What is ahead for 2016? Most people don’t realize how tightly the following are linked:
- Growth in debt
- Growth in the economy
- Growth in cheap-to-extract energy supplies
- Inflation in the cost of producing commodities
- Growth in asset prices, such as the price of shares of stock and of farmland
- Growth in wages of non-elite workers
- Population growth
It looks to me as though this linkage is about to cause a very substantial disruption to the economy, as oil limits, as well as other energy limits, cause a rapid shift from the benevolent version of the economic supercycle to the portion of the economic supercycle reflecting contraction. Many people have talked about Peak Oil, the Limits to Growth, and the Debt Supercycle without realizing that the underlying problem is really the same–the fact the we are reaching the limits of a finite world.
There are actually a number of different kinds of limits to a finite world, all leading toward the rising cost of commodity production. I will discuss these in more detail later. In the past, the contraction phase of the supercycle seems to have been caused primarily by too high population relative to resources. This time, depleting fossil fuels–particularly oil–plays a major role. Other limits contributing to the end of the current debt supercycle include rising pollution and depletion of resources other than fossil fuels.
The problem of reaching limits in a finite world manifests itself in an unexpected way: slowing wage growth for non-elite workers. Lower wages mean that these workers become less able to afford the output of the system. These problems first lead to commodity oversupply and very low commodity prices. Eventually these problems lead to falling asset prices and widespread debt defaults. These problems are the opposite of what many expect, namely oil shortages and high prices. This strange situation exists because the economy is a networked system. Feedback loops in a networked system don’t necessarily work in the way people expect.
I expect that the particular problem we are likely to reach in 2016 is limits to oil storage. This may happen at different times for crude oil and the various types of refined products. As storage fills, prices can be expected to drop to a very low level–less than $10 per barrel for crude oil, and correspondingly low prices for the various types of oil products, such as gasoline, diesel, and asphalt. We can then expect to face a problem with debt defaults, failing banks, and failing governments (especially of oil exporters).
The idea of a bounce back to new higher oil prices seems exceedingly unlikely, in part because of the huge overhang of supply in storage, which owners will want to sell, keeping supply high for a long time. Furthermore, the underlying cause of the problem is the failure of wages of non-elite workers to rise rapidly enough to keep up with the rising cost of commodity production, particularly oil production. Because of falling inflation-adjusted wages, non-elite workers are becoming increasingly unable to afford the output of the economic system. As non-elite workers cut back on their purchases of goods, the economy tends to contract rather than expand. Efficiencies of scale are lost, and debt becomes increasingly difficult to repay with interest. The whole system tends to collapse.
How the Economic Growth Supercycle Works, in an Ideal Situation
In an ideal situation, growth in debt tends to stimulate the economy. The availability of debt makes the purchase of high-priced goods such as factories, homes, cars, and trucks more affordable. All of these high-priced goods require the use of commodities, including energy products and metals. Thus, growing debt tends to add to the demand for commodities, and helps keep their prices higher than the cost of production, making it profitable to produce these commodities. The availability of profits encourages the extraction of an ever-greater quantity of energy supplies and other commodities.
The growing quantity of energy supplies made possible by this profitability can be used to leverage human labor to an ever-greater extent, so that workers become increasingly productive. For example, energy supplies help build roads, trucks, and machines used in factories, making workers more productive. As a result, wages tend to rise, reflecting the greater productivity of workers in the context of these new investments. Businesses find that demand for their goods and services grows because of the growing wages of workers, and governments find that they can collect increasing tax revenue. The arrangement of repaying debt with interest tends to work well in this situation. GDP grows sufficiently rapidly that the ratio of debt to GDP stays relatively flat.
Over time, the cost of commodity production tends to rise for several reasons:
- Population tends to grow over time, so the quantity of agricultural land available per person tends to fall. Higher-priced techniques (such as irrigation, better seeds, fertilizer, pesticides, herbicides) are required to increase production per acre. Similarly, rising population gives rise to a need to produce fresh water using increasingly high-priced techniques, such as desalination.
- Businesses tend to extract the least expensive fuels such as oil, coal, natural gas, and uranium first. They later move on to more expensive to extract fuels, when the less-expensive fuels are depleted. For example, Figure 1 shows the sharp increase in the cost of oil extraction that took place about 1999.
Figure 1. Figure by Steve Kopits of Westwood Douglas showing the trend in per-barrel capital expenditures for oil exploration and production. CAGR is “Compound Annual Growth Rate.”
- Pollution tends to become an increasing problem because the least polluting commodity sources are used first. When mitigations such as substituting renewables for fossil fuels are used, they tend to be more expensive than the products they are replacing. The leads to the higher cost of final products.
- Overuse of resources other than fuels becomes a problem, leading to problems such as the higher cost of producing metals, deforestation, depleted fish stocks, and eroded topsoil. Some workarounds are available, but these tend to add costs as well.
As long as the cost of commodity production is rising only slowly, its increasing cost is benevolent. This increase in cost adds to inflation in the price of goods and helps inflate away prior debt, so that debt is easier to pay. It also leads to asset inflation, making the use of debt seem to be a worthwhile approach to finance future economic growth, including the growth of energy supplies. The whole system seems to work as an economic growth pump, with the rising wages of non-elite workers pushing the growth pump along.
The Big “Oops” Comes when the Price of Commodities Starts Rising Faster than Wages of Non-Elite Workers
Clearly the wages of non-elite workers need to be rising faster than commodity prices in order to push the economic growth pump along. The economic pump effect is lost when the wages of non-elite workers start falling, relative to the price of commodities. This tends to happen when the cost of commodity production begins rising rapidly, as it did for oil after 1999 (Figure 1).
The loss of the economic pump effect occurs because the rising cost of oil (or electricity, or food, or other energy products) forces workers to cut back on discretionary expenditures. This is what happened in the 2003 to 2008 period as oil prices spiked and other energy prices rose sharply. (See my article Oil Supply Limits and the Continuing Financial Crisis.) Non-elite workers found it increasingly difficult to afford expensive products such as homes, cars, and washing machines. Housing prices dropped. Debt growth slowed, leading to a sharp drop in oil prices and other commodity prices.
Figure 2. World oil supply and prices based on EIA data.
It was somewhat possible to “fix” low oil prices through the use of Quantitative Easing (QE) and the growth of debt at very low interest rates, after 2008. In fact, these very low interest rates are what encouraged the very rapid growth in the production of US crude oil, natural gas liquids, and biofuels.
Now, debt is reaching limits. Both the US and China have (in a sense) “taken their foot off the economic debt accelerator.” It doesn’t seem to make sense to encourage more use of debt, because recent very low interest rates have encouraged unwise investments. In China, more factories and homes have been built than the market can absorb. In the US, oil “liquids” production rose faster than it could be absorbed by the world market when prices were over $100 per barrel. This led to the big price drop. If it were possible to produce the additional oil for a very low price, say $20 per barrel, the world economy could probably absorb it. Such a low selling price doesn’t really “work” because of the high cost of production.
Debt is important because it can help an economy grow, as long as the total amount of debt does not become unmanageable. Thus, for a time, growing debt can offset the adverse impact of the rising cost of energy products. We know that oil prices began to rise sharply in the 1970s, and in fact other energy prices rose as well.
Figure 3. Historical World Energy Price in 2014$, from BP Statistical Review of World History 2015.
Looking at debt growth, we find that it rose rapidly, starting about the time oil prices started spiking. Former Director of the Office of Management and Budget, David Stockman, talks about “The Distastrous 40-Year Debt Supercycle,” which he believes is now ending.
Figure 4. Worldwide average inflation-adjusted annual growth rates in debt and GDP, for selected time periods. See post on debt for explanation of methodology.
In recent years, we have been reaching a situation where commodity prices have been rising faster than the wages of non-elite workers. Jobs that are available tend to be low-paid service jobs. Young people find it necessary to stay in school longer. They also find it necessary to delay marriage and postpone buying a car and home. All of these issues contribute to the falling wages of non-elite workers. Some of these individuals are, in fact, getting zero wages, because they are in school longer. Individuals who retire or voluntarily leave the work force further add to the problem of wages no longer rising sufficiently to afford the output of the system.
The US government has recently decided to raise interest rates. This further reduces the buying power of non-elite workers. We have a situation where the “economic growth pump,” created through the use of a rising quantity of cheap energy products plus rising debt, is disappearing. While homes, cars, and vacation travel are available, an increasing share of the population cannot afford them. This tends to lead to a situation where commodity prices fall below the cost of production for a wide range of types of commodities, making the production of commodities unprofitable. In such a situation, a person expects companies to cut back on production. Many defaults may occur.
China has acted as a major growth pump for the world for the last 15 years, since it joined the World Trade Organization in 2001. China’s growth is now slowing, and can be expected to slow further. Its growth was financed by a huge increase in debt. Paying back this debt is likely to be a problem.
Figure 5. Author’s illustration of problem we are now encountering.
Thus, we seem to be coming to the contraction portion of the debt supercycle. This is frightening, because if debt is contracting, asset prices (such as stock prices and the price of land) are likely to fall. Banks are likely to fail, unless they can transfer their problems to others–owners of the bank or even those with bank deposits. Governments will be affected as well, because it will become more expensive to borrow money, and because it becomes more difficult to obtain revenue through taxation. Many governments may fail as well for that reason.
The U. S. Oil Storage Problem
Oil prices began falling in the middle of 2014, so we might expect oil storage problems to start about that time, but this is not exactly the case. Supplies of US crude oil in storage didn’t start rising until about the end of 2014.
Figure 6. US crude oil in storage, excluding Strategic Petroleum Reserve, based on EIA data.
Once crude oil supplies started rising rapidly, they increased by about 90 million barrels between December 2014 and April 2015. After April 2015, supplies dipped again, suggesting that there is some seasonality to the growing crude oil supply. The most “dangerous” time for rapidly rising amounts added to storage would seem to be between December 31 and April 30. According to the EIA, maximum crude oil storage is 551 million barrels of crude oil (considering all storage facilities). Adding another 90 million barrels of oil (similar to the run-up between Dec. 2014 and April 2015) would put the total over the 551 million barrel crude oil capacity.
Cushing, Oklahoma, is the largest storage area for crude oil. According to the EIA, maximum working storage for the facility is 73 million barrels. Oil storage at Cushing since oil prices started declining is shown in Figure 7.
Figure 7. Quantity of crude oil stored at Cushing between June 27, 2014, and June 1, 2016, based on EIA data.
Clearly the same kind of run up in oil storage that occurred between December and April one year ago cannot all be stored at Cushing, if maximum working capacity is only 73 million barrels, and the amount currently in storage is 64 million barrels.
Another way of storing oil is as finished products. Here, the run-up in storage began earlier (starting in mid-2014) and stabilized at about 65 million barrels per day above the prior year, by January 2015. Clearly, if companies can do some pre-planning, they would prefer not to refine products for which there is little market. They would rather store unneeded oil as crude, rather than as refined products.
Figure 8. Total Oil Products in Storage, based on EIA data.
EIA indicates that the total capacity for oil products is 1,549 million barrels. Thus, in theory, the amount of oil products stored can be increased by as much as 700 million barrels, assuming that the products needing to be stored and the locations where storage are available match up exactly. In practice, the amount of additional storage available is probably quite a bit less than 700 million barrels because of mismatch problems.
In theory, if companies can be persuaded to refine more products than they can sell, the amount of products that can be stored can rise significantly. Even in this case, the amount of storage is not unlimited. Even if the full 700 million barrels of storage for crude oil products is available, this corresponds to less than one million barrels a day for two years, or two million barrels a day for one year. Thus, products storage could easily be filled as well, if demand remains low.
At this point, we don’t have the mismatch between oil production and consumption fixed. In fact, both Iraq and Iran would like to increase their production, adding to the production/consumption mismatch. China’s economy seems to be stalling, keeping its oil consumption from rising as quickly as in the past, and further adding to the supply/demand mismatch problem. Figure 9 shows an approximation to our mismatch problem. As far as I can tell, the problem is still getting worse, not better.
Figure 9. Total liquids oil production and consumption, based on a combination of BP and EIA data.
There has been a lot of talk about the United States reducing its production, but the impact so far has been small, based on data from EIA’s International Energy Statistics and its December 2015 Monthly Energy Review.
Figure 10. US quarterly oil liquids production data, based on EIA’s International Energy Statistics and Monthly Energy Review.
Based on information through November from EIA’s Monthly Energy Review, total liquids production for the US for the year 2015 will be about 700,000 barrels per day higher than it was for 2014. This increase is likely greater than the increase in production by either Saudi Arabia or Iraq. Perhaps in 2016, oil production of the US will start decreasing, but so far, increases in biofuels and natural gas liquids are partly offsetting recent reductions in crude oil production. Also, even when companies are forced into bankruptcy, oil production does not necessarily stop because of the potential value of the oil to new owners.
Figure 11 shows that very high stocks of oil were a problem, way back in the 1920s. There were other similarities to today’s problems as well, including a deflating debt bubble and low commodity prices. Thus, we should not be too surprised by high oil stocks now, when oil prices are low.
Figure 11. US ending stock of crude oil, excluding the strategic petroleum reserve. Figure by EIA.
Many people overlook the problems today because the US economy tends to be doing better than that of the rest of the world. The oil storage problem is really a world problem, however, reflecting a combination of low demand growth (caused by low wage growth and lack of debt growth, as the world economy hits limits) continuing supply growth (related to very low interest rates making all kinds of investment appear profitable and new production from Iraq and, in the near future, Iran). Storage on ships is increasingly being filled up and storage in Western Europe is 97% filled. Thus, the US is quite likely to see a growing need for oil storage in the year ahead, partly because there are few other places to put the oil, and partly because the gap between supply and demand has not yet been fixed.
What is Ahead for 2016?
- Problems with a slowing world economy are likely to become more pronounced, as China’s growth problems continue, and as other commodity-producing countries such as Brazil, South Africa, and Australia experience recession. There may be rapid shifts in currencies, as countries attempt to devalue their currencies, to try to gain an advantage in world markets. Saudi Arabia may decide to devalue its currency, to get more benefit from the oil it sells.
- Oil storage seems likely to become a problem sometime in 2016. In fact, if the run-up in oil supply is heavily front-ended to the December to April period, similar to what happened a year ago, lack of crude oil storage space could become a problem within the next three months. Oil prices could fall to $10 or below. We know that for natural gas and electricity, prices often fall below zero when the ability of the system to absorb more supply disappears. It is not clear the oil prices can fall below zero, but they can certainly fall very low. Even if we can somehow manage to escape the problem of running out of crude oil storage capacity in 2016, we could encounter storage problems of some type in 2017 or 2018.
