm systems to prevent removal or tampering. They could only be removed from the storage bunker by turning the alarm off. And the squad commander clearly would not have authority to turn off the alarm.

 

 

The Impossible Mistake

 

Bluntly, the mistake of loading nuclear weapons on a combat aircraft in combat-ready position is simply not possible to make. Safeguards are far too stringent and far too many people would be involved. Particularly given that the mounting was in violation of policy that's been in place without exception for almost 40 years.

 

No discipline is expected to be meted out. The New York Times tried to imply the commanding general had been fired. Actually, the squad commander in charge of munitions crews at Minot was "relieved of duty pending an investigation". He has not been removed from his position or disciplined. The crews involved have been "temporarily decertified pending corrective actions or additional training" but have not been disciplined. No mention has been made of the wing commander.

 

Note carefully: These actions amount to nothing at all. The wing and squad commanders are still in place and the crews can easily be re-certified.

 

 

Successful Confusion

 

Washington's efforts to confuse the public have been successful. Attention has shifted from the crucial issue.

 

This news has already become non-news. The August 14 stand-down will momentarily become news, followed by announcements of more stringent restrictions, improved safeguards and additional training. The public always has been and always will be safe.

 

 

One of the major issues will be avoided:

 

Someone in an irregular chain of Air Force command authorized loading and transport of nuclear weapons.

 

And that would never have been done without a reason. Given the magnitude of regulatory violations involved, the reason must be extremely important.

 

The paramount issue will be avoided, if necessary with repetition of the reassurance that the Air Force was in control at all times. The weapons were only missing during the 3.5-hour flight.

 

At Barksdale, the missiles were considered to be unarmed items headed for modernization or the scrap heap, and of no particular importance. They were left unguarded for almost ten hours.

 

According to one report, almost ten hours were required for airmen at Minot AFB to convince superiors that the nuclear weapons had disappeared. According to information provided to Congress, this time lapsed before airmen at Barksdale "noticed" the weapons were present. News reports will continue to overlook this fact also.

 

Even here the focus is on time. The number of missiles and warheads issue was overlooked.

 

Early news reports spoke of five nuclear warheads loaded onto the bomber. Apparently, this information was provided from Barksdale.

 

That number was later updated to six weapons missing from Minot, apparently based on anonymous tips provided to Military Times by people at Minot. This information has also been forgotten.

 

 

Conclusion

 

Six nuclear weapons disappeared from Minot AFB in North Dakota.

 

Five nuclear weapons were discovered at Barksdale AFB in Louisiana.

 

Which leads to my chilling conclusion:

 

Someone, operating under a special chain of command within the United States Air Force, just stole a nuclear weapon.

 

 

What next?

 

The answer has been provided several times, most recently by CIA Director and General Michael Hayden. On September 7, dressed in full military uniform, Hayden told assembled members of the Council of Foreign Relations:

 

"Our analysts assess with high confidence that al-Qaida's central leadership is planning high-impact plots against the U. S. homeland."

 

"We assess with high confidence that al-Qaida is focusing on targets that would produce mass casualties, dramatic destruction and significant aftershocks."

 

An eye for an eye. Use of nukes will justify use of nukes. A perfect excuse to wage nuclear war against Iran.

 

I suspect Hayden is absolutely correct, except for his mistaken identification of the "central leadership" that is planning detonation of a nuclear weapon on American soil.

In a shocking development, the Treasury Department website is openly stating that as of January 24, 2006 our national debt stood at $8,185.3 billion and on January 26^th at $8,190.5 billion.

http://www.publicdebt.treas.gov/opd/opdpenny.htm

Yet the US national debt ‘ceiling’, the maximum amount of debt the US government may hold at any one time, stands at $8,184 billion – a full $5.5 billion less. Although called upon by John Snow, Congress has not yet passed an expansion of the debt ceiling and so the US government is now operating in technical default.

