Tag: Paul Gilding

Market forces.

A powerful essay from Paul Gilding.

Having our good friends, Andy and Trish, with us for a few days means, quite rightly, that time with them is top of our list; so to speak.

Thus I want to republish a recent post from Paul Gilding that seems to me to be right on the mark.

But first an apology.  About 10 minutes ago (07:40 US PDT yesterday) I pressed the ‘reblog’ key over on Paul Gilding’s posting in error.  Subscribers to Learning from Dogs will have been sent an email to that reblog and then discovered that I had deleted it, in favour of this approach!

Mr Paul Gilding.
Mr Paul Gilding.

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THE GLOBAL ENERGY MARKET’S MOMENT OF TRUTH

If you want to know what addressing climate change will really be like for business and investors, then take a look at today’s electricity and energy markets. Driven by climate policy, technology development, business innovation, NGO campaigns and investment risk analysis, creative destruction is inflicting itself upon the sector with a vengeance – and the process has just begun.

Value is being destroyed at an incredible scale with just one example being European utilities losing $750 billion in market cap in recent years. Another is the huge losses in value for coal companies and the cancellation of a large number of new coal mining projects around the world as the forecast growth in China and India evaporates. As I argued in my last Chronicle, Carbon Crash Solar Dawn, this is not a temporary market blip but a fundamental shift. Company strategies and business models that have been working for generations are collapsing. In parallel we see the creative side of the process, with new industries being built, entrepreneurs flourishing and massive wealth being created. Now the market is working, as it should, allocating capital to the places where risk and return are best aligned. It is at once a beautiful and brutal process to observe.

This is an important inflection point to acknowledge, with significant implications that should reframe our thinking about these issues.

For a start it means, climate policy and its economic consequences have now shifted from future forecasts to present reality. This reality, with all its brutality for existing businesses, give us important insights into what to expect as the world wakes up to climate change. Business is already waking up to what that means in a market economy – creative destruction unleashed to destroy slow responders.

This suggests that traditional corporate responsibility, which argued sustainability was good for all businesses, is outmoded and not helpful. We have moved into an era of win/lose rather than win/win, and with that, sustainability is shifting from ‘environmentalists vs business’ to ‘business vs business’ as I covered in this earlier Chronicle.

Taken together this means we need to change the way we talk and think about climate change and business. Sustainability is not good for many businesses – in fact it means they’ll have to go out of business. This is what sustainability at its core is all about – things that are unsustainable will stop.

While on the one hand this is blindingly obvious, it is a conversation many in business and politics don’t want to acknowledge. So when the previous Australian government brought in its carbon pricing scheme, it went to great lengths to argue that Australia would still have a healthy coal industry. And President Obama’s new regulations on CO2 emissions in the US power industry are likewise being positioned as being as much about health and air pollution as climate policy.

But as Michael Grunwald argues in this Time Magazine piece on “Obama’s War on Coal” – a phrase used by the coal industry to suggest this is unfair and unreasonable – it’s time to face up to the reality of climate action. It is a war on coal, pure and simple. Grunwald calls it the “just but undeclared war ”. But rather than “just” with its moral overtones, we could simply argue it is “necessary” based on any objective analysis of what’s good for the economy and for society. What is necessary is to move a range of companies out of the economy and replace them.

Coal is first in the firing line. As a major cause of CO2 emissions and with the lack of market support for Carbon Capture and Storage suggesting “clean coal” is either a delusion or at best an expensive PR campaign, coal simply has to go. That means coal companies will go out of business, and then oil companies and gas companies will follow them.

This is not a problem at all for the economy, as they will be replaced with new companies and new industries, which will create new jobs, new wealth and new innovations. But it is a major problem for the incumbents who will cease to exist and for their owners who will lose their money. Unless we have that conversation honestly and openly, we are setting ourselves up for pain and suffering we can easily avoid or at least minimise by thinking through the consequences and being better prepared for their departure.

Of course the best way to minimise the pain would be for fossil fuel companies to transition to new areas of business, to use the great wealth they have created to diversify into sustainable sources of profit. But most of them won’t. It’s not that they couldn’t – it’s just that they won’t. And it’s not just coal but also oil and gas who are, for the most part, in strong denial about what’s coming and so won’t be prepared, as well explained in this article by Giles Parkinson at RenewEconomy.

