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The Standard

The Domino recessions

Written By: - Date published: 11:21 am, February 25th, 2011 - 67 comments
Categories: energy - Tags: , ,

I read a book a while back that was set in the near future after what it called the ‘Domino recessions’ – successive oil shocks had created a series of economic and political crises, each one before the world had recovered from the previous recession. As the second oil shock in three years hits, that scenario looks to be coming to true.

In 2005, oil production more or less peaked. Having grown at an average of 2.4% a year for 40 years, oil output has hovered around the same level for the last six. This lack of additional supply resulted in the market tightening and tightening, and the price rising and rising until a full price shock broke out in late 2007. This put household budgets under immediate pressure – particularly American families in exurbs with ‘sub-prime’ mortgages on houses they couldn’t really afford. Over-indebted families couldn’t pay their bills and afford the petrol their lifestyles were built around. Mortgage defaults grew, banks failed and the value of mortgage-backed securities plummeted. Investors fled to the one thing on the up – oil. The fundamentals of supply and demand led to a speculative bubble that didn’t burst until oil hit US$147 a barrel and the world entered recession.

Now, it’s happening again. Global oil demand fell just 2.6% between 2008 and 2009 but that buffer of extra supply was enough to let the price fall back to US$35 a barrel. Then demand started to rise again, at twice the rate expected, mainly thanks to China. The supply buffer shrunk. Oil prices started to rise, dragging up the price of food (roughly, for every 6 calories in food, a calorie of oil is used in producing and transporting it). Food production has also been hit by climatic disasters associated with climate change. Oil was already flirting with the economically dangerous US$100 a barrel amount at the end of last year.

Whereas the previous oil shock caused a crisis in the financial system, this one has sparked a crisis in the political system of the Middle East (anyone who thinks it’s just a coincidence that governments are falling during an oil and food price shock, or thinks its a coincidence the financial system went into meltdown during the last one is a fool).

Two governments have fallen, another is on its way, up to half a dozen could follow. Libya is the first of the countries severely affected to be a large oil producer. It only produces 2% of the world’s supply and only about half has been affected by the revolution so far but, with global supply so tight, that has been enough to push oil up 20% to nearly US$120 a barrel in the past few days.

Now, OPEC has said ‘don’t worry Saudi Arabia can supply extra oil to make up for any lost from Libya’. And, if you believe the officials, it can because the world has about 5 million barrels a day of spare production capacity and nearly all of that is in Saudi Arabia. However, there’s fears that unrest among the Shi’ites in Bahrain could spread across the causeway to the Shi’ite minority in Saudi Arabia, who live atop the oil fields and make up most of the workforce. And, more fundamentally, no-one quite believes that the Saudis have as much spare production as they claim.

You’re familiar with the classic supply and demand graph – higher price means higher supply. You probably also know that OPEC has a target oil price that it says it can target by altering how much oil its members produce. Well, look at how Saudi oil production actually responded to the last oil shock.

It didn’t increase, it hit a wall at about 11 million barrels per day. Indeed, even in 2008 when Saudi Arabia could sell its oil for a record price it didn’t match production in 2005, when the price was half that level. Which suggests Saudi Arabia doesn’t have 4 million spare barrels per day of production up its sleeve, or it won’t pump it because the Saudis know its worth more in the long-run if its left in the ground for now.

What’s behind the dramatic increase in oil prices in the last few days is investors (yes, speculators) betting that turmoil in the Middle East will continue to affect oil supply and Saudi Arabia won’t be able to make up any shortfalls. They’re betting that the ‘spare 5 million barrels’ doesn’t really exist.

Analysts are saying oil could hit US$200 a barrel if more oil producers have revolts. But I think a global recession would be triggered long before that level. Indeed, with the UK, Australia, and New Zealand already in recession, I think that if the price stays where it is for long, the whole developed world will quickly double-dip.

Every extra dollar on the oil price represents an outflow from New Zealand of $100,000 a day (we have net oil imports of 100,000 barrels a day). The $20 increase we’ve just seen is $2 million a day, or 0.3% of daily GDP. Every other net oil importer is experiencing the same thing. Governments’ books are already strained, as the all households’, except for the rich elite.

