293. "BLOOD IN THE STREETS"
Over time, we've seen a gradual shift in the rhetoric of the peak oil community. The original pessimist position was based on "hard", unavoidable numbers and realities: the human population is dependent on oil for food, and as oil declines, this must lead inevitably to mass die-off of most of the world's population. As we have seen, however, this argument is only superficially plausible, and when we dig deeper into it, we find that it is basically a bunch of B.S.
On the whole, even the doomers themselves have grudgingly accepted the refutation of die off theory, and have shifted their focus to economic cataclysm. Their rhetoric is now based on concepts like fiat money, unmanageable debt, recession, depression, inflation, deflation, stagflation, consumer credit, housing bubbles, financial overextension and imbalances etc. etc. It's kind of ironic really. The original doomer position was that economists are wholesale idiots, "flat earthers" who have no credence whatsoever. They were supposed to stay out of the peak oil debate and leave it to geologists -- because economists don't have the expertise to comment on oil depletion. Yet now, we are seeing the peak oilers crassly invading the turf of their enemies (the economists) in order to salvage their collapse scenario. I guess the bottom line on the turf question is that economists have no valid opinions on peak oil because they have no expertise, but peak oiler amateurs have valid opinions on economics because they're... well... peak oilers.
One thing is for sure, though: economic apocalypse is notoriously hard to predict.
Just to give you an example, I recently got an interesting old book from a friend when he moved and threw out all his old paperbacks. It's called "Blood in the Streets: Investment Profits in a World Gone Mad". It was written by two financial commentators/analysts (James Dale Davidson and Sir William Rees-Mogg) in 1988. Here's a quote:
The coming years will be a bad time to be ill-advised. A time fraught with snares for anyone who is unprepared. We could be on the verge of a financial upheaval when blood will, indeed, "run in the streets".The authors describe in great detail the coming upheaval due to the Latin American debt default, the imminent real estate crash, the end of American supremacy etc. etc.
It's entertaining reading because the authors were 100% wrong about everything. The U.S. didn't go down the toilet in the 1990s. Rather, the country experienced the greatest surge of technology-driven prosperity in its history.
My point is that people have been predicting the implosion of the global financial system for more than 30 years. Davidson and Rees-Mogg made an extremely convincing case for it 20 years ago. Nevertheless, nothing actually happened. In fact, anyone who actually bought into their imminent collapse theory in 1988 got burned.
The warning sign, I think, is the tone of the analysis. Davidson & Rees-Mogg were so sure of themselves, and it's eerily reminiscent of the tone in the peak oil community. Many of the quotes from their 1988 book could have easily been lifted off The Oil Drum or peakoil.com yesterday. That's the problem. The economic future is highly unpredictable and should be addressed by hedging -- not by being sure of yourself, but by questioning yourself. Seriously and toughly asking yourself: Could I be wrong? And if so how? What am I missing? That's what Davidson & Rees-Mogg didn't do and that's why they were so wrong.
-- by JD