This article is an excerpt from Richard Heinberg’s new book which has the working title ‘The End of Growth’ and is set for publication by New Society Publishers in July 2011. Given the urgency and fragility of the global economic crisis, the Post Carbon Institute is serializing the rough content as Richard writes it. Additionally, Richard will be offering ‘live peeks’ at the events and information that inform his writing process through Facebook and Twitter accounts created expressly for this publication.

The article was originally published as the MuseLetter #222

Introduction: The New Normal

The central assertion of this book is both simple and startling: Economic growth as we have known it is over and done with.

The “growth” we are talking about consists of the expansion of the overall size of the economy (with more people being served and more money changing hands) and of the quantities of energy and material goods flowing through it.

The economic crisis that began in 2007-2008 was both foreseeable and inevitable, and it marks a permanent, fundamental break from past decades-a period during which most economists adopted the unrealistic view that perpetual economic growth is necessary and also possible to achieve. There are now fundamental barriers to ongoing economic expansion, and the world is colliding with those barriers.

{ Installment 6 of Ivan Illich’s Energy and Equity series }

The radical monopoly of industry

A desirable ceiling on the velocity of movement cannot be usefully discussed without returning to the distinction between self-powered transit and motorized transport, and comparing the contribution each component makes relative to the total locomotion of people, which I have called traffic.

Transport stands for the capital-intensive mode of traffic, and transit indicates the labor-intensive mode. Transport is the product of an industry whose clients are passengers. It is an industrial commodity and therefore scarce by definition. Improvement of transport always takes place under conditions of scarcity that become more severe as the speed-and with it the cost-of the service increases. Conflict about insufficient transport tends to take the form of a zero-sum game where one wins only if another loses. At best, such a conflict allows for the optimum in the Prisoner’s Dilemma: by cooperating with their jailer, both prisoners get off with less time in the cell.

I am no expert on Wall Street shenanigans or the economy more generally, but thanks to The Automatic Earth, it’s always possible to see what’s being reported in business news, with a bit of insight into the bigger picture. (I suppose I should also shout out Barry Ritholtz’s The Big Picture since that’s where they picked up on the story I’m sharing here… but I’d have to say that The Automatic Earth presents a much bigger picture).

While corporate media makes big noise about inaugural pageantry in Boston and in Washington DC, and even less meaningful distractions, some incredible Wall Street maneuvering is happening without much fanfare.

In what Ritholtz calls a “back door bailout of the banks”, Freddie Mac and Fannie Mae have been negotiating with Bank of America, JP Morgan and others who sold them no-verification “liars loans”, namely via “buy back demands.”

Bank of America just settled these demands with Freddie Mac and Fannie Mae for a total of $4.1 billion. But the Freddie deal is particularly insidious.

Continue reading $127 billion giveaway to Bank of America?