- Falling oil prices are likely to cause numerous problems. One is debt defaults, both for oil companies and for companies making products used by the oil industry. Another is layoffs in the oil industry. Another problem is negative inflation rates, making debt harder to repay. Still another issue is falling asset prices, such as stock prices and prices of land used to produce commodities. Part of the reason for the fall in price has to do with the falling price of the commodities produced. Also, sovereign wealth funds will need to sell securities, to have money to keep their economies going. The sale of these securities will put downward pressure on stock and bond prices.
- Debt defaults are likely to cause major problems in 2016. As noted in the introduction, we seem to be approaching the unwinding of a debt supercycle. We can expect one company after another to fail because of low commodity prices. The problems of these failing companies can be expected to spread to the economy as a whole. Failing companies will lay off workers, reducing the quantity of wages available to buy goods made with commodities. Debt will not be fully repaid, causing problems for banks, insurance companies, and pension funds. Even electricity companies may be affected, if their suppliers go bankrupt and their customers become less able to pay their bills.
- Governments of some oil exporters may collapse or be overthrown, if prices fall to a low level. The resulting disruption of oil exports may be welcomed, if storage is becoming an increased problem.
- It is not clear that the complete unwind will take place in 2016, but a major piece of this unwind could take place in 2016, especially if crude oil storage fills up, pushing oil prices to less than $10 per barrel.
- Whether or not oil storage fills up, oil prices are likely to remain very low, as the result of rising supply, barely rising demand, and no one willing to take steps to try to fix the problem. Everyone seems to think that someone else (Saudi Arabia?) can or should fix the problem. In fact, the problem is too large for Saudi Arabia to fix. The United States could in theory fix the current oil supply problem by taxing its own oil production at a confiscatory tax rate, but this seems exceedingly unlikely. Closing existing oil production before it is forced to close would guarantee future dependency on oil imports. A more likely approach would be to tax imported oil, to keep the amount imported down to a manageable level. This approach would likely cause the ire of oil exporters.
- The many problems of 2016 (including rapid moves in currencies, falling commodity prices, and loan defaults) are likely to cause large payouts of derivatives, potentially leading to the bankruptcies of financial institutions, as they did in 2008. To prevent such bankruptcies, most governments plan to move as much of the losses related to derivatives and debt defaults to private parties as possible. It is possible that this approach will lead to depositors losing what appear to be insured bank deposits. At first, any such losses will likely be limited to amounts in excess of FDIC insurance limits. As the crisis spreads, losses could spread to other deposits. Deposits of employers may be affected as well, leading to difficulty in paying employees.
- All in all, 2016 looks likely to be a much worse year than 2008 from a financial perspective. The problems will look similar to those that might have happened in 2008, but didn’t thanks to government intervention. This time, governments appear to be mostly out of approaches to fix the problems.
- Two years ago, I put together the chart shown as Figure 12. It shows the production of all energy products declining rapidly after 2015. I see no reason why this forecast should be changed. Once the debt supercycle starts its contraction phase, we can expect a major reduction in both the demand and supply of all kinds of energy products.
Figure 12. Estimate of future energy production by author. Historical data based on BP adjusted to IEA groupings.
Conclusion
We are certainly entering a worrying period. We have not really understood how the economy works, so we have tended to assume we could fix one or another part of the problem. The underlying problem seems to be a problem of physics. The economy is a dissipative structure, a type of self-organizing system that forms in thermodynamically open systems. As such, it requires energy to grow. Ultimately, diminishing returns with respect to human labor–what some of us would call falling inflation-adjusted wages of non-elite workers–tends to bring economies down. Thus all economies have finite lifetimes, just as humans, animals, plants, and hurricanes do. We are in the unfortunate position of observing the end of our economy’s lifetime.
Most energy research to date has focused on the Second Law of Thermodynamics. While this is a contributing problem, this is really not the proximate cause of the impending collapse. The Second Law of Thermodynamics operates in thermodynamically closed systems, which is not precisely the issue here.
We know that historically collapses have tended to take many years. This collapse may take place more rapidly because today’s economy is dependent on international supply chains, electricity, and liquid fuels–things that previous economies were not dependent on.
I have written many articles on related subjects (unfortunately, no book). These are a few of them:
Oops! Low oil prices are related to a debt bubble
Why “supply and demand” doesn’t work for oil
Economic growth: How it works; how it fails; why wealth disparity occurs
We are at Peak Oil now; we need very low-cost energy to fix it
This is it, folks! https://www.superstation95.com/index.php/world/750
Ok, I think this is a hoax, sorry
As I told another poster, I don’t think the data in this article is right. It only counts ships that are near land, at least according to one report I read.
@Gail, the map of world shipping with all the vessels in port was covered at ZeroHedge. One of the commenters there appeared to have direct knowlege of the systems used for reporting and was generally supportive of the facts described.
I did try to do a search, for general interest, but gave up, so can’t confirm personally.
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Noble Group’s “Margin Call” Part II: The Enron Moment
Our balance sheet – the strongest in recent history – represents a significant advantage as we continue to identify high value growth opportunities across the products and geographies we operate in. Maintaining out investment grade rating with the international rating agencies is a vital part of this strategy.
http://www.zerohedge.com/news/2016-01-10/noble-groups-margin-call-part-ii-enron-moment
I notice this article from Jan 7 says, Noble Group Bonds at 53 push bonds to distressed grade. Not a good sign.
Ms. Tverberg, are you aware of Paul Hanley, the Baha’i agreiculturalist / ecological writer? He is both a “doomster” and an optimist, in the sense that he expects a new civilization to (eventually) emerge from the old. Perhaps you might consider critiquing his work:
http://www.amazon.com/Eleven-Paul-Hanley/dp/146025046X
(His book “Eleven,” referring to the expected 2100 world population of 11 billion)
http://www.elevenbillionpeople.com/
(His personal website)
http://bahaiteachings.org/author/paul-hanley
(misc. religious essays, most with a connection to his book)
Such views will be unpopular with some posters, but I agree with what I just now read. Thanks.
I will have to admit I am skeptical of this book. If our problems were much simpler and farther in the future, maybe I would believe this. The book is supposedly filled with numbers and insights, but suppose we cut back our demand greatly, as he seems to propose. This brings commodity prices down to zero (or close). People end up out of work. I wish I could believe the many glowing reviews it has received. Has anyone who understands the problems we are facing looked at this book?
Everyone loves a happy ending ….
*Happy Endings?* Humans are hard-wired for it.
The unemployment in Slovakia is going down, but the group of the long-term unemployed (i.e. the persons unemployed longer than 48 months) is getting bigger. This phenomenon started to affect also the most prosperous region around the capital of Bratislava, which belongs among the most prosperous regions of the EU (http://ec.europa.eu/eurostat/documents/2995521/6839731/1-21052015-AP-EN.pdf/c3f5f43b-397c-40fd-a0a4-7e68e3bea8cd). Since 2011, the number of such long-term unemployed in the region of Bratislava has risen about four times.
http://spravy.pravda.sk/domace/clanok/379488-dlhe-roky-bez-prace-na-slovensku-coraz-vacsi-problem/
Some of these people stop looking for jobs here in the US. Then they are no longer considered unemployed.
China Contagion Spills Over To Hong Kong Banks As HIBOR Explodes To Record High, Stocks Tumble
Chinese stocks are trading at the lows of the day after Overnight HIBOR rates (Hong Kong’s interbank borrowing rate) exploded a stunning 939bps to a record high 13.4%. It is clear that banks are utterly desperate for liquidity and/or are extremely concerned about one another’s counterparty risk. This has dragged HSCEI down 5% (to its lowest since Oct 2011).
http://www.zerohedge.com/news/2016-01-10/something-just-snapped-fx-markets-rand-crashes-most-lehman-yen-surges-1-year-highs
It’s beginning to look a lot like 2007… everywhere you go….
Lots of strange happenings.
Gail, for some reason I have been unable to reply to your reply relating to Michael Hudson on the previous blog. Are comments closed now?
Anyway my answer to the “huge problem” is not to lessen it but to say that answers are out there.
We have to have a debt Jubilee. That will mean different things to different people.
Steve Keen has one view, Unfortunately I seem not to have saved it. But he says the CB would inject directly into private bank accounts. Those in debt must cancel debt. Those not in debt geta cash injection. Rebase money to more fiat, less credit. Restructure banking etc. What he is saying is that the banks do not lose pre existing money, but the overproduced money and debt should be written off.
Then there is this;
http://jubileedebt.org.uk/countries#desc-debt_burden
And more.
It’s going to take a crash to change minds on this. It’ll never be done voluntarily.
Wheter we then get a second chance really depends on all those limits you tell us about.
I expect the comments on the previous post are now closed.
I would not take Steve Keen’s view as gospel as to how the situation can be saved. I don’t think it can happen. We are already seeing the meltdown in the stock market that a person would expect. We are expecting meltdowns everywhere, and assets prices fall. At least part of the problem is that governments and central banks fail, so that they can’t keep injecting money into bank accounts.
Maybe Steve Keen is talking about a band aid during the first 5% of the crisis we are talking about. He is not talking about a general solution. I am not convinced that Steve Keen really understands the magnitude of the approaching problem.
@Gail, Steve Keen had a video talk referencing the environment within the last few months :
https://www.youtube.com/watch?v=tS_Xbfl03mc
I’d guess that he takes the view that there are only so many battles you can fight, hence you should choose your adversary carefully.
A debt jubilee didn’t happen in 1929, and I think things will get worse than that before real attempts to fix things happen. In terms of probabilities, I’d place war as the most likely outcome.
Thanks! I have tended to stay away from mentioning war, even though that is one of the possible outcomes. The many things that China is selling at below the long-term cost of making them are a problem. Oil supply is also a problem right now, but in a mismatch with demand way. Taxes are a way of trying to solve these problems, but so are “hot” wars.
I looked at a little of Steven Keen’s lecture. He is looking at the standard stuff of first, second, and third laws of thermodynamics, not the fact that the economy itself needs to keep growing, and in fact, needs additional energy to grow. That is a pretty big omission, in my view.
Keen is interested in the Stabilized World Model shown as Figure 46 in the 1972 Limits to Growth study. When I looked at the 1972 book, I brushed the model off as absurd. At most it would delay collapse a little. It is put together without proper consideration of diminishing returns with respect to extracting minerals, including fossil fuels, in my opinion. Also, a big piece of pollution is the dispersion of mineral resources into small pieces. These can never be reused, because of the huge amount of energy required to gather and reuse them. The dispersed portions of minerals (such as mercury, arsenic, etc.) are harmful to human health.
These are the assumptions that go into this model:
1a. Population is stabilized by setting the birth rate equal to the death rate in 1975. (Comments: This seems to require no resources. Also, a large portion of the rise of population has to do with people living longer. Achieving this goal would mean many one-child families.)
1b. Industrial capital (which is defined as physical resources like metals, oil products, and wood products used to make capital goods) is allowed to increase naturally until 1990, after which it is stabilized by setting the investment rate equal to the depreciation rate. (Comment–maintaing even a constant level of additional industrial capital, such as steel tubing used in drilling for oil, is going to be a major challenge. If we are battling depletion, we are going to need a rapidly rising amount of industrial capital, or the system will quickly collapse, IMO.)
2. To avoid a non-renewable resource shortage such as shown in Figure 45, resource consumption per unit of industrial output is reduced to one-fourth of its 1970 value, starting in 1975. (Comment: Not likely! Resources for building each car are reduced to one-fourth of their 1970 value? Resources for building each house are reduced to one-fourth of the 1970 value? Resources for building roads are reduced to one-fourth of their 1970 value.)
3. To further reduce resource depletion and pollution, the economic preferences of society are shifted more toward services such as education and health care, and less toward factory-produced material goods, starting in 1975.
4. Pollution generation per unit of industrial and agricultural output is reduced to one-fourth of its 1970 value, again in 1975. (Comment: Sure thing! Waste from extracting mineral is going down by 75%, even as we find it necessary to extract minerals from ever-more depleted sources. Also, CO2 generation per unit can be decreased by this huge percentage. Even if a person believed that nuclear electricity, too cheap to monitor, was right around the corner, as many did in 1972, the approach would have led to a huge need for new nuclear plants to be built in three years. Furthermore, uranium ores of reasonable concentration are a finite resource as well, and recycling plants for uranium are resource intensive.)
5. Capital is diverted to food production, to produce enough food for all, starting in 1975. (Comment: This would seem to lead to a lot of waste. Roads, trucks, refrigeration, and electricity are needed, as well.)
6. The use of agricultural capital is altered to make soil enrichment and preservation a priority, starting in 1975. (Comment: This is not compatible with going to very industrialized agriculture, as planned in 4.)
7. The average lifetime of industrial capital is increased through better design and more attention to recycling, starting in 1975.
To Keen’s credit, he did mention that even if this model was introduced at a later date, it wouldn’t work.
Of course, the LTG model does not model the financial system. With all of the implied contraction, it would seem like debt could not be repaid with interest.
I didn’t happen to run across the part about the 1929 depression, and the fact that a debt jubilee did not take place then. If Keen is taking a model like this at all seriously, it seems to me that he misunderstands the seriousness of our problem.
Why keep trading oil with the US if it has become somewhat an oil producer.
Oil produdcing nations should meet their own needs and stop trading with producers since it is not profitable and put debt to better use than Oil extraction.
I know is not that simple but then oil trade does not make sense the way it is right now, the global market has to break down again to meet their local market needs first.
Ki, may I ask you this, “How much oil does the US need to import daily to meet its needs?
Not enough to keep prices from falling it seems…
It could wake up Americans from BAU, if they stopped importing, moreover I believe
the US should be cooperating to find a goldlilock zone between energy production an consumption along with the rest of the nations before producers get int the same trouble otherwise there won’t be a producer to meet the US nor anyone else needs.
“Be courageous. I have seen many depressions in business. Always America has emerged from these stronger and more prosperous. Be brave as your fathers before you. Have faith! Go forward!”
Thomas A. Edison
Ki,
your “goldilocks zone” (which I think no longer exists) reminds me of the “Coffin Corner” in which we could very well find ourselves right now:
https://fabiusmaximus.files.wordpress.com/2014/07/coffin-corner-analogy.jpg
“However, things get more dangerous as altitude increases: stall speed goes up, as the air gets thinner and thus less able to support the weight of the airplane; and the overspeed limit goes down, as the speed of sound decreases with lower air temperature. As a result, at high altitudes the range of speeds at which an aircraft can function becomes so narrow that even the best pilots become unable to keep the plane on level flight.”
http://fabiusmaximus.com/2014/07/10/economic-growth-coffin-corner-lombard-street-research-69785/
I think the choice (if we could repay debt while keeping gdp growth stable) would be between keep climbing or try to make a crash-landing from a lower altitutde, since we will run out of fuel anyway going higher makes things worst in my humble opinion.
