Reaching Oil Limits – New Paradigms are Needed

I have written in recent posts that oil limits are more complex than what many have imagined. They aren’t just a lack of a liquid fuel; they are inability to compete in a global economy that is based on use of cheaper fuel (coal) and a lower standard of living. Oil prices that are too low for oil exporting nations are a problem, just as oil prices that are too high are a problem for oil importing nations.

Debt limits are also closely tied to oil supply limits. It is actually debt limits, such as those we seem to be reaching right now, that may bring the whole system to a screeching stop. (See my posts How Resource Limits Lead to Financial CollapseHow Oil Exporters Reach Financial Collapse, Peak Oil Demand is Already a Huge Problem, and Low Oil Prices Lead to Economic Peak Oil.)

We have many Main Street Media (MSM) paradigms that mischaracterize our current predicament. But we also have what I would call Green paradigms, that aren’t really right either, because they don’t recognize the true state of our predicament. What we need now is new set of paradigms. Let’s look at a few common beliefs.

Inadequate Oil Supply Paradigm

As I stated above, indications that oil supply is a problem are confusing. MSM seems to believe, “If the US can be oil independent, our oil supply problems are solved.” If a person believes the goofy models our economists have put together, this is perhaps true, but this is not true in the real world.

Without a huge, huge increase in US oil production (far more than is being proposed), being “oil independent” simply means that we are unable to compete in the world market for buying oil exports. US oil consumption ends up dropping, and we end up on the edge of recession, or actually in recession. Oil exports instead go to the countries that have lower manufacturing costs (that is, use oil more sparingly).  See Figure 1 below. In fact, even some of the oil products that are created by US refineries end up going to users in other countries, because it is businesses in other countries that are making many of today’s goods, and it is these businesses and the workers they hire who can  afford to buy products like gasoline for their cars or diesel for their irrigation pumps.

Figure 1. Oil consumption by part of the world, based on EIA data. 2012 world consumption data estimated based on world "all liquids" production amounts.

Figure 1. Oil consumption by part of the world, based on EIA data. 2012 world consumption data estimated based on world “all liquids” production amounts.

The Green version of this paradigm seems to be, “If world oil supply is rising, everything is fine.” This is related to the idea that our problem is “peak oil” production caused by geological depletion, and if we haven’t hit peak oil production, everything is more or less OK. In fact, the limit we are reaching is an economic limit, that comes far before world oil supply begins to decline for geological reasons. See my post, Low Oil Prices Lead to Economic Peak Oil.

The real paradigm is, “Limited oil supply leads to financial collapse.” This is true for both oil exporters and for oil importer. For oil importers, the problem occurs because they cannot import enough oil, and oil is needed for critical parts of the economy. The belief by economists that substitution will take place is not happening in the quantity and at the price level (very low) that it needs to happen at, to keep the economy expanding as it has in the past.

Limited oil supply first leads to high oil prices, as it did in the 2004 to 2008 period; then it leads to government financial distress, as governments try to deal with less employment and lower tax revenue. By the time oil prices start falling because of the poor condition of oil importers, we are well on our way down the slippery slope to financial collapse.

Growth Paradigm

The MSM version of this paradigm is, “Growth can be expected to continue forever.” A corollary to this is, “The economy can be expected to return to robust growth, soon.”

In a finite world, this paradigm is obviously untrue.  At some point, we start reaching limits of various kinds, such as fresh water limits and the inability to extract an adequate supply of oil cheaply.

Economists base their models on the assumption that the economy only needs labor and capital; it doesn’t need specific resources such as fresh water and energy of the proper type. Unfortunately, substitutability among resources is not very good, and price is all-important. In the real world, growth slows as resources become more expensive to extract.

The Green version of the growth paradigm seems to be, “We can have a steady state economy forever.” Unfortunately, this is just as untrue as the “Growth can be expected to continue to forever.” Even to maintain a steady state economy requires far more cheap-to-extract oil resources than the earth really has. (US shale oil resources, which are the new hope for oil growth, can only grow if oil prices are sufficiently high.)

We are very dependent on fossil fuels for making our food supply possible and for our ability to make metals in reasonable quantity. Fossil fuels are also necessary for making concrete and glass in reasonable quantities, and for making modern renewable energy, such as hydroelectric dams, wind turbines, and PV panels. We cannot keep 7 billion people alive without fossil fuels. Perhaps the quantity of fossil fuels consumed can be temporarily reduced from current levels, but with continued population growth, any savings will be quickly offset by additional mouths to feed and by the desire of the poorest segment of the population to have the living standards of the richest.

Unfortunately, the correct version of the paradigm seems to be, “Overshoot and collapse is to be expected.” This is what happens in nature, whenever any species discovers a way to way to increase its energy (food) supply. Yeast, when added to grape juice will multiply, until the yeast have consumed the available sugars and turned them to alcohol. They then die.

The same pattern has happened over and over with historical civilizations. They learned to use a new approach that allowed them to increase food supply (such as clearing land of trees and farming the land, or adding irrigation to an area), but eventually population caught up. Research shows that before collapse, they reached financial limits much as we are reaching now. The symptoms, both then and now, were increasingly great wage disparity between the rich and the working class, and governments that needed ever-higher taxes to fund their operations.

Eventually a Crisis period hit these historical civilizations, typically lasting 20 to 50 years. Workers rebelled against the higher taxes, and more government changes took place. Governments fought wars to get more resources, with many killed in battle. Epidemics became more of a problem, because of the weakened condition of workers who could no longer afford an adequate diet. Eventually the population was greatly reduced, sometimes to zero. A new civilization did not rise again for many years.

Figure 2. One possible future path of future real (that is, inflation-adjusted) GDP, under an overshoot and collapse scenario.

Figure 2. One possible future path of future real (that is, inflation-adjusted) GDP, under an overshoot and collapse scenario.

It seems to me that unfortunately overshoot and collapse is the model to expect. It is not a model anyone would like to have happen, so there is great opposition when the idea is suggested. Overshoot and collapse is very similar to the model described in the 1972 book Limits to Growth by Donella Meadows and others.

Role of Economics, Science, and Technology Paradigm

The MSM paradigm seems to be, “Economics and the businesses that make up the economy can solve all problems.” Growth will continue. New technology will solve all problems. We don’t need religion any more, because we now understand what makes people happy: More stuff! As long as the economy can give people more stuff, people will be satisfied and happy. Economics even can allow us to find “green” solutions that will solve environmental problems with win-win solutions (assuming you believe MSM).

The Green version of the paradigm seems to be, “Science and technology can solve all problems, and can properly alert us to future problems.” Again, we don’t need religion, because here we can put our faith in science to solve all of our problems.

I am not sure the Green version of the paradigm is any more accurate than the MSM media version. Science is not good at figuring out turning points. It is very easy to miss interactions that are outside the realm of science, and more in the realm of economics–for example, the fact high-priced oil is not an adequate substitute for cheap-to-extract oil, and it is the lack of cheap oil that is causing a major portion of today’s problem.

It is also very easy to put together climate change models that are based on far too high assumptions of the amount of fossil fuels that will be burned in the future, because economic interactions are missed. If debt collapse brings down the economy, it will bring down all fossil fuels at once, meaning that the vast majority of what we think of as reserves today will stay in the ground forever. A debt collapse will also affect renewables, by cutting off production of new renewables, and by making maintenance of existing systems more difficult.

The real paradigm should be, “Neither science and technology, nor economics can solve the problems of humans. We have instincts similar to those of other species to reproduce in far greater numbers than needed for survival, and to utilize all resources available to us. This leads us toward overshoot and collapse scenarios, even though we have great knowledge.

Because of our propensity toward overshoot and collapse scenarios, humans have a real need for a “moral compass” to tell us what is right and wrong. If there is no longer enough food to go around, how do we decide which family members should get it? Is it OK to start a civil war, if there are not enough resources to go around? There is also a need to deal with our many personal disappointments, such as finding that the advanced degrees we worked so hard on will have little use in the future, and that life expectancies are much lower. Perhaps there is still a need for religion, even though many have abandoned the idea. The “story line” of religions may not sound exactly reasonable, but if a particular religion can provide reasonable guidance on how to handle today’s problems, it may still be helpful.

Climate Change Paradigm

The MSM view of climate change seems to vary with the country. In the US, the view seems to be that it is not too important, and that it can be adapted to. Perhaps the models are not right. In Europe, there is more belief that the models are right, and that local cutbacks in fossil fuel consumption will reduce world CO2 production.

The Green view of climate change seems to be, “Of course climate change models are 100% right. We should rationally be able to solve the problem.” There is only the minor detail that humans (like other species) have a basic instinct to use energy resources at their disposal to allow more of their offspring to live and to allow themselves personally to live longer.

Unfortunately, a more realistic view is that climate change may indeed be happening, and may indeed by caused by human actions, but (1) we are already on the edge of collapse. Moving collapse ahead by a few months will not solve the climate change problem, and (2) collapse itself is an even worse problem than climate change to deal with.  By the time rising ocean levels become a problem, population is likely to be low enough that the remaining population can move to higher ground, and agriculture can move to where the climate is more hospitable.

Climate change may indeed cause population to drop even more than it would if our only problem were overshoot and collapse. But because the cause is related to human instincts (having more offspring than needed to replace oneself and the drive to use energy supplies that are available), changing the underlying behavior is extremely difficult.

Over the eons, the earth has been cycling from one climate state to another, with one species after another being the dominant species. Perhaps natural balances are such that the time has now come that humans’ turn as the dominant species is over. The earth is now ready to cycle to a state where some other species is dominant, perhaps a type of plant that can use high carbon dioxide levels. If this is the case, this is another disappointment that we  will need to deal with.

Nature of  Our Problem Paradigm

The MSM’s paradigm seems to be, “Our problem is getting the economy back to growth.” Or, perhaps, “Our problem is preventing climate change.

In a way, the MSM paradigm of “Our problem is getting the economy back to growth,” has some truth to it. We are slipping into financial collapse, and in a sense, getting the economy back to growth would be a solution to the problem.

The underlying problem, however, is that oil supply is getting more and more expensive to extract. This means that an increasing share of resources must be devoted to oil extraction, and to other necessary activities (such as desalinating water because we are reaching fresh water limits as well). As a result, the rest of the world’s economy is getting squeezed back. See my post Our Investment Sinkhole Problem. Squeezing the world’s economy creates great problems for all of the debt outstanding. The likely outcome is widespread debt defaults, and collapse of the world economy as we know it.

The Green paradigm seems to be, “We have a liquid fuel supply problem.”  If we can solve this with other liquid fuels, or with electricity, we will be fine. Many Greens also emphasize the climate change problem, so their big issue is finding electric solutions for the liquid fuel supply problems. There is also an emphasis on local food production, especially with respect to perishable foods.

Unfortunately, the real problem seems to be, “We are facing a financial collapse scenario that is likely to wreak havoc on all energy sources at once.” Using less oil products may be helpful for a while, but in the long term, we are dealing with an issue of major system collapses. Using less of a particular product “works” as long as the supply chain for that product is still intact, including the existence of all of the factories needed to make the product, and the existence of trained workers to operate the factories. Banks also need to remain open. World trade needs to continue as well, if we are to keep our supply chains operating. The real danger is that supply chains for many essential services, including fresh water, sewage disposal, medicines, grain production, road repair, and electricity transmission repair will be interrupted. As a result, we will need to find local solutions for all of them.

The situation we are facing is not at all good. While we can do a little, it will be very challenging to build a new system that does not use fossil fuels. In the past, when the world did not use fossil fuels, the population was much lower than today–one billion or less.

Also, in the past, we started simple, and gradually added complexity to solve the problems that arose. This time around, we need to do the reverse. We already have very complex systems, that are too difficult to maintain for the long term. What we need instead is simpler systems that can be maintained with local materials. This is not a direction in which science and technology is used to working.

Creating new systems that require only local resources (and a few other resources, if transport can be arranged) will be a real challenge. Areas of the world that have never adopted modern technology would seem  to have the bast chance of making such a change.

Importance of Tomorrow Paradigm

MSM seems to assume that we can save and plan for tomorrow. Greens have a similar view.

Perhaps, given the changes that are happening, we need to change our focus more toward to day, and less toward tomorrow. How can we make today the best day possible? What are the good things we can appreciate about today? Are there simple things we can enjoy today, like sunshine, and fresh air, and our children?

We have come to believe that we can and will fix all of the problems of tomorrow. Perhaps we can; but perhaps we cannot. Maybe we need to simply take each day as it comes, and solve that day’s problems as best as we can. That may be all we can reasonably accomplish.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to inadequate supply.
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224 Responses to Reaching Oil Limits – New Paradigms are Needed

  1. “Maybe we need to simply take each day as it comes, and solve that day’s problems as best as we can. “-Gail

    Problem with that is problems not addressed early enough tend to spiral out of control to where they can’t be fixed. Typical example is say Breast Cancer, which if you catch it when it’s a tiny lump is EZ to fix, but wait too long and it kills you.

    Anyhow, the obvious solution is to move toward a low per capita energy society and begin the process of moving away from all the Toys we have come to define our lives by.

    RE

    http://doomsteaddiner.org

    • There are certainly some people who are moved to more radical action. But I am not sure everyone will necessarily be up to survivalist approaches.

      Moving to a low-energy society is tricky. It can’t save everyone. This is the reason that no government will be able to support a low-energy society. It has to be a do-it-yourself project.

      • “Moving to a low-energy society is tricky. It can’t save everyone.”-Gail

        Well, as the Tag Line on the Diner goes, “You can’t Save them All, You can only Save As Many As You Can“.

        Anyhow, despite the fact long term you can’t support 7B with a low energy footprint, if you went about conservation in a comprehensive manner and switched off Capitalism and Debt based money to a Resource Based Economy, you probably could spread the Die Off over a Century or more, with most of it coming from fairly natural causes of aging. So there are at least theoretical possibilities for doing this in a more rational manner than simply triaging off one country after another into the litany of Failed States and sending the kids Dumpster Diving, as is now the case in Cypress and Greece, and Coming Soon to Italy and Spain.

        Sadly, enough of the population is not yet aware of the realities, and so no Goobermints are formed around these ideas, because they simply are not discussed in the MSM. That is why we need websites like OFW and the Diner to raise more awareness and present better methodologies of social organization. That is what we are currently engaged with in the SUN Project on the Diner, Sustaining Universal Needs.

        RE

        http://doomsteaddiner.org

        • We really need to have different people offering different approaches. I don’t have a problem with your approach. None of us can come up with all of the answers.

    • For anyone interested in Monetary Issues, the April 2013 Issue of the Doomstead Diner Webzine is now available in PDF format on Scribd.

      This issue features a 4 part article on Money & Wealth from Monsta, along with Boston Bombing articles and Rewilding as well.

      RE

      • Thanks! I am reading Money and Wealth – Part II. It is very good. Regarding quantitative easing, it says,

        This dynamic of buying and selling bonds or other financial instruments that are almost worthless to central banks is not limited to bonds and occurs with other financial assets. In effect the central bank is acting like the big “bad bank” and is the party that buys all the bad or “loser loans” from the commercial banks that either no else will buy or will not buy in sufficient quantities to make the loans valuable or even viable. However what is significant in these transfers is that the liabilities of the debt repayments shift from the commercial banking sector onto the taxpayer.

        It is likely that this dynamic has allowed governments and banks to remain solvent as this demand for loans created by quantitative easing has been chiefly responsible for keeping interest rates down. If these programs were stopped or worse the interest rates set by the central bank were raised then the rise in interest rates would likely render many economies and banks insolvent. The fact that countries such as the US, UK and Japan run high fiscal deficits means that every year the interest rate threshold to remain solvent will need to decline year after year unless these deficits can be closed.

        It was clear to me that there is no way to stop this process. This observation adds a little more to the reason why.

        I thought the “Conduits” article was very good. Actually, what I read of the magazine was all quite good.

    • Patrick says:

      What you are missing is that oil is not only more expensive to extract. It’s more energy intensive. Therefore we are using more energy to get to the remaining reserves than we did previously. The end result of course is energy negative where we use more energy to extract and process the oil than we get from them once they are processed for market. It would be an interesting and useful addition to your graphs.

      The energy that we use in this extraction/refining/transportation process was previously available for consumption by the global market but now the oil industry is literally competing with it’s customers. Guess who wins that race? Effectively they get to use up all the reserves of oil extracting the remaining reserves of oil. They might be able to displace some of that loss with coal or renewables but it’s a downward trend.

  2. Ravi Nathan says:

    Gail, excellent article as usual. Are you familiar with the work of Guy McPherson? In his analysis, near term extinction is already a foregone conclusion due to the switching on of various positive feedback loops in climate. in other words, futher increases in CO2 may not be necessary. Here is the link to his post.

    http://guymcpherson.com/2013/01/climate-change-summary-and-update/

    • I know that is his position. I think there are really a lot of different things converging in the direction of near term extinction, even apart from climate. Oceans are a problem, and certainly the financial system is a problem. The large number of species that have been lost since the advent of agriculture point in that direction as well.

      The one place I would disagree with him is on the world’s ability to keep burning fossil fuel. I think financial collapses will have much more effect than he thinks they will. I don’t know whether climate is already beyond a major tipping point. If it is not, this could make a difference for the better. Models of all sorts are less than perfect.

    • Leo Smith says:

      If there is one thing that wont play a major part in any collapse, its climate change.

      Except insofar as it distracts from addressing the real problems.

  3. Mel Tisdale says:

    Scary, or what? But, given proper management, the collapse can be controlled and possibly survived by the human species, though it is debateable whether we deserve to.

    Originally, I let my mind wander on the specifics, but I assume that we all have our pet ideas and solutions and now is not the time for them. What we really need is a decent bout of honesty on the part of world leaders about the scale of the problem and what they see as a possible solution. Gail will not be the only actuary who has seen the mess we are in, so I expect that there will be some action going on in the background. That surely has to come to the foreground in an open and transparent manner. In other words, they are going to have to treat us like adults. Perhaps then they will get our support more readily than they will if they seem to have been forced into disclosure.

    • I can’t imagine any disclosure by officials. The story will be that everything is fine.

      • xabier says:

        Gail

        Thank you for another wonderfully clear and lucid post. There is not much like it on the net. And nothing in the MSM, as you note.

        Dishonesty, and putting off the bad news, is quite simply baked into the cake with governments: it’s human nature, and it serves government ends very well. They have also learned, since mass-propaganda got into its stride in WW1, that the masses are there to be manipulated and lied to, not treated as equal partners. In WW2, and the Cold War, governments took an even bigger step away from their peoples. They employ 10’s of thousands of people to hide the truth and massage it and disinformation is an important branch of warfare.

        I find it very hard indeed to envisage a rationally managed transition on such a global scale: even the most straightforward – if complex – domestic government projects run into huge problems and fail: and that’s just a case of limited adjustments within the current system! It’s like the ideal society the French revolutionaries once dreamed of: you can set it out on paper, but the transition to reality is where it all goes wrong.

