Reaching Debt Limits: With or without China’s problems, we have a problem

Credit Problems are a Very Current Issue

In the past several years, the engine of world’s growth has been China. China’s growth has been fueled by debt. China now seems to be running into difficulties with its industrial growth, and its difficulty with industrial growth indirectly leads to debt problems. A Platt’s video talks about China’s demand for oil increasing by only 2.5% in 2013, but this increase being driven by rising gasoline demand. Diesel use, which tracks with industrial use, seems to be approximately flat.

The UK Telegraph reports, “Markets hold breath as China’s shadow banking grinds to a halt.” According to that article,

A slew of shockingly weak data from China and Japan has led to a sharp sell-off in Asian stock markets and the biggest one-day crash in iron ore prices since the Lehman crisis, calling into question the strength of the global recovery.

The Shanghai Composite index of stocks fell below the key level of 2,000 after investors reacted with shock to an 18pc slump in Chinese exports in February and to signs that credit is wilting again. Iron ore fell 8.3pc.

Fresh loans in China’s shadow banking system evaporated to almost nothing from $160bn in January, suggesting the clampdown on the $8 trillion sector is biting hard.

Many recent reports have talked about the huge growth in China’s debt in recent years, much of it outside usual banking channels. One such report is this video called How China Fooled the World with Robert Peston.

Why Promises (and Debt) are Critical to the Economy

Without promises, it is hard to get anyone to do anything that they really don’t want to do. Think about training your dog. The way you usually do this training is with “doggie treats” to reward good behavior. Rewards for desired behavior are equally critical to the economy. An employer pays wages to an employee (a promise of pay for work performed).

It is possible to build a house or a store, stick by stick, as a person accumulates enough funds from other endeavors, but the process is very slow. Usually, if this approach is used, those building homes or stores will provide all of the labor themselves, to try to match outgo with income. If debt were used, it might be possible to use skilled craftsmen. It might even be possible to take advantage of economies of scale and build several homes together in the same neighborhood, and sell them to individuals who could buy the homes using debt.

Adding debt has many advantages to an economy. With debt, a person can buy a new car or house without needing to save up funds. These purchases lead to additional workers being employed in building these new cars and homes, adding jobs. The value of existing homes tends to rise, if other people are available to afford them, thanks to cheap debt availability. Rising home prices allow citizens to take out home equity loans and buy something else, adding further possibility of more jobs. Availability of cheap debt also tends to make business activity that would otherwise be barely profitable, more profitable, encouraging more investment. GDP measures business activity, not whether the activity is paid for with debt, so rising debt levels tend to lead to more GDP.

Webs of Promises and Debt

As economies expand, they add more and more promises, and more and more formal debt. In high tech industries, supply lines using materials from around the world are needed. The promise made, formally or informally, is that if more of a supply is needed, it will be available, at the same or a similar price, in the quantity needed and in the timeframe needed. In order for this to happen, each supplier needs to have made many promises to many employees and many suppliers, so as to meet its commitments.

Governments are part of this web of promises and debt. Some of the promises made by governments constitute formal debt; some of the promises are guarantees relating to debt of other parties (such as nuclear power plants), or of the finances of banks or pensions plans. Some of a government’s promises are only implied promises, yet people depend on these implied promises. For example, there is an expectation that the government will continue to provide paved roads, and that it will continue to provide programs such as Social Security and Medicare. Because of the latter programs, citizens assume that they don’t need to save very much or have many children–the government will provide funding sufficient for their basic needs in later years, without additional action on their part.

What is the Limit to Debt? 

While our system of debt has gone on for a very long time, we can’t expect it to continue in its current form forever. One thing that we don’t often think about is that our system or promises isn’t really backed by the way natural system we live in works. Our system of promises has a hidden agenda of growth. Nature doesn’t  have a similar agenda of growth. In the natural order, the amount of fresh water stays pretty much the same. In fact, aquifers may deplete if we over-use them. The amount of topsoil stays pretty much the same, unless we damage it or make it subject to erosion. The amount of wood available stays pretty constant, unless we over-use it. 

Nature, instead of having an agenda of growth, operates with an agenda of diminishing returns with respect to many types of resources. As we attempt to produce more of a resource, the cost tends to rise. For example, we can extract more fresh water, if we will go to the expense of drilling deeper wells or using desalination, either of which is more expensive. We can extract more metals, if we use as our source lower grade ores, perhaps with more surface material covering the ore. We can get extract more oil, if we will go to the expense of digging deeper wells is less hospitable parts of the world. We can even use substitution, but that will likely be more expensive yet.

A major issue that most economists have missed is the fact that wages don’t rise in response to this higher cost of resource extraction. (I have shown a chart illustrating that this is true for oil prices.) If the higher cost simply arises from the fact that nature is putting more obstacles in our way, we end up spending more for, say, desalinated water than water from a local well, or more for gasoline than previously. Much of the cost goes into fuel that is burned, or building special purpose equipment (such as a desalination plant or offshore drilling rigs) that will degrade over time. Our system is, in effect, becoming less and less efficient, as it takes more resources and more of people’s time, to produce the same end product, measured in terms of barrels of oil or gallons of water. Even if there are additional salaries, they are often in a different country, around the globe.

At some point, the amount of products we can actually produce starts shrinking, because workers cannot afford the ever-more-expensive products or because some essential “ingredient” (such as fresh water, or oil, or an imported metal) is not available. Since we live in a finite world, we know that at some point such a situation must occur, even if  the shrinkage isn’t as soon as I show it in Figure 2 below.

Figure 1. Author's image of an expanding economy.

Figure 1. Author’s image of an expanding economy.

Figure 2. Author's image of declining economy.

Figure 2. Author’s image of declining economy.

The “catch” with debt is that we are in effect borrowing from the future. It is much easier to pay back debt with interest when the economy is growing than when the economy is shrinking.  When the economy is shrinking, there is less in the future to begin with. Repaying debt from this shrinking amount becomes a problem. Even promises that aren’t formally debt, such as most Social Security payments, Medicare, and future road maintenance become a problem. With fewer goods available in total, citizens on average become poorer.

Governments depend on tax revenue from citizens, so they become poorer as well–perhaps even more quickly than the individual citizens who live in their country. It is in situations like this that richer parts of countries decide to secede, leading to country break-ups. Or the central government may fail, as in the Former Soviet Union.

Which Promises are Least Affected?

Some promises are very close in time; others involve many years of delay. For example, if I bring food I grew to a farmers’ market, and the operator of the market gives me credit that allows me to take home some other goods that someone else has brought, there are some aspects of credit involved, but it is very short term credit. I am being allowed to “run a tab” with credit for things I brought, and this payment is being used to purchase other goods, or perhaps even services. Perhaps someone else would offer some of their labor in putting together the farmers’ market, or in working in a garden, in return for getting some of the produce.

As I see it, such short term promises are not really a problem. Such credit arrangements have been used for thousands of years (Graeber, 2012). They don’t depend on long supply lines, around the world, that are subject to disruption. They also don’t depend on future events–for example, they don’t depend on buyers being available to purchase goods from a factory five or ten years from now. Thus, local supply chains among people in close proximity seem likely to be available for the long term.

Long-Term Debt is Harder to Maintain

Debt which is long-term in nature, or provides promises extending into the future (even if they aren’t formally debt) are much harder to maintain. For example, if governments are poorer, they may need to cut back on programs citizens expect, such as paving roads, and funding for Social Security and Medicare.

Governments and economies are already being affected by the difficulty in maintaining long term debt. This is a big reasons why Quantitative Easing (QE) is being used to keep interest rates artificially low in the United States, Europe (including the UK and Switzerland), and Japan. If interest rates should rise, it seems likely that there would be far more defaults on bonds, and far more programs would need to be cut. Even with these measures, some borrowers near the bottom are already being adversely affected–for example, subprime loans were problems during the Great Recession. Also, many of the poorer countries, for example, Greece, Egypt, and the Ukraine, are already having debt problems.

Indirect Casualties of the Long-Term Debt Implosion

The problem with debt defaults is that they tend to spread. If one major country has difficulty, banks of  many other countries are likely be to affected, because many banks will hold the debt of the defaulting country. (This may not be as true with China, but there are no doubt indirect links to other economies.) Banks are thinly capitalized. If a government tries to prop up the banks in its country, it is likely to be drawn into the debt default mess. Insurance companies and pension plans may also be affected by the debt defaults.

In such a situation of debt defaults spreading from country to country, interest rates can be expected to shift suddenly, causing financial difficulty for those issuing derivatives. There may also be liquidity problems in dealing with these sudden changes. As a result, banks issuing derivatives may need to be bailed out.

There may also be a sudden loss of credit availability, or much higher interest rates, as banks issuing loans become more cautious. In fact, if problems are severe enough, some banks may be closed altogether.

With less credit available, prices of commodities can be expected to drop dramatically. For example, during the credit crisis in the second half of 2008, oil prices dropped to the low $30s per barrel. It was not until after  QE was started in November 2008 that oil prices started to rise again. This time, central banks are already using QE to try to fix the situation. It is not clear that they can do much more, so the situation would seem to have the potential to spiral out of control.

Without credit availability, the prices of most stocks are likely to drop dramatically. In part, this is because without credit availability, it is not clear that the companies listed in the stock market can actually produce very much. Even if the particular company does not need credit, it is likely that some of the businesses on which it depends for supplies will have credit problems, and not be able to provide needed supplies. Also, with less credit availability, potential buyers of shares of stock may not be about to get the credit they need to purchase shares of stock. As a result of the credit problems in 2008, the Dow Jones Industrial Average dropped to $6,547 on March 9, 2009.

Furthermore, lack of credit availability tends to lead to low selling prices for commodities, making production of these commodities unprofitable. Production of these commodities may not drop off immediately, but will in time unless the credit situation is quickly turned around.

Can’t governments simply declare a debt jubilee for all debt, and start over again?

Not that I can see. Declaring a debt jubilee is, in effect, saying, “We have decided to renege on our past promises. In fact, we are letting others renege on their promises as well.” This means that insurance companies, pension plans, and banks will all be in very poor financial situation. Many who depend on pensions will find their monthly checks cut off as well. In fact, businesses without credit availability are likely to lay off workers.

If it is possible to start over, it will need to be on a much more restricted basis. Everyone will be poorer, so there won’t be much of a market for expensive new cars and homes. Instead, most demand will be for will be the basics–food, water, clothing, and fuel for heat. Unfortunately, it is doubtful that prices will be high enough, or the chains of supply robust enough, to again produce fossil fuels in quantity. Without fossil fuels, what we think of as renewables will disappear from availability quickly as well. For example, hydroelectric, wind and solar PV all work as parts of a system. If the billing system is unavailable because banks are closed, or if the transmission system is in need of repair because lines are down and the diesel fuel needed to make repairs is unavailable, electricity may not be available.

As indicated above, demand will be primarily for basics such as food, water, clothing, and fuel for cooking and heating. It will still be possible to use local supply chains, even if long distance supply chains don’t really work well. The challenge will be trying to shift modes of production to new approaches in which goods can be made locally. A major challenge will be training potential farmers, getting needed equipment for them, and transferring land ownership in ways that will allow food to be produced in ways that do not depend on fossil fuels.

Belief in credit will be severely damaged by a debt jubilee. The place where credit will be easy to reestablish will be in places where everyone knows everyone else, and supply lines are short. Debt will mostly be of the nature of “running a tab” when one type of good is exchanged for another. Over time, there may be some long-term trade re-established, but it is likely to be much more limited in scope than what we know today.

Conclusion

Long-term debt tends to work much better in a period of economic growth, than in a period of contraction. Reinhart and Rogoff unexpectedly discovered this point in their 2008 paper “This Time is Different: A Panoramic View of Eight Centuries of Financial Crises.” They remark “It is notable that the non-defaulters, by and large, are all hugely successful growth stories.”

Slowing growth in China is likely to mean that world economic growth is slowing. This will add to stresses, making failure of the system more likely than it otherwise would be. We can cross our fingers and hope that Janet Yellen and other central bankers can figure out yet other ways to keep the system together for a while longer.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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621 Responses to Reaching Debt Limits: With or without China’s problems, we have a problem

  1. Christian says:

    Letters of Credit couldn’t be replaced by another instrument?

    • Paul says:

      You could re-name the instrument but that does not change anything – if banks do not trust one another they will not do extend credit regardless of what you call it.

      When Lehman was not bailed nobody knew which banks were in trouble due to the globalized nature of finance — in fact they probably were all insolvent due to the domino effect – so lending/LCs stopped – nothing moved. Only central bank action loosened the knot.

      If the entire system is questioned – i.e. the central banks ability to con the world ends – then we have a very big problem. Ultimately this is about confidence in the system, fiat currencies etc…

      • Christian says:

        What would come first, no letters of credit or no bank accounts?

        • Calista says:

          No LOCs. Unless you see confiscation by a government entity. I’d bet on seeing refusal to issue LOCs first.

          • Christian says:

            They work for how long time?

            • Christian says:

              I mean, it’s a loan during days, weeks?

            • Calista says:

              I’m not sure I understand the question. A LOC is dependent upon your line of credit, business line and relationship with the bank. I only know a very small subset of how they work and that is information from 10 years ago. Most LOCs I saw were for 3month, 6month, 1 year and were issued on a per project basis. When the project was finished it would be rolled over into a more permanent mortgage or sale, usually with some other type of debt issued. The amount of the LOC, time of the LOC etc. was dependent upon the project and our past track record with the bank. Please note this info is very industry dependent. ie what type and structure of a LOC one type of business would get is very different from the next. I don’t know what say a shipping company’s LOC looks like.

              If you’re asking how long a LOC would work after some sort of black swan event I doubt many would be issued even the day after such an event although I’d guess that any outstanding would be honored. I really don’t know enough about banking to answer that. I have a friend who knows more and lives in a South American country I could ask as I think he’s seen, from the outside, some of the previous Argentina issues and the neighboring country banks response. I will ask, no guarantee of a quick answer from him.

            • Paul says:

              Had breakfast with a retired London banker over the weekend and this came up — he indicated when Lehman went under banks completely stopped issuing letters of credit under all circumstances. They only resumed when the central banks agreed to stand behind all LCs.

              If that doesn’t happen within days the shops would have been empty and we’d have had a taste of what the future holds.

              I cannot see how the central banks can back credit issuing institutions after they have already printing tens of trillions of dollars – so more of the same thing that is failing (and always was going to fail) and people will believe ‘if only a little more the world will be saved’

              Even Paul Krugman is going to lose the faith when the next shoe drops. Stimulus does not replace the end of cheap oil – it only delays the inevitable.

            • Free Oregon says:

              Google Antal E. Fekete’s writing about real bills as an alternative to letters of credit. They are outstanding for 90 days. They self liquidate as the goods manufactured and traded are sold. The collateral is a promise to pay gold. Real bills were the principal method of financing in the 19th century. Fekete blames the Depression on elimination of real bills because they supplied the capital with which to employ labor. Real bills deal with real goods, real production, and actual exchanges of “stuff.”

            • Calista says:

              Thanks for this additional info. Kind of what I suspected but I don’t want to speak to more than I actually know. I also agree with you on Heinberg. I had a similar reaction to his presentation. Once again, thanks to Gail and other commenters here.

            • Christian says:

              Thank you both. It would be good to know from your friend Calista

            • Calista says:

              A link you will find relevant: http://www.npr.org/blogs/parallels/2014/03/15/283995626/working-without-pay-a-reality-for-much-of-greeces-labor-force?ft=1&f=1001

              My friend’s response about the Argentina crisis was this:

              The kind of crisis you are talking here is more like an
              atomic bomb, where creditors, governments, companies, the entire
              establishment will sink if they don’t find an agreement, so they will find
              an agreement.

              In Argentina’s case, the government started with a ban to cash withdrawns
              from the bank, which effectivelly eliminated the risks of a bank run. Along
              with that payments for LoCs and other private bonds are suspended and
              repayment periods are extended once the parts can work a reasonable
              agreement for both parties. The second step was to restructure debt, and
              send the pain to pensioners in the form of smaller monthly allowances.
              Third step is to print money and devalue it, which brings inflation, that
              keeps the government working

              It’s hard to fathom a crisis like that in the US, unless you get Obama-like
              deficits for more 10-15 years, then you might get an insolvent state AND
              insolvent private entities. The US had always one or the other, but never
              the two, and once Obamanomics go away (and it will some time), you should
              get a more sustainable profile for the fiscal policy, further diminishing
              the risks of a full blown crisis like Argentina.

              ——
              His initial assessment of “if we don’t find agreement we will sink so we will find agreement” is what I’d say is happening now in the markets. I do wonder what the people in charge will do if or when they are confronted with this. I think some of human nature is to continue doing what you’ve been doing and hope the outcome will change. See the story on Greece above for a personal example of such. In other words a LOC lasts as long as it was contracted for and will likely be extended as they want to keep the wheels spinning. I think his assessment, as an non-US person in banking/finance is interesting. “difficult to see” is more true than you think for more people than we think.

      • Christian says:

        To some extent it is also possible to draw a list of the most valuable activities and find a way to protect them from banking troubles. Oil, electricity and their suppliers; NPK and suppliers, nuclear safety, hygiene, antibiotics and morphine, phones and Internet, hand tools. Almost all people can survive without new toothbrushes, electronics, guns, tourism trips, cars and most of stuff and services (and without increasing the industries before mentioned).

        • Paul says:

          You will need to add to your list to include all the things that use things like oil and electricity (otherwise what’s the point of having oil and power) … you would also have to guarantee the many thousands (millions?) of items that are required to pump oil, transport it, maintain power grids + the spare parts + you’d need to guarantee the educational institutes that teach engineers how to maintain all these systems etc etc etc etc etc…

          • Christian says:

            Well, well, well… Not so fast. College education is not very much invited to post collapse, and there is obviously no urgence in getting new ingeneers, of which may be we will need no more. Besides, the point of havign oil and power is to be able to continue using existing items, far more than to feed new ones. Spare parts… It would not impossible to YPF and local oil producers to make the list of all they would need for some years. Of course some things can go wrong, even badly wrong, but this is a good approach, any other at sight?

            • Paul says:

              The only way forward that I think offers any chance whatsoever of survival is doing what people did before the Industrial Revolution – organic farming.