We’re in a far worse position to handle this oil shock than we were the last one. It looks like the next domino is falling.

67 comments on “The Domino recessions”

  1. Chilling.

    I can see the possibility of a number of countries rioting against their governments. When the expense of food gets beyond the ability of the masses and they can no longer afford petrol then the social structure we have created is bound to break down.

    New Zealand should be immune from this but recent controversy about the price of milk shows that a purely market driven model will cause ructions. Why milk should be so expensive is beyond me.

    And an increasing group of unemployed and dispossessed will increase the prospects of something happening here.

    We really need leadership that will plan for the next 20 or 30 years. Shame smile and wave cannot see past a week after the next election.

    • Draco T Bastard 1.1

      I’m not even sure he can see to the next election. The problem with living in an ideology, as National, Act and the MP do, is that you tend to base decisions upon what you want to happen and ignore the facts especially when the facts show that your decisions were wrong.

    • Colonial Viper 1.2

      We really need leadership that will plan for the next 20 or 30 years. Shame smile and wave cannot see past a week after the next election.

      Its been a long time since NZ had a crop of politicians who had a 20 year vision and plan to make NZ a better place for everyone to live and prosper in.

      Tim Jackson’s report Prosperity without Growth just became much more important, even more than it was before.

  2. Draco T Bastard 2

    Analysts are saying oil could hit US$200 a barrel if more oil producers have revolts. But I think a global recession would be triggered long before that level.

    Yeah, I can’t see it hitting US$150/barrel again. When it did that we were in boom times but now we’re pretty much stuck in recession and there just isn’t any vitality in the economy available to push it higher.

    Oil price hits fresh 29-month high

    The price of Singapore’s Tapis Crude, which dictates the price at Australian bowsers, was at $US120.4 a barrel at 7.30am AEDT.

    It is a $US24 premium on the price at 1 January 2011, but it is not near the record price of $US158 it reached in July 2008.

    West Texas Crude oil was at $US97 a barrel, after spiking to $US103.

    London’s Brent Crude was down to fetching $US114 a barrel, after hitting an intra-day high of $US120.

    /shrug

    It’s not the End of Times yet but the economy isn’t going to grow any more and that means we need to be looking at a better distribution of the wealth (The actual physical resources as defined by the Renewable Resource Base) that the country has. We cannot afford the rich as they are nothing more than parasites.

  3. Draco T Bastard 3

    AA Petrolwatch

    Petrol & diesel price review 25 February 2011

    Since the pump price rise on 16 February, oil prices have spiked following the political crisis in Libya. The price of Brent oil has risen over US$10 a barrel in the past week, to over US$114/barrel. Expect the retail price of fuel to increase very soon as a result – by at least 8 cents per litre and as much as 13 cents/litre in the next week.

    Wonder how many people will be able to afford to go to work next week? It’ll certainly be hitting the retail sector hard as people cut back spending even more.

  4. Afewknowthetruth 4

    This is one of the best items I’ve seen on TS. It is connected with reality -unlike most of the political nonsense that gets posted.

    Oil cannot go to $200 a barrel in the short term; that would terminate globalisation, tourism and most of the industrial economy and a lot of the food supply. But it is very likely to go to $200 longer term, as the money in out pockets gets devalued by the bankers’ Ponzi scheme.

    It is not wise to think of the predicament we are in as a series of recessions: we are in the early phase of the Second Great Depression -the one that never ends- and have nearly hit the end of the road as far as operating a globalised consumer society is concerned. Desperation measures, such as deep water drilling and ripping up a huge area of Canada to extract oil from tar sands (ata very poor EROEI), will allow the world economy to stagger along a bit longer, but the situation is absolutely terminal ……. and best evidence indicates collapse of the world economy some time between 2012 and 2015, though a few are flagging collaspe later this year.

    The ironic aspect is, of course, the longer present economic and social arrangements prevail, the worse it will be for eveyone still alive a decade from now.

    Those who are afflicted with industrial fundamentalism reject scientific analysis of the predicament we are in and insist that someone somewhere is going to come up with some kind of magic bullet that will save current economic and social arrangements. They’ll learn the hard way.