You may recall that when last the debt ceiling was approached in the months surrounding the 2004 elections, the Treasury department furiously employed every accounting trick in the book (and then some) to avoid breaching the limit. They even went so far as to take the unprecedented step of borrowing $14 billion from the Federal Financing Bank to cover up the shortfall.

But they never breached the ceiling.

On January 24^th they breached it brazenly and openly and with nary an accompanying explanation. Neither have any lawmakers have broached this indelicate subject.

I suppose we could write this off as merely an unsurprising development from a government that no longer bothers to even appear to be adhering to rules, laws and procedures, let alone actually doing so.

But the silence is all the more troubling because there is an unprecedented level of government borrowing on the books for 1Q06 with next 2 weeks (Feb 1st to Feb 9th) an especially busy period of time. An ambitious ~$70-$80b in Treasury paper will hit the market.

The federal government does not have the legal authority to borrow above the statutory debt limit, which raises the prospect of emergency congressional action to avoid a full-fledged default.

Congress will probably attach a rider to a “must-pass” defense appropriation bill and ironically title it “The Fiscal Responsibility Amendment of 2006”. And if they do, $50 says they do it very late on Friday night.

Since the debt ceiling has been raised 50 times over the past 40 years, hoping for some rational debate on the matter would be an extravagant indulgence. Time spent wishing pigs could fly would offer a far better potential return.

Another odd facet of this story is the deafening silence from the financial press (and I use that term loosely) regarding this matter. Leaving aside the issue of a technical default, one wonders why questions aren’t being asked about the rate of debt accumulation and whether it’s sustainable.

The last debt-ceiling adjustment was $800 billion and was passed in November 2004. Now, on January 24^th 2006, it is entirely gone. $800 billion in only 16 months for an average of $50B a month.

Factoring out the plundering of excess social security contributions, the US government borrowed $52B in 3Q05, $96B in 4Q05 and expects to borrow $171B in 1Q06. A trend nearly as mind-boggling as the soon to be discontinued M3 series.

Why do I even bother to pen such distressing factoids?

Because in all my time studying economics I have determined only one thing; there’s no free lunch. Pay now or pay later but pay we will.

Or, more accurately, we hope that our kids will, and not stiff us for the bill. But if they did, who could blame them?

I, for one, would not be shocked.

2006: The Year of Oil Collapse?

By James Howard Kunstler, Kunstler.com
Posted on January 11, 2006, Printed on January 11, 2006

Editor's note: This is one of three perspectives AlterNet has assembled on the prospect of peak oil and its implications for modern society and the global economy. The other two are from World Watch: Christopher Flavin writes that while we can't know exactly when oil production will start declining, we must focus on alternatives to petroleum now; and Robert K. Kaufman describes the role the market and government should play in helping to make the transition from a petroleum-dependent society.

The sheer weight and inertia of American life kept our systems on their feet through 2005, despite a worsening economic climate and some harsh body blows, like the hurricanes that pounded oil and gas production in the Gulf of Mexico. In a way, some perverse law of sociopolitical physics seemed to concentrate all the year's destructive potential in the devastation of New Orleans, Biloxi and other Gulf Coast towns -- while the mighty din of motoring and cheeseburger sales roared on elsewhere without pause from Cape Cod to Catalina.

First, a little background briefing on where we are at -- to use some of the bad grammar now normative in American life -- before I make predictions (i.e., guesses) about the year ahead.

You can only introduce so much perversity into an economic system before distortions cripple it. From 2001 through 2005, consumer spending and residential construction had together accounted for 90 percent of the total growth in GDP, while over two-fifths of all private sector jobs created since 2001 were in housing-related sectors, such as construction, real estate and mortgage brokering. Much of the money spent did not really exist except as credit -- incomes as yet unearned, hallucinated liquidity, wished-for wealth, all based on the expectation that house values would continue to rise at 10 percent to 20 percent a year, forever. It became a reckless racket, all predicated on sustaining an economy that had lost its other means for generating wealth -- foremost its infrastructure for making things besides suburban houses.

