Bert Hielema–Columns and Writings

Year 9-14

“I screwed up” said President Obama last week. He also admitted that if he can’t solve the money crisis, he will be a one term president.

Why is there a money crisis? The simple answer is that money is debt, which, in fact, makes it a debt crisis. When I go to the bank to get a mortgage, the bank quickly creates that money in the form of a debt, for which I, in return, give my house as guarantee until I have paid the debt back in full.

Yes, money is debt. And there is no dearth of debt. We have come to the point where debt is doing us in. Debt, unsecured debt, depreciating debt, deflating debt, ecological debt is today’s bane, is society’s death knell. Will it make Obama a one-termer?

I am reading a 400 page long somewhat boring sermon – not unusual for sermons – by New York Times columnist Thomas L. Friedman: “Hot, Flat and Crowded” in which he explains in daunting detail how global warming and an expanding middle class world-wide with a rapidly growing appetite for bad things such as cars and air conditioning, spells disaster unless we all go green. In his latest column he concedes that this means a much lower living standard. Welcome to the 21^st Century.

One of the laws of ecology is that “everything is connected to everything else,” and this applies to climate change and money meltdown as well. Both have their origins in the notion that it is perfectly acceptable to burden the world with mammoth amounts of malignant material: in the case of the credit crunch, with trillions of dollars of sub-prime lending, and with climate change, with millions of tons of carbon. In short: bubbling consumerism has boosted emissions.

Admit it: our monetary gods have failed us. The globalization of the US dollar has been the last straw. Money is nothing else but an agreement to use ‘something’ as a medium of exchange. That something is ‘trust’. That trust is disappearing.

In saner times gold guaranteed the bank notes in circulation. These could be redeemed – until 1972 – for a fixed $32(US) per troy ounce – 31.1034 grams. Having gold as the money basis would have greatly curtailed debt creation, which would have forced society to live within the limits set by the available gold, reflecting the finite world we live in, which, incidently, would also have prevented pollution overload.

Over the very, very long term, gold holds its value. An ounce of gold today buys about as much stuff as it did during the reign of Julius Caesar, 2000 years ago. This is because we have increased the amount of gold above ground at about the same rate as we have added other goods and services. Throughout the centuries gold has been the world’s most reliable, most universal store of value. No wonder gold is now the only rising commodity.

At any rate, Obama has bet his political future on the soundness of the American Dollar. He needs a lot of prayers, because it looks to me that he hasn’t got a prayer. Now every important country has bailout fever, so the world at large no longer has the surplus funds to finance the US trillion dollar deficits, while the American citizens themselves also lack the cash to help Uncle Sam. This will force the Federal authorities in Washington to print the missing dollar bills, signaling hyper inflation.

We live in new times. I can foresee that barter will again become fashionable. “I have a load of wood, you have a bag of flour, since I need to eat and you don’t want to freeze in the dark, after some haggling, the proper exchange amounts are arrived at.” The variations are endless.

Willem Buiter of the prestigious London School of Economics writes that: “We can go down in history as the generation that created the Great Depression”. He continues that, if they go ahead with unsustainable fiscal stimuli in the US, the UK and elsewhere this will spook markets, push up long-term interest rates and raise the spectrum of default everywhere.

The US President appropriately apologized for a mistake. It’s about time that we Westerners admit that we too have screwed up badly in letting money mesmerize us, to the extent that we have sacrificed all things, precious air, water, soil, our very health, our family structure and spiritual welfare on the altar of money.

Everything is connected to everything else, with the human mind central to it all.

This column and earlier ones can be seen at ‘hielema.ca/blog’. He can be reached at ‘hielema@allstream.net’.

Year 9-13.

“What is the aim of education?” or “Why do I write my column?”

A Harvard University report says that “The aim of a liberal education is to unsettle presumptions, to de-familiarize the familiar, to reveal what is going on beneath and behind appearances, to disorient young people and to help them to find ways to reorient themselves.”

Harvard’s approach reminded me of a book I have by Dr Herman Fiolet, a Dutch Roman Catholic theologian, who wrote, in a passage dealing with prophecy, and I translate:

“A prophet is a believer who is open to what’s happening in this world and accepts complete responsibility for the immense challenges our fast-changing society faces.

“A prophet is a believer who deliberately re-examines decisions made in the past, including confessional statements, and test them on their relevance and viability for today.

“A prophet is a believer who, rooted in the present, takes steps to keep nature intact for our children while also engaged in working for a church and society in which future generations can thrive.

