Published on Energy Bulletin (http://energybulletin.net), 05/28/2009

At the Transition Network conference, Richard Heinberg gave an online presentation looking at the concept of Emergency Planning for Communities, something he initially unveiled at Findhorn last year. You can see his presentation here. For a while now, Richard and I have been discussing the tension between longer term planning for resilience and the more immediate and pressing responses demanded by sudden and rapid change. It is still an ongoing discussion, but we thought now, with Richard’s presentation, it would be a good time to open up the conversation for your thoughts. What follows is the series of email exchanges we have had since late last year.

One of the fascinating discussion points at the conference between those in the US and those in the UK, revolves around the degree of vulnerability people feel. When Naresh and Sophy returned from delivering Transition Training in the US, one of their observations was that, as a country with no free healthcare and little in the way of social services and benefits, life feels much more fragile there, and the sense that things could all fall apart tomorrow much more palpable. Translating Transition to the US context can be, some of those present were saying, a bigger challenge because of that. Is the US being overdramatic, or the UK lulled into a false sense of security? Does putting emergency planning at the forefront of Transition risk losing more people than it engages? Is it possible to build resilience in the middle of a crisis? There are just some of the questions that arise from these exchanges. Anyway, we throw this open, and welcome your thoughts based on the discussions below. …

December 10th 2008.

Dear Rob,

Let me start by saying that I am not proposing any specific change in the public Transition written materials or trainings, merely a private strategic discussion among those at a high level within the movement.

My reasoning is simple: Transition has a very positive and optimistic face, which is extremely attractive and the main reason for its success. As you know, better than anyone, its goal is to envision a desirable post-fossil fuel future and then backcast incremental local steps for the achievement of that future.

Now: the reason we all see it necessary to transition away from fossil fuels is that if we don’t, dire things will happen. But what if it’s actually too late to prevent some of those dire things from happening, and they occur during our Transition period and process?

Obviously this is not an academic question. We are seeing a truly frightening financial collapse-partly resulting from this year’s high oil prices-unfolding before us. The world has changed very significantly in the past few months, so much so that the shift is difficult to overstate, even though its direction and implications are still revealing themselves. My question is: should the Transition movement ignore this new fact-on-the-ground, address it as just a bump or pothole along the way, or take it very seriously as (1) a potential challenge to the Transition program if people feel that their optimistic efforts are being overwhelmed by catastrophic economic conditions including closure of local businesses and loss of jobs and funding by key organizers; (2) a potential opportunity both to grow the movement and to offer tangible help to people in genuine need; or (3) both of the latter?

If it is to be seen as (2), an opportunity, what might that mean in terms of public messaging, trainings, etc.?

My own view is that organizations like ours can help by providing inspiration (as Transition certainly does, probably to a much greater extent than PCI), as well as by helping to solve real problems. I would guess that in the near future solving problems will become more of a priority than it has been up to this point, simply because the number and scale of problems that individuals and communities will be confronting will snowball. Whether we like it or not, those of us who have put ourselves forward in the public eye as having answers will be looked to for practical solutions to very basic problems like homelessness, unemployment, hunger, decaying infrastructure, lack of heating fuel, lack of capital, and bank failures.

Obviously, what Transition and PCI have been advocating (community gardens, local currencies, etc.) are in fact at least partial solutions to these very problems, but so far we have discussed them in terms of proactive efforts to keep the problems from happening, or to build a better world in the future. Should the growing presence of these problems affect how our solutions are described (to the general public, to policy makers, or among ourselves) and/or how they are implemented?

Again, this is only meant to be a conversation opener. We’re all figuring this out as we go along-at least I am!

With all best wishes,
Richard.

January 9th 2009.

Dear Richard,

Happy New Year to you. I have been giving your email some thought over the last couple of weeks and wanted to respond with some feedback. I agree with you that some element of Emergency Planning (which feels like a more appropriate term to me) is vital, but I wonder whether it is something that either falls completely outside of the work of Transition groups or, while connected, has somehow to be kept clearly distinct for the reasons below.

To begin with, that kind of emergency response work is usually done by local authorities, or in the US by groups like FEMA. It is hard to figure out how one would come up with a community response plan that would be more effective, or able to mobilise what they are able to mobilise, than what they could do. I haven’t tried to find out who is responsible for that in Totnes, but I suspect that whoever it is would not be entirely welcoming of well-meaning approaches from us offering to input some Transition flavouring.

At the root of it is the old bottom up/top down question. Is it possible to design a bottom up emergency response plan that is effective? At present, in the event of an emergency, in theory at least, the government agencies swing into action, organising water, energy, food and so on (although of course Katrina is an example of exactly the opposite happening, but what would a pre-planned community response in New Orleans have looked like?). Of course this raises fascinating questions, as I suppose in a few years a community fully engaged upon energy descent would be far better at dealing with emergencies than “the authorities” - and in the past bottom up emergency planning worked superbly in the anarchist led communities during the Spanish Civil War. Having said that, those were communities which were already, and explicitly, united around a common vision; ie more like communities already meaningfully engaged in energy descent than the current early adopting transition initiatives.

I think about this in terms of the principles of Transition. Does Emergency Planning lead to increased resilience? Maybe yes, but maybe not. Tends to be peoples’ last consideration in times of panic. The priority turns to short term survival. We are already seeing in the Ukraine people felling trees left, right and centre in order to keep warm, and Ireland during the Famine had barely a single tree. Short term emergencies tend to move people away from resilience, something that, it seems to me, can only really be created in a longer term, intentionally designed way. On the other hand, does that mean that principles of resilience should be put to one side in an emergency? While the answer to that must be no, I’m struggling to see what one does with the resulting tension.

In terms of ‘Inner and Outer Transition’, I think this creates a huge challenge. There are very few people who can really delve into the nitty gritty of emergency planning without feeling deeply despondent.. there are a few grizzled doomers who would thrive on it, but how to create a meaningful community process of planning emergency responses without breeding powerlessness on an unprecedented scale is hard to imagine. There may be a need for working out how to do trauma counselling on a huge scale, training a team of people to support the freakouts that would happen, but again, on that scale it needs the Health teams and the NHS.

In terms of subsidiarity, emergency planning is something that has almost always come from the top down. I would be fascinated to hear your thoughts on what an effective bottom-up response might look like. Wouldn’t bottom up responses to emergencies, almost by definition, be actions which emerge rather than follow a pre-determined plan? The piqueteros in Argentina appeared as a result of dire need/emergency, but not because of a previous plan. It may well be that within a TI a few people who are so inclined might write such a thing, but I can’t see it being something many people would choose to engage with.

I feel that absolutely key to all of this is the fact that, in terms of visioning, there isn’t a positive potential outcome to use to inspire and engage people. Transition is very deliberately designed to be non-threatening, to be inviting and engaging. It could be argued that emergency planning is the opposite. The danger is that if the vision becomes collapse next week, that the Transition group becomes seen as a survivalist cult, and loses people. It is hard enough for us to engage and work with our local authority here, and we are presenting ourselves to them as rational, positive thinking people with ideas they need, answers to questions they aren’t asking yet, although no doubt we are still seen as fringe players. If we were to take a very doomy position, and invite them to prepare for meltdown next week, I suspect we would find it far harder to find a way into them.

I think the question for me is more around how does one ’speed up’ an EDAP. Most of the work in one tends to focus on their first few years, and if it is written properly it should really engage that kind of input. For example, if we want to have food gardens in place in time for an emergency, the same obstacles still exist to their creation now that exist in an EDAP. It is about designing things that are viable in one economic context that will also be viable in another entirely different one. It is a big job, but those gardens aren’t going to appear by magic, they need to be planned, created and maintained. Same with woodfuel, local markets and so on.

I find it hard to see how the things that would actually lead to increased resilience could be done any faster, short of actually being in that emergency scenario by which time, in some ways, it is too late to do that effectively. Say the UK’s gas is shut off tomorrow, leading to a speeding up of the current economic troubles… not too much in the way of meaningful gardening to be done in Totnes in January.. Would be at least June before much is produced. An EDAP would be looking for triggers for rapidly speeding up the numbers of people growing food, other institutions that could help, identifying potential growing land and so on. It is hard to see how it might be done any faster.

Finally, there are lots of other organisations, community groups and so on, who don’t engage at the moment, but who would in an emergency. I think the EDAP creates a template for how they might be invited to direct their energy. So, my feeling is that the creation of Emergency Plans is something that could either happen in parallel with the EDAP process, or could be the work of a separate group. I think it would shift public perception of the work of that initiative away from it being seen as a positive, forward looking and inclusive thing, to being a doomer cult, the embodiment of what everyone always suspected environmentalists were all about in the first place. It certainly has an important role, but perhaps it is something that just happens discretely…

Finally, turning to your explicit question:
“My question is: should the Transition movement ignore this new fact-on-the-ground, address it as just a bump or pothole along the way, or take it very seriously as (1) a potential challenge to the Transition program if people feel that their optimistic efforts are being overwhelmed by catastrophic economic conditions including closure of local businesses and loss of jobs and funding by key organizers; (2) a potential opportunity both to grow the movement and to offer tangible help to people in genuine need; or (3) both of the latter?”