    It is far too late for ‘solutions’. They needed to have been implemented when the writing first appeared on the wall 40 years ago. Far too late now. We are like Wile E Cyote, off the cliff and suspended in mid air via the frantic whirring of feet.

    Presumably the clowns who lead all mainstream political parties will conveniently retire to their bolt holes the moment the going starts to get tough.

    • Colonial Viper 4.1

      Oil cannot go to $200 a barrel in the short term; that would terminate globalisation, tourism and most of the industrial economy and a lot of the food supply.

      There is every chance oil will hit US$200/b in the next 6-12 months.

    • M 4.2

      Yep, Afewknowthetruth GD2 for sure coming at us with breakneck speed.

      Just been on Ruppert’s Collapsenet for his latest video update (it’s behind a pay wall that my brother shouted me) and Mike was listing all the shit gaining momentum:

      Rioting in Greece, ME and North Africa

      The threat of war between major powers over the Kuril Islands of Japan: either Japan v Russia or the US v Russia (if that’s the case time to bend over and kiss your own arse goodbye)

      Japan is the equivalent of the dead carcass the major powers will be scrapping over.

      Mike has a contingency plan of using a yacht to keep Collapsenet going as he reckons that the US can only last three to four months longer before civil unrest makes it completely unworkable and emphasised it was a generational revolution.

      Preparedness measures included:

      FM handheld handset
      Go packs
      Consolidating personal effects
      Three months’ food
      Clubbing together with people near by

      Makes me think of the Titanic on its final death plunge.

      • Colonial Viper 4.2.1

        Makes me think of the Titanic on its final death plunge.

        Except the Carpathia, the Baltic and the Olympic were all on hand within hours to rescue the survivors of the Titanic. Who will rescue us?

        • M 4.2.1.1

          CV, I don’t think anyone can rescue us. In much the same vein as the men of Jarrow were told to go home and work out their own salvation.

  5. Zac 5

    Noted Comments on Smile and wave should learn to no when to shut there mouths. If you were to look at all comments By Keys smile and wave are at 0, However Phil is at 8, Someone need to till Phil to look away from the Camera when he gets the urge to smile.

  6. tsmithfield 6

    Actually, it looks like the world’s largest oil consumer, the US, might have plenty of oil. Also, they have enormous natural gas supplies that have been identified as a ready oil substitute.

    On the other hand, it looks like the greens are causing hunger with the preoccupation on biofuels.

    • Colonial Viper 6.1

      ts, the world is not running out of oil. The Canadian tar sands hold 150 bb worth. There are over 500 bb worth in the Venzuelan tar sands.

      However the world IS running out of oil which you can buy for under US$200/b. Cheap easily extractable oil.

      And how do we know that? Because everywhere you see countries turning to sources of oil they have known about for years, but which were completely uneconomic at US$40/b. Seriously, why drill for oil in water over a kilometre deep, when there are easier, cheaper places to extract it from? Well, when there isn’t, that’s why. And that happens to be right now.

      So yeah, you will have unleaded 91 you can put in your car for years to come. At $4/L, $5/L, $6/L.

      Enjoy.

      • tsmithfield 6.1.1

        The circuit breaker is the natural gas though. The yanks have enormous quantities of that, and it is easy to substitute natural gas for petrol, heating etc.

        • mickysavage 6.1.1.1

          There is this wee problem that you need heat to extract the oil from the tar sands. You can use natural gas but the amount required to completely extract the oil equates to most of the remaining reserves in the world.

          And you can use natural gas to replace oil but there is the small problem of there being no adequate distribution system. You will need to build a few trillion kilometers of pipeline to do this, not to mention the need to build thousands and thousands of depots.

          And the climate change implications are horrendous.

          We really do need a better way.

        • Marty G 6.1.1.2

          natural gas is no curcuit breaker. Ask it to replace oil in any quantities and it, too, will become scarce. There’s a glut now but if you use that glut it disappears.

          Re the US having plenty of oil – US/Canada does have oil for decades, expensive, hard to get at oil. This does not equal a supply of oil that can be pumped in sufficient quantities at low enough prices.

          Re your comment on biofuels – Green groups have been raising concerns about biofuels for years. It was the Bush Administration that kick-started biofuels as a sop to farmers. I’ve never supported them because they have poor Energy Returned on Energy Invested and they mean rich people are burning in their cars what could be food for the poor.