        Only individuals may take action, right now, for themselves and their families: but they should be aware that governments, trying to maintain the present system will probably enact many measures which will frustrate them – I’m thinking particularly of heavy and increasing taxation, which is the pattern in Europe and Britain as I write. The advanced economies will possibly be broken long before any transition has been made. All efforts will be invested in maintaining the current system: and the electorates will vote for that.

        In terms of reducing population, I think we will be astonished how quickly demographics will change once prompt and universal access to antibiotics, and also ample heating fuel and so on, becomes problematic. Already in Britain it has been estimated that the ‘premature’ death -toll among the elderly who cannot afford sufficient food and fuel can be numbered in the 10’s of thousands – and the welfare system is still more or less functioning. It is not a harsh climate,but it is a damp one, and kills easily. One may say the same for infant mortality rates. Many already have to choose between heat and food.

        On the whole, those areas of the world where life is more basic, or which are comparatively isolated, will, if spared environmental catastrophe of the kind predicted by Guy McPherson, or nuclear disaster spreading from neighbouring regions, be best placed for survival. The old Arabs could survive live on cakes made of camel hair and blood, among other things, if they had to – of course, this is why they had to go robbing whenever possible! Nomad peoples got everything from their camels, goats and horses, and so on. In an emptier world, it might work……..

        • Xabier,

          You are right. No one is going out of their well to tell us the bad news. It is too hard to deal with.

          And population reduction comes quickly. If water supplies are not clean, that by itself could lead to many early deaths. I hadn’t heard what nomadic people lived on. Doesn’t sound appetizing.

          • xabier says:

            Gail

            The blood cakes was a worse-case scenario for the desert Arabs: they much preferred to steal other peoples’ goats and roast those! But they could do it. Man can endure so much, and it’s easy to scare ourselves.

            I think governments today realize that even a whisper of bad news will crash the whole over-leveraged financial system before time. Hence all the silly MSM puff-stories about stocks and property.

            Myself, I’m hoping to sell a property in a suburb to some fool who believes in it as a store of value, in order to raise the money to help build my survival garden, so I’m all for the propaganda……..

      • Mel Tisdale says:

        I guess you are correct, Gail, but we have to ask for some disclosure, if only to let them see we are not all celebrity worshipping couch potatoes who can be easily duped, though heaven knows there are many who are, and perhaps that is what will define how much we are told.

        Just out of curiosity, has anyone noticed what might be considered evidence of the ‘powers that be’ possibly making preparations for a post collapse world, such as FEMA camps?

        • Brian Carpenter says:

          Mel,

          Up until the middle part of the first decade of this century, the US military was prohibited from domestic law enforcement activities by the Posse Comitatus Act. That was repealed in 2007:

          “The President may employ the armed forces… to… restore public order and enforce the laws of the United States when, as a result of a natural disaster, epidemic, or other serious public health emergency, terrorist attack or incident, or other condition… the President determines that… domestic violence has occurred to such an extent that the constituted authorities of the State or possession are incapable of maintaining public order… or [to] suppress, in a State, any insurrection, domestic violence, unlawful combination, or conspiracy if such… a condition… so hinders the execution of the laws… that any part or class of its people is deprived of a right, privilege, immunity, or protection named in the Constitution and secured by law… or opposes or obstructs the execution of the laws of the United States or impedes the course of justice under those laws.”

          The NDAA further strengthened and clarified some parts of the legislation.

          This is a recently leaked Army military police policy and procedure manual compiled in 2010:

          http://info.publicintelligence.net/USArmy-InternmentResettlement.pdf

          It specifically envisions the setting up of facilities for internally displaced persons and law enforcement actions in conjunction with the Dept of Homeland Security and other US federal agencies. It even provides layouts for a facility to house and feed 4000 displaced persons…. complete with barbed wire and guard towers and psyop officers to help pacify the population of the facility. It specifically mentions operations in the US and its territories.

          Section 7-16 gives processing procedures for prisoners. It’s obvious that US citizens are in view here because the prisoner’s social security number is to be collected.

          These things could be erected in days/weeks. There’s no need to have a big open field with a “future home of your local FEMA aid facility” sign on it.

          Clearly the government is preparing disaster response. I have read that the financial crisis of 2008, where we came within hours of a complete worldwide financial meltdown, had the government scrambling to figure out how to feed and shelter a lot of people. I remember reading one article (NY Times, I think) that one Treasury official was seen sitting at his desk sobbing hysterically that it was all imploding. I can’t seem to find that article now.

          It would be foolish and a dereliction of duty for our leaders not to plan for a systemic breakdown. Any response must also take into account frightened people who have lost everything and perhaps are separated from their families, as well as agitators, hysterics, criminals, and predators. I can understand laying these plans. I can understand keeping them quiet. I can also see potential for abuse. It all depends upon what’s in the hearts of our leaders.

          • Scott says:

            Yes Brian,

            There is certainly something up with FEMA and the multitude of new agencies formed recent years “to protect us”.

            I have read many crazy things about what they are doing lately. Denver Airport has a secret facility underground and it is huge they say. They certainly purchased enough ammo to kill many of us.

            I surely plan to stay away from them if I can.

          • Mel Tisdale says:

            Brian, I take your point, but would add that your comment mainly concerns what to do about unrest generated by the collapse. What I would like to see is some idea of how to manage the collapse, if that collapse is unavoidable so that any unrest is minimised. For example, a medically induced coma is far more easily to manage than one resulting from trauma. With that in mind, it might be sensible to induce the collapse so that it can be controlled. (I know that is one of the biggest ‘mights’ you will ever come across, but it would be nice to know that it had been considered, at least.)

            The difference between a successfully managed collapsed and an unsuccessfully managed one could easily come down to public reaction to it. I would contend that an informed public just might ride the punches and so ensure for the greater good that the system keeps operating, even if they have to wait for their pay while doing so, because the results of not behaving thus has been spelt out to them. It might still be touch and go, but if it were obvious that the U.N. was genuinely united, not just in name only, to the global nature of the collapse, then it would stand a chance. The alternatives are probably worse outside the U.S. where there is little obvious planning for any potential public unrest from whatever cause.

          • Brian Carpenter says:

            Mel,
            Our school systems and televisions are the closest thing I know of to a medically induced coma. They do tend to inhibit both thought and action.

            • Mel Tisdale says:

              I do not know about your school system, but from what I have seen of Fox News, it drives far from going into a coma. It makes me want to throw my laptop across the room. How on earth such a terrible channel can survive in an educated society is a mystery to me.

            • Good point! Get rid of your television! Try to find another option besides public schools.

          • xabier says:

            These US plans would also be very sensible measures to have in hand in the event of massive earthquakes and super-storms.

            They are not evidence of high expectation of a financial collapse, or of a plan to establish dictatorship, as some think.

            The intentions may well be benign: if I have arms in my house, it might be to protect myself and my neighbours against intruders, not because I am plotting murder.

        • xabier says:

          Mel

          It’s interesting to see what happens when someone puts a real question – as opposed to an anodyne plant – to someone like Mario Draghi the ECB head.

      • I agree and explain why in: “Why do political and economic leaders deny Peak Oil and Climate Change?” http://energyskeptic.com/2012/climate-change-deniers/
        Outstanding article, there are so many factors to consider and it’s hard to choose the most important and explain how they’re related since this is such a complex scenario unfolding. Gibbons “Decline and Fall of the Roman Empire” was 6,000 pages, but you did a great job of reducing the likely scenario to a fraction of that, very hard to do.

    • xabier says:

      Mel

      Having a drink with a senior UK banker, I said it was a wasted opportunity that the Prime Minister did not, on coming into office, address the nation with a ‘The chips are down, this is a growing emergency and this is how it is folks,’ speech on all the harsh realities we face. He completely agreed: he’d been doing the sums for himself, and his conclusions are not pretty. Yes, there is a lot of thinking going on behind the scenes, but no chance of honesty from public figures it seems. Any major crisis will just come out of the blue to the mass of people, making the reaction even worse.

      • Mel Tisdale says:

        Xabier, you want to be very careful about what you admit to on the internet. There may come a day when your admission that you associated with a senior banker could be used in evidence against you!

        As to your point that politicians are not known for their openness, I take the view that if what they intend should happen is all the more likely to happen if the public are inform about the ‘method behind their madness’, then they have a motivation to break the habit of a lifetime and that is all the more likely if the public lets it be known that they know something is going on and they want to know what it is; no, ‘want’ is too weak a word. They ‘demand’ to know what is going on.

        • xabier says:

          Mel

          If there’s ever a revolution, I’m probably toast on many scores -I can live with that. But I’m practising my Revolutionary Fist salute all the same!

          Maybe I can shelter my banker friends when the going gets tough, in my vegetable patch: I’ll keep some scruffy old gardening clothes on hand for them just in case.

          When I see a British politician talking about something other than salvation and growth through taking up cheap loans, I’ll know a miracle has taken place……..

          • Mel Tisdale says:

            Watch any video of Prime Minister’s Questions in the U.K. parliament and you will give up hope of ever getting anything that might be considered adult behaviour from them.

  4. Greg Chadwick says:

    Gail,

    Your statement that….”“We are facing a financial collapse scenario that is likely to wreak havoc on all energy sources at once.” reminds me of a paper written by David Korowicz entitled, “Trade Off- Financial System Supply-Chain Cross-Contagion:a study in global systemic collapse.

    Korowicz explores the mechanics that could trigger this state of affairs in a good bit of detail. It’s a bit long at seventy-five pages; however, for those who find this type of thing interesting, it’s probably worth a read.

    As you can guess from the title, this is not a very comforting analysis.

    The PDF is available for download at the Feasta web site.

    http://www.feasta.org/2012/06/17/trade-off-financial-system-supply-chain-cross-contagion-a-study-in-global-systemic-collapse/

    • I have read several of Dave Korowicz’ papers, and have met him in person. I agree with his general principles, which is part of why any type of contraction of the economy scares me so much. Our economy is not set up to contract. A business has fixed expenses and variable expenses. If the economy contracts, the fixed expenses suddenly become much greater, relative to sales. It becomes a huge problem to keep the system going. A lot of workers end up being laid off from work, if sales decline, even because of a planned contraction.

      • Scott says:

        We could face another situation like in 2008, when the letters of credit for boats laden with goods could not be obtained due to credit not being available suddenly. There were pictures of thousands of cars on the boat docs and other goods that could not go anywhere. These goods could include oil. So we could create our own crisis in financial collapse.

        Without money nothing runs and just sits there waiting for a buyer with cash. It may have to be sold at half the price, that is a deflationary collapse. But the cost next time to bail out the money supply and recapitalize the banks will likely be exponentially higher which will likely bring uneven inflation meaning worse inflation in some things especially most needed items like gas.

        In summary; if we have another 2008 style deflation, the monetary response of world banks response will be much bigger (paper money creation) and that will changes prices unevenly like I know I am paying twice as much for food than I was 5 years ago.

        There is a whole bone yard out there for currencies that were used through out time, the dollar, Euro etc. are not exempt from that demise either.

        Even during the times of Rome when they used gold and silver, the government began clipping chunks out of the coins and reissuing them from the banks. That was kind of during the time of the end times for Rome. So yes, even back then in Rome they had inflation I have read.

        In the event of a currency collapse if we do see one at some point (not just yet I think but it may be out there in a few years) we could likely see them roll out a new currency and likely we will see an unfair trade, perhaps a $5 bill may only get a new currency that is valued and will buy much less, how much less I do not know, but less would be likely.

  5. p01 says:

    What we truly had was an increasing food production issue.
    In reverse, the “moral” thing to do, is to leave food production deal with the problem, as intended by Nature for all species.
    What will happen in reality. is that humans think they know better than Nature, and, predictably, a select few will decide the fates of many.

  6. Matt Ough says:

    Hi Gail

    I am an Australian 23 year old, I have been following your blog for a few months now and I couldn’t agree more with what I have read in this post.
    I like your assessment regarding the following, “Using less of a particular product “works” as long as the supply chain for that product is still intact, including the existence of all of the factories needed to make the product, and the existence of trained workers to operate the factories.”

    Politicians in Australia are fantastic at marketing a change in energy usage that they believe will be sustainable and environmentally friendly. However I believe this is false advertising for the exact reason your have eluded to in the above. Unless we have complete change in how something is produced i.e. manufacturing, transport and end use, an alternative energy will always compete with an existing cheaper energy. Humans are driven by greed and as a result the alternative energy unless cheaper will slip through the cracks for years to come until a huge problem arises such as the “Over shoot and collapse” scenario.

    What is your take on how Australia is positioned in terms of Energy? Are we too far gone down the path of economic growth can last forever? Or can we put practises in place now to ensure we limit growth to sustainable levels through a change in our energy usage?

    I would love to get more people reading your blog, it takes away the political blanket too many people are under and exposes the real issues that are just around the corner.

    Thanks

    Matt

  7. Ikonoclast says:

    I think we need to be careful of certain fallacies in our thinking. Avoiding these fallacies will clarify the central argument.

    The prime fallacy to consider is the fallacy of reification. This is the error of treating as a concrete thing something which is not concrete but merely an idea or a notional entity. Gail reifies money, debt and finance and treats them as if they were real. Money, debt and all financial operations are not objectively real in the sense that real materials and real energies are real. It weakens the key argument (that real resources are the limiting factor) to conflate financial limits wth real limits.

    Real material and energetic limits are binding. Financial limits are non-binding. The second statement needs a caveat. Whilst ideological and ideational fallacies make it a firm and systemically held and institutionalised belief that financial limits are binding then financial limits will appear as binding and indeed act as binding up to some point. We will come back to this “point”.

    It is easy to prove that money, debt and all financial operations are not objectively real in the sense that real materials and real energies are real. Real matter-energy cannot be created or destroyed but only changed from one state to another. The first law of thermodynamics deals with the conservation of matter and energy and states that matter and energy cannot be created or destroyed. Matter and energy can be transformed, and energy can be converted from one form into another, but the total of the equivalent amounts of both must always remain constant. Matter and enegy are related by Einstein’s famous eqaution of mass-energy equivalence: E = mc^2.

    On the other hand, money can be created and destroyed. When a government “prints” money even by electronic means and transfers then money is created. When a government runs a surplus i.e. taxes more than it spends, the surplus monies can be destroyed ie. written out of existence. When a private bank lends more money than it takes in deposits (a common occurence) it creates “debt money” so-called to differentiate it from the “fiat money” created by thje government. The “debt money” created is lent out and circulates until the debt is paid off. Paying off the debt destroys that particular debt money.

    I am not sure we would want to weaken and obscure the basic thesis about real material limits by bringing in financial “limits”. It is superficially attractive to do so but it leads to various incorrect assumptions. The first incorrect assumption is that financial limits will remain binding when the current financial system stresses or fails. They may remain binding but they need not necessarily remain binding. They will likely remain binding so long as we persist with an inappropriate financial system and/or inappropriate financial settings. They will cease to be binding if the financial system and/or settings are amended or even radically transformed.

    Quite simply, there are other ways of organising and utilising real resources (labour, materials and energy) other than by market operations and the current extant financial system. These other ways are not always the most desirable or the most efficient but where the market-financial system breaks down comprehensively these other methods become preferable to a total paralysis of production. Where or when the current free market – financial system fails and fails comprehensively, no people, nation or government will throw up their hands and say “Well that’s it. It’s game over. We can’t do anything now.”

    They most assuredly will not do that. Desperate times will call for desperate measures. Any or all of various expedients will be attempted. Initially, attempts will be made to “clear the books” and re-prime the economy. This will involve huge write-offs of private debts and a re-priming of the economy by large federal government budget deficits. Where nationally strategic infrastructure and production is concerned (like energy production) the state will step in and nationalise assets of companies which have gone broke and can no longer produce. These assets will be put to work, kept nationalised or re-privatised.

    Look at what happened to General Motors. Let Wikipedia remind us of the story;

    “The General Motors Chapter 11 sale of the assets of automobile manufacturer General Motors and some of its subsidiaries was implemented through section 363 of Chapter 11, Title 11, United States Code in the United States Bankruptcy Court for the Southern District of New York. The United States government-endorsed sale enabled the NGMCO Inc.[1] (“New GM”) to purchase the continuing operational assets of the old GM.[2][3][4] Normal operations, including employee compensation, warranties, and other customer service were uninterrupted during the bankruptcy proceedings.[2] Operations outside of the United States were not included in the court filing.[2]

    The company received $33 billion in debtor-in-possession financing to complete the process.[5] GM filed for Chapter 11 reorganization in the Manhattan New York federal bankruptcy court on June 1, 2009 at approximately 8:00 am EST. June 1, 2009 was the deadline to supply an acceptable viability plan to the U.S. Treasury. The filing reported US$82.29 billion in assets and US$172.81 billion in debt.[6][7] [8][9][10]

    After the Chapter 11 filing, effective Monday, June 8, 2009, GM was temporarily removed from the Dow Jones Industrial Average and replaced by Cisco Systems. From Tuesday 2 June, old GM stock has traded Over the Counter (Pink Sheets/OTCBB), initially under the symbol GMGMQ[11] and currently under the symbol MTLQQ.

    On July 10, 2009, a new entity completed the purchase of continuing operations, assets and trademarks of GM as a part of the ‘pre-packaged’ Chapter 11 reorganization.[12][13] As ranked by total assets, GM’s bankruptcy marks one of the largest corporate Chapter 11 bankruptcies in U.S. history. The Chapter 11 filing was the fourth-largest in U.S. history, following Lehman Brothers Holdings Inc., Washington Mutual and WorldCom Inc.[14] A new entity with the backing of the United States Treasury was formed to acquire profitable assets, under section 363 of the Bankruptcy Code, with the new company planning to issue an initial public offering (IPO) of stock in 2010.[15] The remaining pre-petition creditors claims are paid from the former corporation’s assets.[12][15].” – Wikipedia

    If national production of energy or materials in the US were strategically threatened by large company failures, bankruptcies or financial crises, the US Federal Govt would take similar action. If the situation became dire enough, some productive facilities and even exploration for new resources could remain effectively nationalised indefinitely. The US government is not limited financially. It can repudiate debt and print money. It could pass laws to draft and conscript labour if the situation were dire enough. It could implement price controls, rationing and other measures to contain inflation and distribute scarce resources by other than mere market mechanisms.

    In benign times, these measures are often less efficient than free-er market mechanisms. In desperate times where financial collapse and market failures become systemic and prolonged these measure become preferable to complete economic and societal collapse.

    Ultimately, only the shortage of real resources will be limiting and determining. It is fallacious to reify current financial practices and limits as well as current political possibilities and to treat them as real insuperable limits.

    • I am sorry. I disagree with you. It is the fact that businesses and people can make contracts and keep them that keeps the economy operating as it does. Without money and debt, it is very difficult to get energy products out of the ground, and transfer resources around the world. You may consider them abstract, but they are just as real as the energy products they represent.