“A prophet is a believer who through reading the Scriptures recognizes what God, in the long history of the human race, has done to keep our world through Christ in the grip of salvation. That’s the reason why he or she, in spite of all evil and sin in this world, is able to look to the future in full confidence.

”A prophet is a believer who, even now, can sense what the future will bring and dares to criticize past inactions that prolong the status quo, and strives to influence the present to embrace renewal.”

The Harvard report wants us to unsettle presumptions, one of which is stimulating growth at all costs, even though this leads to resource depletion and climate change. The same holds true for global ‘stimulus’ packages, which merely transfer immense financial burdens to the future, and, paradoxically, want to cure overspending with more spending. When Jesus was faced with something similar, accused of casting out devils in the name of the Devil, his reply was that “a house divided against itself will fall.”

Another glaring presumption is that we will always have access to energy. By de-familiarizing the familiar, it is revealed that beneath and behind our need for light, heat, fuel and comfort, Alberta sees seas of sludge and clouds of contamination and so speeds up world-wide warming. Moreover based on Energy obtained by Energy Invested – EOEI- 80 calories of clean natural gas are burned to obtain 100 calories of dirty motor fuel, not counting the pollution it causes in the process, which more than annuls any gains.

Sir Francis Bacon (1561-1626), the father of the scientific method wrote that Nature was to be “placed on the rack”, “enslaved,” “bound into service,” and “forced out of her natural state and molded.” Rene Descartes (1596-1650), the fellow famous for “I think therefore I am,” saw the human race as “masters and possessors of nature.” Our own tar sands are a clear case of such cosmic cruelty.

Current government and industry actions are founded on these ancient heresies. Here’s what the celebrated John Maynard Keynes (1883-1946) – he is everybody’s favourite now- once wrote: “Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.” Indeed, the voices of Bacon and Descartes are still echoing in the minds of politicians and industrialists alike, even though the Bacon-Descartes doctrine has led to the present plight of the planet.

Just as our planet is a living entity, now suffering from a multiple range of diseases, so the economy too is a complex, dynamic, non-linear system, which refuses to be manipulated by trillion dollar infusions here or there, and is molded more by the moods and minds of the masses than by men and women in power whose aim is growth at all cost.

Are there still prophets today? Yes, going by both the Harvard and the Fiolet statements, fortunately there are, because:

Those people are prophets who assume responsibility for past and present actions, and take steps to ensure that our children and grandchildren can experience ‘shalom’ , that beautiful Hebrew word that conveys ‘harmony’ and ‘being at peace with the human race and nature alike.’

Those people are prophets who reorient themselves, stand still, look around, perhaps even take a step back to seek wisdom, and make sure that they are on the right road to the future.

Those people are prophets who dare to choose the “Road Less Traveled”, the creation-friendly road, in the sure conviction that this is needed to safeguard our planet’s future.

I hope my column contributes to that.

Year 9-12

Remember Dr. Henry Kissinger former Secretary of State under President Richard Nixon? Even today when this esteemed diplomat speaks, the world listens. Last week he stated that we, as a global community, either solve our problems together or, failing that, court disaster.

President Obama in his inauguration speech voiced a similar message.

The harsh truth is that we, collectively as the world’s inhabitants, are broke, insolvent, unable to make ends meet. That, in short, is the predicament we’re in. Liquidity, access to ready cash, has melted away in spite of governments everywhere pumping in dollars, pounds and euros, because the minute they do, these moneys vanish in the quick sand of debt.

Here’s what triggered this money-drowning affair: both borrowers and lenders assumed that real estate, stocks, tangible assets would always go up in value or at least remain stable. So people bought stuff and then some, and banks loaned money and then some, using the stuff as collateral, when, suddenly, the Black Swan of deflation dived down to destroy this delusionary dream.

Now everything is over-valued, and many loans are no longer covered, so banks don’t know where they stand. That’s why, until they determine their real value, if any, they – the USA and Great Britain in particular – have suspended lending. Fortunately Canada never went overboard that way.

Lowering the interest rate to next to zero and pumping trillions of dollars into the lending bodies makes the problem worse, because all that cash is simply sucked up in the black holes of foreclosures, overvalued collateral, corporate bankruptcies, and public deficits, simply postponing an even greater reckoning.

I have read that these so-called ghost assets now amount to $30trillion (US). By trying to salvage these ‘investments’ governments are choosing short-term band-aids over long-term solutions.

Here’s a personal illustration. I gave a person a small loan, even though I was fully aware that it would never be repaid in full, because economic conditions would make that new activity unprofitable.
The banking world did the same thing, but with a difference: it did not expect, of course, that this money would not be repaid. I could afford the loss, but the banks cannot, because they kept on lending and borrowers kept on borrowing assuming that in the end matters would rectify themselves, because “the future will always be better”.