I think we clearly can’t ignore it or view it as a bump or pothole - and my gut feeling is that it is (3), the combination of challenge and opportunity. It may be though that the truth is that the opportunity is that the emergencies coming towards us will serve to demonstrate the need for transition more than anything else.

Thank you for having raised this issue, which is absolutely vitally important. On re-reading the above, I’m not sure that we’ll get to a completely clear answer, but I look forward to your further thoughts with great interest. It might be worth looking at the idea of publishing this exchange of emails on Transition Culture, and/or elsewhere, as I know it is a subject of conversation elsewhere. There is, for example, an interesting thread on the Transition Network forum exploring this.

Rob

February 2nd 2009.

Dear Rob,

Many thanks for your thoughtful reply to my earlier letter about Transition and emergency planning. I think the best way for me to continue the conversation would be to respond to specific points you made.

“Is it possible to design a bottom-up emergency response plan that is effective?”

If not, then I think that we (that is, those of us who desire to see an orderly, decentralized transition process) may be in danger of being written off as irrelevant at some point-perhaps in just a few months’ time. As you point out: during an emergency, people are much less interested in long-range plans and much more focused on satisfying immediate needs. The emergency is unfolding, and it is not going to be transitory. So as people deal with survival issues, how can their collective efforts trend toward sustainability?

“In the past bottom-up emergency planning worked superbly in the anarchist-led communities during the Spanish Civil War.”

This is an encouraging example to think about, even if-as you note-circumstances are very different now. In fact, I think communities are going to be left mostly to their own devices, once the efforts of national governments begin to fail-and fail they will. So how will communities get by? Who will help them organize their response to an almost complete economic shut-down, so that families still have food, water, shelter, sanitation facilities, work, and health care? I think anyone who can offer tangible help will be regarded with some respect.

“Does Emergency Planning lead to increased resilience?”

As you say, emergency planning doesn’t necessarily lead to greater resilience, but on the other hand I don’t see how a society can be resilient without it, especially when there are so many crises looming.

“I would be fascinated to hear your thoughts on what an effective bottom-up response might look like. Wouldn’t bottom-up responses to emergencies, almost by definition, be actions which emerge rather than follow a pre-determined plan?”

Yes, but such responses are likely to emerge more quickly and effectively if a few folks within the community begin running scenario exercises ahead of time, identifying community resources and thinking about how those might be mobilized. Such efforts could in fact be crucial to preserving societal coherence.

And this is what I fear most, frankly: the loss of societal coherence. If that goes-if we are each on our own, competing for food and drinkable water-then we have lost the game. This is what Orlov is talking about in his five stages of collapse (www.energybulletin.net/node/40919): it is social and cultural collapse that we must avoid if at all possible. We are seeing financial and commercial collapse now, and the beginnings of political collapse in many nations. How far down the chain are we going to go? Can we interrupt the process at some point by creating more cultural coherence? Transition is in fact creating more local cultural coherence-we’re on the right track!-but is it enough, and of the right sort?

“I find it hard to see how the things that would actually lead to increased resilience could be done any faster, short of actually being in that emergency scenario by which time, in some ways, it is too late to do that effectively. Say the UK’s gas is shut off tomorrow, leading to a speeding up of the current economic troubles… not too much in the way of meaningful gardening to be done in Totnes in January. Would be at least June before much is produced. An EDAP would be looking for triggers for rapidly speeding up the numbers of people growing food, other institutions that could help, identifying potential growing land and so on. It is hard to see how it might be done any faster.”

Fair enough-we’re all working as hard as we can, going as fast as we can go. But maybe there are unseen opportunities here.

In the beginning of your letter you point out that, “that kind of emergency response work is usually done by local authorities, or in the US by groups like FEMA. It is hard to figure out how one would come up with a community response plan that would be more effective, or able to mobilise what they are able to mobilise, than what they could do. I haven’t tried to find out who is responsible for that in Totnes, but I suspect that whoever it is would not be entirely welcoming of well-meaning approaches from us offering to input some Transition flavouring.”

I think you might be surprised. The few emergency response folks I’ve talked with are frankly very worried. A lot would depend on the manner in which they were approached. If they sense that we are merely pushing an agenda, they are likely to be quite hostile. If we appeal to a shared interest in addressing real looming problems, there is likely to be at least some openness to collaboration. These are the “adults” in the community, people who are taking responsibility in ways that aren’t always fun or rewarding, but are doing things that need to be done for everyone’s sake. I’d like to think that we are in the same category (though I wouldn’t rule out the “fun” part).

Moreover, emergency response officials aren’t the only ones who are worried: my guess is that Community Resilience campaigns undertaken right about now (with cheerful smiles, holding garden implements, but acknowledging that the economy is falling apart and that we have to act fast) might garner even wider support and interest than Transition is already doing.

“Finally, there are lots of other organisations, community groups and so on, who don’t engage at the moment, but who would in an emergency. I think the EDAP creates a template for how they might be invited to direct their energy. So, my feeling is that the creation of Emergency Plans is something that could either happen in parallel with the EDAP process, or could be the work of a separate group. I think it would shift public perception of the work of that initiative away from it being seen as a positive, forward looking and inclusive thing, to being a doomer cult, the embodiment of what everyone always suspected environmentalists were all about in the first place. It certainly has an important role, but perhaps it is something that just happens discretely…”

If there is no looming emergency and you are planning for one, people may call you a doomer. When the emergency is palpable and undeniable and everyone is filled with a sense of urgency, then people may call you a realist-if you can describe what is happening accurately and point to solutions in a helpful way. Much depends on one’s tone of voice. This is the source of much of Obama’s attraction: he has earned the nickname “no-drama Obama” because he’s so unflappable. At this point, no one is going to call us doomers for engaging in disaster planning unless we have shrill voices and are buying up all the ammunition in town. A calm voice with a realistic yet helpful message will get you a long way these days.

Maybe, as you suggest, aspects of the disaster-planning/EDAP process need to be discrete, but at this stage I think the existence of such a process is more likely to be a drawing-point than a put-off. I agree that the EDAP is already a helpful template in guiding existing groups to pitch in to address crises, though perhaps that could be more explicit.

“I think we clearly can’t ignore [the economic crisis] or view it as a bump or pothole-and my gut feeling is that it is (3), the combination of challenge and opportunity. It may be though that the truth is that the opportunity is that the emergencies coming towards us will serve to demonstrate the need for transition more than anything else.”

Yes, I agree completely. Yet somehow I still think there is more we could be doing. I understand: in the past two years Transition has taken off like a rocket; if it’s working, why screw with it? Perfectly sensible. At the same time, I have to underscore my sense that what we are seeing unfolding in the world right now will change just about everything. And everyone will have to adapt to survive-Transition (and Post Carbon Institute) included. I’m looking for both a plan to save the community, and a plan to help our efforts remain relevant and perhaps become much more so.

It’s worth asking: What is Transition actually capable of doing to respond to an unprecedented economic crisis? In the most cynical assessment, it consists essentially of a lot of well-meaning local activists wanting to envision a better future. These are not the sorts of people to engage in serious emergency response work, nor do they have the support mechanisms to enable them to do it.

But who does have the ability to do that work in the context of a vision of what needs to be done also to solve the longer-term crises of climate change and resource depletion? For whatever reason, Transition is appearing on the world scene at the right time, it is viral, and it has a positive, hopeful face that people respond to. It needs to keep that positive, hopeful visage, but perhaps it also needs to be perceived as being responsive to changing circumstances. If what we are proposing to do can only succeed if we have a decade or so of “normal” economic conditions during which to grow our base, train more trainers, and deploy our methods, then . . . it may indeed be too late. But if we can adapt quickly and thereby strategically help our communities adapt, the result may be beneficial both to communities and to those who are organizing Transition efforts.

Obama is telling Americans that the economy is going to get much worse before it gets better. He was elected on a platform of hope, but he’s dishing out some pretty grim forecasts these days. I want him to succeed, but I fear that circumstances will overpower his ability to respond.

You’re likewise a hopeful, unflappable public figure, Rob, and people love you for it (as well as for other qualities-your ability as a writer, your humor, and more). I suspect that there are a lot of folks out there waiting to see how the Transition message will evolve in response to changed circumstances. But I shouldn’t presume to speak for them; I am really just stating my own thoughts here.

The emphasis of my own work will change from here on. I know I gained whatever notoriety I have on the basis of my gloomy writings about Peak Oil, but that may be a near-dead issue for the time being. I won’t leave it entirely behind (energy is ultimately where it’s at and I still have a book and some other publications on energy issues coming out in the next few months), but this year I intend to focus primarily on identifying efforts taking place in communities around the world that (1) address basic human needs in the context of economic collapse (2) are replicable and/or scalable, and (3) set us on the path toward sustainability. In fact this will also be the main focus for Post Carbon Institute for the foreseeable future, as we expand our Fellows program. I hope that what we come up with as a think tank will be immediately useful to Transition initiatives everywhere.

I’m confident that in our partnership we will be able to do some really useful work. I realize that my suggestions are vague. Maybe overt disaster planning is just not practical at this stage (it may well be too late, and we may well not have the capacity), and maybe all that can come from this is a some new messaging that acknowledges the dire circumstances and that promises that useful ideas for responding to communities’ burgeoning problems will be forthcoming.