      • Ikonoclast says:

        If money is “just as real” as energy why can money be created and destroyed when energy cannot? Clearly, money is not “as real” as matter and energy. Or to put it another way, its reality is not of the same order or category as real matter and energy. In reifying money you conflate it with the category of real objective phenomena, specifically matter and energy. So, in terms of logic, it is both a reification error and a category error to regard money as objectively real in the material sense. It’s clearly an empirical error too.

        I have given a specific example of what happens when a key enterprise fails (the GM failure) and what happens when the Federal Government decides (in its wisdom or lack of wisdom) that failure is not acceptable in the business or sector under question. The Government steps in and “fiats” the continuing existence and operation of the enterprise using one or more techniques from debt shuffling to injecting fiat monies to nationalisation. This fiat is effective so long as government itself is effective and so long as real materials and energies are available to support the enterprise. Basically, the government can break the current rules of the current (or any) financial game, make new rules for special cases or make new rules for all cases and so on.

        There are many examples, even in the US, where rules other than free market rules are applied to get things done. You have invested a lot of time and energy in your current financial theses but they are leading you astray when the argument is taken too far. What you say about financial constraints is true up to a point. Beyond that point, two broad outcomes are possible. Continued adherence to the current financial paradigm indeed will exacerbate and accelerate the collapse. Creation of new and appropriate economic paradigms or even ad hoc nationalisations and dirigist actions could slow or ameliorate the collapse. Given the real constraints nothing can now avert collapse. We do agree on that.

        But saving half or a quarter or even a tenth of civilization is preferable to saving none of it. That is if one holds civilization to be a value at all. Your current arguments give too much succor (as I see it) to BAU. It’s essentially a fatalist legitimisation of BAU which is unable to creatively imagine or suggest any paths or alternatives to a possible partial saving of the situation. It really is a counsel of total despair. I hope you can reconsider your analysis and position. Any shred of hope must be pursued. Otherwise, ’twere better to die at once.

        • davekimble2 says:

          Money gets its “realness” from the magical properties of belief in the system. If people believe they will be able to buy stuff tomorrow at the same price that they pay today, then they will keep their paper dollars in their wallet. But when inflation gets going, people stop believing, and there is a mad scramble to spend today, and the Velocity of money increases, making for hyperinflation.

          I don’t see people pulling together as a community until the place they are in is so bad that the “powerdown” future, that they used to laugh at, looks good and worth struggling for. Civilisation will be a gonner before that happens.

        • Money represents a promise, and from that point of view is important. Debt is also a form of a promise. Insurance policies also represent promises. It is the fact that we have monetary promises that are generally followed through on that allow trade to be carried on as it is today.

          What “messes up” the current system is the connection between money and energy, and the fact that with less cheap energy, it becomes impossible to carry though on those promises. This makes it much harder to carry on long-distance trade. Perhaps a system of trust can be used locally, but as unknown players are added, this becomes more difficult.

          I honestly don’t know whether some fraction of humanity can be saved. If we had a common system we could all aim for, including new ways of trade (perhaps sailing ships), a new financial system, and sustainable agricultural systems without fossil fuels, perhaps based on perennial plants, it would be easier to see that there is a way of getting to a sustainable end result. The sustainable system would somehow need to handle the population issue as well–otherwise it wouldn’t be sustainable.

          The nature of a finite earth is that nothing is really sustainable for the long term. Earth timescales are so much longer than human timescales that this has not really been an issue in the past.

          Maybe there are ways of fixing the current situation for some subset of humanity. It certainly doesn’t hurt to grow some crops locally, and make certain you have a good water supply. I am not the one who has all the answers on this subject, however. I wasn’t trying to rule out this kind of activity–it just wasn’t one of the things I tried to write about.

          • Brian Carpenter says:

            Gail,

            All fiat money is debt. It is loaned into existence either by a central bank or its member banks. All fiat money is thus a promise.

            It used to be a promise of 100% convertability into a fixed amount of gold or silver. Now it is a promise by the government to extract the labor and material goods from its citizens in order to give back the requisite number of green pieces of paper or the digital equivalent (principle plus interest.)

            The problem is that the pieces of paper or the digital equivalent which represents the interest doesn’t exist until it also is loaned into existence. The existing debt cannot ever be repaid without taking on new debt. Thus the absolute requirement for growth. It is a perpetual motion machine. Or a Ponzi Scheme. We’re at the end of the line now.

            However, nothing prohibits the authorities from simply repudiating the debts or declaring the currency itself to be invalid,and issuing a new one. As a matter of fact, it has happened quite often in modern history. What it takes is a crisis painful enough and just long enough that people are psychologically primed for a new currency and put their confidence in it.

            All of which begs the question: what is the basic unit of value? Most in the west say it’s a given currency. Some say gold and silver. Marx said it was human labor.

            I say it’s energy. Energy is wealth in the truest sense. The dollars and Euros and Yen are just a means of keeping track of it.

            • davekimble2 says:

              > I say it’s energy. Energy is wealth in the truest sense.

              That definition needs a little refining. The energy in coal is not worth the same as the energy in electricity, as you lose up to 65% of coal’s energy in the conversion. Odum’s concept of Transformity needs to added to take that into account. Since the planet’s basic source of energy is sunlight, the natural unit of energy (and therefore wealth) should be the Solar Equivalent Joule (seJ).

              The convertibility of paper dollars into gold was also a bit of a trick, as TPTB had already cornered the market in gold centuries ago, so were able to continue controlling the currency for their own benefit. I believe they really do have the stated amount of gold in the vaults, but it has been rehypothecated (used as collateral for currency) many times over – hence the US not being able to give Germany its physical bullion bars back.

          • Brian Carpenter says:

            Dave,

            I agree with your theoretical definition using the solar joule. But the energy has to be readily accessible to perform work. Solar joules are not. Thus coal is worth more than sunlight. Oil is one of the most ideal forms of energy wealth because it is fairly dense, easy to transport, easy to store, and easy to use.

            There is an enormous amount of energy bombarding our planet each day, but we can’t really capture and use much of it. Technology may improve to make solar (or thorium nuclear) more accessible and useful for performing work. But it’s really hard to beat oil.

            • davekimble2 says:

              All sources of energy start off as “free”, including sunlight, but need energy spent to collect them and get them into a form matched to the kind of task that can use them. Oil isn’t exactly the ideal form of energy, because it needs to discovered, extracted, transported, refined and transported again before it is useful to you. That embodied energy has to be taken into account, and it constantly changing as ERoEI falls as the resource is used up. Equally sunlight is not much use without a solar panel, as you say, and clearly won’t last for 100 billion years, but it pretty stable in human timescales.

              Any particular form of energy might do as the Standard Unit, but the seJ represents the SIMPLEST place to start. It definitely isn’t intended to be the BEST form of energy.

      • Joe Clarkson says:

        Consider this little thought experiment. Imagine that all the money in the world disappeared over night, all debts, all financial assets; everything.

        If everyone just ignored the absence of money and just kept on doing the same things they were used to doing, money would not be needed at all. One would go to the store and “purchase” groceries by putting them in the cart and then carrying them out to the car without paying anything. In the morning everyone would go to work and go about their day as usual, but when “payday” came, there would be nothing to receive in the way of payment. All producers could continue to produce and deliver their products into the supply chain without receiving payment. They would get needed raw materials and supplies the usual way, but without paying anything for them.

        If everyone actually took “according to their needs” and contributed “according to their abilities”, then we could just carry on without any medium of exchange. Money need not exist at all. The real world could continue on without it indefinitely (or at least as long as needed resources were available). This is the essence of Ikonoclast’s argument.

        His argument is theoretically sound, but operating without money requires total honesty from everyone; no “free riders” allowed, at any level or any location around the world. Since that is never going to happen, I think you can safely say that media of exchange will always be a necessary part of our world economy. That is what makes it a market economy. If everyone loses confidence in money and other financial instruments, the world market economy will cease to exist. And that will be a life threatening problem for the vast majority of the world’s population of humans.

        • Leo Smith says:

          “If everyone actually took “according to their needs” and contributed “according to their abilities”, wishes would be horses and beggars would ride.

    • Methodical Man says:

      Very interesting discussion. Where Ikonoclast’s arguments start to break down is that yes, money, finances, even contracts are shared fictions of the human mind, but then, so are governments.

      You can theoretically command people to accept printed money that has no artificial limit, but here is where we have to fall back to 2200 years of human history, and how people tend to behave when governments tried to enslave them and/or steal everything they produce. It usually doesn’t end to well for the regime as well as the people.

      For the US specifically, most tend to gloss over the structure of our government in making bold assertions what it can do its people, and more importantly, to the states that comprise the constitutional republic. Should the oppression become dire enough (in reallity, well before then) the states can simply push the reset button and start amending under Article V. The federal government that went awry under this scenario is likely to come out severely curtailed in its future powers, especially financial.

      Then of course there’s outright revolt and/or secessions, again going back to the structure of relatively independent states with their own sovereign governments (in many constitutional respects.) IMO there is not enough military to fight a civil war and maintain a global reserve currency empire. In any scenario, there are very real limits to what the FedGov can actually do and what it can become. It is very, very far from a unified absolute dictatorship, and at that point, you probably don’t have a US anymore, or its money.

  8. davekimble2 says:

    While climate change is a serious problem, it is nowhere near as serious as the IPCC forecasts of fossil fuel consumption make out in the fourth assessment report (AR4). For AR5, due out next year, they are changing the “40 scenarios” mechanism to make possible many more scenarios. All you have to do is predict the emissions in 140 categories at decade intervals out to 2050, and you can then have the climate model run those figures and output the results.

    One such Representative Concentration Pathway as they are now called, is RCP 2.6 , which is described at http://tntcat.iiasa.ac.at:8787/RcpDb/dsd?Action=htmlpage&page=welcome . I have extracted only the “CO2 emissions from fossil fuels” numbers from it, and charted them at http://www.peakoil.org.au/charts/RCP2.6.gif (my trendline is polynomial 4 – approximating a Hubbert Curve). We are yet to see this being put through the latest climate model, but it is sure to yield lower global temperature rises than the lowest of the 40 scenarios in AR4 – B1-miniCAM. It probably won’t make the headlines, because it is not scary enough.

    Of course a Hubbert Curve represents the best we could do production-wise. Financial collapse, disrupting supplies of everything, disrupting employment, disrupting finances further, would make emissions much lower still.

    WW3 will not have any winners. Against such worldwide forces played out over decades, nothing any individual can do will make any difference, so I agree – enjoy the simple things in life while we can.

    • I am not ruling out anything that any individual can do, but placing all of our hopes in that direction seems like we are making a lot of assumptions. We need to take advantage of the opportunities we still have today, and in many ways will continue to have, no matter what happens.

    • Mel Tisdale says:

      WW3 will not have any winners

      I am afraid that you might possibly be incorrect in that assumption. With highly accurate delivery and multiple warheads per missile, which we now have with Trident D5, it would be possible for the U.S. to annihilate Russian with little fear of any significant retaliation, especially with its ABM systems operational. One assumes that Russia has a similar capability and similar expectations.

      It does not take a Sherlock Holmes to work out just where that could so easily lead and that the temptation could easily become overwhelming. It would guarantee that the victor would be able to demand whatever it wanted from most, and probably all, other countries and to hell with the fact that the finance system is broken. A nice position to be in pre or post collapse.

      • Brian Carpenter says:

        Russia isn’t the target anymore.

        • Mel Tisdale says:

          Russia is the only one with an equivalent arsenal of nuclear weapons and the only one that stands a chance of launching a successful pre-emptive first-strike. All othe nuclear armed nations can be destroyed by either of the two nuclear super powers without making much of a dent in their inventory.

          And on a general note, surely you have noticed the frosty nature of relations between Russian and the west, not to mention the thawing of the relationship with China.

          • Ikonoclast says:

            You seem to be forgetting that any major nuclear exchange or even a comprehensive first strike will cause at worst a nuclear winter and at best clouds of radioactivity circling the entire northern hemisphere. How would this be good for the USA? I guess it would halt global warming for several centuries but not in any way that you could construe as good.

            • Mel Tisdale says:

              With both sides having the ability to annihilate the other side’s ability to use its weapons, it is obviously beneficial to be the one to fire first, even if there is no obvious cause for concern that the other side is about to attack, such is the nature of nuclear warfare today.

              It is doubtful that a nuclear winter would ensue from a one-sided attack, especially given the accuracy of modern missile systems and the level of detail concerning the location of targets (thus minimising the number of warheads necessary for a successful attack). Though even that would be better than suffering a nuclear winter after having lost all one’s nuclear weapons in a pre-emptive first-strike delivered by the other side and thus be at their mercy as well. Deterrence only applies to minor nuclear armed nations (that have sane leadership – N. Korea is capable of the most idiotic behaviour and is obviously undeterred to some extent at least.)

          • Brian Carpenter says:

            “And on a general note, surely you have noticed the frosty nature of relations between Russian and the west, not to mention the thawing of the relationship with China.”

            I have, indeed, noticed. Russia doesn’t like us poking around in the Whereeverstans of their soft underbelly, but I think we’re about done with that. Putin doesn’t like us one bit, and Russia still smarts from the humiliation of losing their empire. Putin would love to unseat the dollar as the reserve currency. But they’re basically a failed state. They cannot field a credible army much beyond their own borders and they can’t really keep a bluewater navy functioning, in spite of the fact that they possess enormous mineral and energy resources and the political structure to simply appropriate them. They possess some rather nasty weapons, to be sure, including probably a supersonic torpedo to go along with the anti ship missile mentioned elsewhere. They will soon lose their stranglehold on the European natural gas market. Delaying that is one of the biggest reasons they’re supporting the Syrian regime.

            Their biggest problem is not the US. We annoy and harass them when they behave badly, and they would certainly return the favor where they can, but China poses an existential threat to Russia. All the Chinese have to do is strike north and there is a sparsely populated area with abundant natural resources which China needs. It’s also an excellent way for Beijing to kill off a few million surplus Chinese men who will never find wives thanks to the one child policy and the cultural preference for male children. I’d try constructive engagement with them, too, if I were Putin.

            All things being equal, China is the next empire. We stand a very good chance of war with the Chinese in the next 50 years.

            • Mel Tisdale says:

              Please see my previous reply, where I stress the role that the nuclear weapons play. It matters not what one’s conventional war-fighting capabilities are if one’s command, control, communication and intelligence infrastructure can be destroyed in a matter of minutes out of the blue, when all seems well with the world, i.e. no hint of trouble.

      • davekimble2 says:

        Russia has supersonic anti-ship cruise missiles, which the US’s AEGIS system has never been tested against, let alone used in an active war theatre, where radar-jamming, satellite attacks and volleys of ASCMs change the picture entirely. India and China probably have something similar, and if they have made their way to Iran (perhaps in exchange for oil) then Iran actually controls the Persian Gulf, not the US.

        As for winners, I was thinking more about having the energy resources to rebuild out of the rubble. The post WW2 era was a remarkable rebuilding era, but it was all done with fossil fuels. That will never happen again.

        • Mel Tisdale says:

          The main thrust of my argument is that both superpowers (taking into account the number of nuclear weapons Russia has, the term ‘superpower’ is still valid) have enough warheads and the means of delivering them to be able to annihilate the other side’s nuclear arsenal.

          Imagine two feuding neighbours, each armed with a snipers’ rifle. The one who fires first wins outright, whereas the older nuclear weapons were the equivalent of blunderbusses and any victory would only be a Pyhrric one and certainly not worth doing, hence deterrence as a philosophy. Any argument that this point is invalid has to take into account the excessive number of warheads compared to the number of targets and also that the warheads are groundburst with C.E.P.s of less than 100 meters, which as good as guarantees their ability to destroy even the most hardened of targets. Obviously the yield of the warhead is relevant and the smallest ones are about six times that of the Hiroshima device, with the largest around one megaton, though small numbers of more powerful weapons have been built.

          As for conventional war-fighting weapons, I doubt that any side whose nuclear arsenal has been destroyed, along with a signicant amount of its Command infrastructure, will feel like fighting a conventional war against a foe that still has a significant number of nuclear weapons that it can use against them.

          I rather think we have wasted the peace that broke out in the 1980s, when serious nuclear disarmament down to much smaller arsenals with no M.I.R.V. delivery could have been achieved, especially considering the spirit of the times.

      • Leo Smith says:

        The people most likley to be targeted by a nuclear strike would be your own
        Mass euthanasia of the major cites, which server no further economic purpose.

        • Scott says:

          That certainly is our greatest danger, a nuclear strike.

          I was born into this age of nuclear arms and fear and it has not gotten better.

          But, I wrote earlier about how we there will be survivors and maybe not us, but survivors that will exist again on Earth much like the American Indians and other tribes from around the world did.

          A new beginning of sort.

          And, I was also thinking how fast the Earth and Seas would heal.

          In just a few years the seas and rivers and forest may once again be teaming with fish and birds and wildlife.

        • Mel Tisdale says:

          The people most likley to be targeted by a nuclear strike would be your own
          Mass euthanasia of the major cites, which server no further economic purpose. (sic)

          Ah, what a joy it is to see a right-winger reveal their true nature! No wonder you disagree with the notion that climate change poses a danger to our species and must fought. Gail’s posts notwithstanding, climate change is on course to kill off even more people than your rather sad nuclear strategy would. Trying to curtail its effects must be something of anathema to a person who thinks the way you do.

  9. Don Stewart says:

    Dear Gail
    A thought provoking post as usual. I do think that the focus on nation states may mislead us. There are people living in the United States who are only tenuously connected to what we think of as The American Way. Similarly, I am sure there are people in China who are immersed in The American Way. What I suggest is that people who are living very simple lives may be better situated than people who are living more complex lives–regardless of where they live.

    I would also include people who may have gotten to ‘simplicity’ by way of ‘complexity’. For example, someone may have made some money trading commodities, retired, and be living a self-sufficient life far from the complexity of Wall Street.

    I believe that that qualification is important because it may give a hint for what people who are currently entangled in complexity need to do…which is invest their paper assets in real assets which will enable them to live simple lives. (While the paper assets still have some value.)

    Whether nation states will be a help or a hindrance remains to be seen. At the present time, I see nation states as almost wholly dedicated to the preservation of bank balance sheets. There is apparently no limit to the pain nations will inflict to preserve the banks. I believe it was Stuart Staniford who opined that we could have a financial collapse without a physical collapse. Dmitry Orlov observed that, after the collapse of the USSR, some things continued to work such as electrical generation and public transportation. Apparently, the people who actually made these things work just continued to do what they needed to do. So it is not a given with me that everything will collapse if there is a financial collapse–unless there is a nation state which tries to enforce unenforceable contracts. Of course, all those people who were expecting to be paid will have a rude awakening–which is a good reason for focusing on the real rather than the financial in one’s personal life.

    Can a society very quickly begin to operate at 25 percent of its previous level? Humans are adaptable and sometimes surprise us with their capabilities. And if we are operating at 25 percent, can we allocate resources to the most pressing needs? I think some of us could.

