As in several articles, and his book, Reinventing Collapse, Dmitry Orlov recently looked at his five stages of collapse in light of today’s headlines.

Best quote:

I found it quite funny that the recent clamoring for re-regulating the financial markets was greeted with cries of “Socialists!” Failing at capitalism doesn’t make you a socialist, any more than getting a divorce automatically makes you gay.

General premise:

I am an engineer, and so I naturally tended to look for physical explanations for this process, as opposed to economic, political, or cultural ones. It turns out that one could come up with a very good explanation for the Soviet collapse by following energy flows. What happened in the late 80s is that Russian oil production hit an all-time peak. This coincided with new oil provinces coming on stream in the West - the North Sea in the UK and Norway, and Prudhoe Bay in Alaska - and this suddenly made oil very cheap on the world markets. Soviet revenues plummeted, but their appetite for imported goods remained unchanged, and so they sank deeper and deeper into debt. What doomed them in the end was not even so much the level of debt, but their inability to take on further debt even faster. Once international lenders balked at making further loans, it was game over.

What is happening to the United States now is broadly similar, with certain polarities reversed. The US is an oil importer, burning up 25% of the world’s production, and importing over two-thirds of that. Back in mid-90s, when I first started trying to guess the timing of the US collapse, the arrival of the global peak in oil production was scheduled for around the turn of the century. It turned out that the estimate was off by almost a decade, but that is actually fairly accurate as far as such big predictions go. So here it is the high price of oil that is putting the brakes on further debt expansion. As higher oil prices trigger a recession, the economy starts shrinking, and a shrinking economy cannot sustain an ever-expanding level of debt. At some point the ability to finance oil imports will be lost, and that will be the tipping point, after which nothing will ever be the same.

Orlov believes the US is well into Stage 1: Financial Collapse with some evidence of Stages 2: Commercial Collapse and 3: Political Collapse.

On the one hand, there are signs that global shipping is grinding to a halt, and that big box retailers are in for a very bad time, with many stores likely to close following a disastrous Christmas season. On the other hand, states are already experiencing massive budget shortfalls, laying off state workers, cutting back on programs, and are starting to beg the federal government for bail-out money.

What is most unnerving is that instead of relating Russian post-collapse anecdotes, Orlov now can offer the personal observations of a Detroit resident:

With the decline of one of the last vestiges of our manufacturing base, the auto industry, Detroit and the surrounding areas are described as “ground zero” for the meltdown that has been occurring. Places that just a few years ago seemed like icons — various restautants, movie theaters — are being shut down and boarded up. Meijers, Walmarts, Target are all cutting back their employees’ hours and making them work 32 hours a week instead of 40. Christmas sales are down this year, and retailers are just about giving their stuff away. There are rumors that many will further cut their already worried employees, and that others will go bankrupt.

In the last few years, roughly half of my neighborhood has gone up for foreclosure, and I live in a middle class neighborhood. I am still haunted my (sic) the memory of a neighbor down the street driving away with her 3 children, tears streaming down her face. She was a victim of the auto layoffs. I learned later that she stated that she had nowhere to go. Just a few months ago, the street was alive with the sound of children playing. Then the streets became silent. Homes that went up for sale are just sitting there, not being sold.

Many others are moving back in with parents, relatives, friends or family. Those who do not have such resources head for the homeless shelters, which, like the soup kitchens here, are bursting at the seams. Many people, when asked, will state with utter despair that they never thought they would have been in this predicament just a few months ago.

People who commit crimes do not want to leave jail. This is a first, to prefer prison over cold and hunger. Of those unemployed that do not prefer prison life, they will do just about anything to earn a dollar. There were stories on the local news last night about these people standing out in the frigid cold suffering from frostbite for a mere $40 to hold a “going out of business” sign for yet another store going belly-up. Other women whom I had met on the net and dated in my single years (my happy years) are degenerating from once happy and secure ladies to ones full of anguish and despair. Some are begging people to let them clean their houses, some are even thinking about selling themselves. There has been a large increase in prostitution in this area.

Local, country, and state governments are scaling back. I have noticed that it takes them what seems like forever to clear the highways after the recent snow storm. The medians along the highways are starting to look like they do in Iraq: cars spun out into ditches and medians, and abandoned.

I am one of the few who still has a job, as a nurse. Employers are developing a sadistic mentality: if you have a job, you had better work harder, or else you are out the door! Meanwhile, broke state governments are strapped for funds are doing everything they can to “regulate” our jobs, making an already hard and stressful job next to impossible.