          • tsmithfield 6.1.1.2.1

            “And you can use natural gas to replace oil but there is the small problem of there being no adequate distribution system.”

            Same with any technology to substitute oil. That doesn’t mean we shouldn’t do it though. At least there is already technology for natural gas in vehicles and at least some infrastructure. So its not like starting from zero.

            “Ask it to replace oil in any quantities and it, too, will become scarce. There’s a glut now but if you use that glut it disappears.”

            I didn’t say replace. What I meant was to further augment oil. By using natural gas alongside oil more, the oil supply will spin out for longer allowing more time to find new technologies.

            • Draco T Bastard 6.1.1.2.1.1

              Same with any technology to substitute oil. That doesn’t mean we shouldn’t do it though.

              The lack of resources, most notably oil, means that we can’t do it.

              • Colonial Viper

                By using natural gas alongside oil more, the oil supply will spin out for longer allowing more time to find new technologies.

                The US uses 20mb of oil per day.

                Reducing that by just 10% and using natural gas instead will require an investment in infrastructure across the country valued in the tens of billions of dollars.

                It is an investment which Big Oil will not support politically.

                Prediction: natural gas will not reduce US oil consumption by 10% in the next 5 years. And probably not the next 10 years. And it will certainly not stop oil going to US$200/b in the next 12-24 months.

    • RedLogix 6.2

      On the other hand, it looks like the greens are causing hunger with the preoccupation on biofuels.

      Flat out bullshit that’s just a tired repetition of a line you read from some other especially ignorant RWNJ …most Greens were among the first to warn of the dangers of biofuels competing with food sources.

    • Draco T Bastard 6.3

      There’s a problem with Natural Gas – it doesn’t have the same energy density as oil. This means you need more of it to achieve the same effect.

      Hmmmm…. Actually, the article you link to tells you it’s not the silver bullet you’re looking for.

      That’s good for about a 100-year supply (less if natural gas consumption increases).

      100 years unless use is increased which is what you’re suggesting happen so not 100 years. To replace oil usage in any meaningful way I’d be surprised if it those resources didn’t peak before 2030.

      • Rosy 6.3.1

        There is another problem with natural gas – the fracking process contaminates water supplies. This is a big issue in the U.S with the process being exempt from safe drinking water legislation

    • Afewknowthetruth 6.4

      ts I suggest you look at Energy Return On Enegy Invested before getting excited about so-called alternatives.

  7. tsmithfield 7

    “Flat out bullshit that’s just a tired repetition of a line you read from some other especially ignorant RWNJ”

    I thought the BBC was quite authoritative actually.

    “…most Greens were among the first to warn of the dangers of biofuels competing with food sources.”

    Of course, you would have a link to support that assertion?

  8. exit lane 8

    a few energy savvy pundits like Jeff Rubin (a major source in a prescient article in the NZ Herald 18 months ago by NZ peak oil bogger Denis Tegg)….
    http://www.nzherald.co.nz/economy/news/article.cfm?c_id=34&objectid=10590384
    predicted that that as soon as the global economy began to recover, oil prices would rise over US$100 a barrel, and the world, and NZ would be back into recession. Brent crude was already over US$100 per barrel before the uprisings in the Middle East.

    “Despite warnings from a New Zealand Parliamentary report, Lloyd’s Of London, the International Energy Agency, the US military and a host of other credible groups, our mainstream media has failed to report this looming crisis.

    Likewise our politicians avoid this issue like the plague, and no risk management planning has been done. We are no better prepared than we were in 2008 when prices last spiked. They need to be held to account. In an election year hard questions need to be asked as to why these clear and urgent warnings have been ignored and not shared with the public, and what policies BOTH main parties have to urgently lower our oil dependency, and to plan for an imminent oil-induced recession.”
    http://oilshockhorrorprobe.blogspot.com/2011/02/starting-to-join-dots-finally.html

  9. tsmithfield 9

    Actually, fair enough. I accept the Greens weren’t the ogre on this one.

    I think we both agree that biofuels from crops are very inefficient and disadvantage the poor.