We shouldn’t be surprised. History shows how rare it is for companies to transform and survive major market and technology shifts. That’s why the average life expectancy of a successful multinational is only 40-50 years. And that’s why the financial markets – who act without ideology based on looking at the data – are rapidly responding. They are stripping value from fossil fuel exposed utilities and the resource companies that provide their fuel. They are also downgrading credit risk, with Barclays recently issuing a warning the investors should no longer see utilities as a “sturdy and defensive subset of the investment grade universe”. The report concluded: “We see near-term risks to credit from regulators and utilities falling behind the solar plus storage adoption curve.” No doubt Deutche Bank considered these risks when they recently announced they wouldn’t consider funding a major new coal port next to Australia’s Great Barrier Reef.

So while the idea of “war on coal” is in some ways an accurate summary of the momentous threats the industry faces from a range of forces that are consciously and deliberately coming after them, we could also just see this as how markets work.

Fossil fuels provide us with energy, but they also destroy value across the economy – by driving climate change, damaging health and increasing costs for taxpayers while imposing unmanageable risks on other companies who rely on a stable climate for their business success. So the market is simply doing its job, pricing in some of these costs using the proxies of regulatory, credit and technology risk.

The market is working …. and fossil fuels are losing.

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Hope you agree with me that it’s a great essay and, also, I hope you followed the links – they are all very interesting.

Those of you who are not familiar with Paul Gilding can find out more about him here.  Plus the following TED Talk by Paul is highly recommended viewing.

Common sense!

Some people seem to have a knack for saying it how it should be!

My sub-heading, above, applies to many people right across the world.  But the reason that this was triggered in my mind for today’s post, was a recent item on Christine’s excellent Blog, 350 or bust.  Read more about that Blog here.  I subscribe to that Blog.

A couple of days ago, there was an article with the title of Live Long And Prosper, Already.  It started thus,

Gene Roddenberry, the creator of the amazingly popular Star Trek series, was a man ahead of his time. Here is one of the things he  had to say about humanity and our problems (with one editorial comment from me!):

“I believe in humanity. We are an incredible species. We’re still just a child creature, and we’re still being nasty to each other [Stephen Harper: are you listening?].  And all children go through those phases. We’re moving into adolescence now. When we grow up, man, we’re going to be something!”

But what caught my eye were these comments to the Post.

The first one from a Mickey Haist that read,

It’s a nice goal, but would clenching our teeth and willing progress be of any effect? After all, children don’t spontaneously mature – they’re raised.

Have to say that I was left unsure by what Mr. Haist was trying to convey.  But not so Christine!  This was the first of her two replies,

No teeth clenching allowed! Robert Kennedy once said “Each time a person stands up for an ideal, or acts to improve the lot of others, or strikes out against injustice, he or she sends forth a tiny ripple of hope. And crossing each other from a million different centers of energy and daring, those ripples build a current that can sweep down the mightiest walls of oppression and resistance.”

It’s not about everyone doing everything, it’s about each of us doing what we can. Not taking action because the problem is too big is not the answer.

And her second reply,

And Mickey – if the challenge of climate change/ocean acidification/biodiversity loss that we are facing as a species (taking the rest of the natural world with us) doesn’t make us mature, then nothing will.  But I believe it will – as Paul Gilding says, humans are slow but not stupid!

Paul Gilding’s excellent website is always a great read, by the way.

But do reread those words of Robert Kennedy, they are powerfully inspiring.

Robert Kennedy

Each time a person stands up for an ideal, or acts to improve the lot of others, or strikes out against injustice, he or she sends forth a tiny ripple of hope. And crossing each other from a million different centers of energy and daring, those ripples build a current that can sweep down the mightiest walls of oppression and resistance.

Despite the fact that these words were said in response when South Africans suffered the tyranny of apartheid, the words are, perhaps, even more relevant today.  Mankind has to combine the many ‘ripples of hope’ and build that current that will sweep away the crazy selfishness that is preventing us from living in harmony with this beautiful planet for hundreds of years ahead.

