"District of Columbia. Tent life of the 31st (later, 82nd) Pennsylvania Infantry at Queen's Farm, vicinity of Fort Slocum" (find the puppy)
Ilargi: TAE co-founder and senior editor Stoneleigh (Nicole Foss) did another Jim Puplava interview on Financial Sense this week. Puplava had seen a video posted by Aaron Wissner entitled How I prepared my family for peak oil.
Actually, it's called How I prepared my home for peak oil and economic uncertainty, and that is a better name, since peak oil is not the biggest threat to our lives these days, the credit crunch is. But hey, nothing beats a catchy title.
The energy guys should really revise their models to include the financial crisis, but so far that's not happening. It would force them away from their field of expertise, and that's never easy to accept and always easy to ignore. Energy consumption is set to fall a lot, certainly in the western world, simply because it will become much less affordable. Peak oil, then, will become an afterthought receding into the hinterland; not an urgent concern.
Below, you can find Jim Puplava's interview on preparation (it doesn’t matter all that much for what one prepares, it’s far more interesting to see which practical steps to take), as well as the Aaron Wissner video and an article on that. As soon as a transcript of the Puplava interview is available, we will add that. Also, Nicole will appear at Aaron Wissner's Local Futures Conference at Shanty Creek Resorts, Bellaire, Michigan, November 9-12, along with the likes of Steve Keen.
In other news, we’ll let the Euro "solution" boil and simmer for a few days, in order to let the details sink in. Prediction: we’ll find a fine mess.
Jim Puplava interviews Nicole Foss:
Preparing for economic uncertainty
Nicole Foss of the Automatic Earth joins Jim this week from Europe to discuss her personal efforts to prepare her family for Peak Oil and the general economic uncertainty that she believes is headed our way. Nicole believes "there is a hell of a lot we can do, but we can’t have business as usual."
Please choose your preferred audio format:
How I prepared my family for peak oil
by Aaron Wissner - Sustainabilityconference.org
Local Future published a full-length, uncut, video presentation by Nicole M. Foss on her personal efforts to prepare her family for economic uncertainty and peak oil.
Foss is senior editor of The Automatic Earth (TAE), where she writes as Stoneleigh. TAE integrates a study of the global economy with a peak oil perspective. Previously, Foss served as the editor of The Oil Drum - Canada. Foss ran the Agri-Energy Producers' Association of Ontario, where she focused on farm-based biogas projects and grid connections for renewable energy. While living in the UK, Foss was a Research Fellow at the Oxford Institute for Energy Studies, where she specialized in nuclear safety in Eastern Europe and the Former Soviet Union, and conducted research into electricity policy at the EU level.
Her academic qualifications include a BSc in biology from Carleton University in Canada (where she focused primarily on neuroscience and psychology), a post-graduate diploma in air and water pollution control, an LLM in international law in development from the University of Warwick in the UK. She was granted the University Medal for the top science graduate in 1988 and the law school prize for the top law school graduate in 1997.
In 2009, Foss created a presentation titled A Century of Challenges, which lays out in 80 minutes the overall picture for peak oil and decline, and how the economy is likely to respond. Since then, she has toured extensively throughout North America and Europe, delivering talks to audiences ranging from small transition towns groups to large international conferences.
Her conference speaking events have included the Transition Towns conference in the UK, the FEASTA (Foundation for the Economics of Sustainability) conference in Ireland, the ASPO-USA (Association for the Study of Peak Oil) conference in Washington, DC. and the Local Future leadership conference in Michigan.
Foss has been interviewed by various radio and TV stations, as well publications including Financial Sense, Max Keiser, CollapseNet and Transition Voice. She was thanked by Richard Heinberg’s for her insights into the world of finance, which Heinberg incorporated into his book The End of Growth.
In November, Foss speaks at the ASPO-USA conference and the Local Future conference. At ASPO, she speaks for about 30-minutes as part of a three person panel including Dmitry Orlov and Gail (the Actuary) Tverberg. For the Local Future conference, Foss delivers her full, updated A Century of Challenges presentation as part of a full day of activities to study the future of the economy, along with Dr. Steve Keen of Australia, author of Debunking Economics.
