Mexico: A Collapse Update

I’ve been predicting the collapse of the Mexican Nation-State since 2006. It turns out that was a bit premature. But with violence flaring, the potential for collapse in Mexico is once again in the headlines. Oil production continues to fall, border violence is up, and the government is preparing for a showdown with the drug cartels. I’ll argue below that the government will keep the wheels on through 2009, but that the Mexican state will collapse shortly thereafter, ushering in the beginning of the end of the Nation-State.

It’s been difficult to read a paper or watch the news recently without hearing about the growing troubles in Mexico. The US military’s Joint Forces Command issued their Joint Operating Environment 2008 report recently that listed Mexico and Pakistan as the most likely states to collapse in the immediate future (PDF, see p.35 for analysis of Mexico). Even 60 minutes ran a segment about the rising drug violence.

Of course, readers are probably already aware that a root cause of the problems in Mexico is the precipitous decline of Mexican oil production and an even faster decline in the level of oil exports. Add to that declining remittance incomes being sent home by migrant workers in America, declining tourist revenues, and lower revenue per barrel of oil exported, and the Mexican state is experiencing a severe financial crunch.

While the fiscal stability of the Mexican state is impacted by continually declining oil production and oil exports that are declining even faster, this impact is mitigated to some extent because PEMEX hedged the majority of its oil production through 2009 at roughly $70/barrel. Depending on the price of oil in 2010, Mexican oil revenues stand to drop off a cliff as PEMEX loses hedge coverage.

Does this mean the Mexican state is finished? The current crack-down by the Mexican military and federal police is, I think, best seen as a last-ditch effort to save the state. But it is also evidence that, by the very existence of this pitched battle, the state retains enough viability to pose a threat, and therefore to be targeted.

In military theory, pitched battles are only consciously joined by both sides when both have an incentive to risk the main body of their force—-either because they think they can win a decisive victory or because they are running out of the political, logistical, or economic ability to sustain their army in the field and must seek a decisive action while they can.

Clearly the drug cartels smell blood—-and tactics like forcing the resignation of the Juarez police chief by killing one or more police officers every 48 hours demonstrate their desire for a decisive engagement. Additionally, the motivation behind a recent truce among rival drug cartels may be to facilitate a joint offensive against the government.

In my opinion, the Mexican government is seeking a pitched battle for the second reason—with their oil hedges only in place through 2009, and with oil production, remittance income, and tourism dollars poised to continue a sharp decline, the state may not have much more than a year of financial viability in which to cripple the drug cartels.

While a pitched battle may be politically expedient for the state, I think the cartels are too widespread and deeply ingrained to be defeated militarily. Salvation for the Mexican state will require regaining the long-term ability to compete with the cartels as a provider of social order and economic activity—-something that cannot be gained on the battlefield. At a minimum, in order to finance its ongoing viability, the state needs significantly higher oil prices to increase export revenue or a rapid recovery in the US to generate an increase in remittance income. Given the current economic climate, the occurrence of both of these seems highly unlikely—-there is simply no way of knowing where the tipping point lies, whether either one of these factors, or both, can save the Mexican state from eventual collapse. And without a renewed fiscal foundation, the eventual collapse of the Mexican state seems inevitable…

Impacts of Increasing Instability in Mexico

First, the increasing instability in Mexico will have a significant impact on PEMEX’s ability to maintain the necessary levels of investment to minimize production declines. This creates a positive feedback-loop: faster declines mean more financial difficulties, more instability, and less investment, precipitating even faster declines. In 2009, PEMEX plans capital expenditures of roughly $20 Billion. Traditionally, due to laws that prevent foreign ownership of many categories of natural resources, PEMEX has relied on debt to finance capital expenditures. More recently, PEMEX has also been pushing for a reform to the Mexican oil law that would allow foreign companies an ownership stake in Mexican projects in exchange for investment. Regardless of whether PEMEX pursues debt or equity financing, instability in Mexico’s property rights regime—-certainly including the potential for governmental collapse—-will seriously hamper these efforts.

Certainly the impact of disintegration in Mexico will have an impact north of the border. There is already a clear spill-over in criminal activity in border states. At some point, the national security threat to the United States will bring calls for intervention—but are there any effective options? The sprawling yet dense cities and mountainous rural terrain of Northern Mexico should give any military planners pause, especially in light of recent American experiences in Afghanistan and Iraq. That didn't stop President Obama and Admiral Mullen from meeting yesterday to discuss exactly these options. Some commentators have even suggested that Mexico, not Iraq or Russia or Afghanistan, will be the defining national security challenge of the Obama administration.

The potential impact on Mexican oil production seems clear. More superficially, the situation in Mexico gives commentators of all stripes something to worry about. The spill-over of drug violence seems to preoccupy most mainstream talking-heads, but a few commentators have traced these problems back to their roots—and see a much more troubling threat. Specifically, the troubles in Mexico are an early sign of the failure of the Nation-State model. I’ve written about this extensively, and my intent here is not to re-hash my critique of the Nation-State system: if you’re interested, here’s an academic paper on the topic. The key is that the trends pulling Mexico apart at the seams are ubiquitous—-Mexico is merely facing this perfect storm first. As the Nation-State dominos begin to tumble next--Pakistan perhaps, then Iraq, then Russia, then Italy, then China, then Indonesia, etc.—-the pressure on the rest will grow. And many of the most threatened states are also the most critical to global oil exports.

While I don’t think Mexico—in its current form—has many years left, I hope I’m wrong. It’s a beautiful country (especially if you can get outside the Americanized hotel zones), with a vibrant culture. It may even prosper in a post-peak world under some different form of social and political organization. And a token state-shell may last for decades (another global trend, I suspect)—after all, the cartels will probably be happy to delegate parts of the social contract to the “sovereign.” But, for all practical purposes, the Mexican state won’t survive to see 2012.

Thanks for spending some of your weekend on this update Jeff.

So if you are right, and I expect your are, what does it directly mean for US (and via ripple effect ROW?). I know people in Texas are already afraid. I've heard that the ammo shortages in Southwest (which also have ripple effect) are due to mexican gang members coming across border and taking large hoards back to Mexico. If the nation state does collapse, what does that do to GOM production, Texas production ,etc? Does this ripple south of Mexico as well? Into Costa Rica and other LA countries?

Is there any truth at all to Amero? How, if at all can US help Mexico at this point? We have our own problems.

The whole system has become so complex that it is impossible to predict what/if might be Archduke Ferdinand type event - (almost exactly 100 years later).

P.s. my essay yesterday referred to individuals, but if a trend in decline of nation-states is underway, then one could argue that those that decline first might eventually have an advantage, being forced to learn/adapt, while fossil fuels and resources are still available and ROW is at peace. Hard to say.


I think, globally, one of the key ripple effects of collapse in mexico will be a growing bifurcation of the role of the "state." By "Collapse," I don't mean that there will be no Meican state, but rather that it will cede effective sovereignty over much of the country and much of day-to-day life (which will be absorbed by cartels, or other "providers"). What I think the state will continue to do is act as a storefront for Mexican natural resources, leveraging its remaining ability to to protect discrete points (e.g. oil fields) as opposed to the entire contryside, and focus its reduced ability to monopolize violence on those areas that best allow it to funnel wealth... what Philip Bobbitt would call the "Market State."

That's a long way of approaching your question about the Amero and GOM oil production. I think the "Amero" and related projects (everything from very concrete infrastructure projects to the wide array of conspiracy theories about the North American Union, some true, some fantasy) will serve mainly to facilitate this ongoing access to Mexico's natural resources by multinationals (and possibly also fortified, concentrated "manufacturing zones" such as already exist in the periphery of Mexico City).

I think the nominal collapse of the Mexican state (or, perhaps more accurately, its retreat from 90% of the countryside and from its social obligations) will pave the way for increased outside investmet and ownership in Mexican natural resources--including onshore and offshore Gulf oilfields. The ability to actually attract this investment will, I think, be determined by the Mexican state's ability to cordon off certain geographic areas and legal relationships to make these investments secure and stable in the eyes of foreigners. The real threat here is not the ability of the elite to sell of shares in KMZ, for example, but their ability to protect the export infrastructure to make these investments secure. In general, I think we'll see the cartels continue to challenge this consolidated state by targeting infrastructure (as we see in Nigeria, Iraq, Colombia, etc.) in a form of protection racket. Offshore fields may be more viable here, at least until the cartels gain a more sophisticated reach (as the Tamil Tigers have in Sri Lanka). It will be an interesting game of cat-and-mouse, as the value of this protection racket to the cartels (who will lack the sophistication for some time to control something like KMZ directly, and who would surely face a US military intervention if they tried) requires the general viability of these exports.

However, from a net-export perspective, a Mexican collapse could actually decrease domestic consumption (Westexas-any thoughts on this?)

Maybe this is too obvious, how do the cartels finance themselves, drugs. So take away their source of energy (money) and power, which is cash, by decriminalizing the drugs. No illicit drugs, no huge returns for contraband, and most of the cartel members are back to serving frozen Martgueritas by the poolside.

Overly simplistic, aside from the net oil export problem? I don't know. You see, the US "War on Drugs" is spilling over into Canada also. The rash of gang killings in Vancouver is not a local problem, it's a continental problem. The drugs go to the US, and the guns and ammo come back to Canada. Ten years ago, there might have been a half dozen shootings a year in a city area of 2 million (maybe I exaggerate a bit), but now we are getting over 10 a month. And, most of the weapons used are not sold in Canada.

I put it back to the US, you've got to get your collective heads around this. The emperor has no clothes and all the vain and facile posturing against drugs is not going to stop it. This is certainly a case of the law of unintended consequences (or is it? Hmmm...). We better start dealing with the true nature of the problem. If you cut off one of Hydra's heads and two grow back, then cut off the legs.

If you examine the size of the global narcotics industry (in dollars) and you read the list of the Forbes richest humans, you will note an interesting dichotomy. This gigantic industry apparently only produces street level hoodlums and has no political influence or ability to control USA politicians. How likely is this?

The influence can be either direct (JFK), indirect (numerous politicians stumping on fighting drugs), or the opposite (Robert Kennedy, Nixon). The drug card is a significant influence whether street level or big Pharma. Does big Pharma want the decriminalization of street drugs? Certainly not when one can take care of nausea from cancer treatments with $10 of marijuana instead of their $300/mo anti-nausea prescription drug (Zofran). We had a business in the US assisting Americans with their prescription drug purchases from Canada and I saw the bills. And don't buy into the "research and development" propaganda either, some of the recent innovative drugs have come from France (highly socialized) and the Netherlands (i.e. Spiriva).

The whole situation can be summed up by the quote from Upton Sinclair.

Most of these drugs are heinous, I'm not defending their abuse. But so long as we keep trying to wish the problem away, the mode of consumption will be abuse - because illegality leads to binging - and not to intelligent and controlled use. Just ask any seasoned police officer or fireman.

My dad is a retired fireman that spent the better part of his career in downtown Vancouver. He picked his fair share of dead junkies off the sidewalks. All the first responders working downtown hated "Welfare Wednesday" because it inevitably resulted in terminal Thursday and forensic Friday. He, and other colleagues of similar tenure advocate the decriminalization as they feel most of the real street level problems would go away.

Note I've been using "decriminalization" and not legalization. One stipulates a controlled distribution without fear of penal action, while the other denotes images of a drug frenzied free for all.

Why is drug supply prosecuted so vigorously and demand so leniently? Who in the United States is receiving drugs from Colombia, laundering the money, marketing drugs every day to 30 million U.S. citizens, bribing lawyers, the police, and politicians? There must be U.S. drug barons far more powerful than any Colombian trafficker. But the people who are dying are those fighting them in Colombia, not in the United States.

--Carlos Fuentes, A New Time for Mexico

I'd call it an alignment of self-interest. Politicians get to grandstand and act like they're protecting the children. Drug lords makes lots of money because the black market keeps prices and legitimate business competitors out.

I agree with you that we could take a lot of wind out of the sails of the drug cartels by legalizing drugs. I think this is one of many examples of the right policy move but one that has no chance in hell of working. Kind of like the right policy in the war on terror is to recognize that we caused the problem by repeatedly screwing the people of the Middle East (both dirctly and more frequently through oppressive proxy governments that supported our economic needs) and then stop. Not going to happen either...

Tragically, I think that the most likely political outcome of these problems is for states to further crack-down on the problem, thereby adding fuel to the fire. We'll fund narcotics enforcement in the US, and we'll give money and training to the Mexican state to do the same there, all of which will play into the hands of the drug cartels...

I have to sadly agree. As much as I would like to see the sensible policy, we know in our hearts the outcome will be as you have outlined. There's too much money in play for all sides. Sometimes I don't know whether I should be clicking my heels three times, chasing after the white rabbit, or calling the Ministry (Brazil).

BTW Jeff, I came across your writing a few years back with the Theory of Power and have appreciated your recondite analysis. (It surprises a few that are caught in the typical military stereotype to see the honest and thoughtful analysis that is coming from US military members).

Thanks, BC_EE. For the record, though, I'm no longer employed by the Federal Government or a member of the US Military. That said, it's my opinion that there is a great deal of "independent thought" in the military--it's primarily the structure of our political-military complex that drives outcomes...

Taleb in The Black Swan came to the same conclusion. He has the highest regard for U.S. military planners.

