By Mathew Maavak
This is a planet in denial. While the existential question gets a red hot "apocalypse now" for an answer, our stock markets seem to have regained paradise lost.
We are witnessing nothing less than history's first confluence of unsustainable "peaks."
Perhaps, we are incapable of piecing them all, for when crude oil reached an all-time intra-day high of $84.10 per barrel on Sept 20, its entitlement to a front pager screamer was conceded to the tale of a few thousand empty -- or emptying -- American homes.
It was like the Butterfly Effect, with a twist. The flapping rooftops of confiscated homes were now whipping up an economic tsunami worldwide.
Here is how it works.
US mortgage lenders, voracious as ever for "more," had extended loans to the default-income group, who, were in turn hit by bad economic management. Credit card issuers followed suit to bloat consumer fantasies, and banks tightened the noose with additional loans for cars, tuition and businesses.
In the world of finance, debt is ironically regarded as an "asset." Think of the rock-solid house that can be repossessed in the event of a default.
Debts, with the outward promise of a steady cash flow, are regularly pooled, "securitized" and converted into a bewildering array of financial products along an upward chain, where, they are hawked off by fund managers to the global market
This money buys up commodities, stocks, and yes, more "securities and derivatives," along with junk bonds and blue chips.
It was easy come, easy go, wherever the money takes you...a 24/7 electronic casino...a Las Vegas without borders.
London bankers were toasting to the dawn of "the haves and the have yachts" at cocktail parties where sauvé qui peut was the vintage.
One of the greatest scams in recent memory was unfolding, exposing a pyramid scheme of epic proportions.
When this reached the point of metastasis, stock markets began to collapse.
The bottom feeders could not pay up anymore. Even the middle class were finding it difficult to pass the buck upwards.
This is called a liquidity crisis, and it happens when the laws of gravity finally exert a pull on the cash flow.
Still the champagne flowed. Lip-smacking advertorials continued to gush over "securities," "derivatives," and "comprehensive financial suites," set in a Jacuzzi lilting to Ponzi's version of "money for nothing and chicks for free."
The pyramids may come crashing down, but the missing capstones are free to roam, investing in gold here, financial products there and junk bonds everywhere.
To avert a panic run though, central banks worldwide pumped $400 billion to maintain liquidity's equilibrium.
Stock markets were no longer in the bearish or bullish mode; rather they were cancroidal, allowing fund managers to sidewheel from one market to another in search of profits, suckers, and a subtle pullout before the big bang.
It was the dawn of the crab, of cancer in stock market terminology, if one was needed. Suspicions were mounting. European banks were facing insolvency.
For three days beginning Sept. 14, savers across the United Kingdom removed £2 billion ($4 billion) from Northern Rock, Britain's fifth largest lender. The Bank of England had to step in to guarantee all deposits in all banks – a move with little or no precedence.
However, the banks were not convinced either. Inter-bank lending, which profitably cycled cash from one bank to another as demand dictated, was now deemed an inter-bank debt trap. Available cash was hoarded up.
The Bank of England's cash auction of £10bn -- at a rate of 6.75% over three-months -- has been shunned for the third consecutive week.
Either the "have yachts" have sailed away, or banks may actually find it difficult to repay the Bank of England.
Worldwide, the full weight of the "asset-backed" collateralized debt obligations (CDOs) and structured investment vehicles (SIVs) may run into more than the $400 billion which central banks coughed up to keep the system afloat.
CDOs and SIVs are the sleek-sounding trillion-dollar apexes built on loans taken from simple homeowners.
Banks are still tallying what is real and redeemable, and what was created from, and whirling in thin air. Their best bet now is for a deux ex machina.
Bull in the China Shop
The biggest economic success story of our times was the product of Western consumerism. It created a real supply and demand situation, which forced the relocation of factories to the Third World of cheap labor.
China was the champion recipient. Demand for toys, screws, machinery, computers and cellphones could never ebb, whether it came leaded or unleaded. Beijing's policymakers decided that the perennial flow of greenbacks demanded a domestic infrastructural revolution dictated by the export market -- a first in history if there was one.
Factories, coal-fired plants, superhighways, skyscrapers were springing up at breakneck speed to fulfill the export craze. Excessive pollution and the plight of "unregistered" migrant workers from rural China mattered little.
What mattered were prestige, kickbacks and $1.2tr in hard currency-based reserves. It did not matter that China's domestic consumption vis a vis its GDP was actually decreasing; it was more a matter of consumer opiates, of who was boss in the center of the universe.
It did not matter that Chinese cities were shrouded in toxic gray, where "only 1 percent of the country's 560 million city dwellers breathe air considered safe by the European Union." 
The Chinese may cough but the "days when the world caught a cold whenever Uncle Sam sneezed was over." Or so it seemed.
Uncle Sam sneezed.