    • I personally think that biofuels have a certain if limited role to play. In New Zealand we would be able to augment diesel consumption to a limited extent without too much difficulty. The problem is if we think that we are going to be able to continue to drive the way that we do now and augment petroleum with alternative supplies.

      Biofuels do have the advantage that they collect the carbon before releasing it.

      But starving the third world so that someone can keep driving their V8 is not the way to go.

      • tsmithfield 9.1.1

        I actually like the idea of technology that turns sewage into biofuel etc. Much better.

        • RedLogix 9.1.1.1

          Or something harvested off marginal land that was never going to be much use for food production. Problem is that all of these caveats need to be regulated … if you leave it to the market then the fuel tanks of the rich will out-compete the stomachs of the poor every time.

  10. fermionic_interference 10

    ok I’ve been bated into commenting:
    To paraphrase my university Physics professor (Sorry no names I don’t think I have the right).

    “The volume of oil isn’t the problem, the fact that prices are increasing, is due to the fact
    that we are reaching the point at which we can no longer stick a straw in the ground and
    oil spurts forth, but it doesn’t really matter what new techniques we think up for extraction
    because if we use all that oil we will already have destroyed the earth”.

    This related to a discussion on the implications of climate change and humanities fossil fuel use.

    • Afewknowthetruth 10.1

      There is already abundant evidence we have pushed the Earth’s positive feedback systems close to the tipping point for abrupt climate change, i.e. a largely uninhabitable planet a few decades hence.

      Continuing to burn fossils fuels, as per the BAU plan, is guaranteed to rob every young person of a future.

      I cannot understand why young people are not marching in the streets demanding change.

      • Colonial Viper 10.1.1

        9B humans by 2050. Yeah I agree that would be a disaster initself.

      • fermionic_interference 10.1.2

        Unfortunately the majority of the “young people” I know fall into the authoritarian New Zealanders category and see the NZ media as portraying unbiased information which they class as equivalent to peer reviewed scientific papers. This means that they don’t differentiate between opinion pieces by laymen, oil company data and opinion, political spin as different to balanced research. Actually in NZ this is the biggest problem I have seen over all age groups, as a culture we seem to evaluate all information as equal in the majority of cases. Whereas we need to evaluate the strength of the info provided.
        I also run into a few who are of the opinion that god wouldn’t allow such a calamity to occur.
        Or even those that don’t understand scientific method in the slightest and think we have to have 100% proof before they will take any notice.

        • Afewknowthetruth 10.1.2.1

          Oh well, within 2 years they will get the 100% proof they need to understand have been continuously lied to by politicians and the mass media.

          As for God, if they have any understanding of the Bible or spitituality at all, they will recognise God is not at all pleased with the way humans have been trashing the Earth.

          • Colonial Viper 10.1.2.1.1

            God gave dominion of the Earth to man, man has the God given right to trash it, is that not so?

          • fermionic_interference 10.1.2.1.2

            I thought people would’ve started to figure this out by now 3-4 years ago but it’s almost as though we’re just spinning our wheels.

            100% proof in scientific terms is non existent.
            using the theory of gravity as an example
            We came to the theory (or Newton did) with use of empirical data and this empirical data brought about the theory which will stand unless we find a counter example so with regard to science there is never a 100% proof just evidence and the strength thereof. Giving strong evidence for the theory of gravitation because we haven’t found a counter example in 150+- years.
            When we look at this with regard to CO2 emission and CO2 equivalents, we look at ice core and other sources of atmospheric CO2 concentrations and temperature in past epochs which doesn’t give us real time data as well as results so it’s difficult to see what is cause and what is effect. Although there is strong evidence to suggest that increasing CO2 concentrations increases the global temperatures but there are so many complicating factors with regard to the climate and being a theory we can’t say this is the case we can only test for a case which disproves it. Which is a big issue with politicians and most people wanting definitive guaranteed answers. Before hand we can only give probabilities or estimates of what might occur and what has strong evidence of occurring or what has strong evidence of causing more damage.

            • Afewknowthetruth 10.1.2.1.2.1

              Tyndall discovered that CO2 absorbs and re-raditates IR radiation in 1859. CO2 levels are up 40% on the historic norm. It’s very easy logic for those who want to see the truth.