    My argument here, of course, is back to the tails of the distribution. Suppose that 90 percent fail, but that you and your closest associates and loved ones are in the 10 percent who make it. The fact that things may be horrible for most people should not blind us to the possibilities. Look at all the fish eggs that perish before ever maturing…or even the percentage of fertilized human eggs that spontaneously abort. We are well advised not to let romantic notions prevent us from doing what needs to be done.

    Don Stewart

    • If we look for opportunities, you are right, some of us may do fairly well.

      I don’t think just sitting around worrying about the situation does much for anyone. We never have perfect certainty. Our certainty just becomes somewhat lower.

    • xabier says:

      Don

      One of the problems with real and productive assets – like land to garden and farm – is that as long as the State, or any other coercive power exists, it can at any time redefine your property rights or even abolish them, ‘for the greater good.’

      In WW2 in Britain, the whole economy and labour force was ruthlessly commandeered by the State, in a manner much admired by Hitler no less: if you had a family farm and weren’t doing just what the government wanted you to do with it, it was quite simply taken away from you for the duration of the conflict, and you had to live elsewhere.

      As some comments in favour of State centralized direction on a crisis show here, there will be many people who will behind such policies, out of self-interest and naivety. So all one’s work for oneself, family and community could be abolished in an instant. And in trying to keep everyone alive, they may lead to doom for all.

      • Don Stewart says:

        Xabier
        I agree. Governments are much more likely to throw sand in the gears than to actually do any good…Don Stewart

      • philsharris says:

        X
        We might take a different view in Britain because as the saying goes these days, without food imports we ‘are toast’. Co-incidentally I am giving a talk tonight to a local British group on the subject, and was talking to a friend this morning whose father was our regional scientific advisor to the local Executive Committees who managed details of agricultural expansion during WWII, He was always bitter that as a young man he had not been allowed to join the military, but was commandeered because his expertise was so vital. So it goes…

        I wrote elsewhere about the issues facing Britain … “Industrialized Britain, 50 million in 1939, could best be considered in those days as a set of very large cities with a rather small run-down agricultural area that imported 70% of food-as-calories.”
        You correctly identify the draconian powers but these were managed by ‘peer groups’ and used rigorously identified scientific expertise. (Give a thought BTW to the way that ‘peer groups’ still manage standards of reporting of scientific studies. This is make-or-break for some labs and individuals, but necessary for all that.)
        Here are quotes on ‘powers':
        “Regulations impose sentences of up to 12 years penal servitude for black market operators.”
        “Science and state intervention combine.”
        “[Local] farmers’ executive committees, with experts, have wide powers to bring land into cultivation.”

        The result was that ‘run-down’ British farming doubled its pre-war production, and that food imports as calories were halved. Even so, over 30,000 British merchant seamen were lost. (We needed of course that oil from Texas among other things for doubling farm machinery use, as well as for other parts of the war effort.)

        It had been recognised from WWI that food could not be rationed by price and household income. Preparations began in 1936 – not a moment too soon, it has to be said. The strategy turned on being “all together” and having priorities for food for industrial workers and for maintaining ‘health’, especially of children. All these were achieved to some degree.
        Gardens and community ‘allotments’ for private growing were popular, built as they were on previous traditions.

        Britain almost literally ‘sinks or swims’ together.
        I am saying this tonight:
        Q. Can Britain feed itself?
        A. No
        Q. Where will we buy our food?
        A. Like now, mostly from EU countries
        Q. Can we afford it?
        A. Well, it’s a case of having to

        Phil H

        • xabier says:

          Phil Harris

          We don’t really differ.

          In many ways the State is still our bulwark of protection -against drug gangs and criminals completely taking over the streets, against corporations doing quite everything they wish to us and our food, and so on. As you so rightly say, WW2 would not have gone well for Britain without the policies you explain (and, as I noted, Hitler, Goebbels and Speer were great admirers of British ruthlessness and efficiency – when Hitler by contrast made the mistake of trying to keep the Germans on a peace-time consumption economy in order to preserve the appearance of normality and success). State action in that instance was an unqualified success.

          I was writing more as a caution to those -like me – who are taking refuge in the ideal of cultivating their garden in some distant spot and letting the rest go to Hell (I simplify of course) : the thing is, the powers that be will come after them in some form – the tax collector, if not the agricultural expert.

          Taxes and bureaucrats, just as much as our barbarian ancestors, ground down the late-Roman State. States in crisis will get blood out of a stone.

          Those Argentinians who survived the initial shock in their last economic crisis fell victim to taxes and all kinds of restrictions preventing them from surviving and perhaps helping themselves – Argentina is well worth studying as a society in profound crisis.

          Governments today already have far more useless dependants to fund and bribe today than ever before, and bribe them they will if it is at all possible. And a crisis will multiply that dependant population hugely.

          You might then see government-backed legalized squatting by the evicted, ‘invasions’ of ‘privileged’ enclaves, etc. In Argentina, people – not the super-rich – set up gated communities to protect themselves against lawlessness, and those gates are now being forced open by the Kirchner government, allowing just anyone to wander in, because they are ‘an offence against Democracy.’

          When Britain faces its crisis, it will be in the context of a society clearly much less law-aiding and cohesive than in the 1940’s, and morally ruined by drugs and MSM culture. Who can say if the State will wear a benign face then?

          Even now, with the enormity of the challenge in the immediate future already clear, the British government is hell bent on taking good agricultural land out of use in order to satisfy the construction and ‘growth’ lobby. It bodes ill.

  10. Scott says:

    Thanks for another informative article Gail.

    I am already noticing that my favorite foods especially from the sea are getting harder to find and more expensive. When I was a kid we had canned abalone on the shelf and fish sticks were made with true cod. Now a days they use some other more abundant fish and cod is expensive as an example.

    In one of the links you provided I read that along the fishing shores of Italy the fisherman today only catch about 20 percent of what Fathers caught in fish. And I also read that it now takes about 20 or more days to catch as many fish today compared to the year 1900.

    So when you look at an 80 plus percent decline in world ocean fisheries that is very shocking to me and this only happened in the last century.

    My late brother once said “this is the time of the Harvest for the world”. Seems that way.

    So when I look at the oceans and depletion rates on these older large fields that we have come depend on there sure has been profound change in this last century and the next century promises even more profound change.

    So yes, we should live one day at a time and enjoy life. I found a passage in the Bible once that says Jesus we should not worry about the Morrow.

    Morrow is a word meaning “the next day” in literary English. It also means “morning” in archaic English.

    But it is hard not to I guess we see to much and we feel it is our job to do something, but make sure that I savor each day as a good day.

  11. Scott says:

    No doubt that the that many developing nations have raised their lifestyle in recent years as they many nations like China are producing so many goods and as we can see on the charts the oil demand from the developing world is really accelerating our crisis window opening.

  12. RobM says:

    I agree with your comments on religion. My reading of history suggests religion may be the only force strong enough to override some of our destructive evolved behaviors. But we need a new religion. Not one of the many destructive “go forth and multiply and dominate” religions that exist today. We need a new religion grounded in science that worships the mysterious universe, our amazing planet, and the miracle of life. We know from the history Abrahamic religions that a new religion can spread and displace old religions very quickly. Maybe we could recruit someone with long hair like Nate Hagens to take some drugs and start hearing voices so we would have someone to follow…

    • It seems like people have been starting new religions from the dawn of the ages. There are many different flavors of religions. Different denominations within the same religion can be quite different.

      I personally am a member of an ELCA Lutheran Church. My husband was raised Episcopalian. Both of these denominations tend to be fairly liberal. I have a sister who is gay. She and her partner are members of a United Church of Christ congregation. None of these denominations believe that the Bible is literally true. I have a different sister, Lois Tverberg, who writes about the Jewish context of Jesus. Her books add Jewish understanding to the story the mainline protestant churches teach. She came as an outsider and studied Hebrew and the Jewish faith both in Israel and with local rabbis.

      I have had quite a number of clergy contact me and ask if they could distribute copies of things I wrote to their congregations, or read pieces of what I wrote in their sermons. Needless to say, these were clergy from the more liberal churches.

      • RobM says:

        Interesting, thanks. Perhaps I need to open my mind a little. It seems you are saying that some good religions exist today because they ignore their defining texts. Sounds like a religion can be anything the people that attend the church want it to be. So maybe we can morph an existing religion into a belief system that teaches us not to overcrowd and damage our nest.

        • I would not describe religions as “ignoring their defining texts”. There are many ways a text can be read. If you gave a text to a six year old, or to a Ph. D. student, there would likely be very different interpretations, for example. You need to choose a group that looks at texts more the way you would read them. You may also need to be part of discussion classes, that look more closely at texts.

          In the case of the seven-day creation myth, the way I have seen it discussed is in comparison to other creation myths of the time. How does this myth differ from the other creation myths, such as the Babylonian creation myth, and what does this tell us about the Jewish people, and the way they viewed God?

          Archeological evidence is also brought to bear. “Thou shalt have no other gods before me,” seems to mean that it is perfectly OK (at least at that point in time) to have other gods, since the evidence is that early Jews seemed to have various household gods. The Jewish God wants to be first, however.

          Old Testament stories are viewed as transcriptions of oral traditions. The rules for that day may or may not have any importance for us today. New Testament texts were written long after the fact, and often contradict what seems to be said in the Old Testament, and also the details of other New Testament books.

          One major emphasis is on figuring out how we should live our lives today. This may or may not correspond directly to what the Bible seems to literally say. A recent sermon talked about the Ethiopian eunuch who according to church tradition became a missionary to his own people, after his baptism by Philip. The sermon pointed out that the Ethiopian Eunuch was very definitely a person the Jewish religion of the day would reject. Since he was an Ethiopian, he was clearly not Jewish. Furthermore his sexual status clearly made him an outcast from the Jewish religion as well, based on Deuteronomy 23:1. Yet this is clearly a person through whom God chose to work.

          Furthermore, the person who baptized the Ethiopian Eunuch was Philip. Philip did not have a “job” as an evangelist. He was one of seven men appointed to wait on tables, when the Twelve Disciples decided that they were too busy for that task, saying “It would not be right for us to neglect the ministry of the word of God in order to wait on tables.

          So God decided to work through someone who was appointed to wait tables, and someone who was a sexual outcast (as well as being of the wrong race, and not Jewish). Perhaps we should re-examine whom we decide to exclude, because for some reason they do not appear to be worthy. God makes his own choices, which are often very different from human choices.

  13. Pingback: Reaching Oil Limits – New Paradigms are Needed | Doomstead Diner

  14. “Money gets its “realness” from the magical properties of belief in the system.”-Dave Kimble

    Actually, no, Money gets Realness from its relationship to the Legal Constructs of Property Ownership and then maintains its Value through the Taxation system and Interest System, Both Monsta and I went into great detail on this in the last month on the Diner.

    In the end, Money always has to be tied to the ability to acquire resources with it. Once it starts failing to do that, the money begins to lose value. Similarly, money begins losing value once Interest Payments on Issued Debt cannot be met or Taxes cannot be paid. You see all these phenomena in effect at the moment.

    In essence since the beginning of the Industrial Revolution, Debt has been issued on the expectation of continued extraction of resources out of the earth, primarily Energy. It is no coincidence that the same people who control the Banking System also control Ownership over the Energy Production facilities. This began in earnest with the monopolization of the Oil Industry by Standard Oil of John D. Rockefeller in the 1800s, and the system has been expanding since then, based on Infinite Growth essentially, which we all know cannot happen in a world of Finite Resources.

    To put it simply, the money will cease to hold value when there is insufficient Oil to drag up to issue credit on. This really has already passed, but it is possible to mask the problems in some places by Triaging others off the Credit Bandwagon, which is what is currently underway in the PIIGS nations. By destroying demand in those countries, continuing to issue new Credit to the “stronger” economies, they get access to the Oil the Hung Out to Dry countries cannot buy anymore.

    This is how the Ringfencing is progressing at the moment, and it keeps BAU running a bit longer in the stronger economies that can continue to issue credit, but they are now hitting the Wall also, most acutely the Japanese at the moment. This phenomenon will continue to work its way inward to the most Central Economies of the FSoA, China and Germany until they also Implode.

    You CANNOT MAKE SOMETHING FROM NOTHING. All the money creation in the world by the CBs will not put Oil burned up and now in the atmosphere back into the ground, so the new money creation of debt is basically WORTHLESS. It is already being recognized as such, but there is plenty of room for lopping off limbs here like Cypress, Greece, Spain, Portugal and Italy before the whole ball of wax comes crashing down. Crash it will though, it is Baked in the Cake now.

    RE

    http://doomsteaddiner.org

    • xabier says:

      Reverseengineer

      While you are debating the reality or otherwise of money, the bailiff is knocking at someone’s door to take their workshop or home, in order ultimately to pay for the bad investments of banks and governments and the overwhelming debts of the latter – and that’s while are still plenty of goods such as food and fuel to go around.

      Or, to put it another way, the beliefs of the Spanish Inquisitor might have been false, but he could still have you executed!

      I think this is really Gail’s point here about financial limits, although you are completely correct of course in saying they are of different order to resource limits.

      • “Or, to put it another way, the beliefs of the Spanish Inquisitor might have been false, but he could still have you executed!” -Xabier

        Don’t get me started here on the Spanish Inquisition. I get in enough trouble on my own Blog for my perceptions on this one. At least there I can’t be banned for it. LOL.

        RE

        • NOBODY expects the Spanish Inquisition.
          but seriously, I think there is a real danger of a theocracy arising in the aftermath of any finance/energy/food supply crash
          I n the absence of anything else that makes sense, I think there will be an inclination to believe the godbotherers.
          It couldn’t happen? The US military is already infected with the god disease, when the economy collapses, someone will have to take control, that someone will be the one with the most firepower to back it up and commandeer available fuel supplies-(in the national interest of course)
          The constitution? forget it. desperate people can’t eat constitutions, that will be suspended the moment the military dictator takes over (temporarily of course),

          • xabier says:

            End of More

            Having very militant atheists in my family on the Basque side, I have to say that I’d trust them rather less than the people you dismiss as ‘God-botherers.’ Some of them have done terrible things, but they are very proud not to know any Catholics, etc. As if that excused their own crimes. Neither Stalin nor Hitler were known for bothering God very much…….

        • Atheism per se has nothing to do with personal conduct. I don’t think there have been any mass persecutions specifically in the name of militant atheism, loony theories, yes.
          individual conduct is another matter, and irrelevant.
          on the other hand mass persecution in the name of one god or other has been common throughout history.
          Hitler was a practising Catholic until at least 1929
          my overall point is that as resources go into acute depletion there will be conflict to acquire them, and widely varying reasons given as to why they are not there, Conspiracies, plots, party politics, intrigues and so on. Like now, people will refuse to accept the truth, that we’ve simply run out of gas. Gullible people will fall for the god reason—insufficient prayer to refill the oilwells etc.( the equivalent of getting out of a broken down car and kicking the tyres) In the absence of anything else, this will seem the only viable alternative, and so I would suggest that a theocratic dictatorship will arise to reorder the ‘godless multitudes’
          Actual ‘belief’ in this context has no more relevance to any god than electing a Borgia as pope…the point is a grab at power, or the remains of it, pure and simple.
          Once power is held, it has to be kept by persecuting the weak, or those of the wrong religion or politics—same thing.
          Right now, shortage of resources, or battles over wealth, is the ultimate driving force between muslim sects across the middle east. leaders give preference to their own tribe. As resources run short in the USA, the same thing will happen, as it will as Europe fragments into its old borders. Only prosperity holds disparate people together, poverty destroys societies and drives revolution. History confirms that. Our wealth has been entirely a construct of oil energy input, life without that energy is too frightening to contemplate.

          • I don’t know if you read my post from February 2012 called, Human Population Overshoot–What Went Wrong?

            Other “K-selected” species like dogs and monkeys are very territorial. This is a major way population is kept down, without running out of food supply. Humans have this tendency as well. When there are plenty of energy supplies, it is easy to be at peace with neighbors–trade is too important to interrupt with petty grievances. But once there are resource shortages, there are all kinds of excuses for wars. Religion can work both ways in this-holding together local groups, and fighting with those of other religions, especially in times of resource shortages.

          • Brian Carpenter says:

            End,

            You ought to read the accounts of all sorts of religious people about their lives under the Soviet regime. They took their Marx seriously and made a sincere effort to stamp out religion and the people who clung to it.

          • xabier says:

            The Soviets persecuted in the name of militant atheism!

            My point about my Basque relations is that they have no moral base themselves, and approve of terrorism, in a political cause, but they are proud not to know ‘filthy’ Catholics and have a fit when they see a Crucifix.

            They leave me speechless. ‘Moral superiority’, ‘progressive and democratic’ (in their own eyes) and approval of murder!

    • people get Nobel prizes for economics for saying that you can get wealthy by borrowing money and spending it.
      I wonder if i can get one with my thesis on how having a leg amputated can halve the cost of buying shoes.

    • You make good points about how the system holds together. There is really a whole system behind it of land ownership, taxation, and energy extraction.

      • The “System of the World” as Neal Stephenson put it in the Baroque Cycle series. The folks in charge of Money creation have been perfectly aware of the relationship between thermodynamics and money since Isaac Newton was Master of the Mint. They have always been betting on discovery of an infinite power source to keep the game going, thus the massive investements in Super Conducting Super Colliders and the like over the last Century. Sadly they failed, and so the System of the World is also in catastrophic failure mode.

        RE

        • Scott says:

          Financial collapse sure seems possible soon. Fed still buying most of the bonds which has got to end badly here in the USA and also in Europe and UK I think the same game is going on. Today the US Fed said it plans to continue and perhaps increase or decrease depending on markets. More of the same. Bond markets would fail and collapse without Central Bank Bond Buyers. This has got to be inflationary at some point, surprised it has not yet hit that hard (yet). I am looking for a bond market collapse as the canary in the coal mine as if we do not have enough canary warning signs already.

          Another point on my mind is that we have been discussing the failure for world governments to disclose the fossil fuel energy shortage that is pretty much here. In fact it seems that they are not disclosing many things.

          I still wonder if they have something up there sleeve, perhaps that is why they do not say much maybe a Reverse Engineered UFO Hyper Drive System or some other solution. I do think big oil is protecting its enterprise for now. You know they are very secretive about so much which makes me wonder. Maybe they are not worried, just planning to release the solution soon.

          Just hopeful thinking as their apathy is interesting.

  15. Hi- this and your last post has been stimulating – the end of cheap oil has not led to more and more expensive oil as rarity [for oil] or demand [for coal] kicks in. The economic model has suggested that as it gets rarer so the price will increase and so stimulate more exploration- or efficiency – or a switch to alternatives. The reality seems quite different.

    Just as animals find an ecological niche with parameters so it seems [in my view] our economic system is finely tuned to an ecological/economic window related to oil [energy] price. If I take your yeast analogy there is a limiting factor before they eat all the sugar and die- it is a problem that brewers are aware of and go to lengths to solve- at some point the waste [alcohol] becomes too high for yeast to function and curbs growth. Brewers push these limits with ‘high pressure’ yeast to get more alcohol but there is a limit to improvements. The paradigm shift to this problem was distillation [a benefit of this system is low grade sugar- potatoes can be used rather than high value fruit] .