I think this is blindingly obvious. Once Prohibition was repealed the lucrative profits from bootlegging/speakeasies/etc vanished, and so did the likes of Al Capone, Baby Face Nelson, Pretty Boy Floyd, and the rest. 'The Mob' did not disappear, but retreated into the more benign background of gambling/numbers/casinos, protection rackets, an so forth. Think about it: the U.S. had carloads of mobsters driving around making hits on people with Tommy guns. There was a running gun battle between the Feds and the Mob.

Decriminalize drugs, and the profit motive for the cocanistas and all the other drug lords goes poof in a heartbeat. It is just that simple.

I really don't want to hear any moralizing from the self-appointed guardians of America decency out there about this. Plain old cigarettes have killed over 400,000 people per year for decades and no one says boo hoo to any of that. In fact, plenty of people (some who I personally know) and politicians go to great lengths defending the 'right' of God-fearing patriot American tobacco farmers to grow their poison and profit from it. Plenty of beer-soaked bubbas would start a revolution if we tried (again) to crack down on alcohol, the abuse of which aslo kills many people each year. These apologists always invoke personal responsibility and personal liberties when they defend the legality of these substances...but draw their own arbitrary line at invoking the same philosophy about currently banned substances. Hypocrisy much, anyone? I have never taken any illegal drugs, nor have I ever smoked, save for one tentative puff when I was 12 (it tasted disgusting). I drink a beer or a glass of wine once per month, maybe. My wife and my almost adult children are the same. Even though tobacco and alcohol are legal and available to us, we choose not to use the former and my wife and I barely imbibe the other very infrequently. There is your personal liberty, personal morality, and personal choice. BTW, I do support the right for government buildings and restaurants, libraries, stores, etc. to ban these things...second-hand smoke is NOT a choice for those who are breathing it and harmed by it. Do what you want in your home. For those who would talk about driving/working under the influence of drugs: There are laws and there should be very stiff penalties for that. This still does not obviate the right to ingest substances on your land/in your home.

Of course these ideas will never fly here, not in small part due to the the huge business that is the American Prison Industry. I've said this before here and I'll say it again: The US Government obtains many things from prison (slave) furniture (UNICOR, formerly Federal Prison Industries, with each desk having a slip of paper that is the 'Escape-Proof Guarantee), military uniforms, and much more. I would speculate that there are plenty of bribes being paid out to government officials in various 'law enforcement' and 'Dept of Justice' and legislative bodies to keep the co-dependent drug cartel BAU system rolling right along unhindered.

The little old ladies and other moralizers are supporting a paradigm that is rotting us from the inside out. If you can't stop people from doing it, legalize it, tax it, and educate against it.

What is truly sickening is seeing how the drug lord/drug trade has been and still is glorified in many American movies and TV shows. Another industry that would suffer if the current paradigm is broken. How many movies could be made about someone buying weed from Wal Mart?

Rant Off/

BTW, I do support the right for government buildings and restaurants, libraries, stores, etc. to ban these things...second-hand smoke is NOT a choice for those who are breathing it and harmed by it.

I went out to a night club in Bogota, Colombia last Friday night and thanks to a recent new law, no smoking was allowed.

It was so nice.

By the way, drug use is legal in Colombia:

Startling officials of both the United States and Colombia, a high court in Colombia, the source of most of the world's cocaine, has legalized the personal use of cocaine, marijuana and other drugs.

I've often wondered what had more to do with the polestar of drug trafficing moving from Colombia to Mexico, this or Uribe's application of the mano duro.

My view is that all drugs should be decriminalized, and that they can be freely brought from a hospital pharmacy.
All consumers of said drugs must be enrolled in a treatment program.

Treat it with education/health initiatives rather than a criminal issue.

Of course the criminal issue would stay if you drove whilst under the influence etc - much like most places treat alcohol and driving.

Pretty sure that this concept won't fly - but the current paradigm is hardly working either.

Don't do drugs - but have been the victim of a burglaries by drug addicts looking to fleece stolen goods to fund their habit.

Your plan is just another form of criminalization. It completely ignores the real problems of recreational use and addiction.

Disclaimer: Haven't; never will.


For the *vast* majority, there is no problem of recreational use, unless you have moral problems with people getting wasted.. In which, case, mind your own business.

The taxes raised from drug sales would have to be ring fenced for addiction treatment, but the casting of drug use as a problem in its own right is very much a political act.

There is more to it than just recreational use. I started that way, and then became fascinated with a different view of reality, the stepping out and back in, adds a remarkable clarity to thought. Doing some Sandoz acid back in the 60's led me to some truly inspiring places. It is a large part of who I am today and why I live how and where I do. I am at peace in the woods. I have the stars at night and the wind in the trees. I chased that for a few years after, and lost count after I dropped acid for the 500th time.
I actually ended up doing public service when the locals had a really bad tripper, the cops would show up and I would get to go into the cell and talk them down. Not really down but guide them to a different place.

Once my first child was born I stopped all use of illegal drugs, not something you can do if you are responsible for a child, but yes I still drink and sometimes smoke. Roll my own, especially when I have a touch of Jim Beam.

The places and experiences I had I now go to in a different way, meditation, working with the chi, and physical labor. I do credit the acid with showing me the way the first time and I might never have known otherwise.

Mankind has spent generations altering his reality, prayer, fasting, flagellation. The interior of a mosque or church are desinged to take you from your reality. I was lucky enough to actually experience an Indian peyote ceremony. Read "Varieties of Religious Experience" by James if you will.

This is a story as long as mankinds story, with many, many chapters. Quantum physics is only just starting to explain or even admit some of these effects are there. Point you specfically to the non-local effect.


Don in Maine

I would greatly prefer to be utilizing a joint right now instead of vodka to relax...ethanol has way too many calories...

I agree that the obvious solution is just not implementable in the current environment...

It is a shame that a country so adamant about a free market is so ignorant to basic truths...


In a related question, does anyone know what happens to the demand for narcotics when the economy tanks? On the one hand people don't have as much money to spend, so you might think it would go down. On the other hand lots of people are stressed and depressed, and that would suggest that demand might go up.

Alcohol is recession prof. Consumption goes up in hard times. I would expect the same to be true of recreational drugs.

I agree completely.

But Mexico already tried to legalize some drugs. And guess who raised such a fuss that then president Vicente Fox vetoed it?

That's right, Mexico's benighted and uncaring neighbor to the north:

Mexican legal drug proposal rejected

Fox vetoes bill amid growing U.S. criticism

Power (money) corrupts all the way to the top. Say one thing in public, be on the take in private.

Very True. The Mexican government is corrupt, and will not last another year.
A new government will emerge, maybe like Venezuela, the iron fist of Chavez.
At this moment the drug lords have more power than the govt in Mexico.

I´d say that its more like in the next 5 +/- 3 years that the people of Mexico will be seriously invited to contemplate revolution. I think 1 is too early. I had kind of thought maybe something would happen when Fox got replaced by Calderon, or when the new oil legislation got debated, but now I think it will take a bit longer.

Hopefully it will be a moderate, cheerful revolution like Venezuela's. (compared to other revolutions...not to BAU)

I think there are two big questions. One is if the various regions of Mexico will work together, or separately. The other is if the people will be working towards a goal, or reacting against a situation.

PS, if you go to google images and search APPO or Atenco or EZLN you can find lots of images. I had wanted to include one of the ones showing the masses barricading the streets against the police/army, but i don't know how to add images to these posts. I had hoped to illustrate that in Mexico its not only the drug cartels that have more power than the government, the people do to. (Although the government has some nasty people on their side)

It's obvious alright - to those of us in touch with reality. Our fearless leaders, on the other hand truly believe (or, at least must claim to believe if they want to qualify for elected office) that tracking down, arresting, processing, convicting and jailing people for possession or use of various forbidden shrubbery is not only acceptable but vital for a healthy and moral community. These people are delusional. And if we continue to let these nutters run the show we're just as bad.

Prohibition is a de-facto government subsidy to organized crime. The only way to take these gangs down, whether they're in Mexico, Columbia or the streets of Vancouver, is to remove the black market that funds them. This can not be done by force. When you take down a big dealer or network, supply is removed and demand holds - prices rise, and this funds a gang war between the half-dozen or so smaller entities underneath them to determine who gets to fill in the gap left in the black market. The bigger the gap, the more prices rise, and the more incentive to fight over it. In other words, these PR-friendly crackdowns always lead to nothing more than increased body count and a re-organization of the black market with the most aggressive and violent elements tending to prevail.

The utterly transparent fiction that drug laws have anything to do with public health is made a complete mockery by the medical and social effects of the two currently legal recreational drugs - Alcohol and Tobacco. Anyone who tries to tell you drugs are illegal because they're bad for you is either massively misinformed(most of the public) or lying to you(cops – see below).

The biggest impediment to drug law reform is law enforcement itself, since next to organized crime, they are the group with the most to lose should prohibition end. Drug enforcement is a huge component of police budgets, and no self-respecting police chief is going to kiss that amount of his budget goodbye without a fight. Not every cop is on board with the prohibitionist fiction, and there are voices in the darkness (, but the ones high up the police ranks (and their overlords in the US DEA especially)know the true stakes and are staunchly supportive of further crackdowns and rabidly against any liberalization of drug laws in order to safeguard the interests of the law enforcement community. Needless to say, when you find that the cops and the gangsters are on the same side of a political issue, it's a red flag that something very rotten is going on.

Legalize it!


Economic collapse--especically combined with government collapse, e.g., the Soviet Union--can be a double edged sword, resulting in both falling consumption and an even faster rate of decline in production.

Mexico's most recent production decline was about -10%/year. At this decline rate, if they wanted to maintain flat net exports of about one mbpd, they would have to cut their consumption in half over the next five years.

Volumetrically, it appears that the combined VenMex net export decline last year was about 650,000 bpd, a one year decline that was close to two-thirds of total Canadian net oil exports.

Hi Jeff

One of the main drivers of the obsolescence of the Nation State (according to your academic paper) is globalization. This has contracted sharply recently and will do so to a much greater degree as PO impacts human activity. The world seems set for another bout of nationalism; and as the pressure on resources grows, surely we can expect more war as an outward expression of the nation-state?

I fear you are right and hope you are wrong. Of course, this is a matter of political ideology. Nationalism's reputation really didn't fare too well the last time it motivated really big events (WWII). Hopefully people remember that.

I don't think they will; a lot of people never learned or understood the lesson in the first place.

Between "Love it or leave it" and "We grew here you flew here" it's a really nasty streak in human nature that makes me very angry to see.

It's the under 30s that count, especially if we give weight to 'street politics'. In my experience a lot of these people generally feel a disconnect between themselves and what happened to others, elsewhere, seventy years ago. All they focus on is their own nation's overseas involvement past and present, and feel a patriotic militaristic pride about that.

Societal memory is fairly short--my post a little later in this thread puts a couple of back of the envelope numbers on it.

I think this is a very good point--right now I think we're actually seeing a retrenchment of the Nation-State, at least in those states that remain relatively solvent ("relative" is debatable). I think JaggedBen is right--we'll see a resurgence of nationalism, and this could be very dangrous, at least in those states where it remains a viable means of mobilization. In the long-run, I think the fate of Nation-States in general (beyond those obvious constructs of colonial cartography that seem destined to fail) depends on how humanity reacts to peaking energy supplies. If people re-localize, return to primary loyalties, while simultaneously migrate and establish global networks, then the Nation-State as a construct is finished. To some extent (and this has been fairly leveled at me as a criticism elsewhere), I see this as the prefered outcome in a post-peak world and therefore I am most likely guilty of confirmation bias in looking for why the Nation-State will fail. The alternative--which I see as much worse--seems to be the kind of resurgent nationalism, increased authoritarianism and oppression, and renewed conflicts to secure our "rightful" share of a shrinking pie. That path might keep some Natio-States intact, but I think it's far worse for humanity in general...

Once economic growth gets going again, I wouldn't be surprised if Mexico isn't viewed as the main culprit for high oil prices. I would definitely like to see a good analysis if some of these fields. Cantarell is down from 2.4 million to 700,000. Where is this expected to level out? Ku-Maloob-Zap now produces more than Cantarell, about 800,000 per day. But Ku-Maloob-Zap is a much smaller field than Cantarell and they injected nitrogen from the very beginning so I think they are really maxing it out and it might have a pretty short life span. Chicontepec is the focus of a huge spending project (I think 30 billion over the next 20 years), but I'm not sure if the numbers they are expecting from this field aren't greatly exagerated. It is a much more difficult situation than Cantarell or Ku-Maloob-Zap. The easy oil is going fast. At the least, the costs at Chicontepec will be much higher than at the other fields, even if they do end up getting the amount of oil they are projecting. Revenues could really be hit at some point and Mexico will be in big trouble.


I'd like to see a detailed analysis of this as well--PEMEX keeps a lot of critical information under wraps, though. My understanding is that projects like KMZ present much higher capex costs and are more expensive in terms of marginal production. As a result, the future prospects seem to largely depend on Mexico's ability to present the facade of a stable, attractive investment environment to fund these projects. See my comment to Nate above about these issues...

Jeff, great topic and in line with something that has been rattling around in my head for some time.

After reading (and learning) a great deal on TOD, there is little consensus on the nature of collapse, but wrt petroleum collapse I see some very worrying trends as I study in more detail.

- The general depletion curve (Hubbert) is very instructive and worrying.
- The ELM gives a much clearer picture in terms of true oil availability and is even more worrying.

Now, with the financial mess, a number of factors come into play:

- During the recession, I assume a disproportionate amount of the cheapest marginal cost oil is being shipped, diminishing our core. i.e. cheap, supplies.
- E & D is severely reduced due to lack of financing, eliminating much of the replacement supply, with a long recovery lag.
- Oil that has a marginal cost above present prices is still being shipped due to hedging, but as you state, this will expire soon.
- The ability to produce and enhance existing reserves is reduced.