              Attempting to extend the current style of life in any way shape or form is something that I expect will end badly — and quickly. ‘

              Then again, thousands of nuclear cooling pond — in a sea of chaos — all bets are off if we are unable to maintain those and get cooling water onto them.

            • Jan Steinman says:

              “The only way forward that I think offers any chance whatsoever of survival is doing what people did before the Industrial Revolution – organic farming.”

              I’d call it “a step in the right direction,” but organic farming is largely based on annual crops, and is still destructive and long-term unsustainable. Look at the so-called “Fertile Crescent” between the Tigris and Euphrates — used to be the breadbasket of the civilized world, and is now desert and salt marsh, thanks to “organic farming.”

              We need to focus on perennial food systems. Paul, I suggest you read Restoration Agriculture, by Mark Shepard, published by the good folk at Acres USA, possibly the best ag magazine available these days.

            • Paul says:

              Thanks Jan – just looking briefly at this http://www.forestag.com/book.html I suppose Permaculture is more accurate than organic farming….

              To a great extent we are practicing much of this here on our land in Bali with a lot of fruit trees planted… we are also planting non-perennials but the system will be pretty much self contained and sustainable (as it must be) – we are getting another cow shortly – we have trucked in some compost but that’s mainly so we can accelerate the planting of a lot more banana and papaya trees + give a boost to some other trees we planted years ago – and get the first crop on a big new field underway without having to wait.

              I am keen to rip out another big lawn space and plant that as well but my wife is resisting — my argument will be that when the SHTF ALL the landscaping is getting ripped out and re-planted anyway so why not do a big chunk more of it now….

            • Calista says:

              Fruit and nut trees, ignoring dwarfs, I highly recommend avoiding planting dwarfs, take years to come into production. Think 5 years if you plant a decent apple tree for first production and that is planting a 3 year old bareroot tree. If you don’t rip out the lawn I would recommend planting your fruit and nut trees asap.

            • Paul says:

              Agree – anything that takes 5 years to bear fruit is not of much use.

              Good idea re: lawn — I will check with our permaculture guy tomorrow re: using that space as an orchard as a compromise.

              I also have to check which trees will grow here — we planted some mango trees 5 years ago which are starting to have fruit – also some mangosteen and a few others — but they all take a long time to produce —- bananas and papayas have fruit after about 6 months so are ideal.

          • dashui says:

            London bankers? Hedge fund managers? a plantation in Bali?
            Let’s discuss my social circle…
            I was having cocktails in the liquor store parking lot with Lenny the Wino and associates .
            We are of the agreement that post 2008 it is getting harder to recive a line of credit from passer-by allowing us to replinish our inventories of malt liquor and fried pork rinds….

            • InAlaska says:

              Ha!

            • Paul says:

              Can’t seem to work out where to find the original comment from dashui …. so replying to Alaska…

              My social circle is actually pretty well rounded and includes triad truck drivers in Hong Kong (who I played sports with during my days there) — and if you want to call a 1.4 hectares in a remote area of bali a plantation then I guess I need a manor house instead of a one bedrooom wooden shack 🙂

              The people I reference in some of the anecdotes are not as you might assume — they are much more like the triad truck drivers than the typical hedge fund manager or London banker (except for having no tattoos) …. that is why I choose to associate with them.

              The Ubud area of Bali tends to attract very few if any Ferrari-driving, LV toting %$#holes

  2. Ludwig says:

    It reminds me the F.A. Hayek Triangle ,,.

    http://www.auburn.edu/~garriro/ppsus.htm

  3. Rick Larson says:

    I wouldn’t put your hopes on a fiat currency. Easy credit is the ability to borrow from the future what can never be repaid.

  4. While we can approach the problems mooted in this forum with varying ‘solutions’ and opinions on it, it seems that others come to the same conclusions independently
    http://www.huffingtonpost.co.uk/2014/03/17/civilisation-doomed_n_4977387.html?utm_hp_ref=uk

    • Christian says:

      NASA is still a big brand. Alas, the guys are among the less sustainable poeple on the planet. But they did incredible things.

  5. Stilgar Wilcox says:

    “I fear it would be like burning down a forest then trying to rebuild it to its previous state in a month.”

    I agree, and speaking of burning things down, get a load of the following!:

    http://in.reuters.com/article/2014/03/17/ukraine-crisis-russia-kiselyov-idINDEEA2G01G20140317

    ‘Russia can turn US to radioactive ash – Kremlin-backed journalist’

    (Reuters) – “A Kremlin-backed journalist issued a stark warning to the United States about Moscow’s nuclear capabilities on Sunday as the White House threatened sanctions over Crimea’s referendum on union with Russia.

    “Russia is the only country in the world that is realistically capable of turning the United States into radioactive ash,” television presenter Dmitry Kiselyov said on his weekly current affairs show.

    Behind him was a backdrop of a mushroom cloud following a nuclear blast.”

    Now that’s hyperbole I thought we’d never hear at that level, but maybe it’s simply a reflection of the economic tension in the world right now. The stakes for oil, NG and the Ukraine’s pipelines are apparently getting quite high.

    • orninaryjoe says:

      I think the possibility that the TPTB have decided a nuclear war is the form of collapse that best serves their interests must be considered.

      • Stilgar Wilcox says:

        It sure would solve a lot for TPTB. As the net energy decline eats away at the economy more and more people are turning to the govt. for assistance while tax revenue declines, setting up a very stressful situation for those in power. Maybe that’s why these types of situations often lead to war because it solves several problems at once. There’s another country to blame, less people to assist and those in power get to remain in power.

      • One question is whether anyone survives a nuclear war. Isn’t it likely to affect climate?

        • ordinaryjoe says:

          The climate and other changes would unimaginably negative for the planet. Survivability seems remote. I am sure TPTB understand the issues discussed on this site. The clock is ticking on economies and energy. What war does provide is an external cause which all hardships can be blamed on. This may provide advantages to those with their hand on their button. Current events display a lack of skill by statesmen. Perhaps such a degree of incompetence is possible but I cant help but wonder if war is the desired outcome. IMHO the actions of the TPTB demonstrate that they value the planet little. If they can print trillions for the banks why not a fraction of that for Fukushima? Why not a reality based actions on climate and energy issues? Why are we not joining hands as a species worldwide to work for a future that values nature and family? Because the disregard for the planet shown by TPTB I wonder if war is evaluated to be the best option for what they do value whether it will be initiated.

    • Thanks for the links.

      Greece sounds a lot like Russia, after the collapse, with many people working without salary. We perhaps should be watching this. Forbidding foreclosures is a way of partially eliminating the effect of debt.

      I hadn’t heard about the Florida Everglades situation. I suppose the theory is that we aren’t using the Everglades for much (even if our ecosystems are).

      • we perhaps forget that humans have always had to ‘work’ to produce enough material for survival. Everybody worked to the level of their fitness to do so.
        getting paid to do it is a very recent innovation, what ‘payment’ actually means is using somebody else’s fitness to produce your means of survival

  6. timl2k11 says:

    A “debt jubilee” is not the only option. Instead of debt being cancelled it can be “bought” by central banks. The end result would be hyperinflation instead of debt deflation, but the economy would be screwed just the same.

    • xabier says:

      Hyper-inflation. It may very well happen, and I believe many in finance are expecting it.

      Those wealthy enough to buy substantial assets over a wide spread of classes, which they believe will retain value through to the other side of a hyper-inflationary period, may well view this option as acceptable. Hence the purchases of real estate – residential and commercial – and agricultural and forestry land by the wealthy which can be observed.

      Agricultural land has risen four-fold in the UK over the last 5 years: this is money from the financial sector, bonuses and so on, going straight to where they believe future yields will be (in the UK there are considerable tax advantages attached to holding such assets, above all forestry.

      At this stage, I don’t believe anyone can envisage confiscation of real estate as at all likely, although one wealthy friend did raise the question of revolution the other day over drinks! I did not comfort him!

      • Paul says:

        A hedge fund manager friend was mentioning quite a few clients are ‘filling boxes in gold vaults in HK, Singapore, Bangkok with roughly 6 million worth of gold (that’s what each box holds) – they are still trading but they see this as a doomsday hedge against hyperinflation or some sort of collapse’

        I am not so sure gold will be a good hedge given that there will be no food so no need to store wealth – but who knows – it’s certainly better than cash, stocks, bonds, apartments in London, Hong Kong, or any city etc….

        For some really good insights into the gold market have a read of Things that make you go hmmm….

        http://www.mauldineconomics.com/ttmygh/never-the-twain

        http://www.mauldineconomics.com/ttmygh/what-if

        • InAlaska says:

          Paul,
          If the collapse is slow, or stutter step, having gold will allow temporary great wealth during the transition period. So for a limited time I believe gold will be very useful. But is it or lose it.

  7. edpell says:

    It is time to give the young folks a chance. Cancel “all” debt. That of course includes social security, medicare, unfunded pensions. Not in favor of cancelling corporate debt that is just a give away to the owning class. Might also want to take some of the accumulated wealth of the folks over 50 and give it to/invest it for the folks under 50. I am 55 my wife is 59. Our kids are all under 31.

    • The accumulated wealth of the folks over 50 includes a lot of the debt that will be cancelled, so will be gone, even before you decide to take it.

    • InAlaska says:

      edpell,
      I agree. A complete cancellation of debt. It will mean that pensioners and old folks will have to suffer, but you know, everyone is going to suffer irregardless. So a debt jubilee may actually at least give one more generation one more chance. I’m 50, my kids are teenagers. I would be willing (and able) to trade my future for theirs. And I think a lot of other people would, too (if they truly understood what is at stake).

      • Paul says:

        As much as I’d like to believe this could kick the can — after watching what happened with Lehman — I am incredibly skeptical.

        I think a debt jubilee would lead to a massive collapse of the interconnected complex global economy/supply chain — and once you bust that there is no putting it back together.

        A market economy does not react well to central planning.

        I fear it would be like burning down a forest then trying to rebuild it to its previous state in a month.

      • Jan Steinman says:

        “A complete cancellation of debt.”

        I can’t imagine how that would work. But perhaps I simply lack imagination.

        This means every mortgage. This means all corporate debt. Wouldn’t it also mean government debt? What about private debt? And who would enforce debt forgiveness? What if it was Mafia or loan-shark debt? How can you cancel debt owed to organized crime, when the “collateral” is your kneecaps?

        I would imagine that, should this happen, there would be lots of loopholes, and the vast majority of “cancellation” would “trickle up” to those who least need it. Witness the stiffening of personal bankruptcy laws recently, combined with relaxation of corporate bankruptcy laws. Big companies could renege on pension plans, but Joe Sixpack, who can’t pay his rent because he plays the ponies, will still owe his bookie.

        • xabier says:

          Jan

          Very true. In the UK the law has recently been changed to allow seizure of property for very small debts indeed, previously this was regarded as disproportionate and unfair, – the financial people know what is unfolding, and no-one is to get away from their nets if they have assets.

          But big corporations can get sweetheart deals from the tax authorities and endless lines of credit. Politicians’ salaries and benefits remain untouched….

          In Greece now, if you have money, everything is still sweet: for the poor, they die when they can’t afford basic medicines (a friend of mine has family there and some of the stories are harrowing.) Funnily enough, there isn’t so much in the MSM about Greece these days, or Portugal, etc.

          The IMF and the wealthy are quite happy to see this unfold. It doesn’t touch them.

        • I would add that governments around the world would likely grab assets, to try to make up for defaults. The US has a lot of bases in other countries that would likely be gone, overnight. Also, overseas operations of US companies.

      • A debt cancellation likely means no more debt, so it doesn’t give a new generation a chance, even though that is an appealing idea. It means that resources can no longer be extracted, meaning the Hubbert Curve changes to an Overshoot and Collapse curve.

    • orninaryjoe says:

      Debt is just a symptom. There is no opportunity. There is no opportunity because most of our skill/trades/careers exist only because of free energy. The cognitive dissonance is palatable, intelligent youth getting one or even two degrees to work as a sales associate in a retail store- if they are lucky. Everywhere bright kids (and not so bright kids)living with their parents. No one wants to face reality. If our species were sane as a collective. we would be decommissioning all nuclear plants and storing nuclear waste while the energy still exists to do so in relatively permanent manner. We will all be exposed to radiation after the energy ends without this simple measure. It will only get worse as time progresses, containment erodes and more material with half lives in the thousands of years gets released into the environment. If I could make nuclear containment happen I would gladly stop using all electricity and fossil fuel tomorrow. Would it be easy -no but i would gladly take that deal- that exists only in my imagination. Nuclear decommissioning and containment is what would “give the young folk a chance” IMHO. The purest form of debt is US treasuries and the federal reserve note. Cancelling “all debt” means what we regard as money go’s away. I do not believe the transition to a barter society will be easy. Who runs bartertown? The longer our debt based fiat system remains functional the longer our species has the possibility of facing reality (however remote) and taking commonsense actions to preserve some of the planets capabilities to nurture life post fossil fuel. What we are missing as a species is a connection to our planet. I believe that possibility of that connection coming into existence quick enough to save the planet is possible if not probable. I do not believe there is any other possibility that will preserve the beauty of the species that the planet sustains humans among them. Our species remarkable, exceptional, but the sole species not in balance with the planet. Ironic dont you think?

      • Christian says:

        Decomissioning: seems nobody knows how much it could cost. Have seen here and there: all UK facilities, civil and military, 100 billion pounds; all civil Europe: a 100 billions euros. Anything else?

        • Christian says:

          Any idea about the resources needed to nuke decommissioning? Fuels, materials? It seems costs had varied a lot among the (few) actual experiences. We must just lie to ourselves and believe waste stocks would no be damaged long term, which of course we will luckily no find out.

          So, we have four horsemen:

          1- First of all, almost imminent financial and trading failure.
          2- Nuclear downsizing.
          3- Food, agriculture and demography.
          4- Climate, but can do short or nothing about it.

          TPTB have come to be Apocalypse itself and lead the gang. Switching them for another ruling class would imply: a) now, military intervention; b) after some hypothetical non all destructive financial shock, ??
          Any case, a lot of people is hearing about this, and wathever can be achieved in general resilience will be directly proportional to general awarness. So It’s true advancing some information to general public is important; in fact, it is because of this kind of attitude from others we have ourserlves come to be here. For instance, making comments to news in MSM sites is not personal, confortable, far reaching and free.

          • Interguru says:

            Even at worst, such as Chernobyl, nuclear issues are not globally apocalyptic. Chernobyl only damaged a limited area. Ocean acidification, global warming and species extinction are much more serious. For that matter, the contaminated area around Chernobyl is a wildlife refuge, with thriving ( in the sense of reproducing and populating the area), even if sickly, populations of wildlife.

            Actually, according to Mycio and photographer and field biologist Sergey Gaschak, the animals are thriving. The 1986 explosion, the worst nuclear accident in history, forced 300,000 people to abandon the highly contaminated area around the wreckage of the power plant. Communal farms turned to wetlands and forests, and the animals came back. The area is now the largest, if unintentional, wildlife sanctuary in Europe.

            • Jan Steinman says:

              Things are not well around Chernobyl. Microbial and fungal activity is sharply down.

              The New York Academy of Science published a meta-analysis of non-English literature that concludes nearly a million excess human deaths will occur due to Chernobyl. Of course, it was furiously and loudly shouted down by TPTB, and NYAS eventually retracted their support for the study, although they still have it for sale on their website.

              It seems to me that nuclear contamination is the perfect thing for deniers. It is almost impossible to “connect the dots” except via statistics, which of course, are easily shouted down. (“Correlation is not causation!”)

              Even the stodgy US National Cancer Institute will calculate your increased lifetime risk of thyroid cancer due to atmospheric nuclear weapons testing.

              The deniers love to assert unprovable statements like, “Not a single person was killed from Fukushima,” while ignoring that (for example) infant mortality in British Columbia tripled after that event. (The BC Coroner’s office chalked that up to “poor parenting skills,” while not explaining why parenting skills suddenly got much worse. Maybe all those babies died because their parents didn’t notice they were suffocating, because the parents were glued to the TV, watching the Fukushima disaster unfold.)

              So be very careful before ascribing lack of global effect to nuclear contamination. Chernobyl here, Fukushima there, pretty soon the background radiation level goes up imperceptibly, and thousands or even millions are dying prematurely.

            • Christian says:

              Additionally, all occurred accidents have been addressed. Imagine just one of them would have not. Imagine just 1 of actual 500 reactors explodes and just keeps leaking: this would possibly be three orders of magnitudes worst than what we have experienced up to this day.

            • Jan Steinman says:

              “Imagine just 1 of actual 500 reactors explodes and just keeps leaking”

              You haven’t been keeping up with Fukushima, have you?

              It’s a verified “China Syndrome,” with corium burning its way through groundwater. But nobody’s really talking about it.

            • Paul says:

              Ex-Japanese PM on How Fukushima Meltdown was Worse Than Chernobyl & Why He Now Opposes Nuclear Power

              http://www.democracynow.org/2014/3/11/ex_japanese_pm_on_how_fukushima

            • ordinaryjoe says:

              “Ocean acidification, global warming and species extinction are much more serious”. If Gail is right we will be hitting the wall soon and fossil fuel use will radically decline. Ocean acidification, global warming and possibly most species extinction is from humans use of fossil fuels. Simplistically, there are only two possibilities. We continue our growth and consumption of fossil fuels or we do not. My opinion and it is only that, favors the latter possibility. If we hit the wall, with a little luck, the acceleration of ocean acidification, global warming and species extinction will be largely negated and further wounds to the planet will be avoided from those blights. While those threats are hopefully negated when we hit the wall, nuclear power plants inherent danger to the planet manifests, as the energy and technology to contain them in any meaningful fashion disappears.
              The latest podcast of lifeboat hour mentions the use of biological organisms to “eat” nuclear waste. http://prn.fm/category/archives/lifeboat-hour/ Does anyone have any knowledge about this?

            • Free Oregon says:

              “Eating nuclear waste?” What goes in one end comes out the other. You just transform the nature of the disposal problem.

            • Interguru says:

              I do not mean to poo-poo dangers from nuclear power, but to put them into perspective. We already have populations living in high radiation areas , such as Denver where background radiation produces 30,000 excess deaths per million .

