A Century of Challenge

12 02 2012

We had the great privilege the other night of seeing Nicole Foss from Canada present her Century of Challenge lecture….  and what a polished performance!  Over 1 1/2 hours of stumble free oration, without a single second of emotional  drama, all factual, all presented in a way anyone could understand.  Even for someone as knowledgeable as I am, there wasn’t one second of boredom!  At the end, she got a deserving standing ovation….

Nicole Foss at the Big Pineapple, Nambour

My heartfelt thanks to the Transition Nambour folks who organised this, great job guys…. and the attendance was amazing, I estimate at least 300 people turned up, her biggest audience ever according to Nicole…!

The future belongs to the adaptable

To say we are in deep shit is an understatement.  I cannot understand how the morons in charge of running the world cannot at this late stage come out and say it; it is really beyond me… as Nicole said, they can kick the can down the road some more but they are running out of road.  Greece will default, no ifs no buts, it’s only a matter of time, it could easily happen this week.  It is mathematically impossible for Greece (or any other European country to repay its debts – it’s as clear as 1 + 1 = 2..)  Portugal will be next, and Ireland, Spain and Italy will follow suit.  The Euro, and the Eurozone, are finished.  And as the dominoes fall over one by one, the greatest depression will begin.  And make no mistake, Australia is not immune, globalisation has made sure of that.

Are you ready?  The future will have two kinds of people in it: the adaptable, and the rest.  Those who watch Days of our Lives, and those who listen to the likes of Nicole (and Chris Martenson, and James Howard Kunstler, and and and many other prophets all over the internet).

If you are in debt, it’s time to get out.  Nicole predicts that property values could easily fall to what they were in the 1970’s, that is to just 10% of their current bubble value.

Architecture of a housing bubble

Canada and Australia have much in common….  largely untouched by the GFC, with an economy that relies on abundant resources the rest of the world wants.  As long as they have money to pay for it.  China’s housing bubble is even worse than ours.  They have entire cities, all brand new, that are uninhabited…..  poor Chinese have no hope of ever buying apartments there, China’s capitalists are way past the stage they can recover their investments, or repay their debts.  When this bubble bursts, just watch the demand for our resources fall off a cliff.  But they keep saying “this time it’s different”.  It’s different alright… this time the depression will be global.

Here, our banks are raising their interest rates, even though the Federal Reserve is lowering the cash rate.  This is a very bad sign in my opinion.  Australian banks have to raise an important proportion of their funding from overseas and the deep crisis in Europe means that the cost of borrowing money in those international markets has risen to levels not seen since the GFC. The RBA cannot influence the price of money internationally.

Just think about what this means… anyone worried about not being able to meet their commitments may decide to sell.  As  more and more houses hit the market, there are fewer and fewer buyers, worried that if they borrow, their interest rates may rise and sink them too.  So prices fall.  As prices fall, more people stake out sale signs on the footpath, worried that their investment is going pear shaped.  So prices fall some more…

Eventually, many people end up owing more than their properties are worth, called being “underwater” in the US.  It has happened before, in the 1930’s great depression.  My mother in law’s parents lost everything like this at the time.  Don’t think it can’t happen again.

As Nicole pointed out, all this depressing stuff occurred at a time resources were plentiful, and cheap.  There were no excuses for growth to not occur, except that it is money that oils the cogs of the economy, and without money, everything grinds to a halt….

Now imagine what happens when, after much deleveraging, this idiotic system tries to put the pedal to the metal again only to discover the energy to do it with is no longer there.  As one last item to depress you, here is a little something I found on the internet the other day.  It is a spreadsheet from a government website http://www.ret.gov.au/resources/fuels/aps/Pages/default.aspx

See those red numbers at the bottom…..  that’s our depletion rate.  TWENTY SIX POINT SIX PERCENT PER ANNUM!  Still don’t believe we’ll run out of oil before 2020…?

Table 1A. Petroleum Production, Australia



Crude Oil Condensate Total Crude Oil and Condensate
megalitres megalitres 000 bbls / day
2008-09 20,106 7,680 27,785 479
2009-10 17,497 8,896 26,393 455
2010-11 13,231 8,426 21,657 373

November 2010 1,196 704 1,900 398
December 2010 1,101 725 1,826 371
January 2011 851 721 1,572 319
February 2011 840 590 1,431 321
March 2011 1,027 640 1,667 338
April 2011 995 675 1,670 350
May 2011 1,036 661 1,696 344
June 2011 843 661 1,504 315
July 2011 793 661 1,454 295
August 2011 989 709 1,698 345
September 2011 1,071 581 1,652 346
October 2011 1,122 632 1,754 356
November 2011 1,127 668 1,795 376
December 2011 1,182 658 1,839 373
Percentage change on year-to-date



Fiscal -17.8 -12.7 -15.9
Calendar

-26.6

-10.2 -20.9
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7 responses

14 02 2012
joe

hey mike was issacs young there?

14 02 2012
mikestasse

He certainly was….. he organised it! (well with some help I expect..)

21 02 2012
Justin

Hi Mike,

I’ve enjoyed reading about your efforts to escape the matrix. I would love to do the same but as you say, without going into debt I don’t see how it’s possible. I guess I’m looking for any suggestions you might have. My partner and I have savings but it’s still not enough for land alone (we live not too far from you on the Sunshine Coast). I refuse to become a debt slave and buy into the housing bubble, so we rent. The only option for us I can see is to await the deflation Nicole Foss predicts and then snap up some land with our savings once we can afford it. Where did you live while your house was being built? How much did it cost to build? Did you do all the work yourself? Is it something anyone with common sense and some intelligence could do, or do you have prior knowledge in building structures?

