Saturday, 21 April 2012

Nicole Foss: Preparing for the Economic Depression

by Andy Barratt

 Nicole Foss began her talk at the Hampden Hall on 23 March by describing herself as a "big picture" person, and it was certainly a big picture that she set out before her audience.

Nicole's thesis is a simple one. The developed world faces two imminent crises: a financial crisis and an energy crisis. The financial crisis will come first (we are already experiencing its first phase); the energy crisis will arrive somewhat later. Hence the title of her talk, important though peak oil and other forms of resource depletion might be – not to mention the ever-growing spectre of climate change – it is on the current financial situation and its implications for our way of life that we should be concentrating our attention right now.

Nicole is not the only one to be talking of an inevitable economic collapse, of course -- a quick search on the internet or the shelves of the public library will supply endless hours of depressing reading -- but where her analysis differs from most (see, for example, Dmitry Orlov's darkly hilarious Reinventing Collapse) is that she expects this to be a deflationary (rather than a hyperinflationary) economic depression. In her account, the banking crisis of 2008 marks the high point of an economic "bubble" which she describes as a massive pyramid scheme which (like such bubbles throughout human history) is bound to burst – at immense cost to us all. When it comes, the ensuing depression will be at least as long as the Great Depression.

And that is only half the problem, of course. This is because the energy crisis will then follow hard on the heels of the economic depression. (Thankfully for those wishing to keep total despair at bay, Nicole hardly made mention of the ever-escalating dangers of global climate change – a small enough mercy though it might seem.)

On the energy front, Nicole gave a fairly rapid summary of what is by now a standard analysis, reviewing the peak oil scenario, diminishing returns on energy invested in ventures like oil from shales, the lack of credible alternatives to cheap fossil fuels, and so on. The good news, though, is that the impact of the energy crisis will be mitigated – at least for a while – by the economic crisis, which will reduce demand and thus give us a breathing space before the supply collapse really kicks in.

The final part of Nicole's talk was the bit we were all waiting for, of course. If all this is on the way, what the hell do we do about it? There is no way New Zealand will be miraculously spared. Our problems are well understood already: high household debt; a housing price bubble; vulnerability to rising interest rates; and a reliance on international trade (which is a major casualty during periods of economic depression). The NZ dollar will fall in value and we are likely to pay the price of having our trading banks in Australian ownership.

As we face all of this, Nicole reminded us of the importance of human psychology and the need to steer a course between the natural – but ultimately unproductive – responses of anger or fear. Instead, she stressed the need for us to keep a long-term view and to focus on constructive activity. What this means above all is doing things for ourselves. Forget about central governments coming to our rescue and work towards survival from the grass roots. In a depression, deglobalization and decentralization will be the way forward and strong local communities an absolute necessity.

So what do we do? At the individual household level we need to reduce debt as quickly as possible and gain as much control as we can over essentials, such as water and power supply. Hold on to cash (don't rely on the banks!) and try to pool wealth across generations, reinventing the extended family. We also need to become generally much more tolerant of the risks we face, accepting these as a natural part of the process of living. We should invest where we can in "hard goods", the things we need when the going gets tough: shelter, land, water provision, cooking equipment, low-tech transport, hand tools, books and manuals, medicines, and so on. At the community level, it will be a matter of pooling resources and understanding that interdependence, not autonomy will be the key to resilience. Again, Nicole drew on her background in psychology, emphasizing the necessity of developing relationships of trust.

Oddly enough – and despite the depressing prognosis it contained – Nicole's talk was, for me at least, an invigorating experience. For those who missed it, her interview on the Kim Hill programme on National Radio (24 March) is available on the internet. And her website (theautomaticearth) also has lots of interesting stuff on it.

From and 'Blueskin News' published by Blueskin Media: voluntary/non-profit community publishers in Blueskin Bay (Seacliff, Warrington, Evansdale, Waitati, Doctors Point, Purakaunui), Dunedin, New Zealand. All material sent to or published by us is "copyleft" in the public domain and may be freely shared, archived, re-edited and republished. If you want to credit the source it's "".

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