Global finance began hemorrhaging, and it had to be resuscitated through an intravenous flow of taxpayer money.
Western consumers finally realized that girths had to be tightened, and what better way than to curb spending, and let a market correction take place in the import sector.
An entire supply chain leading to China's factories are in danger of folding up. Mineral resources from Africa, semiconductor plants in Malaysia, raw textile products elsewhere, now face acute market uncertainty.
China is in a bad fix. However, this is not deterring factories from coming online next year to meet the projected "global demand." If Western consumers are scaling down their purchases, Africans are not in a position to be the replacement buyers, and without a market, they will not be able to sell their raw products either.
In such circumstances, moods can shift. When "Beijing rolled out the red carpet for more than 40 African heads of state last November, billboards depicting Africans clad in leopard skin underwear, and an indigenous man from Papua New Guinea, plastered the city." 
It is no wonder that China's list of "allies" is getting shorter by the day.
Events in Myanmar are not proving helpful. China enjoys a near monopoly over Myanmar's estimated 2.46 trillion cubic meters of gas and 3.2 billion barrels of crude oil. Beijing had plans to develop two parallel oil and gas pipelines stretching 2,380-km to link the deepwater port of Sittwe to Kunming, in the Chinese province of Yunnan. Upon completion, a good portion of Middle Eastern oil and gas is expected to bypass the Straits of Malacca.
The quid pro quo was arms supply and support at the UN for Myanmar's military junta. Any new government might negate all existing deals, and pull Yangon into the US orbit. This is a timely revolution from Washington's perspective.
North Korea too is seeking rapprochement. There is enough operational space now to tackle Tehran, Damascus and the Hezbollah.
China can of course play the spoiler by providing arms to these regimes via a proxy. It is still a bad idea as the Israelis are just itching for war.
The IAF recently destroyed a Syrian installation that was purportedly an embryonic nuclear facility, but may well turn out to be a Kolchuga-type passive radar system, ideal for downing B2 stealth bombers. Coincidentally, the Russians have pledged to upgrade Syrian radar defenses after the attack.
If a wider conflagration breaks out in the Middle East, there will be no oil flowing from the Straits of Hormuz to China, either through Sitte, or through the Straits of Malacca.
The best option for Beijing will be to lock its oil and gas grid to the Russian Far East at a breakneck speed, and clean up some level of air pollution in time for the 2008 Olympics.
If an all-out war in the Middle East is our worst nightmare, think of the following unfolding crises...
The Peak Crises and its plural
Peak Oil: Fossil fuels, compressed and formed over aeons in subterranean geological layers are now releasing the telltale sibilant whispers of a punctured gas tank –- low as it was on petrol in the first place. With crude oil hovering above $80 per barrel, the various subsidies built into national economies are bound to burst at the seams, and precipitate price increases for basic necessities.
There is however a unique solution -- falling consumer demand worldwide. That would crimp industrial demand for fossil fuel. It is no wonder oil majors were reluctant to build new refineries when profits seemed guaranteed in the era of "peak oil." This day would surely come!
Peak oil is also tied to the current dollar crises. With the US dollar dipping against other major currencies, crude oil should come cheaper for Washington.
Oil and other commodities are traded in dollars, and dollar-denominated assets outnumber assets weighed in other currencies. Beijing can dump its hundreds of billions in dollar reserves for euros, only to trade them back into dollars to buy crude oil, gold and other assets.
The dollar blackmail will not work, especially with the US Army entrenched in the oil-rich Middle East.
Doomsday theorists are however predicting another Great Depression ahead, where the value of the dollar may mean little in the event of a global financial meltdown.
If this occurs, a global depression will have to deal with the following phenomena that was absent in the 30s.
Peak Urbanization: More than half of the world's population will live in urban areas in just... a few months, according to a United Nations Population Fund report. That translates to 3.3 billion people in an urban concentration camp of shantytowns and high-rise pigeonholes.
Children are growing up in a peculiarly boxed-in environment, removed from the soil that births their identity. They do not wake up to the sound of a crowing rooster, which is nature's way of sowing repentance and a turning of mindsets outside the conventional thinking box.
They wake up to beastly clangor instead. It is either the alarm clock or the barking dog, installed as "pets" to yelp any perceived intruder during the morning rush hour. The urban jungle is an industrialized Ziggurat, which pecks out a hierarchy from childhood. The ones right at the bottom will be the ones shouldering more concrete, or the biggest debt burden.
Close human proximity also leads to petty competitiveness and conflict. That is why "civilization" is held at gunpoint; by the police, by the army and by "treaties."
The urban life is delicate and vulnerable to all sorts of hazards, from plagues to a breakdown in the utilities, communications and transportation services. And political upheavals. A disaster will grind down traffic to a gridlock, far from the escapist countryside.
What if an energy warfare broke out? What if a global depression hits us? Can three billion people grow a patch of greens on their balconies?
