Musings Report #46 11-16-13 The "Impossible" But Inevitable Solution: Decentralization
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For those who are new to the Musings reports: they are basically a glimpse into my notebook, the unfiltered swamp where I organize future themes, sort through the dozens of stories and links submitted by readers, refine my own research and start connecting dots which appear later in the blog or in my books. As always, I hope the Musings spark new appraisals and insights. Thank you for supporting the site and for inviting me into your circle of correspondents.
The "Impossible" But Inevitable Solution: Decentralization
Correspondent John D. recently sent in a link to an interview with energy expert and author Jeremy Leggett. The title, "Make no mistake, this is an energy civil war" is a bit sensationalist, but the gist of his point is that centralized control of energy (and the capital that owns the energy and distribution networks) is colliding with new models of decentralized, locally autonomous control and ownership of energy generation and distribution.
Given the immense power of the banking/energy/political Elites that directly benefit from centralization of energy, capital and political power, I term this decentralization solution "impossible." Yet because it is driven by the diminishing returns of the centralized model and the emergence of the Web as an unstoppable force distributing decentralization and new models, the transition from ossified, failing centralized models to adaptive, faster-better-cheaper decentralized models is also inevitable.
This is the context of Leggett's view that there is an 'energy civil war' between the powers defending centralization and those promoting community ownership and control of energy. Here are some excerpts from the interview:
You’ve just published a book called The Energy of Nations. Could you just tell people in a nutshell what they might expect to find in there?
I worry that the energy industry is in the process of repeating systemically the mistakes of the financial sector, and on multiple fronts.
It’s not all bleak because I think the neuroscientists also tell us that we have this great yearning as human beings for community and all the rest of it, and individualistic or selfish, perhaps what people on the right of the political spectrum constantly try and persuade us that we are. That all points towards the possibility of a road to renaissance and that’s why I titled the book The Energy of Nations: Risk Blindness and the Road to Renaissance. I talk about the importance of things like the Transition movement as the building blocks for this road to renaissance.
What can we learn from Germany, do you think in terms of practicality and in terms of ambition?
I think that it’s altogether very encouraging indeed. We can learn that it’s possible to renewably power a modern economy like Germany 100% with renewables, and do it much quicker than people anticipate. We can also see that the ownership structures can change radically, so that people power comes into the mainstream. As you know, more than half the renewable assets in Germany are owned by people, by people and communities.
That’s not just the small energy co-ops that are being set up by the multiple hundreds, but whole cities are talking about taking their own power into their own hands, even Berlin, with a membership movement to take control of the way that energy is created in cities. Germany is vital in the whole narrative going forward.
You talk about a localisation mega-trend and peer-to-peer lending and community-led initiatives like Transition and others, need to sit alongside the bigger things as well in terms of investment etc. How do you see those two things sitting alongside each other?
I think inevitably what’s going to happen whether people like it or not, is that communities, towns, individual houses are going to get themselves off that grid and the march of technology is going to help them. People and communities are going to become increasingly self-sufficient. When you do that, where’s the role for the national electricity grid, at a certain point? Where’s the role for a giant company like National Grid?
Aren’t we just going to be devolving down into community-based companies, co-ops and all the rest of it. I think it’s an exciting vision, because you get all sorts of spin-off benefits from a transition of that kind. I don’t have a blueprint template of how we get from A to B, the globalised national, international infrastructure world to the localised world. I think that’s a work in progress that we’re all going to have to be active players."
The interview also raised the same question I have discussed in the Musings and blog, What lies beyond the current versions of Capitalism and Socialism? I think the basic answer is coming into focus: since the current iterations of Capitalism and Socialism are both systems of increasing centralization (and thus of systemic fragility), the future belongs to the Web-enabled, localized but globally networked models of decentralized capital, currencies, ownership, production and distribution.
Summary of the Blog This Past Week
Have We Lost Our Common-Sense?