Stefeun,
I have a commercial pilots license and I have no idea what “overspeed” means as the term can be applied to an overspeeding engine or overspeeding of the control surfaces. There are many aircraft that can maintain level flight at super sonic speeds at high altitude. The U2, the Blackbird, etc., most passenger jets at least up to 45000 feet.
Maybe net energy is the problem. A barrel of oil which costs 80 dollars to get up to the surface does not contain the same net energy as a barrel of oil which costs 20 dollars to produce (production price not market price!) Energy balance 7,5 vs 30. HIgh oil production costs take away the consumption of discretionary items. Oops!
I am not inclined to use the term net energy for the problem, because the energy used in oil production is rarely oil–it is nearly always something much cheaper–generally natural gas, sometimes coal. Unless we are about to “run out” of energy, as claimed by many peak oilers, the loss of energy is not the problem. Using costs for the comparison–$20 versus $80 as you are doing in your comparison, is much better than an EROI comparison because $ costs can include a much wider range of inputs than energy products, and can properly distinguish between the different costs of different kinds of energy, including human energy.
A different, at least equally important problem is that in order to extract and use the high-cost oil, debt needs to rise by more than the value the oil adds to the economy. We end up with the debt to GDP ratio spiraling out of control. This issue is not as easy to see as the supposed EROI problem, but it is the major issue we are facing. The problem is even worse, if we use debt to make solar panels and wind turbines to add to the economy.
Ki;
Our host has determined that society can pay only $20 for oil, but the breakevens shown by psile are … well … somewhat higher. Note that those numbers from psile are for countries pumping conventional oil.
There is no “goldilocks zone”.
CAPEX is going to go through the floor as here are the updated breakeven oil prices per major oil producer and oil is heading towards the $20 p/b zone. Even at $50 bucks, all these countries are still in a world of hurt…
http://ichef-1.bbci.co.uk/news/624/media/images/79755000/gif/_79755553_oil_breakeven_prices2_464gr.gif
$10 Trillion Investment Needed To Avoid Massive Oil Price Spike Says OPEC
http://oilprice.com/Energy/Crude-Oil/10-Trillion-Investment-Needed-To-Avoid-Massive-Oil-Price-Spike-Says-OPEC.html
OPEC says that $10 trillion worth of investment will need to flow into oil and gas through 2040 in order to meet the world’s energy needs.
The OPEC published its World Oil Outlook 2015 (WOO) in late December, which struck a much more pessimistic note on the state of oil markets than in the past. On the one hand, OPEC does not see oil prices returning to triple-digit territory within the next 25 years, a strikingly bearish conclusion. The group expects oil prices to rise by an average of about $5 per year over the course of this decade, only reaching $80 per barrel in 2020. From there, it sees oil prices rising slowly, hitting $95 per barrel in 2040
Most good news
That is an outstanding find.
Libya wouldn’t need anywhere near as much per barrel if the different factions stopped fighting over the stuff. Is it so hard to agree to share?
Of course the factions would not be fighting over the oil if NATO had not arranged for the murder of Gaddafi and turned the country into a failed state…
And of course thousands of desperate men and women would not be fleeing the failed state that NATO created — and showing up in Europe.
You reap what you sow.
Stop complaining.
If anyone has a right to complain — it would be each and every refugee what our governments created.
When was this chart published?
Mid-2015. Here’s another article about it, http://www.businessinsider.com.au/break-even-oil-prices-for-all-the-major-producers-in-the-world-2015-7
http://static.businessinsider.com/image/55acfaa92acae7c7018b7e62-1200/image.jpg
And another, http://blogs.wsj.com/moneybeat/2015/06/02/low-oil-prices-a-tough-balancing-act-for-petrostates/
Most of the world’s largest oil producers can’t balance their budgets when oil prices are below $70 a barrel, according to data from the IMF and Deutsche Bank published in May. Saudi Arabia needs oil prices above $100 a barrel to avoid running a budget deficit.
Oil customers do not care about oil exporters balancing their budgets. We do know it may be necessary for UN troops to defend the oil fields. As Jimmy Carter told the world the oil is a US national security issue.
Well they will care when those countries collapse due to cvil strife. Military intervention will only hasten the destruction of oil infrastructure and extractive capacity. As we’ve seen with Libya.
Saudi Arabia would be the big concern …. when the regime cannot pay off the people…. that will turn into a blood bath
Given the strategic importance of that country — the gloves will not doubt come off and we might see a complete lockdown of the country … martial law … shoot to kill …
That’s pretty much what happened in Egypt…. the government forces just started shooting people dead…. that put an end to the democracy demands rather quickly…
I could imagine oil producers erupting into chaos — while the US military ring-fenced their oil fields…
Essentially that’s the situation in Iraq…
However there is also the issue of debt defaults. If oil producers — actually no — if countries that rely heavily on resources to balance budgets are deprived of those revenues…
Not only do they have have problems with their budgets ….. their ability to service their massive sovereign debts becomes a huge issue… and for many countries that debt is in USD….
As Noble Group is finding out — if there are no expectations of a recovery in commodity prices — nobody wants to roll your debt over and/or they demand much higher interest rates…. and any new debt that is added comes with punitive interest rates as well…
The same applies for sovereigns …. just that the scale is far larger.
The solvency of the global financial system becomes the issue…. these countries will eventually default…
Thanks! I remember that one now.
Thanks! It is a lot easier to refer to if I have a link to a story where it can be found.
http://money.cnn.com/data/premarket/
At the link above US premarket for stocks is at -135 for the Dow. This is the updated premarket for tomorrow’s trading. It’s that low but still 15 hours from the start of trading. What will China’s stock market do once they see US once again prepped for a big day down?
http://www.zerohedge.com/news/2016-01-10/something-just-snapped-fx-markets-rand-crashes-most-lehman-yen-surges-1-year-highs
‘Something Just Snapped: Currencies Crashing, Dow Dumped’
“China ripples may be turning into tsunamis. As FX markets creep open, something serious must have snapped. The South African Rand just crashed 10% the biggest single-day drop since Lehman to new record lows.
Korean Won plunges to its lowest since July 2010…
And Yen is surging…
It appears people were expecting some Chinese intervention over the weekend… and so far have been disappointed.”
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My reading and commentary of the above article in my podcast. Enjoy
http://ricklakin.podbean.com/e/episode-3-louise-williamson-coachinginnerwisdomcom-gail-tverberg-falling-oil-prices-in-a-finite-economy/
Thanks for making the recording and posting a link. I know some people especially like audio recordings they can listen to.
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Dear Gail and Finite Worlders
This will be an ‘anti-limits to growth’ argument for food production. I have separately referred to Christine Jones’ presentation at the Quivira Coalition conference last year. I suggest that you also take a look at David Johnson’s talk. David is at New Mexico State. Go to:
http://quiviracoalition.org/2015_Conference/SPEAKERS/
and scroll down to David. I suggest that you click on the PDF, which are his slides. If you are interested, you can go back and also listen to the audio.
I’ll summarize some of the points here. What follows are quotes or excerpts, with no comments from me until I so indicate:
Plants are no different from us as they are also outnumbered by their Microbial Counterpart and depend on them for nutrient acquisition, pathogen protection, and gene regulation, etc.
If we can fix human micro biomes…
Can we do this in our agricultural and rangeland soils?…
Can it be this easy?
Montgomery tests a system he calls Biologically Enhanced Agricultural Management (BEAM)
With BEAM, he gets 5X the fungal biomass as conventional agriculture. In comparison with Miracle Gro, he increases aboveground dry biomass from 2994 to 15,626. with irrigation, 17,579
Cotton production in the field increases from 1548 to 2472
Chile production in the field increases from 10.5 to 20.8
Changes in nutrients compared to conventional:
Nitrogen +107 percent
Phosphorus +64 percent
Potassium +37 percent
Copper +40 percent (Christine Jones talked about the importance, and declining availability, of copper)
Biomass production rates:
Swamp and Marsh 2000
Conventional Cultivation 650
Tropical Rain Forest 2300
BEAM-transitional 1980
BEAM-advanced 4279
Cost of EPA compliant carbon sequestration:
Power company efficiency 155-625 dollars per ton of C
Photovoltaic 130-333
Carbon Capture and Storage 276 to 345
BEAM 17-22
Average soils can sequester carbon at the rate of 0.23 percent C for the next 75 years.
Back to me.
*His method uses dairy manure. Currently a troublesome waste product high in salt. He composts the manure cheaply, with no turning, and little labor. However, there ARE some limits on how much dairy manure is available. If we were to revert back to one dairy cow per family farm, then I don’t know if his system would work.
*Even if dairy manure is not used, his review of the biology is very suggestive of the power of biology.
*The current system is insane, and will stop one way or the other. But the cessation of conventional agriculture may turn out to be a very good thing for humanity and the planet.
*Lots of city people may have to get their hands in the soil.
*Best to get started right now
*His proposal on CCS is everything that Official Washington detests…cheap, little corporate profit, not much opportunity to skim money.
Don Stewart
Interesting! Also since cheap available methods like aquaponics and no till are spreading into impoverished regions of Africa and elsewhere, the proverbial drop of oil will be squeezed even more for further “efficiency gains”, in this example less malnutrition, and less dependency on global capital.. Overnight Fast Express doomers will be disappointed from this can kicking, which might eventually undermine the current prevailing system in the longer run, simply shifting us on different track.
I went through some of their pdfs quickly, and you are right their rosy number are upper range limited by several practical constrains (manure-fungi at the very plant spot), in one paper they describe using for fungi enriched soils seedlings experiments ~1kW fluorescent lights 12hrs per ~90days of growing season. That’s perhaps realistic for some parts of NM but no way global insolation with realistic weather patterns.. I think it’s still valuable study into confirmation both of theoretically possible maximums and practically known elevated yields of decades alternatively managed agriculture.
I don’t seem to be able to get used to the fact that people are masters of self delusion. I see things that should outrage anyone for the shear insult to our intelligence every day, and they just keep coming. Name any problem that humanity faces, and there is at least one group proposing “solutions” that range from mind blowing stupidity, to the merely irrational.
You can see it in every aspect of modern society. People refuse to see what should actually be obvious. Is it fear of what the reality of the situation means, or is it some other weird way human brains are wired? I still don’t know after looking into the situation as best I can for several years now. How can most of the people on the internet have no sense of epistemology … no ability to tell the crazy from the true.
Name an issue, and the delusional come out of the woodwork armed with posts of articles, videos, audio, and more from the internet. Its not like the flat earth society (a funny thing to think about), the people making these posts actually believe that their impossible solution has merit, and that the “expert” making the claims knows anything about the subject that he espouses. Generally, those “experts” are converted “journalists” that once attended a conference.
One prime example is the stock market. David Stockman (and many others) have been pointing out the craziness in the markets for years now but we all know what is getting set to happen perhaps as early as tomorrow.
Another example is peak oil – or peak affordable oil. There are lots and lots of solutions to peak affordable oil:
Cold fusion (not physically possible, duh), Hot fusion ( possible, but not practical ever maybe in another 40 years), Hot fission – maybe with Thorium (maybe 40 years ago), Solar PV (great way to store FF), Wind power (an even better way to store FF), biofuels (a really stupid way to store FF, but a great way to starve people.
Need to feed 9 billion people on a finite world?
No problem say the people that belong to the Church of Veganology, just stop eating meat. Never mind the fact that people like meat and will (and alway have) eaten meat if they can get it. The solution is based on the premise that if you avidly post vegan propaganda then the people reading will be transformed from an animal that eats meat to one that does not.
No problem say the singularitarians, the robots will raise all the food we want using new techniques that the robots invent. Oh, and meat-from-a-vat! Never mind that to grow meat-in-a-vat the con man pushing it feeds the meat-in-the-vat (you guessed it) meat . Speaking of religion …
No problem say the religious, god will provide. In the typical religious mind of course, followers of the right religion will have plenty and the others will starve.
You know Mr. Stewart, I never said that manure is bad for soil. I have no doubt that letting farm land especially land that has been used for a factory farm rest really improves it. In fact, I’ll bet that the BEAM process is just great for improving soil. That is not and never has been my point. The concept of soil improvement is a good one, one that I use every day. Bring in manure, wood chips, etc. add mycorrhizae and till gently, and you will have a great garden. But what works for my little area will not work worldwide, because very simply we live on a finite planet. What I put on my garden came from somewhere else, and it is very likely that the soil somewhere was degraded in the process.
My point is very simple. Let me restate in a slightly different way:
1. We live in a finite world. (I won’t post the definition of “finite”.) On that world every square meter of arable land is used to the fullest potential that the locals can muster. Sometimes the locals are not very good at farming, sometimes the locals are forced off their land so that it can be paved over, sometimes people raise stupid crops (see biofuels). The point is that there is no more farm land to bring into production.
2. To add manure or any other source of carbon to one piece of land you must get it from a different piece of land. Since all the land is being used you have a choice:
a. cut down a forest, grind it up, and spread it on the farmland. So, which forest do you volunteer? And, of course, the soil under that forest will be degraded and eroded by your actions, so in sum, the process gains nothing, and once that forest has been cut down, ground up, shipped to the farmland, and spread, it is gone for decades and perhaps forever because forests need soil too.
b. Use existing farmland to grow forage or carbon capture plants. By retiring some farmland to build the soil on some other farmland you have made the tacit decision to let someone starve. That doesn’t strike me as a solution to world hunger either.
At this point, I fear that you have imbibed some coolaide and stopped thinking. Solar panels are great for me, and terrible for societal solution to peak affordable oil. Manure is great for my garden, and a non-solution for society.
You want to prove me wrong? Easy.
Buy a chunk of land, and start farming. There is one rule. You must never import any carbon from land that is not your property, and you may not use commercial fertilizer. If you are correct, you will make money and raise more calories per acre than me. If you are wrong you will not. Meanwhile, I will continue to build my soil be degrading the soil somewhere else.
I have responded to this sort of comment so many times I am exhausted. If you had responded to what I wrote, as opposed to what you think my position might be, I would spend more time on it.