This housing bubble economy represented, holistically speaking, the wish to maintain a sense of normality in American life under conditions of disintegrating normality, and it is no symbolic accident that it centered on the images of hearth and home, because fundamental comforts were what many Americans actually stand to lose in a reality-based future. The decay of standards and norms in banking behavior applied to housing started, as in the case of the proverbial rotting dead fish, at the head, the Federal Reserve, and infected every lowly loan officer through the body until, in effect, lending standards ceased to exist.

The suburban housing bubble and its related activities were predicated on the idea that we could continue building out a living arrangement dependent on cheap oil and methane gas, and that all the subdivisions and strip malls would retain value for decades to come. Of course, this was the central delusion of the suburban sprawl economy, because it was obvious to anyone who gave the situation more than a cursory glance that cheap oil and gas were the things we were least likely to have in the decades to come.

This reality had begun to penetrate the American collective consciousness and will be represented in 2006 by millions of individual choices to not buy a new suburban house, either because the individuals fear the expense of long commutes, or they fear the cost of heating a 4,000-square-foot house occupied by only a few people (or both). As the inventory of unsold new houses mounts up, the prices of all houses, new and old, will start to go down. There will be enormous psychological resistance to this reality, expressed in a lag of correct pricing, as the owners of these value-shedding "investments" wait for the bubble behavior (anticipated 10 percent to 20 percent asset appreciation) to return. Eventually they will get the picture.

The velocity of change in the housing bubble (and the psychology involved) will be greatly affected by oil and gas prices. It seemed to many of us watching the energy markets that the world may indeed have passed through its all-time oil production peak in 2005. Production in 2005 was nearly flat over 2004. The world was producing and also using roughly 82 million barrels of oil a day. Oil coming into new production was not making up for signs of depletion showing among virtually all the world's major producers. Iran, Russia, Mexico, Venezuela, the North Sea and, of course, the United States, were all past peak.

The big mystery was Saudi Arabia, but its inability to boost production from the 50-year-old fields that comprised its main reserves suggested that it was topping out, too. Which left an energy-hungry world with the need to either (a) make other arrangements for powering industrial economies or (b) contest for control of the remaining oil reserves, which were substantially concentrated in the Middle East and Central Asia.

Here, I hasten to remind the reader that peak is peak, meaning right now we are all operating on the basis of a lot of oil flowing around the world. The comfort level is still high. The factories are still humming in China, and the six-lane commuting corridors are still full of big cars around Atlanta, Dallas, Denver and Minneapolis. The problem is that the oil supply will soon steadily diminish at a rate of at least 3 percent a year, and that necking down of supply is likely to be expressed in greater geopolitical friction and turmoil between the great nations who crave oil.

The United States entered into the military phase of this turbulence before any other nation. We used our superpower status to set up a centrally located Middle East garrison in Iraq, under the idealistic cover story that we were removing a dangerous head-of-state and helping to set up a model democracy that would invite us to stick around the vicinity indefinitely and thus retain some control over the deportment of other oil-rich states in the region.

The foregoing is the background of my predictions for 2006, which will be the year that the hardships and difficulties I lump together as "The Long Emergency" get some serious traction.

The world’s oil-allocation system is now so fragile that any disturbance in one producing region can send damaging shock waves around the planet. There is no more "swing producer." The United States squeaked through the huge loss of oil production capacity this fall by taking oil from our own strategic petroleum reserves and from Europe's. These actions kept oil prices in the high $50 range through the holidays, giving Americans a false sense of festive security. Those withdrawals are now over. Global demand for oil is still increasing. The strategic reserves will now have to be refilled (they're called strategic reserves for a reason). This will start oil prices moving upward again -- they already have moved above $61 as of Jan. 2.