In any case, I’m delighted to be working in collaboration. I have nothing but admiration for what the Transition Network has accomplished so far. May those accomplishments grow!

Best wishes always,

February 4th 2009.

Dear Richard

Thanks so much for your considered and fascinating response. I’m delighted you feel happy for this exchange to be made public, as I think it will be of great interest to people. As you say, things are moving so very fast, it is fascinating to observe. I was very interested to hear you say that you feel that peak oil is in danger of becoming a non-issue… would it be fair to say that some of the peak oil community, in an understandable effort to communicate the implications of peaking, didn’t communicate clearly the possible implications of peak demand being reached before peak supply? I still find it a very useful lens to help people view things through, but as you say, we have to stay nimble and on our toes, as the economic situation is what is most clearly in peoples’ faces.

I feel that your last email actually gave me a certain ‘Eureka’ moment. As you state, Transition “is working, so why screw with it?”, but at the same time, as you put it, “in the most cynical assessment, it consists essentially of a lot of well-meaning local activists wanting to envision a better future. These are not the sorts of people to engage in serious emergency response work, nor do they have the support mechanisms to enable them to do it”.

Yet what Transition groups have done most powerfully in my experience is at least start to weave into their communities a powerful web of connections and links that weren’t there before. It has developed a language and an approach that is as accessible to Councils and businesses as it is to teachers, activists and estate managers. This, I think, has been one of the things that is most powerful about it. In Totnes for example, were the shit to hit the fan tomorrow, TTT now knows the best gardeners, the best people at teaching it, who are the main landowners, who are the local funders, and so on, so the drawing together of those pieces is far easier than it would have been before. This is highly valuable, and is perhaps one of the key contributions, alongside the awareness raising work..

My Eureka moment comes from thinking about how to best combine the need to build resilience as well as the need to build the ability to better respond in emergencies. As you know, the Transition idea emerges from a background in permaculture and bioregionalism, although permaculture training (and I write this as a teacher of many years) tends to assume a gentle transition in its perspective. While it offers an invaluable set of thinking tools, its longer term focus on ‘permanence’ perhaps doesn’t lead to a sufficiently appropriate set of tools. For example, teaching sheet mulching with vast amounts of cardboard and compost may not be the best approach for people faced with turning a football pitch into allotments.

Were a training, presented in the Transition way, i.e. positive, empowering, visionary, yet intensely practical, to be developed and rolled out though Transition groups, this could be a very useful tool. It could pull together the best from bushcraft training (but without the excessively survivalist flavour), the best from bioregional studies (i.e. how to read where you are, what is home, what is the nature of where you live), the best of appropriate technology (how to build simple yet effective tools and then how to use them), biointensive horticulture (most amount of food from smallest amount of land), traditional allotment gardeners (growing food with what you’ve got), and also emergency response organisations (how to organise amid chaos, how to prioritise based on situations).

Indeed, it could also create a very dynamic interface between emergency response organisations, green groups, Transition, education providers, probation/youth offenders services, and a range of training providers, among others. Perhaps even the Army (now there’s a sacreligious thought!!). What would be important would be that it would move beyond the usual crowd that go to such courses. It would draw as much from the work of activists such as Catherine Sneed, engaging young men who have been in trouble, as it would the usual permaculture course-going public.

Such a programme, which could become core in schools and colleges, would start to create a team of people who would be ‘on call’ for this, and who could undergo regular additional training. My friend who is a fireman did his core training but then has to do regular top-up trainings. Perhaps then a key part of the EDAP is looking at how that training could be developed and then rolled out, as well as how it might be funded. The key aspect of it, as with all of this, is tone. If it is presented as an emergency response force training, I don’t think it would be as effective as if it was Transition Teams or something. It would be great to get some marketing/advertising bods on board with it, to really focus the presentation and the language. I think Chris Martenson’s Crash Course was designed with some of this in mind. There is also a fascinating area of overlap in terms of working with young men, and menswork, which is a vital thing to look at too in all this.

I think that such a training, if properly designed, could run alongside the regular work of Transition initiatives, and run alongside the EDAP process, while at the same time generating useful insights for that. It builds on the positive slant of this. I do wonder though, thinking of my family and neighbours, just how much this kind of approach would engage people, given that many people will respond to the developing economic situation by thinking “how can I remortgage the house so as to reduce my payments”, “how can I reduce my overheads by switching to a different home phone provider” and “how secure is my job”, rather than “how am I going to store rainwater”, “how am I going to dig up my garden” and so on. In that regards, the Transition awarness raising stuff it clearly vital alongside this.

In that sense, one could still have a Transition emergency preparedness group, if there were people keen to do such a thing, but Transition Network could design and pilot such a training that could then be rolled out through the network. The EDAP would be doing the longer term resilience building, while at the same time training and mobilising a group who would be of use in both scenarios. This would, as you say, create more “adults” in the community, but in a sense of maturity rather than paranoid survivalists. Key, as you say, in maintaining ’societal coherence’.

Anyway, just a few thoughts. The field we are exploring here is so vast and wide, it is hard to pin it down to particular things, but for me I feel that the above maybe offers one way of building on what is best about Transition while at the same time developing a practical and relevant side to accompany the awareness raising work and the networking that combines to create the EDAP.

If you’re interested in looking in more detail at how to develop this line of thinking, perhaps we could fix a time to have a telephone or skype conference, with me and Peter and Ben over here? If it seems to be fruitful, perhaps we could look at running a workshop on it at our conference on 24/5/6 April, with you attending electronically?

With very best wishes

Rob

February 4th 2009

Rob,

I love your idea. At New College (R.I.P.) we always offered experiences in backpacking, camping, and primitive/appropriate technology alongside our heady course work in anthropology and social critique. It’s what many of the students came away remembering best. It gave them a sense of basic mammalian competence that took the edge off of the grim information we were imparting. The key will be to offer skill-building experiences that are both inviting/fun and relevant to the kinds of practical challenges people will be facing.

As you say, many people will be focused on questions like

“how can I remortgage the house so as to reduce my payments”, “how can I reduce my overheads by switching to a different home phone provider” and “how secure is my job”, rather than “how am I going to store rainwater”, “how am I going to dig up my garden” and so on.”

If we can address people’s very real economic concerns, we will be offering tangible benefit. What are some strategies for saving money? Get family and friends to move in with you. Find ways to cook with less fuel (solar cookers are only one of many strategies there), use less water (gray-water recycling with or without re-plumbing your house), ditch your car, share stuff, repair stuff, make stuff. How to live happily without x, y, and z. How to live more happily and healthily than ever on a fraction of the income.

The big question on everyone’s mind is: How can I get by once I’ve lost my job (or now that I’ve lost it)? Learning how to raise capital and form cooperative ventures that benefit the community (and are therefore worthy of community support) could be a life-saver. Also: how to set up barter networks, how to make community currencies work for you.

The design of such a course will be easiest if we get together three or four people who have complementary skill-sets and who are already teaching many of these things. The Voluntary Simplicity people have some of this down; also the appropriate technology folks; the primitive tech folks; the co-op venture folks. Now that I think of it, it might take more than three or four “experts.” But maybe there are those like Chris Martensen who are already aggregating these skills. It would not be so good to initiate a course design process that requires months and months of work and lots of investment, given that time and money are in short supply. The key is to synergize existing resources. As you know from the success of Transition itself, if it’s the right idea at the right time, circumstances will conspire to help.
Content on this site is subject to our fair use notice.
Source URL: http://energybulletin.net/node/49052

Links:
[1] http://transitionculture.org/2009/05/27/to-plan-for-emergency-or-not-heinberg-and-hopkins-debate/
[2] http://transitionculture.org/wp-content/uploads/robrichard.jpg
[3] http://transitionculture.org/2008/05/02/richard-heinberg-on-resilient-communities/
[4] http://www.energybulletin.net/node/40919

View Richard Heinberg’s Presentation on Resilient Communities here.

Richard Heinberg on Resilient Communities: Day 7 of the Findhorn Positive Energy Conference

The final day of the recent Findhorn Positive Energy Conference began with rain driving on the bedroom window. This extraordinary week at Findhorn had offered us a year’s worth of weather in one week. Snow, sleet, an odd kind of snow I’ve never seen before that looked more like polystyrene pellets than actual snow and that actually bounced when it hit the ground, sun warm enough for people to lie on the grass to soak it up, hard frost, strong chill winds and now, driving rain.
After doing our packing, it was off to the Universal Hall for Richard Heinberg’s talk, ‘Resilient Communities. Paths for Powering down; an exercise in strategic thinking’. Once again the Findhorn blogger has done a wonderful job of creating an accurate record of this, so I will instead offer my reflections.

His talk was underpinned by 8 assumptions. The first was that global oil production are nearing an all time maximum and will begin to decline within the next 18-24 months, with gas and coal peaks not far behind. The second was that the consequences, as identified in the Hirsch Report, will be severe.

Assumption 3 is that there will be no technofix, no silver bullet that will mean that business as usual can continue. Therefore, Assumption 4 continues, we will have to power down. Assumption 5 was that in the meantime, climate change poses thorny policy challenges where everyone wants to be seen to be doing the right thing, but enormous economic interests stand in the way of enforcing effective global agreements, which without China and the US will be ineffective.