That assumption is now proven false: the banks have run out of money and the borrowers can no longer repay, thus both parties to the contract are broke: the global financial system is insolvent as liabilities exceed assets.

That’s why banks are hoarding their cash while anxiously scrutinizing their balance sheets, trying to figure how much deeper they will go in the red. They perfectly realize that all aspects of real estate – the McMansions, the office towers, the shopping malls, hotels and warehouses – are still dropping in value, while consumer and car loans and credit card debts are also deteriorating.

The banks are not entirely to blame. They were also fooled by the rating agencies – Standard & Poor’s, Moody’s – that gave liar’s loans triple A recognition. Nevertheless the buck stops at their doors. Now wonder bankers everywhere, from Tokyo to Beijing to Saudi Arabia’s Riyadh to New York and London, have sleepless nights.

To make matters worse, customers all over the globe are canceling orders or stop buying, in spite of discounted prices, while governments world-wide face higher deficits and possible bankruptcies. Russian billionaires are begging the Kremlin for help, and even some wealthy investors commit suicide, as if the possession of money is a matter of life and death.

So what is President Obama going to do? Follow Kissinger’s advice? There were hints in his inaugural address, while his promises of telling the public the true state of the economy, even when it hurts, is a healthy development.

In front of me where I am writing is a batik which I bought in Malawi. It pictures three colorfully dressed women pounding away at corn in clay pots, while a flock of chickens roam around them pecking away at the scattered grains.

These hard-working Africans are closer to self-sufficiency and a responsible life than we, spoiled and spoiling westerners. Henry Kissinger is right: we either solve our global problems together including with our African neigbours, or court disaster. President Obama in person embodies that message of inclusiveness. I am sure he will reach out to Iran, Cuba, China and Russia, because only when we together as world citizens are bailing to keep the global economy afloat, will we succeed.

Year 9-11

Barack Hussein Obama is now the 44^th president of the United States, an exceptional man called to serve in exceptional times, facing exceptional challenges.

Until the World Trade Center calamity, President Bush was just hanging in there, only half-heartedly engaged for failure of a focus. Then Osama struck and from there on terror defined his tenure, even invading Iraq under that banner.

We now have Obama. We already know what will define his presidency. We can already state that “What Osama was to Bush is what the Bust will be to Obama.”

Let me go back some 80 years, to the onset of the First Bust, 1929, a year when unemployment was only 3.3 percent, which almost tripled the next year to 8.9, followed by 15.9 percent in 1931, 23.6 thereafter, reaching a high of 24.9 in 1933.

We now have an official 7.2 percent of unemployed in the USA, which omits those whose benefits have expired, fails to count the people who have given up looking for work and disregard those who want full-time jobs but can secure only part-time. When these are included we arrive at 13.5 percent, approaching Depression levels.

Recessions are natural phenomena. Once overproduction and too much inventory have gone through their cycle, matters revert to normal. However, a Depression doesn’t cure itself, all too evident from the frantic efforts to reverse the current trend.

The 1930’s Depression was bailed out by World War 2. In 1942 everybody had a job, thanks to the production of tanks, warships, planes, bombs, with many millions in the armed forces. The war made America the industrial and financial powerhouse of the world. During it the USA financed Britain and later helped out Germany and Japan. Large deficits then were not devastating, due to the high domestic savings rate.

The difference between 1929 and 2009 cannot be greater.

Going into the Dirty Thirties people were thrifty: no credit cards circulating, no liar’s loans lurking. Most houses were paid for. People had close-knit families, were informed, relied on self-help, eager to learn, willing to be led, mainly rurally based.

During World War 2 Texas was gushing with oil, Fort Knox was overflowing with gold. The word pollution had not yet been invented. Every country in the world looked to Uncle Sam for a loan.

The difference between 1929 and 2009 cannot be greater.

Now the trillions of US dollars aimed as medicine for the melt-down are all borrowed from abroad, while the American family structure is fragile, peoples’ needs more extravagant, savings non-existent, debts abound, their fixed expense- cell or land line phone, internet, cable or satellite service – high, their general level of knowledge low, their prejudices and beliefs anti-intellectual, their survivor skills minimal, their tolerance of hardship shallow, mainly city-based and threatened by environmental dangers and shortages.

Where will those borrowed trillions go? Fattening the rich, Wall Street, the Stock brokers and banks whose stupidity and greed caused

this crisis in the first place?