In the video presentation released by Local Future, Foss details the preparations she and her family undertook in order to get ready for tough times ahead.
Foss had been living in England with her family in the 1990s, but after studying the economic indicators, decided to sell everything and relocate to a rural farm in Ontario, approximately eleven years ago. At the time, there was a large property bubble in England, which allowed her to sell a single townhouse, and turn around and purchase a 40-acre farm, with cash to spare.
Foss and her husband set a goal to reduce the energy use of the farmhouse by ninety percent. First, they discontinued using the vertical open loop geothermal system. They installed a outdoor wood burning furnace, which greatly reduced the electricity demand. They cut the wood themselves. For the summer, they installed solar hot water panels for domestic hot water.
For electricity, they installed a renewable energy system, with three kilo-watts of solar panels, and six deep cycle marine batteries. The various essentials of the home are hooked up to this system, including the well pump, sump pump, refrigerator, freezer, an invisible fence, a few lights, a few fans, etc. For a secondary set of electric loads, they have a gasoline generator, and a generator that can be installed on their diesel tractor. The battery bank can be charged from the solar panels, the generator, or the utility lines.
Several decisions had to be made when installing the renewable energy (RE) system. Foss decided not to connect the solar panels in a grid-tie situation to take advantage of Ontario’s feed-in tariff program. She believes that long term feed-in tariff contracts will not be honored in the longer term. Foss states that for her, these are not energy generating systems, but rather money generating systems. Rather than installing a tracking panel arrangement, which Foss considers a weak point in an RE system due to the moving parts. Instead, she installed more panels, which can be adjusted for their angle in winter and summer. For a similar reason, due to the moving parts maintenance requirements, they decided against a wind generator.
One consideration for Foss was that the solar panels generate much less energy in the winter months, which she sees as a vulnerability. This is one of the reasons that they did not disconnect from the electric utility, but rather switched as much of the electric load as possible to the renewable energy system. Items which are neither on the RE system or the generator circuit include an electric range, and assorted appliances.
Foss looks at home preparedness as being a matter of building in redundancy, which allows for function regardless of the available energy inputs.
For cooking, Foss has built redundancy. In addition to the electric range, she has a toaster oven, but notes that devices that generate heat from electricity are typically inefficient. Instead, she states that she could cook using a microwave oven, a wood fired range, a barbecue range with propane, a Coleman stove with butane, a solar oven or use a tripod and dutch oven over a fire pit.
Clean water is an essential for living. She suggests a very effective passive water filter such as used by aid agencies in the third world. Foss owns a Big Berkey filter for this purpose. She normally uses white ceramic filter to improve her well water quality. These systems need filters, but the filters last for a long time. Her farm has the original 30 foot deep dug well, with a pump handle. If she used this water she would use activated charcoal filter.
Transport options are useful. Foss lives three kilometers from the nearest village. The family has bicycles, and it is possible to walk that distance. She notes that, if necessary, she could walk twenty kilometers to Ottawa. She sees this as an area of vulnerability, and suggests that living in the city benefits from centralized services and ease of walking places. Rural areas would need to be much more self-sufficient. Her farm has seven barns, which could be converted into additional living space, with the possibility of a future intentional community. She shares the least hope for new suburbia.
Foss is a hobby farmer. She does hay and has sheep, alpaca, chickens and a dog sled team. She is a musher as a hobby, which she sees as a transport option for winter. She uses most of the sheep and alpaca for fiber. Her family eats the male sheep and eggs from the chickens. Foss grows various vegetables including corn, beans and squash in a three-sisters pattern; as well as tomatoes and peppers. She also has nut trees and fruit trees. They use a heated greenhouse to extend the growing season. She sees food storage through the non-producing months to be a key aspect of effective preparedness. Foss believes that living on a vegan diet becomes more difficult in areas with shorter growing seasons, and thus families will need to address such dietary considerations.