              This does not count for the people living near Chernobyl of Fukashima, I am talking about the average global danger.

              [Disclosure : In 1972, a fusion project ,which I worked on Trisops received a $25,000 grant from Florida Power and Light. I have had no formal or informal relations with anything involving power since. ]

            • Jan Steinman says:

              “We already have populations living in high radiation areas , such as Denver where background radiation produces 30,000 excess deaths per million .”

              You’re conflating radioactivity with radioactive contamination.

              The folk in Denver are exposed to gamma rays, which interact weakly with human flesh for the briefest instant. They are not consuming radiocaesium, radiostrontium, and radioiodine, which are incorporated into their bodily tissues, constantly irradiating nearby tissue with more damaging alpha and beta particles.

              This is an argument of the nuclear industry: that so much nuclear contamination is “equal to” the radiation of so many bananas, or granite counter tops, or high-altitude airline flights — or living in Denver. It is a fatuous, apples-to-oranges comparison, designed to keep us all asleep.

            • Interguru says:

              Good point. I will do some research including ingested radioactive materials. However note for the Denver numbers, 70% of the excess deaths come from radon, which is ingested.

            • Jan Steinman says:

              Lots of places have radon problems, which, once you are aware, are easily mitigated by sealing areas in contact with the ground. Radon, a radiodaughter of uranium-238, is a gas with a short half-life, which when inhaled, transmutes into radiopolonium, which is also used to assassinate people.

              The nuclear apologists cite Denver because its high altitude causes more exposure to cosmic rays.

            • Ellen Anderson says:

              I think the story that wildlife is just fine and wandering happily in nuclear waste is intended to make us all go to sleep about nuclear waste. No – things are not fine. Dry casking nuclear waste and closing down power plants is something we could actually do. There must be thousands reading this blog. Everyone of us who lives within 50 miles of a nuclear plant could find an existing anti-nuc group and join it. Or, everyone of us could start calling state reps to find out what is being done. There are plenty of people who are clueless about what would happen to them or something they care about it there is a significant power outage and not enough diesel to keep the pumps going.

              Here is something for people who drink water in the Boston region. Do you know that the Quabbin Reservoir is within 30 miles of Vermont Yankee? There is way more waste stored there than there was at Fukashima and the plant itself is the exact same design. The NRC is poo-pooing the possibility of a similar accident there.

              There are a lot of people in Vermont and Central/Western Mass who know and care but it needs to become a priority for both states starting with the question of: where does the waste go now that the federal government has refused to do what it promised in overseeing disposal.

              Maybe the financial system and global warming are beyond the control of political organization at this point. I think not but I could be wrong. However, shutting down nuclear facilities is still achievable – not easy but possible – and it could be the gift of this generation to anyone who gets through the bottleneck alive.

    • xabier says:

      Don’ worry, it is clear that desperate politicians are eyeing your savings, pensions and property, there won’t be any need for a noble sacrifice…….!

      But isn’t the real problem facing the young in advanced economies: 1/ Globalisation of labour market and industrial production, 2/ Automation/ 3/ Excess supply of labour 4/ Education and training systems that leave many of them ill-prepared for work?

      The ability of politicians to make suitable investments for the future is something I regard with great scepticism. Any money raised will surely go to short-term expedients to satisfy vested interests.

      • Interguru says:

        “Might also want to take some of the accumulated wealth of the folks over 50”.

        We’re already doing it. QE is driving interest rate to nothing. Retirees who planned on living on the interest of their savings are now dipping into their principal. The money is instead going to banks and Wall Street where it is inflating the “bubble de mode”.

  8. Don Stewart says:

    To Jan Steinman
    Jan
    Here is a good example of an intelligent writer framing a problem badly (in my opinion). Kurt Cobb’s Resource Insights blog today:

    http://resourceinsights.blogspot.com/2014/03/net-vs-gross-energy-is-it-wise-to-be.html
    ‘Net energy is what’s left after the energy sectors of the economy–oil and gas, coal, nuclear, hydroelectric, renewable energy industries, and farming which provides food for human and animal energy and crops for biofuels–expend the energy they must to extract energy from the environment and then sell the surplus to the rest of us.

    Since 86 percent of the energy consumed worldwide is derived from burning finite fossil fuels, we are faced with a serious dilemma.’

    And then he proceeds to define the Net Energy issue, and criticize the United States EIA for failing to even define Net Energy, much less measure it.

    But suppose he had framed the problem thusly:

    Almost all of the energy we get from the sun goes to warm the planet to make it habitable for us, and drive wind and water currents. This energy dwarfs all other energy sources. About 1 percent of the sun’s energy is fixed by plants in the process of photosynthesis and turned into plant material which can be eaten by animals. The Net Energy from plants (after accounting for their own respiration) is 100,000 gigawatts per second. Fossilized plants, which we can mine from the Earth and burn, currently amount to 10,000 gigawatts per second, one tenth of the photosynthesis. As the ‘easy to access’ fossil fuels decline, then the net energy from fossil fuels will decline and humans will have to rely increasingly on the warmth of the sun, possibly on wind and water currents, and the products of photosynthesis.

    It is possible for humans to take actions which increase the amount of photosynthesis. For example, see this example of agroforestry in Columbia which doubles the previous level of photosynthesis products available to humans:

    http://www.resilience.org/stories/2014-03-14/in-the-pastures-of-colombia-cows-crops-and-timber-coexist
    In the Pastures of Colombia, Cows, Crops and Timber Coexist

    Kurt’s framing of the issue leaves one with the feeling that all is hopeless. The second framing, in my opinion, starts one to thinking about alternatives.

    Don Stewart

    • Interguru says:

      “The Net Energy from plants (after accounting for their own respiration) is 100,000 gigawatts per second. ‘”

      This is a misnomer. A watt is already in units of energy per second. I thinks the author means 100,000 gigawatts.

      • Don Stewart says:

        Dear Interguru
        The authors did say just ‘gigawatts’.

        I was looking for just a very sketchy statement, debated for a second, and chose to use ‘per second’ to make it clear that the time frames were the same. Probably a mistake on my part.

        For a well worked out statement, one should probably include geological forces such as those that move the tectonic plates around (which may be bigger than solar radiation, for all I know), the force of gravity, the immense energy in atoms, the small energy arriving in the form of gamma rays, etc.

        One could also lead the person to consider the value of the various kinds of energy in different situations. Gravity, for example, has an immense value to us by just keeping us relatively stable on our feet. Oil is dense and portable. Etc., etc.

        Lenton and Watson believe that humans are surrounded by immense amounts of energy, and will strive to use it…as opposed to revert to the Stone Age. Lenton and Watson are less sanguine about humans and pollution. And pollution is what has led to previous near extinctions.

        The goal of any statement would be to lead the reader to consider resources and goals, how we do it now, and how we might need to do it in the future.

        Thanks for correction…Don Stewart

        • Jan Steinman says:

          Don, while I appreciate your enumeration of all the other energy forces at work here (let’s not forget the moon’s influence on tides!) my original statement was in regards to “basic productivity” or “primary productivity,” which is a term of art in ecology and other life sciences that refers to the total sunlight harvested by photosynthesizing plants.

          So we may well both be right here — just using different measures.

          A quick google didn’t help. Might have to go back to my old ecology textbooks…

      • Jan Steinman says:

        “This is a misnomer. A watt is already in units of energy per second. I thinks the author means 100,000 gigawatts.”

        The author probably meant “100,000 gigiwatt-seconds,” flipping the time term from denominator to numerator. Energy is power times time.

  9. SlowRider says:

    I watched the video mentioned at the beginning – “How China fooled the World”. One city alone will be spending twice as much on infrastructure projects during the next five years than will be all of Great Britain. And their state-owned enterprises took up so much credit in one decade as did US corporations in the last 200 years, something like that.
    One other thing I didn’t quite know: the heavy part of their investment binge happened on request from the US government to stem the global financial collapse after 2008. Through private hedge funds, they were also buying US equities on a huge scale.
    Their attitude couldn’t be more far away from some progressive western thoughts about a less consumption-focused lifestyle. Their only religion is money, moving up to the middle class. And they won’t stop. They want as much of it as they can, before the collapse – be it financial, environmental ore else – about which they don’t care for one minute.

    • xabier says:

      We now see lots of the new middle-class Chinese tourists here, all year round, as this is a charming old town. By which I mean we see whole streets packed with them, making it hard to move around.

      They look as happy as anything to be travelling around, and are great buyers of designer goods. On the whole, they look distinctly smarter than the groups of tourists from Europe, -and native English! – and have much better street manners (somehow they never bump into you however tightly packed the streets are, unlike some nationalities I could mention – the really uncouth and rowdy young Italians, French and Spaniards might be in mind here!)

      This sudden rush of prosperity and physical freedom must be almost intoxicating and highly addictive. They often direct very hard stares at what one is wearing (I look very traditionally English I suppose) and carrying by way of branded shopping bags: they are drinking up freedom and the chance to buy things.

      Like all addicts, they will find the lows far outweigh the highs. It is interesting that protests against pollution and food contamination are now a feature of Chinese life, as far as one can tell.

      Watching these tourists, I feel that I am standing at the fringes of a great tragedy unfolding – but maybe that comes from an OFW world-view! They themselves are cats lapping up the cream.

      • Paul says:

        Here’s how Hong Kong feels about the tourism from China http://edition.cnn.com/2014/03/07/world/asia/hong-kong-china-visitors-controversy/

        Ironically HK the soulless bastion of materialism looking down on the ‘invaders’ as uncouth…

      • SlowRider says:

        Very good observation. I guess Chinese tourists abroad should really be considered (in their terms) as upper middle class – the kind of people who can afford to buy the downtown appartments in their new megacities. If that means only 2-3% of the population, you still get some 30,000,000! And as they all travel to the same famous places, it seems they are so many.
        The big emerging Chinese middle class is just moving into an urban lifestyle. But before going on international holidays, they might save for a car, a house, their parents. If one day 300,000,000 Chinese go on regular vacation trips by plane, it will be different. Let’s hope for the planet it won’t happen.

        • xabier says:

          Yes, they are clearly the wealthiest on the whole, although one can sense different class levels: some look very sleek and pleased with themselves, others like real workers who’ve had tough lives.

          A friend of mine had a Chinese grad student staying with her, in the tech sector, he wouldn’t open up at all about life in China. He was – in contrast to a European grad student in the same sector – very fashion-conscious and had plenty of money to spend, keeping 3 cars.

          One curious thing was that he was utterly shocked by the ‘highly immoral’ nature of her books – classic novels with the usual content of affairs, divorces, murders, etc. He asked her to recommend ‘improving and moral’ European literature, and she was at a loss!

        • Calista says:

          The Chinese educating their children is propping up our otherwise shrinking secondary educational system. An example of a university not too far from me has had steady enrollment for the last 15 years, give or take a thousand or so. Their Chinese student population has gone from less than 2% of the student body to over 10% of the student body.

          • xabier says:

            Calista

            Here, the University of Cambridge is building about 3,000 ‘housing units’ for graduate students, just a mile or so from my village. (Ironically on the site of a small and unrecorded Roman town which vanished in the Collapse of the 5th century).

            The unspoken, and slightly – to the ostensibly high-minded academics – dirty truth about this is that they plan to fill them with Chinese students, not UK graduates.

            As it is, when I cycle past the science labs, these days I often only see Chinese students – often with wives and children.

            They pay very high fees. The University is trying to get free of government control, create a substantial endowment, and this is one of the routes they are taking to financial independence.

      • InAlaska says:

        xabier,
        As I mentioned in an earlier post, you can only feel sorrow for these new Chinese middle class folks. They don’t know it, but they’ve joined the party just at the end (right before the police show up to kick everybody out). All of that unnecessary building of roads and buildings and cities. They are wrecking their country to create an infrastructure that will shortly be no longer viable. I guess it is good that they are enjoying this last gasp of wealth (lapping up cream, as you say) while they still can.

        • xabier says:

          InAlaska

          Like a Roman engineer putting the last touches to a magnificent aqueduct in….. 400 AD: except that they held together rather well and could be repaired with local resources and labour.

          All that shoddy concrete infrastructure won’t last long.

    • The scale of what they are doing in China is just astounding. It is hard to see how all this debt will be paid back without (1) the rest of the world continuing to grow and purchase Chinese products (2) Chinese employment staying very high (3) pollution problems suddenly going away, so growth can continue, and (4) a growing supply of cheap coal that somehow doesn’t make their pollution problems worse.

      • InAlaska says:

        Gail,
        I worry that if China sticks with coal all the way to the bitter end, which seems like the most likely scenario, then it truly is “game over” for the environment and catastrophic global climate change.

        • Paul says:

          More than 1,000 new coal plants planned worldwide, figures show

          World Resources Institute identifies 1,200 coal plants in planning across 59 countries, with about three-quarters in China and India

          http://www.theguardian.com/environment/2012/nov/20/coal-plants-world-resources-institute

          When I mention this to the greenies in Bali who believe they will save the world by building houses with bamboo they go catatonic.

          Kinda like when they say all we need is a cheap clean energy source to replace fossil fuels and I say — but won’t that allow us to desalinate oceans, grow more food and support billions more — who will pillage the other resources of the earth such as the fish, iron, copper, etc etc etc…

          Catatonia-inducing.

          I probably shouldn’t do that – they appear quite happy believing what they believe.

        • On the other hand, for now, all the pollution might be providing the “global dimming” we need to keep temperatures down.

          • InAlaska says:

            You have a point there. Wouidn’t it be ironic if our very own pollution is the factor that saves us from our very own pollution. At least to live long enough to die of black lung disease, cancer and various nervous system disorders.

  10. Free Oregon says:

    What’s coming is a Debt Jubilee of Biblical proportions, either with serial bankruptcies and accompanying shifts of asset collateral to creditors, or a Jubilee that follows a planned, rational course. So let’s take a look at the Rational Jubilee option.

    We already have a concentration of assets – the physical means of production – in the hands of a few. Too much concentration, in fact.

    Wouldn’t it be better to leave the assets where they are, not make the concentration worse, and get rid of the debt? All of it? Getting rid of Voluntary Sector debt is most important. Forgive the Student Debts. Wipe out the Credit Card debt. All mortgages deemed paid in full.

    I suppose one also would need to get rid of the Coercive Sector debt to make this work. Ideally governments, i.e., the Coercive Sector, would not borrow at all in the future. Perhaps creditors in the future will have more sense than they have in the past and not lend to them.

    What about the creditors? What about the sanctity of contract and all that jazz?

    What if you simply print the money to make them whole? We are doing that already, just doing it ineffectively because we increase the debt and leave the debt outstanding.

    There’s really no difference between cash and a zero coupon bond except that the bond, until sold or hypothecated, does not reenter the money supply to be spent. The work or value the bond represents already has been spent, wasted, or lost.

    What you want is a world of debt free assets and banks and insurance companies with lots of currency to lend IF anyone still is willing to borrow or to lend at that point.

    • Paul says:

      There is indeed a jubilee coming whether planned or not — call it a debt jubillee or what it really is going to be – one massive uncontrollable default on debt.

      And it is going to completely unravel the global system of finance (can’t put toothpaste back in a tube) – and it will not fix the fundamental problem which is we are out of cheap resources.

      As we have witnessed after 2008, the price of oil quickly dropped to $30 but almost as quickly it powered back over $100.

      Even if we could magically wipe out all debt and start over (which we can’t) we would immediately hit the wall on resource prices.

    • Stilgar Wilcox says:

      In the case of a debt jubilee, doesn’t cancellation of debt also mean cancellation of investment debt, i.e. bonds etc. It would seem the easy part would be wiping out the debt – the hard part would be enticing new investors. “Look X investment Group, we’re real sorry you lost 2.3 billion in the debt jubilee, but really it won’t happen again for a very long time, so we urge you to invest in our bonds at 4% and make a good return on your money.”
      “Ah, I’ll get back to you.”

      • Free Oregon says:

        The best thing that could happen would be economies that are equity based, debt free, with actual capital.

        I doubt this would occur.

        Under my scenario you would wipe out all debt. People, existing entities, everyone with assets now would own those assets free and clear. The Investors you worry about enticing would be sitting on cash with no income and no prospects of income unless they get out of their ivory towered offices and go to work producing real wealth.

        Initially there would be great uncertainty. Then the first enterprising American would have a productive idea. Those investors would need little inducement, if that enterprising American decided to crowdsource in some way.

        I do not think your worries have a sound basis, but yes, I want to make everyone, both borrowers and lenders, much more cautious.

    • Every time you get rid of someone’s liabilities, you get rid of someone else’s assets. So someone comes out poorer–often a pensioner, depending on Pension Plan assets. If a government prints money to cover everyone else’s debt, it seems like you are putting the government in the position of being the next one to fail. It doesn’t really solve the problem; it just moves it elsewhere.

      This sounds like Steven Keen’s plan for ordered collapse.

      • Free Oregon says:

        Government as we know it is failing anyway. Is it better to hang on for the ride, or give it a push and step into the future?

        What if we go back to square one? I govern myself. You govern yourself. Perhaps instead of law enforcers with guns we recruit people with actual courage and an ability to empathize. Call the Peacemakers. What if we go local? In the extreme no one delegates any decision making to anyone with whom he has not broken bread, with whom there is no personal basis for trust.

        As for energy and food, you are correct of course. However, if you take a look at Sepp Holzer’s “Desert or Paradise” and study actual farming techniques that mimic nature, yields are greater than with today’s conventional agriculture and you do not add amendments like fertilizers and pesticides, so input costs are lower. You also grow food with much greater nutritional density. You use as little energy consumptive equipment as possible. Instead you use animals to do the work – pigs, chickens, ducks, goats, etc. Permaculture encompasses a very wide range of practices so I try not to generalize. Some Amish practices also work. The challenge is how to transition from where we are to a very different kind of living. Our suburbs will be obsolete. People will need to learn or relearn skills. Time is short.

        I do not see smooth transitions. As a society we’ve hardly begun.

        In my own case I am looking for rural property outside the US.

        • Stilgar Wilcox says:

          “What if we go back to square one? I govern myself. You govern yourself. Perhaps instead of law enforcers with guns we recruit people with actual courage and an ability to empathize.”

