Here’s a great graphic I saw the other day showing some of the problems that are already here and ones that are currently brewing. Scary. This bubble is going to blow up, and probably not that far down the road.

It’s a long piece, with lots of background, and an obvious attempt at balance. I’d love to hear reactions from people in the Gorge that have lived through the Commissions reign. They have some, and the comments afterwards touch upon it, but it’s only scratching the surface. No other single event has impacted the lives of those living in the Columbia River Gorge as much in my lifetime.

What made me post this? This paragraph here:

Counties were given a choice: Adopt their own ordinances implementing the management plan or let the Gorge Commission oversee development. Eventually five counties adopted ordinances. The holdout was Klickitat County. To this day, Gorge Commission staff reviews all applications for development in the part of Klickitat County that lies within the scenic area. Because it chose to ignore the law, Klickitat is not eligible to receive economic development money.

That’s the county that White Salmon’s in. Who would have thought that the county would have been a den of rebels!

I’m personally convinced that we’re seeing a slow motion collapse of the old, post WW2 order of things, to be recreated as something, well, unknown at this point. So, when I saw his two part series on “The Death of the American Dream”, I read it immediately. It’s very compelling and insightful. He talks about what we all know — the catastrophic drop in housing values throughout America.

The damage is heavy. For most Americans, their single biggest asset is the equity in their home. At the peak of the boom, total net home equity in the US (the value of owner occupied homes minus the remaining mortgage debt) stood at 13 trillion. Today it is down to $6.5 trillion. America’s home equity losses are greater than the GDP of Japan.

But he goes deeper than that, arguing that this isn’t a temporary drop, but a fundamental shift of what it means to be a successful middle class citizen of America.

But something has, I think, changed. Something big. Humpty Dumpty has fallen off the wall. A social ideal has received an irrecoverable blow and the era of consuming our way to prosperity is drawing to a close. The country has maxed out its credit cards, and we are going to have to live within our means.

In the second essay, he goes ties together how shifting technology, societal norms, and demographics caused the death of the Family Farm as surely as it’s destroying this particular dream. We seemed to have solved the last shift. Maybe by looking back at those challenges and how we met them, we can find clues as to how to go forward now.

Here’s Part One and Part Two.

The big question that everyone should ask themselves is this: can my job (or what I want to do) be replaced by a computer program or a robot during my earning years? If so, then it’s probably pretty wise either change career paths ASAP or develop a backup career that doesn’t answer in the affirmative. If I was helping someone with career path planning, I’d advise them to stay out of retail (including management), most government-related work, higher education, law, or finance. Of course, you can succeed in almost any of those fields (they aren’t going to go away completely), but you’re putting yourself in a situation where there’s a shrinking demand with growing supply. You’ll have to really shine and work hard to carve out a career. Better areas to pursue? Science, engineering, computers, and — where I part ways with the author of the article — medical. Above all, create useful things that save people’s time, money, health, and energy.

Jerry Pournelle also has some insight into this, linking to the same article, but puts it into a larger context of human history and the grind of poverty.

Every established medium is ruled by people tied to the existing models, and the bitterclingers imagine the short-term models will prevail long enough so they can amass sufficient capital to buy a nice place in Florida.

He’s talking about media, but it really goes for anything. Insurance, software, auto workers — you name it. Self-delusion: even if you can see it, you really don’t.

Here’s a reality check: We will not have high-speed rail within Segwaying distance of 80 percent of the country, ever. We will not get 80 percent of our electricity from “clean energy sources” by 2035, unless someone far outside the halls of government invents a snail that eats trash and poops hydrogen. Obama won’t veto every bill that arrives on his desk with earmarks–re-watch that part of the speech last night; no one believed him.

That’s right. I’m sure there are people out there that will believe this stuff, just as there were people with past President’s SotU speeches that ate it up. Until both the President and Congress are willing to not just “reform” entitlements, but actually get rid of them in the long run, and until the people of this country are ready for that same thing, we’re going to continue towards the cliff. It just depends on how fast we get there and how far down the drop is. Paul Ryan is on the right track, while a large minority of the country freaks out at the idea of cutting the National Endowment for the Arts or freezing discretionary spending, it’s a track that we’re not going to take.

The second piece comes from TV’s newest reality show star, Sarah Palin. She writes an editorial in the Wall Street Journal today, vigorously supporting Paul Ryan’s “Roadmap for America’s Future” that was released earlier this year. I have more respect than ever for Palin in endorsing the plan. I’d agree with her that it’s the best plan proposed by anyone with actual power in the government. It shows that all the wailing in our capitol about how it’s impossible to balance the budget and to fix our structural fiscal issues is hogwash.

Now, most importantly, does our leadership have the courage to implement something like this? It’s radical, sure, but no more radical than the original programs — Social Security and Medicare — that got us into this mess to begin with. Probably more to the point, do the American people actually want this? Unfortunately, probably not yet. This is from a poll by Bloomberg:

Americans want Congress to bring down a federal budget deficit that many believe is “dangerously out of control,” only under two conditions: minimize the pain and make the rich pay.