Thanks Christine.

The Tenacity of Dogs, part two.

More on how dogs adapt to challenges in their lives.

(As readers picked up from my closing comment in yesterday’s part of this story, technology has rather interfered with events.  ‘Touch wood’ things appear to be back to normal!)

Yesterday’s article (thanks to Paul Gilding for the link) was about the stray dogs in Moscow.  Before musing on the more general nature of how dogs survive as strays, there is a video on YouTube about these Muscovite dogs.  Just over 7 minutes long, it further underlines the amazing adaptability of the domesticated dog when thrust into self-survival.

As regular readers of Learning from Dogs will know, before Jean and I met, Jean had spent a large part of her life rescuing dogs in the San Carlos area of Mexico, much of that with Suzann (who was instrumental in Jean and me meeting!).  Indeed, when Jean and I moved up to Payson in February, 2010 we had with us, much to the amusement of the American border staff at the Nogales crossing, 12 dogs and 6 cats, all rescues except my German Shepherd dog, Pharaoh.

So Jean has lots of stories about how the far-too-many stray dogs in San Carlos developed strategies for staying alive.  Dhalia, see story below, shows her feral habits when we go out for a walk in the forest by constantly looking for food, despite the fact that she is a well-fed, happy and contented dog.  Jean recounts finding Dhalia,

It was in 2005, about three months after Ben died (Jean’s husband). I was driving out to the small Mexican fishing port of La Manga where there were many stray dogs.  The aim was to feed them on a regular basis and hope that they would become sufficiently comfortable with my presence so that they could be caught, so that they may be spayed or neutered and then offered for adoption.

On the way there, I drove past a couple of dogs running alongside the highway.  Dogs frequently did this looking for ‘road-kill’ that they could feed on.  I stopped the car wanting to put out some food and water.

One of the dogs was so feral that it immediately took off into the bush.  I turned around and the other dog was standing about ten feet away.  It was cadaverous and obviously suffering from mange but cautiously came up to the food, sniffed carefully and then started to eat.  That dog allowed me to pick it up and then sat quietly with me on the front seat of the car while I continued to La Manga.  It sense immediately that it was safe and from that day has remained with me.  I named her Dhalia.

Dhalia in Jean's arms, November 2008

Fast forward to today.  Dhalia is one of Pharaoh’s group of dogs and is a sweet and loving animal.

Finally, a couple of other stories to give you a feeling about these rescue dogs. One from August 2009 about a dog called Lucky Lucy.  The other about Corrie, both stories from Suzann.

Enjoy.

The Tenacity of Dogs, part one.

Stray dogs demonstrate remarkable skills at staying alive.

Before I start, a big word of thanks to Paul Gilding who passed this story to me.  Apart from reading Paul’s powerful book, The Great Disruption, and exchanging a couple of emails, he doesn’t know me from Adam.  But the fact that this undoubtedly busy man (his book has been a great success) not only responded to an earlier email from me and then dropped me a note to say that I might enjoy the following article, says a great deal about the integrity of the person.

The article, from the website The Dog Files, is about Moscow’s stray dogs.  I’m taking the liberty of reproducing it in full.

Each morning, like clockwork, they board the subway, off to begin their daily routine amidst the hustle and bustle of the city.

But these aren’t just any daily commuters. These are stray dogs who live in the outskirts of Moscow Russia and commute on the underground trains to and from the city centre in search of food scraps.

Then after a hard day scavenging and begging on the streets, they hop back on the train and return to the suburbs where they spend the night.

Experts studying the dogs, who usually choose the quietest carriages at the front and back of the train, say they even work together to make sure they get off at the right stop – after learning to judge the length of time they need to spend on the train.

Scientists believe this phenomenon began after the Soviet Union collapsed in the 1990s, and Russia’s new capitalists moved industrial complexes from the city centre to the suburbs.

Dr Andrei Poiarkov, of the Moscow Ecology and Evolution Institute, said: “These complexes were used by homeless dogs as shelters, so the dogs had to move together with their houses. Because the best scavenging for food is in the city centre, the dogs had to learn how to travel on the subway – to get to the centre in the morning, then back home in the evening, just like people.”