Don Stewart
Don, please don’t be offended by flybynight individuals not comprehending the value of the great material you are providing here. Your insight and links are greatly appreciated. I’ve found in one Johnson’s paper great tools how to measure, compare and evaluate several of the key metrics when applying alt. agri practices towards higher fungi & bacterial life there: soil Carbon respiration, F& B biomass and population, etc.. thanks again
Yes and Scott Nearing is the answer… if we could all just be like Scott Nearing…. (except for the pick up truck – Walmart tools — and summer joints on the airplane to Florida…)
Sounds like Fast Eddy is “Living the Good Life”
Maybe I should right a book about my lifestyle …. which is as completely unsustainable as Nearings… but I do consume far more than he did…. so if everyone would live like me… BAU could continue awhile longer…. if we all tried to emulate Nearing… we’d have collapsed long ago
from Scott Nearings speech THE GREAT MADNESS
A Victory for the American Plutocracy. Looks like nothing has changed.
SPREADING AMERICANISM WITH THE SWORD
A short two years sufficed to enable the business interests of the United States to take charge of the country. They had previously secured the natural resources, the manufacturing industries, the credit machinery, the public utilities and the merchandising establishments. This economic power, together with the control of the channels of public opinion and of the machinery of politics enabled them over night, in the history of American affairs, to put across their program and prepare to “crush Germany.
Nearing was never an isolationist of the individual. He never made claims about living without others. He is more about politics then permaculture or sustainability. He started as a Wharton Business school professor.
from wikipedia
“In 1954 he co-authored Living the Good Life: How to Live Simply and Sanely in a Troubled World with his second wife, Helen. The book, in which war, famine, and poverty were discussed, described a nineteen-year “back to the land experiment,” and also advocated a modern-day “homesteading.””
Pintada, I would just like to add to your excellent post, that the best farmlands have traditionally situated next to a river or an lake. The best possibility, having farmland next to a freshwater lake that is connected by a rivernetwork all the way to the sea. The farming improves not just because of the water, irrigation or transportation possibilities. Rivers and lakes provide fish (phosphorus), reed and other biomass but also waterbirds manure. And if the rivernetwork is connected to the sea, then the farmland also gets nutrients circulating all the way from the sea.
If we try to artificially take care of ecosystem services provided by the seven seas, then thats quite a lot of ecosystem services to maintain artificially. I believe a more energy efficient option would be to work with mother nature, then to try and replace her artificially.
Van Kent;
Absolutely, flooding has always made farmland rich because all the nutrients being washed from higher ground ends up on the fields. Virtually Every time people mess with the system, they make it worse.
Van Kent;
I reread your comment and I like this bit especially: “If we try to artificially take care of ecosystem services provided by the seven seas, then thats quite a lot of ecosystem services to maintain artificially. I believe a more energy efficient option would be to work with mother nature, then to try and replace her artificially.”
That is exactly what the utopians that we read on the internet miss. Whether they are techno-utopians, mainstream economists, steampunk-utopians (Michel Greer), or a farming-establishment-of-holistic-management-utopian they miss two very important facts:
1. The earth provides a vast amount of wealth (ecosystem services) that must be taken into consideration when thinking about what is possible (what will be possible after the crash), and
2. The world is a finite and closed system.
Forget either part and your ideas about the future necessarily are BS. Faulty logic, and false information cause embarrassment in the forum. Use faulty logic to try and survive post-BAU, and your family dies.
Your challenge is easily answerable, tomorrow pickup a phone and call to any long run farming establishment of holistic management and ask them the following: should you for whatever reason be from now on deprived of the external input of carbon material/compost etc. (beyond the sourced material from the entire property of the farm) what will be the result:
a/ it will result in no decrease of production/profit
b/ it will result in slight decrease of overall biomass output and market profits as I re-balance the stock and production plans for the property
c/ it will result in great decrease of overall biomass sooner or later resulting in notable degradation of the farm and substantial loss of profit – assured bankruptcy
He who answered you options a/ – c/ will be out in short order anyways and respondents b/ are still going to be around for a long long time..
Be sure to ask them where the water will come from to keep the crop growing when irrigation is needed…
Specifically make sure that they understand there will no longer be electricity post collapse i.e the pumps won’t work…
Yep, tomorrow we will all die instantly, lolz.
BTW that reminds me about all those people living before us who were also pumping water for relatively big projects using gravity (ponds), or via human and draft power leverage, and so on. As to your likely followup question, no I’m not responsible to plan for the future of 7.5B people..
Be sure to ask them if they have a gravity water fed supply when you make the call… water is fairly important in maintaining crop yields…. so that’s a key question.
You are close to becoming president of the koombaya of the Koombaya Klub…. keep up the great work!!!
Fast Eddie, darned good questions.
For information from an Ag expert that asks (and seeks to answer) the actual questions that matter i recommend:
Brown, Lester R. (2012-10-01). Full Planet, Empty Plates: The New Geopolitics of Food Scarcity . W. W. Norton & Company.
Worldofhan;
If I was to call a “farming establishment of holistic management” (whatever that might be) i would ask one question:
“From where does the money you use to do your “farming establishment of holistic management” come?
They would say, “donations”, or “we sell plots of land (trinkets, paintings, sculptures, etc.) to any rube that we can find” or “mostly we do lectures”, or they would lie. If a “farming establishment of holistic management” person could make a living doing actual “farming establishment of holistic management”, Don wouldn’t have such an impossible job trying to sell “farming establishment of holistic management”. Heck, maybe I would want to be a “farming establishment of holistic management” person.
If there is anyone left alive a decade after the oil stops flowing, he will be a hard nosed subsistence farmer with a defensible perimeter, and some people with military training in his tribe. He will put whatever he can on his fields to make his food grow, manure or any fertilizer that he can find. The “farming establishment of holistic management” people will be dead, because the people that survive will need workers, and practical engineers, not public speakers and confidence men.
“Oils tops flowing” – this will likely transpire as regional phenomenon, different regions getting unequal access to the resource at different time scale. Apparently, we are not there yet, not mentioning another 10yrs after the fact as you suggest. So you are evidently painting with brush decades away scenarios, which I and others referred to as further steps on the staircase collapse, so again mishmash in your argumentation..
Again, if there is an example of established of pursuit in holistic management farm, lets say of 2-3 decades of continuous practice or more, many to point out in the US and internationally, you can bet the folks owning the place would at that event you mentioned rather kill all of the animals and move out of that place now under some commanding cretin ruining the place back into decrepit soil eroded hellhole reverting to similar condition they started when buying it from conventional farmer.
You are only publicly showing zero knowledge about the topics discussed here.
There is no reasoning with such people…. I have been at it for 3 years now and no matter what facts are crammed down their throats… they will keep coming back the same pie in the sky nonsense over and over and over and over…
The only way this gets shut down is when this steaming pile of dung slides explodes — and all these ivory tower theories get exposed for the total rubbish that they are….
And those who proposed them are eating boiled rat meat over a fire fueled by the foam from car seats….
Then they will understand that when we say the end of BAU comes — it is for all intents and purposes the end of the world — or at least of any decent future….
There is no Little House on the Prairie without BAU — there will be no food — there will be violent hungry desperate people everywhere
And your little patch of hopium out back will be pillaged by starving people — your animals shot and killed and eaten
What do you think — that you are on an island that is impregnable — that you will just be allowed to spend your days tilling the soil and growing wholesome food and sitting back and smoking a pipe at the end of the day?
This is absurd. It is ridiculous…. it is not going to happen.
I think this is where Joan Baez is meant to start… Joan? Joan? Yooooo hooooo…. they want to hear the song…. because Fast Eddy has upset them with a dose of reality…. they are in a real tizzy…. please … a song … waiter — can we get an Ambilify on my tab … anyone who needs it – yes…
This was suppose to be no till post and comments lolz,
your are apparently wrong here as usual, we did not discuss tillage here.
Boy, you have been onto something only for 3yrs ?! What a youngster, I’ve been doomerist for almost two decades, you are prolly still going through those very early gruesome years of panic, acknowledgment and slow acceptance.
Fast eddy will continue to lose it for two more years at least, ’cause ya know, collapse is always two years away. However, he did say we wouldn’t have turkey next Xmas which has me kind of bummed out. But, I’ve got one in the freezer just in case.
If I had adopted the doomster position 3 decades ago that would have meant resignation …. which would have lead to a wasted life…
Better to become a doomer during the twilight years… just enough time to complete the bucket list….
‘Lord, grant me chastity and continence; but not yet.’
Saint Augustine, father of the Roman Church.
Here you go Fast Eddie written by a guy that tried to explain something else, to a different audience, but the sentiment is the same the wisdom just as applicable.
http://witsendnj.blogspot.com/2014/09/five-stages-of-awareness-or-is-it-six.html
I may have posted it here before. I post it everywhere.
From the intro, “If you think this is as brilliant as I do, you might want to later check out the marvelously irascible Dave Cohen’s tour de force series, Adventures in Flatland Part I and Part II” [there is a part III and (i think) IV now]. (I found Cohen interesting for a while, but there is a huge flaw in his work. Do you see it?)
He’s a doomer who hates doomers? Lol
Stage 6: Acceptance and just LETTING GO.
Yep…. I call it resignation… kinda like I’m playing hockey — we are down 8-1 to the best team in the league — with 45 seconds remaining in the game….
That cut me up big time 😀
Dave Cohen has been highly dismissive of the deflationary collapse scenario. Dave’s clever. Gail’s clever. Who to believe? Damned if I know. I read these collapse blogs hoping to get some insight into what is happening. If I were 100% sure I’d be dead within two years, or that my cash would become worthless in that time, I’d certainly be living my life very differently.
I meet and talk to a lot of people. People who own and work in shops, bars and restaurants. I know even without reading doomer blogs that business is down massively even from a year ago. But I still don’t have anything like enough information to decide when it will all fall apart.
Obviously Gail is correct
http://pbs.twimg.com/media/CUl_CeDWcAAcq5k.png
If anyone wants to dispute her assertions — then they need to explain how commodity prices turn around….
Trillions have been printed… china has poured more concrete in 3 years than the US did in a 100… and now we are sinking…. the central banks are out of ammo…
I cannot see how these prices rise — in fact it is difficult to argue that they will not drop much further…
Which will result in massive uncontrollable bankruptcies… and further deflation …
Happy to reconsider if someone can explain how another outcome is possible…
How would you live your life differently, if you knew you would be dead in two years? If there were good things you would do–remake contacts with family matters, for example, or be more appreciative of what you have today–wouldn’t it make sense to do them now, anyhow?
@Gail
How would you live your life differently, if you knew you would be dead in two years? If there were good things you would do–remake contacts with family matters, for example, or be more appreciative of what you have today–wouldn’t it make sense to do them now, anyhow?
I’d work a lot less (if at all) and spend more time with my family. It would make sense to do that now if I knew the money I am currently saving would soon be worthless.
That is the big advantage of being 100% certain that money is about to become worthless … you can piss it away without a care…
Written on the final day of a 30 day European free for all where I’ve pissed a fairly obscene amount of money away — something I normally would not do — and would normally feel very uneasy about doing because of my experience with relative poverty in the past…
But hey —- this is it — you cannon take cash with you — and if you do come out the other end of the collapse cash will be what you use to light the fire….
I do recommend keeping at least a bit of gold though — it’s always been the last man standing….
Even if you didn’t exactly know that the money you are currently saving would soon be worthless, it might make sense to find a reasonable balance between work time and time with your family. You can hardly expect others to take care of you, so not working at all isn’t a very good option.
Working way too many hours simply because of hope that an unsustainable system will be available 10 or 20 years from now doesn’t make much sense.
I have responsibilities (children) and I cannot risk getting the timing wrong. In your situation I’d do the same. Except I’d have done Eastern Europe IN THE SUMMER! Enjoy your return flight.
Can’t handle the crowds so never go near any part of Europe in the summer….
The good thing is that we have burned so much coal that December/January were rather balmy….
Interesting stages the author has come up with.
It would really be necessary to try out the system on a fairy wide area to see how much it would produce, given that animals that are not locked up in a barn take some area to graze. We are really dealing with a whole system here.
Thanks! The key thing seems to be enhancing fungi growth relative to bacterial growth in agricultural settings, if I am looking at this right.
Dear Gail,
Great article. Highly appreciated! You hit the spot and also match with your arguments, Minsky’s theory of instability of financial systems from an oil production perspective.
I guess you know professor Steven Keen from Kingston University in London who also is of this collaps opinion. We seem to have crossed the point of no return. The question is, why the FED persued the low interest policy, not from an macro economical approach, more from a geopolitical pov?!? To utilize the crude oil industry to destroy and destablize opponent countries and later to make the US to take them over? Anyway… we will see!
Cheers from Germany,
Matthias
B.W, Hill says that we need 25 dollars a barrel to cover lifting costs for oil. We are currently at 33 dollars a barrel and counting. You can study economic theory until your eyes cross but in the end its all about oil. As Gail posited in one of her papers a few years back, oil and the economy are one thing. More precisely oil and the dollar are one thing. Steve Ludlum says that we are in a time of dollar preference, is how he puts it. This is bad news for China, good news for us for a little while longer. The next five years should be fascinating.
It is a mystery to me why the Fed raised rates now, except perhaps that they believe that if required rates of returns are higher, less investment will be made in things that clearly make no sense. Of course, if we need an ever-rising amount of debt, then even unprofitable investments help keep the ship afloat a bit longer.
I have to wonder about the great strides that have been accomplished in productivity, i.e., more services/commodities per hour of human labor. It must have the effect of depressing wages for two reasons. One, mechanization reduces the number of workers and two, skills and knowledge encoded into mechanisms depresses the value of hourly wages. The result is a flood of commodities that fewer people can afford.
One solution to the problem of gluts might be deliberately lowering productivity to involve more workers with the skills that had been supplanted by machines. This, however, goes counter to the notion of ever increasing productivity and the expectation of eternally increasing profits. This expectation seems to be ingrained in theories of management going back to the early phases of modern banking and industrialization. Could anyone at that time have foreseen how two centuries on the how Earth’s human population would have increased ten-fold? Or that Malthus’ fears of food shortages would be delayed by heat engines and nitrogen chemistry?
So, some of us have enjoyed a few centuries of growth sufficient to service interest payments and prevent capital flight. Until now. Capital is now all bunged up in great torpid concentrations in tax havens. Or hordes of capital are chasing returns into the black holes of securitized debts or junk securities. Fraud and monopoly now seem to be the way to turn a profit. Combine that with the geological limits to growth and it seems, yes, we’re in a mess.
Agreed. Get rid of LED light bulbs? Work on making cars less fuel efficient? It is not going to happen. Even well intentioned changes have adverse results.
Advances in medicine make it possible to treat even rarer diseases. At the same time, they make the cost of medical care higher and less affordable. Do we just outlaw treating diseases that affect fewer than 10,000 (or 100,000) people in a year?
We do have a mess, I agree.
Gail, society can put a life time limit of $300,000 per person of government paid for care. After that pain management, only from the government. Whatever the individual can afford to pay is fine.