The public wants Congress to keep its hands off entitlements such as Medicare, Medicaid and Social Security, a Bloomberg National Poll shows. They oppose cuts in most other major domestic programs and defense. They want to maintain subsidies for farmers and tax breaks like the mortgage-interest deduction. And they’re against an increase in the gasoline tax.

Pain for thee, but not for me. The crazy part about this is that Ryan’s plan doesn’t really involve much in the way of extreme sacrifice for everyday citizens. No, if implemented, the pain would be felt primarily by politicians and bureaucrats as their power is slowly stripped away. What a shame that would be, right?

I’ve recently been asked by several blog readers and consulting clients about my predictions for the economy for the next few years. Here they are, in a nutshell: The US economy will remain weak for for at least five years. Both the commercial and residential real estate markets are unlikely to recover before 2018, especially as interest rates begin to increase. Noticeable inflation should begin around the Spring of 2011 and will become uncomfortably high by 2012. If the announced Federal income tax and capital gains tax increases do indeed go into effect, they will stifle the economy for the foreseeable future. Continued financial instability in the periphery of the EU will continue to keep the Euro weak versus the Dollar, but in the end, both currencies are doomed. Global credit market chaos will probably continue for several more years, as will the Mother of All Bailouts (MOAB) here in the United States. I’d say that there is a 25% chance of a Dollar Panic and devaluation in the next four years, and a 5% chance of a hyperinflationary Dollar Collapse. But regardless, some inflation is coming. Its severity is difficult to predict. The bull market in precious metals is nowhere near its end. I still predict that spot price of silver will eventually exceed $50 per ounce.

I think it’s pretty close to what I would predict. When he says “…in the end, both currencies are doomed”, while probably true, could be a decades away. I think it’s interesting he’s picking 2018 as the earliest real estate recovery date when I picked close to the same thing last night (I was a little more optimistic, thinking 2015). The inflation prediction is his earliest prediction, so I’ll be watching for his accuracy.

Here’s another “I’m not an idiot” moment. Richard Fernandez wrote this yesterday:

But Barone implies that for all the apparent flux one thing remains constant: it’s a brake and throttle world. The liberals hit the throttle and the Republicans sometimes step on the brakes. Republicans haven’t noticed the steering wheel.

Yeah, that’s just about right, IMO. This ties in with the above prediction. That pessimism is born out of not believing that either party will do anything more than delay the inevitable. People tend to operate in their own self-interest, and a vast majority of politicians’ self-interest is diametrically opposed to the country’s self-interest. And as a rule, the longer they are “serving”, the more that’s true. Later he makes a comment that’s rather apropos to a conversation I had with my wife last night:

It may take more than hard times to make a political paradigm shift thinkable.

Or planting fruit trees, for that matter. How many people just can’t imagine growing their own food? All people create their own boxes of their minds that can be very difficult to break out of. Some worse that others, of course. Limits in thinking equal limits in action, so when an action is required that requires you to think outside your little box, you freeze.

The world economy is like a person with a bad stomach flu; that horrible sick feeling keeps coming back. In 2008 it was mortgage-backed bonds and the failure of Lehman Brothers; last year it was the worst recession since the 1930s; this year it’s the European financial crisis. We still don’t know where this is going; there is plenty of good news out there. The National Association of Business Economists is upgrading its growth forecast for the US in 2010; China remains strong; the IMF is upgrading its growth forecasts worldwide. On the other hand, some of the world’s smartest investors are buying gold like there was no tomorrow, there is talk about a new global meltdown, and the world’s financial markets seem ready to plunge on the slightest whiff of bad news.

The second is a piece on Pajamas Media pointing out that the Mexican President’s pants are on fire. One thing I’ve learned through my study of history: always be very scared when politicians want to take away the citizen’s guns. It all comes down to power and money.

President Calderon’s assertion that Mexico has seized around 75,000 guns and assault weapons in the last three years — and that more than 80 percent of them came from the United States — is a bald-faced lie. It simply is not remotely connected to the truth.

But Portugal and Spain are suspect — as well as many of the larger EU economies too. Their problems can be fixed to be sure. But they cannot be fixed by any kind of bridging loan, “put” or ’shock and awe’ intervention. None of that will work in the long run. However things are stabilized in the short term, eventually a scaling down of the welfare state — and indeed the size of the Western state itself — will be necessary. There’s simply not enough money to sustain it. A wave of change, but not the kind of change that President Obama imagined, is following right behind the financial tsunamis. All of his ill-timed “investments”, like bloated Federal Health care, immigration “reform”, and cap-and-trade have come at a time when they simply can’t be borne. Institutions like featherbedded unions, monopolies and obsolete gatekeepers should view recent events in the same way that dinosaurs who looked up at an enormous descending meteor should. The enormous tower of quangos, EU commissions, massive agencies, vast entitlements is trembling beneath that most quotidian of assaults: lack of supply, “like a cut flower in a vase; fair to see yet doomed to die.”

So far our leaders — including most on the conservative side of the aisle — have shown absolutely no desire to address these issues. I don’t think they will unless they’re forced, either. There’s no way around it: in the end, it means them giving up a huge chunk of power. We haven’t had a politician like that in high office since George Washington.