Dr Poiarkov told how the dogs like to play during their daily commute. He said: “They jump on the train seconds before the doors shut, risking their tails getting jammed. They do it for fun. And sometimes they fall asleep and get off at the wrong stop.”

The dogs have also amazingly learned to use traffic lights to cross the road safely, said Dr Poiarkov. And they use cunning tactics to obtain tasty morsels of shawarma, a kebab-like snack popular in Moscow.

With children the dogs “play cute” by putting their heads on youngsters’ knees and staring pleadingly into their eyes to win sympathy – and scraps.

Dr Poiarkov added: “Dogs are surprisingly good psychologists.”

By Elaine Furst for Dog Files

Now had this been a normal day then I would have had the time to complete this story about the tenacity of dogs.  But a failed wireless modem earlier today (Thursday) meant the loss of too many hours fighting technology.  It was all sorted just a little before 5pm.  It is now 6.15 pm and dinner is ready and, frankly, my brain is too tired to continue.

So stay with this fascinating story about stray dogs as I continue it tomorrow (Saturday, 20th.).

The unexplored shores of the future

A focus on Tim Bennett’s movie, What a Way To Go: Life at the end of Empire

We first came across this film, made by independent film-maker Tim Bennett, on the Top Documentary Films website, see here.  The title to this article comes from that introduction, from which is quoted,

Tim Bennett, middle-class white guy, started waking up to the global environmental nightmare in the mid-1980s. But life was so busy with raising kids and pursuing the American dream that he never got around to acting on his concerns. Until now…

Bennett journeys from complacency to consciousness in his feature-length documentary, What a Way To Go: Life at the End of Empire. He reviews his Midwestern roots, ruthlessly examines the stories he was raised with, and then details the grim realities humans now face: escalating climate change, resource shortages, degraded ecosystems, an exploding global population and teetering global economies.

Now to be honest, this is a film that is both captivating and, in parts, pretty grim.  A couple of trailers and other background material were posted on Learning from Dogs back in February.

The film also has an excellent web site What a Way To Go Movie which contains much background material including the opportunity to watch the film for free, click here.  Or a quick YouTube search will bring you to here.

My own view is that this is a ‘must see’ film.  Not because I want all of you to wallow in doom and gloom, far from it, but because, as Paul Gilding writes in his book, The Great Disruption, the quicker that mankind recognises the massive levels of denial presently in place, the quicker that mankind will commit to the scale of change that is required.  That’s where Paul Gilding’s approach differs from the movie, The End of Empire.  Gilding is optimistic that man will bring about change simply because fairly soon, in just a few years, it will be obvious at all levels in our societies that there simply is no choice!

The blame game

A retrospective muse about the present global challenges.

A few days back I posted an article by Tom Engelhardt called The Great American Carbon Bomb.  It attracted a number of comments including a couple from Learning from Dogs supporter, Patrice Ayme.  Here is one of those comments,

Dear Paul: There is a gentleman leading the Tour de France, right now. He was not given a chance, especially in the mountains. However, he has been going day by day, and has now worn the Yellow Jersey for more than a week, supported by his inferior, but dedicated team. His philosophy: humility, and do the job day by day, trying his best, although he strongly doubts that he is up to the task.

We, as humankind, or, rather, our hubristic leaders are doing the exact opposite. We are not doing our best, and it’s precisely because those leaders are not humble and not honest, and so very sure we are going to pull out OK, because that’s what we do best, and have always done, and thus will always do.

Verily all indicators are that of an unfolding catastrophe. All signals are loud and clear that way. So it’s really not the moment to say:”Oh, BTW, we are very resilient and totally great, so it’s just a matter of time before we put it all together OK. So now let’s all pull together, and it’s fine.”

In truth we are on the verge of an irreversible situation, as the CO2 poisoning will turn, within a decade or so, into a political, and then military issue.
PA

Patrice is an angry man (not a criticism by the way – so many of us are angry!) and anger is a great reason to find someone, something, anything, to blame!  I suspect, wearing my cloak of an amateur psychologist, that a core reason why we feel anger is that, so often, the causes of our anger are our own errors.  Anger at one’s self is much more difficult to deal with!

Anyway, back to the plot.