As the recession continues, (two years, three years) the above factors will continue and perhaps deepen.

As various countries go from net producers to net consumers, the distribution dynamics will change. Obviously, Mexico is a prime example as it will shift from exporting a significant amount of oil, to becoming yet another country competing for external sources. Do tankers coming up from SA stop at Houston or do they go to Dos Bocas?

This probably means that once the economy recovers, we will not be able to just pick up where we left off, because the fundamentals will have changed. It looks to me like we will see a "brick wall" scenario determined by reduced production and proportionately higher marginal costs.

I am not asserting anything here, and all of the above is well know to most TODers. It's just my attempt to summarize and hopefully promote discussion. That said, lately I have been thinking that some sort of rapid energy collapse is more likely than I previously thought. For an extra Doomer shot :-), fields like Ghawar and Bergen are truly wild cards due to limited real data.

If I have a point, it is that the analysis you mention is desperately needed, not just for Mexico but for the whole system. Sort of an ELM on steroids which not only looks at production capability of each region, but the associated production costs, in the same way that coal energy supplies factor the quality of various deposits. I have yet to see anything substantive written on the game of nasty musical chairs that will be played out on the downside of the curve.

Excellent summary. The elephant in the room is future demand. If demand falls rapidly then other problems will force oil into the background maybe for decades.

However all my research indicates that after the initial contraction that demand tends to flatten then slowly rise if population is expanding at the minimum it tends to a constant per capita. A review of VMT in the rust belt states shows that oil usage shows this.

Further drops from our current level are possible but similar drops to what have happened are in my opinion improbable without at least returning to high oil prices.

But regardless without a clear picture of the demand side as our economy at the minimum stagnates its really hard to see whats going to happen.

As this post about Mexico points out the current prices are probably going to accelerate the fall of Mexico which is one of our large oil suppliers and next door neighbors regardless of their production capacity.

One aspect not mentioned would be the onslaught of Somalia like pirates operating out of Mexico in the gulf.
It would not be hard for them to interfere with the oil trade. Also of course Mexican drug cartels could readily become politicized like whats happened in Columbia with drug trafficking taken over by groups with political agendas.

The key point is that most factors on the supply side point to even faster drops in the future and at least as far as I can tell having researched the topic demand changes should become increasing smaller overtime.

Thanks memmel,

The key point is that most factors on the supply side point to even faster drops in the future and at least as far as I can tell having researched the topic demand changes should become increasing smaller overtime.

Well said! That is the crux of the problem. Is the slope of depletion steeper than the slope of demand reduction? I call it "bumping our heads on the curve". Some countries will bump their heads much sooner, and more often, than others for many reasons that have already been discussed here. Ultimately, I think depletion must win. Timing is the only question.

But regardless without a clear picture of the demand side as our economy at the minimum stagnates its really hard to see whats going to happen.

I agree, but IMO, that is just a short-term question. IOW, is there one more bounce left in the world economy, or is it one great sleigh ride down to a new level? I found it interesting that, from yesterday's DB, Iran is experiencing 26% inflation, IIRC, and they are an exporter. I think politics and ideology will play a huge role, not necessarily for the better.

Ironically, the countries that have been the most profligate, have the most elasticity. This means that the disruptions (collapses?) will not be uniform, and the effects will manifest themselves in unpredictable ways. As Leanan said, PO may never be realized, or at least acknowledged because other forces will overwhelm the situation and take centre stage. Our oversized and growing population assures that.


Ironically, the countries that have been the most profligate, have the most elasticity. This means that the disruptions (collapses?) will not be uniform, and the effects will manifest themselves in unpredictable ways. As Leanan said, PO may never be realized, or at least acknowledged because other forces will overwhelm the situation and take centre stage. Our oversized and growing population assures that.

This is a very important point. For the US at least and probably most of Europe housing prices are so inflated that we can allow them to drift down for years as long as they fall faster than wages you open up a lot of excess cash flow.

More than enough to cover rising fuel and food costs I might add except of course at the bottom of the pyramid.

So for the US I see the lowest paid workers crushed into real poverty close to third world and for the rest primarly a reduction in money spend on housing and automobiles.

Only when housing prices are finally reduced to the point that further reduction results in no significant gain will we finally be forced to deal with rising fuel costs.

For example in large parts of california housing prices have dropped enough that your talking about 1000-2000 less a month vs the peak yes the peak was insane and the current prices are insane but the point is for most people the cashflow is now there to more than cover higher oil prices and higher food prices.
Certainly people that bought at the peak are being foreclosed on but for many this means moving from a 4,000 a month payment to say 1000-2000 if they are renting. This trick works until houses start dropping below 150-100k at that point the monthly savings from further drops is a lot less. Basically all of us can convert either the equity or the debt in our existing housing stock into cashflow to cover rising fuel and food costs. We are effectively able to spend the equity thats getting wiped out via lower housing costs. Even renters such as myself are now benefiting from the housing bust I'll soon be lowering my rent by almost 800 a month moving to a larger and cheaper rental.

I figure this can go on for 2-3 years before the effective conversion of debt payments on mortgages no longer provides a cushion. The same effectively goes for cars as more people move to purchase second hand and new car prices are forced lower. Across the board the ability to pay short term expenses is actually rising. Thus both debt defaults and refusal to take on debt or taking on less debt increase cash flow.

Some of this cash will of course be spent on other things besides gas and food so outside of real estate both residential and commercial and autos I actually would not be surprised in the least to see the cheaper retailers and basically anyone that sells reasonably useful stuff thats generally under 100 dollars perk up and do OK.

Bottom line we can afford to spend a lot more on monthly expenses then we could at the start of the year. Cheaper gas for now also helps.

Demand could even grow weakly esp this summer as people choose local trips instead of flying. I think a lot of people will be surprised.

Eventually of course I think we will lock into a situation that housing prices will continue to fall and oil prices and food prices will increase. And as I said at some point you simply won't have anything left to take out of housing.

When ?

Pretty much now I think the trend of falling home prices is well established and I think that oil seems to have found its bottom we simply need to watch demand for oil over the next several months. If it remains flat to slowly rising then oil prices will begin to rise and this will cause people to continually reassess their ability to purchase a house ensuring the housing market remains slow. On the unemployment/wages side I think what we will see over at least this year is that unemployment remains in the range of 10-15% and persistently high but not going much higher with wages slowly falling. Some people of course will take big cuts few will get pay increases but my best guess is we will see wages fall on average fairly slowly say 1-3%.

A bigger driver of falling wages is I think a lot of companies will force early retirement on the baby boomer generation this will happen as they stabilize but I think you will see a lot of older workers forced into retirement and if they are replaced replaced with less experienced and cheaper younger people.

This is for two reasons first because many pension funds will be blowing up and a easy way to cut longer term costs is to give a cheaper retirement package and it will help the short term cash flow to cover the blowing up pension fund.
In any case average wages should drop substantially from this forced early retirement. This will generally add and additional burden on the housing market as people forced to retire decide to sell the housing and move to cheaper housing to shore up their retirement funds. Thus I think we will see many boomers forced into selling earlier then they planned to come up with a workable fixed income living arrangement on a reduced pension.

I'd not be surprised in the least to see many moving into the rustbelt cities even Detroit despite the cold could well become a refugee area for early retirees. Many will be forced to choose trailers in retirement parks for example.

The theme is that we can and will convert our current leverage of inflated housing prices and even pension debt into better short term cash flow positions. This is why this Depression is different from our last one in the last one it went quickly into a cash flow issue while this time around we have a lot more debt that can be defaulted on to stave off when people finally don't have enough cash to live day to day even with no debt.

For a lot of California for example give even the current housing prices most people would have to see gasoline raise to north of 6 dollars a gallon or more to match the cash flow at the height of the bubble if you had bought a house.

To bring this slightly back on topic it does mean that overall demand for drugs in the US probably won't decline in the near future as the cash for recreational drug use has not dried up. This implies that the Mexican drug gangs will continue to be funded for the short term at least. We may even see drug use in the US increase over the coming months along with alcohol.

As the downside of nitrogen injection in the Cantarell field becomes apparent, it is difficult to see the nitrogen injection ramp up in he KMZ field having any medium or long range benefits to the Mexican economy. As Cantarell has fallen from 905 million barrels in 2004 to 430 million barrels in 2008, the decline in the next two years is very clear. Even Pemex has recently predicted 255.5 million barrels in 09. Propping up oil production with nitrogen injection leads to a cataclysmic decline in only a few years as the experience of the Cantarell field shows.
One only has to "follow the Money" to see who benefits from this "drive over the cliff policy".

I think this is a timing issue. If you accept my hypothesis that Mexico needs a financial rescue by 2010 to continue to hold off the drug cartels, then:

- Can a crash N2 injection program at KMZ realize incrased production by mid-2010 at the latest? If not, then the cost associated may, from the perspective of the Mexican state, be better spend today in a last-ditch attempt to cripple the cartels or somehow fundamentally "change the game."

- Can Mexico use debt or equity to finance this crash-program such that it doesn't impact their near-term cash-flow (a function of their ability to maintain the stability facade necessary to attract investment)? If so, then they may try this, even if it has disasterous long-term effects: this cost is worth the short-term bump in revenue (assuming that's a possible outcome).

- From a net-exports perspective, collapse in mexico may actually decrase domestic consumption as the stable environment necessary for the operation of global industry fades away. Unknown whether this would present a short-term plus or minus to federal revenues (though the long-term is certainly negative)...

Jeff: I agree with your comments about Mexico but IMO China is a separate case entirely. Mexico's long and unbroken history of widespread corruption blurs the line between state power and criminal organization. China's government is brutal, but it appears that the Chinese government is motivated to increase the economic well being of the country-China has a "first world" mentality. Mexico has always had a firm 3rd world mentality in which individuals plunder the country for personal benefit using the power of the state. Unfortunately, as MexAmerica emerges this pattern is more prevalent north of the border also.

There are huge differences between Mexico and China, to be sure. However, I'm not sure that China is in that different of a boat from Mexico when it comes to collapse. Pre-WWII Chinese history amounts to several centuries of feudal factionalism, corruption, and crimnal networks that put Mexico to shame. Recently (post-WWII), a united and oppressive central government has been able to maintain control. However, several trends suggest that this won't last long:

1) the once isolated Chinese peasantry was cut off from effectively communicating and organizing--something that is increasingly changing with the internet, the modern migration of workers to the cities, the rise of organizations like Falun Gong, etc.;

2) the "arms/armor" progression between the ability of the state to control the populace and the ability of the populace to undermine the state is rapidly shifting in favor of the populace (see, e.g. John Robb's blog, the open-source insurgencies in Iraq, Afghanistan, Pakistan, Nigeria, etc. Especially by targeting China's increasing dependence on energy and communications infrastructure, I think the peasantry will soon be able to mount an effective challence to the Communist Party if they're sufficiently motivated;

3) the motivation is coming. The constitutional foundation of the Chinese state is essentially this: you cede your freedoms to us, and we'll continually improve your standard of living. This worked while China was growing at 9% a year, but its ongoing viability is largely dependent on the resiliency of the Chinese economy. We'll have to wait and see how this plays out, but my guess is that we're about to see some earth-shaking upheaval starting in the Chinese countryside. If they can figure out an effective infrastructure targeting strategy, the Chinese state is in serious danger.

) the once isolated Chinese peasantry was cut off from effectively communicating and organizing--something that is increasingly changing with the internet, the modern migration of workers to the cities, the rise of organizations like Falun Gong, etc.;

Does the Chinese govt. maintain final central control over all its internal communcations infrastructure? The shutting down of easy communication would certainly indicate things were not going well.

The 'empoorer' of Nepal shut off his nations cell phone networks a few years ago to try and squelch the opposition's communications. How has that played out for him? I haven't heard lately.

The ex-king of Nepal now lives in exile. His palace is a museum. The Moaist fighters are power sharing with other republicans. The country is still chronically short of oil, which it cannot afford to buy.

I agree with your comments on China.Their history,going back many hundreds,even thousands of years,does not suggest an innate stability.In addition to the problems you cite the killer is environmental degradation on a massive scale combined with an equally massive population overshoot.I doubt if China has a hope of feeding itself in the near future.This is why they are trying to lock in food supplies(as well as other resources) from countries in Africa and Asia,as well as Australia.This will inevitably meet resistance - just another form of colonialism.

Here in Australia there has been a lot of BS from government,business and the MSM as to how China will be the saviour of our resource export dependent economy.That BS seems to have abated a little of late.Notwithstanding our Chinese speaking and two faced Prime Minister.

I agree.

Jeff paints a picture of some chiliastic battle between the drug capos and the government. It doesn't work that way. They're connected at the hip through bribes and what we in the U.S. would call "regulatory capture." It's sort of an internicine battle. The drug capos are not unlike bankers in the U.S. They think they have enough politicians bought off so that they can do any damned thing they want. But there are limits for those who operate from very small and rapidly deteriorating politcal bases, as bankers in the U.S. and drug capos in Mexico may soon find out.

China has arguably a longer history than Mexico, but an unbroken vein of corruption runs through it, as it runs through any imaginable history.

All human history is rife with stories of corruption; before the empire, romans bought elections; the american colonies were built on indentured labor: slavery was applicable to any color in the beginning. The emerging states of the european middle ages were little more than glorified maffia empires - family was everything. A giant protection racket, run by a few families.

