Jeff Vail: The Timing of the Financial Crisis & Peak Oil

You can buy a house with a frozen credit market–you just have to save up the cash purchase price first. Novel approach, I realize, but there you have it. Believe it or not, people used to do this fairly frequently.

You can still manufacture complex products. But, rather than getting a loan to buy the capital equipement, materials, and pay the labor, then give it to the customer, get them to pay you, and repay the loan, now you need to 1) get the customer to pay you, or 2) maintain enough cash reserves to carry this cost until payment. This means that either the customer or the producer needs to save up the money for the end product first, rather than pay later. This also has a dramatic impact on business models–the ‘get big first, then figure out how to profit’ model advanced by and others simply doesn’t work. All these changes really shake up the rate of throughput while System B reverts back to System A. […]

The next two or three years of focus, budget, and effort fixing the financial crisis are two or three years where we aren’t using oru rapidly dwindling supply of high net-energy surplus oil and gas to invest in a renewble energy infrastructure or to restructure our economy away from the demand for continual growth. In fact, the short-term drop (or at least fear thereof) in commodity consumption is likely to depress prices enough that there’s no financial incentive to even invest in keeping production steady.

We’re setting ourselves up for the perfect storm. Resurgent global demand for energy will hit just about the time that our energy supplies (especially our net energy supplies) begin to rapidly decline. As I’ve said in jest many times on this blog, the Mayan prophecies about 2012 may not be that far off the mark–at least as far as timing is concerned.

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1 Comment

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