    It seems to me that the economy has an un seen limit- it was never designed to function in an expensive energy environment . High energy costs require a different economy and hence the need for a new paradigm.

    Thoughtful stuff- I shall endeavour to think up an entirely new economy in the coming week!

    • very very few people grasp that we built a society that can only function on cheap energy—it just can’t run on expensive energy
      yet not one person in 1000 will accept that–Ive almost given up trying to say it anywhere.

      • Brian Carpenter says:

        End,

        Please further define the words “cheap” and “expensive.” That is the source of the quibble, I believe.

        Also, as one of the “God-botherers” myself, I wonder if you aren’t overstating your case. By quite a bit. Perhaps you would be so kind as to review my comments on the last post where you spoke this way.

        Kindest Regards,
        Brian

        • you make a good point- defining cheap expensive energy at least on a financial level is $120 barrel- anything over that is not sustainable. Currently there is plenty of oil so supply is no problem but at $100 there is almost zero growth. Coal also peaked in 2008 at $200 a ton dropping to $100 and now seeing a decline to $60-80.

          outside of money as a guide there are variables- in the US petrol is half the price of Europe but people buy cars/semi trucks with half the fuel efficiency so we spend about the same proportion of our wages on travel. In Asia a small amount of expensive fuel delivers better returns and as a small-hold farmer I can relate to that: my soil cultivator will work an acre on a gallon of fuel which is excellent value even if fuel was 2 or 3 time more expensive. However that same gallon in my truck will only take me to the supermarket one way so I would rather use local shops and have less choice.

          10 years ago home fuel gas and electric in the UK was just half the cost- my income remains much the same- so it make sense to install solar and do a high level of insulation rather than spend £1500 a year. The high cost makes going green economic although we are lucky to have some big savings to spend now [and also like many people of my generation we are benefiting from wealthy baby-boomer parents either in donations or wills(and the certainly were the generation with excellent pensions and returns on houses)]

          but energy costs high or low relate to variables such as geography: living in a city and age: I spent a huge proportion of my income on my car as a 20 year old but didn’t have a family or home.

          The variable answer to what determines cheap energy is really what we are used to. If you budget your life to fuel at $60 a barrel then it will be more difficult to pay the mortgage when it doubles. Compared to the US Europe pays twice as much for energy but we tend to use half as much. In Germany the passive house system uses very little energy and the up front cost is paid off within a few years.

          I agree with Gail that mitigating energy use is not a long term sustainable strategy but it buys a lot more time. A transition economy does allow us to sustain the economic system for a few decades, delays the impact of peak fossils and AGW.

          • I am not sure the oil price situation in Europe is as simple as you describe. Governments have encouraged individuals to conserve oil by putting extra taxes on it. These higher taxes reduce your tax load elsewhere and leave you with more discretionary income, so the effect is not the same as higher oil price would be–that would reduce your discretionary income as well. Also, it is really only the private citizens that have this tilted set of taxes. As I understand it, the business community (which is very much affected by fuel costs) as well as governments have to pay whatever today’s cost of fuel really is, so that part of the economy is still affected the same way as elsewhere (except for carbon taxes, which seem to be coming down).

            In at least some countries (Germany for one), the cost of electricity is also disproportionately charged back to wage-earners, to try to help businesses out.

            With respect to what high fuel costs are, most of the US infrastructure was built on $20 or $30 barrel oil. It becomes much more expensive to repair when costs are a lot higher than this. I think $120 barrel is way too high. For growth, we probably need oil under $50 barrel, maybe lower than that.

            • I take onboard my oversight as far as the benefits of road fuel taxation you rightly point out. Although taxing through fuel duty does benefit industry in that UK business does not have to pay health insurance and low wages [i.e. company competitiveness] are subsidised with state welfare.

              Gas and Electricity are not taxed beyond 5% and are more expensive than the US making solar pv/thermal and insulation attractive and therefore fuel consumption lower. The Euro system whilst imperfect does demonstrate that a short term transition economy is possible. But I do take your points.

              the US could buy time by adopting a Euro energy use policy rather than try and turn the clock back to $50 b, 1950s American dream and big V8s.

              But I am not an optimistic Green- more pragmatic and see it as a means to buy time [both oil-peak/AGW] for the transition needed.

        • cheap oil is oil what used to be produced at an EROEI of 100 to 1, thats the bubblin crude that made Jed Clampett move to Beverly Hills
          Expensive oil is the stuff got out of tarsands, at maybe 4 to 1, or from 5 miles under the Atlantic off the coast of Brazil..
          There seems to be a collective denial that oil costs more to get hold of, year on year.
          Oil from those sources means that we are spending too much to support our infrastructure, but cannot accept it. You cannot run a viable economy at that cost ratio. Our jobs have all been created by fuelburning, no matter how remote we are from the fuel.
          This is the wrong forum for religion, so I dont intend to waffle on about it beyond this post, it’s ok at the individual level, but unfortunately it gets hijacked by evil men for doctrinal purposes (god is on our side etc) Dont forget the belt buckle on the SS uniform said Gott mitt unz.
          my point was that as the economy crashes, a ‘reason’ for it will have to be found as will a solution. Logic and reason fly out of the window when faced with financial catastrophe. scapegoats are sought, and must be found (read Germany in the 30s)
          Politics hasnt worked, economics hasnt worked so whats left? Pray harder and get rid of the infidels. Once nations start to fragment, governments lose their power, if power is then taken over by a military with odd beliefs (and there’s a lot of evidence for that) then we’re all in trouble.

          • Brian Carpenter says:

            Well, I’m a working pastor with two colonels, two majors, three captains, and a Master Sergeant in the congregation. They’re men and women with beliefs you’d probably clarify odd. I don’t see them turning into dictators. They are honorable men and women who love God and want to do their duty

          • xabier says:

            End of More

            It’s simple: if, in a collapse, you are worried that the ‘God botherers’ will come for you, just adopt their faith!

            Its happened in Europe many times. When Spaniards realized that staying true to Christianity would just leave them as 2nd class subjects, liable to slavery and paying higher taxes, they converted en masse to Islam in the 9th and 10th centuries, having held out for several centuries.

            Similarly, if a dictatorial party arises, join it: that was the Italian solution under Mussolini.

            There is always a way to adapt and survive.

          • Phil says:

            In the UK, the scapegoating’s already happening.
            The UK government is blatantly persecuting the poor and infirm, cheered on by the right-wing press.

        • Brian
          I’m not condemning well meaning individuals, I’m pointing out the danger of collective hysteria in the face of catastrophe.
          Good can be hijacked by bad, while still retaining its ‘good’ name. Once good power has been transferred to bad people, whatever banners they are carrying, it’s too late to do anything about it. The German people have always been among the most cultured and civilised in the world, but once their political system was hijacked, the majority got swept along with the (temporary) delusion of prosperity.
          A great many people acknowledge that we have an oncoming catastrophe of some kind, which is obviously a collective problem, but think of the solution to it as an an individual problem, or at most a local problem. (I’ll just bug out is a favourite, or ‘hunker down’, or dig my own veg patch). In order to survive religion will be just one collective label we will use to bond with (or reject) others, or colour, or language…you have lots to choose from, but group recognition is a primitive instinct, (almost certainly one of the original creative forces of religion.) because it gives a survival advantage in group security. Rejecting others who are not part of our society helps to bolster our secure feelings and ‘righteousness’ ….whatever is wrong in ‘our’ society must be ‘their’ fault. If leaders can put a godlabel on it is an added bonus. So religions break into sects, but only live in peace as long as they remain prosperous. When poverty bites, they start fighting each other. Shortage of resources again, wherever that problem arises, conflict is inevitable. ‘They’ are wrong because ‘they’ are infidels.
          So you have catholics and protestants (N Ireland UK), Sunnis and shias, no doubt nice people on an individual basis, but collectively homicidal when faced with threats to their well being and survival. No nation is immune to this threat when groups identify themselves in a tribal fashion–which we all do, deny it though we may

          • EndOfMore- I sadly agree with you. desperate people who have been sold the dream of endless growth turn to desperate politics- in Europe we have the Spanish popular party, the Greek golden dawn and the British UKIP all offering easy solutions that involve anti immigration and nationalism and idiotic tax and spend which involve less of one and more of the other. UKIP is the most disturbing because they don’t wear swastikas but they still sell the lost ‘Golden Age’ taken by ‘evil’ -insert minority- who are part of a New World Order- whose manifesto is no longer the ‘Protocols of the Elders’ but Agenda 21 [Lord Monckton is a UKIP supporter]. They love their conspiracies as did Euro politics in the 1930s, some have a religious element [Destiny] and have in the past gone from a few % of the vote to 30%+ during economic crisis.

            If the future was not challenging enough we will all have to deal with the additional threat of popularist politics.

            Gail I find your insight valuable and wise but I don’t quite see significance of religion except good one will be helpful to transition.

            • Mel Tisdale says:

              I never use Monckton’s title because I just do not think he is worthy of it. The only good thing about him is that he is an ideal example of just how daft the hereditary honours system is and might just be the cause of its demise.

            • Monckton is an idiot but he has followers in the US who are powerful making Monckton dangerous.

            • Mel Tisdale says:

              He also has enemies. See here.

              I wonder how big an idiot he really is. Take his position on climate change. I find it difficult to believe that he goes to all the expense of travelling around the globe peddling his nonsense about climate change without recompense somewhere along the line. It seems to me that he has spotted an income stream and is milking it for all it is worth. He certainly does not live like a pauper, far from it.

  16. yt75 says:

    carpe diem
    in the end ..

    • Capre diem- literally “pluck the day”

      Merriam Webster’s Definition, “the enjoyment of the pleasures of the moment without concern for the future”.

      I suppose we can run around madly trying to save ourselves. But for many of us, there is not a lot point to this. The best we can do is make the best of the situation we have today.

  17. Don Stewart says:

    Dear Gail
    Those interested in a distinction between ‘financial crisis’ and ‘banking crisis’ and a pretty detailed exploration of the origins of banking crises should read:

    http://www0.gsb.columbia.edu/faculty/ccalomiris/EP%20Calomiris%20Banking%20Crises%200910168.pdf

    The article traces political response to banking crises back to 33AD and the Roman Empire. In terms of banking crises, the article clearly pins the blame on political rules which encouraged foolish behavior–right up to now.

    A few thoughts that the article raises in my mind:
    1. In a well designed system, things like letters of credit would not be a problem. Regulatory capture which lets firms like Deutsche Bank and JPMorgan write enormous derivatives and include those under the same umbrella as letters of credit is the culprit. Furthermore, we could change all that if we wanted to.
    2. The waves of 19th century bank failures in the United States did not stop the US from growing. Those who had money in the banks just lost some or all of their savings—shades of Cyprus.
    3. Gail’s graph of ‘US GDP Under One Scenario’ implies a smooth downward trajectory. She doesn’t specify whether GDP will fall in sync with the decline in oil production or faster than oil production or more slowly than oil production. Suppose, just for illustrative purposes, that the line also represents the trajectory of oil available for use in the United States. Is such a decline also consistent with a functioning banking system? If the banking system is sound, as discussed in Calomiris’ article, I don’t see why not. The banks would be fundamentally about facilitating commercial transactions and not about speculating in markets with their depositors money and exotic financial instruments. Cotton could be produced in Alabama and sold in New York through bank intermediaries.
    4. Does debt make any sense if oil production falls as indicated by the graph? Investors and banks would probably have learned to be gun-shy about a lot of things. But if someone brings them a really convincing story, I don’t see why investors and banks would refuse the opportunity to make money. The Hurdle Rate will be high–but some projects will make it. Long payback periods will be very difficult to fund.
    5. Will GDP fall as rapidly as oil, faster than oil, or less fast than oil? That depends on the struggle between depletion and innovative ways to generate wealth without oil. Hard to predict and I don’t have a crystal ball.
    6. If we don’t reform the banking system to greatly reduce the risk of bank failures, will bank failures or the money printing required to save them bring about the collapse of real economic activity? The evidence we have from the 19th century in the US shows us that bank failures didn’t stop growth. But now, in the 21st century, we are much more financialized. If the banks were isolated on the sidelines just facilitating commercial transactions, and the stock market and assets such as housing and commercial buildings simply collapsed because of bubbles bursting, it seems that the ‘paper wealth’ of lots of very rich people would disappear. There would certainly be a period of time when adjustments would be required, and, due to the shrinking oil supply, we would be shooting at a continuously receding target. My guess is that things would be very hard.

    Don Stewart

    • Don,

      My graph, “US GDP Under One Scenario” probably shouldn’t be as smooth as it is. I wanted to give an idea of what a 20 year collapse decline might look like.

      I am certain governments will attempt to have some kind of money. The question is what that money will buy. If international trade is in poor condition, there won’t be more than the most basic forms of equipment available. Food supplies are likely to be inadequate. If the banks have no electricity, their services might be pretty basic. (I’m afraid I don’t have all of the answers with respect to banks. It is pretty easy to change the rules for banks, and the results will be somewhat different. As you say, the depositors can be left without funds, and the economy can still go on–as was the case in Iceland recently. Of course, most of the depositors in that case lived elsewhere.)

      One of the issues, too, is which government. We think of the United States and the Eurozone. These could break down into many smaller units, each with their own currency. It is not clear that these currencies will necessarily be interchangeable, especially if there are local wars going on.

      I think I have said that I expect some kinds of debt to continue indefinitely. There will just be much less of it, and interest rates will tend to be higher. It may still make sense to finance something that is a productive asset, if the expected rate of return is high enough. Short term loans to facilitate trade may also still be made.

      • Don Stewart says:

        Gail
        I obviously have no crystal ball. But if I had to put my future on one scenario, it would be collapse followed by rebuilding. My reasoning is as follows. The Soviet System was a command and control system where the bureaucrats knew where everything came from and everything went to. When the political system collapsed, it was easier to keep the real production system together.

        Back in the late 1960s there was a study of the US economy called ‘Input/Output Analysis’. The idea was to identify where things came from and where they went to. So that, in the case of nuclear war, the bureaucrats could effectively direct the reconstruction of the economy–or at least the most effective use of what was left of the economy. It didn’t impress me all that much, even then.

        Now I think it is a hopeless task. Supply chains are so extensive and so fluid that they cannot be managed centrally. So I put some things into this sort of perspective:
        1. If DB and JPM go bust and all their hundred trillion in derivatives are worthless and the governments are at least intelligent enough not to make the taxpayers responsible…who will really care. A lot of rich people will wake up poorer. Their algorithm driven trading machines will have burned out from overwork and the world will be a better place.

        2. If the US dollar or the Euro or the Yen, or all of them, collapse, then it will take a while for the businesspeople to figure out some other way to trade with each other. So I would expect a collapse and then a rebuild as trade re-emerges. I would expect a lot of pruning as non-essentials fall by the wayside and only important things are traded. Perhaps, after a couple of years, 20 percent of the current volume of global trade. Meanwhile, I would expect a rejuvenation of local trade–again focused on essentials. A medium of exchange will be invented.

        3. Banks should not fail if they are performing mostly ‘fee for service’ duties such as facilitating trade. (As the article stated.) If banks are speculating with depositor money and the speculations go bad, then it will all depend on whether our politicians have any backbone. Letting the banks fail would deprive people of a lot of imaginary wealth. In the short term, there can be damage to the real productivity of the economy–as in the Depression in 1932 when farmers dumped corn on the ground because it wasn’t worth hauling it to town to sell.

        4. Stocks could crash as the standard of living continues to fall in the US, Europe, and Japan and corporations are unable to earn money. That just means that rich people won’t be nearly as rich and Porche and Ferrari sales will not be setting records. Most of the corporations are not providing essential services, and we would be better off without many of them. If we are able to contract and keep things like electricity and water working, then life will be tolerable for people who have low expectations.

        5. If the OECD governments survive and the Central Banks stop printing money, then pension funds invested in bonds may break even. While many corporations will default, interest rates for the survivors and for governments will increase and the flow of money to pension funds may be level.

        6. People who are dependent on corporations making non-essential products, or government transfer payments, are likely to suffer. Many will die.

        I could go on. But to me it is like breaking billiard balls. They go in all sorts of directions. Those with the least exposure to the risks will probably live longer and fare better.

        Don Stewart

        • Scott says:

          Yes, I do think a new medium of exchange will evolve after the crash. In rural areas like I live we see a lot of trading of things, a barter system and people with out cash looking to trade things.

          As for me, I do not want to store all my savings in a bank. instead have it invested in things I can trade including food, food seeds, tools and gold and silver coins.

          I know you have heard this before, but…. Silver and gold have had value for thousands of years during collapse times which I mostly keep to trade and plan to eat the food! I guess if things really get bad the food may be worth the most – but I think some gold and silver coins will help. Better than holding Bonds and paper money which may be worthless in a true collapse.

        • I am sure that even with a collapse, some trade will continue.

          The big “if” would seem to be what happens to governments. If the Euro falls apart then there is a problem. If the United State government falls apart, then we have a major problem.

        • xabier says:

          Don

          I can’t think of a single government in crisis that has ever been wise enough not to burden the taxpayer…….

          Otherwise, I agree, we humans have rebuilt time and time again. This time it may be different, of course, but to think like that is not a good idea going forward.

  18. Ed Forbes says:

    “perhaps a type of plant that can use high carbon dioxide levels. If this is the case, this is another disappointment that we  will need to deal with.”

    LoL…have you paid ANY attention to the CO2 levels hot houses pump in to enhance plant growth? Current CO2 is about 280 parts per million. Hot houses pump in CO2 to greater than 1000 ppm. US subs also have CO2 well above 1000 ppm.

    Get below 200 ppm and plants start being starved due to LACK of CO2.

    • Perhaps I should have worded it differently. The point is that we are not the only species on earth. Even if the climate is not good for humans, it will be good for some other species. We have a very ethnocentric view of the situation.

  19. Ed Forbes says:

    Errr..current is about 380 ppm.
    Makes one wish for an edit function.

  20. Timothy says:

    I think the argument around money vs energy as the cause of collapse is just a matter of semantics. Yes, money can be reevaluated, it is a contract. But energy is finite and cannot be reevaluated. It is what it is. Regardless, I think the distinction Gail is making is accurate although somewhat misleading. Yes the collapse will not be caused directly by fossil fuel depletion, but it is the primary reason for financial collapse. So is it the financial system that will fail us or the energy system? They are so intertwined and interdependent, is there a difference at this point?

    • Part of my point is the fact that world oil supply doesn’t actually have to decline, for there to be a problem. High prices can create problems long before that point. So there is geology involved, but it is not the part of the geology that “peak oil” folks had been warning about.

      • Timothy says:

        Right, but what else causes the price of energy to increase, but supply limits? Yes there are occasional political events, wars, etc that can impact the price, but in the long run, the ultimate energy price regulator is supply.

      • Don Stewart says:

        Dear Gail and Timothy

        I am searching for my copy of Overshoot and Bottleneck, but they are hiding from me.