In some form or another it is still going on everywhere. Quite a few european countries have effectively hereditary parliamentary representation. Political families produce politicians, generation upon generation. Some are aristocratic dynasties, some bourgeois, some are socialist (as an affiliation, not as a philosophy any more).

Don't kid yourself. We're all human.

The oil crisis is easily explained by common sense. (Q. How much oil is left in Pennsylvania, where John D. Rockefeller made his money, until Standard Oil got broken up [and incidentally saved the wales.] A. None worth speaking of.)

Oil pricing and volatility in easily explained in a YouTube video. [ ]

What's happening in Mexico is that criminal enterprises taking advantage of the sort-sightedness of the people in an area to extract some profit in a "race to the bottom," like politicians in Zimbabwe.

Try to buy drugs, or anything else, with Zimbabwean dollars... They're essentially worthless.

Even the most demented and violent drug cartel knows that its is entirely dependent on their NOT winning. If they DO win, they win a Zimbabwe.

They can be dismissed from the conversation because they are not representative of any kind of socially responsible movement. They do not deserve anything but their inevitable descent into self-interested barbarism.

Rather much like the drug-lords of Afghanistan who got their butts kicked by the Taliban (who were demanding indignantly that the other Muslim nations for establishing a Caliphate, [shortly before the US and UN troops went and bombed the rubble they had made of the country.]) Now the Taliban have since gone into the drug trade themselves.

What does the "Amero" bring to the table?

While it does bring a single currency to the Americas, regardless of how fractured it might become, its a red herring.

The US dollar has become a debt instrument for at least the next generation.

People will live and die to insure its stability.

I agree that the cartels don't want to "win" in the sense that they don't want to replace the current state. What I do think they want is (as detailed in my response to Nate above) to force the Nation-State to re-cast itself as a limited Market-State that leaves the general infrastructure in place for the cartels to operate.

Also, the game in Mexico is somewhat unique: even if Mexico collapsed into complete chaos, the cartels coudld still profit (this may even optimize profit). A chaotic Mexico still shares a border with a largely coherent United States--it would act as a kind of "black-market free trade zone" in a symbiotic relationship with the US in drugs, and everything else the US tries to control.

I agree in general that the Amero is a red-herring. I don't think we'll see a unification of currency, and I regard most of the NAU discussion as conspiracy fantasy, but to one extent I think it's on target: it highlights the need to continue to integrate high-level markets across borders to better facilitate the transition to the Market-State. American elite, Mexican elite, and Mexican cartels all benefit from this process, so I think it's reasonable to see it moving forward, perhaps even at an accellerate pace in response to the current crisis.

What I do think they want is (as detailed in my response to Nate above) to force the Nation-State to re-cast itself as a limited Market-State that leaves the general infrastructure in place for the cartels to operate.

Do you have any evidence to support that assertion?

As far as I know, the Mexican narcos have not made any move whatsoever to engage in any activities other than drug smuggling, kidnap and human trafficing. I have heard of no attack by the narcos on any Mexican infrastructure, nor of their asking for any money to not attack infrastructure.

There was an attack on oil and gas infrastructure back in September of 2007, but that was carried out by the Ejercito Popular Revolucionario (EPR), a Marxist group:

I have heard of no alliance in Mexico between the narcos and any left-wing Marxist or right-wing paramilitary group. Sure, such alliances are well known in Colombia. But in Mexico?

No, I have no evidence that they have or plan to target infrastructure--if by infrastructure we're talking about energy infrastructure. Right now, I think they just want hands-off from the government to run exactly the operations that you detailed. As long as that is the most profitable choice, I think it will continue. I don't honestly think they've thought far enough ahead to envision and evaluate alternate end-games, to consciously plan what portion of the state they want to remain intact to best facilitate their own operations, but that's also just a hunch. However, it could make sense at some point in the future to play a kind of protection racket--protection is usually far less profitable than drugs for criminal organizations dealing with neighborhood businesses, but the potential when you're dealing with 1+ mbpd of oil production, or the ability to transport cheap food or manufactured goods to US border crossings... this kind of protection would hinge on the demonstrated ability to disrupt energy or transportation infrastructures, but it's purely speculation.

Similarly, the cartels could decide that they need to undermine the federal government's financial viability, either to sap their strength to crack down on the cartels, or as a negotiating point for freedom of operations--then a series of EPR-style pipeline attack would be very effective (huge ROI). While I think this could be a tactically sound choice, I also have no evidence that it is being planned. Still, evaluating potential courses of action for effectiveness is one approach to prediction...

I have heard of no attack by the narcos on any Mexican infrastructure

Perhaps not physical infrastructure... One of the core attributes of a nation-state is that it reserves to itself alone the legal use of violence within its borders. The police force is the mechanism for enforcing that, and as such it is part of the infrastructure of the state.

Threats to kill one police officer every 48 hours constitute an attack on infrastructure from this point of view.

Social infrastructure is probably as important as physical infrastructure in the medium term. (Haven't thought too deeply about comparisons.)

I think Jeff got it right when he said: "Right now, I think they just want hands-off from the government to run exactly the operations(drugs, kidnapping and human trafficking) that you detailed."

I've heard of no Mexican drug capo expressing any political ambition other than this pragmatic, money-making goal.

This is very different from the lofty political ambitons expressed by leaders of the left-wing FARC or right-wing Auc in Colombia, who are also heavy into drug trafficing. These groups justify their involvement in drugs as a necessary means to finance their continued fight "for the people."

But like I say I've heard none of that in Mexico. Thus far the criminal elements have articulated no political agenda. For them it's all business. That's not to say it wouldn't be a bad idea for them to hire some think-tank like the Heritage Foundation or the American Enterprise Institute to make their case for them.

This post and the paper on nation-states represent entirely new ideas to me. I want to thank Jeff Vail and the Oil Drum for introducing these - I really appreciate the education. In general, this makes a great deal of sense to me. I come from several generations of globe-trotters and my family therefore has had a somewhat different view of nationalism for its own sake.

Drug cartels may not be a socially responsible movement, but in Mexico as elsewhere, the way to get rich at this point in history is not to play the game within the nation-state. In fact, enormous numbers of people have been immigrating illegally to the US, actually risking their lives, facing alienation and discrimination in an inescapable drive to avoid economic disaster for their families in Mexico. In turn, TPTB in the US have (I believe) counted the beans and concluded that Mexican illegal immigration was a net benefit to the US as well. So separating the two nation-states with an impermeable barrier in fact benefits perhaps no one (low income White Americans also benefit from lower food prices).

Also, as Mexico collapses, this affects US food security, especially in view of the drought in California. This may be a boon to the food localization movement, itself a movement that belongs (along with international terrorism, but oh, well...) in the category that does not support the hierarchical concentration of power that defines the nation-state.

Thanks for a fascinating look at a useful way to interpret the trends around us.

Pas de touché: Mexico is no failed state, but it needs aid | Viewpoints, Outlook | - Houston Chronicle

Unfortunately, talk of Mexico in the United States these days has turned increasingly to a debate over our neighbor’s viability as a nation. By doing so we are fueling a perception that is neither accurate nor constructive.

Failed states do not have functioning executive, legislative and judicial branches. They do not boast the world’s 12th largest economy, nor do they trade with the United States at a pace of more than $1 billion a day. And, failed states do not demonstrate — as President Felipe Calderon has done — the political will to take on the transnational cartels that threaten the region’s security and the courage to sustain that fight until victory is secured.

President Barack Obama should prioritize the U.S.-Mexico relationship and place a premium on bolstering our already strong partnership with the Mexican government and its people.

I'm on the Legalize It bandwagon as well. Would be a buckshot of BBs for a whole flock of problems, but dimrods like this pundit of course would be right on the picket screaming about socially subsidized junkies.

I agree with you about the legalization issue, but the chances of that complete policy reversal seem about as likely as the establishment agreeing with me that hierarchal organization in the first place needs to be reconsidered!

As for the quoted pundit--it's a good indication that he doesn't have a clue what he's talking about when he refers to the viability of the Mexican NATION. It's the STATE that is under threat--the Mexican Nation is a fantasy to the extent that it envisions a monolithic, unified people contained within a single political boundary. I realize I'm stating the obvious, but...

I recall the Iran-Contra controversy and the cross currents of illegal drug trade, illegal arms trade, and supposedly legitimate government activities back then.

Some of the same players have been active and even in key roles in US government since then, have they not? As well as buddies along the way.

How is the drug trade intertwined with supposedly legitimate government and banking and finance?

I think that it is obvious that the "War on Drugs" is, like the "War on Terror" simply a cover to beat poor people into submission while making plenty of money and expanding the power of the elites.

The weapons trade is booming, with weapons sold to supposedly legitimate police and militaries, but also plenty sold to arm extra-legal and illegal paramilitaries as well.

Blackwater just changed their name I believe, but are opening a training facility in California not too far from the US-Mexican border. I imagine huge sums of tax money will flow to this private paramilitary group to do some brutal enforcement, but clearly not to stop the drug trade, or to stop the flow of human trafficking and prostitution along the border.

Large and powerful paramilitaries are quasi-private, quasi-governmental, and so will enjoy the "monopoly on violence" of government as a cover for defending the interests of the elites who direct our tax dollars to fund them.

Rich bankers and politicians will continue to profit from the trade in drugs and weapons, and will continue to use drugs with impunity.

The only time someone is prosecuted for war crimes or drug crimes is when it benefits the elites. Poor people are kept beneath the jackboot of terrorist police, military, and paramilitaries, and any political or business leader who steps out of line can be brought down quickly -- remember Elliot Spitzer?

Spitzer was "outed" as a guy who visited prostitutes -- and did so quite often, by the way -- because he was going after some people on Wall Street. Had he played the game quietly, he would still be paying prostitutes and posturing as an upright, moral leader.

My point is this: corruption is not at all endemic to Mexico or other countries or cultures. Our government and business culture here in the USA is riddled with corruption through and through.

Evil is so diffuse in our culture that there is no way to point fingers or separate it out. We will falter because we do not have the courage to face our own individual and collective evil, especially the addictions that really fuel our drive to make more weapons and kill more people. That seems to be the ultimate addiction.

"Killer Apes" use the big, developed brain to carry out the impulses of the tiny lizard brain.

That is what we do.

One wonders if there is a way out of this.

I keep hoping that we will evolve or transform through the process of this crisis.

It is essentially a religious or spiritual or irrational hope.

Meanwhile we humans spend more on drugs and weapons every day when we need to marshall all of our resources to heal our habitat, which we have mortally wounded.


enormous numbers of people have been immigrating illegally to the US, actually risking their lives, facing alienation and discrimination in an inescapable drive to avoid economic disaster for their families in Mexico.

I recall a survey which found that most illegal Mexican immigrants to the USA had jobs in Mexico, but saw an opportunity to reap a windfall.  A great many of these illegals abandon wives and children in Mexico and start new families in the USA (so much for "Mexican family values").

TPTB in the US have (I believe) counted the beans and concluded that Mexican illegal immigration was a net benefit to the US as well.

TBTB have concluded that illegal immigration is a net benefit to them.  TPTB have been assisted by ethnic pressure groups.  Voters have voted to throw the illegals out whenever they get the chance, and are wildly supportive of local officials who do something about the problem (e.g. Joe Arpiao in Phoenix).

Economists have found that the economic surplus generated by illegal immigrants is entirely consumed by the immigrants themselves.  Research found that the average non-immigrant family in California pays over $1000/year for social services and other costs of illegals (this was a few years ago so the total is probably higher now); the illegals consume more services than they pay in taxes (some $1.3 million lifetime per family), and the only net benefits are captured by employers as lower wage costs.  I found another study which found that the costs of illegal immigrants in California are roughly equal to the California state deficit.  Conclusion:  round up and deport the illegals, and the deficit disappears.

Since this is an energy blog, I should note here that one of the things that illegals buy with their financial windfalls is energy, a great deal of it in the form of oil.  If they are deported, their energy consumption will go down.  This is one way to take some pressure off world oil supplies and buy a little more breathing room.

Thoughts from an old guy.

Something not mentioned here or very much in MSM. Interesting thing about drug cartels ... they need consumers.


Further it is not the average middle income people with a $500/day habit, IMHO it must be the same people that have ruined our economy, i.e. the rich eliet that need CDSs to maintain their habits (whatever they are). Of course this is a generalization but true none the less.

Three options not discussed much. Really make it illegal with thousands (millions?) of convictions and camps in the desert to hold all the addicts or leagalize it and tax the hell out of it. The third option is to piss and moan about it and continue drug BAU which is the option the US has adopted.

Which part about THERE IS TOO MUCH MONEY IN IT TO LEGALIZE IT do people not understand?

See above. We actually agree with this position, but we can try can't we?

However, I am encouraged to see the truth of the matter is obvious to many. There's hope in that.

I had a similar question: Who is buying this much drugs, and where does the money come from? It's not teenagers experimenting with X and pot, with a very small fraction doing harder drugs.

It can't be average middle-class middle-age family people, because that's my circle and I don't know anybody who does hard drugs at all, or even does pot any more.

If it's poor people, then the money has to be welfare-supplied, and that is likely to drop some as people increasingly need welfare for survival, and as the system becomes overloaded with the newly non-working once unemployment runs out.

That leaves the wealthy -- do movie stars and investment bankers really do that much coke? Do the media lefties and investment righties get together with the enforcement agencies and agree that drugs for rich people are somehow OK?

Or is relatively low-rate recreation use, say a few grand per year, for a relatively small fraction of the populace -- say 20% -- enough to create the highly complex drug business?