Catapulting piles of cash into the pockets of plutocrats pre-supposes that the crisis is an economic one. It is not. Parachuting trillions into a moribund system is like keeping a brain-dead person artificially alive. With the monetary system already on life support, giving it a transfusion with exactly the same toxic substances that caused its illness in the first place, will lead to a certain death.

We need a fundamentally new direction. The death of 40 million human beings during World War 2 was the price paid to cure the last Depression. This was followed by an all-compassing cosmic war on creation, threatening even more casualties, unless we make peace with our planet.

We need a total new strategy that first of all recognizes that Climate Change- also giving record cold- is the great threat. Coping with diminishing resources- even when gas sells below cost – is next. We then can proceed with healing, which includes extensive re-education how to live without ruining nature even more, and using funds wisely by having rail lines going everywhere and bus routes connecting small communities.

Today’s situation reminds me of a little ditty written by James Taylor, part of his “Traffic Jam” song.

Now I used to think that I was cool
Running around on fossil fuel
Until I saw what I was doin’
Was driving down the road to ruin.

Now is the time to replace machine power with man power, globalization with localization. Time is not money: all need a fair wage. The hour has come to recognize that our current way of life is unsustainable, that a totally new approach is needed, if an all-inclusive Bust is to be avoided.

Does Obama see the true picture? What is certain is that ‘as Osama defined Bush, so will this Bust define Obama.’

Year 9-10

With the white of winter everywhere, will a “Black Swan” be easier to spot? Not really, because a Black Swan is like the wind. And who has seen the wind?

The “Black Swan” phenomenon has become popular ever since Nassim Taleb introduced this concept in his book by that name. To quote him:

“It illustrates a severe limitation to our learning from observation or experience and the fragility of our knowledge. One single observation can invalidate a general statement derived from millennia of confirmatory sightings of millions of white swans.”

My goodness, why can’t people write in plain language? Here’s what the man means: because nothing in the past gives any hint that a certain disaster will ever happen, the chance of this taking place at all is very remote. But when something unexpected does occur, in hindsight we’d say, “of course; makes sense.”

Since the Bible goes back a long way, a few examples from it are not out of place. During the time before the Flood, when Noah built the Ark – they must have called him Nutty Noah behind his back – nobody expected to drown in the centre of Asia, but, things had gotten so bad that, in retrospect, we can now see that a new start was needed. So God pulled a Black Swan.

Good man Job never expected to lose everything he held dear, but, as the Bible shows, Job’s misfortune was necessary to turn him from an ego-centered fellow to an eco-centered man. That Black Swan event still serves as an excellent example of God’s mysterious ways to educate even us today.

Recent samples are the rise of Hitler, the Pearl Harbour bombing, the fall of the Soviet Union, and September 11.

Nassim Taleb gave a good illustration. “Until Thanksgiving the turkeys live well. Everyday, the food arrives. Everyday, they get bigger and fatter. Then, one day, just before the third Thursday in November, when Americans celebrate their traditional Thanksgiving dinner…with no warning, comes the knife…the crash…the collapse…the discontinuity…the 7 sigma event in the turkey’s life that changes everything.”

Look at our banking collapse: A real Black Swan, it changes everything.

Barton Biggs, in his book, “Wealth, War, and Wisdom”, also mentions the Black Swan. Although he still expresses his total commitment to “the wisdom of equity markets”, “the intuitive astuteness of the investors”, and “the perfect and dispassionate judgements of the stock exchanges”, he ends his book on a note of caution. Says he: “expect the unexpected”, prepare for a “Black Swan” event.

Writes this man who has spent his entire life on Wall Street, and is seen as THE authority there: “History often leaps forward in disorderly, chaotic jumps.” He even quotes “The Four Horsemen” those beasts of doom cited in Revelation 6, who “will ride again and the barbarians will be at the gate“.

He says that “By definition, the next Black Swan will be some form of total breakdown of civilized society and the social and financial infrastructure as we know it.” The ongoing Money Melt-Down has the potential to deteriorate into such a disaster. No wonder the Pentagon is preparing 20,000 troops especially for such an eventuality.

Biggs cites one scenario: “The trigger event could be a power failure that lasted not a day but a month and would paralyze the economy.”

This was before the money-meltdown whose consequences are still in its infancy. Says he, ”Whatever happens, it most likely will be an event that is both unexpected and we will not be prepared for”. This fits the present circumstances. Both former Secretary of the Treasury Alan Greenspan and the current one Ben Bernanke voiced their surprise in connection with the current crisis, caused by the enormous fall-out from their cheap money policies. Yes, a true Black Swan situation.