I can't predict whether some maniac will drive a Zodiac boat into a tanker in the straits of Hormuz or fire a shoulder-launched missile at an Arabian refinery. If nothing like that happens, the first year of post-peak will express itself in turbulent oil markets. Fear of not getting enough will rule. Futures will be overbought and then dumped or shorted, and then overbought again. This will at least increase the violence of the ratcheting effect in the markets. Overall, I expect to see $100-a-barrel oil at some point this year. Last year I made a bet with a friend that oil would end 2005 at $75. I lost the bet. But it is a fact that the price of oil altogether ended the year 40 percent higher than 2004, so it is not as if the markets did not show extraordinary stress.

New laws regulating gasoline mixtures will also contribute substantially to higher gasoline prices (perhaps as much as 40 cents a gallon). So I will predict gasoline breaking through the $4-a-gallon mark sometime this year.

Our natural gas situation is pretty dire. Prices shot up for a while above $17 (per one million BTUs), but that was the energy equivalent of $100-a-barrel oil and was based at the time on the enormous damage in the Gulf of Mexico prior to the start of the heating season. The heating season so far as been abnormally mild in the northern United States, and prices have slumped back to the $11 range -- which is still a lot higher than the $7 range in 2004. Unlike oil, we will get no quick relief from international gas sources if the rest of winter turns sharply colder. We're short of terminals to receive significant quantities of imported liquefied natural gas, and they cannot be built quickly (or cheaply). The natural gas markets in the United States respond very sharply to current conditions. A warm week and the prices sink. A cold one and the price shoots up. Our gas storage for the year is slightly below 2004 levels. Even if we have a mild winter overall, there will be spikes of cold. Our production is still crippled in the Gulf. Therefore, I'll predict that methane gas prices will spike above $20 sometime before May.

High gasoline, heating oil and methane gas prices will absolutely kill the housing bubble for reasons I've already outlined. The production home builders will be idle, stuck with huge inventories in places that never should have been suburbanized in the first place. A lot of Americans holding "creative" mortgages -- no money down, interest only, adjustable rate, what-have-you -- will be crushed by the expense of their obligations. Many of them will go bankrupt under new bankruptcy laws that leave no wiggle room for escaping partial repayment. Their houses will flood the real estate markets in an orgy of distress selling. "Greater fools" will snap up these "bargains," failing to realize that many of the logistical liabilities will remain -- namely remote locations and huge heating costs of enormous McHouses -- even if the ownership terms are less hazardous than the previous owner's. At some point in the future, after several flippings perhaps, all those 4,000-square-foot houses 44 miles outside Denver (or Cleveland, or Seattle) will be seen as the mistakes that they are, and their cash value will reflect that.

With the cratering of the housing bubble, the U.S. economy has to fall on its ass. The global economy is likely to fall on its ass, too, since so much of it depends on the decisions of Americans to take out exotic loans for buying houses they can't afford. Large numbers of jobs will vanish in construction, remodeling, real estate sales, and the various mortgage rackets -- those things precisely related to the recent gains in GDP.

The sheer falloff in new mortgages will send a tsunami through financial markets addicted to continuous supplies of new "money" to preserve the illusion of expansion. I'd called for a Dow-4000 late in 2005. I think that was just an error in timing, and I still call for the Dow to sink into that range, or worse, in 2006. This will represent a moment of painful clarity for market professionals, as they realize that an industrial economy and the finance that serves it must be based on the expectation of generating real future wealth, not on zero-sum rackets, games of monetery musical chairs, or casino legerdemain. Hedge funds, which depend on predictable stability, will be especially vulnerable. They will certainly take some large banks down with them when they go. I'll call for the so-called government sponsored entities of Fannie Mae and Freddie Mac to groan under and then drown in a sea of nonperforming loans, probably with overtones of criminal irresponsibility.

If these things occur, ugly things would happen to the dollar. I would predict an episode something short of hyperinflation -- say a rapid 30 percent drop in dollar value -- with a later deflation in the price of things like houses, paintings by Childe Hassam and many consumer goods. Which means that standards of living will fall across the board as incomes vanish with jobs, and food and energy prices rise -- while Americans try to shed their houses at the same time that consumer products sit unsold on the shelves of WalMart, Target and Best Buy. This will spell the beginning of the end for the chain store universe.

