I am busy working on some bigger projects that I can’t write about yet, but I thought I would put up a little scanned in section from today’s WSJ relating to food prices. Food prices are now 18.5% higher than a year ago, and higher than when they reached their peak in 2008.
High food prices are a concern, both for poorer people in the US, and for the huge number of poor people around the world. If food prices go up, many will not be able to pay for sufficient food for a well-balanced diet (assuming they could in the past). And of course, as food prices go up, people will cut back on spending on more discretionary items, since they have to eat.
The current rise in prices does not look like it has hit a maximum yet. The recent run-up in oil prices may not be fully reflected in the food costs. All of this is concerning.
I wrote this post almost a year ago, and originally posted it at The Oil Drum. It is a write-up of a talk I gave in October 2009 at the Biophysical Economics conference in Syracuse, NY.
In October 2009, I participated in the 2nd International Biophysical Economics Conference at SUNY-ESF in Syracuse, New York. Charlie Hall had written to me, inviting me to come and give a talk. Specifically, he wanted me to go back to my post from January 2008 called Peak Oil and the Financial Markets: A Forecast for 2008 and explain why my forecasts had turned out pretty close to correct, while many others widely missed the mark. The title he suggested for the talk was Delusions of Finance.
My financial forecast really has implications for beyond 2008, so I added some more forecasting thoughts as well. In this post, I would like to share this presentation with you.
One thing the modern financial system tries to teach us is that with the miracles of compound interest, we can be fairly certain that the funds we invest today will be worth much more a few years from now. All we need to do is invest in the stock market, or some type of insurance “product,” or even in a bigger house than we need, and in a few years, the value will grow, and we will be rich.
For a while, this seemed to work. But it is really a difficult system to make work, if one is living in a finite world, whose resources are depleting. Realistically, we have to assume that the financial system is not going to be able to provide the kind of returns we have been told might be available. In fact, there is a good chance that the amount of goods and services we will have in the future will be less than we have today, no matter how much we try to store up. All of this “investing” may not give us a positive return.
So what do we do? Continue reading
Two days ago, I put up Part 1 of this post by George Mobus, and this is Part 2. You will remember that George is looking forward to some time in the future. At that time, there seem to be a much smaller number of people on earth. In Part 1, George tells us how generally he sees a sustainable living pattern–in communities of about 500 people, located in areas where the climate is favorable, and that soils are favorable, and there is a diversity of plant and animal life. His base case is a low tech society. In this segment, he tells us more about how he would envision such a new society to be organized. His original post on Question Everything can be found here. Continue reading
This is a guest post by George Mobus. It was previously published on his blog, Question Everything. George published this post, plus what I plan to publish as part 2 in a day or two, as a single post. Since it is quite long, I thought I would try dividing it into two shorter posts, posted a couple of days apart.
How Do We Establish Feasible Sustainable Living?
The peaking of oil extraction and refining appears to be upon humanity. The evidence is quite strong (if you want to follow this story I recommend you regularly read The Oil Drum for news and updates as well as technical reports). Because the cost of oil reflects to a large degree the imbalance between supply and demand, and has been pushing higher for the last several years, this has had a dampening effect on demand and a depressing effect on the economy. Thus, instead of an actual peak due to geophysical issues alone (the basis of the original peak oil theories) and subsequent decline, we are witnessing a bumpy plateau. Demand destruction leads to lower production in response and that means some oil is not being pumped out of the ground that would have been otherwise. But the overall trend is basically the same. Oil production will go down leading to upward pressure on the price we pay for each unit that is pumped. The feedback between the economy and oil production will mean that the process of decline will be stretched out a bit longer. Continue reading