      • Armchair Critic 10.1.3

        I cannot understand why young people are not marching in the streets demanding change.
        Easy. Because there is money to be made from distracting them from doing so.

  11. M 11

    SA to supply needed oil? Don’t think so!

    ‘The problem of the diminishing returns of the new technology comes into play. Horizontal drilling or injecting nitrogen or seawater into rock to goose the oil out of the rock just depletes the oil fields more. The Saudis have depleted their fields that way. They’re no longer the world’s No. 1 producer of oil. Russia is.’

    Comment by JHK in AOL article:

    http://www.aolnews.com/2011/02/24/how-will-the-libyan-crisis-and-rising-oil-prices-affect-the-us/

  12. Colonial Viper 12

    UK Economy Contracts 0.6% Q4 2010

    Or over 2%, annualised. Record bad weather blamed.

    http://www.guardian.co.uk/business/2011/feb/25/uk-economy-contracted-by-0-point-6-percent

    No mention of the role of mass Council and public servant layoffs as a factor.

    I hear the sound of dominoes falling…

  13. ak 13

    They’re no longer the world’s No. 1 producer of oil. Russia is.

    Good lord. Literally. And shit a BRIC, you filthy Anglo-fascisti rapists of our world.

    Yet rejoice ye little ones: for the dawn of a glorious new age is upon us. Prepare, precious meek, to inherit, and forgive.

    • Afewknowthetruth 13.1

      The ‘glorious new age’ won’t come until after the most horrendous transition period imaginable. And it may not come at all if the environmental collapse continues to accelerate.

  14. Colonial Viper 14

    It’s starting: Spain Literally Slowing Down Because of Oil Price

    This will damage Spain’s already fragile economy further.

    Spain will lower motorway speed limits, cut train ticket prices and use more biofuel under an emergency energy-saving initiative because of soaring oil prices brought on by unrest in Libya, an official said Friday.

    The Libya crisis has sharply reduced exports from the oil-rich nation, and about 13% of the oil Spain consumes comes from Libya.

    Deputy prime minister, Alfredo Pérez Rubalcaba, said Spain’s energy supply is not in danger, despite shutdowns by oil companies operating in Libya, but the national energy bill will rise significantly because of the sharply higher petroleum prices.

    http://www.guardian.co.uk/environment/2011/feb/25/spain-speed-limit-oil-prices

    • Afewknowthetruth 14.1

      That’s what happens when you construct an economy on tourism and shopping, and are dependent on oil imports..

      Where Spain goes, NZ follows a little later.

      There is a fair chance the meltdown will occur before the election, and the present gang of criminals and clowns will get left holding their baby.

      • Colonial Viper 14.1.1

        LAB doesn’t always lend a sympathetic ear to peak oil theorists. But I know NAT never ever does. Bill and John will not take have taken into account oil instability at all in their calculations for this year, and still will not have.

        • Afewknowthetruth 14.1.1.1

          I don’t think it makes any diffference which party is in power: policy is driven by ideologues in Treasury and MED -and they won’t have a bar of anything connected with reality, especially anything that challenges the dogma of perpetual growth.

          Treasury and MED will keep promoting utter nonsense until they can’t.

          • Jenny 14.1.1.1.1

            “I don’t think it makes any diffference which party is in power”

            Afewknowthetruth

            Maybe, Maybe not.

            In the current situation of Market collapse and impending climate collapse, can it still be business as usual?

            Or something completely different?

            At the start of this post Marty G describes a science fiction novel set in a future in which “Market Forces” have free reign and where the only players are corporate executives.

            This is obviously an extrapolation of the current state of the world.

            The people’s revolutions in Tunisia, Egypt, Bahrain, Jordan and Libya show that the people themselves are not just dumb clay to be manipulated by “leaders” but might have some say in events as well.

            It is still hard to say at this stage where these revolutions will end up, but with their calls for reform, it is possible that they will launch an experiment in new form of equitable democracy in these countries that could be an example to the world, where no longer will all the say be just in the hands of the elites.

            In Wisconsin 70,000 people have marched against austerity measures.
            As well as the tens of thousands on the streets, hundreds have occupied the Wisconsin State Senate chanting “This is what democracy looks like”.