So here is what Barton Biggs recommends: “Another strategy should be to have a farm somewhere or a ranch far off the beaten track but which you can get to reasonably quickly and easily…. You should assume the possibility of a breakdown of the civilized infrastructure. Your safe haven must be self-sufficient and capable of growing some kind of food…. It is expensive to be early, but it is far better to be early than to be late.”

His advice to the wealthy applies to all of us.

The least anybody can do is to have sufficient food in place – canned, frozen, dry, milk powder, root crops, bottled water – for at least 4-6 weeks, together with some basic camping supplies for cooking, heating, sleeping.

We don’t know when the next Black Swan rears it elongated neck. Better be prepared.

Year 9-9

2009 is going to be a colorful year, with lots of pink slips, bank statements printed in mostly red, people feeling blue, hairs turning prematurely grey. Blame the difficult economic times.

I grew up in such a time. I was born before the Great Depression, which ingrained frugality in me, something reinforced by five years of wartime experience in occupied Holland.

My earliest memories go back to two events: as a three year old I snatched a 2.5 guilders piece- called a ‘rijksdaalder’ and having the value of one US dollar then – from the kitchen table, the weekly pay for our live-in help, and went to the store to buy candies. My mother discovered my childish capitalistic venture when the merchant knocked at the door to bring back the change. My second recollection was when, at the North Sea, I was thirsty but unable to drink from the salty water, and suggested to my father to throw in a piece of wood, as Moses did when the Israelites were confronted with brackish water.

So, two things were drilled into me early in life: money and the bible, and I have maintained that interest. I also remember that, as a 10 year old, in those pre-penicillin days, I was ordered to stay in bed for 6 weeks to cure a bladder infection, where I read 100 books. That too has remained an abiding passion.

One of the books I treasure is Yale Historian Paul Kennedy’s 16 year old, “Preparing for the Twenty First Century”. It ends with a timely warning: “Nothing is certain except that we face innumerable uncertainties; but simply recognizing the fact provides a starting point, and is, of course, far better than being blindly unaware of how our world is changing.”

This point is affirmed by the “The Age of Extremes, the Short Twentieth Century- 1914-1991”, by Eric Hobsbawm, another historian.

This 600 page best seller also ends on a somber note: ”We live in a world captured, uprooted and transformed by the titanic economic and techno-scientific process of development of capitalism, which has dominated the past two or three centuries. We know that it cannot go on ad infinitum. The future cannot be a continuation of the past and there are signs that we have reached a point of historic crisis.”

Hobsbawm correctly stated that the 20th Century ended with the fall of the Berlin Wall, which didn’t mean that at that point Century 21 started. The interim from 1991 to 2008, those 17 years of unprecedented profligacy, can be seen as its introduction. I have observed that the rain is always heaviest just before it stops; my chainsaw always has an extra burst of power just before the fuel runs out: that’s how I see the time-span of ‘irrational exuberance’ to quote Alan Greenspan out of context.

We now have reached the point of historic crisis Hobsbawm referred to. The End is here: the End of the Age of Abundance, the age of subdivisions and two cars and super markets and big box stores and drive-to and drive-through whatever, the age of unnecessary upgrading, the age of ‘shop till we drop.’
Welcome to a belated start of the real 21st Century, an era that will rule the rest of our lives as cruelly as the Age of Abundance spoiled us rotten. Welcome to ever greater scarcity and ever more necessary restraint. No market magic will remedy this malaise. No government stimulus will turn the tide. We have arrived at ‘The Limits of Growth” the title of a book that appeared some 35 years ago under the auspices of the Club of Rome.

Capitalism is defined as the perennial gale of creative destruction. Its goal: to maximize personal consumption, and was designed for a world with some 1 billion people and abundant natural resources. We now are approaching 7 billion of ever more greedy customers with shortages of arable land, fish, oil, water and trees.

The future of limits is here; the age of Capitalism is over.
There are simply not enough resources left to satisfy the needs of a rapidly growing population. If all of the world’s nearly 7 billion people consumed as much as we North Americans, we’d need five Earths to support us all. Earth’s 27.7 billion acres of biologically productive land and water can support only about 1.2 billion people at our standard of living and consumption.

I’ll make it through all right in the coming age of Scarcity, having learned a few things in life. But I worry deeply about our five kids – all in their first marriage – and 13 grandchildren. At the very least they will have less, a lot less.

Paul Kennedy ends his insightful volume with an appeal for spiritual renewal. I believe that all spiritual activity and renewal starts with creation caring.