Peak oil, bailout bunk, and the coming recession
by Tom Whipple and Steve Andrews

Congress just passed a $700+ billion bill to free up the credit markets which were said to be totally or partially paralyzed. Some seem to think that in a couple of weeks, this bill will grease credit markets and the recession will be minimized. Many others, however, find this absurd. The US bubble economy appears to have problems measured in trillions of dollars, so bailouts in the 100s of billions are unlikely to have more than a short term impact. While an “affordable” bailout may eventually unfreeze some loans, it certainly will not solve the myriad economic problems that have been piling up for a long time.

In recent days there has been much discussion of the “business cycle” and the “rebound” that has always occurred as each past downturn ended. Some believe that the rebound started last Friday with the passage of the bailout bill, others say in a few months, some say in “a few quarters,” or if you are really pessimistic, in a few years. No one outside of those who understand the meaning and imminence of peak oil recognize that the traditional business cycle of the industrial age is about to be turned on its head.

Talk of “rebounds” during an era when oil production will be declining shows a failure to understand a fundamental critical reality: we depend on prodigious quantities of cheap energy, especially liquid fuels, to run our cars, to farm and distribute our food, and to move people and goods by ship, train and plane. Unless we stumble upon some miraculous breakthrough—either in the world of energy supplies or financial market fixes, or both--we likely face a very tough economic transition that could last for many years. Softening oil prices of late will only serve to delay awareness about the need to proactively select a more intelligent transition path than the one we’re trapped on today.

http://www.energybulletin.net/node/46785