His sixth assumption is that Climate Change makes global Powerdown necessary, whereas Peak Oil means it is not only possible but unavoidable. The seventh is that the powering-down process will be complex, lengthy, and perilous, and his final assumption was that these are not the only looming crises -nor even necessarily the most imminent. It may well be that a financial crash, already beginning, will affect us first.

He gave an overview of the emerging responses, the bottom up approaches such as Transition Initiatives, Relocalisation Outposts, and so on, and of the top down responses, such as Post Carbon cities and local government plans such as the Oakland Peak Oil Task force, of which he is a member.

Richard then unveiled a concept which he has been evolving and of which this was the first public airing. He calls it the Resilient Communities Action Plan (a careful assembly of those 4 letters that could so easily have gone horribly wrong). The idea is that it is something that is a companion to the Energy Descent Action Plan, but it is different, it is, in effect, an emergency response plan, a Plan C to the EDAP’s Plan B. It would be created by a working group within a Transition Initiative or a Post Carbon group, and would sit alongside the main plan as an emergency response that could be taken off the shelf when required.

While crisis can equal opportunity, he argued, it may not necessarily yield the kind of opportunity we are talking about here. In the past, crises have produced Hitler, and the kind of insidious undermining of economies that Naomi Klein set out in her (enormous) book Shock Doctrine.

This plan would involve many of those who have relevant knowledge and would be made very visible to the community at large. He unveiled, with a tip of the hat to the 12 Steps of Transition, his 10 Steps to a Resilient Community. They were;
Form a working group
Identify people and organizations with something important to offer post-peak
Ask their help and participation
Work with them to develop a contingency plan in their field: how to scale-up quickly?
Seek input from disaster management officials
Contact mainstream organizations responsible for water, food, power, fuel, health care, etc.
Assemble a coherent Resilience Plan
Present the plan
Implement the plan
Work with other communities to create a national plan: repeat steps 1-10 at higher levels

Most response groups, he argued, cultivate an upbeat, hopeful tone, which is essential. In contrast, creating this kind of disaster management is a sobering activity-but it is strategically and practically necessary. Somebody’s got to do it!

As with many things that arise from hearing Richard speak, one often needs time to go off and digest these ideas for a while. My initial thought is that this could be possible as a subset of the EDP process, and could be something that could emerge from the material gathered. However, it felt to me, from what Richard said, that it involved the creation of a panel of experts, and that the danger with that approach is that the community feels no sense of involvement in the plan itself.

I can see his argument that, in effect, our Energy Descent Plans need to maximize their resilience as it were, as in they can be as robust in the face of a rapidly onsetting breakdown as in a more gentle transition. My initial sense is that rather than having a separate process, that the creation of an EDP should involve the continual assessment as to how its recommendations would hold up in the face of a sudden shock. I guess that the proof of the pudding will be in the eating, as in in a couple of months when we begin the Totnes EDAP process formally, we will bear that in mind and see how it might fit in. Richard was, as ever, authoritative and passionate, clear and forward thinking.

The next speaker was Richard Lochhead, the local MSP (you can read the Findhorn blogger’s version here). He was introduced as a politician who finally was starting to talk the right talk. He announced that ’sustainable economic growth’ (which by this point in the conference most delegates recognized as an oxymoron) was at the heart of their policy making. They are committing to an 80% reduction in CO2 emissions by 2050 (a 20% improvement on Westminster), and he announced a Climate Change Fund for communities which will give out £17 million over the next 3 years.

He said he was delighted recently to have spoken at the launch of Transition Town Bigga, and is very supportive of Transition Initiatives in Scotland. His dedication to community empowerment, he said, is not just jargon, it is the real thing.

He is aiming (I forget by when) for 50% of energy to be coming from renewable, and that a Scottish renewable energy revolution has more chance of success if it comes from the bottom up rather than top down. His department would be offering £13.5 million for the support of microgeneration, and would make the installation of renewables in schools a priority.

His talk was a mixture of vision and pragmatism. As so often at amazing conferences such as Positive Energy, it is a shame when politicians are just dropped into the event, not having shared the experiences and the learning process that those at the conference have undergone. In questions, he was asked for his view on aviation, which he replied by saying that he was supportive of expansion of air travel, as Scotland was starting from a low base and needed to catch the rest of the UK up a bit.

He was questioned on the term ’sustainable economic growth’, and replied that if a renewable revolution is to take place, and if that manufacturing is to take place in Scotland, that needs an economy that is growing. Asked how deeply peak oil is reflected in his thinking and policies, he replied that he was aware they still had a lot further to go.

After lunch was a very touching closing ceremony, and then, after a final walk around Findhorn with my camera, supper. Then Rowan and I were off to the station and onto our night sleeper home, a much more restless night’s sleep than on the way up.

The Report Format for each group to contribute toward the “sketch plan” can be viewed here.

Initial Framing Questions:
1. What do I see that needs to be done to create a sustainable Tucson.
2. What question am I motivated to address right now?
3. Who else should be “at the table”?

For each group, decide who will
1. Facilitate
2. Take Notes
3. Debrief to large group
4. Use the “Open Space” process for large group brainstorming

Pages for Discussion Groups by Topic: Click on page links below for reports.

Transportation.

Food.

Water.

Neighborhoods.

Economy/Jobs/Money.

Public Policy and Urban Planning.

Awareness and Education.

Quantifying and Analyzing Sustainability.

Cultural and Spiritual Change.

* If the topic of your interest does not appear above, that just means no one has yet taken the lead in this process for that topic.

If you’d like to form a sustainabilty plan write-up group around a different topic, please email us through our Contact page to tell Sustainable Tucson Core Team of your interest.

For ideas of other topics that have been on our radar, please see our Topics of Focus pages.Working-group initial format and posts - from Sustainable Tucson’s 2009 Sustainability Planning Initiative

The Natural Resources Conservation Services (NRCS) has created a special $50 million pool of funding for a new Organic Initiative under the Environmental Quality Incentives Program (EQIP). The Initiative will provide payments and technical assistance to transitioning and existing organic farmers who adopt NRCS conservation practices used in organic production systems.
Eligible Farmers:

* Farmers just beginning or in the process of transitioning to organic production;
* Existing certified organic farmers who want to transition additional acres or animals;
* Existing certified organic farmers who need to adopt additional conservation measures;
* Producers who sell less than $5,000 in agricultural products and are thus exempt from formal certification are still eligible for Organic Initiative payments.

Read More Here…

The 4 Principles of Open Space:

1. Who ever comes are the right people

2. Whatever happens is the only thing that could have
3. Whenever it starts is the right time
4. When it’s over, it’s over

The law of two feet. If you decide that you’re not that interested in what’s going on at the table you are located at, walk to another table or none.

There are two types of wanderers…
The bumblebees go from table to table cross-pollinating as they go.
The butterflies head for the snack table and hang out and talk. And that’s ok too.

WASHINGTON - Cars, power plants and factories could all soon face much tougher pollution limits after a government declaration Friday setting the stage for the first federal regulation of gases blamed for global warming.

The Environmental Protection Agency took a big step in that direction, concluding that carbon dioxide and five other greenhouse gases are a major hazard to Americans’ health. That was a reversal from the Bush administration, which resisted such a conclusion and said it would be costly for companies to meet new emission limits, and therefore could harm the national economy.

“In both magnitude and probability, climate change is an enormous problem (and) the greenhouse gases that are responsible for it endanger public health and welfare,” said the EPA, concluding the dangers warrant action under federal air pollution laws.
It was the first time the federal government had said it was ready to use the Clean Air Act to require power plants, cars and trucks to curtail their release of climate-changing pollution, especially carbon dioxide from the burning of fossil fuels.

The agency said the science pointing to man-made pollution as a cause of global warming is “compelling and overwhelming.” It also said tailpipe emissions from vehicles contribute.

EPA Administrator Lisa Jackson cautioned that regulations are not imminent and made clear the Obama administration would prefer that Congress address the climate issue through a broader “cap-and-trade” program that would limit heat-trapping pollution.
But she said it was clear from the EPA analysis “that greenhouse gas pollution is a serious problem now and for future generations” and that steps are needed to curtail the impact.
Even if actual regulations are not imminent, the EPA action was seen as likely to encourage action on Capitol Hill.

It’s “a wake-up call for Congress” - deal with it directly through legislation or let the EPA regulate, said Sen. Barbara Boxer, D-Calif., who chairs the Senate committee dealing with climate legislation. If Congress doesn’t move, Boxer said, she would press the EPA to taker swift action.

Rep. Ed Markey, D-Mass., whose House Energy and Commerce subcommittee hopes to craft legislation in the coming weeks, called the EPA action “a game changer.”
“It now changes the playing field with respect to legislation. It’s now no longer doing a bill or doing nothing. It is now a choice between regulation and legislation,” said Markey.

Republicans and some centrist Democrats have been critical of proposed cap-and-trade climate legislation, arguing it would lead to much higher energy prices. Such a measure could impose an economy-wide limit on greenhouse gas emissions but let individual companies or plants trade emission allowances among one another to mitigate costs.