          What?! Meanwhile;

          http://crudeoilpeak.info/world-crude-production-2013-without-shale-oil-is-back-to-2005-levels

          World crude production 2013 without shale oil is back to 2005 levels

          Unnoticed by the mainstream media, US shale oil covers up a recent decline of crude oil production of 1.5 mb/d in the rest of world (using data up to Oct 2013). This means that without US shale oil the world would be in a deep oil crisis similar to the decline phase 2006/07 when oil prices went up. The decline comes from many countries but is also caused by fights over oil and oil-related issues in Iran, Libya and other countries which can be seen on TV every day.

          • InAlaska says:

            Stilgar, this is truly frightening, because it means we are already on the downslope of the sharkfin, its just that the fin is submerged in a sea of US shale oil. Therefore we cannot see the downslope yet. Then, when US shale begins its inevitable decline…

            • Stilgar Wilcox says:

              Agreed. Really remarkable how long the plateau has extended, but with an inevitable decline in the offing. Right now it’s a red queen drill baby frack like mad to stay ahead of very high decline rates, against a backdrop of reduced capex by the majors. It’s time to store away the freeze dried goods and whatever else, cross your fingers and watch the Titanic heading for that big cube in the highly stressed global economic waters.

              It will be interesting how it will actually plays out. Will it be a 1) shark fin descent, 2) A stepped down process or a 3) slow tortuous contraction? 1 would be chaotic mayhem but over the quickest. 2 would be like musical chairs as many become disenfranchised while others remain seated due to better position going in. 3 would take the longest and require the most adaptability. I figure it will be 1 or 2 but not 3.

            • I think it will be a financial break, so it will go down fairly quickly–but probably not all at once.

            • edpell says:

              I vote for decline style #2, but I think it can be long drawn out and painful.

            • This is very similar to what I showed in my post http://ourfiniteworld.com/2014/02/25/beginning-of-the-end-oil-companies-cut-back-on-spending/ using slides of Steve Kopits on the same subject.

        • I am not convinced that things will work out as well as you state. Water is an important part of getting crops to grow. Right now we are using a lot of sprinkler systems, whether the systems are called organic of conventional. Even permaculture tends to have water brought in from afar, perhaps with a plastic hose and solar panel. Unless you can get the carbon content of the soil way up (so it will hold more water) you need to keep adding water one way or another. Any of these take water. Even the permaculture approach is not truly sustainable, although it may last for a while.

          • Jan Steinman says:

            “Even the permaculture approach is not truly sustainable”

            I don’t know of a single “permaculture approach” to water, although probably the most often suggestion is to plant perennial food systems that require no additional water.

            Another “permaculture approach” to water is the “keyline system,” in which near-contour swales are combined with ponds to provide passive, gravity-fed water systems.

            We’re using gravity feed for our water, still using drip-line while experimenting with sub-surface, gravity-fed irrigation so we can go “plastic-free.”

  11. mg says:

    Thanks, Christian, for your explanation about Argentinas debt. Your information gives my some deeper insight. We, in Slovakia, also had collapsing banking sector in the end of 90s, after the decline of energy intensive heavy industry. There were also some non-bank financial institutions which offered high interest rates and they went bankrupt, together with some smaller banks. The big banks were saved by the state and privatized. At that time Slovakia was quite politically isolated, many of the bad loans in the banks were provided during the privatization of the Slovak industry in the 90s with a corruption background. Old energy intensive companies in the hands of the naive comrades of the ruling parties went bankrput and the complete financial system of then isolated Slovakia was on the verge of collapse.

    • edpell says:

      MG, I know nothing about Slovakia. Can you tell us a little? Do you have any energy resources? Do you grow your own food? Does winter require much heating? Do you have exports that people want to buy? What is the national and private debt situation? Is the population growing or declining? Thanks.

    • edpell says:

      From CIA Factbook Slovak fertility rate 1.4 per women. You are dying off just like the rest of Europe. 🙁

      • MG says:

        Dear edpell,

        yes, we are past the peak and the population decline is imminent. Better than war, famine etc. The Slovak economy is now totally dependent on exports of car production and partially also electronics. Currently, it is in a relatively good shape, but the debts are rising.

        These days we have a presidential election going on. Guess who is a possible winner? Person who got rich on providing consumer loans…

        • Interguru says:

          I visited a friend in Liberecz Czechoslovakia in 1975 and 1985. In the earlier visit, the town was surrounded by beautifully forested mountains. In the latter visit the trees were all dead, killed by air pollution, probably caused by burning lignite and coal. Does Slovakia have the same situation?

          • MG says:

            Dear Interguru, the polution in Slovakia was mainly the problem of the 80s when the heavy industry was booming. (Today, when we import from China, the polution is there, but the climate, you know, gets also warmer…)

            Yes, we have/had some areas in Slovakia where the dead trees are/were present, I personally know Krompachy area in Slovakia, where the ores with the content of iron, silver, copper and gold were mined and processed.

            You can see some semi-bare hillsides using google maps and street view:

            053 42 Krompachy, Slovenská republika

            About mile away from the town eastwards you can find a Roma settlment (Rómska osada) – these post industrial areas are often occupied by them.

            Roma people are also present in the area of Liberecz (a former center of textile industry in the Czech Republic).

            http://www.novinky.cz/domaci/298830-devet-tisic-za-plesnivou-garsonku-romove-v-liberci-plati-ale-domy-chatraji.html

            The area near Liberecz was severely damaged by lignite mining and by the production of electricity from lignite.

            As regards the Roma communities in the Czech Republic and Slovakia and the debt, it is known that usury thrives there. These postindustrial areas in the Czech Republic and Slovakia resemble very much Detroit in the USA. Instead of the poor black population we have the poor Roma population.

        • Christian says:

          Good candidate, would be a lot of fun hanging him. Right precandidate here is a nice boy, major of the very new rich part of Buenos Aires, Tigre County. He did arranged a 16km2 big yacht country club, transforming all the ground, eliminating almost all the trees and twisting Paraná riverside in a bizarre desertic Venice of one stage houses and a Highway. Lot of water, not much space to feed residents (12k people).

  12. Interguru says:

    Just a reminder, Tom Murphy is his blog Do The Math has an excellent series of articles using basic physics to evaluate various energy issues. (Skip his newest one – A Physics-Based Diet Plan – he is weak on biology), If you only have time for one read Exponential Economist Meets Finite Physicist .

  13. Paul says:

    Fire-sale of US Treasuries is a warning of acute stress across the world

    Somebody is a selling a fistful of US Treasuries. It could be Russia, or China, Turkey, South Africa, or Indonesia, or all frantically selling bonds at the same time for different reasons.

    We don’t yet know. All we know is that the US Federal Reserve’s custody holdings on behalf of foreign central banks plunged by $106bn in the week ending March 12, the biggest one-week drop on record.

    Russia’s central bank is undoubtedly liquidating reserves at a breakneck pace to prevent a collapse of the rouble, as foreign companies scramble to get all their spare cash out of Russian accounts before the G7 guillotine comes down on the Putin clan next week. It is certainly trying to remove its assets beyond the jurisdiction of the US authorities – though that will not be easy. The SEC takes no prisoners. In the end, the world is more frightened of US regulators than it is of Putin’s tanks or his polonium. Soft power can trump hard power.

    One investor told me that clients in Russia are literally loading up cars with computers, machinery, and anything that will fit, and rushing them out of the country for fear that assets will nationalised. Whatever happens, nobody will forget this in a hurry.

    Yet the latest financial ructions go beyond Russia, they reek of stress in the international system. “Countries are intervening all over the place to defend their currencies, (which means they are tightening). Their central banks built up huge war chests of reserves for a rainy day, and now it is raining,” said David Bloom, currency chief at HSBC.

    Indeed it is. The international order is unravelling. Russia is of course smashing the post-Cold War order by seizing Ukraine, and blowing up the global architecture of nuclear non-proliferation. Let us not forget that Ukraine agreed to give up its nuclear weapons – the world’s third biggest arsenal at the time – in exchange for a guarantee by the great powers in 1994 that its territorial integrity would be upheld. Russia was one of the signatories.

    China is laying claim to large parts of the East China and South China Seas, and has established an air identification control zone over the Japanese-controlled Senkaku islands.

    China and Japan are one blow – or misjudgement – away from outright military conflict. The battle on the Pacific Rim is ultimately even more dangerous than the West’s clash with Russia over Ukraine.

    Whether or not the wheels really are falling off the Chinese economy remains to be seen, but the discussion has crept into the market. You can smell the beginnings of fear.

    “The global situation is extremely serious,” Lars Christensen from Danske Bank. “Russia is committing economic suicide, there is a massive corruption scandal in Turkey, and capital outflows from China threaten to have huge ramifications.”

    “If the US dollar were to strengthen drastically at this point, we would go straight into a global recession.”

    That is indeed the risk. Let us hope the Fed can pull its head out of its closed-economy macro model for once and take a look at the world before it tightens again next week. Tread very carefully Madame Chairman.

    http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100026831/fire-sale-of-us-treasuries-is-a-warning-of-acute-stress-across-the-world/

    • Thanks for sharing with us Ambrose Evans-Pritchard’s latest post. When energy supplies are having huge problems–prices not quite high enough for exporters like Russia, plus an ongoing need for more energy supplies, is when conflict is likely to break out. In an era of abundance since World War II, we have been protected from some of this conflict.

      • InAlaska says:

        I don’t quite understand the correlation between the problems in Ukraine and energy prices/supply. It seems to me, at least on the surface, that this land grab by Putin is a cultural/ethnic issue, not resource based. Am I wrong?

        • Paul says:

          This is the best analysis I have seen on the situation in the Ukraine – as usual the aggressor is the Deep State http://www.zerohedge.com/news/2014-03-13/russian-explains-real-stakes-fight-crimea-and-ukraine

        • I need to study the issues to write anything very good about the issue. This is an article by Nafeed Ahmez that explains at least some of the issues. Ukraine is in a strategic location, with gas pipelines. There are also plans to extract shale gas in the Ukraine, although this is still quite far off time-wise.

          I understand that at least part of the problem is that the very old gas pipelines through the Ukraine need repairs, and the Ukraine’s is near financial collapse. Without funding, it cannot pay for these repairs (among other things.) There was discussion about the EU providing aid, but then Russia made a counter-offer (see Ahmed article). Both the Russia and the West would like influence.

          Another issue is that Russia needs a fairly high natural gas price, in order to pay for its cost of extraction plus building all of the pipelines. This gives it less money to share with the Ukraine with respect to gas transit costs.

          With respect to Crimea, there are oil and gas resources nearby in the Black Sea that Russia would no doubt like to have. Having Crimea would also give Russia a warm water port, something it badly needs.

          • Paul says:

            The Crimea historically has been a part of Russia – most people are ethnic Russian and speak Russian – Russia has for years maintained a naval base on the Black Sea http://en.wikipedia.org/wiki/Black_Sea_Fleet – so this has nothing to do with access to the Black Sea – they already have it – and they had thousands of troops in the Crimea before this flare up.

            I suspect what this is about is Russia’s oil and gas reserves – the US encircling the bear attempting to corner and kill him – then BAU would be to put in place a compliant thug (see The Shah, Mubarak, Pinochet, House of Saud, Kalifa Family, Suharto, Marcos etc etc etc etc) who will do the bidding of US corporations – particularly big oil.

            The EU indeed tried to cut a deal with Yanukovych – but he decided not to take that deal and went with the Russian’s better offer. Of course the EU/US did not like that so as usual when they don’t like that a democratically elected government spurns them they follow the formula: foment protest and attempt to overthrow the government. Democracy is not allowed.

            Putin is not stupid – he knows what they are doing – and he is drawing a line in the sand. I very much doubt he will back down.

            Paul Roberts has a number of rather articles on his site re: this topic — he often sounds like he is going to blow a fuse — but he makes good points:

            http://www.paulcraigroberts.org/2014/03/16/95-7-crimeans-give-finger-white-house-tyrant-paul-craig-roberts/

            http://www.paulcraigroberts.org/2014/03/16/obama-declares-self-determination-threat-us-national-security-paul-craig-roberts/

            http://www.paulcraigroberts.org/2014/03/16/bbc-washingtons-mouthpiece-paul-craig-roberts/

            http://www.paulcraigroberts.org/2014/03/16/washington-set-world-path-war-paul-craig-roberts/

            http://www.paulcraigroberts.org/2014/03/14/world-war-1-paul-craig-roberts/

            • Thanks for the links and your insights.

              Also, doesn’t Russia really need a commercial port on the Black Sea, in addition to their naval operations? Russia has a canal system up to St. Petersburg, but the locks are so small that a large share of what the system supports is tour boats between St. Petersburg and Moscow.

            • Free Oregon says:

              Putin has a clear vision of where he wants to go. He is effective.

              Look at what he’s accomplished without “shock and awe.”

          • InAlaska says:

            As I understand it, Russia has a warm water port for its Black Sea fleet at Sebastopol. They signed a 100 year lease with Ukraine in exchange for Ukraine giving up all of its nuclear arsenal (an artifact from its days as a Soviet state). So Russia already has access to a warm water port. So still not sure if Russia is going for Crimea because of a large ethnic Russian population or because it has natural gas? I just don’t see the end game here, as Russian already has the port and has plenty of its own reserves. I believe that Putin is following his aspiration of restoring the Russian state to greatness, not a grab for more natural resources. This is only my read, though.

            • xabier says:

              Yes, I have experience of nationalists in Spain and one thing about nationalism is that it is irrational and emotional: it is a mistake to look for material interests alone in these matters. Crimea/Ukraine is emotionally important to Putin. It is part of the Motherland. They do not regard such regions as negotiable.

            • Christian says:

              It’s also possible everybody is just acting. Two things I know: no nuke air show, to Russia loosing Crimea would be as loosing one leg, so it’ll not happen. It’s all kind of circus to be paid by non Russian Ukranians.

            • There may be an issue of cheap to extract natural gas reserves near markets vs. expensive to extract gas reserves far from markets. I don’t know how cheap the natural gas would be to extract, but it would likely be a huge improvement over the natural gas Russia is attempting to extract from far north areas.

    • edpell says:

      Russia moved the custodial holding of 100 billion dollars of U.S. bonds from the U.S. to a different location in the world that will not seize them when the U.S. seizes all Russian assets. I would guess China. Not clear to me why they can not be held in Russia. Maybe they can be. I guess it all comes down to settlement and speed of liquidity.

      You mention many interesting happening. I feel at this point the games are irrelevant. It is the physical economy that counts. The various oil and nat-gas producers are still producing. Food growers are still producing. All the major players have bilateral currency exchange in place.

      Could it be that the minor players fall out if the global currency system stops. Places like Egypt, Yemen, Africa minus Nigeria, South America minus Mexico, most of Europe minus France and Germany? Of course India is in an unstable state. China too?

      Maybe we have a time 20 years when the majors are the only industrial society left. North America, Shanghai, Australia, New Zealand, Saudi Arabia, Qatar, Iran, Russia, Germany, France, Iceland 🙂 , Sweden?

  14. MG says:

    As regards the future of China, it is very interesting to see that the Russia is in fact turning East with the oil pipeline to China from its East Siberian fields. China is also securing Iraq’s oil.

    http://www.reuters.com/article/2013/10/22/china-russia-energy-idUSL5N0IC10F20131022

    http://www.nytimes.com/2013/06/03/world/middleeast/china-reaps-biggest-benefits-of-iraq-oil-boom.html?pagewanted=all&_r=0

    We can not wonder: West Siberian oil fields are in decline and the East Siberian oil fields are situated in worse natural conditions (but closer to China), so the rising costs of oil production (and other resources) make the use of the resources situated closer to China sound logical. The same can be applied to Iraq.

    The resource base of the Russia in the West is weakening. Russia is definitely trying to tie its resources with the partners that will use them most efficiently in the future. And that is China. I would say that Russia does not mind the ties with the West as much as before. The nationalization of Western oil companies would bring benefits to Russia regarding the exploitation of harder to recover oil, as China’s oil thirst can bring them money and technologies that they need.

    • It is hard to know whether and to what extent China can hold on, after the West collapses. With all of their debt, I expect that they will have problems as well. There are still quite a few peasants in China that are doing things the old way–plowing with draft animals, for example. I wonder too whether some of their coal mines are still done in relatively simple ways–although China has been trying to close them down. It seems like some parts of their economy might continue for a while.

  15. Stilgar Wilcox says:

    http://www.sfgate.com/technology/businessinsider/article/Nobody-Just-Sold-100-Billion-Of-US-Treasuries-5318866.php

    ‘Nobody Just Sold $100 Billion Of US Treasuries’

    “In the week through Wednesday, March 12, the amount of U.S. Treasury securities held in custody for foreign official and international accounts (i.e., central banks) at the Federal Reserve dropped by a staggering $104.5 billion, marking what was far and away the biggest weekly drop on record.

    The most likely explanation for the drop in custody holdings is that Russia moved its U.S. Treasuries outside of the U.S., so that if and when the West levies financial sanctions against it as a result of escalating military tension in Ukraine, Russia will still be able to access its money.”

    Go to the link and look at the graph showing the drop – it’s substantial! This is no small story, but probably Russia as the 2nd paragraph notes. I have a bad feeling about this butting heads with Putin, cause Merkel who speaks fluent Russian and has talked to him by phone says he’s basically nuts. The world’s economy is like a big building on loosely shifting sands – let’s not risk shifting it too much. After all, remember it’s a recovery! LOL.

  16. Paul says:

    From the above article…. I have to chuckle… the scientists behind this clearly are not reading Gail’s blog…

    The two key solutions are to reduce economic inequality so as to ensure fairer distribution of resources, and to dramatically reduce resource consumption by relying on less intensive renewable resources and reducing population growth:

    “Collapse can be avoided and population can reach equilibrium if the per capita rate of depletion of nature is reduced to a sustainable level, and if resources are distributed in a reasonably equitable fashion.”

    The NASA-funded HANDY model offers a highly credible wake-up call to governments, corporations and business – and consumers – to recognise that ‘business as usual’ cannot be sustained, and that policy and structural changes are required immediately.