Or how about an annual limit on the compensation of doctors of say, $100,000? Or that techniques developed after 2010 cannot be used? Part of the problem is that very simple things cost an inordinate amount. My son’s broken arm recently cost over $80,000. It did need surgery, but this is getting absurd.
Or open a free market in medical care. Stop letting the AMA dictate the number of doctors trained per year. Allow all to provide services as long as they relieve the truth of their training. That would allow doctors trained outside the US to work in the US without repeating medical school.
I would go with only techniques before 2000 to be used for government paid for health care. For self paid the customer can be shown the prices and decide how expensive they want to go.
The current medical system is a bubble that is not sustainable.
There are a whole lot of changes that could be made in health care. US costs for health care are ridiculous compared to anywhere else in the world, and the outcomes are less good, even with these high costs. The whole system needs to be rethought.
If there are two levels of care, in my view one level would be for 100& self pay. The other would be for all insured care, whether government programs or “regular” insurance programs. The amount of advanced care for very elderly patients needs to be cut back; also that for those who are clearly near death.
I have to wonder about the great strides that have been accomplished in productivity, i.e., more services/commodities per hour of human labor. It must have the effect of depressing wages for two reasons. One, mechanization reduces the number of workers and two, skills and knowledge encoded into mechanisms depresses the value of hourly wages. The result is a flood of commodities that fewer people can afford.
Yep, that’s what Marx predicted ~150yrs ago as the final stage of capital accumulation or what could be rather called mis-allocation. Now the question remains how long the infrastructure ages from the peak over time forwards. As I mentioned previously, some faction of the elite will try to run with it like mad dogs till the very end at all cost (in openly totalitarian regimes and neo-fiefdoms), while there is another growing undercurrent of people opting out of the system in terms of diywise arranging their own food caloric intake, local micro electric grids (lights and very small manuf).. So, this process will continue rip apart the current version of civilization in coming decades, specifics not possible to predict now, informed speculation only.
” informed speculation only.”
But reasonable sounding just the same. (as far as it goes). It’s a very complicated world to figure out. I can see some big businesses adapting in very imaginative ways. Like Walmart using more skylights, buying more local produce, letting homeless in cars use parking lots…
Humans are extremely inventive, anything and everything will be tried as they thrash about in the early to mid stages of collapse. Predictions and opinions about it are as common as assholes. Unless during that stage a new plentiful and cheap energy supply is discovered or invented, you can be assured of only one outcome and the cornucopien’s are fighting that inevitable fact to the bitter end.
Although some of this so called “thrashing about” makes more sense than the status quo and should have been done in the first place. By itself, and leaving aside eventual outcomes, I don’t see why it’s preferable not to do those too-little-too-late things anyway.
To put it bluntly anyone and everyone can do whatever the hell they like and of course they will. I don’t think it will make a difference one way or another. As Ron Patterson likes to say “they will eat the songbirds out of the trees”. Overshoot is a bitch and she don’t take prisoners.
“they will eat the songbirds out of the trees”
And I guarantee they’ll be eating each other — just as happened in many previous famines in the good old days before aid agencies rushed in food on airplanes….
Productivity increases don’t really help if the benefit doesn’t get back to wages of workers. If it only means higher profits for a few owners, the benefits have been largely lost.
Please see my post!
– Can We Free Ourselves from the Current Debt Supercycle?: http://permaliv.blogspot.no/2016/01/can-we-free-ourselves-from-current-debt.html
Øyvind, I think Ayn Rands philosophy is psychotic and wont work in Post-BAU environments. Ayn Rand followers conveniently forget that she took welfare when she got sick. Eventually she died alone and miserable in a hotel. Her rational self-interest philosophy is just a load of BS, that can not work outside of a cheap oil age.
The 20th century and the last decades of individualism, consumerism, hedonism are but short blips in the history of our species. For the majority of our species history it has been, and will be again, the survival of the fittest group. Individuals are part of large families, families team up with other families to make villages, villages team up with other villages to make tribes. From time to time there comes a conquering warlord that tries to kill off all Y-chromosomes and replace them with his own Y-chromosomes, but such successfull conquering warlords weren´t as common as people think. For the most parts people tried to cooperate because war and glory ususally came with the price of being killed and the family revenged upon.
The usual every day life our species is one in which we are constantly surrounded by small children, aging elderly, famine and disease. If you try to be egoistical in an environment of small children running around, old elderly people to take care of, you will be shunned from the entire village. And alone, lone wolfs, wither away in silence. The next high fever that hits, no coming back from that, because nobody is taking care of you.
We will be going back to a mate choice and sexual selection where the extended family or even the entire village, that the mate choice promises, will be the winning strategy again.
What does good skin, good teeth, clear eyes, good general health, fit and athletic, clean clothes of good quality, a status symbol or two as ornaments imply, really? For a million years or so those have been clear signals that that individual is well cared for. That individual has an strong vibrant extended family that takes care of that individual. That individual has access to resources and free labour through family ties and extended family ties. Our mate choice and sexual selection is primed like an arrow to seek strong family groups to team up with.
And as for economic or social models to produce for the future.. Well, whoever survives the next few years, try talking with them and find out how they would want to manage things. But if they don´t have any skills or other large resource bases, you´ll just ignore the difficult individuals, and try to build cooperation with those that do have cooperation skills and large resource bases. The ones who prefer not doing anything, who prefer to leach on other people’s work, well, they´ll be left behind pretty fast. Just saying, what goes around comes around.
‘For the most parts people tried to cooperate because war and glory usually came with the price of being killed and the family revenged upon.’
This sentence is not clear.
War and glory —- this assumes tribe vs tribe — nation vs nation …. and as we can see from reading history and observing the world …. this is a continuous process… it never stops… it is endless…
Family revenged upon — that is a different matter — it has no relevance to war… yes of course within a society we must cooperate — if we were at each others throats as nations are at nations throats — then we would quickly succumb to the more cooperative tribe or nation…
You will notice that the most successful warrior nations tend to have extremely strong cooperation— observe America over the past 80 years or so — hand over heart singing God Bless America… a very cohesive nation — a nation with very strong belief in itself… ‘the chosen nation’ — it is an honour to die for America…. etc etc etc… the PR machine has done a great job in creating this cohesion… and it has been leveraged to build a global empire…
But make no mistake — America’s empire is no different than any other — it relies on violence — or implied violence…. and those under the yoke would in a heartbeat rip the throat out of America if they could….
For a million years, excluding the last few centuries, and again a few years Post-BAU, you´ll know who the bastards were, and where they came from, who tryed to rob and kill your family. Then it´s just a matter of deciding when the revenge party will be on their way to burn their house down.
When long distance travel is not an option, or long distance supply lines can not be withheld, you´ll know the bastards if not by name, then by reputation.
Large scale war was invented by Napoleon. Mass conscription and canned foods made it possible. We will not have large scale wars a few years after Post-BAU, no supplies to do so.
You can win any warbands allegiance by providing security to the warriors families, wives and children. If the women feel safe, then you know you got the men to do the heavy lifting for you.
Sounding very similar to Scott Nearing….
I’ve got a pick up truck — just like Scott Nearing. In fact I admire him — he as a farmer enabled the 7.5 billion population that we now have on the planet… he provided the food to feed them!!!
If only people would idolize the hunter gatherer…. then I could see your point.
Same political international outlook as Scott Nearing…Fast Eddy that is just peachy.
You say you have a pick up truck also?…No way..Maybe you and Mrs Eddy can write a new title. “Living the Good Life Down Under”
You both still have time to apply for the Resident stay at Forest Farm in Harborside, Maine
It would do you some good.
Thanks for informing me about Nearing! The difference is that while Nearing was an economist, Bongard is an biologist, specialized in human biology. Actually I don’t think he understands much economy, f.ex. the role of debt. His idea is to re-organize production in such a way that we can hold the society together without money as the primary glue.
“Fortunately, attractive mate strategies also include the urge to display generosity and cooperation. Game theory reveals these human universals, and under which circumstances they appear and thrive. Human evolutionary past consisted of ‘ingroups’ in which all members knew each other. These ingroups favoured sexual selection through a well-known behavioral mechanism called the Handicap Principle. The peacock’s tail is only the tip of an iceberg compared to the human results of this attractivity selection: “Look at me, I can be generous and share my wealth, I can show-off and bear burdens of all kinds, and still be top among peers”.” – Terje Bongard
In an ingroup setting people will sacrifice themselves for gaining status within the group, as the Arabian Babbler does. For the Babbler the birds with highest rank are those who have the most dangerous sentry, or those who force low status birds to eat their food. The birds who don’t share their food or don’t have sentries with a high risk for getting killed, are low status birds. The same behaviour can be observed in small, tribal, human groups. This is inert drivers connected to sexual selection: http://www.nina.no/archive/nina/PppBasePdf/poster%5C2012%5CBongard%20%20Can%20bytes%20save%20Poster%20Planet%20under%20Pressure%20London%20March%202012.pdf
The problem of Bongard is though that he doesn’t seem to understand the role of debt in our economy, and he thinks we can go on with BAU until we have emptied our resources, just like other animals. But other animals don’t use debt as a tool to get their resources out. I tried to explain to him what limited time range we have, but I don’t think he really got the point.
Thanks, great post. The ‘look at me I’m generous” seems reasonable at the basic level but look at Genghis Khan, millions can trace their ancestry to him. I don’t think his reproduction technique was by being generous.
@bandits101, Genghis Khan said that “there’s no greater pleasure in life than to feel the wifes and daughters of my enemies to my breast”. So he reproduced a lot with the wifes and daughters of his enemies all over Asia. But he might have been generous to his own ingroup, if he was not a pure psychopath?
I read a history of Khan — apparently he had a committee that would act as quality control for the women/girls that were sent to him…. nothing but the finest for Genghis…. and often multiples at the same time….
Thanks Van! I made a link to your nice comment at the end of my post.
Some common sense truths here.
I wish our problems were easy to fix–I am afraid that they are not. Generosity is not really sufficient.
In case you want to catch up on Opening Week for 2016 on the markets and oil… 🙂
https://www.youtube.com/watch?v=9rdZGnWQye4
RE
China Demolishes Never-Used Just-Built Skyscraper
Directional blasting demolition of a high-rise building was completed successfully at 7 a.m. on November 15, 2015 in Xi’an, in northwestern China’s Shaanxi province.
The building was 118 meters high (27 floors) with a total construction area of over 37000 square meters.
Having been left unused for too long, the building could not be brought back into use so local government decided to demolish it.
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/01/20160109_chinaWTF1_0.jpg
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/01/20160109_chinaWTF2.jpg
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/01/20160109_chinaWTF4.jpg
And thus the commodity price collapse solution has been found…. China will blow up all the ghost towns …. and start rebuilding them…..
Hurrah! Hurrah!
I don’t know about Hurrah, but to keep the Party in power, I see the government capable of demolishing all its uninhabited towers etc, and rebuilding them. Anything to keep everyone quiet. It’ll all catch up with them when the resources get too scarce.
Very strange!
Strange! If added debt and jobs is the issue, and a person doesn’t care about pay back, I suppose blowing up buildings “works.”
Digging holes — filling them back in — rinse repeat…. pay 50,000,000 workers $100 per hour.. with time and a half for OT….
You laugh but how many millions of Westerners are on the dole with subsidized housing and food stamps? Couldn’t they at least be required to pick up trash or patch a sidewalk? We don’t allow homeless and unemployed people to simply die in the streets of starvation. There is so little productive work available they just sit at home or hang out on street corners.
I would have them making cell phones, blue jeans, and televisions and export unemployment back to China. We are already paying these people a living wage, they are alive right? All that money going overseas could stay here and circulate around. If you say WTO I will SCREAM!
“Couldn’t they at least be required to pick up trash or patch a sidewalk?”
Patching a sidewalk takes materials and tools that are well beyond a typical homeless person.
Requiring people to pick up trash takes expensive supervision.
However, a high fraction of homeless and a higher fraction of welfare people have cell phones. The minimum cell phone these days has a camera. When I am out walking, I frequently pick up trash and broken glass. I have often thought that reporting it someway through the internet could be useful, perhaps storing up Karma points or in the case of homeless, paying them for their efforts. In California there is a fair sized army of people who are paid for their effort of picking up cans and bottles. (The California return value.)
Look up the CCC. Were any of you in the military. In 1971 I had the lucky draft lottery number 13. The person in charger of a work group only has to know as much about the job as the workers need to know and his only extra pay is he isn’t one of the workers.
While some world travelers think I know nothing I did manage to put four children through school and have a comfortable home on 13 acres I own. All the smart people have been running the banks and government for the last 60 years. It would be hard to do worse.
“Look up the CCC”
The Army Signal Corp provided radios for the remote CCC camps. My dad was attached to a CCC camp in this way.
Problem is that an awful lot of things that need to be done take more skills than people have now. I have a few ideas about how to solve that but they are way off topic for here.
I was in British Columbia a couple of years ago — I noticed a shop selling hand made corn brooms — for the astonishing price of $55!
Same broom — machine made (no doubt better than the hand made one….) – 10 bucks… http://www.walmart.com/ip/Unisan-Corn-Fiber-Bristle-Parlor-Broom/22133541
So ya – if you want to pay $5000 for your next phone — let’s onshore all those jobs and get people back to work in America.
Populist solutions always appear to offer simple solutions to complex problems….. unfortunately complex problems seldom have simple solutions — and quite frequently there are no solutions … only band-aids… and can kicks….
A hand made broom is like tailor made suit, of course it would be expensive. I’m talking American factory made. American automobiles are not 10 times more than Japanese made ones. You also have to remember that multiple employee benefits are included in American salaries, Workman’s comp, healthcare cost, unemployment insurance. Then there are the external cost of that $600 China built cell phone; welfare payments, section 8 housing cost, food stamps, depressed wages for those who can find a job, higher taxes to pay for benefits.
Businesses go where they can make the most profit, it doesn’t matter if an American made cellphone was $601 the jobs would be gone.
The phones will soon be assembled by robots be it in the US or China.
If all you want to do is raise reported GDP, this sort of works. I presume the $100 per hour comes from additional debt. If you can keep the debt merry go round working a little longer, this almost works too. Just borrow more debt, when this debt plus interest becomes due.
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Dear Gail and Finite Worlders
Here is a link to Christine Jones, the Australian soil scientist, talking about the urgent need to drastically reform agriculture, and what we need to do about it. It really isn’t difficult.
http://quiviracoalition.org/images/mp3s/6235-q15_a_christine_jones_part_1.mp3
This is a long talk. It is definitely worth your time if you are one of those people who insist that the Green Revolution saved the world, and that everyone will starve if we fail to use all the fertilizers and herbicides and pesticides. This talk is likely to be a big wake up call for you.