How About Ending Social Security and Paying Retirees with Cash?
Will the Dollar Lose its Reserve Currency Status to an SDR Currency?
The Three Types of Politicians
The Big Lie: Lunch (and Debt) Are Free
Our Era’s Definitive Dynamic: Diminishing Returns
A week of fairly challenging policy ideas; my favorite was "Have We Lost Our Common-Sense?" that riffs off the unexpected feedback I received on last month's "New Constitution" satire.
Best Thing That Happened To Me This Week
Longtime correspondent Dan A. sent me an email describing the camp-out for Cub Scouts he led: "On a positive note: I hosted a pack of cub scouts at the ranch last weekend for a 2 night backpack trip. No place to spend any money. Great Dutch oven pizza and pineapple upside down cake for dinner. Lots of hiking a bit of spelunking. Cheap recreation is still available, it has just been abandoned for the sake of comfort."
Thank you, Dan, for taking time out of your busy professional life as an entrepreneur and employer to give the Scouts an unforgettable experience in Nature. You and everyone else who donates time and energy on behalf of kids are heroes and heroines, at least to me.
Market Musings
I was amused by the spate of articles suggesting that the Bull Market will run until 2016 (or perhaps 2018), never mind that at 5 years and running it is already long in tooth--we're good to go for another 2 to 4 years. At the same time, other articles are suggesting stocks can't possibly be in a bubble because everyone is talking about stocks being in a bubble.
I have commented before on the "how many angels can dance on the head of a pin?" nature of this psychological conundrum: the market can only do what few expect of it, so if everyone is looking for bubbles, there can't be any bubbles. But what else do you call a market that rises 10+% in a mere 6 weeks?
Three indicators of note suggest this move will reverse shortly, either in a "healthy correction" or a reversal of trend--which one cannot be determined until the downturn is underway.
The rapid rise of the market has traced out a bearish rising wedge. This pattern usually leads to some sort of correction. The MACD histogram is divergent, dropping to the neutral line while the SPX soars higher. Lastly, price has pulled away from both the 50-day and 200-day Moving Averages, suggesting the rubber band is remarkably stretched.
I tend to look at options positions for a sense of where traders are buying hedges or betting on continuations or reversals. I noticed a huge number of put options (bets on further decline) on the volatility etf, VXX.
The VXX is one of those etfs where value decays with time, and so this appears to be a "safe bet" to many options traders. But it is also a bet that volatility will continue dropping, even as the VIX (measure of volatility) scrapes along at yearly lows. How much lower can volatility fall? Not much, if history is any guide.
The SPX at 1798 needs a mere 2 points to reach the round-number attractor of 1800, smack-dab in the middle of many TA forecasts (1780 to 1820). The Dow at 15,961 is a coin-toss away from its round-number attractor of 16,000. This level will invite great cheering ("new all time high," never mind adjusting for inflation) and will also present an opportunity for a downdraft, since the next targets are considerably higher.
From Left Field
Our Army of Invisible Helpers (via John D.) "Every day oil provides humanity with the equivalent energy of 22 billion human slaves - or 'energy slaves.' Check that--it's more like 120 billion energy slaves....
The One Straw Revolution by Masanobu Fukuoka (via John D.) (9-min. video) the art of non-cultivation and do-nothing, natural farming....
About that "new golden age: of TV: Television Is an Evil (via Lew G.) "I was overjoyed recently in Paris to find a well-documented book that confirmed one of my deepest prejudices, namely that television is, if not the root of all evil, at least the root of much evil."
This is What Winning Looks Like (via David C.) 1:30 hr documentary on the winding down war in Afghanistan by ben Anderson, author of the book "No Worse Enemy"....
Swedes Develop Invisible Bike Helmet (via David C.) You gotta see this, even if you haven't ridden a bicycle in years....
"Twitter makes me like people I've never met. Facebook makes me hate people I know in real life." TedinJest
Thanks for reading--
charles