Like Patrice I also feel badly let down by our ‘leaders’.  Especially with regard to the nightmare of economic and ecological issues fast approaching.

Then I read this in Paul Gilding’s book, The Great Disruption, that has been featured on this Blog a couple of times.

Our addiction to growth is a complex phenomenon, one that can’t be blamed on a single economic model or philosophy.  It is not the fault of capitalism or Western democracy, and it is not a conspiracy of the global corporate sector or of the rich.  It is not a bad idea that emerged in economics, and it is not the result of free market fundamentalism that emerged in the 1980s with globalization.  While each of those factors is involved, it is too simple and convenient to blame any of them as the main driver.  Growth goes to the core of the society we have built because it is the result of who we are and what we have decided to value. [Chapter 5, Addicted to Growth, p66]

That last half of that last sentence – ‘it is the result of who we are and what we have decided to value.‘  That strikes me as the core truth.  It is the reason why Patrice, and me, and countless thousands of others across the globe, are so angry.  At heart we all know that the circumstances we find ourselves in are, in great part and before we ‘saw the light’, the result of earlier personal values which we now know were not compatible with a sustainable relationship with the planet we all live on.

It is very good news.  That anger is fuelling change.  As Malcolm Gladwell writes in his book The Tipping Point societies change when something of the order of 18% of individuals emotionally commit to change.

William Rees on disconnection

William Rees discussing the disconnect between economics and ecology.

Yesterday, I wrote about Paul Gilding’s book The Great Disruption.  In a sense today’s article continues the theme; the idea that the future is going to be very different to the past, indeed has to be if mankind is to have a viable future.

Dr. Bill Rees

Dr. William Rees is Professor at the University of British Columbia’s School of Community and Regional Planning.  More details of Dr. Rees here.

Here’s a 17-minute video interview of Dr. Rees with Thomas Bernes, Executive Director, CIGI.

That interview is carried on the website of the Institute of New Economic Thinking from where one can read the introduction, thus,

The world economy is depleting the earth’s natural resources, and economists cling to models that make no reference whatsoever to the biophysical basis that underpins the economy. That’s why ecological economics is needed, says William Rees in this INET interview.

Standard economics portrays the economy as a circular flow: households pay money to firms in exchange for goods and services, and firms pay wages to households in exchange for labor. Textbooks describe this circular flow as self-perpetuating, capable of infinite expansion. William Rees argues that the textbooks get it wrong; he says the production of our goods and services depends on the extraction of material from ecosystems, causing resource depletion on the one hand, and excess pollution on the other.

William Rees, best known in ecological economics as the originator and co-developer of ‘ecological footprint analysis’, says the United States is using four or five times its fair share of the world’s total bio-capacity. In order to bring just the present world population up to the material standards enjoyed by North Americans, we would need the biophysical equivalent of about three additional planet earths.

There has been no time in history where income growth hasn’t been accompanied by increased material and energy consumption, Rees cautions. He says technologies exist that would enable us to enjoy our current lifestyles with perhaps as little as 20 percent of our current energy and material consumption, but we do not have the incentives in place to force that decoupling to take place.

Rees is as pessimistic on current culture and politics as he is optimistic on the technology. The global culture remains in denial, and people with vested interests in the status quo wield enormous power.

Want more from Dr. Rees?  Over at the website West Coast Climate Equity is an eight-part series where Dr. Rees sets out the proposition that humanity’s survival depends on an 80% reduction in energy use.

Finally, on the Post Carbon Institute website there’s a link to an audio speech given by Dr. Rees summarised as follows.

Bill Rees speech to Vancouver World Federalist meeting on Radio Ecoshock Show
This is a speech by Dr. Bill Rees delivered April 15th at the World Federalist meeting in Vancouver.  It goes a long way to explaining why we fail to act, even as the facts become clear and indisputable.  He covers the three brain theory, the limits of evolution, memes, Peak Oil, and cultural myths, plus some thoughts on solutions – mostly contraction and convergence.  Rees is one of the few academics more or less calling for a planned economic collapse.

The 53 minute speech is featured in this week’s Radio Ecoshock show, broadcast by 20 college and community radio stations in the U.S. and Canada, plus Green 960 AM in San Francisco.