But environmentalists called the EPA action a watershed in addressing climate change.
“It is the first time the federal government has said officially the science is real, the danger is real and in this case that pollution from cars contributes to it,” said David Doniger, climate policy director for the Natural Resources Defense Council, an advocacy group.
Reaction from energy-intensive industries was critical. “The proposed endangerment finding poses an endangerment to the American economy and every American family,” said Jack Gerard, president of the American Petroleum Institute.

by Steven Gjerstad and Vernon L. Smith
Published in The Wall Street Journal on April 6, 2009.

Dr. Vernon Smith is a Nobel Laureate economist who taught and conducted research in experimental economics at the U of A.  Sustainable Tucson Core Team member, Bob Cook, took his UA course in 1979.

______________________________________

Bubbles have been frequent in economic history, and they occur in the laboratories of experimental economics under conditions which - when first studied in the 1980s - were considered so transparent that bubbles would not be observed.

We economists were wrong: Even when traders in an asset market know the value of the asset, bubbles form dependably. Bubbles can arise when some agents buy not on fundamental value, but on price trend or momentum. If momentum traders have more liquidity, they can sustain a bubble longer.

But what sparks bubbles? Why does one large asset bubble - like our dot-com bubble - do no damage to the financial system while another one leads to its collapse? Key characteristics of housing markets - momentum trading, liquidity, price-tier movements, and high-margin purchases - combine to provide a fairly complete, simple description of the housing bubble collapse, and how it engulfed the financial system and then the wider economy.

In just the past 40 years there were two other housing bubbles, with peaks in 1979 and 1989, but the largest one in U.S. history started in 1997, probably sparked by rising household income that began in 1992 combined with the elimination in 1997 of taxes on residential capital gains up to $500,000. Rising values in an asset market draw investor attention; the early stages of the housing bubble had this usual, self-reinforcing feature.

The 2001 recession might have ended the bubble, but the Federal Reserve decided to pursue an unusually expansionary monetary policy in order to counteract the downturn. When the Fed increased liquidity, money naturally flowed to the fastest expanding sector. Both the Clinton and Bush administrations aggressively pursued the goal of expanding homeownership, so credit standards eroded. Lenders and the investment banks that securitized mortgages used rising home prices to justify loans to buyers with limited assets and income. Rating agencies accepted the hypothesis of ever rising home values, gave large portions of each security issue an investment-grade rating, and investors gobbled them up.

But housing expenditures in the U.S. and most of the developed world have historically taken about 30% of household income. If housing prices more than double in a seven-year period without a commensurate increase in income, eventually something has to give. When subprime lending, the interest-only adjustable-rate mortgage (ARM), and the negative-equity option ARM were no longer able to sustain the flow of new buyers, the inevitable crash could no longer be delayed.

The price decline started in 2006. Then policies designed to promote the American dream instead produced a nightmare. Trillions of dollars of mortgages, written to buyers with slender equity, started a wave of delinquencies and defaults. Borrowers’ losses were limited to their small down payments; hence, the lion’s share of the losses was transmitted into the financial system and it collapsed.

During the 1976-79 and 1986-89 housing price bubbles, the effective federal-funds interest rate was rising while housing prices rose: The Federal Reserve, “leaning against the wind,” helped mitigate the bubbles. In January 2001, however, after four years with average inflation-adjusted house price increases of 7.2% per year (about 6% above trend for the past 80 years), the Fed started to decrease the fed-funds rate. By December 2001, the rate had been reduced to its lowest level since 1962. In 2002 the average fed-funds rate was lower than in any year since the 1958 recession. In 2003 and 2004 the average fed-funds rates were lower than in any year since 1955 when the rate series began.

Monetary policy, mortgage finance, relaxed lending standards, and tax-free capital gains provided astonishing economic stimulus: Mortgage loan originations increased an average of 56% per year for three years - from $1.05 trillion in 2000 to $3.95 trillion in 2003!

By the time the Federal Reserve began to slowly raise the fed-funds rate in May 2004, the Case-Shiller 20-city composite index had increased 15.4% during the previous 12 months. Yet the housing portion of the CPI for those same 12 months rose only 2.4%.

How could this happen? In 1983, the Bureau of Labor Statistics began to use rental equivalence for homeowner-occupied units instead of direct home-ownership costs. Between 1983 and 1996, the price-to-rental ratio increased from 19.0 to 20.2, so the change had little effect on measured inflation: The CPI underestimated inflation by about 0.1 percentage point per year during this period. Between 1999 and 2006, the price-to-rent ratio shot up from 20.8 to 32.3.

With home price increases out of the CPI and the price-to-rent ratio rapidly increasing, an important component of inflation remained outside the index. In 2004 alone, the price-rent ratio increased 12.3%. Inflation for that year was underestimated by 2.9 percentage points (since “owners’ equivalent rent” is about 23% of the CPI). If home-ownership costs were included in the CPI, inflation would have been 6.2% instead of 3.3%.

With nominal interest rates around 6% and inflation around 6%, the real interest rate was near zero, so household borrowing took off. As measured by the Case-Shiller 10 city index, the accumulated inflation in home-ownership costs between January 1999 and June 2006 was 151%, but the CPI measured a mere 23% increase. As the Federal Reserve monitored inflation in the early part of this decade, home-price increases were no longer visible in the CPI, so the lax monetary policy continued. Even after the Fed began to slowly raise the fed-funds rate in May 2004, the average rate remained low and the bubble continued to inflate for two more years.

The unraveling of the bubble is in many ways the most fascinating part of the story, and the most painful reality we are now experiencing. The median price of existing homes had fallen from $230,000 in July to $217,300 in November 2006. By the beginning of 2007, in 17 of the 20 cities in the Case-Shiller index, prices were falling. Serious price declines had not yet begun, but the warning signs were there for alert observers.

Kate Kelly, writing in this newspaper (Dec. 14, 2007), tells the story of how Goldman Sachs avoided the fate of many of the other investment banks that packaged mortgages into securities. Goldman loaded up on the Markit ABX index of credit default swaps between early December 2006 and late February 2007, as their price dropped from 97.70 on Dec. 4 to under 64 by Feb. 27. But the market was not yet in free-fall: The insurance on AAA-rated parts of the mortgage-backed securities (MBS) remained inexpensive. By mid-summer 2007, concern spread to the AAA-rated tranches of MBS.

At the end of February 2007, the cost of $10 million of insurance on the AAA-rated portion of a mortgage-backed security was still only $68,000 plus a $9,000 annual premium. Housing-market conditions deteriorated further in the first half of 2007. Case-Shiller tiered price sequences in Los Angeles, San Francisco, San Diego and Miami all show serious declines by the summer of 2007. Prices in the low-price tier in San Francisco were down almost 13% from their peak by July 2007; in San Diego they were off 10% by July 2007. Startling developments began to unfold that month. Between July 9 and Aug. 3, 2007, the cost of insuring AAA MBS tranches went from $50,000 upfront plus a $9,000 annual premium for $10 million of insurance to over $900,000 upfront (plus the annual premium).

Once the cost of insuring new mortgage-backed securities skyrocketed, mortgage financing from MBS rapidly declined. Subprime originations plummeted from $160 billion in the third quarter of 2006 to $28 billion in the third quarter of 2007. Mortgage-backed security issuance fell comparably, from $483 billion in all of 2006 to only $30.7 billion in the third quarter of 2007. Other measures of new loan originations were falling at the same time. The liquidity that generated the housing market bubble was evaporating.

Trouble quickly spread from the cost of insuring mortgage-backed securities to problems with credit markets generally, as the spread between short-term U.S. Treasury debt and the LIBOR rate increased to 2.40% from 0.44% between Aug. 8 and Aug. 20, 2007. Since U.S. Treasury debt is generally considered secure, but a bank’s loans to another bank carry some risk of default, the spread between these rates serves as an indicator of perceived risk in financial markets.

In one city after another, prices of homes in the low-price tier appreciated the most and then fell the most; prices in the high-priced tier appreciated least and fell the least. The price index graphs for Los Angeles, San Francisco, San Diego and Miami show that in all of these cities, prices in the low-price tier have fallen between 50% and 57%. Moreover, housing prices have continually declined in every market in the Case-Shiller index. According to First American CoreLogic, 10.5 million households had negative or near negative equity in December 2008. When housing prices turned down, many borrowers with low income and few assets other than their slender home equity faced foreclosure. The remaining losses had to be absorbed by the financial system. Consequently, the financial system has suffered a blow unlike anything since the Great Depression, and the source is the weak financial position of the people holding declining assets.

Earlier, during the downturn in the equities market between December 1999 and September 2002, approximately $10 trillion of equity was erased. But a measure of financial system performance, the Keefe, Bruyette, & Woods BKX index of financial firms, fell less than 6% during that period. In the current downturn, the value of residential real estate has fallen by approximately $3 trillion, but the BKX index has now fallen 75% from its peak of January 2007. The financial sector has been devastated in this crisis, whereas it was almost completely unaffected by the downturn in the equities market early in this decade.

How can one crash that wipes out $10 trillion in assets cause no damage to the financial system and another that causes $3 trillion in losses devastate the financial system?