    • Stilgar Wilcox says:

      “Collapse can be avoided and population can reach equilibrium if the per capita rate of depletion of nature is reduced to a sustainable level, and if resources are distributed in a reasonably equitable fashion.”

      That all sounds holistic and balanced, however even in that scenario (which I doubt can be achieved) people would have to continually adapt to ever lower levels of net energy consumption, as EROEI descends due to higher costs of extraction. What Gail writes about is how that ongoing process has negative financial knock-on effects that will lead to collapse.

    • “Collapse can be avoided and population can reach equilibrium if the per capita rate of depletion of nature is reduced to a sustainable level, and if resources are distributed in a reasonably equitable fashion.”

      That is a pretty wacky statement. The per capita rate of depletion in nature that is sustainable is 0. So just don’t use any more resources, and everything is OK. Huh?

      • Eivind Berge says:

        Actually, it seems the model in that NASA paper only takes renewable resources into account. “This version of HANDY so far contains only one region, and only renewable natural resources.” So in that case, I guess you can have a sustainable rate of depletion of resources in theory. However, it has nothing to do with current reality, of course. Here is the full text again:

        http://www.atmos.umd.edu/~ekalnay/pubs/handy-paper-for-submission-2.pdf

        Seems to be just an exercise in modelling a hypothetical world where everything is renewable.

  17. Paul says:

    NASA-funded study: industrial civilisation headed for ‘irreversible collapse’?

    http://www.theguardian.com/environment/earth-insight/2014/mar/14/nasa-civilisation-irreversible-collapse-study-scientists

  18. Don Stewart says:

    Dear Gail and Others
    Here is an excellent chicken/ compost video from Geoff Lawton.

    http://www.geofflawton.com/fe/64322-chicken-tractor-on-steroids

    I want to explain one or two things, and then list some of the points to note in the video.

    Explanation: Soil health can be thought of as a three legged stool, involving chemical factors (NPK, Cation Exchange Capacity, Ph, etc.), physical factors (tilth, water behavior, roots and space, etc.), and biological factors (the ecological contribution of the hundred thousand species of critters which live in healthy soil, around 6 billion of them per tablespoon). Industrial agriculture pumps up the chemical factors, especially NPK, while destroying all the other factors and promoting erosion. Industrial agriculture is enormously fossil fuel energy intensive. Biological systems are powered either entirely or mostly by the sun.

    Biological farming attempts to use natural cycles as much as possible to take care of all three legs of the stool. So that, for example, the soil is not tilled annually (but may be tilled once at the beginning to construct beds and earthworks), and the cessation of tillage permits the biological life to flourish. Biological life can be measured with a Haney soil test, which you can easily find described with a search. A Haney test is not what your local agricultural extension office will do. Instead, it is a measure of the metabolic activity in the soil, thus indicative of the life in the soil. Life in the soil must be fed. We feed the life with the living, the dead, and the very dead. When one of the six billion critters eats another of the six billion critters, the living have contributed. When a plant root dies back due to drought or harvest above ground, then the critters eat that dead material to get carbon and nitrogen and other nutrients. When dead material has been very well eaten and recycled many times, it becomes humus, which is very dead. Humus is important for many things, but it is no longer a nutrient rich source of food. Therefore, you will see that the chickens lose interest in the old compost piles in the video. They are going much more for the fresh waste which still has a high nutrient density.

    Also, please note that the compost (unless sifted), still has a lot of solid material in it. Solid material is important because it contains very slow to degrade substances such as lignins and cellulose, and because its incorporation into the soil provides pockets for air and water. Subsoil air and water are key elements in fertility. The opposite is compaction, which is a product of heavy farm equipment, plowing which results in plow pans, and heavy clay soils which have very tiny particles of soil and so settle into dense formations. Sifted compost makes excellent material to start transplants.

    Things to Notice:
    1. The rapid production of usable compost without machinery.
    2. The excellent quality of the compost.
    3. The recycling of food waste and animal manure.
    4. The use of the innate characteristics and intelligence of the chickens. Industrial chickens would not survive in this environment.
    5. The recycling of old vehicles.
    6. The usefulness of pieces of metal and a welder.
    7. Gravity powered drip water lines.
    8. The usefulness of very light weight fencing.
    9. If in an open field, fencing would not be necessary because the birds would stick with the compost…their food supply.
    10. Around here, there would be a dog to guard against predators.
    11. The human labor is best done by a crew. What is fairly hard labor for a solitary human becomes a social event for a crew.
    12. The human/ bird interactions. Good for your brain, as well as the bird’s brain.
    13. Closing the cycle of waste to food very efficiently.
    14. Reducing the human labor by increasing chicken labor (but they seem to be having fun)

    This example is from a teaching farm which serves 30,000 meals per year, and so has lots of waste available on site. However, you can use your imagination to think of similar applications. For example, institutional settings where large numbers of meals are served. Or neighborhood chicken recycling stations where people bring their food waste. (Bill Clinton said at the Omega Conference last fall that if he were Obama faced with a recalcitrant Congress, he would simply use his powers to close down all the landfills, which produce lots of methane, a climate change gas. If the landfills stopped accepting organic waste, and everything was diverted to neighborhood chicken tractors, think what the implications would be.)

    I believe this system will work much better with a group of neighbors than for single homesteaders. Which fits in nicely with the evolutionary fact that humans are social animals.

    I have previously recommended the book Revolutions That Made the Earth. The authors explain how Nature gradually put together, with many missteps, a recycling system which permitted a very large increase in the biological use of solar energy. What Lawton has done here is put together a human designed system which greatly increases our ability to harvest solar energy in the form of food, by efficiently recycling the waste materials from our food supply.

    Don Stewart

    • B9K9 says:

      Don, can you please explain how the underlying principles of permaculture are effected by the fundamental laws of thermodynamics? More specifically, are you suggesting that outputs can exceed inputs? Also, absent energy stores (up to 200m years old) found in traditional sources of NPK fertilizers, what balance would be required between total available nominal/annual NPK production and population/consumption?

      I await your reply; but, just to help you out in case you don’t recognize the trap, try to avoid any mention of a perpetual energy machine. TA

      • Don Stewart says:

        Dear B9K9
        Solar energy is as close as we can come to a perpetual motion machine. I believe the current projections are that it will continue to function in a range friendly to biological life on Earth for another couple of billion years. After that, our sun becomes a super-giant which engulfs the Earth and all biological life ceases.

        But I suspect you want some other sort of answer. Given the fact that the solar energy fixed by photosynthesis is roughly 10 times the amount of energy we humans get from fossil fuels, and given that fossil fuels are finite while photosynthesis is not so limited, it makes sense to use photosynthesis whenever and wherever we can. I think all biological farming and gardening systems recognize that principle. Humans can design systems which use photosynthesis more efficiently than unaided Nature. Evolution has multiplied the photosynthetic fixed energy by several thousand times since life appeared on this planet. By doing things such as permaculture design, we can multiply the photosynthetically fixed energy several more times. For example, spreading water out over a landscape so that the water sinks into the soil, rather than letting the water take a purely gravity defined path to the sea, can multiply the photosynthetically fixed energy. Think of the energy fixed in a forest as opposed to a desert.

        We humans who have command over fossil fuels can, of course, waste them in relatively unproductive or actually harmful enterprises, such as growing corn for ethanol or high fructose corn syrup. For that matter, a biological farm can also grow corn for the same wasteful or harmful ethanol and high fructose corn syrup. We can also use fossil fuels intelligently to increase the photosynthetic energy produced by moving things around or building structures which make the system work better than unaided Nature. I think Geoff’s system is an intelligent use of fossil fuels to multiply biological productivity.

        A forest or a grassland harvest energy from the sun and then a myriad of living creatures use that energy for life and everything ends up as humus…which has great value in terms of nurturing a new generation of plants to fix yet more energy. A forest or a grassland can waste so little nutrients that the nutrients from rainfall and the weathering of the bedrock replenish the nutrients lost through water runoff. Thus, Nature is an extraordinarily efficient recycler. If Nature were not an efficient recycler, there would be no nutrients left on the surface of the Earth, because life has been using them now for a couple of billion years.

        Industrial agriculture does not worry much about loss of nutrients, since it assumes that industrial sources of resupply will always be there (talk about perpetual motion!). And it seldom worries about pollution. It’s focus is monetary profit.

        If you will check Revolutions That Made the Earth, you will learn that recycling nutrients has been responsible for the flourishing of life on Earth, and the failure to recycle, which creates pollution, has been responsible for several near extinctions of life on Earth.

        Therefore, when we say that ‘energy is central to everything’ , that is true only in certain circumstances. Energy is very important if your time horizon is billions of years. Energy is very important if you have become dependent on fossil fuels, which are depleting. Energy is not the only central issue in a biological system on a time horizon of millions of years. Historically, pollution has been more important than energy…although both are obviously very important in the construction of the Earth we now inhabit. The efficiency with which you can promote and utilize photsynthetic energy is very important if you have a large population relative to the easily harvested products of Nature (think hunter gatherers vs. 7.2 billion humans). I would argue that the current industrial system must collapse, and so our only hope is better biologically based systems.

        Sorry…no perpetual motion machines.

        Don Stewart

        • Christian says:

          You’re great Don

        • Don,

          But isn’t phosphorous a problem? Aren’t we eroding soil (thanks to farming, etc) faster than the wearing away of the underlying rocks can provide that phosphorus? Too much of the topsoil is ending up in the ocean or floating down a river. If we were not disturbing the soil, and instead living only on perennial plants, it would not be too much of a problem.

          • Don Stewart says:

            Dear Gail
            I have written pretty extensively here on the phosphorus issue. For a more complete explanation, use your magic search engine.

            I will briefly recapitulate. But first, some fresh material from Albert Bates:
            http://www.ic.org/permaculture-at-the-farm/

            ‘Every piece of land is unique and will be influenced by how water passes through it, irrespective of where the farm, cattle ranch, shopping mall, or four-lane highway gets put. By directing that water from valley to ridge, gravity and rain make the life of the farmer and rancher much easier. Keyline design combines cultivation, irrigation, and stock management techniques to greatly speed up the natural process of soil formation, and results of 400 to 600 tons of topsoil per acre each year are possible. Keylining can annually deepen topsoil four to six inches, and darken it a meter deep in less than a decade.

            One of the students in our class was a former securities trader named Brian Bankston. He was so impressed with the keyline method that he went out and bought a keyline plow and took it to his farm in Arkansas. A year later, he relocated to The Farm and became one of the strongest weapons in our Land Use Committee’s arsenal. Each year he has been reclaiming more and more of the pastures and croplands of The Farm, using a combination of keyline method, compost tea slurry application, rock dust, and biochar.’

            and from:
            http://www.i4at.org/

            ‘How fast do bacteria replicate in presence of food? Every 20 minutes. One bacterium in 72 hours with infinite food supply would weigh more than the planet Earth. What stops that from happening? The absense of food. What will stop the human population from overrunning the planet? The absense of food. We are poised at the cusp of a Malthusian correction.

            Our goal is to develop and disseminate a method of agriculture that supplies our food in an ethical way, which also means being a positive force in the climate equation, building healthy future soils and promoting biodiversity. We want to heal the planet from the abuses of our careless predecessors.

            When some part of a growing plant dies, it drops material high in protein, which is food for the soil decomposers. That food becomes bacterial and fungal biomass. The N is tied up. The C is tied up. Bacterial and fungal bodies are eaten by nematodes and microarthropods which release the nitrates (soluable) and ammonium (gas) fertilizers in their wastes. If you can fix those nutrient flows you can eliminate the need for fertilizer. Healthy organic soil systems do this, and can more than double yields in the first growing season they are applied.

            Mother Nature takes soluable nutrients and changes them into biomass. Biological processes decompose the biomass and use metabolic wastes to make soluable nutrients to fuel the next round of the cycle. Humans are Gaia’s tool for taking plant waste — free oxygen — and turning it into plant food — CO2. In a healthy system, it all goes around, is not shuffled off to form toxic burdens on the atmosphere or ocean, but merely replenishes its own needs.

            This is not rocket science.’

            Please note that in the first article, The Farm is remineralizing their soil by adding rock dust, which will contain a wide variety of minerals, including phosphorus. In the second article, Albert points out that getting carbon and nitrogen to plants, two gases abundant in the air, ‘is not rocket science’.

            So why is it that Bill Mollison warned 25 years ago that phosphorus would be the limiting factor to human population numbers, and more recently David Holmgren opined that we will never have a large number of natural gas powered vehicles because we will be desperately using the natural gas to make nitrogen fertilizer? The short answer, I think, is that the ‘not rocket science’ statement is true, but it is also true that doing what we will need to do is not what is taught at the Harvard Business School and it is not what the political powers in Washington, DC want to happen and it is not on the radar of the average person from Shanghai to New York to London. And so the only realistic assumption is that humanity will run into hard limits at 90 miles an hour and there will be a lot of suffering and death. Albert has another essay which contrasts the ultimate victory in the civil rights struggle, and the abject lack of progress in terms of climate change and resource depletion. It’s about social or psychological or financial matters, or however you want to describe it.

            So…the smartest people I know think that remineralizing soil (including phosphorus) is a very good idea in terms of food security, if your soil is currently deficient. Once you have remineralized, you should adopt stringent practices to make sure that the minerals do not leach out of your soil faster than they are replenished. (Or at least, that it takes a very long time for leaching to get the best of you.) In the case of phosphorus, mycelium play a very large role in getting phosphorus to the plants, both chemically and geographically. Mycelium will not flourish with annual tilling or with heavy applications of industrial chemicals. Therefore, it is necessary to use the biological farming and gardening methods that have been developed by Albert and Fukuoka and Bill Mollison and a myriad of others, including many indigenous societies.

            Annual additions of phosphate rock should not be included in anyone’s farming or gardening plan.

            Don Stewart

            • edpell says:

              Don, thanks I learned a lot from this post.

              Just one pet peeve “a Malthusian correction”. We have always experienced Malthusian pressure, people have always died of Malthusian pressure. It is not a binary system on or off. It is analog 1% on, or 26% on, or 88% on. People in places with poor growing condition, Sudan, are having significant Malthusian pressure now. People are the bottom of the social pyramid are experiencing significant Malthusian pressure now. Yes, the net population is increasing and yes a time will come when the net population decreases.

              All of Europe including Ukraine and Russia are predicted to loose a significant fraction of their population by 2050. Life is hard there. The same for Japan. Africa on the other hand with close to zero FF input will increase population significantly by 2050. Life is easier there.

            • Thanks for the additional information.

        • xabier says:

          Don

          As an example of the craziness of modern agriculture and government:

          The president of the British Farmers’ Union has just retired. In his farewell speech he told something of his experience of government attitudes.

          Essentially, since compensation to farmers for bad weather and animal disease can be so expensive, and as the UK is running out of money fast, they hope to see the agricultural sector in the UK (already unable to feed the population) shrink, so that the the financial risk of compensation can be reduced.

          Let other countries take the production risks, is the idea, we can just import what we need. The extraordinary assumptions behind this are rather alarming.

          Food security? Continued availability of industrial fertiliser? Trouble-free global food trading? Having off-shored industrial production, they’d also, so it seems, be happy to off-shore food production.

          We simply cannot trust governments to take even common sense measures.

          • edpell says:

            I have to say the UK government is even worse than the US government in its lack of ability to plan for the future. In the US extreme militarism does lead to some good future planning. It is military bases that are leading in the installation of solar energy in the US. I know a local retired West Point guy whose current projects are all aimed at making US military bases energy stand alone sustainable. In fact, using them to restart the national grid if the national grid goes down.

            • Don Stewart says:

              Dear edpell and xabier
              Regarding the British government policy of outsourcing agriculture.

              One of the British organizations which study climate change has recently been talking about the percentage of food in Britain which is grown in floodplains. As I recall, it is near 40 percent. I believe they came up with a figure something like one year of flood out of five. So they’ve got it right about the risk.

              I am not sure they can rely on the rest of the world, however. I think the percentage of food from floodplains is pretty high on a global basis. We know what happened to Pakistan.

              Don Stewart

          • edpell says:

            I would go further it is the military that is the only intact and functioning culture in the US. I think it is filling the role of monasteries in middle ages Europe.

            • InAlaska says:

              I have to agree with you there. The US Military is the last bastion of traditional culture, honor, and discipline in the country. They have forward thinkers who are planning, planning, planning.

            • xabier says:

              An interesting point! The military virtues are too often disparaged and derided, but I’d rather be in the company of an honourable soldier than a politician offering me the earth for my vote and pretending to be my best chum! (Most of my forebears were soldiers, and I have politicians in my close family now – no comment!).

              The selection process for politicians is certainly much more degraded than that of the military: they are never the brightest and the best and are far too beholden to their sponsors, both in their parties and in the world of finance. While military ‘politicians’ do exist, in the senior ranks, military selection is geared towards an accurate estimate of ability and character. What political party, run on blackmail and corruption or doctrinal fanaticism, can compare?! At heart, all politicians believe they can get off the hook with the right formula of words.

              Senior military planners clearly have more of a grasp of what is occurring – resource constraints nd political instability – than most, as is clear from what has come into the public domain.

              After all, they have soldiers to equip, feed and move, and machines to keep running, and that concentrates the mind somewhat. Few people can compare to a well-travelled, well-informed, intelligent soldier. A politician just has to mouth some words about ‘recovery’, a soldier has to explain why he has lost a piece of territory and can’t get it back……

              However, as we saw in Spain in the 20thc, or Latin America, (rather than the obvious and hackneyed example of Nazi Germany) with the military dictatorships, the military mind can be too attracted to simple solutions and also descend into a barbaric and callous use of force. It is certain that prolonged warfare – above all when it is very bloody – can be highly brutalising. Honourable men have done awful as well as great things.

              A key factor must be the extent to which the military sees itself as part of society, or an entity outside of it – threatened and able to threaten. This is partly why insurgency and civil wars are so brutal: the insurgents become mere targets or animals to be eliminated. Soldiers fighting those whom they believe to be of an inferior level of civilisation also often degenerate into murderers if not restrained (as when the Germans fought partisans -themselves very brutal) in Russia and in the decline of their power in Italy,Greece and France in WW2).

              An army is, after all, just an instrument, to be used for good or ill.

