We're certainly headed for extreme economic contraction. That means political unrest as well. Many (really, many!) wealthy people I know or know through others are preparing for civil unrest. From bankers in The City in London creating places in rural Montana to a billionaire who has built a "bunker" (his word -- although it's more a heavily-secured mansion) in Switzerland, it's definitely concerning them enough to "insure" against it.

I don't see how it can't get really ugly in the next five to ten years, including moments of martial law. The markets are set to go through the floor. My investiment advice is: cash + gold and silver coins in your matress. Seriously.

But I really don't think it will get worse than that. People get romantic and think civilization as we know it will fall apart. I don't see that happening. I do see a violent depression coming, and then after a few years, lifting.

Here's someone who says it so much better than I can:

Robert Reich

http://www.youtube.com/watch?v=KIxXZa5Fwzc

The bailouts demonstrate that climactic politico-economical collapse will never occur.People literally will make shit up in order to prevent the unimaginable. This is also the fundamental lesson of Hobbesian theory of state of nature. None of that to say we aren't undergoing a process of collapse. It's just that it's trajectory of decline is going to be very slow and incremental. The environment will probably collapse before we legitimately experience politico-economic collapse. Some people can see the winds of decline and are taking the self-sustainable route since relying on government guaranteed quality of life will kill you first (for a long time now the governmental allowed corporations to do us physical harm). The real question is: are you one of those people?

I think about it, but I'm not to the point of buying a piece of land and building a basement and growing a vegetable garden...

There have always been risks, before it was wars, lately the cold war or terrorism, now peak oil, economic collapse etc.

I don't see any contradiction with being entrepreneur at the moment. Physical growth may be limited but the demand for services is not.

If you're interested in "collapse discussions", you should check out http://www.reddit.com/r/collapse (not to read if you're the worrying type though ;-))

Here's how it's different now: A lot of the progress of the 20th century was predicated on cheap oil. With a Return on Energy (ROE is like ROI but for energy; how much energy you get vs. how much you need to get it out) of 30 to 1, crude oil essentially still gushes from the ground.

After a certain point, even for the same reserve, that ROE drops. There's still oil, but it's harder to get out. We'll always have oil, but we won't have it cheaply for much longer. Converting to an alternative is possible but it will take time and pain. And that's the sticking point. America especially relies on a JIT inventory of trucked-in goods, cars to get to work, school, the store, etc. The switch will be ugly.

Piggybacking on that is the long, wonderful period of growth that had us overextend. The Great Depression also came after a period of over-extension, but back then we had yet to tap our resources and our debt. We've tapped both out at the start of this depression that's coming. Add to it the increased demand for resources from China, India and the rest of the world. We're out. Bacteria is at its greatest expansion when it hits the edge of the petri dish, and in an instant, it's over.

I won't plant a garden or buy a gun -- I don't think it will ever be so bad -- but for a while, during the process of converting to alternate energies and transportation mechanisms, it won't be fun.

True. I'm not denying the fact the risks are different from past risks, the situation is a new one indeed.

I was pointing out that there have been risks (of a different type) and there are risks now. I still think investing in yourself by learning, pursuing business interests is justifiable even in light of these risks.

In terms of adapting to a changing world as an individual, I think being either self-reliant or being close to major population centres (access to jobs, public transportation etc) are both good strategies. It might be good to learn some martial arts, how to defend yourself, learn to live with less etc.

I don't think that there will be any kind of collapse, sudden peak oil or any other sudden and drastic change of civilization. Some people are bored with their life and want to believe in such things, but it's unrealistic to expect that this will actually happen.

There will be, of course, change. For example, at some point we may (slowly!) run out of oil, which would mean that oil prices will go up. But this will be a process that runs over a decade or more. And by then there will be alternatives, like electric cars, that allow you to live a similar life.

Selling to survivalists is probably a great business. Doom! Gloom! Gold! Guns! With anything sort of cultish like that, once you hook people, it's easy to steer them further and further away from the rest of the world.

This stuff came and went in the 80ies, too. This film is a funny portrayal of that particular brand of it: http://en.wikipedia.org/wiki/The_Survivors_%281983_film%29

And they can pay for it from their gold which nearly doubled in the last year alone because everyone else is buying too.

My dad grew up in The Great Depression and fought in both WWII and Vietnam. My mom grew up in Germany during WWII and it's aftermath. I've done a lot of reading and thinking on "economic collapse" type stuff. And I'm an environmental studies major and have had a couple of classes that covered peak oil.

First of all, even in a depression, people still need food, shelter and clothing. The shallow end of the pool empties first. So luxury items may be an issue but, for example, clothing didn't take as big a hit during The Great Depression as most people would think.

Second, even during The Great Depression, there were businesses that boomed. Second hand stores boomed. Bicycles boomed (people couldn't afford cars but still had to get to work). Some company began selling frozen french fries (and I want to say dehydrated onions) in supermarkets and eventually made a mint (because they were cheaper for the end user at a time when every penny counted -- ie they had real value for the consumer). I read his story (the founder's story) and it was fascinating.

When he was a kid (teen), there was a glut of pigs on the market, so farmer's were killing piglets. It wasn't worth raising them. He went around and offered to take piglets off their hands for free and got a bunch of piglets for free. He had no resources so he would go hunting for wild horses or whatever to feed them. He managed to make it through the few months it took to raise them -- he managed to keep them all fed somehow. And the next year, low and behold, there was a pig shortage. Why? Because the farmers had all been killing their piglets the year before. So he made a lot of money for a kid because he got the pigs for free, worked to feed them (rather than spending money to feed them) and sold at a premium. And he later went into business.

I believe in peak oil and I think it's a serious issue. But I don't think it's an end of the world issue. It's just an end of our current culture issue. (Favorite song line: "It's the end of the world as we know it. And I feel fine.") Current culture is constantly in the process of "dying" -- and something else is constantly in the process of being born to replace it. I wish people would quit wigging out about that.

I have given up my car, in part because I believe in peak oil but mostly I couldn't afford both my rent and my car and I decided I would rather walk to work than live out of my car or move back in with family. I don't expect to go back to owning a car, which is rooted in health issues that have benefited tremendously from being carless. So I basically think, yeah, we could all stand to make some lifestyle changes which will be more peak-oil-friendly. But those lifestyle changes should be ones that make sense for us as individuals, not driven by fear. My choice to be carless and remain carless is in line with my belief that peak oil is an issue but it is not driven by that. It was driven by real issues in my own life -- which is as it should be. So I don't think that making decisions to solve your own problems in a way that takes into account the whole peak oil thing actually means we all need to move out to the country, buy a shot gun, stock gold, and start a garden. My future may well include a more rural location and a garden. If living in a rural location makes having a shot gun a logical thing to do, it might even include a shot gun. So my future might resemble some of those details, but not in a hysterical "head for the hills, the martians are coming" sort of manner.

Well, I have to go get ready for work. So my editing is done, whether the post is polished or not.

Later.

The guy with the great story of bootstraping himself with pigs and whatever he could feed them and then eventually becoming the frozen french fry king (an important secret to McDonald's success, his were consistent)is J. R. Simplot: http://en.wikipedia.org/wiki/J._R._Simplot ; George Gilder celebrates him in a book where he ends up being one of the Micron investors.

Any scenario in any year is unlikely, but if you aggregate a bunch of long-tail scenarios and take a 40-year time horizon, it becomes worth dealing with.

For a fascinating take on the subject, I recommend "Industrial Society and its Future" by Ted Kaczynski.