In the equities-market downturn early in this decade, declining assets were held by institutional and individual investors that either owned the assets outright, or held only a small fraction on margin, so losses were absorbed by their owners. In the current crisis, declining housing assets were often, in effect, purchased between 90% and 100% on margin. In some of the cities hit hardest, borrowers who purchased in the low-price tier at the peak of the bubble have seen their home value decline 50% or more. Over the past 18 months as housing prices have fallen, millions of homes became worth less than the loans on them, huge losses have been transmitted to lending institutions, investment banks, investors in mortgage-backed securities, sellers of credit default swaps, and the insurer of last resort, the U.S. Treasury.

Steven Gjerstad is a visiting research associate at Chapman University. Vernon L. Smith is an adjunct scholar for the Cato Institute, a professor of economics at Chapman University, and the 2002 Nobel Laureate in Economics.
More by Vernon L. Smith

In an important paper in 1983, Ben Bernanke argued that during the Depression, severe damage to the financial system impeded its ability to perform its economic role of lending to households for durable goods consumption and to firms for production and trade. We are seeing this process playing out now as loan funds for automobile purchases have withered. Auto sales fell 41% between February 2008 and February 2009. Retail and labor markets too are now part of the collateral damage from the housing debacle. Housing peaked in early 2006. Losses from the mortgage market began to infect the financial system in 2006; asset prices in that sector began to decline at the end of 2006. Meanwhile, equities and the broader economy were performing well, but as the financial sector deteriorated, its problems blindsided the rest of the economy.

The events of the past 10 years have an eerie similarity to the period leading up to the Great Depression. Total mortgage debt outstanding increased from $9.35 billion in 1920 to $29.44 billion in 1929. In 1920, residential mortgage debt was 10.2% of household wealth; by 1929, it was 27.2% of household wealth.

The Great Depression has been attributed to excessive speculation on Wall Street, especially between the spring of 1927 and the fall of 1929. Had the difficulties of the banking system been caused by losses on brokers’ loans for margin purchases in 1929, the results should have been felt in the banks immediately after the stock market crash. But the banking system did not show serious strains until the fall of 1930.

Bank earnings reached a record $729 million in 1929. Yet bank exposures to real estate were substantial; as the decline in real estate prices accelerated, foreclosures wiped out banks by the thousands. Had the mounting difficulties of the banks and the final collapse of the banking system in the “Bank Holiday” in March 1933 been caused by contraction of the money supply, as Milton Friedman and Anna Schwartz argued, then the massive injections of liquidity over the past 18 months should have averted the collapse of the financial market during this current crisis.

The causes of the Great Depression need more study, but the claims that losses on stock-market speculation and a monetary contraction caused the decline of the banking system both seem inadequate. It appears that both the Great Depression and the current crisis had their origins in excessive consumer debt - especially mortgage debt - that was transmitted into the financial sector during a sharp downturn.

What we’ve offered in our discussion of this crisis is the back story to Mr. Bernanke’s analysis of the Depression. Why does one crash cause minimal damage to the financial system, so that the economy can pick itself up quickly, while another crash leaves a devastated financial sector in the wreckage? The hypothesis we propose is that a financial crisis that originates in consumer debt, especially consumer debt concentrated at the low end of the wealth and income distribution, can be transmitted quickly and forcefully into the financial system. It appears that we’re witnessing the second great consumer debt crash, the end of a massive consumption binge.

by Dave Cohen

Published on Energy Bulletin (http://www.energybulletin.net) March 5, 2009

What is the biggest impediment in 2009 to mitigating the harmful effects of energy problems in the 21st century? The answer may surprise you-it is insolvent zombie banks and our entrenched FIRE economy (Finance, Insurance, Real Estate). Allow me to explain.

Another Tragic Misallocation of Capital

Last week I took the long view of the climate and resource challenges we face in coming decades. Common sense tells us that the longer we wait to address those problems, the worse the consequences will be. Replacing oil consumption with widespread adoption of plug-in electric hybrids in 2020 after world oil production is already in permanent decline-provided this goal is actually possible-is like closing the barn door after the horse has left. What we do now has stronger, longer-lasting effects than anything we do in 2015, 2020 or beyond. There is not a moment to lose.

On February 24 Bloomberg reported that U.S. bailout and stimulus guarantees now amount to $11.6 trillion dollars ($11,600,000,000,000). Of this money, about 90% has been directed or pledged toward “fixing” the broken banking system.

Two clear and mutually exclusive paths lie before us in 2009. I am sorry to report that as of March the Obama administration is going down the wrong one. In my example below I will focus on energy investment, but my remarks could just as easily pertain to health care, manufacturing or education. I’ll use a round number to make my point-I think $10 trillion dollars will do very nicely. We might ask how some of this money would be best spent in the energy arena.
Yes, We Can! - spend the money on reducing oil consumption and transforming the power grid. This would include large expansion of public transit in metropolitan areas (electrified light rail, trolleys, buses), an expanded system of long-haul railroads for both freight and passengers, direct financial support for troubled American-built PHEVs and batteries, wind and thermal solar farms to replace coal-fired base-load capacity, long distance power transmission lines to hook those farms up to the grid, encouraging reorganization of work & living patterns to decrease energy consumption, etc.
No, We Can’t! - spend the money propping up insolvent banks like Citigroup or insolvent insurance companies like American International Group (AIG), the very institutions whose irresponsible risk-taking wrecked the global financial system. Merrill Lynch’s John Thain approved an “accelerated pool” of $4 billion in bonuses at the same time that Bank of America (which acquired Merrill) was in Washington begging for an additional $20 billion in bailout money. What energy-related projects could have been built with $24 billion in funding?

What about the stimulus package? That contained some useful energy spending, right? Of the $787 billion in the bill, only $43 billion was spent on direct expenditures and tax breaks for “clean and efficient” energy. That amounts to only 5.46% of the stimulus and 0.37% of the grand total ($11.6 trillion) broken out by Bloomberg. That’s next to nothing in view of the climate and resource catastrophes on the farther horizon. We need to replace roads, not repair them.

Just today (March 2, 2009) the “federal government … is providing embattled insurer AIG with an additional $30 billion in capital on an as needed basis, but also exposing U.S. taxpayers to additional risk.” The new money, now added to the $150 billion already committed, comes from the Troubled Asset Relief Program, or TARP. AIG lost a record $61.66 billion dollars in the fourth quarter of 2008.

The latest results [the quarterly loss] included the restructuring charges and write-downs as the company continues to be slammed by credit-market deterioration, especially in its exposure to commercial mortgage-backed securities

“The company [A.I.G.] continues to face significant challenges, driven by the rapid deterioration in certain financial markets…. The additional resources will help stabilize the company, and in doing so help to stabilize the financial system,” the Treasury and Federal Reserve said in a statement.

The AIG funding eclipses the $50 billion that Citigroup Inc. has received from three Treasury programs, and the $45 billion that Bank of America Corp. has received, although each of those firms might receive additional funding in coming months, if necessary. The two banks also have commitments from the U.S. government to back potential losses down the road, putting hundreds of billions of dollars in public funds on the line.

The Federal Reserve (Chairman Ben Bernanke) and the Treasury (Obama’s Secretary Tim Geithner) have the temerity to lecture-in effect, threaten us-concerning why AIG is too big to fail.

Given the systemic risk A.I.G. continues to pose and the fragility of markets today, the potential cost to the economy and the taxpayer of government inaction would be extremely high. AIG provides insurance protection to more than 100,000 entities, including small businesses, municipalities, 401(k) plans, and Fortune 500 companies who together employ over 100 million Americans. AIG has over 30 million policyholders in the U.S. and is a major source of retirement insurance for, among others, teachers and non-profit organizations. The company also is a significant counterparty to a number of major financial institutions. [emphasis added]

That last sentence looks almost like an afterthought, doesn’t it? On the contrary, it is the primary motivation behind government policy, not the threat to small businesses or 401(k) plans.

Under the inspired leadership of Maurice “Hank” Greenberg, the financial products division of AIG (AIGFP) sold credit default swaps (default insurance) on mortgage-backed securities and other derivatives to banks in the U.S. and all over the world, including many large European banks. Those are the counterparties referred to in the joint Fed/Treasury statement. The value of these derivatives went bust after the Housing Bubble collapsed. Consequently-

AIG almost collapsed in September, 2008 after ratings agency downgrades triggered demands for billions of dollars in extra collateral from firms that had bought derivative-based protection from the insurer on complex mortgage-related products known as collateralized debt obligations, or CDOs…

[firms making demands included Goldman Sachs, Merrill Lynch, UBS and Deutsche Bank]

By Nov. 5, the insurer had paid out $37.3 billion of that money to counterparties who had purchased a certain type of derivative-based protection from AIG called multi-sector credit-default swaps…

Since then, AIG and the Federal Reserve Bank of New York1 have unwound most of these contracts. To do this, they offered to buy the CDOs that were originally insured by the agreements. The counterparties sold these assets at a discount, but were compensated in full in return for allowing AIG to extricate itself from the obligations. The counterparties also got to keep the $37.3 billion in collateral…

Thus Joe Nocera explains why “a bailout of AIG is really a bailout of its trading partners-which essentially constitutes the entire Western banking system” (New York Times, February 27, 2009). Nocera exaggerates the situation. What about the healthy banks out there which were forced to take TARP money?