          • xabier says:

            About 80% of Britain’s cereal crops are grown in a radius of 60 miles from my house. Until the 18th century, much of this land area was marshes or poor quality soil – the later being improved in the 18thc Agricultural Revolution, sponsored by the major landowners.

            The former marshlands are kept dry by an extensive system of oil and electricity-powered pumps: without them, I’d be able to go fishing and wild-fowling just a few miles from home.

            The absence of capacity for forward-planning in Britain is simply shocking. But then, what bankrupt struggling to juggle creditors ever thinks far ahead?

        • Jan Steinman says:

          “Given the fact that the solar energy fixed by photosynthesis is roughly 10 times the amount of energy we humans get from fossil fuels”

          I cannot find an attribution, but I recall reading — perhaps on The Oil Drum — that North Americans currently exceed world basic productivity, the amount of sunlight collected by all organisms, by 25% or so.

          I’ve located a graph I downloaded at the time, but have unfortunately lost the attribution.

          It shows 80 quads as total photosynthesis, and US use at 100 quads.

          Anyone recognize that graph and perhaps its origin?

          Perhaps you can cite a source for your “10 times” claim? It would be interesting to resolve this discrepancy.

          • Don Stewart says:

            Dear Jan
            I get the numbers from Revolutions That Made the Earth by Lenton and Watson. Page 48 in the paperback. ‘With all our modern measurements on land and sea, and with satellites to show us the whole Earth, we know pretty well the total productivity of life on the planet today. After accounting for their own respiration, the plants of Earth currently extract about 3000 tonnes of carbon from atmospheric carbon dioxide every second, half on the land and half in the ocean. They fix energy from the sun at the rate of about 100,000 Gigawatts as they do so–to give you some perspective on this number, it is about ten times the rate at which the entire human race is currently using energy through burning fossil fuels…’

            Some ecologically minded people try to add up the amount of ‘human directed energy’. That is, a wheat field may be fixing a lot of energy from the sun, but it is ‘under the direction of humans’. Such an attempt opens up a philosophical can of worms. For example, consider Michale Pollan’s bestselling book The Botany of Desire. As one of his case studies, he considers the Dutch and the Tulip. The fact that the Dutch fell deeply into lust with an obscure plant had huge implications for the world. The number of tulips is vastly larger than it would be in a natural world, the recurrent financial bubbles that we are currently experiencing owe something to the tulip, and the Dutch use a lot of energy and ingenuity to grow tulips and ordinary humans work hard to make the money to buy them. So Pollan posed the question ‘who is manipulating whom?’. As humans, of course, we KNOW that we are in charge. From the point of view of the tulip genes, it might well look like they have successfully manipulated the humans.

            It is currently fashionable to ask the same questions about bacteria and humans. A human contains more bacterial genes than ‘human’ genes. Did the bacteria invent humans to spread their ‘selfish genes’? Similarly, in the end, the worms get all of us…are we created by the Great God of the Worms to make sure that worms never go hungry?

            If there is any bedrock for the climate denial camp, I suspect it arises out of the recognition that even fossil fuels, as large as they are, are small relative to natural phenomena. But as The Revolutions, makes plain, it is failure to recycle wastes that has lead to mass die-offs and near total extinctions in the past. Human industrial activities generally create pollution…as opposed to providing feedstocks for some other organisms. (Oil spills, by the way, are feedstocks for some other organism, as demonstrated by natural oil seeps.) The bulk of the evidence about climate change is convincing to me, just as the emergence of the bacteria and oxygenic photosynthesis created a crisis billions of years ago.

            It’s interesting to think about the permaculture principle that every element should have many uses. Most everything in Geoff Lawton’s chicken tractor video is an example of a cycle where everything is used by multiple organisms. Even the old vehicle which is salvaged and used to form the tractor is pretty well used up. So did The Great God of Chickens create Geoff Lawton to insure that chickens got lots of protein rich stuff to eat, a warm dry place to sleep, and protection against predators? I think it is good to look at these cycles from multiple viewpoints, as Pollan suggested.

            Relative to phosphorus, particularly, perhaps this passage on page 50 of Revolutions will intrigue you:
            ‘Once photosynthesis was available to supply energy, life on land had to find ways to increase the availability of the materials it needed. There were two different means it could adopt: increase the inputs and conversion to biologically available forms, or reduce the outputs and recycle what it already had. In fact, both strategies have been used…..the only option was for life to learn to recycle efficiently. Eventually, the land was colonized, and weathering too became a biologically controlled process. One element which is in short supply and which is particularly difficult to recycle because it has no gaseous form is phosphorus, and land life eventually succeeded in finding ways to coax this out of the rocks….as we’ll discuss in Part IV.’

            So…if you really want to know about phosphorus, don’t listen to me. Get Revolutions and look at Part IV.

            Don Stewart

          • I am not quite sure which post the chart is from, but the graph shown is one of Charlie Hall’s or of one of his students. Most likely it appeared in a post by Dave Murphy, who at the time he wrote for The Oil Drum was a student of Charlie Hall’s. A virtually identical graph appears as Figure 15.2 on page 327 of Energy and the Wealth of Nations, by Charlie Hall and Kent Klitgaard.

        • Peter S says:

          “Solar energy is as close as we can come to a perpetual motion machine.”

          Solar power is about 20% efficiency at most. So that’s a really bad argument.

          • FreeOregon says:

            If we don’t like 20%, what if we study nature, use our minds and invent ways to increase yield?
            What are our goals, and where do we expend our own time and creative efforts to achieve them?

            • Peter S says:

              We had a 100% “green”, “carbon neutral”, “renewable” and “balanced” economy and society 200 years ago.

              That should be the goal. It’s the reluctance to give up our ipads and cars and high technology that blocks us – even unconsciously – from doing what is needed to help the planet. If we are very lucky, we may have a better quality of life, maybe comparable to 1900, because we have a lot of knowledge and experience now. But we know the goal, we’re just reluctant to admit it.

            • The catch is that we were using more than our share of the 100% green, renewable, carbon neutral, and balanced economy, not only 200 years ago, but long before that–back when humans first learned to harness the use of fire to burn biomass, over 1 million years ago. Back as hunter-gatherers, we were able to wipe out many (most) species of large animals. One technique we used was burning down forests, so that we would better get at the wild-life. Our tools and our mental intelligence helped as well. The intelligence came about the same time we started eating cooked food. Once our bodies did not need to spend so much effort on chewing and digesting food, it could increase the size of our brain. With our brain, we could outwit other species.

              No one asks how much of the renewable energy is our share. It is not very much, if other species are to have their share as well.

            • Jan Steinman says:

              “we were using more than our share of the 100% green, renewable, carbon neutral, and balanced economy, not only 200 years ago, but long before that–back when humans first learned to harness the use of fire to burn biomass, over 1 million years ago.”

              The difference, of course, is that we were forced to live within the solar budget then — even if we did wipe out much of the megafauna in the process. We might overshoot locally or even regionally, but things would eventually stabilize again.

              But now, we’ve turned 100 million years of sunlight into some 6+ billion people, and are deeply, deeply into planet-wide overshoot. Good luck with that one!

              But what the heck. Is that any reason to be gloomy? Do what you can to ameliorate things, and enjoy the time you have left.

          • Don Stewart says:

            Dear Peter S
            Solar energy is not a stock which depletes on any time frame meaningful to humans. It is a continuous flow, the use of which costs us nothing most of the time (enjoying the average temperatures which are conducive to life, as contrasted to Mars and Venus, sunbathing on a nice spring day, eating food which got its energy from the sun in a process which does not destroy any of the molecules involved, etc.). Solar PV cells, however, are an artifact of industrial civilization and are thus subject to all the vagaries of the industrial process.

            Don Stewart

            • Peter S says:

              A perpetual motion machine is one that gives out the exact same amount of energy that goes into it. You compared that to solar power.

              Lets ignore for now, that solar power is a high technology that needs massive amounts of oil to manufacture and massive amounts of rare earth minerals that need oil to mine. Lets ignore for now that you cannot mine with solar power. Lets ignore for now that you can’t make the oil or energy for manufacturing solar power technologies with solar power. It doesn’t pay for itself.

              It’s not a perpetual motion machine by the very definition of perpetual motion machine. The sun gives us an enourmous amount of energy. But we have very limited technology to capture a tiny percentage of it. It’s not a perpetual motion machine, and cannot survive without oil.

            • Don Stewart says:

              Dear Peter S
              Almost all of the solar power used on Earth comes from either the heating of the air, earth, and water, or else the act of photosynthesis. What little solar power is harvested by PV panels is a drop in the bucket.

              A rock in the desert sits there, absorbing solar radiation all day. At night it emits the heat. Clever gardeners can make use of that effect. The rock does turn into dust over millennia, so its not exactly a perpetual motion machine. The solar radiation is free.

              A plant uses photosynthesis to manipulate materials with no loss of molecules. Again, the solar radiation is free. You could get picky and try to calculate the EROEI of all the embedded effort that went into evolving photosynthesis, but I don’t know what you would prove by that.

              Sitting near a rock to get warm and eating plants are two very good things to do. They are not perpetual motion, but they come close to the notion of ‘something for nothing’.

              Don Stewart

    • InAlaska says:

      I watched Geoff’s video last night at two in the morning. This is really good stuff. It has already given me some great ideas for my own place. Thanks, Don.

  19. Interguru says:

    Just a little less fuel for the fire

    Shell’s U.S. Woes Highlight Difficulty of Cracking Shale

    Shell’s new boss, Ben van Beurden, said bets on U.S. shale plays haven’t worked out for his company. Its North American performance was already hit by pessimism over offshore Alaska, but its latest move shows Big Oil hasn’t quite mastered how best to capitalize on the U.S. oil boom.

    “Some of our exploration bets have simply not worked out,” Shell’s Chief Executive Officer Ben van Beurden said.

  20. MG says:

    When I summarize the history of my country (Slovakia) in the 20th century, I come to this historical line:

    1. Fall of the Austro-Hungarian Empire in 1918. Smaller states like Czechoslovakia emerged in Central Europe.
    2. Agrarian refrom in Czechoslovakia- feudal and church land was redistributed among the people in the 20s.
    3. WWII – cannibalism starts: Jews driven away (into concentration camps and killed in them) and their properties were taken over and redistributed
    4. After WWII German minority driven away and their property was redistributed, left unoccupied.
    5. Communists came into power in 1948: creation of big collectivized farms in 50s and 60s.
    6. Roma population growing, taking over the unoccupied land and creating illegal settlements in specific areas, where industry is in decline.
    7. Druzhba pipeline (http://en.wikipedia.org/wiki/Druzhba_pipeline) from Soviet union brings oil in big quantities into Czechoslovakia. The economic situation quickly starts to improve, the country starts to look like the West. Democratization of the communist party.
    8.1968: Soviets see that they lose the influence over Czechoslovakia and come to stop the democratization.
    9. 1972: First nuclear power plant put into operation (ratio of the nuclear energy in the electricity production: in 2014 about 50%, 3rd place in the world)
    10. 70s: big concrete residential areas (panelák buildings) are created (http://pete-teaches-in-bratislava.blogspot.sk/2011_07_01_archive.html). Highest consumption of the oil in the history.
    11. 80s: heavy industry (production of weapons for the Soviet allies in the frame of Cold War) booms.
    12. End of the 80s: ecological problems, economy declines (Cold War and weapons production is ending), fall of the Soviet empire.
    13. Beginning of the 90s: Heavy industry is declining, as cheap energy inputs are being limited
    14. 1993: Division of Czechoslovakia.
    15. 90s: Czech republic has large deposits of coal and uranium, Slovakia is dependent on imports = Slovakia continues to decline, the economy in the Czech republic is improving.
    16. After 2000: relocation of the car productiona capacities from the West to Central Europe: Slovakia becomes the biggest car producer in the world per capita (http://www.thedaily.sk/slovakia-is-world-no-1-car-producer-per-capita/). Also production of electronics sector (mainly Samsung) is ramping up. Construction boom (until 2008) and bust (after 2009).
    17. 2014: The debt continually rises:

    http://finweb.hnonline.sk/komentare-a-analyzy-123/slovensko-sa-stava-krajinou-rekordov-komentar-dna-542625

    Explanation:
    Red bars: in millions of EUR
    Blue line: as percentage of GDP

    The deflation is here:

    http://en.cihan.com.tr/news/Slovakia-records-deflation-in-Feb-_9008-CHMTM3OTAwOC8z

    Conclusion: Slovakia is 50:50 rural and urbanized country. “Japanization” (and the population decline connected with it) comes, but it does not have to be as severe due to its lower population. Although the climate change can make food production more difficult. Despite the booming car industry sector the general population faces low wages, low pensions, declining ability to pay houshold expenditures, rising debt on housing and consumer goods etc. Many people see the foreign investment as exploitation. And I believe it, too. Because energy matters. (E.g. I have heard a story about the production line moving faster here in Slovakia than in Germany in one of the companies, but when the delagation from German headquarters came to see the production, the production line was slowed down. That was 2 years ago. Now the production of this company was relocated to a cheaper Balkan country).

    • MG says:

      Not to mention the dependence on the EU subsidies and EU financed projects, which is seen as the salvation (but, in fact, a source of corruption). After 2008 crash, the high unemployment is here again and now it is seen as something that is almost impossible to fight (some groups of the unemployed are simply left out of the statistics, so that these look better):

      http://www.tradingeconomics.com/slovakia/unemployment-rate

      • Timothy says:

        I particularly enjoyed the comments on this article so far. Elves, Children going back to the natives, etc. Good stuff and a nice reprieve.

        • xabier says:

          Thanks to a very tolerant Gail. The Archdruid would not permit such digressions.

          • I figure pixels are cheap, and the number of open discussion forums is down.

          • InAlaska says:

            Yes, Gail, thank you for your tolerance. It occasionally helps the spirit to go off-track. Too much doom can really bring a guy down.

            • xabier says:

              InAlaska

              There’s doom and gloom, and then there are crises one can react to:

              Churchill and a colleague received some very bad news during the war: his colleague said, ‘Awful news: I feel about twenty years older now!’ and Churchill: ‘Yes, quite awful, dreadful! I feel twenty years younger!’

    • Thanks for your summary of the situation in Slovakia.

      My observation is that debt levels in communist influenced countries have tended to be lower than historically capitalistic countries, especially until recently. Even at 50% of GDP, Slovakia is doing much better than many countries around the world. It started later in ramping up debt, though. From what little I have seen, individual households and businesses were not encouraged to ramp up debt as much either, under communist regimes. It was when capitalism came along that resource extraction (and pollution, and exploitation in general) could go into overdrive, with more and more debt.

      • MG says:

        Yes, going into debt is a recent phenomenom. Communist countries were a relatively closed system. They did not import much during the history, as they did not have colonies like Great Britain. Their access to world trade was also limited by the infrastructure constraints. That is why they reached a resource peak in 80s.

        The phenomenon of depletion of resources is an integral part of Slovak history, as the golden, silver and iron ores and also lignite, oil and gas were exhausted mostly in the past. The most renown Slovak director Juraj Jakubisko comes from such a post-peak mining region of Slovakia and the post-peak (even apocalyptic) visions are deeply present in his movies. E.g. this movie from 1980, situated in the native post mining native region of the director:

        http://www.jakubiskofilm.com/en/movies/12-build-a-house-plant-a-tree/?PHPSESSID=6583e6164bbb40c154d193026cb2dfa7

        I can now fully understand his work and the past of my country,when considering the impacts of resource depletion. And what is happening now, too. The way the oil prices make the people recede from the central mountains into the valleys, the indebted collectivized farms, the rising debt levels of ordinary people, need of higher taxation from the side of the state, aging population, high unemployment that can not be solved as before via emmigration. (Every family here has some distant relatives in the USA, my family in the Milwaukee area). One of them, a woman working in the real estate, came to visit Slovakia shortly before the 2008 crash after decades of no conntact. (Made possible by the internet…)

        I can see a big parallel between the boom of the reinforced concrete buildings in the 70s (80s) here and what is happening now in China or somewhere else, too. In the former Eastern Germany, they are already tearing down and cleaning such residential areas and turning them into parks. The story of the reuinification of the Germany is an interesting example of post peak impacts, where the newly accessible resources from other parts of the world are trying to revive the regions that have already peaked: the Eastern Germany can not catch up with the West… LIke other post-communist countries, too. How could they, when the West is more and more indebted and the West is now coming closer to what the East has already experienced?

        • I hadn’t realized the extent to which Slovakia and the rest of the East had already used their resources. I thought that they were importing some oil and gas from the Soviet Union. I hadn’t focused on to what extent they had already exhausted their own resources.

    • VPK says:

      Thank you for the overview of your nation. I have relatives that live there myself (Bratislava). Both my Mother and Father side. Highly educated and modern. Many young leave for employment in the West and try to stich opportunities. Years ago I warned them not to “develop” in the manner of “America” and my cousin was sympathetic to my reasons.
      Yes, Slovakia is a car manufacturing center. One thing going for it is the strong agricultural culture. Nice people and I hope they will weather the storm ahead

    • Interguru says:

      MG

      Perhaps you can answer a question for me. Why did Slovakia choose to break off of and leave Czechoslovakia in 1992? It seems to their advantage to be linked up to a richer area, rather than break away.

      • MG says:

        I would interpret the division of Czechoslovakia in 1992 based on the available energy resources: the situation of Slovakia and the Czech republic was completely different at that time. The people did not understand the energy situation then. It is true that the industry in the Slovakia and in the Czech republic started with mining of the big hard coal deposits in Silesia, on the border of Czech and Poland in the midst of the 19. century and building of the corresponding railways. The separatistic tendencies often do not have any rational cause, they are often based on some unique historical event, in the case of Slovakia and its separation from the Czech republic in 1992 it were the memories of the Nazis puppet state o Slovak republic during the WWII. The division of the Czechoslovakia in 1992 was better for the Czechs, as they really did not have to carry the burden of restructuring the post-Soviet declining heavy industry in Slovakia. The debt levels in Slovakia, immediatelly after the break-up of Czechoslovakia, soared. In the end of the 90s, the banking sector of Slovakia had to be saved in a simmilar way the USA or some other European countries are doing now, after 2008.

        • Christian says:

          Half people living in the country, that sounds good. We are on 90% here. Have a good look in Slovakia.