300M x 25% is 75M....x $2000 per head is "only" $ that enough to compromise the gov't of multiple nations and infiltrate and coerce militaries and police all along the path?

I strongly suspect drug revenues will decrease as the economy slows, but unfortunately there will be many more willing hands trying to make a few bucks on the sly, and probably drugs will simplly get less expensive along with other non-essential products as deflation digs in.

A lot of it is middle class people. There is one per extended family with money coming from others in the family. Some is poor people and the money comes from middle/upper class people paying for sex.

Sorry, but you mised the 4th (extreme) option. The 4th option is to remove the market by decimating demand. If 30 million recreational and hard core drug users are causing the problems with narcotrafficcing then stop them without the expenses of gaols, judges, cops etc.How? by destoying almost all demand overnight by contaminating the drug supply. Contaminate intercepted drug shipments and spray drug crops with some nasties. Perhaps as a warning shot use a chemical that causes diaohhrea, a million recreational users would sh*t themselves for a week and get the message. Then go for hot shots for the remaining hard core.
Result? most demand destroyed which stops the drug dealers, stops junkies need to rob to buy drugs and shrinks the use of dope to grow your own types (and they are not a threat to anyone in society but the moralizers).
A side benefit is that the loss of the drug trade would also destroy a large chunk of corruption in the same way as legalization and corporations that run the prisons would lose their meal-tickets,

I agree that arbitrarily murdering a relatively large % of your citizens would be evidence of decreasing government corruption-while you are at it you could consider wiping out all these bloggers criticizing the honest efforts of the establishment to right the hard working financial elite.

Further to my post is this story [ ] which details how the dollar is still an extremely desired currency and how the Chinese are still buying staggering amounts of it.

That last part is particularly worrisome.

The Chinese will hold the debt for decades and our currency will become a traded specie, traded by everybody else but us.

It may be that everybody will be holding some but us.

We'll hold the debt and have to pay it back at the same dollar value which guarantees the Chinese with leverage to use on all of our potential oil suppliers.

If the dollar has little utility to us, why would we pay it back?

Default, either directly through reneging on debt or indirectly through inflation, seems to be exceedingly likely. How else can this game end?

An interesting preview of coming attractions from 1912 Vienna...

Another relevant read would be the book "The nine nations of North America" by Joel Garreau (of Sorel, QC) an editor of the washington post.

It was written some years back, but its' time has come...

For those awaiting juvenile distractions such as " American Victory in Afghanistan" one might keep in mind that Afghanistan has been around for at least four thousand six hundred years, as has China...

A parting comment on "The Drug Cartels":
Created solely by corrupt and criminal governments and "legislators" to enrich the few who now press to keep the drug business criminal. (No money for us "legislators" if we make everything available for a dollar a kilo at a government store, is there?) Besides, if we were to attempt to legalize it all and pull the rug from under the cash machine the "cartels" depend on, we'd be executed, wouldn't we?

The rest of us might view this outcome as the best of all possible worlds

BrianT and snowbird: You are spot-on wrt to there being too much profit (for politicians as well as criminals) in the drug trade to legalize it. And the yammering self-appointed guardians of morality will keep voting the same criminal legislators in...most of the joe lunch bucket holier-than-thou moralizers have no clue, and will never be convinced, that their moral outrage and control freak tendencies are a fundamental part of keeping the current drug trade paradigm alive and well.

Glen Frey nailed it with his song many moons ago:

One last, I can't resist since I was in the military:

We sure do turn a blind eye when we have other fish to fry...One of many, many examples is our 'working with' the Opium Lords in Afghanistan to achieve whatever our objectives over there might be. Can anyone tell me what our objectives in the Iraq and the 'Stan are? Anyone, Bueler?

Errr...didn't the Taliban just about eliminate the opium production in the 2000/2001 growing season? And shortly thereafter TPTB saw fit to send our military into harm's way, ostensibly to find some boogy-man hiding in a cave somewhere, but no boogy-man was ever found. But opium production has increased in Afghanistan.

Nope, can't figure it out. Teh cognitive dissonance would make my hed asplode.

I don't want to go too far down this path and distract the better part of the discussion, but its worth saying. What about the CIA as the largest cocaine importer into the US during 80's and early 90's? Conspiracy theory? Well, I thought it might be but I put it by my "person of direct contact" (I don't what to get him/her in trouble). He has been working in federal law enforcement all his life. He said, "That's the worst kept secret in Washington. The CIA had the largest air fleet running between Columbia and the US." He then went on to tell me about a past DEA colleague in Miami that got onto "something really big" and ended up washing up on the beach a few days later as a result of a fishing accident.

The problem is so bad for people working inside the system that he and his wife are looking for a quiet ex-pat retirement location in hopes they will leave him alone and let him die in his sleep. Sad commentary from a two-tour Vietnam special forces vet.

So it all comes back to the corruption and money, I don't think any us are immune and its my best excuse for not having much. I really hope the best for Mexico because I like the place and the people. Then there is the oft repeated issue of decreased oil imports to the US, and will the GOM become a semi-militarized zone? Will Blackwater open a new business unit specializing in open water rig protection?

CIA Awkwardly Debriefs Obama On Creation Of Crack Cocaine

WASHINGTON—In his first meeting with President Barack Obama, CIA crime and counternarcotics analyst Timothy R. McIntire haltingly explained to the nation's first African-American commander in chief the highly classified origin of crack cocaine and the resultant epidemic that swept across U.S. inner cities. "Well, you see, sir...thing is, we needed money to help those Contras back in '85, and we never really we distributed it, and...shortsighted...and, ha, well, Christ—is it hot in here?" McIntire said between exaggerated coughs. "Yikes, okay. See, it was a very tense time—not that that makes it right—and, uh, bottom line is, we're a different agency now."

McIntire went on to disclose several other secret CIA operations, including the assassination of President John F. Kennedy in 1963 and the recruitment, four years earlier, of a Kenyan grad student for a clandestine program at the University of Hawaii.

In the spirit of Thom Friedmann's editorial.

For those tiring of the endless USA pharma promotion TV commercials

Has the USG repealed the obviously discriminatory differences in sentencing between traditional powder (rich white kids) cocaine and poor urban dweller's crack cocaine? I thought I heard a while ago that the sentencing disparity (about 100-1 in terms of weight possessed) was going to be normalized...did it break toward power, toward crack severity, or stay the same?

This "rumour" of CIA involvement in drug trafficking is not new.Mike Ruppert in "Crossing The Rubicon",put some emphasis on it and many others I'm sure.

Oh,what tangled webs we weave once empire becomes the motivator.

Maybe it's time we all stayed at home and minded our own business.
There sure is plenty of it to mind.

The problem is so bad for people working inside the system that he and his wife are looking for a quiet ex-pat retirement location in hopes they will leave him alone and let him die in his sleep. - BC_EE

They will leave him alone if he goes away and minds his own business henceforth. That is the real deal and he would be well advised to take it.

Good question,MoonWatcher and one I have been increasingly asking myself.
If it is about defeating terrorism then it has failed.
If it is about defeating the Taliban then it has failed.

And not likely to succeed.Maybe Obama can do a Nixon/Kissinger and get peace with honor.Remember Vietnamization? Just another word for defeat.
But,what the hell,it got us to hell out of where we should not have been.BTW,I am a Vietnam veteran.

Sigh...I must say (again) that I don't like it very much when TOD ventures into this kind of territory. I think it dilutes TOD's utility as a energy focused blog with a relatively "robust" approach, i.e. a lot of data and a generally scientific attitude. It also doesn't help matters to have a country-specific commentary by someone who, AFAIK, isn't an expert on the country. (By that I mean not someone who spends the bulk of his time studying the country or it's region, or who studies the country according to wide variety of aspects. AFAIK.) And, finally, TOD seems to have a tendency to favor a kind-of military/security/intelligence approach to these issues. There are other points of view. Let them all have their own blogs, I say.

Jeff, I think your article would seem less hyperbolic if you made some distinctions between different kinds of collapsed. Somalia, the USSR, and Argentina all "collapsed" in the last two decades, but in very different ways. Moreover, I think it would be more honest to separate, somewhat, your prognostication on Mexico (or any other country) from your theory on nation-states. Use Mexico's situation to argue for your nation-state collapse thesis, if you like. You've kind of done it the other way around, and I don't find it very convincing.

That's my most polite response, resisting the temptation to ridicule a few things here and there (in both the post and the comments). Plus I have somewhere to go right now.

You will be sadly missed.

It also doesn't help matters to have a country-specific commentary by someone who, AFAIK, isn't an expert on the country.

I have to concur.

As someone who has lived in Mexico for the past ten years and has read just about everything I could get my hands on about the country, including its history, cultural and political analysis as well as current events, I see Jeff's analysis as being dogmatic and lacking in scope.

When I read this post, I was immediately reminded of this:

In 1984, Presient Reagan's National Security Council expert on Latin America, Constatine Menges, told Casey that things in Mexico had gotten even worse. It was on the verge of chaos, if not revolution, he insisted. Mexico was strapped with a more than eighty-billion-dollar foreign debt, rampant corruption, and many other social problems. About the same time, an intelligence board that advises the president issued a top-secret report charging that the CIA wasn't paying enough attention to political instability in Mexico. This prompted Casey to order a CIA estimate of the Mexican situation. He picked his national intelligence officer for Latin America, John Horton, to head the project. Horton, who had been the CIA station chief in Mexico, picked another analyst, Brian Latell, to work up a draft report. Latell visited Mexico and wrote a report that listed the familiar items: urban and rural unrest, large foreign debt, enormous capital flight, and widespread corruption. Horton agreed with the facts in the draft but not with Latell's conclusions that Mexico was ripe to fall. Horton refashioned the report so that it concluded there was at best a 20 percent chance of a collapse of Mexico. A Horton footnote indicated that most U.S. intelligence didn't even support a number that high. Latell's mistake in making direr predictions, Horton told Casey, had been to assume that Mexicans would react the same way that Americans would to such conditions. Americans would revolt. Latell assumed Mexicans were about to do the same.

--Patrick Oster, The Mexicans

For the record, as I have stated repeatedly on TOD, the situation in Mexico is like a complicated machine with many moving, interlocking parts. Various outcomes are possible.

However, I see the most likely outcome being that Mexico goes the route of Colombia. In reaction to the anarchy, the country will become more authoritarian, perhaps even totalitarian. Many functions the police currently perform will fall to the military. And all this will happen with the blessing and full support of the United States government, if not its outright involvement. But I believe the chances that the state will collapse are not as great as what Jeff believes. This is not to say that the U.S. military doesn't have to prepare for that contengency. The acknowledgment that "black swan" events do occur and need to be planned for is the reason Taleb has such respect for military planners.

Let's be careful about promoting legalization without specifying which drugs we are talking about. None of these drugs are beneficial to people or society but some drugs are truly destructive and some less so. Both Cocaine and meth interfere with neurotransmitter function irreparably. Meth is truly terrible and decriminalizing meth would be a very bad idea.

Referring to a comment I made farther up:

Note I've been using "decriminalization" and not legalization. One stipulates a controlled distribution without fear of penal action, while the other denotes images of a drug frenzied free for all.

In Canada, we are careful to discriminate. From what I've seen about Meth, that is one drug that should be either wiped off the face of the earth, or produced very carefully in a controlled industrial environment. Not only is the drug ruinous, the environmental damage from its manufacture is highly toxic.

Some of the illegal drugs used modestly have healthy benefits. Cocaine is one of them, but even the great fictitious mind of Sherlock Holmes got addicted to it. However, trying to hide the problem under the rug denies the opportunity to deal with it. So far we haven't been dealing with it very well. I don't subscribe to the welfare-like or social hand holding methods either, but the dearth of pertinent education isn't helping either. The general attitude is that to educate is to promote, and this is just plain stupid.

Methamphetamines can be made in a home lab from pseudoephedrine. I'm told that there is no other way to produce speed or ice.

By its nature, pseudoepehedrine can only be produced very carefully in a very expensive and obvious industrial environment.

AFAIK it's usually used in cold & flu tablets, I don't know if it has much "serious" medical use other than this.

It's clearly a huge cash earner for the pharmacy companies but it seems a net loss to society.

If cocoa leaf is not dangerous, but illegal because it can be processed, should not pseudoepehedrine be illegal under the exact same logic? Bikie gangs cannot grow it or produce it themselves, at all.

Sadly though I cannot find my reference for this, which is most disappointing.

Methamphetamines can be made in a home lab from pseudoephedrine. I'm told that there is no other way to produce speed or ice.

By its nature, pseudoepehedrine can only be produced very carefully in a very expensive and obvious industrial environment.

AFAIK it's usually used in cold & flu tablets, I don't know if it has much "serious" medical use other than this.

It's clearly a huge cash earner for the pharmacy companies but it seems a net loss to society.

If cocoa leaf is not dangerous, but illegal because it can be processed, should not pseudoepehedrine be illegal under the exact same logic? Bikie gangs cannot grow it or produce it themselves, at all.

Sadly though I cannot find my reference for this, which is most disappointing.

I disagree that "None of these drugs are beneficial to people or society." Some are truly terrible, and most are generally without redeeming features, but in my opinion there is great promise for marijuana and many of the psychedellics (DMT, salvia, etc.). I don't see much benefit in the recreational sense, but in medicine, psychiatry, spirituality, and an understanding of consciousness, our current drug policies are extremely limiting.

A bit of a tangent, but not entirely...