        It occurs to me that the global economic system has evolved to use some ideal forms of energy and in ideal amounts per unit of GWP. Just as a plant has evolved to use an ideal combination of nutrients and sunlight and water to produce biomass and ultimately seed to perpetuate its genes. The global economic system is, I think, best looked at as the ‘normal’ part and then there are ‘abnormal’ parts. For example, the generation of electricity in Saudi Arabia is ‘abnormal’ because the Saudi’s have made a decision to use their oil to generate electricity. The ‘normal’ parts of the system seldom use oil because it is far more expensive than other alternatives. Similarly, a peasant in southeast Asia farming a subsistence plot and interacting only marginally with the global economy is ‘abnormal’. A corn farmer in the Midwest is ‘normal’. The distinction between ‘normal’ and ‘abnormal’ is dependent on how integrated the activity is with the global economic system.

        The distribution of economic activity across the globe will tend toward uniformity over time. If the Chinese are willing to work for less money, then wages in the OECD countries will be driven down over time. Of course, things are never in ‘equilibrium’, for a whole host of reasons, but we can see which way the water will try to run downhill.

        If the price of a particular type of energy increases, then the entire design of the global economy will become out of equilibrium and the water will try to run downhill in a different way. Changing the design of the global economy to adjust to the higher price of, for example, transport fuels, will exact a toll in terms of friction. Just as the willingness of Asians to work for less money is exacting a toll in terms of friction and the attendant fall of living standards in the OECD countries.

        Running financial imbalances such as balance of payments deficits or the accumulation of debt must be considered ‘abnormal’. Just as with wages which are out of kilter, so we can expect the water from monetary imbalances and debt accumulation to run down hill toward equilibrium.

        Our experience tells us that humans are attached to what they have grown accustomed to. We will tend to run balance of payments deficits as a country and to incur additional debt in order to maintain consumption levels. We will incur debt to maintain a large military. We will retain a fierce belief in the right of every fertilized egg to grow to prosperous adulthood. And so…the sign that things are not going well with transport fuels is likely to be the signs of stress as what we do becomes increasingly out of line with what we OUGHT to be doing. These signs may arise when a particular group of people (say, the OECD countries) have pursued bad policies and practices until they have hit roadblocks, or when a group of people following sensible policies and practices is nevertheless caught by the necessity to make changes in those policies and practices because of the increase in the price of the resource.

        So far, it seems that the OECD countries are in the first group. China is apparently in the second group. (Although pessimists about China could argue differently.) An ‘abnormal’ person who is living on a very small transport fuel budget and is largely self-sufficient (largely independent of the global economy) may experience much less strain.

        Don Stewart

        • I think you are right about the world tending toward a new equilibrium.

          I understand that the fact that the US dollar is the reserve currency has permitted to run trade deficits, far more than would otherwise be the case.

          The other issue is that as the economy tries to shift toward equilibrium, there is a tendency for “breaks” or “tears” in the system to take place. OECD products are no longer competitive, so more people are laid off of work. Governments have increasing problems repaying their debt. At some point, huge changes start taking place. The Euro may no longer be used or some countries may drop out of the Euro. There may be local wars, or governments overthrown.

          • Scott says:

            Well it is Friday night and since we talked about living each day to the fullest –
            Here is song from a time in the 1980’s that our friends from around the world may like. Takes me back to a time I liked before we had to worry about all this crisis. Can we roll back the clock?

            Stevie Nicks – Rhiannon 1981 Live

  21. Ikonoclast says:

    Money is a representation of use value. It does not have a use value in itself other than facilitating exchange. The use value of bread is that I can eat it and get energy and nutrients from it. I cannot eat money and it is only useful (for exchange) whilst I can exchange some money for a loaf of bread. This is uncontroversial. We all agree on this.

    Gail has also highlighted that money is a promissory system. Indeed, the term bank “note” comes from the term “promissory note”. Gail’s emphasis on the possible looming problems caused by any breakdown in the promissory system (all money and finance essentially) is a completely valid stance. As Gail has said, in these conditions of breakdown “it becomes impossible to carry through on those promises.” This too is correct.

    At this point, I want to explain exactly where my analysis and Gail’s analysis diverge somewhat. I hope Gail will carefully consider my points. We are coming from the same analytical starting point (as exemplified by the above statements of agreement about what money is and also by our agreement on the resource limits to growth), but we differ somewhat about what might be possible at the crisis point. Gail takes a more standard or orthodox economic view about what will be possible at that crisis juncture (not much essentially). I take a more theoretical approach and say “theoretically some adjusting changes are possible.” At the same time, I say these changes won’t be easy and they won’t save everything (indeed far from it).

    Let me be more specific. When the current promissory system (money and finance) breaks down in whole or in part, Gail, you essentially say that production also breaks down. More specifically you say or strongly imply that production breaks down further than that which would simply be explained by resource shortages. That is, over and above the breakdown that is materially mandated by resource shortages, you see more extensive and earlier breakdown being caused by financial problems (faliure of the promissory system) and their knock-on effects of bankruptcies, lay-offs, unemployment and so on.

    Again, I would say this is correct but I would two riders or conditions. One, this is correct in the early stages of the crisis. Two, this reamains correct whilst the government takes no action or the wrong action. However, there are actions the government can take to ameliorate the the financial aspect of the crisis. The material aspect of the crisis is fundamentally immutable as we know.

    However, your analysis seems to assume that the government will never or can never take action on aspects of the financial crisis. My analysis says that governments can and do take actions to ameliorate financial aspects of crisis. My analysis suggests that resources, plant and people need not be left idle solely due to financial crisis. You seem to view all aspects of financial crisis as irremediable. You seem to assume that resources, plant and people must be left idle if the current financial system (the one that is failing) cannot put them to work. This is manifestly incorrect. My example of GM proves this empirically.

    Without government intervention, GM would have failed comprehensively and the USA would either have ceased to make cars or ceased to make cars in any siginficant number or ceased to make cars from a US owned and controlled company. Those more acquianted with precise details can let me know which it is. The US government, in its wisdom, intervened with fiat and special powers which exceeded and negated the standard financial rules. The GM plant did not become idle and GM workers were not (at least not totally) laid off.

    Whilst one can question the wisdom of state support for automobile manufacture, one cannot question, in my opinion, the wisdom that says that an advanced economy cannot abandon medium and heavy manufacture. If all else fails the government must intervene to see that the nation continues to have that capacity at least while resources last. And this is exactly what happened. The government intervened and superseded the standard economic and market rules of the free market economy and finance to ensure that a vital national function continued.

    The same thing will undoubtedly occur if, for example, electricity of gasoline supply is threatened by financial problems over and above actual resource exhaustion problems. Your government will intervene to maintain supply so far as that supply is possible within real resource constraints. Will this be as good as a smoothly functioning free market system when resources are still plentiful? No. Will this be better than allowing the system to break down and deacy further and faster than it should do merely due to financial problems? Yes.

    I believe your analysis underestimates the capacity for positive state intervention in financial crises. This is a common American mistake (I hope you do not mind me saying so) as your nation and people are heavily ideologically biased to laissez-faire capitalism with a marked suspicion of government and a strong bias that government intervention is never helpful.

    If anything causes the US excess trouble (over and above that in the pipeline due to looming resource shortages) it will be this ideological blindspot to possible partial solutions delivered by government. This is not in any way a suggestion to move to a full command economy, a move which never works in my opinion. It is a suggestion that the government will need to play a larger, active role in dealing with market and financial failure. Otherwise, the scenario you paint of financial failure leading and exacerbating resource depletion will indeed come true.

    • I think that where the difference in our views comes is with respect to what happens when the financial crisis of the type we are talking about takes place.

      In my view, financial crisis is pretty much coincident with government collapse. Once it becomes clear that a government can’t keep its promises, then it seems likely that that government is not long for the world–it will be overthrown or at best, voted out of office. If the usual problem is the situation I have described–there is no possible way to collect enough taxes to run the current government, then there really has to be a very major governmental change to make the new government much cheaper to operate. For example, the central government may disappear altogether, or a dictator may take over and wipe out most social welfare programs. If central government disappears, trade becomes much more difficult, reducing manufacturing. If a dictator takes over and wipes out most social welfare programs, many fewer buyers will be able to purchase goods, also having a very negative impact on manufacturing. In neither case will the weakened government be able to do very much.

      It is the government breakdown, and the cutbacks in government spending, and the breakdown in international trade agreements, that lead to interruption in manufacturing capability. Money per se is not necessarily the problem.

      • xabier says:

        Gail

        Latin American experience shows that the new regimes will probably keep welfare going in some form, it buys votes (this assumes the survival of sham democracy. What you don’t want to be is middle class – wealth will be extracted until you are among the destitute.

        There is some hope in having just a little property, too small to be seized – in Argentina, people with very, very small mortgages were protected by legislation, when everyone else fell liable to repossession. It was part of building a grateful voting block for the regime.

      • Don Stewart says:

        Gail
        The ‘international trade agreements’ mostly just remove barriers to trade and then global capitalism does what it does. Governments mostly intervene when they don’t like the results–such as the rescue of Chrysler and GM and the TBTF banks and AIG. And look at the trade barriers erected against Cuba. Back in the good old days, smuggling was a respectable trade…an example of human creativity in a world of government suppression.

        Look at Apple selling bonds in the US while it holds billions in tax shelters. Corporations can move money around without any help from governments…and despite the intentions of governments. The governments are, of course, fighting back.

        Government breakdown of regulations cuts both ways. Sometimes corporations welcome government regulation–such as the requirement that everyone in the US buy Obamacare. Usually corporations manage to make regulation a toothless tiger with regulatory capture. For example, the Texas hearings into the fertilizer plant blast show that no state agency was really responsible for the safety of the plant. The agencies point to the Fire Marshall in the town…a town that doesn’t have a Fire Marshall.

        Government regulation is frequently aimed at making the world safe for corporations and difficult for ordinary people. For example, the European Union is continuing their effort to outlaw heirloom seeds which have not been proven to be ‘safe’. The potato may have been bred in the Andes 500 years ago, but you won’t be able to plant it in Ireland because it hasn’t been through an expensive lab process. This is not just another example of bureaucratic stupidity. I imagine that the big seed companies favor outlawing the heirlooms. It is to the big companies advantage that people not ever see any alternative to the one they are offering.

        In the US, the big food companies continue to pressure the FDA to ‘regulate evenly’ all food. So the FDA comes out with draft regulations which essentially require anybody who might be thinking about selling a cow to operate a thousands of cows a day packing plant with government inspectors on hand. Joel Salatin has written eloquently about the grave danger government agencies pose to small farmers. It isn’t so much that the bureaucrats sit around thinking of ways to persecute small businesspeople–it’s that the Big Guys won’t leave it alone. They don’t want people to know that meat doesn’t come shrink wrapped in a plastic tray in a grocery store.

        We get the same thing with housing. The county I live in has regulations which make it hard for people to build small, handmade houses. The county has looked the other way in a significant number of cases. But the neighboring county (being better educated and richer) drove away a young man with a homemade trailer that he was living in.

        Food trucks are the staple way working people eat lunch. Yet Chapel Hill has made it impossible for food trucks to operate in that supposedly ‘progressive’ place. During the debate, one restauranteur wrote the local newspaper and said ‘our business is booming…and our kind of people don’t want to have to walk down the street where people are patronizing a food truck’. Needless to say, that restauranteur had a large clientele of Southern Belles marrying Rhett Butlet types at great expense.

        It MIGHT be awful to see the governments in the US collapse…but it might be fun to get rid of the b_______.

        Don Stewart

        • xabier says:

          Don

          Giant agribusiness just want to crush small food producers. Full stop. Now they use ‘food security’ arguments, going with the times, to condemn small producers on grounds of inefficiency and lower production, ie they are a ‘threat’ to world food security!

          The problem for people trying to make a transition, is doing so successfully within this very hostile environment.

          The EU is certainly a nightmare of over-regulation without any thought of the burden it places on ordinary people.

          • Don Stewart says:

            From Gene Logsdon’s blog today, reprinted by Resilience.org:
            Most tell me that they are leery of big government but that it is the only entity powerful enough to maintain a fair playing field between big corporations and small business if only it would. I have this hunch, or hope anyway, that these are the people who are going to bring some sanity not only to our economy but to our politics. And along the way, some mighty good food too.

            He is talking about the explosion of people in Ohio who are creating food related small businesses. I point out the ‘if only it would’. Everyone who looks at the issue objectively (at least in the US) concludes that the government is basically backing the Bad Guys.

            Don Stewart

          • Don Stewart says:

            Dear Xabier
            If one asks oneself WHY the US government almost always backs the bad guys, then I think power is the answer. Barack Obama recently met with all the TBTF bank heads. Nobody knows exactly what they said to each other.

            I think it goes like this. Obama describes what actions he want them to take. The respond with demands about what he will do for them IF they do what he wants. Finally, sitting around a table, these powerful people agree on something. Obama can command the Executive Branch and the bankers can command trillions of dollars of money. They get personal satisfaction out of ‘being in control’.

            Now consider Obama addressing a meeting in Cedar Rapids, Iowa of about 5000 country bankers. 5000 country bankers do not speak with any single voice, and cannot effectively negotiate. Therefore, Obama cannot discern what it is he might do for them, even if he wanted to. So Obama’s real position is the continued consolidation of the banking system into something that he can influence. Politicians don’t like anarchic enterprises.

            Don Stewart

        • xabier says:

          Don

          I agree with you entirely: decisions are made by those few who have concentrated executive and financial power in their hands, and to hell with the rest.

          In the same way, the world was settled by ‘three old men and a boy’ (a young official who took the notes) after WW1; and Roosevelt, Churchill and Stalin blithely settled the fate of Eastern Europe at their various conferences. I once met one of the diplomats who dealt with Stalin, he said it was all very personal indeed. (He had a lovely story, too, about a French diplomat who said to him regarding the Czechs and their betrayal by the West: ‘Of course, you are going to give him (ie. Hitler) that country, aren’t you? Now, I think e should dress for dinner. ‘ A whole country, mark you.

          Elections don’t regulate this process at all. The Swiss system of referenda is interesting, but then that’s a micro-state. We are dealing with Empires. Crumbling ones.

        • I agree on government regulation. Insurance companies are regulated by states. That means that there are 50 sets of conflicting, not too strong, laws. No insurance company wants federal regulation, because it might actually do something. Many companies are captives, which are domiciled offshore, and have even less regulation (and taxes).

          In case of insolvency, most states have post-insolvency assessment funds, that assess the companies that are not bankrupt, to pay for claims related to the bankrupt company. That method only works with an occasional small failure. If there are many large failures, from a systemic problem, it doesn’t work at all.

      • Gail- 1930s Germany was able to build new infrastructure and get people working – or at least employed as soldiers despite the US calling in their huge loans to pay for their own infrastructure projects to relieve unemployment like the Hoover Dam. I should do my own research but despite the lack of money major works were still carried out.

        the chaotic systems like Afghanistan, Congo and Somalia tend to try out dictatorships before they end up a claptocrasy. None of these option appeal to me- I was rather hoping for the Ecotopia of a fictional NW America.

    • xabier says:

      Ikonoclast

      I’ve noticed that some Americans get quite excited about the idea of State action – it’s a novel idea to them!
      And many intelligent observers in Europe, Britain and Latin America have the gravest reservations – based on hard experience! Recently, in Britain, it sometimes seems that nearly everything the State touches gets screwed, to put it bluntly……

  22. Ikonoclast says:

    I need to add an addendum to the above. Gail is correct in saying that much current debt (especially private debt) implies a promise to repay the creditors and thus a promise that they, the creditors, will be able to reinvest (create more plant or stock) or consume in the future. These promises cannot now be kept.

    Those owing the debts will not be able to generate the income to repay the debts due to resource shortages limiting production. Thus the debt must be defaulted upon. Default destroys the debt monies and thus default destroys the promises; the promise to repay and the implied promise that the creditor can further invest or consume. Default realigns the financial system with future real consumption possibilities. Default is completely good and correct in this empirical sense.

    Where future investment monies are not available due to defaults, this may impede future production or this may just realign the lesser available investment funds with the lesser available places for productive investement (the latter being due to resource depletion). Where it is the former and the government discerns idle resources, plant and workers, these can be put to work by government mandated actions, by the extra-market and extra-financial operations that an effective government always has within its power.

    • Besides the government breakdown issue I noted in my other response, I would also point out that in order to put the idle plant to use, there is a need to buy energy resources to make the plant operable. If the problem in the first place is that the government is “broke,” then getting those energy resources from another country may be out of the question–the other country won’t sell the energy resources for the kind of money that the broke country can provide. (Think of Greece.) Perhaps if the country has the energy resources within its own territory can it do something about the situation–send troops over to take the energy resources. Of course, then they won’t be available for the original purpose. We get back to the energy issue again.

      • xabier says:

        Gail

        In a crisis like that which is taking place in Argentina, which deals a huge blow to an economy but does not stop it completely, with goods continuing to move, people to be fed in some form, etc, what one sees is the sudden impoverishment of the great mass of people; the near-complete destruction of middle-income groups; the comparative immunity of the very rich; and the creation of a pauper mob manipulated by the regime that comes to power in the wake of the Crisis (in return for welfare.)

        Violent crime rises dramatically, and life is in every way degraded – intermittent electricity, fuel shortages, deteriorating food and water quality, and so on. All the organs of State remain in existence, police, army, town council – except now they are looking for bribes and may be setting out to rob you. The State is there, it just doesn’t do you much good and often isn’t visible. It’s a step down from a fully-functioning advanced economy, but not quite into Hell.

        Argentina is well worth studying, although I believe there are few reliable economic statistics due to State manipulation. Many elements in the Argentinian situation are already visible in Spain – destruction of middle income groups, sharp rise in violent crime and robbery, repressive State measures, immunity of the elite, everything obscured by Stet propaganda: even saying that young people fleeing Spain are ‘seeking adventure, not desperate for jobs’!!!!!

        • Thanks for that description of Argentina. I used to work with an actuary from Argentina. She would tell me about the problems her parents were having, and it agrees with your description.

          When I read your description, some of it struck me as also matching up with the current state of Russia, in its degraded state. When I visited Russia last year, there were many complaints about how impossible it was to get public officials to take action on any complaint. Many problems with corruption were noted. The water in Russia is nearly all non-potable, even though it was, prior to 1991. Roads are not good at all, especially if a person gets away from the main roads. There has been outside investment in Russia, but that doesn’t fix basic infrastructure, like roads and bridges.

          • Scott says:

            Yes, look at Argentina for an example of what a currency crisis looks like as they had one in recent years. I remember the pictures of the torn up streets and broken glass after the riots.