Don Stewart
Don, please repost your link. Yes, I agree with the premise and need to act. Will the corporate industrial at agree? Maybe tomorrow, yes perhaps the day after tomorrow.
Remember less than 1% are involved in agriculture here in the United States.
As a matter of fact, the US Labor Department had dropped kping track of agriculture for that reason…(and the fact guest workers don’t count)
Dear MJ
Regarding link, best bet is to go to
http://quiviracoalition.org/2015_Conference/SPEAKERS/
scroll down to Christine Jones. You can select either the audio or a PDF of her slides.
Don Stewart
Interesting presentation. Lack of correct minerals may be part of the weight problem people are having as well, I would guess.
Please stop writing “Dear …”, because it sounds gay.
ktos, it is a convention it means nothing. It was more in style 30 years ago.
Don in my book can be as happy as he wishes to be. I don’t mind being gay at all myself
So…?
Lots of web articles centering on “economic collapse” in 2016…..stand by and hold on…
China Economic CollapseIs China on the Verge of Economic Collapse?
http://www.profitconfidential.com/chinese-economy/this-could-ignite-a-chinese-economic-collapse-in-2016/
Some fear that the suspension of currency trading rights for some international banks represent a major effort to stop the current wave of capital outflows, heralding a potential Chinese economic collapse in 2016.
China’s central bank (the People’s Bank of China, or PBOC) has a problem in keeping the yuan under control. Now the country’s government has ruled out three foreign banks from foreign exchange transactions until the end of March, according to Reuters, which cites sources who have witnessed the notices of suspension. (Source: “China suspends forex business for some foreign banks,” Reuters, December 30, 2015.)
A ban on banks operating on the offshore markets raises questions about the very status of the free market of China
Also this
War-torn economy sees prices soar as it plans to ease capital controls following IMF bail-out
http://www.telegraph.co.uk/finance/economics/12072614/Inflation-hits-44pc-in-Ukraine-amid-economic-collapse.html
The war-torn economy, which has been plunged into crisis following conflict with neighbouring giant Russia, will also start to gradually lift capital controls as it begins to receive disbursements of bail-out cash from international lenders, said Ms Gontareva
Inflation will hit 44pc in Ukraine this year, as the embattled economy has seen prices soar amid economic collapse.
Consumer prices have hit eye-watering levels in 2015, according to the country’s central bank governor. Inflation averaged 24.9pc in 2014
And this from “The Atlantic”
Emerging economies like Brazil, South Africa, Thailand, and Turkey, rather than China, will be the real sources of concern in 2016, argues U.C. Berkeley’s Barry Eichengreen. With their high levels of short-term debt, these countries are vulnerable to currency crisis, “potentially leading to economic collapse
http://www.theatlantic.com/international/archive/2016/01/global-economy-2016/422475/
Between a slowing Chinese economy, collapsing commodity prices, and the beginning of the U.S. Federal Reserve’s rate-hiking cycle, many emerging-market economies have become quite fragile, notably Russia and Brazil.
“Now the country’s government has ruled out three foreign banks from foreign exchange transactions…”
That’s huge news MJ. Monday is without a doubt unfortunately perfectly set up from numerous days in a row of stock market losses, to go down Monday potentially on a massive scale, that could turn into a Black Monday stock markets around the world. Two days last week China’s stock market hit the 7% sell limit and stopped trading for the day. However, late last week Chinese officials dispensed with the sell limit – yeah, that’s right sellers can dump shares at will unfettered by any limit. The US stock market looked like it was poised to rise on Friday but ended at -167. That does not bode well for China’s stock market Monday that opens before the US stock market.
Stay tuned for Monday AM reports… Either this puppy is going to crash or find new footing, but with the Yuan in so much valuation trouble the tables are tilted hard in the sell direction but whether there is enough panic to cause pandemonium is uncertain.
Did you set up your “Big Short”? Good luck
Sorry for the out of synch post…. was unable to reply this comment:
MMR – ‘The How is subject to debate.’
It’s kinda like yes everyone would understand the benefits of me being 7ft tall
Instead of posting on FW I would be playing for the Lakers and making 12 million dollars per year… I’d get a lot of babes…. I’d be like – totally awesome…. immense benefits would definitely come my way….
‘The HOW do I grow over 1 foot so that I could get to 7feet and enjoy all the benefits of being the Laker’s centre — well that is up for debate’
Get it why nobody wants to listen to you?
Did I tell you that if I were 7ft tall that I’d be……. what? — you are tired of that story — but why are you tired of it? — let me tell it again .. just 5 more times … come on … where you going? …
I agree 100%!
They were partying at home because of new year’s eve, not looking for troubles. What were you doing that night?
I was in a small town in Czech Republic have a glass of champagne in the square watching people shoot off fireworks ….
I was rather excited by the whole affair and thought I might celebrate by grabbing the asses of some Czech girls…..
But I did not — because I thought it would be highly likely that I would be fighting many hundreds if not thousands of Czech men in the square — or at the very least stopped by these men and arrested by the police.
Now if I were not an Aryan looking fellow — dressed in jeans and a nice North Face ski jacket… with fine leather shoes (matching at that!!!)
Let’s say I was from Syria — brown-skinned… Arab in appearance — maybe a bit of a ratty beard — a raged jacket — one nike shoe and one addidas shoe found in the dumpster…
And I touched up a Czech girl in that square…. wonder what would have happened?
Hot damn no need to touch her up — I might have just used my halting English to say ‘hi – I have come alone to the square because I do not know any people here — you are very pretty and look so nice — may I join you in watching the fireworks?’
Hmmm… I wonder what my fate would have been….
Regardless of your position on the Germany incident — whether you blindly accept the accusations without any real evidence — or you use your common sense and think that it is ludicrous that 1000+ men could sexually assault women in Germany and there not be any photos or video evidence…. that there were no retaliatory attacks ‘because the men were all inside while the women were all out on the street alone’
Remember this ….
Most if not all of the refugees in your country came from countries that we have blown back to the stone age….
Not because they attacked us…
Not because they present any threat to us….
But because we LIVE LARGE by pillaging countries like Iraq and Libya and Syria ….. and we insist on LIVING LARGE and are quite happy to turn a blind eye to what it takes to live our ‘lifestyles of the semi rich and not so famous’
And remember..
Most if not all of these people did not want to be driven out of their homes and into places like Germany — where they don’t speak the language —- incur racists abuse on a daily business — have few prospects…
What they wanted was to remain in their villages and their towns and cities … with their families… with their jobs… with their lives…. without being bombed … and shot … and terrorized…
Your government supported the NATO bombing of Libya….the invasion of Iraq… the completely illegal attacks on the Assad government ….
You elected that government.
So don’t come crying to me about 1000+ refugees supposedly touching up some women — in fact if the hundreds of thousands of refugees that are in Europe suddenly decide to torch the entire continent in a frenzy of violence and anger because they conclude that Europe is a democracy — the people of Europe vote in governments year after year after year that pillage the Middle East … ruining the lives of people there….
And the refugees decide that it’s payback time… for the people of Europe who have lived very well indeed off of cheap middle east oil….
Then I will stand back and watch with bemusement as the karma plays out right before my eyes…I will even turn on CNN so I get a front row seat.
You reap what you sow. Live with it — suck it up — and quite whining like babies.
NOTE: I fully support the bombing of the middle east because I want to live large too — just like all of you — the only difference is that I if I were to be robbed or attacked by the ‘collateral damage’ i.e. a refugee from the middle east…
Instead of whining like a baby — i’d think to myself…. well — it’s better than being shot in the head by GI Joe…. certainly better than being caught in the sites of a drone and torn to pieces….
Fast Eddy, as you like to post A+++++++++++++++:
Scott Nearing would have written the same, but in a more elegant, early 20th century style of expression. As a matter of fact, he actually said the same at his trial for teason and many speeches, books, pamphlets and articles throughout his adult life.
He was also a card carrying communist …. which is the ultimate Koombaya Kult….
Scott Nearing was also expelled from the Communist Party!
So there wise guy….
Fast Nearing Eddy….so funny.
Let me guess… when one Koombaya world became apparent… he ran off to join another Koombaya movement… the farming gig… with the pick up truck and all that…
Perhaps if he were still around and had a chance to read FW — he’d realize his second folly — and tried instead to live as a hunter gatherer….
RecentGerman cover stories.
The events in cologne are pushed. Collapse-Insiders in search of skategoats?
https://scontent-fra3-1.xx.fbcdn.net/hphotos-xlf1/v/t1.0-0/p526x296/10561816_947365025354877_7141527937596213517_n.jpg?oh=4401b086fa3162599858c04d76ee5835&oe=57011A7C
https://scontent-fra3-1.xx.fbcdn.net/hphotos-xpf1/v/t1.0-0/p403x403/12509323_1242745562409225_3577728401526624201_n.png?oh=b196f9ebba37dd691dede41d26d5fc8f&oe=56FC2162
At least now the discussion has started. That´s a good thing.
Immigrants from MENA have a very different culture. MENA women are kept under home arrest (generally speaking of muslim fundamentalists). And (northern) European women have a life of gender freedom and equality. That´s a huge culture difference for some young immigrant male groups to adapt to. It is a good thing the discussion has finally started.
It will be interesting to see which side does the adapting.
I brushed shoulders with a couple of refugees in Amsterdam tonight … in the ‘coffee shop’….
African chaps…. the guy at the counter says ‘what do you want – to relax or to get high….’ – the guy looks at me — I said — ‘maybe some of both?’…. we had a good chuckle over that ….
I bet he’s out there on the street now touching up Dutch girls…. crazed refugees everywhere in Europe mon…. be careful your dotters…. the boogeymon coming for them…. BOOO!
That makes a lot of sense…. the last time the Elders tribe got tagged as the scapegoat (the stab in the back and all that…) it turned a little sideways …. can’t have the happen again
Oh I know — let’s pour Muslims into Europe — then stage two would be to create a big false flag where 1000+ Muslim men sexually abused German women — then anything and everything bad that happens in the world can be directed to the ‘dirty perverted Muslims’
Brilliant — this is a go!
“Fast Eddy, as you like to post A+++++++++++++++:”
Ditto. Funny too.
As I said at first, it’s strange there is no register of the attacks. And as I said later, at least some attacks were real: I’ve seen pictures of injured freunleins and there are hundreds of complaints.
Of course you were not to do anything bad in Czech republic, given you were alone and not a part of a group of a thousand (besides, you had your wife to take care of). I suppose you understad the difference three orders of magnitude can make. My question was intended to highlight nobody was expecting to endure some troubles at (possibly their last) NYE
Of course I didn’t implyed only women were outdoors, but that a small amount of people were at the square (here it’s the summer, we tend to get out more) and that a thousand was an important portion of them.
And remember…
I am not from OECD, my country has no refugees, my politicians doesn’t invade anything and I don’t live large. Perhaps those Dutch joints are too strong for you and you don’t only lose short term memory but also long term one (be careful)
Besides and most important: your statement that refugees are probably pissed off reg. NATO’s behavior doesen’t match your idea they can’t attack or pickpocket NATO’s citizens
NOTE: In case Mr. Troll is to fully manifest again, will you return here with a fourth name? No need to hide so much, can just be Too Fast Eddy
Logic is absent from your post.
1000+ attacks – no video – no photos — no reprisals attacks.
Like I said — your logic is absent.
I am sensing tribal passions in the posts of people who insist this mass attack happened.
Your thought-processes are becoming race driven. All reason has been tossed out the window.
I say again — your government is responsible for these refugees in your back yard — if you want to moan — then moan because your government blew their countries up and let them in.
You elected them — therefore you are to blame.
If not for that we’d not be having this discussion – would we.
I am surprised these refugees are not torching European cities — as payback for what was done to their cities…
I think the Hindus would refer to that as karma – no?
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Humans can’t stop dreaming up stupid things. Till the very last breath, we’re just totally clueless.
https://www.facebook.com/thisisinsider/videos/1504225093218217/
Monkey see, monkey do…
http://i.imgur.com/yMlcxwb.gif
Interesting info and figures about derivatives:
“Financial Armageddon Approaches: U.S. Banks Have 247 Trillion Dollars Of Exposure To Derivatives”
By Michael Snyder, on December 29th, 2015
http://theeconomiccollapseblog.com/archives/financial-armageddon-approaches-u-s-banks-have-247-trillion-dollars-of-exposure-to-derivatives
Thats over the counter derivatives, BIS can´t monitor under the counter derivatives, so, the big banks liabilities are likely double that.
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Farmers will fill up their oil tanks. When all of my containers are full, then I will have a storage problem and I woun’t be able to buy anymore even if it s$1.00/gal
Jal, I know the feeling. Maybe I should buy another tank?
Couldn’t hurt.
Right.
The Dark Side of Empathy
“Politicians are comfortable exploiting this dark side of empathy. Donald Trump likes to talk about Kate—he doesn’t use her full name, Kate Steinle, just Kate. She was murdered in San Francisco by an undocumented immigrant, and Trump wants to make her real to his audience, to make vivid his talk of Mexican killers. Similarly, Ann Coulter’s recent book, Adios, America, is rich with detailed descriptions of immigrant crimes, particularly rape and child rape, with chapter titles like “Why Do Hispanic Valedictorians Make the News, But Child Rapists Don’t?” and headings like “Lost a friend to drugs? Thank a Mexican.” Trump and Coulter use these stories to stoke our feelings for innocent victims, to motivate support for policies against the immigrants who are said to prey upon these innocents.
There is a history of this sort of thing. Lynchings in the American South were often sparked by stories of white women who were assaulted by blacks, and anti-Semitic attacks prior to the Holocaust were often motivated by tales of Jews preying on innocent German children. Who isn’t enraged by someone who hurts a child?”
quote from:
The Dark Side of Empathy
How caring for one person can foster baseless aggression towards another
by PAUL BLOOM SEP 25, 2015
http://www.theatlantic.com/science/archive/2015/09/the-violence-of-empathy/407155/
I feel like our politicians are starting again to manipulate our mirror neurons (https://en.m.wikipedia.org/wiki/Mirror_neuron) in a grand scale, to achieve command and control policies. Fear is a powerful tool in this purpose, but not the only one; our “good” feelings could even be more efficient. Very often it’s a mix of both, explosive.
In an older article (Sep.10, 2014), “Against Empathy”, Paul Bloom explains more in detail the differences between empathy and compassion, and warns us against the traps of listening to our feelings alone.
Against Empathy
http://www.bostonreview.net/forum/paul-bloom-against-empathy
Interesting, Stef.
