Thursday, August 11, 2005
Krista and I went to see Richard Heinberg speak on tuesday, about Peak Oil. He's written several books on the subject--The Party's Over and Powerdown. We'd heard him speak two or three years ago and it was rather distressing. Sort of like the Y2K thing, only much bigger and for real. We wondered what new info he might have for us and he didn't disappoint. It seems that 2007 has been pegged as the absolute peak in oil production (not his own conclusion, but rather a date chosen by a large organization studying the problem--he had some pretty convincing evidence). Okay. So 2007. So what? I think we can sum it up in just two short words: we're fucked. Seriously, if you haven't been thinking about this issue you might want to start.
In other news, literally on the front page of our (NY Times owned) local paper The Press Democrat, the lead Sunday headline reads: "Betting Big On Home Loans". It seems that more than half of the homes sold in Sonoma County (where we live) last year were financed with interest-only loans. More than 3000. But wait, there's more. Alot of these apparently are loans with no money down! It gets better...they seem to be mostly adjustable rate mortgages!! So what does this mean? I think it means we're soon to see an astonishing surge in defaults and foreclosures. As soon as interest rates go up. As soon as gas prices skyrocket and the economy starts to slip (see above). A sudden and dramatic increase in real estate inventory is the start of a deflationary spiral. The psychology of the buyers does a 180. 'Gee, there sure are a lot of places for sale. Prices seem to be going down. Maybe we should wait'. The more folks start waiting the more pressure on sellers to drop their price. The more the prices drop the more folks want to wait. You get it. This is what happened in Japan where the home prices dropped 80% over 1o years. Oops. We're told it can't happen here, in the gorgeous wine country. Too many rich people who want to live here. Maybe. I think we'll find out soon enough.
So what happens when you combine Peak Oil with the housing bubble popping? It seems like the next Great Depression is right around the corner. What to do, what to do?
Personally, I'd like to own a little land somewhere quite rural. Own it outright. Needs to have water and some arable land. Needs to be within a days drive, at the most. I want to start building a straw bale cottage--an ongoing building project. And have solar and wind power (mini-hydro if we had the water). Water catchment systems with cisterns. Wood cookstove. You get the idea. If you see such a place drop me a line!
Posted by rob at 3:43 PM