More on a tangent: Why is "recreation" separated from "medicine ... spirituality, and an understanding of consciousness" in your mind? Look at the word, "re-creation." If I walk in the woods for recreation, or walk in the woods as medicine, or walk in the woods for spirituality, or walk in the woods to understand consciousness a little better - why can't these all be the same walk? The whole "it's okay if it's medicine" coupled with "it's not okay if it's recreation" seems to be saying it's okay if a drug makes you "normal," but not if it helps make you "better than normal."

Yet the whole point of a spiritual quest (and perhaps of understanding consciousness) is to become better than normal. Arguably we've got to do a bit of that soon, because normal's not cutting it very well, is it? Normal says work is virtue, play is vice. Normal says play is "mere recreation." This ignores everything psychology has learned about the essential role of play in consciousness, empathy and intelligence.

The suppression of drugs, isn't it because some large proportion of us is scared of consciousness, is scared that if we were all seeing more broadly we'd stop falling lockstep into implementing these crazy bubbles, and these crazy wars, that keep us all so occupied, so busy working and fighting, so distracted from anything that seems like play or joy?

Seriously, while I've had nothing stronger than beer for some years now, when we reach the tipping point where pot and psychedelics are legal (which we're within a decade of) we'll learn that drugs are not the problem, but a vital part of the answer. And there's no reason Mexico can't have a sane economy largely based on this.

Good point. I think I was off-base suggesting that "recreation" is necessarily without value. On further reflection, I think the state, religion, and mainstream society's fear of individualized access to spirituality leads to the easy dismissal of many of these pursuits under the banner of "recreation."

So,spirituality is one of the benefits of drug abuse?

If a person needs the assistance of a mind altering drug to access their spirituality then they are one sick puppy.

I am not knocking entirely the decriminalization argument but the benefits,if any,are social,not individual.

So,spirituality is one of the benefits of drug abuse?

Nice strawman thirra. You conflated drug use into drug abuse. This sort of semantic thaumaturgy is very common here but rarely overlooked.

You apparently have a rigid view of drug use, which is your own business, but in doing so, you ignore many cultures in which some form of drug is used as an intrinsic part of the spiritual process.

IMO, drug use is not a problem per se. It is the context in which the drugs are used that can cause problems, be they social, spiritual or individual.

Your tone hints of an aversion to the discussion of comparative religions, but if I'm wrong, let's hear it.

Or, at least please be honest in responding to others' comments.


Drug use,drug abuse? That is a matter of definition and it is not productive to get into it.
Personally,I would define drug abuse as the use of a potentially harmful substance to excess. This applies to prescription drugs as well.Others have different opinions.
Also personally,I enjoy a glass or three of wine in the evening after a meal.I can,and have done,given up even that little indulgence for extended periods of time.

Re religions,comparative or otherwise.IMO religions are a complete waste of time and effort at best and a great danger at worst - read some history of the West.

Religion is itself a drug in that it encourages it's adherants to ignore reality.Mind altering chemicals,legal or illegal,are in the same category.

I can't define spirituality,but I have found that some of my most satisfying and enlightening experiences have been when I have been in contact with the natural environment,what there is left of it.
I find that sobriety is conducive to this experience.

I was being honest in my initial response,as I am being honest now in response to you.I do not deliberately set up strawmen.

With respect - thirra


We are on the same page much more than I would have suspected. If there were a race to trash most religions, I'd put my money on me, although I suspect you would come in a close second ;-).

You say that Religion is a drug in itself. I agree, but I would further say that it uses drugs to achieve its goals. The clever part of it is that they don't even have to supply the drugs; they use well-proven methods to make the "faithful" produce their own drugs i.e. endorphins, to achieve their goals. Just last night I watched a documentary that shook me (REALLY). Go to Google Video and search "Jesus Camp". IMO that is nothing less than abuse.

I wholeheartedly agree that the natural environment is the best place for "getting there", wherever "there" is, but I contend that use of various substances can offset the Alice In Wonderland hell we have created. It is a question of balance and self-awareness.

You rightly separated religion from spirituality. Kudos, because they are as different as Hungry Jack's and food!

You have acquitted yourself from my charges well.

Of course my opinion doesn't mean jack $hit in the bigger picture, but I appreciate the honest and sincere response.

I welcome further posts from you.



Is spirituality potentially effectuated by drugs? Short answer: yes.

Does the decision to use mind-altering drugs to access spirituality make one a "sick puppy." Not in my opnion, but to each his own. I think the benefits would be primarily individual, with the natural side-effect social benefits.

As for the failings of religion--I wholeheartedly agree, but point out that religion = spirituality + hierarchy. Spirituality on its own, when accessed as determined by the individual, doesn't exhibit any of these flaws...

When I moved to Hawaii in '75, marijuana was a cottage industry and everyone knew someone who was growing. Other than the crime of growing it, there wasn't much other crime associated with it. Then they cracked down on it aggressively, and it became unsafe to hike the remote (and some not-so-remote) valleys since the growers which remained had automatic weapons and were hard-core. Now meth is the cheap high of choice, and there's a ton of crime with it.

I miss the '70's marijuana culture. I never did use the stuff, but it was a calming influence on society. I can make a better case for its use being compulsory than criminal.

The peak oil crunch is arguably a good time for widespread sedation. Perhaps the ethanol plants can divert it into gallon jugs and ration it as gummint moonshine; I'll bet keeping people drunk would lower their consumptive behavior some. And that soylent green will probably go down better if we all have the munchies.

Interesting that it arguably takes something like a nation-state to enforce a monopoly to prevent creation of one's own sedatives. As they wane, stuff like moonshine, pakalolo, coca trees and opium poppies will become ubiquitous, and the huge amounts of money funneled to organized crime will dry up.

You know it is bad when even before the drug violence, 40% of Mexicans desired to emigrate to the US. 40%! Here is the poll from 2005:

Over 40% in Mexico would live in U.S.

The survey by the Pew Hispanic Center also found that the desire to immigrate to the U.S. cuts across a wide socio-economic swath, with the poorest of Mexicans sharing the urge to move north with high school and college educated fellow countrymen.

Think about that. They want to move to a completely different country, where they won't know much of the language, and they would most likely be starting at the bottom of the social ladder. There is something seriously wrong in Mexico.

They have legal relatives and friends in the US who understand the system

What exactly is a failed state? If a state collapses, what is the end result? Is Haiti a failed state? Are you talking about the failure of one state, Mexico, or the failure of the nation-state as a political entity? And what does failure mean? Is Afghanistan a failed state, run as it is by warlords outside of Kabul and a US-appointed warlord in Kabul? And as far as Russia and China and the rest are concerned, what would collapse mean? China has been a viable and united state for a long time; the Chinese had an advanced culture when Europeans were still living in caves and eating each other, as George Orwell observed, so any talk about their collapse is both premature and subject to extreme skepticism. You really haven't made a case here; all you've done is state a few opinions.

I think the answer is in separating the use of two words that are often, mistakenly, used interchangeably:

Nation is a culturally coherent group of people.

State is a political system of organization that may or may not have a clear link to one or more nations.

Failed state doesn't necessarily equate to collapse: it is possible for a state to collapse, only to be replaced by a new state structure (as I'm suggesting for Mexico, the collapse of the nominal Mexican Nation-State and its replacement with a Market-State). In the case of Haiti, the state structure has largely disappeared, replaced by some fusion of proto-state and chiefdoms (to use the standard anthropological progression of political complexity: tribe, big-man group, chiefdom, proto-state, state).

I think any reference to "China" as a nation underscores our general illiteracy with regard to the constitutional structures of various forms of political organization. China is a nominal Nation-State, but has never managed to craft a coherent "nation" out of its many peoples--something that tends to become incrasingly clear when the State isn't able to effectively provide for its constituent "nation." While a rich and vibrant culture has existed in what is today the political borders of the Chinese state for thousands of years, it has been anything but a viable and united state for a long time. There were long periods where dynamic portions of what is today China were unified in various dynasties, but there were also repeated periods of collapse, state-form transition, significant changes in the geography controlled by these dynasties, etc. To confuse the suggstion that the Chinese Nation-State may collapse with the notion that these nations will cease to exist, or that they will not develop new and vibrant cultures, is to confuse Nation and State. For our purposes--broadly, understanding the effect of political changes on energy production and the impact of energy issues on political structures--it is the change and resulting turmoil that is relevant. And China (and Russia, etc.) has a long history of that.

As for exactly how each individual collapse will progress, and what the outcome will be, those are discussions for entirely separate posts...

You are not making much sense to me.

What is it that makes either Mexico or China a "nominal Nation-State"? Why did you bring into any of this the notion of "nation"? (In my opinion, "nation", a latently racist concept, is not particularly useful in present-day political analysis, at least not outside of Europe.)

China is a nominal Nation-State, but has never managed to craft a coherent "nation" out of its many peoples

This strikes me as nearly the opposite of the truth, in your own terms. If we grant any usefulness to the concept of a "nation" (not that I do particularly) China is a prime candidate for the oldest, most durable "nation." Despite the collapses you mention, it has thus far always put itself back together in a more or less similar shape, usually expanding its cultural influence and "coherence" as a result of the process. This demonstrates that the Chinese national identity is in fact quite robust compared to many others. (Where art thou, Roman Empire?) And if I were to place a bet on any one particular state or "nation" existing in, say, 500 years, I might very well pick China, given that for nearly all of recorded human history there has been such a state, or if not, a "nation".

I have to wonder whether you have not invested so much in thinking about the concept of a "nation-state" that you have successfully confused yourself. On the one hand (in your "academic paper"), you seem to be arguing that the nation-state is passe. On the other hand, you are apparently picking as candidates for "collapse" countries that don't make good nation-states, as if "nations" are quite relevant to which states will survive. Which is it?

You're still confusing "nation," "state," and "Nation-State"--I think you'll be able to easily answer the "Which is it?" question if you keep these separate. If you read my paper, one argument for the growing weakness of Nation-States is the current and increasing discontinuity between nation and state. That inherently makes the makeup of a Nation-State's costituent nation very important: the more monolithic and contiguous with the geographic border of the state, the less stress caused by discontinuity. This means that, while Nation-States are increasingly stressed, the makeup of their cosntituent nation is, as you say, "quite relevant to which [Nation-States] will survive."

I'd already skimmed your paper. I don't think I'm confused. I think I'm responding to the fact that your theory of history doesn't strike me as very sophisticated. You talk as if the nation, state, and Nation-State have the same relationship to each other around the world, and a global trend is discernible. They don't, and none is, IMO. So globally speaking, I do not think there is a "current and increasing discontinuity between nation and state". I think that nationalism is perhaps becoming more important in some areas (Africa?) and less in others (Central Asia? Europe?). (Most academics I've read talk a lot about "nationalism", btw, it being ultimately a much more real thing than a "Nation-State". Yet in your paper, the "nationalism"/"Nation-State" ratio is about 2/91.)

In your paper, you say that the Nation-State's "legitimacy is grounded upon its ability to provide security and welfare to a homogenous, constituent nation." As I said above, I don't think this concept of a "nation-state", particularly the "homogenous" aspect, has nearly as much utility outside of Europe as within it. You're own elucidation of the origins of the nation-state concept is unabashedly Eurocentric. Unlike in Europe, however, nationalism is not sufficient to explain why Latin America is divided into states the way it is, let alone parts of Asia or pretty much all of Africa.

(I think that if you had defined "nation-state" merely in terms of state sovereignty, which is a political tradition distinguishable from issues of nationalism, then your talk of Mexico as a possible example of the weakening of an international system of sovereign states might make some sense, although I still don't think I'd buy it wholesale. But you've conflated that idea with a lot of talk about nations and ethnic groups and such, both in your paper and your comment directly above.)

I think that the weakness or failure of an individual state, be it Mexico, Pakistan or Somalia, says far less about the "Nation-State system" than it does about those individual states, and perhaps the regions they are in. There is no reason to believe in a "domino effect" that goes from Pakistan to Iraq to Russia to Italy (!?) to China to Indonesia. (That's your own inexplicable list, of course. Of those states, I think that Pakistan will likely collapse, Iraq already has, Russia did and has now recovered and won't again, and China, Italy, and Indonesia won't collapse as states in our lifetimes. Weird picks. Italy?)

I think you are probably right to warn of some type of collapse in Mexico. I think it would serve you better to give some concrete examples of the type of outcome you worry about (Argentina? Columbia?) rather than this stuff about "Nation-States." The latter is, to my mind, mumbo-jumbo compared to the former.

As Saildog mentioned above, it's plausible to argue that PO will bring a decline of globalization, which might make room for the revival of the "nation-state" rather than its demise. Perhaps. Who knows, really? In any case, history does not have to go in one direction, nor does it have to go the same direction in different places. I noticed that on your blog you link to John Michael Greer. He has some very critical things to say about historicism, in which category I put your ideas about Nation-States. I suggest you give him a read, or a re-read.

(Oh yeah, I also noticed on your blog post, the one where you were wrong about Mexico in '07, that you referred to it as a South American country. C'mon man.)

I too had a WTF moment when I saw Italy on that list. Indonesia is however another matter and may well break apart in a few years. West Papua, Aceh, Bali etc are very different from Java and the conflicts in the Moluccas between Christians ans Muslims will get worse as the economy fails. 7000 islands can't remain as one nation without a strong central govt.