But
“I’m not usually in favor of killing, but I’d make an exception for the leaders of ISIS”
He fails to explain why he does such an exception, given he doesn’t identify with ISIS victims (they are distant people, not the kind of people he should be expected to care about)
That’s why I think this guy wouldn’t be willing to recognize who are those leaders, it would shock his empathy toward his DoS fellow citizens. Still lost in MSM guidelines regarding this specific issue, while the other article is far more nuanced and interesting
Agreed, Christian.
I quoted the recent article because I see our governments sliding high speed towards authoritarian regimes. In France for example we’re under ‘state of emergency’ (shortly: full powers to the police, without judicial control) since the killings of mid-November, it’s supposed to end after 3 months, but is likely to be extended, perhaps indefinitely.
All this is also giving strong tailwind to far-right parties, as we could see with todays protests in Cologne.
Don’t know if there’s any agenda, but it stinks.
Et Hollande avait mine d’être bête… Bonne chance avec tout ça
Agreed, and it confirms declared “readiness” for staircase style collapse by TPTB, next installment quite likely to be deployed to spike in instability of the system before 2020-25. After that many people here will be very disappointed as elites will be still flying over their heads in private planes and choppers for several more decades, while they would be indefinably stuck without most of the frivolous activities like shopping, carz, int. travel etc.
The term “elite” is relative to circumstance, a capo in a prison camp could be regarded as elite. But to attain your islands of plenty in a sea of want you had better hope that “the elites” and their protection have plenty of bullets. To give you an example, imagine the Assad regime was not receiving outside assistance, they would not be “elite” for long.
You seem to think that we will have BAU lite, while the elites remain fat and healthy and the have-nots quietly fade away. When the economic collapse arrives, air travel will likely be the very first service to stop. When the armoured trucks with their deliveries of money from the bank cease, when the electronic transfer of salaries and wages cease, when deliveries of food and fuel cease and the brownouts, blackouts and complete power failures become endemic there will be nowhere to hide.
The world is not the same as even 60 years ago, the whole world is interconnected, there is nowhere else to go, mining, agriculture, fishing, infrastructure maintenance and transport require huge machines and large quantities fuel. The system requires BAU and growth, no in between. This of course has been explained by others and this blog is about the world. Gail explains endlessly how the whole system works and it’s interdependence.
100%
I never post about “BAU lite” that’s your terminology and interpretation..
Unfortunately, devil hides in the detail and here is the big distinction between “have-nots” corralled away as forced under the yoke of openly authoritarian COG rule before further slide on the complexity staircase vs. your interpretation of “quietly fading away”, which again I never alluded here to.
You “insta-doomers” are to certain extent byproduct of the recent era of fast information exchange yet little substantive value addition.
What I am wondering is what this false flag in Germany is all about — these 1000+ sex attacks that never happened…
What is the purpose of the MSM blaring this from the palace speakers?
First you let them in — then you accuse them of atrocities….
There are dots that need connecting….
FE, two possibilities 1) there is a plan 2) “news” outlets need to sell ads and sex and outrage sell ads.
FE your comments are not funny anymore, you are reacting to imaginary stuff.
According to .DE news outlets, in Cologne the police/gov received like sub 400x accusations so far. That’s all one bundle, consisting mostly of groping cases and perhaps one, two attempted rapes. Similar situation in other few major cities.
However, the major question is how the media PROACTIVELY blocked the info for 4-5days, which backfired strongly now. The current coalition government has taken major hit for it.
To summarize, this is either what it seems to be a blow-back of prior silly “4th Reich regime” policy to import low millions of migrants to boost up horrendous demographics (aim confirmed by industrialists in the media in 2015) or this is some sort of very clever operation to shoot down the current regime in Berlin. Either case is beneficial to most of us here, so what..
‘According to .DE news outlets, in Cologne the police/gov received like sub 400x accusations so far. That’s all one bundle, consisting mostly of groping cases and perhaps one, two attempted rapes.’
I ask again — where is the video of this stuff? CCTV cameras are everywhere …
Not a single German lifted their hand when they surely must have heard women scream rape! rape! rape!
I know what I posted was not funny — it was not meant to be.
When confronted by the reality of the situation — of how you are living a wonderful life on the back of the third world that we pillage — I can imagine… most people would not find that funny.
Just pretend you didn’t read that — and go back to accusing these people…
Funny thing — the cops arrested 400 people?
How exactly did they ID these people when there was no video or photo evidence?
Did each of the women who was sexually mauled grab a piece of ID off of them? Or did they walk down the mean streets with the cops looking for the culprits?
Duh …. do I have to come up with all the logic here? It’s an obvious question. Can’t you think to ask it? I guess you prefer being lead around by the nose by the MSM
When the cops release the videos of each of these arrested men — I’ll come over to your side
Until then — I put this in the false flag basket…
I bet you won’t think this post is very funny either ….
“Lost a friend to drugs? Thank a Mexican.”
Or thank the war on drugs (with its diversion of support for social betterment and drug treatment).
There is a difference between when there are plenty of resources for everyone and when there are not. When there are plenty of resources, it is easy to be generous. Race relations can easily be good; no one worries much about ethnic differences. There is plenty for everyone.
Once we start encountering scarcity–perhaps not enough jobs, or not enough good jobs, then there is much more of a tendency of in-groups to fight against out-groups. It is easy for someone to stir up hatred against some group that is for some reason not to be liked. This can be done by stories fostering baseless aggression. I think this is the problem we are running into now. There no longer seems to be enough to go around.
“There no longer seems to be enough to go around.”
That’s periodically been the case since our line of primates got organized enough to fight off the big cats. I wrote about it years ago.
Evolutionary Psychology, Memes and the Origin of War
Abstract
Evolutionary psychology and memetics are used here to propose a model of war. Population growth leads to a resource crisis. An impending resource crisis activates a behavioral switch in humans allowing the build-up of memes (i.e., learned elements of culture), which lead to synchronized attacks on neighboring tribes. Hamilton’s criterion of inclusive fitness is invoked to account for the evolution of this species typical behavior. War, as a species typical behavior in the Environment of Evolutionary Adaptiveness (EEA) of humans is discussed, first as a response to an attack and then as an unprovoked attack. Unprovoked attacks are more common when the aggressor population anticipates “looming privation.” The well-known reduction in the ability of humans to think rationally in war situations is explained in evolutionary terms as a divergence in interest between the individual and his genes. Population growth at a higher rate than economic growth is seen as a major causal factor for wars.
http://www.mankindquarterly.org/archive/paper.php?p=552
It’s a good fraction of the reason I work on projects such as power satellites and StratoSolar.
Keith, Jane Goodall observed that when a chimp tribe becomes too large it breaks into two groups and the smaller group is driven off. Then the major group goes out and hunts down members of the out group until the out group is extinct.
Ed, Jane Goodall observed a split off and destruction happening once. I don’t know if you can generalize about it, but male chimpanzees differ from humans in that their xenophobia is full on all the time where humans work themselves up to xenophobia only when conditions warrant (falling income per capita).
The collapsing economy of the 1930s gave us Nazi Germany. You can see why I think avoiding economic collapse is a good idea.
Falling standards of living tend to make citizens quite unhappy.
This particular comment was about empathy, which is hard-wired in our brains, and the way it is manipulated by TPTB.
Level of cooperation is a slightly different topic. It can be triggered by empathy, but not necessarily. Let me repost here an answer I made to Don about complexity and energy (you may have missed it, as it was buried in the middle of last page of comments). It’s only a humble suggestion trying to link different concepts to each other, but it makes sense to me:
“One cannot talk about compexity without defining the perimeter of the entity considered.
If we define an entity as a number of cooperating parts and sub-parts on the one hand,
and on the other hand suppose that cooperation takes place only when the total energy dissipated by ‘the group’ is superior to the sum of the energy dissipated by separate parts,
then it makes sense that increased complexity goes along with increased dissipated energy.
According to the MEP law, the dissipative structures are always trying to dissipate as much energy as possible. Not surprising then that they try to increase their complexity, which in fact means they try to encompass as many parts as possible, that cooperate together.
That’s why human society dissipates, by unit of weight, roughly one order of magnitude more than a single individual, which itself dissipates more than a single cell, etc…
If you remember the chart by Eric Chaisson:
http://www.metanexus.net/sites/default/files/old_site/images/Chaisson%20energy%20density.jpg ”
http://ourfiniteworld.com/2015/12/21/we-are-at-peak-oil-now-we-need-very-low-cost-energy-to-fix-it/comment-page-6/#comment-76756
Yes indeed, if an increasing number of cooperating parts can work together, they can dissipate more than proportionately more energy. Systems will tend to evolve in this direction.
Thanks for reminding me of Chaisson’s chart.
Once this system fails, essentially because there is no longer enough energy to dissipate in this manner, it would seem as though economy would need to collapse back, and most likely the people making up the economy would need to collapse back. Any new dissipative structures formed could be fairly different.
We in the first world — are now starting to get a whiff of what it is like to live in the third world…
No good jobs for graduates?
Nothing new about that — if you were born in the third world.
The days of living large are over — there has never been enough for everyone to live large — but by pillaging the weak we have had a good run —- but now there is not even enough for the people in our countries to live large — the middle class has been devastated…
And now – just like in the third world — we are seeing massive polarization with the rich corrupt cronies at the top — a small professional class servicing them — and millions upon millions with declining living standards…
And this is as good as it gets
FE, thanks for saying it. It is here, now.
You seem to understand human behavioral biology well. I think you should have a lot to talk with Terje Bongard about. I just learned that he will now translate his book “The biological Human Being – individuals and societies in light of evolution” himself, as he failed in finding an English publisher.
Please don’t forget to invite Terje Bongard to the “Finite World – Conference” in Beijing of 2016. Here’s his contact info: http://www.nina.no/Kontakt/Ansatte/Ansattinformasjon/AnsattID/16117
Telefon: +47 – 986 44 786
E-post: terje.bongard@nina.no
I found your blog by a link from Naked Capitalism, and I really like what I read here.
As I browsed, I followed the link to Debt Supercycle and saw that it was written by Kenneth Rogoff. I wonder what you think about the controversy that arose not too long ago concerning the paper he published about an economic cliff we would plunge over as soon as the debt reached 90% of the GDP? I remember the conflict between him and Paul Krugman over the shoddy work that he, Rogoff, did and I read Krugman’s comments about it on some CNN talk show. Krugman was very harsh, though he tried to soften his words.
In any case, I am looking forward to reading more of your posts. An actuarial view of our world is something I have not run across before, and I’ll wager that you will supply the focus that I think has been lacking in our national discussions.
You are very fortunate — you have a treasure trove of archived FW articles to read 🙂
I have followed the Kenneth Rogoff discussions about debt somewhat from a distance. My impression is that academics are under pressure to publish as much as possible. It is easy for quality to be lacking, especially in “behind the scenes” calculations. It is easier for an assistant to fix the words so that they look polished than it is for a grad student to fix the numbers.
My favorite Reinhart and Rogoff quote is from their paper (not book) called This Time is Different: A Panoramic View of Eight Centuries of Financial Crises. (March 2008) NBER Working Paper No. 13882. 123 pp; quote from p 15. The paper says,
The authors were looking at countries that defaulted on their debt. The ones that didn’t default were all “hugely successful growth stories,” but somehow, Reinhart and Rogoff couldn’t understand why this would be the case. I would say, “Of course–without growth, the system tends to collapse.”
You might like my article published in the journal Energy in 2012 called Oil Supply Limits and the Continuing Financial Crisis.
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http://www.zerohedge.com/news/2016-01-08/shocking-photos-chinas-creepiest-modern-ghost-town
Cool….
Yes, I saw those last night. Typical of an era where you HAVE to keep growing or else everything collapses.
Ya, Wicked Cool!
https://m.youtube.com/watch?v=GpnoPhY1f70
Mind boggling. Thanks for the post.
Some post. OK, I’m hooked. Enjoy it all. Nothing to do but ride this baby out.
I visited Ordos. One of the graduate students of Petroleum University was from the area. I saw some empty new structures, but not as many as pictured in the article. There was a nice highway to the airport, but very few vehicles on it. The airport was mostly empty. There were a lot of “spaces” for stores, but nearly all of these were empty. As I understand it, the plan had been to greatly raise coal production from this area. This didn’t really happen. Perhaps too much pollution already, or factories too overbuilt already.
Things look bad for the average Joe in China
As China’s economy slows, workers feel the sting
http://www.latimes.com/world/asia/la-fg-china-factories-closing-20160108-story.html
“We’ve seen no indication that things are getting any better,” said Geoffrey Crothall, a Hong Kong-based spokesman for the nonprofit China Labor Bulletin. “In Guangdong in particular, we’ve seen over the past two or three months in particular an increase in the number of labor protests, strikes, and labor unrest in general. As factories continue to close down, the manufacturing sector continues to contract, all these issues which have remained dormant and unresolved for decades on end are now coming to a head.”
Even Apple has felt shock waves from the downturn. On Wednesday, the Japanese financial newspaper Nikkei reported that the electronics giant might cut back iPhone orders amid a slump in demand. According to the Wall Street Journal, provincial Chinese authorities have given its primary supplier, Foxconn Technology Group, $12 million in subsidies to minimize layoffs.
The causes of China’s downturn are wide-ranging and complex. Beijing’s leaders are struggling to shift economic power from state planners to consumers, and the country’s real estate sector is burdened by massive over-investment. “China grew faster and for longer than any other country in recorded history — they were already in uncharted territory,” said Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics. “Some slowdown was inevitable
And yet when you listen to the likes of Peter Schiff, Dr. Marc Faber and countless others they will tell you that China will come out on top smelling like a rose 20-30 yrs from now because of all the gold they’ve been buying.
I personally don’t subscribe to that thinking because the problems that the WORLD will face going forward, gold won’t solve them.
Few days ago ZH ran a headline article that India is trying to “confiscate” via various state guaranteed investing schemes some amount of that 20,0000 tons which peoples of India of various castes squirreled away. From that we can observe if the gov scheme would be only ~10-30% successful that would bring a lot of this stuff to plug various holes among the big players, again argument for collapse kicked away for some years/decades. On the whole you have a point, little people should invest in various forms of resiliency, while spoiled kings and robber barons tend to fight till the end on chasing the seemingly “eternal” substances..
How does this change the fact that we are going to collapse because we are out of cheap to extract oil?
It won’t but they like to ignore the elephants like resource depletion, over population, environmental destruction, economic collapse and global warming. They go in the too hard basket and out of sight and mind. It then allows for a mighty koombaya voice.