The commercial airline industry is already whirling around the drain. 2006 will send it decisively down that drain. Since we cannot do without aviation in a nation as large as the United States (with train service on the level with Bolivia), the government may have to take over the crippled air routes. If that happens, then service will certainly be greatly diminished. Fewer people will be flying under the circumstances, anyway, but there is no reason to believe that this will all occur smoothly. Among other things, huge pension obligations would remain to be worked out.

By similar reasoning, I see an excellent chance for General Motors and Ford to go out of business in 2006. Sales of their stupid SUVs were already tailing off in the second half of last year, and they are not positioned to offer much of anything else. Anyway, a middle class groaning under insupportable debt and bankruptcy is not likely to be assuming new time payments for exactly the kinds of vehicles they would be insane to depend on.

As America roils in economic pain, factory workers in China will be thrown out of work. They will be extremely pissed off, and as their appeals go unappeased, they might start making political trouble in their country. That could easily stimulate Chinese leaders to divert their nation's attention with a compelling military project -- say some moves into the oil-rich former Soviet lands to China's west. Sooner or later, China eventually will go cuckoo from a shortage of fossil fuels. It only remains to be seen how this will express itself. So far it has only done so in terms of an aggressive outreach in oil contracts with producers like Venezuela and Canada. But those arrangements were based on a peaceful world and a peaceful China.

I have no idea what will happen with Iran. Their leader Mr. Mahmoud Ahmadinejad, is clearly a maniac -- calling for Israel to be removed to Alaska, for instance. But here I invoke my allergy to conspiracy theories by saying I do not necessarily expect any U.S. or Israeli strikes against that country. One could argue that Iran could comfortably kick back and watch America get tortured by the insurgency next door in Iraq, and I think it will do just that through 2006. The nuclear card is wild, however, and anything could happen if they keep slapping it on the table.

Which brings us to the extremely sore subject of Iraq. I maintain that our reasons for being there have not changed one bit, namely to make sure that we don't lose access to Middle East oil in any shape or form. Now my stating that does not mean I think we will necessarily succeed. The creation of a constitution in Iraq and holding elections based on it amounted to an admirable stunt, but I tend to think this experiment will dissolve into sectarian violence and civil war, probably in 2006, no matter what else we do. I predict that circumstances will impel us to withdraw from the Iraqi cities, but that we will not give up large bases near the oil production areas of the north and south, and that we will continue to control the air space over Baghdad. Our position in that country would then devolve to a sort of Fort Apache situation. I imagine the vast emptiness of the desert combined with air cover will afford us some protection. But our presence there will only inspire more turmoil, hatred and jihad elsewhere.

King Abdullah seems to be in pretty good health, but he is going on 82. I predict that there will be fissures in the kingdom and continued confusion about its oil production capacity. But by the end of the year, it ought to be clear that they have not increased their output. Peak for Saudi Arabia may be the beginning of the end of the Saud kingdom -- since peak itself is highly destabilizing.

In Europe, we are beginning to see some of the first tectonic heavings over energy as Russia jerks poor Ukraine around on its natural gas shipments. England has managed to piss away all the former advantage of its North Sea oil bonanza, and it now faces a future of dependence on Russian gas, plus the bankruptcy of its remaining industrial base. France enters 2006 somewhat more energy self-sufficient, at least as far electricity is concerned, since 70 percent of it comes from nuclear reactors. The other nations of Europe are apt to get restive this year and may more actively join the worldwide contest for access to fossil fuels. At the same time, they will be struggling to contain large Muslim immigrant populations, and I would be surprised if there were fewer problems in 2006 than last year, with the riots in France and the London subway bombings. We tend to write off Europe as a region of sclerotic cafe layabouts, but for the time being, many of these nations can still mobilize potent military forces if they have to defend vital interests. Generally, I predict 2006 will see a shift in power to the big energy bear, Russia. It's industrial infrastructure is otherwise decrepit. Its armed forces ar