            Tonight I am listening to the latest James Howard Kunstler podcast about the old inland waterway system and how it is still there. Here is the link if anyone wants to listen, it is a good talk, he is talking to a guy that is restoring the old ways back there.—

            — 18 Apr 2013— JHK talks with Erik Andrus of the Vermont Sail Freight Project. They are building a boat dedicated to shipping Vermont farm products to New York City and other markets via Lake Champlain, the Champlain Canal, and the Hudson River.

            http://ec.libsyn.com/p/7/7/6/77696fbf1c13179d/KunstlerCast_225.mp3?d13a76d516d9dec20c3d276ce028ed5089ab1ce3dae902ea1d01ce8032d4c9543b3f&c_id=5600337

            • Thanks! There are just a few more people now to support in New York City.

            • Scott says:

              Yes, I agree with you Gail on New York. I do not think we can feed them all with “Sail Barges” but it would perhaps help support a much smaller population like in the very old days. I am thinking that most folks in the city will not have much of a chance when and if this thing hits hard.

          • Scott says:

            Gail,
            In regards to the finance end of things, I was also looking at this main stream media article tonight, here it is pasted in…

            Treasury Chief Warns of New World If US Defaults on Any Bills

            Thursday, 25 Apr 2013 03:47 PM
            The United States might run into trouble accessing debt markets if it defaulted on any of its financial obligations, even if it were able to keep up payments on government bonds, Treasury Secretary Jack Lew told Congress.

            Lew was responding to questions about a bill in the U.S. House of Representatives that would prioritize payments on government bonds and Social Security if the United States hits its debt limit, in order to avoid a credit default.

            If passed, the law would make it easier for Republicans to use a fight over the nation’s legal borrowing limit, known as the debt ceiling, to try to extract spending cuts from President Barack Obama.

            “The thing I would urge you to consider is, you enter a world we’ve never been in once the United States is not meeting its obligations,” Lew told a House subcommittee. “We cannot assume markets will function in an orderly way if that (happens).”

            The current suspension of the debt limit expires on May 19, although the Treasury can use emergency cash-management measures to push off the day of reckoning into August. The date could fall even further in the future given unexpectedly strong tax revenues and the possibility of a big payment to the Treasury from housing finance giants Fannie Mae and Freddie Mac.

            Lew has said it is impossible to try to pinpoint when exactly the use of these emergency maneuvers would be exhausted due to a delayed tax filing season and uncertainty about the effect of steep government spending cuts known as the sequester.

            Once the United States reaches its debt limit, the government faces the prospect of defaulting on financial obligations, and potentially its debt, which could shake up markets and damage the economy.

            Staff at the International Monetary Fund warned that failure to smoothly raise the U.S. debt ceiling could do serious damage to the global economy.

            © 2013 Thomson/Reuters. All rights reserved.

            Read Latest Breaking News from Newsmax.com http://www.moneynews.com/StreetTalk/US-default-debt-ceiling/2013/04/25/id/501411#ixzz2SCHAMiQv

            • Thanks! Yes, the US is not far away from defaulting, and there are a lot of other countries not doing well either. If interest rates should go up (perhaps because of the end of QE, or because of default) we would be in particularly bad shape.

          • xabier says:

            Gail

            If you dig around on the net, or know people from Argentina (my step-mother is from Buenos Aires, and friends of hers fled to Spain because of the violence, particularly against women) the information can be found. But for anyone relying on the MSM, the impression is: ‘Oh Argentina, they had a Crisis a decade ago didn’t they, but it’s all better now isn’t it? Jobs being created again, good agricultural exports to China, and so on.’

    • The story is Court Deals Blow to Ecuador Plaintiffs in Chevron Case.

      An Ontario court rejected an attempt by Ecuadorean plaintiffs to collect a multibillion-dollar environmental award from Chevron Corp. in Canada, giving the oil company a fresh victory in a legal battle that has sprawled far beyond the Amazonian jungles where it began.

      The Ecuadoreans sued Chevron for contamination in the South American country, and in 2011 a court in Ecuador awarded them a verdict that has risen to $19 billion after appeals. Chevron has refused to pay, arguing it isn’t responsible for the contamination and attacking the ruling as illegitimate. Since Chevron doesn’t have assets in Ecuador, plaintiffs have sought to collect the judgment against Chevron subsidiaries in Canada, Brazil and Argentina.

      For those who aren’t familiar with this, I have written that case against Chevron is pretty absurd. I saw a good many of the details with my own eyes. It is more or less an attempted shakedown by the Ecuadorian government using false testimony and very unfair court proceedings. If there were truth to it, Chevron probably would have settled.

      The Dubious Lawsuit Against Chevron – Part 1

      A Baseless Lawsuit against Chevron in Ecuador

  23. davekimble2 says:

    Adding to the complexity is the way prices for fuels are set by an auction-style system. If buyers come to the market today wanting 100 barrels of oil at the price of yesterday’s close, and there are only 99 barrels on offer, the price will rise, not by 1%, but by whatever it takes to achieve 1% demand destruction, which might be a 10% or more price rise if we are getting down to the inelastic part of usage.

    This is no way to run the serious business of allocating fuel during a shortage. The (Australian) Liquid Fuels Emergency Act mandates what happens when an emergency hits. This Federal legislation has mirroring legislation in all States and Territories, and a Council of Ministers to oversee it. I expect other countries have similar legislation, or legislation-in-waiting ready to be passed quickly. There will also be an extended grouping that includes oil refiners and importers, who have all signed up to cooperate. Usage will be divided into Necessary and Discretionary.

    The Necessary category includes: the Government (3 levels in Australia), the armed forces, police, fire services, emergency services, hospitals and old-age care facilities, the courts, prison system, farming, food processing facilities, food retailers, food transporters, water reticulation, sewerage, raw energy producers, electricity producers, telecommunications, radio and TV stations, public transport, taxis, … and much more. This list was removed from drafts when the final Bill was presented to Parliament, but I have it in my archives from a web-site that no longer exists.

    For the Discretionary category there will be rationing. The ration books have already been printed and distributed around the country. The ration may be set to zero, at the discretion of the Council of Ministers. Queuing at petrol stations will not be allowed to disrupt traffic on the roads. Police/Army will regulate traffic and queuing. Strictly paperwork and payment first, fuel second.

    During the review period for the changes to the Act in 2006, I phoned the relevant department for some detail or other, and got talking to someone who must have had a good liquid lunch, and I asked him what proportion of the total would be in the Necessary category, given the extensive list. He said no one really knew but they were struggling to get the numbers down to 70%.

    So don’t think for a moment that they aren’t planning ahead, or that it will be BAU and free-market rules when the time comes.

    davekimble2

    http://davekimble2.wordpress.com

    • Your summary mirrors my impression of what would happen with rationing.

      If there is any left to ration, that there gets to be a host of details. Do you mail out ration booklets, and if so, using what list? How do you prevent theft? Do you allocate based on number of cars, or should people with jobs be given preference, so that they can get to work? If you hand out ration booklets, that means more trips, especially in rural areas. How do you distinguish between parts of the country where very little fuel is used (Hawaii comes to mind-distances are very short) and places where much more fuel is used (Wyoming–the nearest grocery store may be 30 miles away)?

      • the concept of rationing can be twinned with the delusion of ‘downsizing’

        we have all become accustomed to buying what we want rather than what we need. We ”need’ 2500 calories a day as food, but we ‘want’ and expect far more. Thus the millionaire can grab as many calories as he wants, and burn them as food, gasoline, jet fuel or to heat his swimming pool—all ‘calories burned’–we all do that to a greater or lesser degree, 
its called market forces.
        
If on the other hand, we are all restricted to some kind of basic calorie usage, (whether fuel or food) then the economy will collapse faster than the food supply, because the millionaire burning all those calories of energy gives employment to lots of other people.We ration food, and the suprmarket system shuts down immediately, We ration jet flights, and millions are thrown out of work, same for auto workers and gasoline. when gasoline was rationed in wartime, autoworkers were building tanks. and planes ie–employment was sustained by war work. Soldiers drove the tanks and burned gas. ultimately employment is always dependent on energy consumption in one form or another. Although we had wartime rationing, fuelburning increased. In fundamental terms, wars are about energy availability and use,
        We are exhorted to slow down use less, but our society has no brakes and no reverse gear and the accellerator is jammed to the floor. We have created a society dedicated to unlimited fuelburning because that provides our sustenance. No, it cant go on indefinitely, but we will let it do so until a force greater than ourselves stops us, when our infinite demand smacks into the wall of finite resources.
        And then it will be all out conflict. As James Lovelock puts it so chillingly, Man is a hunting carnivore, not a gentle gardener
        man’s eyes face forward for a very good reason, we are predators.

        • Actually, we need more than the 2500 as food. We also need some calories to cook part of that food–we cannot eat it all raw. (Finely grinding might also work, but also uses calories.) In cold parts of the world, we need clothing and some sort of shelter. We may even need some heat in winter. All of these things send calorie needs up, especially the closer you are to the poles.

          But you are probably generally right.

  24. Ikonoclast says:

    davekimble2, I think your reply supports what I have been arguing. That when the chips are down, governments (of advanced, stable countries like Australia and the USA) will take extensive measures to ensure key functions of the nation state and civil life continue as long as possible. This will entail rationing and impressment (taking or directing by state force) where necessary.

    I do not think this will immediately lead to breakdown of government, government functions and civil order in nations like Australia and the USA. In fact, just like wartime measures it will have widespread civil support when it is perceived that the nation faces an existential crisis and cannot survive short to mid-term without taking such measures.

    On the other hand, other nations with no “fat”, no leeway, will quickly succumb. Haiti springs to mind (once aid dries up) as indeed does say Mexico. Some nations are there already. I think it is pretty clear that the scenario Gail is painting is already happening in places as far apart as Nth Korea, Tunisia, Egypt, Syria and maybe even Greece and Spain not to mention considerable parts of Africa and some parts of Asia, Sth America and Mesoamerica.

    I think Gail will surprised by the resilience of government and civil order in stable, developed countries. Decline may well progress for a generation or more before these states break down, if they break down. They have successfully endured severe depressions, world wars and civil wars before. (Well Australia hasn’t had a civil war.) The “Long Emergency” that is coming, to use Kunstler’s term, will not easily break down state and civil order in advanced countries before say 2050, IMO. Then again I could be wrong. Nothing is certain but I think the probabilities and historical precedents support me on this.

    Long term, Gail may well be right. By 2100, all stable nation states as we know them now could be gone though I hope not for the sake of what will remain of the future generations.

    Very long term, say 10,000 years, I suspect the only place habitable by humans will be Antartica which by then will be a sub-tropical or even a tropical zone. It all depends how far we look ahead I guess.

    • davekimble2 says:

      Yes, we are in broad agreement – TPTB will do anything to keep things under control, including the scraping of free markets and the Constitution, FEMA camps, whatever it takes. The only question is how long they will be able to keep on with that state of affairs, given that fossil fuels are running out. You suggest advanced countries could manage till 2050. I wake up each morning and switch on the radio to hear whether it has already happened. Who would be surprised to hear that the Euro had collapsed while you slept? And what would be ramifications for the Dollar, Sterling, Yen and Renmimbi?

      If it takes 70% of the world’s petrol/gasoline consumption to keep the most basic functions of civilisation going, and I think it is actually a lot higher than that, we are in a very precarious position.

      Yesterday saw the northernmost tip of Australia threatened by a Category 2 cyclone, in May !, while temperatures of -3°C and snow flurries were experienced in the south.

  25. RobM says:

    Gale, do you know how the energy accounting of countries works? If, for example, Canada produces 1M barrels of oil from the tar sands, but burns 0.25M barrels of diesel in the machinery needed to produce it, how much oil does Canada report to the world that it produced?

    • Canada doesn’t report how much energy is used to produce their bitumen and crude produces. Most of the energy used to produce oil is natural gas (just as most of the energy used to produce ethanol is natural gas). Natural gas is a lot cheaper than oil, so even at a 1:1 ratio, it might very well be a profitable exchange. The fact that oil is liquid makes it much more valuable than natural gas, because a natural gas is hard to transport. This is one reason why EROI calculations are not necessarily terribly helpful. It is also a reason why “Gas to Liquids” plants are built.

      To make the Canadian situation more confusing, Canada is both an importer and exporter of oil. The Eastern part of Canada has refineries that process light oil, which they traditionally have imported from Europe and other areas. They are now having trouble getting enough light oil imported. I believe that some of the Bakken oil has ended up being exported, for use in the Canadian refineries that can use that kind of oil.

      The Western part of Canada has the oil sands. Most of the bitumen from the western part of Canada is sent south to the US for processing. So part of the natural gas used in processing the bitumen is US natural gas, used in “cracking’ the long molecules.

  26. Robert E. "Bob" Howard, M.D., Ph.D. says:

    Thanks for another excellent article, Gail. With equally excellent comments also.

    I would recommend an interview of Steve Kopits by Steve Andrews, which sheds further light on the relationships of oil prices, capital expenditures on oil exploration and production, geologic and technologic factors, and factors such as national policy and taxes, on the willingness (and ability) of the marginal consumer to buy at the marginal oil price.

    http://www.resilience.org/stories/2013-04-30/commentary-interview-with-steve-kopits

    I think Kopits’ views are consistent with Gail’s, and help explain the relatively narrow range of oil prices in recent months.

    Nicole Foss made the case for a potentially rapid devolution of a national financial system in a transcript of a recent talk.

    http://theautomaticearth.com/Finance/nicole-foss-in-australia-its-no-use-trying-to-build-a-better-dinosaur.html

    “Because the world of finance is mostly virtual, and the time constant for change in virtual systems is really short. So what happens is when you reach a limit in finance – and these limits are endogenous, you don’t need to trigger an event – you reach a limit in finance, and the changes can be extremely rapid. So if you look at what happened in Cyprus for instance, in two weeks they went back 50 years – they went from being a modern economy to having the banks closed, the ATMs empty, the shops shelves mostly empty, a cash-only economy, capital controls, and the value of these banks went from their full value down to next to nothing in a very short space of time. And so when you have the value of human promises suddenly disappearing, you crash the system.”

    I really appreciate your big picture analyses and syntheses.

    Bob H.

    • You are welcome. I saw the interview with Steve Kopits. It is very good. His thoughts are quite similar to mine.

      The one thing Steve doesn’t mention is the increase in credit outstanding that is fueling what he calls the “carrying capacity” for the oil price for each of these countries. He quotes a US $95-$100 barrel Brent carrying capacity for the US, and of $115-$120 barrel carrying capacity for China. If credit starts contracting, those carrying capacities suddenly start decreasing. This is another issue, over above geology and technology that he mentions, that determines how much oil can be extracted.

      This debt connection is an issue Nicole Foss is particularly concerned about, and I am too.

  27. Ikonoclast says:

    Following from Steve Kopits comments, it occurs to me that the following set of data would be interesting if it could be compiled. A time series of total Capital Expedntiture (CAPEX) in each energy source compared to total energy produced from that energy source. Some national, regional and world data for the last 20 to 50 years might be interesting. It might all have to be inflation adjusted to be expressed in constant dollars (say 2005 dollars). It might also be a heck of a lot of work but Gail you have the time and expertise, right? :)

    • I am not sure that I have the data sets. Maybe someone could point me in the right direction. Steve Kopits works for a consulting firm that has access to some databases that I don’t have. This is a link to Steve’s presentation from the last ASPO-USA conference last December.

      Steve uses Barclays Capital E&P Survey for capital spending. Needless to say, oil and gas are combined.

  28. Don Stewart says:

    Responding to this article today at Resilence.org

    http://www.resilience.org/stories/2013-05-03/solar-dreams-spanish-realities

    I wrote to my children describing the probable decline in both fossil fuels for heat and for electricity from any source and then gave them the following advice:
    This will put a premium on peasant girls as wives–they grew up arising at 4am to milk the cow…and they are mostly dumb enough to think it is a privilege. If you can’t find a sturdy peasant girl, I recommend reading John Muir’s book about his early life as a school teacher in Wisconsin. He hated to get up in a cold room and put on frozen clothing and start a fire and go to the school to start a fire so the room would be warm when the students arrived and shovel the snow so they could get into the classroom. He made a lot of inventions to help him out. One invention involved a bed which became vertical and stood him on his feet so that he could not snuggle back under the covers.

    (Now for all the literal minded, please note that I have a dry sense of humor–no slur on peasant girls is intended. The slur is on those who think they are entitled to arise in a warm room, put on warm clothing, and have ready a warm breakfast, get in a warm car, and drive to a warm office building on plowed and salted roads and make money to buy a big screen TV.)

    Seriously, I do think it is worthwhile to read Muir’s book because it describes a world we may see again in the not too distant future.

    Don Stewart

    • xabier says:

      Don

      It’s just so hard to choose a mate:

      One of my family married a dirt-poor peasant girl -all she wants is two cars, TV, holidays, etc. She’s bankrupting him…… Most of the peasants in Spain have voted with their feet and left the land for the ‘big city’ (even when it”s a provincial hole.) The life of their ancestors is just too hard for them.

      My English great-grandmother, however, was brought up in a prosperous London trade family, eating fillet steak for breakfast, was not allowed to learn to cook or anything practical, and had her own carriage when she married. But when the early death of her husband threw her into great poverty,(as so often then) she buckled down to things and showed how it’s done. Amazing woman, whose memory we all venerate.

      It’s all in the character, not the background, perhaps?

    • Ikonoclast says:

      I think living where I live (Brisbane, Australia) will be a big advantage when the energy crisis hits. For a start we need no heating. We use a little in winter but that is a luxury not a necessity. We can easily survive in comfort with one more jumper and one more blanket on the bed. It never snows or sleets here (nowhere near it.) In summer, we use some aircon in one room for comfort for the two hottest and most humid months of the year but could easily survive without aircon.

      We can and do make all the hot water we need from solar power. Our solar PV panels make twice the power our house uses but of course we need to be connected to the grid to sell extra power and get power back at night. We’ve gone from paying $2,500 per annum for power to getting all our power free (apart from the up front capital cost) and getting $2,500 p.a. profit on top of that from selling extra power. Without solar subsidies, our profit would be about $1,250 p.a. Our capital investment will pay itself off in 5 years and produce power for 20 to 30 years.

      I will happily shift from an IC petrol driven car to a small electric car when they become affordable. I suspect electric power, electric cars and decent roads will be available in Australia for at least another 20 years. Hard to predict matters beyond that. I do expect food to become much more expensive here over the next few decades. I suspect the percentage of my household budget spent on food will double or treble. That’s no big deal. I will lose excess weight and waste less money on other things. It won’t bother me.

      Of course, large events like wars sweeping the globe could puncture my little bubble of complacency. It’s just to hard too predict what will happen in that regard. However, if I lived in a snow swept place (in winters) other than say New Zealand I would be getting the heck out of there. There’s no way (given current trends) there’s going to be enough energy for heating and all other needs. Don’t move near the coast, onto flood plains or into cyclone, hurricane or twister regions either.

      Just sayin’. :)

      • Scott says:

        Hello Ikonoclast,

        We live in a small town in Oregon USA. I am here in Small Town America.