We are perhaps near ~2025 cheap to extract oil for today’s global consumption patterns and 7.5B pop, but there is plenty (few decades) of burnable stuff for “new revision” of this civilization where the 80%ers get even much smaller share of the pie.. To prop up these schemes for few more years they will utilize various strategies incl. as seen in this India example backing for even larger debts apart from more oppressive behavior.
And please don’t respond by silliness such as when 7.5B won’t get fed tomorrow, the guns, ammo, land and people under direct control, all this gets somehow spoiled overnight.. No it doesn’t, human farm soldiers on, throughout the real staircase collapse to a point when the said civilization has lost most of its former defying attributes and it lays abandoned.
You could be right but more than likely wrong. The only thing for certain is the ship is going down, how the deck chairs are arranged is not worth arguing about. We are not running up to seven and a half billion people, we are at it now. The environmental insults to the planet during the run up has been devastating to say the least, what is occurring now is beyond the comprehension of statistically everyone.
Sorry but no — there is no cheap to extract oil left… even the Saudis need a price of at least double the current price to balance the books
Steven Kopits from Douglas-Westwood said the productivity of new capital spending has fallen by a factor of five since 2000. “The vast majority of public oil and gas companies require oil prices of over $100 to achieve positive free cash flow under current capex and dividend programmes. Nearly half of the industry needs more than $120,” he said http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11024845/Oil-and-gas-company-debt-soars-to-danger-levels-to-cover-shortfall-in-cash.html
I agree with you–gold won’t allow China to come out smelling like a rose 20-30 years from now.
To make matters worse, the Western World was depending on this growth.
@ End_of_More (@End_of_More) says:
January 8, 2016 at 4:03 pm
I think the article, Energy & Human Evolution by the late Dr. David Price is the one you’re referring to…
“Before the appearance of Homo sapiens, energy was being sequestered more rapidly than it was being dissipated. Then human beings evolved, with the capacity to dissipate much of the energy that had been sequestered, partially redressing the planet’s energy balance. The evolution of a species like Homo sapiens may be an integral part of the life process, anywhere in the universe it happens to occur.
As life develops, autotrophs expand and make a place for heterotrophs. If organic energy is sequestered in substantial reserves, as geological processes are bound to do, then the appearance of a species that can release it is all but assured. Such a species, evolved in the service of entropy, quickly returns its planet to a lower energy level. In an evolutionary instant, it explodes and is gone.”
That was a great read. Thanks
Very interesting thesis.
thanks—i’d forgotten where i’d read that—but it makes perfect sense
Very interesting! I had not run into this previously. This was published in 1995–has many ideas that seem to be ahead of its time. For example, it says,
I have been saying this for a long time, but didn’t realize that Dr. Price had said it much earlier, before a lot of recent research in this area had been done.
“An example featuring mammals is provided by the reindeer of St. Matthew Island, in the Bering Sea (Klein, 1968). This island had a mat of lichens more than four inches deep, but no reindeer until 1944, when a herd of 29 was introduced. By 1957 the population had increased to 1,350; and by 1963 it was 6,000. But the lichens were gone, and the next winter the herd died off. Come spring, only 41 females and one apparently dysfunctional male were left alive”
Bloody hell, that sounds exactly like Fast Eddy: only 41 females and one apparently dysfunctional male were left alive 😉
Do I get to pre-select the 41 females that making through to the post BAU world? ::)
Jeez! Pre-selecting now are we? Don´t you think the females would be shocked enough to find themselves in Post BAU, and you the only male left 😉
41.. what do you think, two or three at the same time, have a strategy cooked up? 🙂
Yes, he was a real trailblazer. This is the paper that “kicked it off” for me about man and his place in nature. I wonder what he’d think of things today, if he were still alive? Nearly another 2 billion people have been added since the paper was first written.
https://www.youtube.com/watch?v=8aPsqrVNlTI
That’s a Youtube video on potential Black Monday for world stock markets. There’s this infant using a laptop to buy stock, but then he starts to lose money and it gets hilarious. Ok, so the video is not for this coming Monday, but earlier in the year. It’s still funny.
https://www.youtube.com/watch?v=8aPsqrVNlTI
That’s a Youtube video on potential Black Monday for world stock markets. There’s this infant using a laptop to buy stock, but then he starts to lose money and it gets hilarious.
pintada says:
January 8, 2016 at 6:10 pm
Not your’s of course Pintada, but that nonsense fron current fantasist in residence, Durwood M. Dugger.
Just went to the contra corner. Nice to see your article there, Gail. Congrats!!
I didn’t realize it was there. Thanks for pointing it out. http://davidstockmanscontracorner.com/2016-outlook-oil-limits-and-the-end-of-the-debt-supercycle/
I had to laugh when I read the introduction: “By Gail Tverberg at Our Infinite World” He obviously hasn’t figured out what I write about. I tried to make a comment on his Facebook page pointing out the problem. I don’t have an email address for him.
Hi Gail, great post – I’m finding it har to keep up with the flow 🙂
I’d add a couple of things: From a systems point of view, I tend to classify the system by the type of effect the ouput takes. Here, AFAICS you suggest that the oil system is complex: results can be unexpected. That may underatate the Complexity within the wider system.
Another point worth noting is the close relationship between the US and the Chinese economies. I’d suggest the best way to describe this as Siamese Twins. They are really tightly coupled.
Finally, it looks like about 1M bpd is flowing to storage. Just under half to China, some to India, some to the USA. China began storing oil underground about a month ago. It’s slower, but cheaper. This is likely to continue until 2020 if oil prices stay low.
With those thoughts in mind, and noting that there is a reason debts balooned:
http://www.zerohedge.com/news/2016-01-08/35-trillion-neutron-bomb-keeps-kyle-bass-night
“What I think the narrative will swing to by the end of this year if not sooner, is the real issue in China is not simply that profits have peaked. The real issue is the size of their banking system. Do you remember the reason the European countries ended up falling like dominoes during the European crisis was their banking systems became many multiples of their GDP and therefore many, many multiples of their central government revenue. In China, in dollar terms their banking system is almost $35 trillion against a GDP of $10 and their banking system has grown 400% in 8 years with non-performing loans being nonexistent. So what we are going to see next is a credit cycle, and in a credit cycle you see some losses, but if China’s banking system loses 10%, you are going to see them lose $3.5 trillion.”
Looks like big debt problems ahead!
I would agree that the oil system is complex.
I didn’t run across good amounts on how much oil was really being stored. One million barrels a day sounds more reasonable than two million barrels a day. Two million barrels a day would very quickly run through world storage capacity.
Oil production will not go down. It will increase as suggested in the article. The number one reason is that regardless of the price of production and producing at a loss, companies need to service the debt they used to build high production cost sources of oil. They will increase production as much as they need to before going into bankruptcy.
I would say that oil production increases until it collapses–and that collapse can come quite soon. You are right that servicing debt is a driver. So is generating enough tax revenue so the oil exporters can support their high populations.
Bankruptcy may be part of the collapse. The collapse may come in other ways as well, though–overfilled crude oil storage, too many laid-off workers, prices too low for a lot of producers of commodities of all types, falling asset prices, many debt defaults, too little tax revenue for governments, failing banks (probably leading to bank accounts bing frozen or reduced in value) and maybe a demise in the role of the US as the world’s reserve currency.
Half of U.S. shale oil producers could go bankrupt before the crude market reaches equilibrium, says the senior oil and gas analyst at Oppenheimer & Co. “New normal oil price” could be 50 to 100 percent above current levels. He ultimately sees crude prices stabilizing near $60, but it could be more than two years before that happens.”
Article at:
http://www.cnbc.com/2016/01/11/half-of-us-shale-drillers-may-go-bankrupt-oppenheimers-gheit.html
Population control. Edo had it so can we.
Easy to say “population control”…..but on the necessary scale, that means controllers.
somebody would have to lay down laws about baby production, and then enforce them
I leave it to your imagination as to where that leads.
And don’t forget the other end of the scale.
Then it means that all medication, and intervention must be withheld after what age?—70?
80?—90?. If you have enforced birth control, there will be no one to look after the elderly
An otherwise fit 75 yr old breaks a leg say—easily done.Population control means no admission to hospital.
But what if the 75 yr old is wealthy enough to buy the hospital?
If health is governed by wealth, revolution is certain
Not saying we won’t have population control—just that it will come in ways we can’t anticipate.
endof, I used to reject population control for that exact reason it gives way to much power to the authority (whatever it is). You ask if I can image bad side effects of that, yes absolutely. But compared to the death of 6-7 billion people I now think it is the lesser of two evils.
I see no reason to neglect or kill the old. Just limit births. Yes, I know it is too late for the world for this version of civilization. Never the less I believe in the future decent communities will have population control.
human society is predicated on the young eventually taking care of the old
i don’t think there are any other species that do that. If there a fewer young, the population becomes top heavy.
While we might accept the logic of population control, collectively we will reject it because there will have to be ”controllers” of some description—history is very clear on the nature of such individuals.
The planet currently has a 6 bn excess, and with no intervention this will rise to 9 bn by mid century and 11bn by 2100. The parents of them are alive now, you can’t argue with arithmetic.—or sexdrive for that matter.
Note I said–with no intervention.
No form of birth control can prevent the rise to 11 bn—-but on the other hand we can be sure 11bn will not be reached. Why?–because that figure is unsustainable.
It follows then that if conventional birth control can’t do it, then some other force will.
Bear in mind also that mass birth control methods are a construct of an industrial infrastructure.
For a population to drop by at least 75% or more in less than a century means some kind of sudden and drastic intervention. As to the nature of that—you takes your choice
There appear to be 3 possibilities:
1 Pandemic
2 War.
3 Famine
Or more likely a combination of those .
If I’ve missed another option—I’d be happy to stand corrected.
Africa alone is set to double to 2 bn before 2050—The African people will not sit around and starve. China’s population is set to rise again—what happens when they can no longer feed their foster child North Korea, and Krazy Kim starts chucking his nukes out of his pram? When there’s nothing left to lose, he will do exactly that.
endof, I would add pollution to the list though it may be indirect. Pollution leads to disease and famine. China, Flint Michigan.
This is an article form the NY Times on the history of retirement. http://www.nytimes.com/1999/03/21/jobs/the-history-of-retirement-from-early-man-to-aarp.html According to the article, retirement was invented in 1883 by Bismark. He offered a pension to non-working Germans over the age 65, knowing that very few actually lived to age 65. Before that time, people tended to work until they dropped. The article makes the comment, “[older people] tended to hang on to their wealth and property. This made them very unpopular with their middle-aged sons, who were driven to earn their inheritances the old-fashioned way, by committing patricide.”
Social Security was signed into law in 1935. Its start was based on the observation that the only way to get people to stop working was to pay them to stop working. This was in during the Depression, and there were far more people than jobs.
I don’t know about the history elsewhere. I know that there used to be a custom in parts of India for Hindu widows to throw themselves on the funeral pure when their husbands died. This would eliminate the problem of supporting a lot of elderly widows. http://www.pravdareport.com/society/stories/07-06-2006/81664-hindu-0/
Extremely limited view. If you interject genetically eliminating aging into population management (current research well underway), you only need reproductive replacement for accidents. About 95% of medical needs (costs and energy) go away without aging symptoms. With lower reproduction rates, the costs of child rearing and initial education go away – leaving only the need of continuing education of static adult population and small number of replacements and or changes in human employment demands. Depending on how fast we continue to overpopulate and deplete critical resources – particularly energy and phosphates – we may have time to make this happen.
Or, we develop off planet critical resources, colonization, terra forming and export excess population to those off planet sites. Of course the only way this happens now appears to be if we develop a near free energy source to replace fossil fuels – which admittedly looks very improbable at this time.
When there is more and more older people who have better genome and less and less younger people with worse genome, then we are heading towards gerontocracy.
I’m sorry to be rude but….. What a load of drivel!
I’m thrilled to be rude.
This statement, “… genetically eliminating aging …”, is wild, absurd, ridiculous drivel!
Is there no mechanism to mute these sort of posts?
I’m thrilled with your rudeness…. we need more of this when the world is filled with Idiocracy …. it needs to be exposed — and crushed… and sometimes the only way to do that is with a great big rude hammer.
Well a well written genuine solution, The trouble is if you voice this solution you will be lynched. The only moral and ethical action is to implement for the only life you have right to, your own.
Is there no mechanism to mute these sort of posts?
We need some comments from people who are new to the subject, even if some of them seem “not very good.” Gives us a chance to re-explain what is really happening.
Whoever heard of “genetically eliminating aging?” If we could do that, it would have been done long ago. It is sort of like eliminating diminishing returns on oil extraction–can’t happen.
I would agree that it would be incredibly difficult to have a population of mostly old people, unless things changed greatly. These old people would mostly need to work as long as they were healthy enough. Once they stopped working, health care would need to scale back greatly. Of course, in collapse, health care is likely to scale back greatly for both young and old.
The situation with the aging population is really terrible in some countries: in Slovakia, there will be less than 1 person in active age working for 1 retiree in 2060, according to the prognosis. By that year, i.e. in just 45 years, the number of the retirees more than doubles (from 700 000 to 2 000 000).
I don’t think that retirement scenario can really happen. Pretty much everyone will need to work, especially with less energy.
How did Edo got its population control?
Rigid property rights. Rigid restriction to access to resources. Capital punishment for theft of food or resources.
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Saudi Arabia is considering an IPO of Aramco, probably the world’s most valuable company
http://www.economist.com/news/middle-east-and-africa/21685529-biggest-oil-all-saudi-arabia-considering-ipo-aramco-probably
We know what is going on…: a lot of producers of costly oil and lack of demand for such oil… the market share of Saudi Aramco is in an increasing danger…
The proposed IPO doesn’t say much for Saudi Arabia’s view of Aramco’s future.
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I have read somewhere that energy costs amount to 7 % of the world GNP. But as energy prices are quite volatile I suppose that this figure is not a constant. Can anyone help me here?
IEA stats http://www.iea.org/statistics/statisticssearch/report/?country=WORLD&product=indicators&year=2013 take world GDP and divide it with the price of TWh to get the percentage you want. Or you can do it by country/ continent.
World Bank has stats of GDP per unit of energy use http://data.worldbank.org/indicator/EG.GDP.PUSE.KO.PP if those are of any help to you.
An awfully lot of research is done on country by country data, rather than world data. It is fairly easy to make GDP per unit of energy “look good” by sending all manufacturing off shore.
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Very convincing article – thanks! That the debt crisis is also caused by false wage policy is an interesting point. The predictions seem evidentiary. A decline of profits in the middle east would not only lead to a fall of governments but also have implications on general living conditions and the situation of refugees, which could affect the confidence of EU-voters in the problem solving capabilities of their governments.
It could certainly lead to a situation with a lot more refugees going forward.