          I read the book of this Lisandro I mentioned. It’s about his work as a member of the argentinean Parliament, and the set of law projects he presented between 2007 and 2011. He was backed by agrarian organizations, university folks and a couple of small parties, but not a single project passed into law because of Kirchners opposition (somebody asked what I think of the K couple, you can imagine). All four projects did certainly gone in the right direction addressing land renting, agroexport taxes or wathever. In the book, he mentions the Club of Rome and Limits to Growth. I wonder if it would have gone better if he (or they, given he did not worked alone) have insisted more on this point. We just met, and when I told him I was doing some research on international resources and finances he put an ugly face and changed topic. I can’t imagine how does he manages to smile all time, as his profession requires.

          • Christian says:

            Edit function… 90% in cities, of course. And good luck to all of you. We should meet for a party once at least

          • MG says:

            I am completely sure that choosing the new pope Francis from Argentina was made based on his experience of the situation during the Argentinas financial crisis in a highly urbanized country after its peak oil. I am wondering what experts proposed him as the best candidate for the Catholic Church in the era of deepening debt and resource depletion? There could not be a better person. But I am not sure, if the Catholic Church realizes the impacts of the current world situation and if the pope itself understands all the implications…

            • Christian says:

              Good choice indeed. Given Europe’s, and Italy’s, economic downturn I’ve always believed Francis election was based upon his frugality, which enabled the Church to get closer to the people. Europeans having become very atheistic, economical proximity looked a good idea and is clearly helping to improve the Church’s reinsertion in society. This is reinforced by the name he chooses. I am not sure if Vatican gets the whole thing neither. Besides, the Pope has very strong anticapitalist speeches, poorly replicated by MSM (remark “anticapitalist” is not on MS Word thesaurus). I’ve just read a couple of paragraphs, but found nothing about limits to growth, peak oil or such. May be a good search could find something like that. Finally, I can’t imagine how Argentinean debt experience could help the Church, unless they’d working along with governments, the Italian being the first.

              In the 90s Argentina supported a 1 peso to 1 dollar parity. This was initially possible by the selling of State’s enterprises. Telephones, railways, the oil company (YPF), some industries, water and energy distribution were privatized and paid in dollars. Argentinean positive energy balance period started in 91 or so and finished in 2011, oil production peaking in 1998 (lowest oil price year, bad luck). I am not sure how much oil (not NG) exports contributed to sustain the parity, because I could not find export taxes figures in the net. Oil was very cheap on that time, and peak year half a Mbd were exported.

              Whatever happens to be oil taxes story, I guess debt was also to sustain the parity. Sadly, I don’t know very much about our debt history. What I know is that in the last half of the 70s the military government ramped up very much the debt, using YPF as the security. In the 80s debt was very problematic and after the selling of the State’s jewels debt was contracted again. In 2001 parity was impossible to sustain anymore, but the government did not found a way to leave it. Central Bank reserves were falling, slowly at the beginning and at some moment they did it exponentially. In three or four exponential weeks reserves completely disappeared. Then, you know, banks were closed a couple of days until the government announced people will get 1.40 peso (now 0.6 USD) for each peso or dollar they had in their bank account. This was also the rate at which all previous contracts were updated. At this very moment, black market rate was 3, and even 4 to 1. There were a lot of protests and attacks against the banks and the government. The president run away in a helicopter after the police killed some 30 people who wanted to get in the Presidential Office (Casa Rosada) and we had 3 other presidents in 10 days and then the fourth managed to stay in. This was a clever man. People got very angry with the guys who implemented parity as well, and even today they cannot go peacefully in the street.

              The guy who stayed as president was a Senator, chosen by the Parliament, and as his attributions were unconstitutional he stayed just a year and resigned after we had new national elections. Meanwhile, he devaluated once again to 3-1. So, when Kirchner got the power in 2003 he has a very competitive exchange rate, and increasing commodity prices boosted the economy in a way we have not seen since WWII. One of the few things I do acknowledge Kirchner did well is debt management. They cancelled all debt with IMF, so they could say nothing about us anymore. Also they renegotiated with other creditors and framed a simple and degrowing payments scheme which is working very well (until now, at least). Two big creditors remained in default, and that is why we are not allowed credit anymore: the Paris Club and the “vulture funds”. It seems Paris Club will not sue us, I suppose because of systemic risk. Vulture’s claims were heard at a court and they almost get our instruction frigate in Ghana, but sailors resisted and came back with this very symbolic ship. Now they are behind our bank accounts in NY, which we use for international trade. A court of New York ruled in their favor too, but now it seems Obama started supporting our position. Systemic risk, I guess.

            • Quitollis says:

              There could not be a better person.

              “Who am I to judge?”

              Bye bye, papacy.

            • Quitollis says:

              I’ve always believed Francis election was based upon his frugality

              “Everyone, look at how humble I am. You can call me “the humble pope”, you can call me Francis.”

              Yeah right, the PC consultancies earned their money with that one.

            • Quitollis says:

              looked a good idea and is clearly helping to improve the Church’s reinsertion in society. This is reinforced by the name he chooses

              Bergoglio is totally irrelevant, the same as Ratzinger and Woitila.

              Let him go ahead and get played for a fool by the liberal secular media. “Who am I to judge?”

            • Quitollis says:

              Who needs Humble Frank anyway? We already have the songs of Schubert.

    • InAlaska says:

      Thanks, Calista. A good read. You are right, it is a vision of the future both hopeful and horrible. I think we will be lucky to wrench such a future from our present predicament. Paolo B. is a gifted writer/thinker.

      • Calista says:

        Indeed, wrenching a future out of our present predicament, in which humans have a semblance of anything, would be lucky.

  21. birder2600 says:

    I am archiving your, JMG, JHK, Christ Martenson, Richard Heinberg, The Oil Drum key, Nate Hagens and others’ posts onto acid-free paper in a dry cave on my property…. People will know that some knew

    • Christian says:

      If they can read

    • Thanks! I will tell my descendants where to look.

    • Stilgar Wilcox says:

      Great work birder2600! Stuff always gets found later, so I’m sure it will act as a repository for post oil age analysis. Nothing like marking history for future generations to learn from, and best of all it won’t be the MSM sell the trinkets, BAU to infinity propaganda dribble. At least some will know there was a minority that understood, openly exchanging information.

    • xabier says:

      birder2600

      These mysterious and most probably incomprehensible documents will, if they survive, probably become the sacred foundation texts of a post-apocalypse religion……

      • newyorker says:

        Like…”a canticle for leibowitz”.?

        • Paul says:

          🙂 great book – just finished it the other day

          • Interguru says:

            Now read The Windup Girl by Paolo Bacigalupi . It is in the near future, peak everything, You’ll never be able walk into a supermarket without muttering “The Expansion”, which is the name the book gives our present era.

            • Paul says:

              I read that the week before – also excellent

              Currently reading This Life is in Your Hands after having seen it referenced here.

            • InAlaska says:

              I just received The Windup Girl today in the post from Amazon. Bought it after seeing it referenced on this post. Started it today and haven’t put it down except to read this post. Thanks to whoever of you recommended it.

            • Calista says:

              I’m the one who recommended it. I’m glad you guys enjoy. Paolo is a gen Xer and lives and works a day job in Colorado. I’m glad to see someone supporting him. Visions of the futures that are possible help us make decisions that either gain us that future or push away to a different future. I enjoy that he gives us such awful and wonderful visions at once. Something to chew upon.

            • CTG says:

              Interguru, this is my comment to your post as there is no reply button anymore. Your posts are always spot on. You friend may be correct in the sense that it (the financial Ponzi scheme) can go on forever but it will be up till one point where someone makes a mistake (like letting Lehman go) or some natural events happen (earthquake in Tokyo, water shortage in California?) or some planned event went awry (Ukraine/Crimea?) and the whole facade will collapse rapidly. Referring to the 1987 Abelian sandpile model, where just a single grain of sand can cause the entire sandpile to collapse in a big avalanche. Therefore, unassuming event in real like may trigger a total collapse in the system. I am pretty sure you can only “control a system” so much before it goes out of your control.

  22. Doug W. says:

    Gail, what trends, statistics, or indicators are you watching most closely these day, and which ones do you find most concerning?

    • I suppose my big concern now is that the financial system will come “unwound.” So I watch to see if there are indications in that direction. So far, it doesn’t look that way. Right now, the stock market is still staying high even though reduction in QE has started. Five and ten year treasury yields are higher (less low) than they were a year ago, but not higher than they were at the first of the year.

      Housing prices/sales are doing less well than in the recent past, but each month there is an excuse, but so far this hasn’t few through to general concerns about contraction. Now we are hearing more about China’s debt problems, and drops in iron and copper prices. I keep my eyes and ears open for whether we are moving into another global contraction. Right now I am watching to see what happens in China and Japan, because a contraction there could spread around the world.

      • Paul says:

        The problem with watching is that everything can seem stable one day (overall not sustainable — but stable as per the ‘new abnormal’ ) but then virtually overnight the Titanic that we are on can turn on a dime (and I don’t mean turn as in avoid the berg)

        I have a few long haul trips planned away from my Bali refuge in the next 6 months – one of the fears I have is that I will be caught stranded and unable to get back to the farm.

        I suspect (hope) that when this hits there will be a period of inertia (perhaps weeks) — where central banks hose everything with unlimited money. The masses no matter how obviously dire things are, will believe the BS that comes out of the central banks and politicians mouths so I suspect that will give people a period to make final preparations.

        Perhaps they will announce a debt jubilee and the headlines will scream ‘Green Shoots – Green Shoots – all debts are wiped – get the credit cards out! And the masses will rejoice and sing Happy Days are Here (but at some point they will realize there are no jobs, nobody has a pension cheque coming etc etc etc… but they are pretty thick — so that might take a while)

        When I see the central banks go whole hog then I will limit my travel and ensconce myself in my jungle retreat in the mountains of Bali – I’ll hit the shops and get a few last massive purchases of emergency foods and gear in place (probably just blow out the credit card – assuming I won’t be paying that bill) – and wait.

        For those who know what is imminent I think the trigger will be fairly easy to identify – I do not think the central banks can kick the can very far when the next shoe drops – we’ll have weeks – perhaps months at most — from the time the SHTF to when it starts flying all over the place.

        I plan as if tomorrow morning I will wake up – open a few browsers – and find that the catalyzing event has struck. I put nothing off until tomorrow because I might not be able to do what I need to do tomorrow.

        • InAlaska says:

          I think you’ll have days to a week. Not weeks to a month. Once the runs on the banks start, thinks will catalyze quite quickly. People will stop coming to work. Airlines will be quickly effected. Going away from home is a big risk. I’m sending a boy to a private school half a continent away for a year this coming year and it WORRIES me. Good luck to one and all of you.

          • Paul says:

            You may be correct – I expect the central banks will open up the spigot in a last ditch kick at the can but at that point the game may be up – the markets don’t bite – and instead they flee for the perceived safety of the USD — or gold and guns.

        • dashui says:

          Well I know where i’m going to….
          Have some of that Balinese cat crap coffee ready for me, i’ll bring my own hammock….

          • Paul says:

            Done! We are a bit too low to be able to grow coffee though… so will have to make do with Italian roast…

            • dashui says:

              It might b awhile, because I’ll b taking a boat, SEA airlines seem to b going through some problems at the moment….

      • InAlaska says:

        Who knows, the Black Swan could be war in the Crimea, the West steps in somehow, natural gas to Europe is cut off. Dominoes start to fall without an overt financial warning.

        • You are right. Everything is so interconnected that dominoes begin to fall from one direction or another.

          • Calista says:

            I’ve bets on the last part of April 2014 when we see true outlines of our food issues for the coming growing season. Watch the farm reports I do, I do.

        • Lizzy says:

          There was a BBC radio drama a couple of years ago about the outcome of the sudden, complete disruption of the oil supply. A coup in Saudi, I think. It seemed quite plausible and frightening. Within two days there was terror and mayhem: murders, thefts, kidnappings, and it disintegrated from there. Thing is, with all this going on in Crimea, the international money system just might stop. Then there is no credit to pay for oil and oil tankers, oil distilleries and all the rest. We could say that money (or credit) = energy, don’t you think?
          I’m really interested by what Calista said earlier about the sons and daughters of hippies.

      • SG says:

        China is about to buy a large copper mine in Peru – Las Bambas – from Glencore.
        It may be they plan to hoard the stuff to maintain its price and its value as collateral for Chinese domestic debt.
        http://www.independent.co.uk/news/business/sme/market-report-glencore-is-close-to-selling-las-bambas-copper-mine-to-the-chinese-9198276.html

  23. xabier says:

    End

    We need to go a bit off-topic, sometimes, or go mad.

    I’m proud to have got a mention of Elves into OFW. But don’t worry, I haven’t met any yet at the bottom of my garden. Or is that fairies?

    • Jan Steinman says:

      “I’m proud to have got a mention of Elves into OFW.”

      That reminds me, Elvis was spotted on BC ferries the other day.

      (Now can someone compare someone else to Hitler, so we’ll have this OT stuff fully out of our system? 🙂

    • edpell says:

      But Elves have very low reproductive rates. This is critical. 🙂

      • xabier says:

        Whereas Goblins, Orcs and maybe even Trolls breed like rabbits, -Tolkein hit a lot of nails on the head!

        (Apologies, Gail, for the sheer irrelevance of this ).

        • InAlaska says:

          We will all be living like Dwarves in the end, underground. They too, had a low reproductive rate, although I understand that you couldn’t tell the dwarf women from the the dwarf men. Again, apologies!

      • Ed sayd :
        hope this forum isn’t going too wackily off topic

        Follow your own advise before giving some.

        • justeunperdant says:

          Sorry Ed, I meant End_of_More (@End_of_More). There is so a thing as too much of that same

  24. Pingback: evolveSUSTAIN: The latest in global sustainability & resilient systems development.

  25. Quitollis says:

    Late summer afternoon session, Mozart Gran Partita for 13 wind instruments, 178X, pre-oil. We can do this again, aristocratic feudalism, refinement, good taste, good manners and high art. Of course nearly everyone is going to die first but we could not have done it otherwise anyway. !! It looks worthwhile, life should be lived in a charming aesthetic ecstasy, sun over green and pleasant rural bliss. Perhaps there is no obvious reason why tomorrow should not be better than today (nueclar containment aside) any more than that today should have been better than yesterday. (Capitalism was always a deeply subversive movement, we should have stopped it way back.) Chin up, good things come to those who wait. “All manner of things will be well!” I am grateful for those best times that have helped to sustain me through the harsh decades. I give thanks to Eternal Nature for my life even so and I am willing to live it just the same again over and over to eternity.

    FROM you, Beethoven, Bach, Mozart,
    The substance of my dreams took fire.
    You built cathedrals in my heart,
    And lit my pinnacled desire.
    You were the ardour and the bright
    Procession of my thoughts toward prayer.
    You were the wrath of storm, the light
    On distant citadels aflare. (from Sassoon, Dead Musicians)

    (Still, are a million of us worth a single Mozart, a single afternoon spent in pure summer bliss? Does any goodness remain in man?)

    • Telegraph road of MARK KNOPFLER capture really well the human industrial evolution.

      All the way down the telegraph road = Down the time line of human industrial revolution.

      http://www.youtube.com/watch?v=J1HT7IxkbbQ

      A long time ago came a man on a track
      Walking thirty miles with a pack on his back
      And he put down his load where he thought it was the best
      Made a home in the wilderness
      He built a cabin and a winter store
      And he ploughed up the ground by the cold lake shore
      And the other travellers came riding down the track
      And they never went further, no, they never went back
      Then came the churches then came the schools
      Then came the lawyers then came the rules
      Then came the trains and the trucks with their loads
      And the dirty old track was the telegraph road
      Then came the mines – then came the ore
      Then there was the hard times then there was a war
      Telegraph sang a song about the world outside
      Telegraph road got so deep and so wide
      Like a rolling river. . .
      And my radio says tonight it’s gonna freeze
      People driving home from the factories
      There’s six lanes of traffic
      Three lanes moving slow. . .
      I used to like to go to work but they shut it down
      I got a right to go to work but there’s no work here to be found
      Yes and they say we’re gonna have to pay what’s owed
      We’re gonna have to reap from some seed that’s been sowed
      And the birds up on the wires and the telegraph poles
      They can always fly away from this rain and this cold
      You can hear them singing out their telegraph code
      All the way down the telegraph road
      You know I’d sooner forget but I remember those nights
      When life was just a bet on a race between the lights
      You had your head on my shoulder you had your hand in my hair
      Now you act a little colder like you don’t seem to care
      But believe in me baby and I’ll take you away
      From out of this darkness and into the day
      From these rivers of headlights these rivers of rain
      From the anger that lives on the streets with these names
      ‘cos I’ve run every red light on memory lane
      I’ve seen desperation explode into flames
      And I don’t want to see it again. . .
      From all of these signs saying sorry but we’re closed
      All the way down the telegraph road

      • Paul says:

        Superb.