The $180 billion dollars committed to our charitable “AIG Relief Fund”-so far-amounts to 419% of energy-related spending by the Congress and the Obama administration to date. This astonishing, continuing misallocation of capital is a great tragedy in the making for Barack Obama. It is definitely not change we can believe in.

Will the broken banking system be Obama’s Vietnam, his Waterloo? Does Obama get it as he said in his State of the Union speech?

So I know how unpopular it is to be seen as helping banks right now, especially when everyone is suffering in part from their bad decisions. I promise you - I get it.

No, Mr. President, I don’t think you do. Most of us agree that Obama is among the best of men. So, what’s the problem?

Geithner Versus the American Oligarchs

Bill Moyers’ coverage of the financial crisis has been superb. On February 13, Moyers spoke to Simon Johnson, former chief economist at the International Monetary Fund (IMF). He is now teaching at MIT’s Sloan School. Moyers led off with a quote from Johnson’s High Noon: Geithner vs. the American Oligarchs.

There comes a time in every economic crisis or, more specifically, in every struggle to recover from a crisis, when someone steps up to the podium to promise the policies that - they say - will deliver you back to growth. The person has political support, a strong track record, and every incentive to enter the history books. But one nagging question remains.

Can this person, your new economic strategist, really break with the vested elites that got you into this much trouble? The form of these vested interests, of course, varies substantially across situations, but they are always still strong, despite the downward spiral which they did so much to bring about. And fully escaping the grip of crisis

really means breaking their power.

Our new economic strategist is Tim Geithner, Obama’s Treasury Secretary. In a series of articles at Baseline Scenario, Johnson, along with two other respected economists, Peter Boone and James Kwak, argues persuasively that powerful banking interests have hijacked our political system. I am not going to belabor their point, which seems obvious once you look at the situation. Rather, I will quote the Moyers interview once more to provide examples of conflict of interest and then give you a list of resources to consult if you would like to know more.

I have provided some links to document sources in the text below. These links are not from ParanoidLeftWingNut.com. They are from ABC News and the New York Times. Geithner himself is the former head of the New York Fed.

Bill Moyers: Geithner has hired as his chief-of-staff, the lobbyist from Goldman Sachs. The new deputy secretary of state was, until last year, a CEO of Citigroup. Another CFO from Citigroup is now assistant to the president, and deputy national security advisor for International Economic Affairs. And one of his deputies also came from Citigroup. One new member of the president’s Economic Recovery Advisory Board comes from UBS, which is being investigated for helping rich clients evade taxes. You’re probably too young to remember that old song, “Sounds like the Mack the Knife is back in town.” I mean, is that what you’re talking about with this web of relationships?

Simon Johnson: Absolutely. I don’t think you have enough time on your show to go through the full list of people and all the positions they’ve taken. I’m sure these are good people. Don’t get me wrong. These are fine upstanding citizens who have a certain perspective, and a certain kind of interest, and they see the world a certain way. [emphasis added]

There wasn’t enough time to list all the examples, but I would be remiss if I didn’t include this one from Frank Rich of the New York Times:

[Obama's chief economic adviser] Larry Summers and Geithner are both protégés of another master of the universe, Robert Rubin. His appearance in the photo op for Obama-transition economic advisers three days after the election was, to put it mildly, disconcerting. Ever since his acclaimed service as Treasury secretary in the Clinton administration, Rubin has labored as a senior adviser and director at Citigroup, now being bailed out by taxpayers to the potential tune of some $300 billion. Somehow the all-seeing Rubin didn’t notice the toxic mortgage-derivatives on Citi’s books until it was too late. The Citi may never sleep, but he snored.

[Rubin made $115 million at Citigroup over 9 years before leaving in January, 2009]

No conspiracy is required to explain the undue influence of former Citi bankers holding key posts in the Obama administration. The problem is that they can not think outside the FIRE economy box. They may indeed be good people, but they are the wrong people to oversee the dismantling of a banking system that benefited them. Thus we are told that Citigroup and Bank of America are too big to fail.

Here are some additional resources to consult.
Moyers interview with Simon Johnson (video with transcript available, quoted above)
Moyers interview with Robert Johnson, former managing director of Soros Fund Management (video with transcript available)
Renegade Economist interview with economist Michael Hudson (video, recommended by iTulip)
Terry Gross (NPR Fresh Air) interview with Simon Johnson (audio)
Many articles at Baseline Scenario, including here, here and here (among others)

It gives me no great pleasure to report that Simon Johnson believes United States financial policy is starting to resemble fiascoes in emerging markets like “Russia or Indonesia or a Thailand type situation, or Korea.”

A New Energy Regime?

Paul Krugman called the current policies voodoo on January 18, 2009 before it became obvious that nothing changed when Obama assumed power. Krugman suggested a way to fix things.

But recent news reports suggest that many influential people, including Federal Reserve officials, bank regulators, and, possibly [now definitely] members of the incoming Obama administration, have become devotees of a new kind of voodoo: the belief that by performing elaborate financial rituals we can keep dead banks walking…

A better approach would be to do what the government did with zombie savings and loans at the end of the 1980s: it seized the defunct banks, cleaning out the shareholders. Then it transferred their bad assets to a special institution, the Resolution Trust Corporation; paid off enough of the banks’ debts to make them solvent; and sold the fixed-up banks to new owners.

By February 24, Krugman, a Nobel Prize winner in Economics, was referring to mysterious plans that made no sense.

I’m trying to be sympathetic to the various plans, or rumors of plans, for bank aid; but I keep not being able to understand either what the plans are, or why they’re supposed to work. And I don’t think it’s me. [the link is to Geithner's mysterious "stress test"]

The key difference between now and 1987 when the Resolution Trust Corporation was implemented is the intervening 22 years in which FIRE economy oligarchs like Robert Rubin and his protégés acquired great political influence. Simon Johnson has also made suggestions for taking over Citigroup and other insolvent banks. For AIG, which is now 80% owned by we the taxpayers, the story would be the same.

… bankers may not have to worry about getting smacked around by the White House. What bankers do fear is “pre-privatization.” That’s a term MIT professor Simon Johnson applies to the Bush/Obama approach to financial bailouts, as opposed to the painful restructuring that real nationalization would bring. As Mr. Johnson put it on his website, The Baseline Scenario, “We have state control of finance without, well, much control over banks or anything else. Responsibility without power sounds accurate.”

Responsibility with power would likely require AIG and other financial wards of the state to write down their assets so good assets could be separated from bad and sold off to new investors. That’s a prospect that existing shareholders should fear, since their holdings stand to be wiped out in the process. And the managers responsible for the banks’ problems would follow…

[The term pre-privatization appears to come from the respected blog Calculated Risk. The term was half-jokingly introduced to avoid the stigma associated with the word "nationalization".]

In other words, we have options other than keeping these parasitic banks on an intravenous money drip. The latest Baseline Scenario forecast sums things up.

Ideally, global economic growth requires a rebalancing away from the financial sector and toward non-financial industries such as manufacturing, retail, and health care (for an expansion of this argument, see this op-ed). Especially in advanced economies such as the US and the UK, the financial sector has accounted for an unsustainable share of corporate profits and profit growth. The only solution is to invest in the basic ingredients of productivity growth - education, infrastructure, research and development, sound regulatory policy, and so on - so that our economy can develop new engines of growth. [Add energy to the list]

But this change in the allocation of resources is greatly complicated by the increased political power of the financial lobby. During the boom years, large banks and their fellow travelers accumulated ever greater political power. This power is now being used to channel government subsidies into the now outmoded (and actually dangerous) financial structure, and in essence to prevent resources from moving out of finance into technology and manufacturing across the industrialized world.

We have done considerable damage to our economies through a debt-fueled bubble. But it could get worse. If the financial sector can use its political power to generate a higher level of subsidies from the government, we will convert even more of our banking industry into pure rent-seeking activities (i.e., all the bankers will do is lobby, successfully, for more support in various forms). If public policy is captured by banks in the US, Europe and elsewhere, then we face much slower productivity and overall growth rates for the next 20 years. [emphasis added]

If we can get past these seemingly intractable political problems, we can try to rebuild our energy infrastructure. We will know one of two things as we look back on what happened in 2030.
It was possible to reduce our oil and coal consumption over time to lessen the dangers from fossil fuel resource depletion and anthropogenic climate change.
It was not possible to do these things to the degree required and our standards of living deteriorated over time.

If we do not overcome the political obstacles to changing how we allocate capital resources, we will know in 2030 that we never had a chance-we were stuck with #2 regardless of whether success was possible or not.

Contact the author at dave.aspo@gmail.com

Notes

1. The major counterparties to AIG have never been publicly disclosed and the Fed continues to protect their identity. Bloomberg has also sued the Fed (under the Freedom of Information Act) to disclose the names of banks getting loans from the central bank.

The Fed refused yesterday to disclose the names of the borrowers and the loans, alleging that it would cast “a stigma” on recipients of more than $1.9 trillion of emergency credit from U.S. taxpayers and the assets the central bank is accepting as collateral…

The Bloomberg lawsuit said the collateral lists “are central to understanding and assessing the government’s response to the most cataclysmic financial crisis in America since the Great Depression.”