            Outside some people are flying Egyptian flags and one protester has a sign saying walk like an Egyptian.

            Minority democratic senators have fled the state to deprive the senate of a quorum.

            Business as usual?

            I don’t think so.

            Republican senators have accused the democrats and the protesters of being undemocratic.

            Are they?

            Or as the protesters claim “This is what democracy looks like”.

            Is this form of direct democracy an answer to the failure of the two party democratic rule experienced in the US, UK, Aus. and NZ?

            • Colonial Viper 14.1.1.1.1.1

              The people’s revolutions in Tunisia, Egypt, Bahrain, Jordan and Libya show that the people themselves are not just dumb clay to be manipulated by “leaders” but might have some say in events as well.

              I daresay that some powerbrokers in OECD countries are paying very close attention to the effect of “people power” on old established state/commercial (i.e. Fascist) power structures.

            • Afewknowthetruth 14.1.1.1.1.2

              It is worth noting that people only revolt when they are driven to desperation, when they have virtually nothing left to lose.

              Most people in NZ are still quite comfortable, and a few are doing very nicely. Therefore, Treasuty and MED can get away with promoting nonsense, and all maintream parties go along with the game. Nobody want to rock the boat.

              The only difference between National and Labour is the size of the bread crumbs that fall off the table the elites eat at.

              • Jenny

                “It is worth noting that people only revolt when they are driven to desperation, when they have virtually nothing left to lose.”

                Afewknowthetruth

                Brain, This is not the full story. As someone once said, if poverty were the cause of revolution then they would be occurring everywhere.

                The mass protests in Wisconsin, (which have name checked the Egyptian revolt) is a sign that this is not just about having nothing left to lose.

                What is happening is something different.

                As Martin Luther King once said, (it is) “A time to break the silence

                In the past revolts in a country like Tunisia would have except for a few rare voices like King, would have been isolated and misrepresented in the international media, with labels “violent” and “extremist” and “fundamentalist”. The Western powers under cover of this propaganda would then send in military aid and even advisers to quell the protests).

                However, with face book and twitter, people all over the Middle East and indeed the world were able to see the true nature of the revolt and identify with it.

                It doesn’t pay to overstate it, but with the help of the new media, the old power structures are losing their legitimacy.
                The revolts in Tunisia, Egypt etc. were initially labeled by some of their leaders as the electronic intifada.

                Here in the West there is often talk of the electronic commons.

                This represents two things;

                1# The ability to cut through the big business dominated main stream, or state dominated media.

                2# The ability of people of like mind to network like never before.

                3# The ability of like minded people to immediately issue wide announcement of protests, which if representative of the popular mood, can grow at a speed and to a size which by sheer weight of numbers can defy curfews and crackdowns and peacefully overwhelm even a professionally armed and trained para military police force and even the military, who may under difference circumstances follow their orders to violently suppress the protests, but when confronted with the spectacle of huge numbers of their own citizens in the streets are confounded and over run.

                The electronic commons has become so threatening to the old power structures that as well as banning any search of the word “Egypt” , this week the Chinese communist government has tagged such words as “today” and “tomorrow” and even had them removed as searchable words on search engines.

                These extraordinary measures are necessary because the two words “today” and “tomorrow” are being used to swiftly call huge demonstrations before the regime has time to react and crackdown.

                From John Pilger:

                “The uprising in Egypt has discredited every Western media stereotype about the Arabs. The courage, determination, eloquence, and grace of those in Liberation Square contrast with “our” specious fear-mongering with its al-Qaeda and Iran bogeys and iron-clad assumptions, bereft of irony, of the “moral leadership of the West”. It is not surprising that the recent source of truth about the imperial abuse of the Middle East, WikiLeaks, is itself subjected to craven, petty abuse in those self-congratulating newspapers that set the limits of elite liberal debate on both sides of the Atlantic. Perhaps they are worried. Across the world, public awareness is rising and bypassing them.”

                captcha – “involves”

                • Jenny

                  L is the last letter in the word PERIL

                  From the P.E.R.I.L theses

                  With Market collapse and runaway climate change the Global loss of Legitimacy may also be approaching a peak.

                  • Colonial Viper

                    Major problems occur when those in power stop honouring their social bargains with the many, in favour of their social bargains with the elite few and wealthy.