Foss and her husband have three teenage children. She notes that her children, as a captive audience, “have heard it all, they really have”. The children have been encouraged to study practical skills, to stay out of debt, and to only go to an affordable college if they earn a scholarship. Foss warns against any teenager going into debt for college, since students do not have jobs nor the ability to sell assets to pay off debts. This creates a vulnerability to organizations that may offer to pay off debts in exchange for service.
Foss’s eldest is studying massage therapy, and plans to move on to nursing. Foss would have encouraged against going to medical school since it is too expensive. She also notes that advanced skills learned will be unaffordable to most people in the future, thus finding a “happy medium” is important when working towards advanced study.
Foss’s middle child is an aspiring opera singer, which is a vocal skill which takes many years to develop. Foss sees this as opening a range of entertainment possibilities, and notes that “really entertaining people very rarely starve to death”. Foss points out that practical skills that are typically taught in college can also be apprenticed, and this is a very feasible possibility for completing various training in the future.
Setting expectations for children early is important. This was one reason that Foss and her husband chose a farm setting, where practical skills could be seen and used on an everyday basis. Her children did not have television or computer games, and fun was focused around low-energy items such as board games, card games, and walking the dogs. Foss’s youngest, who is now in grade 10, has stated that she is interested in carpentry.
“People can be happy with drastically less”, Foss notes, citing a BBC program called All Our Children to show how children in even the poorest situations could still be happy.
“It’s amazing what you can be happy with,” Foss says. “It’s about expectations. It’s not what we have; it’s what we have relative to what we expected to have or hoped to have. If we can make our expectations realistic, then we can meet those expectations.”
Foss concludes with, “There is a hell of a lot we can do. We can’t have business as usual. We have to get over it. It is gone. It is done. We cant’ have that. We have to be happy with what we can have; that is really what it means to be human, and that is incredibly important.”
The first TAE Community’s “Diamonds in the Rough” Poll was a great success, and we thank everyone who contributed their votes! The winning Diamond was the revival of FDR’s Department of Subsistence Homesteads, and it will be uncovered with more depth and detail in the near future. Now it’s time for the second poll with four brand new ideas, and hundreds of brand new votes! Below are brief explanations of these ideas, as they have been described by those who submitted them. You can vote in the right-hand column, near the top of the page.
1. State-Owned Grain and Flour Mills – The North Dakota Mills are state-owned and supply cereal grains and flour directly to market, bypassing the Minneapolis Commodity Grain Exchange. Their basic bread flour is not bromated or bleached, making it a healthier product. This model could be adopted by many other states.
2. The American Homestead Act of 2012 – A proposal which serves to revive the principle of Homesteading that was the foundation of the settlement of the American West. All homes remaining unsold six months after foreclosure automatically enter the pool of homes available for Homesteading with no compensation for previous lien holder, lenders can voluntarily place units in the pool and homes foreclosed with fraudulent title transfers would in the pool as well.
3. Local Complimentary Currency Model – First, the county/town/what-have-you saves official money into the central bank of the home country (in the beginning this could be 1% of the yearly budget). Next step is to print/issue debt-backed notes for the same amount (i.e. 100% reserve ratio). County/town spends the notes as part of the county/town salaries (or buys stuff/services directly from companies). People and companies have options to pay taxes with notes for face value, use them in transactions, or cash them in for 90/95% of FV (depending on their category).
4. Revitalizing Rural Economies via Small-Scale Farming - The town of Hardwick Vermont is a great example of a place where a new kind of farming has created the spark that's brought a decaying town back from the brink. High-Mowing Seeds was created by the then 19 year old Tom Stearns, and very soon after starting his business he was employing a number of people with all the benefits that come to a community from having steady, well-paying local employment. High-Mowing wasn't the only small farming venture and found itself part of a community of like-minded business owners.
Europe's grand gamble risks failure without ECB
by Ambrose Evans-Pritchard - Telegraph
Europe's "Grand Plan" to save monetary union is, in broad terms, a settled matter, even if the usual theatrics were still dragging on into the small hours of the Belgian night.