Obama has consistently called for transparency in government handling of the financial crisis. Yet no one in his administration has pressured the Fed to disclose who it is giving money to.
Content on this site is subject to our fair use notice.
Source URL: http://www.energybulletin.net/node/48266

Links:
[1] http://www.aspousa.org/index.php/2009/03/no-we-cant/
[2] http://www.npr.org/templates/story/story.php?storyId=100762999
[3] http://www.harpers.org/archive/2008/02/0081908
[4] http://www.aspousa.org/index.php/2009/02/regaining-perspective-on-things-that-matter/
[5] http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZchK__XUF84
[6] http://www.autobloggreen.com/2009/02/27/cmu-study-indicates-the-chevy-volt-may-be-too-expensive-to-be-ef/
[7] http://finance.yahoo.com/tech-ticker/article/163151/Billions-of-Taxpayer-Dollars-Flushed-Down-John-Thain’s-35K-Commode?tickers=BAC,GS,JPM,XLF,MS,^GSPC,^DJI
[8] http://uk.reuters.com/article/oilRpt/idUKN1337875220090217?pageNumber=1&virtualBrandChannel=0
[9] http://www.ibtimes.com/articles/20090218/uto-invest-43-billion-renewable-energy.htm
[10] http://online.wsj.com/article/SB123599072033008283.html
[11] http://www.federalreserve.gov/newsevents/press/other/20090302a.htm
[12] http://online.wsj.com/public/quotes/main.html?type=djn&symbol=bac
[13] http://www.reuters.com/article/newsOne/idUSMAR85972720080918
[14] http://www.marketwatch.com/news/story/pressure-grows-reveal-aigs-major/story.aspx?guid={677481AF-8AC4-4FFD-AE8C-3D8EE2F09C75}&dist=morenews_ts
[15] http://www.nytimes.com/2009/02/28/business/28nocera.html?ref=business
[16] http://www.twincities.com/ci_11722986?source=most_viewed
[17] http://www.whitehouse.gov/the_press_office/remarks-of-president-barack-obama-address-to-joint-session-of-congress/
[18] http://www.pbs.org/moyers/journal/02132009/watch.html
[19] http://baselinescenario.com/2009/02/08/high-noon-geithner-v-the-american-oligarchs/
[20] http://baselinescenario.com/2009/02/01/rahms-doctrine-and-breaking-up-the-banks/#more-2283
[21] http://baselinescenario.com/
[22] http://baselinescenario.com/about/
[23] http://abcnews.go.com/Blotter/story?id=6735898
[24] http://www.nytimes.com/2009/02/11/us/politics/11citi.html?dbk
[25] http://www.ubs.com/1/e/media_overview/media_americas/releases?newsId=161664
[26] http://www.nytimes.com/2008/12/07/opinion/07rich.html
[27] http://change.gov/newsroom/entry/president_elect_obama_meets_with_economic_advisers_calls_for_swift_action_o/
[28] http://www.nytimes.com/2008/11/24/business/24citibank.html
[29] http://www.nytimes.com/2008/11/23/business/23citi.html
[30] http://www.fool.com/investing/value/2009/01/12/rubin-leaves-citigroup-is-pandit-next.aspx
[31] http://www.pbs.org/moyers/journal/02272009/profile.html
[32] http://www.youtube.com/watch?v=3pwAFohWBL4
[33] http://www.itulip.com/forums/showthread.php?s=aa2ea6bcdd124f4e080c846f7c71a85b&t=3773
[34] http://www.itulip.com/
[35] http://www.npr.org/templates/story/story.php?storyId=101360253
[36] http://baselinescenario.com/2009/01/27/to-save-the-banks-we-must-stand-up-to-the-bankers/
[37] http://baselinescenario.com/2009/03/01/tim-geithner-planet-money-interview/
[38] http://baselinescenario.com/2009/02/01/rahms-doctrine-and-breaking-up-the-banks/
[39] http://www.nytimes.com/2009/01/19/opinion/19krugman.html
[40] http://krugman.blogs.nytimes.com/2009/02/24/mysterious-plans/
[41] http://blogs.wsj.com/economics/2009/02/25/bank-stress-test-faq/
[42] http://baselinescenario.com/2009/02/23/privatize-the-banks-already/
[43] http://www.financialweek.com/apps/pbcs.dll/article?AID=/20090302/REG/902279961/0/STATIC
[44] http://www.calculatedriskblog.com/2009/02/preprivatize-banks.html
[45] http://www.calculatedriskblog.com/
[46] http://baselinescenario.com/2009/02/08/baseline-scenario-2909/
[47] http://baselinescenario.com/2008/11/11/obama-economic-strateg/
[48] http://www.auburn.edu/~johnspm/gloss/rent-seeking_behavior
[49] mailto:dave.aspo@gmail.com
[50] http://www.bloomberg.com/apps/news?pid=20601087&sid=aG0_2ZIA96TI

Click here for Registration Form

Workshop Description: This two-day workshop is designed to provide a detailed introduction to the most important skills necessary to successfully set up, develop, and run a Transition project in Tucson or any other locality. It is designed for people who are already in a group that is working to achieve this or who are thinking of creating such a group.

The training comes out of the community experience of Totnes, England, a town leading an expanding worldwide network of communities desiring to lessen their dependence on fossil fuels and to create more resiliency to withstand the economic and ecological shocks coming from our outworn industrial-growth economic system. The Transition Town organization just recently merged with the Post Carbon Institute and thus is becoming one of the most important sources of education and
guidance for communities worldwide that are preparing to transition to more localized and sustainable economies.

At the end of the course, participants will:
◆ Have a clear understanding of the current global context for transition arising from climate change
and peak oil and gas
◆ Understand the Transition Town model
◆ Have experiences of joint visioning, using Open Space, and organizing effective meetings
◆ Understand the purpose and principles of an Energy Descent Plan
◆ Have the outline of an effective and inspiring talk on Transition Towns
◆ Have an initial plan of action for themselves and their community

Who should attend: Those wanting to take on leadership roles within Sustainable Tucson’s present planning initiative and other sustainability projects-students, educators, activists, community organizers, concerned citizens, permaculture andsustainability practitioners, green economy activists, etc.

Facilitators:

Sarah Anne Edwards, LCSW and PhD, is an ecopsychologist and founder of Let’s Live Local, a nonprofit organization working to build local resilience and sustainability in the mountain village of Pine Mountain Club, CA. Along with husband Paul, Sarah has written 17 books on career and lifestyle change. Her background includes training and consulting with a wide variety of private, nonprofit, and government organizations.

Bill Aal is deeply involved in social and environmental justice work with a particular focus on agricultural sustainability and social healing. Versed in opening the imagination, awakening people’s best thinking and inspiring group transformation, Bill works with group reflection to unleash collective genius in organizational settings. He co-founded Riseup.net to build computer-based communications networks for activists.

Registration: Program fee is $220. Those who register by March 13 are eligible for a $20 discount, for a fee of $200. Register soon, as space is limited to 30 people. A $50 deposit will hold your place, with the balance due by March 27. (You also have the option to pay the full fee when you register.) Use this link for a downloadable registration form:
http://www.sustainabletucson.org/2009/02/26/registration-for-the-transition-town-training-april-45/

Please make your deposit check out to: NEST, Inc.
(NEST, Inc. is the parent tax-exempt nonprofit organization under which Sustainable Tucson is a project.)

Please send your check, along with a registration form, to: Kira Freed, 4500 E. Sunrise Dr., #D-6, Tucson, AZ 85718 When your deposit/fee has been received, you’ll receive an e-mail confirmation letter with directions to the training site.

Questions: Contact Linda Ellinor at (707) 217-6675 or lellinor@q.com

Complimentary coffee and continental breakfast will be available in the morning. We ask that you bring your own lunch (sorry, no fridge space) or let us know when you reserve your space if you would like us to supply you with a box lunch for $10/day.

Click here for Registration Form

Click here to download Flyer

2. What currently exists that contributes to or is working toward long-term sustainability in this area?
(businesses, organizations, practices, regulations, incentives, etc.)

3. What current practices, etc., are at-odds with respect to long-term sustainability in this area

–

The Vision: (The preferred state where Tucson becomes sustainable.)
————————

1. What is the overall benefit in becoming sustainable in your topic area?

2. What activities, businesses, and/or practices** don’t exist today in this area that can lead Tucson towards greater sustainability?

(**regulations, incentives, collaborations, policies, functions, etc.)

–

Practical Steps: ( What are the next actions toward the above goals that our working group on [Food, Transportation, etc.] can take towards the creation of a comprehensive sustainability plan for Tucson:
————————

1. Identify the organizations, businesses, etc. who are engaged in current sustainability practices.

2. Identify the organizations, businesses, etc. who are engaged in practices that are not considered to be sustainable for our Tucson community.

3. Identify realistic projects and activities that our group on (Food, Transportation, etc.) would like to spearhead during the next few years.

4. How do these group projects and activities address the core problems Tucson is facing at present in terms of such sustainability areas as fossil fuel use, resource depletion, green jobs, and quality of life?