        I hear you man, where we live in Oregon we have a big Hydroelectric Dam, but when I looked at Google Earth at the power lines that leave the dam they bypass my city and lead away from us to the main cities in the state. So I am not sure the Dam will help us unless the locals cut the lines and reconnect them to our local small town. I do know the locals will not take kindly to big city folks coming here to hunt their lands and fish and that could be a battle in itself someday perhaps if it comes to that.

        Not much work here — But we do have large farms, lakes and rivers and hunting nearby. You know I guess that is the best we can do moving up here. Spring is a busy time and we are busy with the food gardens which grow well here, it is hard to grow enough to eat even if you preserve and dry your harvest. We really still do buy so much from the store, more than I like.

        I do feel better here in this kind environment and maybe it is a false sense of security knowing I am amongst many strong men, loggers, hunters etc. This is the place I chose for my wife and I and you know these are also more pleasant places to live out your old age anyway no matter what happens, Even here we would see a terrible time if the grocery or gas trucks stopped running, so many dependent on checks and outside supplies. I do think a good part of the town would perish if we had to suddenly hunt for food and needed things even here.

        Just cherish each day as a gift. Each healthy day on Earth is a special day!

        • xabier says:

          Scott

          Scott

          It does indeed sound like a sane and healthy environment where you are.

          I suspect rural communities with families used to working, and able to hunt and fish, will pull together in the right way, if it is not too extreme a shock that’s coming. A strong Church community will probably help, too: after all, Christianity has strong communitarian ethics, and can help to moderate violent impulses. Here in England, about 10% of my village are semi-criminal people on welfare already (drink and drug problems, too), they lie and cheat amongst themselves, but as I have said, they stand out and one won’t make any mistakes trusting them!

          In Argentina, the specific problem that rural areas had were: 1/ Food production heading straight out of the rural areas to the cities and to earn foreign currency abroad (esp. China), so lots of malnutrition for those who were not well-connected to farmers and ranchers, and 2/ When policing really collapsed, very large, well-organised gangs laying siege to bigger properties, to rob and rape – due to the economic collapse and the black economy, there was a lot of money and gold held in such houses. They would take days to break in.

          Some people who lived through the recent Balkan wars recommend actually being prepared to abandon your house for a time, leaving things like alcohol for gangs to loot, and then returning when it’s all over. This is actually an old peasant trick from Europe -you can’t win, you dodge the blows. Another trick is to make your house look as though it’s been robbed already…………..

          Another tip from the Balkans is never to give personal food charity – maybe take it to a food bank anonymously, but if you do it personally you are signalling that you have a huge excess – people died for this (again, this is when there is starvation.)

          I’ve been studying societal collapse for the last year,and I think the most basic lessons need to be put out there outside the ‘prepper’ sites which put many people off. I’m a positive fellow really!

      • davekimble2 says:

        When small electric cars become more affordable, you either will be running yours on coal-fired mains electricity delivered over an upgraded local grid via a new charging point, or you will need a lot more solar panels. The kind of thinking where solutions involve “and then I’ll buy a …” are not going to solve our problems. They are just boutique solutions – only available to the well-off in an era of energy sufficiency.

        Where do you think the energy is going to come from to build the electric car factory and the car, the grid upgrades to handle the extra electricity demand, and the solar panels factories and the panels themselves, in an era of energy scarcity ?

        An extra blanket and an extra jumper (assuming you have them) is more like it.

        • Ikonoclast says:

          Australia has plenty of coal, so yes I will be running the electric car on a mains recharging point. This is perhaps not as bad from a CO2 emissions point of view as you might think. If I stop using a 2 litre petrol engine car and start using a much more energy efficient and lighter electric car then emissions from fuel might well be less, not more. Manufacture of a small electric car and batteries, may or may not be more energy hungry than the manufacture of a medium size petrol engine car.

          Yes, perhaps it’s a boutique solution but it will work for a time. Heck, I won’t care if I have to use an electric moped with a little trailer to bring my (much more modest) shopping home. Ultimately, I could backpack my supplies home from the supermarket. If the supermarket is empty then yes of course I am soon to be dead like everyone else in my locale.

          However, in Australia we have adequate coal, natural gas, solar and wind power. We even have quite a lot of uranium for a small population country. Provided we are not stupid enought to sell all our energy sources to China we have plenty of coal, natural gas and urnaium to energetically fund a transition to renewable energy over a generation or two.

          I have already done calculations which show that an area the size of one large shopping area plus its car park will provide enough solar electricity for a suburb. Concentrating solar thermal will do the trick. Sure it still requires energy storage as heat and a grid and some backup generation. This is all feasible engineering right now.

          It is wrong to throw up your hands and give up. Places like the US and Australia can adapt, not easily, but they can adapt. We have enough energy to fund the transition to renewables if we use it wisely. Of course I know we won’t all be driving 3 IC cars per family, taking jet airliner holidays and running multiple PCs and Flatscreen TVs in our houses. Life will be much more modest than that. Places like the Middle East and Africa? Of course they are doomed almost for certain. A place like the UK is probably doomed too. China can never finish its transition to a modern economy. There’s not enough conventional energy left for that.

          A lot of bloggers here seem to expect total global collapse in five years. I used to expect that too. However, I don’t think that will be the case. Rather, expect a grinding, remorseless, slow motion collapse over a span of 20 to 50 years. Yes, places like Egypt and Syria could collapse a lot faster than that. Indeed they are collapsing right now.

          • davekimble2 says:

            Why do you compare a small, light electric car with a large, heavy petrol-powered car ? Surely the only fair thing to do is compare like with like. When you do that you will find that there is nothing especially green about electric cars. Small, light cars of any kind are the way to go, mopeds even better. There plenty available on the market already, but given the choice (and the current taxation regime) the majority of people don’t seem to want them. If the advertising is anything to go by, the thing that people want to know about a car is not its fuel consumption, but whether it has Bluetooth and 17-inch alloys (whatever that is).

            The transition to renewable energy is certainly technically feasible (heat storage is in its infancy, but there are many other storage technologies), but the actual scaling up of the new infrastructure, and new equipment to use it, will require that we divert existing energy from current uses to the transition. That cannot happen with today’s laissez-faire attitude to energy. When you flick the switch, you expect the energy to appear, whether it be 10 W for your green light bulb, or 10 KW to recharge your electric car battery, or 100 MW to run your solar panel factory.

            I see no sign of that message getting through to governments or the public, and the longer we leave it, the more difficult the job becomes. In fact the time when it would be possible to start and complete the transition has come and gone. You are saying that people are going to have to give up 3-car families, holidays by air, flatscreen TVs, I agree. Now imagine how difficult it is going to be to put that into legislation. Price alone is not going to do it, because it’s not doing it now. Making electricity and petrol much more expensive might work, but good luck with that.

            Slow collapse versus fast collapse – read Korowicz and Tainter before you are so sure it will be slow: the complexity and lack of resilience in the system is its biggest weakness.

            • Mel Tisdale says:

              There are a couple of videos on TED talks – How to fool a GPS & Who Are The Hackers – that point to other ways that society can collapse precipitiously. I have not studied Tainter collapse in any depth, but from what I read here and have read subsequently as a result of having had my interest piqued, I suspect these might be manifestations of same.

              I keep getting this notion of our society being like that chap who walked a tightrope between the twin towers during their construction. In that circumstance all we can say is “So far, so good!” It will be one hell of a mess it we slip.

            • If collapse historically takes 20 to 50 years (with 20 years more common recently) and we started collapse about 2006 or 2007, we could be going down the slippery slope pretty quickly, ones there are serious financial dislocations. I don’t see that timing leaves much time for electric cars.

    • Richard says:

      An American peasant girl in the Midwest:

      And of course, I know that you wouldn’t dare describe these folks as ‘dumb’, they (if such still exist) are merely shielded from modern society and well, possess a completely different mentality. Indeed, if we could measure the innate intelligence, I’d say the peasants would fare better than us urbanites, because the statistical gap in births by smart and not-so-smart rural women is likely minimal, unlike in the urban ‘civilized’ areas, where the less intelligent have more children than the well-educated, some of whom will never give birth!

      By the way, if you believe in the blank slate theory, forget what you just read.

      • xabier says:

        Dave Kimble

        As the Victorians knew well, nothing beats thick warm underwear!

        Or we’ll be rubbing ourselves with pig fat and sewing ourselves into our clothes each Autumn……..

        A good way to stay warm when seated and reading is to have a tea light in a clay funnel cover on a dish between one’s feet under a blanket – it generates fantastic heat! It’s a version of the old dish of charcoal once used in Spain and Central Asia.

      • xabier says:

        Richard

        Splendid painting.

        The problem with welfare systems as they exist now in advanced economies, is not such much over – breeding dumb, but anti-social, people, who still have a great sense of grievance. And in any crisis, governments will suck the rest of society dry to maintain the welfare payments, fearing riots. It’s an ironic post-script to the noble hopes of 19thc Socialism, which wanted to put shoes and clothes on the poor and half-starved……..

        • we created our own problems with welfare systems, well meaning and essential as they were in the beginning, and still are in the majority of cases. But that still doesn’t make welfare affordable, no matter how much we want and expect it to give us cradle to grave care.
          Here in the UK, welfare began on 1st January 1909, with a payment of 5 shillings a week (That’s 1/4 of a British pound for non uk readers) to men when they reached 70. As the average age span of a working man then was 48, it didn’t represent a huge payout, and in any case, each pensioner was supported by 28 workers.
          Pretty soon politicians figured out that welfare bought votes, and industry could afford it, so we got more and more welfare over the years. (particularly after ww2) Humanity being what it is, we began to take it for granted, and then as a right, while the number of support workers fell. So the difference had to be made up from increased industrial output and taxation of those actually working.
          We now have about 6 workers for each pensioner, probably less if you discount those already working for the government. they also have to carry all rest of the social security load. This is why the system is creaking, we are in denial of its arithmetic.
          What we are doing now is struggling to support non producers, which is ultimately impossible. I intend to live to be 99, and I expect my pension to just ‘appear’ from somewhere. The reality is that that age, collectively speaking is unsustainable.
          But governments will go on trying to make that happen, because they need to stay in office. This is happening in every developed nation, we have been able to dole out benefits all round, but only because of the profits of industry driven by cheap energy, and the continuing delusion that debt can be infinite The cost of fuel is the problem, As it costs more and more to power our factories and keep ourselves in employment, there is less and less left over to support everything else. It doesn’t matter whether it’s a long haul holiday destination, or keeping a care home open, or keeping our houses at an even temperature, we have less and less excess energy in our system to give us the ‘extras’ we have come to regard as a fundamental right

          • xabier says:

            End of More

            In Spain today, only 2 workers (and of course many of those are not productive) to every one pensioner or unemployed person. An incredible statistic. It has to go Bang!

          • Mel Tisdale says:

            Perhaps the first thing to fix is this. Followed by putting the banksters behind bars and recouping all their past bonuses on the basis that crime must not be seen to pay.

            Fix those two injustices and there might be a foundation for having a more equitable society rise from the ashes of the current one. All that would then be needed is one massive dose of extremely good luck.

        • xabier
          it’s even more scary when you consider that the money borrowed from the imf is to support this unsustainable system
          when the current tranche of cash has been spent, the ‘system’ will still need support, but by then there really will be no money left to do that.
          the 2:1 ratio in Spain really is scary

          • xabier says:

            End of More

            I agree. And yet in Spain, it’s not really discussed – there was a headline, and then forgotten!

            Pensions are keeping many ordinary families afloat at the moment, with younger generations moving back to the family home.

            It’s an alarming situation, going only one way.

      • Don Stewart says:

        Richard
        That looks like Helga painted by Andrew Wyeth either in Maine or the Philadelphia exurbs.

        Thomas Hart Benton made my favorite painting of a Midwestern girl. This voluptuous creature who has fallen asleep under a tree without her clothes (tired from working in the field?). Leering around the tree at her is a ‘typical’ Missouri farmer (about one fifth her size on the canvas with no redeeming features I can think of). It hangs in the Nelson Gallery in Kansas City. I think the title is ‘Corn Fed’.

        Benton is playing off just about every stereotype you can think of.

        Don Stewart

        • xabier says:

          Don

          Try leering like that at the Basque mountain girls of the past, and they’d have had their knives out! The ‘Jota of the Knives’ is one of the least known treasures of Spanish folklore! I think Kipling said it was better to roll over and blow your brains out rather than wait for the Afghan women to find you with their knives…….

          • Don Stewart says:

            Dear Xabier
            A painting is what you see in it. Some critics describe Benton as ‘a corn fed hick’. But that isn’t what I see in his paintings. He had left New York City and settled in the Midwest. But he taught at the Kansas City Art Institute and was well connected to the art currents of the day. He painted four men playing cards, and one of the models was Jackson Pollock–who later moved to Long Island and invented the drip paintings.

            Now back to the issue of our luscious farm girl asleep under the tree. Here is this tiny, ugly little man leering at her with obviously malicious intent. Where is the power? Is it with this ugly, little man or is it with the girl. She could squash him like a bug. I could write a long article about all the cliches in this picture and how Benton puts them on the canvas in a humorous way and juxtaposes them to perhaps cause us to re-examine our preconceptions. Are all country farmers this repugnant? What makes City people feel so superior? Why is the Big City salesman and the sex-starved Farmer’s Daughter a staple theme of comedy (at least it was back then)? Did Farmer’s Daughters really find travelling men to be sophisticated? Does this little guy think he is God’s Gift To Women? And on and on and on. Maybe finally we are able to see the absurdity of much we take for granted. Humor is the gateway to understanding.

            Don Stewart

        • Ikonoclast says:

          I think the title is “Persephone”. Aesthetically, I have to say I am not a fan of the painting style which has both a “naive” style and a wood engraving feel to it. I prefer clear styles that are either fully realist or fully surrealist or fully abstract etc., but that’s just me.

          • Don Stewart says:

            Helga was a neighbor who posed for lots of pictures for Wyeth. The pictures were not made public for a long time.

            Don Stewart

    • I am wondering if population will move farther south. We don’t have enough wood to heat all of the homes in the North, and plumbing becomes a problem in homes that cannot be kept above freezing.

      • ive thought about that long and hard and can’t come up with an answer, basically we’ve filled out homes with water, now we have to constantly find the energy necessary to keep them from freezing and making our homes uninhabitable

        • Scott says:

          Well you can stock up on some Firewood, or Coal, or perhaps Propane, a large Tank?

      • xabier says:

        I’m beginning to feel that there will be nowhere to move to: if we follow Guy McPherson’s arguments, we are all going to fry pretty soon!

        Recently in Spain the summers have been so very hot that even my relations have been saying it’s just too much to bear (a much higher incidence of dangerous fires, too.) They long for the end of summer. Recently- built houses do not have the heavy roofs, small windows and thick stone walls of the past, which kept things cool: thin walls, big windows, turn them into furnaces in the summer, and air-conditioning is of course soon to be too expensive for most.

        In the short-term, I see southern Europeans fleeing North.

        If it is not too cold, one can simply disconnect and drain most of the indoor plumbing, and use just one tap near where the water comes up from the mains supply. That prevents burst pipes in the house.

        • Ikonoclast says:

          Well, all of you just stay where you are and have fun with your freezing pipes. We don’t want an excessive influx of people where I live. :)

        • Scott says:

          Here in Northwest USA, our spring has arrived early, I did plant early this year almost a month early – just by reading the weather: which sees to have worked out – since it has been warmer than usual. Corn is up early this year.

          This site has been interesting to me because it has given me the opportunity to speak to people from around the world on the Internet.

          I wonder and I hope we will still be able to do this ten years from now. That is communicate for nearly free as I remember paying $100 for hour phone call overseas some 20 years ago to talk to people outside the USA.

          I wanted to tell you all a little bit more about the old days and the Indians here in America. Since we may soon have to live like an Indian let’s look at their ways.

          I have done some reading on the old days, books by Louis La Amour and Zane Grey and have found those days interesting those books are really good too. They are fiction – but reflect much history to the best of the authors ability.

          Back in 1800’s and earlier, an Indian actually needed to seek an enemy to get honer in his tribe and in order to marry and get the best girl in those days he must return a hero.

          So and Indian’s mind was a bit different from the way most modern day people;

          An Indian would pray for an enemy in order to return to his tribe

          as a warrior and therefore could have choice of the finest woman in the tribe to marry.

          No enemy then no wife.

          That is the part I have trouble with they did like to fight too much but that was the way they did it then.

          I think we could see a different version of this next time around. Maybe more survival orientated and hopefully less fighting between tribes.

          There was a lot of pride in those days and I wonder about that and I do see that so much for the survivors.

          In summary:
          Just wondering what the next go around would look like for any survivors. Perhaps in some ways like the American Indians, but more orientated to survive than fight?

          • xabier says:

            The good thing about a site with international contributors, is that we can keep politics at bay – just look at how discussion always degenerates on the Kunstler site along the lines of political divisions in the US. The discussions start well, and then it’s all kinds of personal stuff and politics……..

            How violent do people get under stress? Very! Accounts I’ve read from the Balkans suggest that when food is very scarce in town, it’s kill to eat time, no community spirit and sharing. Rural areas did better: they were closer-knit, and the farmers were ruthless in killing intruders. (In the Middle Ages in England, it was the law that you had to blow a horn to tell people you were a stranger coming near – in peace – and not a robber.)

            Today in Spain there’s a lot of rural crime -theft of machinery, etc, and it’s rumoured that the farmers have been dealing with this in their own way: there are lots of ravines…….

            In Argentina, once people knew that the banks were going to be shut for a good length of time, that their savings were devalued, that if you lost your job that was it, and that the police would not be quick to show up to crime scenes, then violent crime just exploded from nowhere. Crime to get money, and also crime to get kicks.

            The really big problem with a bank crisis is that it can lead to lots of cash being stored in homes, so the criminal is very likely to hit the jackpot compared to more stable times.

            Rural areas might fare better, but if the welfare payments stop or become irregular, then probably those recipients in those areas will turn straight to crime even when law-abiding before – what else can they do?

          • I wrote an article quite a while back called ,”Human Population Overshoot – What Went Wrong?

            We have an instinct to have more children than needed to survive to adulthood. To keep population under control, “K-selected” species (and humans should be one) have territorial instincts as well as an instinct to kill strangers impinging on our territory. Humans have gotten around this instinct, partly because trade demands that we get along with others, and partly because of religion, teaching us to “love our neighbor” (but also leading to religious quarrels). With fossil fuels, we no longer need the killing-off-each-other instinct, because there is finally enough food and other stuff for everyone. But losing the killing off instinct leads to population overshoot. If resources suddenly get short, I am afraid the killing-off-folks-you-don’t-know instinct will come back, to balance population and resources.

            • Scott says:

              Yes Gail

              I totally understand your concept of overshoot which seems to be our word of the day.

              I wanted to mention to the group that up here in Oregon, I have not yet seen a single Honey Bee this year. This is my third year here and they were here last year m – but are now gone, it seems so far this spring. Another alarming sign post.

              So more signs of die off.

            • No bees–not a good sign. It has been sufficiently cool and wet here that I have been inside more, and not noticed.

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