21 02 2012
mikestasse

Hi Justin……

I have to say, I do feel sorry for generations following ours who will be unable to accumulate the wealth we were able to over the past four decades. I turn 60 in 3 weeks, a double edge sword….. closer than ever to checking out, but rich and wise enough to deal with the future. I think you renting is definitely the way to go at this point in time…..

What we have done is prepare for not only ourselves, but our twins too. This place, or the next one I build in Tasmania if economic and family situations allow, is to prepare our kids sustainable future for the perfect storm. The future belongs to extended families again….

While initially building the foundations, slab, and stud walls, I bunked down at my Mother in Law’s who lives just under 30km from here. But as soon as the roof was up, I installed the toilet here and started camping overnight on site, with weekend 300km return commutes to Brisbane to see the family. It wasn’t easy, and I’m glad that’s all over, but the only thing I would do differently now is build a proper shed first to live in and keep tools and materials out of the weather and in a lockup…. not that I lost one single nail from thieving!

I built the entire house to almost finished for around $120,000. It’s still not quite “finished”, it’s not even lockable…. and the clerestory windows need some sealing up so that when we have mega storms like last night’s (what a doozy… four hours of blackout to test the battery bank!) we don’t get sprinkled with light rain…. I’m currently building storage spaces we direly need to put away all the belongings scattered around the house. It all takes time, and money I don’t have, though now we are making some from selling power, I’m using it for that purpose.

As far as I am concerned, it’s more comfortable than any other place we have lived in just as it is, and anything more that gets done here is icing on the cake….. I think it is people’s unreasonable expectations of what a house “should be” that gets them into huge debt.

The only building experience I had before this were fairly substantial renovations we did on our first two houses. Is it something anyone with common sense and some intelligence can do, if you’ve ever played with a meccano set as a kid, you could probably just follow your nose so to speak. Building isn’t rocket science, but it is a young man’s game…. I did do everything myself except the block laying. I wanted a good job because all the blocks are visible inside the house. Having said that, I had a lot of help from friends and my young son in the way of working bees for the really big jobs like pouring slabs and raising the roof. I’m particularly proud of having raised a 500kg hardwood beam 3 metres into position in the living room entirely on my own with a block and tackle…

Mike

28 02 2012
Kaye

Hi Mike,

Thanks for the above response to Justin. I have been following your blog for a while and it was great to read about how you got started. Thanks for putting the time and effort into updating your blog. I first found you when you commented on Matthew Evan’s blog. When I saw the name of your blog I had to check it out, because my husband and I also call the mass consumer life “The Matrix”, I was glad to find a like minded person on the internet…I have since found many more.
Look forward to future posts….

Kaye

28 02 2012
mikestasse

Ah yes……. Matthew Evans. I have a love-hate relationship with his show. He’s right with his attitude to local food, but wrong with its mass production. He has far too many pigs for that small property of his. And all that driving to and from Hobart to sell his stuff is unsustainable, plus I can’t understand why he feels he has to do that when there’s a perfectly viable market in Cygnet, and a Transition Town Initiative, who I’m sure could use his media skills…

Why Tassie? I fell in love with Tassie forty years ago when a friend and I went for a bushwalking holiday there. I’ve been there five more times since, Easter 2011 being the latest.

One thing I discovered when I was selling solar power for wages in 2010 was the incredible number of people, often older ones, who simply could not tolerate the heat and humidity of Queensland. It was a real issue because they wanted to install solar to combat their rising electricity bills caused by heavy use of airconditioning, an even greater problem if you’re a pensioner. Of course to do this requires a lot of solar panels, and pensioners cannot afford to spend the large sums needed to install 3 to 5 kW just to power airconditioning. It occurred to me at the time that combining the economic crash with climate change would cause lots of older people to simply die of heat stress…. I really wished I could help them, but typically they all lived in abominably designed houses that could never stay cool without the air-monsters sucking electricity like there’s no tomorrow…

I can’t tolerate the heat and humidity either, but at least inside my house never gets as bad as theirs, and unfortunately I can tell you from experience as a BERS energy rater, it is impossible to retrofit a lemon to the now ten star standard of our house. It just cannot be done.

So when it gets really hot, like over 30C, I can’t work outside. And it’s not like there’s no shortage of things to do…. the weeds have gone totally ballistic since the flooding rain we’ve just had (will probably write this up soon) and the grass….. the grass! It grows a foot a week if you let it. Not even the goats can keep up. I’ve just had to buy another rideon mower to replace my 25 year old Cox which is wearing out from all that hard work…

Tassie will be less affected from Climate Change… and even if it gets another 2 degrees warmer, it might actually be a plus (though it was 37C in Hobart just a few days ago, for just one day, the hottest temperature on record I believe). Tassie also has the cheapest real estate in Australia. I’m currently eyeing a 5 acre block with a permanent creek near Cygnet that I reckon could be had for under $150,000. So what’s there to not like? I thrive in cool conditions. I just hope the collapse happens slowly enough that we don’t end up “stuck here”… at least we have the best place in Queensland to be stuck in! But every day, Tassie beckons, and I’ve already designed our next house. If anything happens, you’ll be the first to know!

28 02 2012
Kaye

I also meant to ask, why Tassie?

Everybody seems to be moving there. It’s a lovely spot, but am I missing something?

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