Italy is actually a classic case-study on this topic: an amalgamation of several highly distinct nations and principalities at the end of teh 19th Century, with an economic powerhouse in the north (higher GDP than the UK) with a near third-world economic structure in the south (a region with a 3000 year history as an economic periphery. There are aleady active northern secessionist movements that get respectible popularity, and the north's subsidy of the massive social safetynetwork that goes disproportionately to the south is a primer motivator. The north (alternately Roma and north or Firenze and north) would love to join the EU as an autonomous region with domestic taxation control. There are massive immigration issues from North Africa, a very recent history of criminal enterprises that truly did provide an alternative to government, etc. I've spent enough time in the weird and out-of-the-way places to say that Italy is a deserving candidate for my "list," for two reasons: 1) it really is a candidate for collapse, especially if the financial industry in the North forces hard time there, 2) it is valuable in that it gets people to think about the validity of the Nation-State everywhere. The Nation-State is at least partially an artificial construct in every instance, so why not Nation-State X? Finally, we're just one more soccer scandal away from complete chaos in the streets, and the state shuts down Serie A. At that point, the facade of the Italian "nation" dissolves completely and we'll start interviewing for new Garrabaldis. If they'll give me Panarea, I'll willingly cede my claims to the rest of the place... I'd even become a Lazio fan that was a string. Brined caper berries, malvasia, and a little pesce crudo with lemon, dill, and olive oil. An Italy in chaos could remind of how to enjoy life. If you're looking for an interesting character, read up on Gabriella Danunzio

On reflection your reply does make for a reasonable arguement as to why Italy makes your list.
BUT to get to that stage would first require the EU to disintigrate (could well happen) and the seriousness of the mess to cause this would likely destroy dozens of other non EU countries first because IMHO the only way they will dissolve would first require the Euro and the European banking system to be destroyed (which could happen this year the way things are panning out).

An Italy in chaos could remind of how to enjoy life.

And with that the wishful thinking behind the theory is more or less confessed. I'm not surprised.

Personally I think that chaos may sound exciting, but would get old pretty fast. Getting a true chance to appreciate what you were previously unable to enjoy may as likely as not be preceded by death. Ask Somalis, Afghans, or Congolese.

There are aleady active northern secessionist movements that get respectible popularity, and the north's subsidy of the massive social safetynetwork that goes disproportionately to the south is a primer motivator.

Now Italy is different than here, but Alaska has had a secessionist movement that gained immense respectabiltiy. The Alaska Independence Party's candidate, Walter Hickel, was elected governor. That pretty well killed off the movement. Italy might manage this same type of trick.

Jeff, your paper raises some interesting points. But breaking everything down between a rhizome and hierarchal systems doesn't seem to approach the complexity necessary to give the proper range of probable outcomes.

Case in point, in the mature rain forest fungi in the canopy are far more energy efficient than the trees own rhizomes. They grow very fast and and can make use of water the forest system could never otherwise utilize. While doing this they produce immense quantities nutritional biomass that rain down on the forest floor and thus help keep the system from depleting itself. This could not happen without the well developed hierarchal system that produced the canopy. In the real world things don't break down as simply as you try to convey they do.

Your paper addresses not at all the condition of the U.S. nation state, one which maintains a border with Canada that has virtually no cultural definition. Of course the maintaining of just these two separate nations for no other reason than to insure the idea of national sovereignity may well do just that. A more natural border with the Mexican people might well be along the lines of Old Mexico (including Texas and California) but the current border is a far more defensible line for U.S. nation state to hold.

The breakdowns you illustrate could as easily lead to the consolidation of power in a few regional empires which would each grow a complex and strong a system of colonial tentacles. Those tentacles would only be limited by how much energy each empire could appropriate for itself. Your propostion seems to assume a very limited use of the force available to the nascent empires. of yet none have begun a thinning operation...

Without going into detail, as soon as the state (the ruling government & affiliates comprises the state) is not acting in the best interests of the people (the sum of the people is the nation) there is a split between the two.

The origins of the nation state ARE eurocentric, begining with, IIRC the treaty of westphalia.

The concept of nations accross states or within states seem peculiar to most westerners, but it's almost common in areas where states have been created by arbitrary intervention from Europe instead of organinc growth and sgreements between neighbouring groups of people on the ground.

Rivers are a good example; one group on this side, one group on the other, both groups know where they stand. There is a lot of this in Europe. Anywhere you see straight lines between nations, look for trouble!

Personally, I think it is valid to say that a culturally distinct people who have historically occupied a specific area for centuries constitutes a nation, even if they are conquered; they become an occupied nation, surely?

Nations, or peoples within states include various Indigenous tribes such as the Maori in New Zealand or some "Red Indian" tribes. It is interesting in context that the 'One Nation' political party in Australia would presumably reject any assertion of nationhood by Aboriginal groups.

Nations across states include Kurdistan accross Turkey and Iraq, Palestine accross parts of Israel, and the Karen in Burma and Thailand. Look to the Balkan states for more complex examples.

States accross Nations include the UK, South Africa and the old USSR.

To try and clarify things, I think the idea is that as modern resources become more expensive, and traditional resources become relatively more useful, this shifts some power from the rulers to the people. Not only do some of the more complex tools of administration, government and enforcement become less reliable, but the state becomes increasingly dependant on the people, and is less able to rely on external resources, be they blackwater mercenaries, Mongolian troops or contract labour to break strikes.

This should, at least in theory, lead to policy decisions that are actually in the best interests of the nation (the people), not just the state (the economy).

Too many things to respond to here, so I'll limit myself to one: I think you are assuredly wrong about China as a nation; the largest "people" in China is the Han, well over 1 billion of them. The other 63 "minor" peoples constitute less than 100 million. The Chinese themselves would claim they are "one" people. At least, my five years living among them gave me that impression.

On the other hand, their "state" is indeed fragile. However, the state has created around 500 million people who can be considered middle class or higher and they support that state. The other 800 million or so are farmers, many of whom left their farms to work as migrants in an attempt to join the middle class and enjoy the benefits of city living. If the state collapses, it could be because of them.

I think your insistence that the Han Chinese are a single people is testament to the penetration of the Nation-State paradigm, and the sales job of the Chinese Communist Party.

The Han, if we accept them as a nation, certianly represent a vast majority of Chinese, though 100+ million "others" isn't exactly trivial.

However, who are the "Han"? They include the major sub-groups of the Mandarin, Hakka, Fujian, Cantonese, and Wu, as well as many smaller groups including the Tanka and Paranakans. These are more than simple regional divisions like Georgians compared to Texans. These groups speak separate languages--related, admittedly, but as distinct as French, Italian, and Spanish. They have significantly separate cultural practices. Using the term "nation" to refer to them is just as disingenous as describing Europe as a single nation.

What is the origin of the term Han? Officially it is anyone who speaks a sinitic language and doesn't belong to one of the 56 officially recognized minority ethnic groups in China. It is a term that exists out of convenience, but in my opinion certainly doesn't define a coherent nation. As you point out, to the extent that many of these people are rising to the middle class and enjoying the benefits of inclusion in the Chinese state, they don't tend to care about these divisions. Classically, however, when things start to go to hell, people fall back on their primary loyalties. Given the bitter disagreements between the northern and souther Italians or the Flemings and Walloons, I think the much more significant differences between the Han subgroups will seriously undermine the viability of China as a Nation-State if their economy declines too far...

Though all won't achieve middle class, don't you think the massive migration and mixing into the urban areas China is seeing will dull these local loyalties in a generation or so anyway? Or are new cities still significantly regionalized and the people sufficiently segregated within them to keep the old ties strong?

If one forgets that the Chinese have been living under the same government for about 700 of the last 740 years, and that they share one written language, then your ideas could seem reasonable. Also note that the divisions you talk about don't get mention in any of the standard textbook treatments of China between 1911 and 1949. Or of the Taiping rebellion. Or the Boxer rebellion. No, the main motivating forces in China have been either Chinese nationalism (not that of subgroups) or class issues. If the Chinese state is vulnerable, it is on the latter issue, certainly. You are way over emphasizing the ethnic divisions.

Weird, as well, that you would make comparisons to Belgium and Italy, two countries that remained intact through foreign occupations last century. Why not pick Yugoslavia, a country that has actually broken up? This is what I mean by not making much sense. I think I am discerning here an obsession with ethnic differences, regardless of how politically significant they've been in a country's actual history.

Dayahka,another Chinese lover,I see.

The Chinese "civilization" is about 4000 years old.To my knowledge no Europeans were living in caves at that time nor were they cannibals.

Get your facts straight,laddie.Racist propaganda is not a substitute.

Actually the cannibalism part seems to crop up from time to time in European history. The Iron age, the Great Famine and a few other occasions have left some physical evidence of it. Of course it seems equally probable China has had as least as much incidence of canabalism as anywhere else through time, I just can't imagine any evidence of it escaping China's government censors.

From memory, I recall reading a link somewhere that stated that during one particularly bad Chinese famine: the Emperor gave approval to cannibalism by allowing families to exchange children, then eat.

If that happened today with an American/Chinese 1 for 1 trade the Chinese would certainly get more calories out of the deal ;-)

Joking aside there have been some tough times through the ages :-(

LOL! Even if it was proportional, the Chinese would likely win if they got to choose, say Alabama or Mississippi.

Joking, and tough times aside, IIRC the vast majority of cannibalism was done for symbolic reasons, i.e. eating the heart of your enemy gave you his strength. In times of famine, the Inuit did not eat their own, the elders just went for a walk out into the blizzard.

I have been told that this is a peaceful exit but I have no interest in testing the hypothesis, at least not yet.

Actually, a few people were living in caves in the UK as recently as the 1930s. Certainly in living memory. Not that many people ever lived in caves, even in the neolithic, there just aren't that many cave in Europe.

First thing the US needs to do is revamp our drug policy.
This stupid failed "war on drugs" will lead us right into the lion's den if the cartels win control of Mexico.
We might as well start lighting billion dollar bills on fire and kiss our butts goodbye.

Second, we are still too dependent on cheap illegal immigrant labor and still too dependent on oil as a sole source of transport energy.

Shutting down the drug war, decriminalization and imposing government tax control on marijuana will effectively open the door for domestic production under controlled circumstances and cut the financial legs out from under the Mexican cartels.

Hello TODers,

As Einstein said [paraphrased]: it will take outside-the-box thinking for a possible solution. So, in that spirit, a few 'Wild & Crazy' thoughts on the Drug topic:

As everything heads into Thermo/Gene Overshoot and Collapse, we will inevitably break down into those who can deal with TRUE REALITY. And those who CANNOT; Kunstler's theory of those who fervently 'Wish Upon a Star' in the full Jimminey Cricket delusion and denial mindset.

Therefore, every city and town needs to create a Drug Disneyland: free mountainous stockpiles of whatever you wish for to escape the harsh Paradigm Shift. Everything from cheap airplane glue and paint for the 'huffers', onward up the scale to pharma-drugs, then sand dunes of crack, meth, and heroin. All free.

Admission is free, and all you are allowed to bring in is the clothes on your back and whatever amount of fantasy fiat currency or precious metals [PMs] you can rustle up. You cannot get back out unless you pass a blood test that shows you are clean and sober. Meanwhile, Indulge to your heart's content, even lethal overdosing is encouraged.

Of course, no medical assistance is allowed inside and you can't get out until you pass the aforementioned 'clean and sober' rule, so if you decide to voluntarily suffocate on your vomit, or try to fly by jumping off a ten story building: it could be a painful few days until your system clears itself of the drugs as you crawl towards an exit gate.

About the need for the fantasy cash & PMs: the smuggling operation will be quite brisk for imported food and water, as none will be found inside this Drug Disneyland. Consider that the present Disneylands don't grow anything edible.

Food and water are TRUE REALITY items; simply not possible to create while you are inside and incapacitated 'wishing on a star', or drug-imagining a mirage of Maine lobsters and Alaskan King crabs scurrying across the desert with bananas and chocolates in their uplifted claws. No matter what drugs you take: flying pigs and cows Won't-Ever-Actually-Land to give you bacon or fresh milk.

The vendors selling Munchies through holes in the towering outside walls will be encouraged to fully exploit Supply & Demand constraints:

"Psst, hey buddy, I got a real nice Snickers bar, a Twinkie, and a Coke soda pop. All yours for just $40 bucks. I also just got from my supplier an outstanding fresh and hot ham, egg, and cheese burrito for $50. C'mon on, dude--I will even let you smell how good it is. How about a fresh loaf of organic French bread and butter for $100? Guaranteed to be the REAL STUFF your body is craving. I ain't talking some Fantasy Bullshit--people worked really, REAL-ly hard to grow, harvest, grind, and then bake this."
Have you hugged your bag of NPK today?

EDIT: Consider the REALITY that #119168 had to deal with to get food!

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

Thank you Bob, there's an image I can sink my endorphins into.

Those blackmarket holes in the wall would no doubt let drugs out as well as food and water in...back to square one.

Ah! But you are forgetting that the Outside is now Reality-based on Thermodynamics, not Wishful Thinking: anyone caught using drugs is sent to my speculative Drug Disneyland with no money and will not be allowed out. The total confiscation of everything they own is what allows the drugs to be free inside Disneyland.

Why would anyone pass drugs out for someone to sell when anyone can go inside and get all they want totally free? It costs practically nothing to grow heroin poppies or marijuana, then merely hire a few people to pluck the plants, then shove them through the holes to the Disneylanders inside.

Ah the sales penalty could change things, but something in our makeup seems to want to push boundaries, surely after a while some will want to see what it is like to do drugs on the outside in this "Brave New World"

Sure, there will be a few people that will try to push their boundary luck 'to infinity and beyond'. Not a wise thing to do...

It is also perfectly legal to spend all night hiking far into the desert with insufficient water. But they won't get much further when the summer sun comes out in this 'Brave New World' and it hits 115F in just the shade alone. Nature [Reality] is much worse than Clint Eastwood, "Do you feel lucky today, punk?"