When it comes to greens, the outlook is not at all verdant...
Peak Grain: Global grain stockpiles are down to their tightest levels in three decades after two years of unusual weather patterns. Heatwaves have wilted crops in the granaries of the world while floods and other environmental scourges have devastated some of the poorer "self-sustaining" regions.
Global wheat stockpiles will fall to a 34-year low by June 2008, according to the International Grains Council. U.S. stockpiles will fall to lowest level since 1951-52. Wheat futures in Chicago reached $9.3925 a bushel late September when major supplier Ukraine slashed exports.
The price of a bushel has more than doubled in the past year.
The bushel of woes includes rice, barley, soybeans, sorghum, oats and lentils as well, and they are all sagging under record prices. The grapes of wrath have gone on to stalk eggs, cheese, milk, meat and the a la carte menu.
There may come a point when the industrial food chain has little choice but to pass the rising costs to consumers in a dramatic fashion.
Creeping upticks in the price of milk and bread are turning Europeans livid. Milk is now dubbed as the "new white gold."
It is not just bad weather to blame. Rising demand from China is pushing up prices, despite the fact that only half of its urban population has basic health insurance. Tragically, processed food re-exported through Beijing's food chain is causing a global health nightmare.
But why pick on China? The current biodiesel craze is inducing farms to purpose-plant their crops for the profitable bioenergy industry, according to the Hamburg-based Oil World.
"It is high time to realise that the world community is approaching a food crisis in 2008 unless usage of agricultural products for biofuels is curbed or ideal weather conditions and sharply higher crop yields are achieved in 2008," it added
Bad news gets worse.
Peak Water: There is not enough freshwater around to sustain the planet's inland ecosystem and its human population. Rivers that help supply drinking water are laden with toxic industrial wastes. Population growth is already straining the capacities of water treatment plants worldwide while desalination plants remain the prerogative of wealthy nations.
According to the Pacific Institute: "Over 1 billion people don't have access to clean drinking water; more than 2 billion lack access to adequate sanitation; and millions die every year due to preventable water-related diseases. Water resources around the globe are threatened by climate change, misuse, and pollution." It estimates that "over 34 million people might perish in the next 20 years from water-related disease -- even if the United Nations 'Millennium Development Goals,' which aim to cut the proportion of those without safe access by half, are met." 
Lots of water will be diverted to industries and agriculture, or the highest bidder as privatization of water supply gains currency. In some regions, the situation is so acute that water diversion in one country may precipitate conflict with a neighbor. As early as 1974, Iraq reportedly mobilized its army to target Syria's al-Thawra dam on the Euphrates. Israel has cast its own eyes on Lebanon's Litani River.
According to Former UN Secretary General Boutros Boutros-Ghali, "The next war in the Near (Middle) East will not be about politics, but over water."
If this watery grave is not enough, think of the next one...
Peak Fish: There is some fishy business going on in our oceans. Like oil and water, we are trawling deeper and deeper for our fish supplies. Such piscatorial adventures have led to a global decline in fish stocks. "Ecologists worry that entire fisheries will collapse as... 'junk fish' are used up." Aquaculture, which substitutes marine catches to an extent, comes with its own environmental problems. 
The Times of London paints a similar gloomy scenario. According to some experts, 90% of fish around British waters "will disappear within 20 years" in the absence of an immediate intervention.
With 75% of fish stocks fully exploited, declining numbers across species worldwide hint at a collapse point by 2048, beyond which replenishment is not possible.
Peak Fish "comes at a time when their nutritional value is recognized more than ever."
"World Health Organisation officials recommend a weekly intake of 200 to 300 grams of fish each week but today's catches can only just meet this target. Since the 1950s an estimated 60 per cent of stocks in British waters have collapsed..."
The Times invokes the paradox that "measures proposed to limit fishing to a sustainable level will only place a cap on the nutritional flow for the coming decades." 
The full circle
What began as sub-prime woes in the US housing sector may ripple into something we cannot yet imagine. Will there be a severe global recession, or worse? If wars are yet contained, bidding wars will yet emerge over wheat, water, fish, medicines and oil. What will the future hold in this ecology of crises?
Here is a refrain from the book of Hosea (4:3):
Because of this the land mourns,
and all who live in it waste away;
the beasts of the field and the birds of the air
and the fish of the sea are dying.
Kuala Lumpur, Oct 9, 2007
Copyright 2007@Mathew Maavak
 As China Roars, Pollution Reaches Deadly Extremes, NYT, Aug 26, 2007
 Beijing police round up and beat African expats Guardian, September 26, 2007
 Global Water Crisis Pacific Institute.
 Water shortages will leave world in dire straits USA Today, 26th Jan 2003
 Fish will vanish from British waters in 20 years, says author Times Online, Sept 15, 2007
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