There are a number of old-line economists in California who have been calling for a rebound in the state’s economy for over a year now. Like most economists, they completely missed the destructive nature of the housing bubble when it was underway, and never integrated energy factors into their models. It should not be surprise that many economists are still using post-war recession models to account for extraordinary conditions in California today: oil prices above 75.00 dollars a barrel, overlaid on 21.9 % broad unemployment. Hello: those are not post-war recession numbers.

How can the state’s budget not be in a crisis, when the number of people employed in California has fallen back to levels seen ten years ago?  This is why I remain with my view that Washington will have to perpetually bail out the states in a kind of staged process that combines aid, with some austerity, followed by more aid. We have just been through one full cycle of this process already with the initial stimulus package, followed by California having to downsize its budget severely from the peak, to the resumption of aid via unemployment extensions. However, the fact that California is signaling a potential return to the IOU system in 2010 is probably a cry for help to Washington. And of course, elections are just 90+ days away.

As if to add a touch of comedy to this news, Alan Blinder and Mark Zandi are out with a Mission Accomplished paper today, which details how the FED and the Government saved the US from a depression. Perhaps a short walk through San Bernardino County (picture above) or several other California counties with their white paper in hand might be in order, as a way to augment some of those views. I would suggest that the US Dollar is probably indicating already some of what lays ahead, here. California’s broad unemployment figure at nearly 22.00% is yet another new high, and indicates the trend is still in place. While Blinder and Zandi are stuck in post-war recession-land, the US Dollar is pointing towards California.

-Gregor

Beijingers Get Back on Their Bikes: Michael Bristow, BBC News.

Barbarism and Good Brandy: John Michael Greer, The Archdruid Report.

Unemployment Tops 20% in Eight California Counties: Alana Semuels, The Los Angeles Times.

The Great British Economy Disaster: John Lanchester, London Review of Books.

Economists Deliver a Sturdy Smackdown of Peak Oil Demand: Kate Mackenzie, FT energysource.

Innovation, Schminnovation – Welcome to the Boring Age: Paul Kedrosky, Infectious Greed.

-Gregor

Photo: Abandoned Car Off Highway in Rio Grande 1972 by John Vachon, from The EPA DOCUMERICA Project.

Can California Declare Bankruptcy?: Christopher Beam, Slate.

Exxon Lowers Bar, Buys Assets Once Seen Unattractive: Edward Klump, Bloomberg.com.

Requiem for a Dying City: Damien Perrotin, Energy Bulletin.

What’s Wrong with Venture Capital?: James Surowiecki, MIT Technology Review.

Losses Wipe Out Equity of Mexico’s Pemex: Robert Campbell, Reuters.

California Job Losses Grow: George Avolis, Contra Costa Times.

-Gregor

Photo: Cincinnati, Ohio 1975 by Lytha Scott Eiler, from The EPA DOCUMERICA Project.

I think it’s going to take 10 years before the United States extracts itself from its current position, and begins to enjoy sustainable broad-based wage growth once again. My forecast takes into consideration at least two more acute phases of the oil crisis, and, the cost of mitigating the relentless ebbing away of affordable oil. Overall, I see a serial recession-and-recovery oscillation that plays out at least 3 more times by 2020. And that’s a best case scenario–a scenario that avoids a political or systemic rupture.

We are currently in just such a recovery now. It’s not sustainable, and it won’t play out like other post-war economic recoveries with soaring GDP growth to kick things off. Instead, it will be a muted recovery that takes back some of the acute collapses in jobs, inventories, and production that started last year. And then we’ll roll over again. If we’re lucky, each of the 3-4 more recessions we experience into 2020 will become successively shallower. But that will be hard given what’s coming mid-decade in the global supply of oil.

It’s been some time since I’ve addressed oil. My recent work on coal, the problems facing cities, and this weekend’s outcome at Copenhagen have have all combined to persuade me that when it comes to addressing the ongoing energy crisis…(this article continues for subscribers through the membership gateway, on the right side of this page)

Gas, Shale, and Hydrofracking – problems of shale gas extraction: Medlock, Mall, Adams, Wujnovich, WBUR On Point Radio.

Aqua Shock – The Water Crisis in America: Author Susan J Marks, Financial Sense Online.

“Keep the Oil in the Soil”: Ecuador Seeks Money to Keep Untapped Oil Resources Underground, Democracy Now Radio.

Passenger Rail: Author James McCommons discusses Waiting on a Train, EP Podcast.

Electric Vehicles: Less celebrated types of electric vehicles at opposite ends of the size spectrum – Electric bicycles and  Electric trains, Ideas Programme, Radio New Zealand International.

-Gregor

Photo: Marco Polo

IEA Warns Non-Opec Oil Supply Will Peak Next Year: Kate Mackenzie, FT energysource.

World Energy Outlook Executive Summary (12 page Adobe .pdf), IEA Paris.

Too Fearful to Publicise Peak Oil Reality: Madeleine Bunting, The Guardian.

Guardian Raises Questions about Past IEA Forecasts of World Oil; New IEA Forecast is Out – With a Lower Forecast, The Oil Drum.

Paging Don Quixote: Spain’s New Wind-Power Record: Keith Johnson, WSJ Environmental Capital.

Good Food Nation – Reversing American Obesity via Regional Foodsheds: Peter Dizikes, MIT News Office.

State Tax Revenues Show Record Drop, For Second Consecutive Quarter: Dadayan and Boyd – State Revenue Report (23 page Adobe .pdf), The Rockefeller Institute.

The Vulnerabilities of Complex Systems: Chris Nelder, Get Realist.

-Gregor

Photo: Statue of Liberty, on display at International Exhibition Paris, 1878: Picture of the Day.

New School of Thought Brings Energy to the Dismal Science: Nathanial Gronewold, The New York Times.

The Narrow Ledge of Oil Prices: Chris Nelder, Get Realist.

Food Will Never Be So Cheap Again: Ambrose Evans-Pritchard, The Telegraph.

Will Allen and the Urban Farming Revolution: Ethan Zuckerman, World Changing.

China’s Water Needs Create Opportunities: Hillary Brenhouse, The New York Times.

The Shrinking of China – High Speed Rail: Duncan Hewitt, Newsweek.

Mortgage Madness: Doug Noland, Credit Bubble Bulletin.

-Gregor

Photo: Wallace Tower, Stirling Scotland: Library of Congress Photochrom Travel Views