                • Carol

                  I have seen some commentary that says the focus on the Internet social networking, is people claiming a US technology as the trigger for the rebellions in the MiddleEast & Nth Africa – ie a Western view that doesn’t fully grasp what is happening in the Middle East. The threats to food etc are far greater than before. Also, in many ME countries there is a high proportion of young people who have a significant amount of formal education, but there are few jobs for them and little money. This is more than poverty as usual.

                  In the US, Republican moves in Wisconsin is theatening the security of many middleclass people, who previously had felt that if they worked hard, paid their mortgages etc, all would be well. Now that is coming under threat in ways not felt for a long time in the US.

                  • Jenny

                    Hi Carol, the essay by Yousef Munayyer, carried on the Kia Ora Gaza website, gives one of the most thoughtful expositions I have seen on the revolts in the Middle East.

                    Click here

                  • Jenny

                    “I have seen some commentary that says the focus on the Internet social networking, is people claiming a US technology as the trigger for the rebellions in the MiddleEast & Nth Africa….”

                    Carol

                    Hi Carol, I agree with you that the power of the internet and social networking can be overstated as a causative factor in these revolts, though, I would argue that this technology does speed up a process that has been going on for some time. Namely, the undermining of the colonisation of the public mind, which has led to crisis of legitimacy.

                    A world wide crisis of legitimacy?

                    “We Shall Not Be Moved”

                    Hundreds of Wisconsin protesters currently occupying the state senate building defy police requests to leave – receive words of support from Egyptian protesters.

                    The Colonisation of the public mind: (from the Peril theses)

                    “And that brings us to the final exitential crisis: Legitimacy.

                    The exercise of power in capitalist society ultimately rests on popular legitimacy much more than state force. That goes for every type of capitalist nation, whether rich, poor or in-between, whether democratic, authoritarian or theocratic.

                    If the masses can no longer be convinced by an elite that their rule expresses common values and promotes common progress, then it is doomed to social corrosion and eventual overthrow.

                    Calling up state force to save a regime whose legitimacy is ebbing away merely worsens the crisis…..

                    Only colonisation of the public mind can secure a broad social base for elite rule”

                    Grant Morgan

                    The P.E.R.I.L. theses:

                    Today, for the first time since its birth 500 years ago, global capitalism is facing the convergence of five system-level crises embracing nature as well as society:
                    Profitability crisis.
                    Ecological crisis.
                    Resource crisis.
                    Imperial crisis.
                    Legitimacy crisis.

                    As these five crises converge into a perfect storm they will tip global capitalism towards collapse amidst international revolutions and counter-revolutions.

                    Grant Morgan

                    A Good Call?
                    In light of the recent and ongoing revolts in the Middle East, in my opinion, this was rather a good call.

                    • Colonial Viper

                      Except I do not think that there is a profitability crisis. The large corporations and banks are more profitable than ever, and their earnings per share are doing just fine, thank you very much.

                      Otherwise pretty much spot on.

  15. Jenny 15

    “Most people in NZ are still quite comfortable, and a few are doing very nicely. Therefore, Treasuty and MED can get away with promoting nonsense, and all maintream parties go along with the game. Nobody want to rock the boat.”

    Afewknowthetruth

    Brain, at the risk of stating the obvious, I would like to point out to you, that to claim that “Nobody want to rock the boat”, is demonstrably untrue, especially for New Zealand. You only have had to lived though the 1981 Springbok Tour protests to see, that though “Most people in NZ are still quite comfortable, and a few are doing very nicely.” They are very prepared “to rock the boat.”

    To ignore this fact is to give yourself over to cynicism, which pardon me for mentioning it, but which I feel is your error. The recent massive protests against schedule 4 mining show that Kiwis are still very prepared “to rock the boat”.

    Giving yourself over to cynicism is an excuse to do nothing.

    Given your knowledge of the serious nature of the crisis humanity is facing, it is very important that people like yourself don’t give into cynicism. Instead with your knowledge you have a responsibility working with other people to take a leading role in agitating and informing and organising the wider public to get involved in doing something about it.

    Instead of a few knowing the truth, Everyone should know the truth.

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