The URL includes a link to download a transcript.

What is it you don’t understand?

Stating the obvious.

I am about a third into Paul Gilding’s book The Great Disruption.  It’s proving to be a very-thought provoking read that I will review in more detail over the coming weeks.

However, I just wanted to quote from the start of Chapter 5, Addicted to Growth,

Indeed, as argued by economist Kenneth Boulding: “Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.”

Very little that can be argued about that statement.  It rather puts into context a couple of items read recently. Both from the blogsite New Economic Perspectives.  The first on June 10th by Stephanie Kelton,

Earlier this week, President Obama talked about the weakening state of the economy, telling us that he’s not worried about a double-dip recession and that the nation should “not panic.” It’s hard to imagine a more alarming assessment at this juncture.

The recovery is faltering. Our economy is growing at annual rate of just 1.8 percent. Manufacturing just grew at its slowest pace in 20 months. More than 44 million Americans – one in seven – rely on food stamps. Employers hired only 54,000 new workers in May, the lowest number in eight months. Jobless claims increased to 427,000 in the week ended June 4. The unemployment rate rose to 9.1 percent. Nearly half of all unemployed Americans have been without work for more than 6 months. About 25% of all teenagers who are looking for work are unemployed. Eight-and-a-half million Americans are underemployed – i.e. working part-time because their hours have been cut or because they can’t find full-time work. There are, on average, 4.6 unemployed people for every 1 job opening. And even if all the open positions were filled, there would still be 10.7 million people looking for work.

The second on July 8th by Marshall Auerback,

Today’s unemployment data suggests that we are experiencing something far worse than a mere “bump in the road”, as our President described it last month.  In fact, if last month was the time to panic, as Stephanie Kelton argued here, then today’s data should create real palpitations in the White House.  This isn’t just a “bump,” but a fully-fledged New York City style pot hole.

First the headline number everyone looks at: non-farm payrolls. Up 18,000 in June, the increase was 100,000 less than expectations.  In addition the prior two month payroll increases were revised down by -44,000 overall.  That’s weak – but not terrible.

Dig a bit deeper into the data and it looks absolutely awful:  The household measure of employment fell by -445,000.  Okay, it’s a noisy number. But, as Frank Veneroso has pointed out to me in an email correspondence, this measure of employment which is never revised now shows no employment growth over the last five months and very negative employment growth over the last three.

But it gets worse:  The work week was down one tenth.  Overtime was down one tenth.  The labor participation rate at 64.1% was the lowest since 1984.  The broad U6 unemployment rate rose from 15.8% to 16.2%.  In other words, as Frank suggested to me this morning, “many other employment indicators in this report confirm the deep disappointment in the payroll series and the much more negative message of the household series.”

Now here’s the latest item published by Paul Gilding in his Blog, The Cockatoo Chronicles. (I have republished it in full, hopefully without upsetting Mr. Gilding – couldn’t see advice on reproduction – but copyright remains, of course, fully with Paul Gilding.)

Like a Grenade in a Glasshouse

June 29, 2011

It’s going to hit hard and it’s going to hurt – made worse because most aren’t expecting it. They think the world is slowly returning to our modern “normal” – steadily increasing growth, with occasional annoying but manageable interruptions. After all, the global recession wasn’t so bad was it? Sure there was pain and things got shaky but Governments responded, bailed out companies, stimulated economies, got things back on track.  While it’s still a bit bumpy, Greek wobbles, US debt, extreme weather, high oil and food prices etc, it’ll work out. It always does….

If only it were so. In fact we are blindly walking towards the next in a series of inevitable system shaking and confidence sapping crises, deluded in the belief that the worst is behind us.

Each crisis will be a little worse than the last. Each one will shake our denial a little more. This is what happens when systems hit their limits. They don’t do so smoothly, but bump up against the wall, hitting hard, then bouncing off equally hard. It is the behaviour of a system trying to break through. But if the limits are solid, as is the case with our economic system hitting the limits of the planet – defined by unchangeable physical capacity and the laws of physics, chemistry and biology – then it can’t find its way through. So eventually, when the pain of hitting the wall gets too much, it stops.