Unfortunately, a lot of illegal Mexicans haven't really understood this movie until their last few minutes alive... :(

Brief editing to text above.

Why would the drugs get transferred out of Drug Disney Land? One can get all they want for free inside and munchies food would have a much higher profit margin. But then it would instigate the "War on Cholesterol".

The war on cholesterol could really get nasty.


Yep, that is where food and potable water is postPeak headed: Recall my earlier weblink where the Indian military ordered it soldiers to shoot-on-sight any suspected I-NPK smugglers trying to sneak the product over the border.

EDIT: IMO, once the Thermo/Gene Downslope really gets rolling and everyone becomes Reality-oriented: there is magnitudes more money to be made in I-NPK & Food than in drugs.

In short, I expect wheatlords and waterlords to be synonymous with warlords. Armies cannot fight on an empty stomach.

That gene thing is often expected to work so don't. They are shuffled real well. Environment will shape human behaviour and skill sets much much much more than any gene variation will, unless of course the genes are engineered, then look out.

Hello Luke H,

I could be wrong, but I think you took 'Gene' too literally in the context I was trying to express. I was referring to possible ramifications arising from Jay Hanson's Thermo/Gene Collision PDF:

On another note, I had Borowski's # wrong in a posting above. It should be #119198:
by Tadeusz Borowski, #119198


Your eloquence and your erudite response overwhelms me. All is clear now.

Don't I know it! The market reality is we are getting much more engineering business from potash mines. Now that they have cash, they are determined to get into this century.

Sounds like you've been on a trip or two in your time, Bob. :D

I've been wondering what you were stockpiling all that NPK for. ;)

By the way, the Mexican leader is blaming US corruption for facilitating problems:
Mexico condemns US 'corruption'
It seems to me all nation states will weaken, including the United States.The financial crisis will have its effects. Gerald Celente is predicting food riots by 2012 and movements for secession. But, looking a little further by 2040 majority of Americans will be its fornmer minorities of which more than half don't graduate high school let alone college. Social Security is due to run out about then;and US debt payment interests costs are due to exceed medicare and social security around that time also. Meanwhile this is a country that takes pride in gun possession. The recipe for chaos with a weak state is a distinct possibility, unless mitigating action is taken so that there is a seamless passing of the baton from one set of majority to the next.
Moreover climate change should be biting badly by then, which means there will be a reverse migration from sunbelt states to areas where climate is cooler and water is more plentiful.
US needs to expend major money that is dwindling on new infrastructure, education and social support.
You might want to keep in mind that there is an overhanging $700 trillion woSth of Over the Counter Derivatives that no country has funds to support unwinding of. The US Government in paying off bad bets of AIG and US and foreign banks is sending out the message that these bets will be paid by public funds. Hello, if the amount keeps on climbing beyond AIG, this is a road US and foreign governments cannot afford to take.
However, no announcement yet that sanity has prevailed about neutralizing this sword of Democles.
Meanwhile there is also the case of rising health care costs.
It seems to me, as Cuba's example suggests, governments from the U.S. to Mexico and beyond can deliver results for their people even under great economic stress. After all despite the great US embargo on Cuba and shortage of oil, Cuba has delivered one of the best health care systems in the world and an urban agriculture revolution.
I also wonder how strong these cartels will remain once financial stress means they start losing their clients?

I like a little extra perspective from Aljazeera too, but I suspect the made for English reading product must differ substantially from the Arabic version. Still I read that article first pass down the menu, they know their markets.

I suspect the made for English reading product must differ substantially from the Arabic version.

I recently watched an interview with the head of the English version of Al Jazeera. He contends that there is a difference, but it is one of tone, rather than substance, in much the same way that the tone of the BBC is far different from MSM in the US. My moderate Arab friends have a high regard for Al Jazeera. I find the English version excellent without the dog and pony show that characterizes the US airwaves, and often rivals the BBC.

Remember that Al Jazeera was established in Qatar as a voice against the MSM in middle east regimes such as Saudi Arabia. From what I have seen, they answer to no one except their audience.

Thanks, that was what I was fishing for. Funny, I first found TOD and Aljazeera English in the same place, the Google Desktop Sidebar.

My pleasure.


And more to your post, May. 2030-2040 does have a certain shadow about it. We had lost virtually all societal memory of the crash of 1929 by 1999, a mere seventy years. Give societal memory of something as traumatic as WWII a little longer life span, say 85-95 years (that wrings out virtually all first hand memory of the war and its immediate shadows) add those numbers to 1945 and you have 2030-2040. We could be boomers at both ends of our lives if things play out badly.

I think India is going to go blow. China is a more distant possibility.
Consider fact that over 600 million Indians defacto in open spaces and only 37 million Chinese.Consider fact that India has malnutirion levels that exceed those of sub Saharan Africa.
Consider that anemia rates are 70%.
Add to this the couldron of communalism, and caste based violence that already attacks the 'other'. South Asian glaciers are fastest receding in the world and there is a major ground water depletion underway.
Poverty rate in India far exceeds China's. What happens when people start fighting over reducing arable land and water?
China I would say is stronger than most developing countries. if it goes, it will go after others go.

India is about as blatant a construct of colonial cartography as one will find... and it surprises many people to learn about the number of active insurgencies currently ongoing in India. It will be interesting (though likely not gratifying) to see how this plays out.

India has a very active Maoist movement, and with the success in Nepal, has gained credibility and support. This is not a survivable situation, and it is going to be very messy.
Mexico is closer to revolution and collapse than most are willing to admit.
Just spent sometime in the rural south, and it becomes clear.

the illegals are swarming over to america to get on our welfare while we are going broke. they are having welfare babies in a depression.

in 10 years, america will be a broke,oil dry,mexispic state.

I had an opportunity last night to read your essay about the decline of the nation-state.

Your argument in favor of a shift towards rhizome seems to be kin to those in favor of communitarianism. While I think this may be a noble goal, I nevertheless wouldn't be too quick to pronounce the nation-state dead just yet.

Here are some things that seem to run counterfactual to your analysis:

In Mexico:
1) Nationalism seems to have triumphed in the crafting of the new hydrocarbons law. As this article written in February 2008 points out:

Calderón tiene que encontrar un equilibrio entre la tradición de nacionalismo petrolero de México y la necesidad de obtener nuevo capital y tecnología para aumentar la producción, sobre todo en las aguas profundas del Golfo de México.

Calderón has to find an equilibrium between the tradition of Mexican petroleum nationalism and the necessity to obtain new capital and technology to increase production, above all in the deep waters of the Gulf of Mexico.

But Calderon's efforts to roll back nationalism were minimal, as this critique of the final energy reform bill by ex-president Vicente Fox reveals:

El ex presidente Vicente Fox Quesada calificó de "pírrica y pequeña" la reforma energética aprobada por senadores y diputados, y afirmó que en poco contribuye a resolver los problemas del país y de su energía.

Ex-president Vincente Fox Quesada qualified as "Pyrrhic and small" the energy reform approved by senators and congressmen, and affirmed that it contributed little to resolving the problems of the country and its energy.

Nationalism appears to be alive and well in Mexico.

2) The way I perceive the Mexican narcos is that they are about as pro-globalization and pro-capitalism as one can get. They are the quintessential P1 (pleasure) maximizers upon which classical and neoclassical economic theory are based. I would venture to say that thoughts of nationalism, political ideologies, religion, morality, ethnic or tribal loyalties hardly enter their minds.

In this regard they don't fit your characterization of the global terrorist networks--"Exacerbated by reactionary ideologies"--that you cite as posing such a threat to nation-states.

Terrorist Networks:

Scott Atran of the National Center for Scientific Research, Paris, France, gives a totally different picture of the terrorist networks than you do. He has done detailed investigations into not only those who perpetrated the 9/11 attacks, but those who perpetrated the Madrid attacks as well. His portrayal of the perps is a far cry from the internationally integrated networks that you speak of. On the contrary, he says these attacks were perpetrated by groups of highly unsophisticated, isolated, friends and "socker buddies" who connected with criminal elements and became radicalized. They seem to have more in common with Timothy McVeigh than they do Bin Laden:

I think he would characterize your description of terrorist networks as a total fiction.


The phrase you coined--"market-state"--seems to resemble the ultimate ambition of neoliberalism. However, neoliberalism as a doctrine is in full retreat in Latin America, having been rejected by just about every country with the exception of Mexico, Colombia and handful of smaller countries in Central America and the Carribean. This was made all but evident in Nestor Kirchner's speech at the Summit of the Americas in Mar de Plata, Argentina in November of 2005:

En la obtención de esos consensos para avanzar en el diseño que las nuevas políticas que la situación exige, no puede estar ausente la discusión respecto de si aquéllas habrán de responder a recetar únicas con pretensión de universales, válidas para todo tiempo, para todo país, todo lugar.Esa uniformidad que pretendía lo que dio en llamarse el “Consenso de Washington” hoy existe evidencia empírica respecto del fracaso de esas teorías. Nuestro continente, en general, y nuestro país, en particular, es prueba trágica del fracaso de la “teoría del derrame”.

In obtaining a consensus to design new policies that the situation demands, the discussion cannot absent those who prescribe policies that profess to be global, valid for all time and for all places. Today there exists empirical evidence of the failure of this pretended uniformity, called the "Washington Consensus." Our continent, in general, and our country, in particular, offer tragic proof of the failure of the "trickle down theory."ública%20Argentina.pdf

I think you raise some important points, but none that I think undermine my analysis:

- I don't think the debate in Mexico over the energy law has as much to do with nationalism as it has to do with classism and the ability of politicians to attract certain demographics by promising that energy-industry protectionism will equate to continued and increased social spending. There is certainly a nationalist element here, but I think it falls under the general theme of "people are happy to be part of a manfactured "nation" when it suits their economic self-interest." When it no longer does, they tend to fall back on primary loyalties.

- I don't claim that groups relying on "reactionary ideologies" are the only threat to the Nation-State, but rather only one of them. The drug cartels, as you point out, are not nationalists nor are they reactionaries (at least in general). The threat they do pose is threefold: they threaten the state's monopoly on violence, they threaten the state's control over domestic economic activity (e.g. the ability to tax and regulate to provide for the social good), and by creating extensive communications and economic networks that disregard political boundaries, they exacerbate the disconnect between the geography of a the "nation" and that of the "state."

- With regard to Mr. Atran's characterization of terrorist networks, I think he's wrong, and I'm confident that I have significantly more training, access to information about, and understanding of this phenomenon than he does. The 9/11 hijackers were certainly more than a few soccer buddies that connected with criminal elements and became radicalized--al-Qa'ida leveraged a sophisticated financial, recruitment, training, and operational network to put those people in play. Today, these networks are even more entrenched: they leverage open-source tactical and strategic development through the use of internet forums and chat rooms in conjunction with human emissaries to various meetings and groups. They are actively pursuing a decentralized branding strategy--witness, for example, the conversion of the GPSC in Algeria to al-Qa'ida in the Land of the Islamic Maghreb. Those who claim they are unsophsiticated because they do not use highly structured and hierarchal organizations to operate in the way western governments or corporations do fail to recognize the sophistication in their decentralized, open-source approach. This is certainly not limited to "islamic terrorists" or even "terrorists" at all--the sophistication of the highly-decentralized animal/earth liberation network, for example, is quite informative. This is a much longer discussion for another time...

- While I agree with Mr. Kirchner's comments, the statements of an Argentine politician (or any politician) aren't very convincing arguments about the abandonment of a structural policy in place in Mexico or elsewhere in Latin America. What I think is actually happening--with a few notable exceptions, such as (arguably) Venezuela--is the wholesale adoption of policies of wealth-concentration under the cover of politicians who state the exact opposite. It's a time-honored tradition, and just because it is on the retreat as an officially espoused policy doesn't mean that the principles aren't still guiding action in Latin America, as elsewhere...

Edit: for the record, "Market-State" was coined by Philip Bobbitt, Professor at the University of Texas and author of "The Shield of Achilles," highly recommended.


The simplest way to get out of this mess for the mexican government is to legalize drugs.

That would basically put an end to the drugs problem in mexico.

The US won't accept that, but somehow I don't think they are going to invade mexico because of this.

So I think you are a bit too pessimistic.

Yes, India has those insurgencies as well. That is in addition to the other factors. India is a uniquely troublesome place for that reason it seems to me. The Maoists are rising because of rural distress and because Govt was giving land tribals lived on to corporates and foreingers.

Right now illegal crossings are down to 1970s levels. I guess that is because jobs are drying up here. Cost of living is too high for these people in US if there are no jobs.
Leap 2020 which has been prognosticating about global financial crash has noted that by 2007, figures of Mexicans crossing over had started dropping. they cited US sources for info.

According to Charles Bowden, US didn't get tough enough with Mexcio before because they knew without drug money Mexican economy would collapse:

March 2, 2006

Charles Bowden, a Fly on the Wall Watching the Drug War that's 'Down by the River'
This isn’t some ugly conspiracy by corrupt American presidents. This is what’s called realpolitik. Tolerating the existence of a narco-state in Mexico is preferable to having an economic collapse in Mexico. Successive presidents have looked at the facts and made the same decision. ... It’s simply confronting reality. ... The effort of the border patrol to stop illegal immigration is also simply for show, because if we really bottled up Mexico and a half million people a year couldn’t come north, the economy would collapse.

I've seen a lot of interesting comments, but no one has mentioned the Zapatistas. Maybe they will outlast everyone else.