Whether it proves any more successful than past efforts over the past two years is far from clear. The package is a huge gamble. If it goes wrong, it may accelerate contagion to core Europe, hastening the denouement so feared by EU leaders.
The EU's €440bn bail-out fund (EFSF) will be leveraged "several fold" – perhaps to €1 trillion – chiefly by insuring the first 20pc loss of new bonds by Italy, Spain and other debtors. This creates a two-tier market, instantly downgrading old debt to lower status.
The plan will "probably" be buttressed by an off-books fund that uses EFSF seed money to rope in the International Monetary Fund, China, Japan and Russia.
French President Nicolas Sarkozy said he would call his Chinese counter-part Hu Jintao on Thursday to garner support. Beijing will almost certainly impose terms, renewing its demand for open-door access for Chinese state firms investing in EU industry and for an end to Europe's veto on "full market status" for China under global trade laws.
First loss is a form of structured credit all too like US sub-prime debt. It concentrates risk. Those holding these tranches of debt take the hit, in this case creditor states.
The question is whether this will damage the standing of core EMU states, pushing the most vulnerable over the edge. France is already battling to keep its AAA rating. Standard & Poor's has warned that France and a string of others risk a downgrade of up to two notches if Euroland tips back into recession, as many fear. "The larger the EFSF, the faster the dominos fall," said Daniel Gross from the Centre for European Policy Studies (CEPS).
The risk is that the leverage scheme will accelerate contagion to the core. Jacques Cailloux, from RBS, said the plan is "very dangerous" unless the European Central Bank (ECB) is fully mobilised to back-stop the system.
Chancellor Angela Merkel again ruled out any such a role for the ECB in her Bundestag speech on Wednesday. She offered no hint of "fiscal union" beyond stricter policing of national budgets. There will be no move towards debt pooling, an EU treasury or fiscal transfers. "Breaches of stability culture must be punished more severely," she said.
Once again she warned that if the euro fails, Europe fails. "No one should think that a further half-century of peace and prosperity is assured. It isn't. We have a historic duty to defend and protect the unification of Europe that our forebears achieved after centuries of hatred and bloodshed."
She was brought back to earth by a volley of accusations that she had misled the Bundestag about the true implications of the EFSF. "You came here to say there would be no leverage, not three years ago, not three months ago, but three weeks ago. You denied everything," said Frank-Walter Steinmeier, the Social Democrat leader. Green leader Jürgen Trittin asked: "You said there would be no leverage. Why are you shying away from telling the people the truth?"
Mrs Merkel won the vote handily but Bundestag ferment over recent weeks and revolt in parts of her coalition suggests Germany is nearing bail-out exhaustion.
The summit has sketched bigger haircut for banks and private holders of Greece's €346bn debt, though it may not prove to be Mrs Merkel's 60pc target. The banking lobby has proposed a last-minute compromise to head off a hard default. So long as the deal is "voluntary", it does not trigger credit default swaps and is easier to control.
Such debt relief may not be enough to pull Greece out of its downward spiral. A leaked report by "troika" inspectors suggested such a plan would leave public debt at 130pc of GDP in 2020. Greece faces a politically poisonous decade of slump without a viable outcome at the end.
Investors will expect fresh haircuts elsewhere once the precedent is set, despite an EU pledge this will not happen. They have already burned their fingers once believing such a pledge on Greece. The risk is that investors shun all Club Med debt, knowing that the underlying North-South gap behind the crisis has not be solved by the summit package and debt-deflation policies are pushing Portugal, Italy and Spain into deeper trouble.
Europe's banks will be recapitalised for €100bn, first by private funds, then state funds, and only from the EFSF as a last resort. This falls well short of the €200bn figure first mooted by the IMF. Banks will have until next June to meet a core Tier 1 capital ratio of 9pc.
The draft said banks must "enhance capital" and "avoid a credit crunch" at the same time, a contradiction in terms. Lenders have already begun to shrink their balance sheets rather than dilute capital. The danger is a brutal contraction of lending, perhaps by €5 trillion, according to RBS. The view in the markets is that only the ECB has the credible lending power to contain the crisis, and on that score the summit did not advance one millimetre.