Then it will hit. Like a grenade in a glasshouse, shattering denial and delusion and leaving it like a pile of broken glass on the floor of the old economic model. Then we’ll be ready for change.

I’ve been arguing the inevitability of this moment since 2005, mostly inside the business community. Before the 2008 financial crisis hit, the idea was almost universally rejected, with a belief in the indomitable power of globalised markets to overcome all challenges and keep growth on track. Most audiences believed that while markets always wobbled, they also always recovered. My suggestion, that this level of arrogance was the hallmark of empires before they fell, landed on deaf ears. They were the masters of the universe and markets and growth would always reign supreme.

Now the response is different. The financial crisis saw many break off from the pack and start to ask the difficult questions. I now find as I tour the world speaking about The Great Disruption to community gatherings, corporate executives and policy makers that minds are increasingly open. While not the dominant view, the previous confidence in the inevitably of growth has become shaky and the group asking the challenging questions is rapidly expanding.

As I argue in the book, the fundamental cause of what’s coming is resource constraint and environmental breakdown, which when combined with an overstretched financial system and high levels of debt puts unbearable tension into the global economy. While no one can know what event will pull the pin out of the grenade, the underlying pressures make that moment inevitable. Yes, the dominant commentary still blames each individual problem on unique circumstances, but the underlying systemic causes are clear for those who wish to look.

The continued level of denial still surprises me, especially given the pressures driving this are not esoteric and can be measured in clear economic indicators. A good example was recently published by one of the more interesting voices to join the growing chorus that we have a system-wide problem. The legendary contrarian and fund manager Jeremy Grantham is co-founder of the Boston based firm GMO, with over $100 billion of assets under management. So this guy is a solid capitalist and market advocate, pursuing wealth for the wealthy. But he sees the data and is raising the alarm, calling this moment “one of the giant inflection points in economic history” – referring to the end of a 100-year steady decline in commodity prices. His views were echoed by Stephen King, group chief economist at HSBC, who wrote in the FT: “After the biggest meltdown since the Great Depression, economic theory tells us that world commodity prices should not be this high. But they are and the West quickly needs to wake up to this new economic reality. Commodity prices are now permanently higher.”

Grantham provides the detail, pointing out that the 100 year trend of falling prices in the 33 most important commodities, except for oil, were wiped out with a price surge from 2002 to 2010 – a surge even greater than experienced in WW2. We have now reached what Grantham calls the Great Paradigm shift; not a price spike but a new reality. Within this new reality, Grantham says: “if we maintain our desperate focus on growth, we will run out of everything and crash.”

This is why hitting the wall is inevitable – because limits are not philosophies, they are limits. We can understand what to expect – and why the grenade will shatter the glasshouse of economic growth – by going back to how systems behave when they hit their limits. Our economic system first hit the wall in 2008 – that was when The Great Disruption began with food and oil prices hitting record highs and a credit crisis driven by reckless monetary policy pursuing growth at all costs. The resulting recession meant we backed away from those limits (bouncing off the wall), and then borrowed massive amounts of money from our children (think Greece) to try to get the economy moving again.

Now that the global economy is slowly entering a so-called “recovery”, the prices of commodities (representing our use of earth’s resources for food and materials) are on the way up, accelerated, in the case of food, by climate change. Of course if significant growth kicks in, the prices of oil, food and other commodities will surge, this timestarting from near record highs.  Then we will bounce back into recession and prices will back off again. Hit the wall, bounce off. Hit the wall, bounce off. Ouch.

By itself this would pose enough of a challenge to growth. But now we also have the debt we used to get the economy moving again. This debt can only be paid off with significant economic growth – but such significant growth is impossible as outlined above. So the debt itself becomes an enormous additional tension in the system, as argued by Richard Heinberg in his important forthcoming book The End of Growth. With the global economy and ecosystem now both burdened by unmanageable debt, effective global default is only a matter of time.

So we’re living in a glass house with the grenade sitting there for all to see. Who knows what will pull the pin. It could be Greece, a Chinese food crisis, peak oil or any number of other triggers. But it’s coming.

The question to ask yourself is simple. Are you ready?

Back to Kenneth Boulding: “Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.

Precisely!