        This is what passes for great lyrics these days…. 🙁

        Yeah, huh
        Yeah, baby baby
        Yeah, baby baby
        Hey, hey

        [Robin Thicke:]
        Girl give it to me
        Girl you know what it do, girl give it to me
        I got somethin brand new, girl give it to me
        I’ll put it all on you, girl give it to me
        Wooo! I got a gift for ya
        I got this for ya, a little Thicke for ya
        A big kiss for ya, I got a hit for ya
        Big dick for ya, let me give it to ya
        Baby baby, I got a call for ya
        I got a whip for ya, black car for ya
        Ball hard for ya, I know you wanna get fancy
        I know you wanna start dancin

        Hey… girl
        You know you’re lookin so damn fly
        You’re lookin like you fell from the sky
        You know you make a grown man cry

        I wanna give it to you, tonight
        And make everything you fantasize
        Come true, ooh baby
        I’ll make you so so so amazing
        I’ll give it to you

        Girl give it to me [x4]

        Ooh! What’s that girl?
        What’s that baby? I like that girl
        I like that baby, on your back girl
        On your back, yeah shake it like that girl
        Baby baby, I got an eye for ya
        Got an eye for ya, I got a smile for ya
        Cheese, let me put it on your face for ya
        Please, I got a taste for ya
        Tasty, I bought lace for ya
        Freaky, I’ll put it on ya
        Yeah, so I can come and take it off ya
        Yeah, and get off to ya

        Uh, you’re like a needle in a haystack
        Uh, I wanna sit you where my face at
        Uh, lunch with a few Mai-Tais
        Uh, purple kisses on my tie
        Uh, life give leave a dick loved
        Uh, now you gettin this dick, love
        Uh, I’m lookin for you with a flashlight
        I wanna feel what a real fat ass like
        No injection, I learned my lesson
        I walk it like I talk it, baby this pedestrian
        Runnin through your mind like Jackie Joyner
        Pussy like pop like “DO!” Go get me a burner
        Got shot like “DO!” This can be detrimental
        T-shirt and panties, that’s your credential
        You’re cotton candy, I need a fistful
        I’m often antsy, hope that convince you

        • Harry says:

          Chris Rea:

          “And all the roads jam up with credit
          And there’s nothing you can do
          It’s all just pieces of paper flying away from you
          Oh look out world, take a good look
          What comes down here
          You must learn this lesson fast and learn it well
          This ain’t no upwardly mobile freeway
          Oh no, this is the road
          Said this is the road
          This is the road to hell”

          • Paul says:

            Oh Neil…. what have we done……

            Oh, to live on Sugar Mountain
            With the barkers and the colored balloons,
            You can’t be twenty on Sugar Mountain
            Though you’re thinking that
            You’re leaving there too soon,
            You’re leaving there too soon.

            It’s so noisy at the fair
            But all your friends are there
            And the candy floss you had
            And your mother and your dad.

            Oh, to live on Sugar Mountain
            With the barkers and the colored balloons,
            You can’t be twenty on Sugar Mountain
            Though you’re thinking that
            You’re leaving there too soon,
            You’re leaving there too soon.

            There’s a girl just down the aisle,
            Oh, to turn and see her smile.
            You can hear the words she wrote
            As you read the hidden note.

            Oh, to live on Sugar Mountain
            With the barkers and the colored balloons,
            You can’t be twenty on Sugar Mountain
            Though you’re thinking that
            You’re leaving there too soon,
            You’re leaving there too soon.

            Now you’re underneath the stairs
            And you’re givin’ back some glares
            To the people who you met
            And it’s your first cigarette.

            Oh, to live on Sugar Mountain
            With the barkers and the colored balloons,
            You can’t be twenty on Sugar Mountain
            Though you’re thinking that
            You’re leaving there too soon,
            You’re leaving there too soon.

            Now you say you’re leavin’ home
            ‘Cause you want to be alone.
            Ain’t it funny how you feel
            When you’re findin’ out it’s real?

            Oh, to live on Sugar Mountain
            With the barkers and the colored balloons,
            You can’t be twenty on Sugar Mountain
            Though you’re thinking that
            You’re leaving there too soon,
            You’re leaving there too soon.

            Oh, to live on Sugar Mountain
            With the barkers and the colored balloons,
            You can’t be twenty on Sugar Mountain
            Though you’re thinking that
            You’re leaving there too soon,
            You’re leaving there too soon.

    • xabier says:

      In Tolkein, this is how the Elves (apart from those who were tempted by machines and scientific invention) tried to live: elegantly and aesthetically in a world turned into a pleasure garden.

      Wasn’t this – in a popularised form – what was promised to us by visionaries in the 1940’s and 50’s? Technology making man free to enjoy the fruits of the earth and cultured leisure?

      However, Reality caught up with Elves, and as for the promises of Modernity…….

      • Lizzy says:

        I read a brilliant book, Feral by George Monbiot about rewilding. I am not a hippy, but you know, sometimes… Anyway. All this talk about getting back to nature and de-complicating our lives: I read in Feral that during the “Indian” wars in North America, both the French and English governors wrote home to their countries’ leaders in complete disgust. They reported that children stolen from the Indians and those stolen by the Indians, later rescued, did everything they could to return to live with the savages. So, ten-year-old white kids abducted for a year or so, then retaken by their European families, did everything in their power to go back to their native American homes and families. Even with their ‘real’ mothers crying and begging them to stay. And those “poor little natives” who had been clothed and fed and had all the (then) mod cons available, fled back, even after years of the more civilised way of life.

        There were more examples of this sort of thing, feeling more alive and happier when exposed to mortal danger (chased by lions), and having to dig for your food.

        • xabier says:

          Lizzy

          In contrast there is the sad story, in Herodotus I think, about the barbarian chief who got to like the life of the Greek traders and settlers by the Black Sea, and when he went to ‘negotiate’ with them got dressed up in Greek clothes and minced about the town enjoying its luxuries, drinking wine and enjoying music and theatre.

          When his tribe got to hear about this, they killed him as a traitor!

          Maybe with the stolen children the old Jesuit saying applies: ‘Give me the child until he is 7 and he’ll be ours for life’?

        • dashui says:

          Thats because eating peyote with the Commanche was a lot more fun than listening to Jonathan Edward’s 6 hour sermons…

        • Interesting!

        • Christian says:

          Can see La Belle Verte movie, don’t know how it was translated into English.

        • InAlaska says:

          Yes, this story is true. I’ve read of many instances on the western frontier where “rescued” children ran away again to return to their Indian families. Some of those who were forced to remain with their original families committed suicide or were abandoned by their parents as too feral.

      • InAlaska says:

        xabier,

        Thank you. By referencing Tolkein you have again proven yourself to be an erudite man. If only we could go back and live in Middle Earth…I dreamed of it as a boy, and still do, sometimes.

        • xabier says:

          Thanks InAlaska

          Actually I must admit that I’ve never read a word of LOTR, only Tolkein’s letters explaining his books, which are fascinating – he was something of a philosopher as well as a spinner of tales. Elves, Goblins, Orcs and Men all represented to him aspects of the human spirit, in which he never lost faith.

          Middle Earth was it seems his version of the English shire he grew up in just before WW1, on the border with Wales.

          That is still quite a lovely part of the country, although parts of that area have, of course, been ruined by industrial and urban development since WW2, and worth a visit – above all Shropshire. Similarly, Cumbria in the north is unspoiled still, although the British governments seem to do everything they can to ruin the lives of the hill farmers there.

          Tolkein is a suitable patron saint for OFT-ers, as he hated the ugliness of industrialism and the will to power and domination which lies behind it, and always as a matter of principle rode a bicycle never learning to drive a car. And he was a brave man who came through the horrors of the trenches in WW1.

          • InAlaska says:

            xabier,

            You really should read him soon. I’ve been reading all his works since I was 9 (now I’m 50), and the LOTR trilogy is one of the literary works I will take with me when its time to go hide from what’s coming. Tolkien was quite ahead of his time in terms of environmentalism. For JRR, every tree was an object of veneration. The sad thing, is that our earth could have been, and should have been, middle-earth, magic and all…

    • Ellen Anderson says:

      18th Century may have been pre-oil but it was post usury. First comes the borrowing, then come the coal and oil. In fact, does anyone else think that the Renaissance was enabled by usury?

      • edpell says:

        I think just the opposite. The massive free time enjoyed in the middle ages was due to the lack of usury. Allowing simple people to do things like build massive public projects i.e. cathedrals.

        • Part of what building cathedrals (and pyramids, and the Great Wall of China) is “sop up” extra labor, so it didn’t go into building yet more intense agriculture, leading to yet more people. One analysis says that it was about the amount of excess labor that got sopped up, IIRC. Mario Giampietro quoted this in his book on Biofuels.

      • From what wonders debt works now for economies, I wouldn’t be surprised if increased debt underlay the Renaissance as well.

    • With respect to classical music, I am partial to Bach. It seems like every culture has its traditional form of music.

      • St. Roy says:

        Gail: For some unusual Bach you might enjoy, try Don Dorsey’s Bachbusters Album. The music is one of my favorite diversions from all the blogs I follow daily on TEOTWAWKI. Your last four posts have been especially good. I would summarize them as the “The Net Energy Rewind” or “The Great Kilocalorie Contraction”. Much of what you have explained in these posts are the ramifications.

    • p01 says:

      Sigh: http://www.oilcrash.com/articles/frog.htm
      This is your “aristocratic feudalism, refinement, good taste, good manners and high art” in real life, AKA meatspace.Your chances of joining the high art party at birth in that period? Less than 0.01%.

      Your post is exactly the reason why, if there are any humans left, they will worship the highest peak of civilization and make pinata bat-fests out of capitalist donkeys, worship democracy and/or capitalist gods and stand in dumb idolatry at the sight of a dusted functional Ipod.
      The ultimate irony is that those striking the pinatas will also long for the long lost golden age, which was only made possible by issuing debt ad-libitum by the very banks and bankers they will turn their bats upon, just as they are doing today.

      “are a million of us worth a single Mozart, a single afternoon spent in pure summer bliss?” Really? No, I mean REALLY?! I don’t get offended much about what people post on blogs or even in reply to my comments, but this is so smugly over the top deluded “I have a superior DNA than anyone else” that I cannot ignore it. Not even Kunstler goes this far.

      • Paul says:

        Thanks – that is one of the best things I have read in some time.

        It really gives a big picture perspective of what we are facing – we never really had a chance of ending up anywhere but where we are – it is sheer ignorance to think that any action we take now will make a difference. It’s like believing one can save the a person riddled with cancer, AIDS, TB, heart disease, with a major heroin drug addiction.

      • Calista says:

        I disagree. If there are any humans left they will discuss the magic of our technology they no longer have. However, beyond the fast transport and fast communication most of them will get on with enjoying their lives as they have a life. They will have watched too many people die to not cherish every last moment they have. As a thought experiment you should track down the children of the hippies and the children of the back to the landers. Most are old enough to have their own children now. Ask them how they are living their lives. Ask them if they too like the children of yore rescued from the “natives” would return to where they were brought up even if it meant poverty. I know all too many of them and more than I ever thought possible have moved back to the land or purchased their own land. They are your organic farmers. They have a very different political philosophy than you might expect.

        • InAlaska says:

          That was me. A child of back-to-the-landers hippy artists. I fought against that heritage through my late 20s, but now: My sister lives in Manhattan and I live on a subsistence farm in rural Alaska. So my family is batting .500.

          • Calista says:

            Indeed. That might explain your common sense attitude towards much of what is coming. Getting a handle on it and getting on with life depends upon understanding lots of moving parts to a very complex puzzle. Gail is kind enough to donate her thoughts and time to helping us look at a few pieces of the puzzle. I think she does an excellent job and offers me a way to help others discuss what needs discussing. It is a slow process but she has helped a great deal. For that and for the very thoughtful comments here I’m liking this spot better than Orlov, Archdruid or any of the straight up finance people.

            • Paul says:

              Agree – this is the best site with both the best articles + the best contributors. I do read Zero Hedge (more finance/politics) but the quality of the forum posts is brutal and generally not worth sifting through the rubbish for the few enlightened posts.

              Great work Gail!

      • Quitollis says:

        Dear P01,

        Your chances of joining the high art party at birth in that period? Less than 0.01%.

        And yet there were aristocratic, then feudal societies since classical times — Greece, Rome and for a thousand years after Rome in Europe. Western culture mainly developed in the context of aristocracy. Capitalism is just a brief period of environmental, human and cultural destruction and collapse. Communism was an even briefer, if similar industrial experiment. Figures aside, I do not see the force of your objection to feudalism. The survivors will have to live some how, whether it is feudal or hunter-gatherer and it will be for them to decide in accordance with their situation and their ideas. I do not make predictions about future civilizations but I would not think that they will attempt to address organisational questions by waving pinatas to capitalism.

        Your post is exactly the reason why, if there are any humans left, they will worship the highest peak of civilization

        The humans of the future will adapt and evolve in very different circumstances to us. It would seem perhaps maladaptive and therefore unlikely that they would totemically worship the brief financial industrialism that trashed our civilization and that left them with a depleted, toxic, trashed landscape. I would guess that they will try to learn some lessons from us about how not to do things and that they will not, for instance, try to produce and to consume as much as possible as some sort of measure of the good life or as some “sacred” mission to which they commit all of their efforts. Likely those who do not so learn will in any case die, like most of us. I guess that too would be natural selection.

        They will have to decide for themselves what is the “peak of civilization” but I hope and trust that a love of Nature, simplicity, music, art, philosophy and yes summer bliss will continue to nourish human souls and that it will help them to survive, prosper and to enjoy life. Perhaps people will have more time to enjoy the higher things in life once we have finished our attempt to destroy our civilization and the planet in the name of capitalism and mass consumerism.

        but this is so smugly over the top deluded “I have a superior DNA than anyone else”“”

        Lets try not to put imaginary words into the mouth of one another and lets try to keep it civil. 🙂

        Pax

  26. Paul says:

    I’ve seen a few comments about a debt jubilee — and that perhaps debt does not matter.

    Letting Lehman go could be considered a dry run for a debt jubilee – that was like Bernanke taking a peak behind the current and the vicious beast slashed half his face off. He quickly put the lock back on the curtain and meekly scampered off for some sutures.

    I think it is simply ludicrous to suggest that we’d come out the other end of a mega-Lehman event smelling like roses.

    Debt matters. More so in a complex globalized economy.

    • Quitollis says:

      By the way, usury, money lending for interest was always seen as fudamentally unjust and as a great moral evil and Christians were banned from practicing it (see the Summa Theologica). The Roman church and state gradually introduced theoretical distinctions to allow for money lending (see the texts of the ecumenical councils.) AB Welby still complains about the worst excesses.

      Usury capitalism has given us a good run for our money but ultimately it is the mechanism that has destroyed our civilization. Just saying.

      • Ellen Anderson says:

        This is so true and I am surprised more people aren’t saying it. When I get one of those cold calls trying to persuade me to get a credit card I always give them a good lecture on the evils of usury. Wonder why those cold calls are declining?

        • Christian says:

          As every social construction, debt has its goods and bads. Quillotlis is right, our society finally granted too much to finances: people understood finances were leading nature and resources exploitation and came to believe giving them more freedom and power would multiplie the output. It was not, nature has it’s own rules.

      • p01 says:

        Civilization is impossible without usury, sorry. Capitalism does not exist n real life, it’s just bubble-buzzword. Capital is always destroyed, and even the raging high priests of capitalism admit deflation is the natural order of things, without realizing the logical conclusion of this affirmation, because dogma is always more powerful than arithmetic.
        More precisely, usury is the very foundation of civilization. What is this foundation made of, you ask? It’s made by changing human food to something else, and putting it under lock and key.
        Now it’s true that producing food for profit from pure-debt money made the population graph is exponential on a logarithmic scale, which is quite a testament of the power of
        fooling each other with promises, but, admit it, it was fun while it lasted.
        If there are humans left, they will make such stories about this, as were never told about other bubble-times of the past.
        I’m sure they’ll use bubble-words such as we use today, and even have traditional 4-year celebrations were they invoke the gods of democracy, offer prayers to the gods of capitalism and other such customs.

        • Ellen Anderson says:

          I am pretty sure that islamic civilizations existed without usury.

          • They do have work-arounds, though. Wikipedia talks a little about them. For example,

            Applying interest was acceptable under some circumstances. Currencies that were based on guarantees by a government to honor the stated value (i.e. fiat currency) or based on other materials such as paper or base metals were allowed to have interest applied to them. When base metal currencies were first introduced in the Islamic world, the question of “paying a debt in a higher number of units of this fiat money being riba” was not relevant as the jurists only needed to be concerned with the real value of money (determined by weight only) rather than the numerical value. For example, it was acceptable for a loan of 1000 gold dinars to be paid back as 1050 dinars of equal aggregate weight (i.e., the value in terms of weight had to be same because all makes of coins did not carry exactly similar weight).

            • InAlaska says:

              And perhaps this is why the very earliest Christian writings taught that money was the root of all evil. First Epistle to Timothy in the New Testament (1 Timothy 6:10a, NIV): “For the love of money is a root of all kinds of evil.”

              So now, our civilization gets to taste the bitter fruit of 2000 years of money worship.

            • That is a good way of putting it.

              Also, humans can withstand more and more crowding; they just need more and more energy to do so. At some point, a limit is reached. Not enough energy to keep the crowding up. An elaboration on Daniel Quinn’s view.

            • Jan Steinman says:

              “the very earliest Christian writings taught that money was the root of all evil”

              Oft misconstrued, as you yourself note in the following paragraph: it is the love of money that is the root of all evil.

              Money itself is just a tool, which can be misused like any tool.

          • Christian says:

            Just a little usury in the most famous trading civilization of middle ages. A ten thousand kilometers trading line without capitalism, just moving things and keeping some. This is what hypothetical survivors of this miss could get. Would it be a 10 km line…

          • p01 says:

            It certainly did not exist without usury, because it could have not. It is a requirement.

            I’m sorry Ellen, but mathematically debts cannot ever be repaid and civilizations cannot exist without it, because, as Gail has often repeated, interest can never be issued, and such does not exist, only principal can be issued.
            This is an exponential function, so it must implode, mathematically.
            No debt can ever be repaid, ever, no matter the amount of interest charged. The lower the interest, the longer it lasts, and more damage it does when it collapses.
            Ask any 5-th grade student, and s/he will tell you debt is impossible to pay. Use apples as an example: Only Ann has the apple trees, and she lends apples with interest. Can anyone who borrow apples from Ann return the apples that only Ann can grow?
            Ask any high school student, and s/he will tell you so without the apple example, and s/he will be able to demonstrate the debt’s exponential nature as a bonus.
            However, ask a (under) graduate about this, and s/he will insist the impossible is possible, and offer empty words to back that up.

  27. VPK says:

    Another breakthrough coming in oil technology that will reduce exploratory costs by 90%!
    Maybe a FEW MORE years to go as we squeeze the well a bit more:
    http://oilprice.com/Energy/Energy-General/New-Spy-Technology-to-Spawn-Oil-Revolution.html

    Wouldn’t that be good news for us old timers, but not for the climate

    • Our problem is that we need improvements that could be made immediately (or sooner). Even new technologies are now too late. The American Petroleum Institute estimated a few years back that the average new innovation took 17 years before it was used widely. It takes a while to “get the bugs out,” train enough people to use the new technology, and all of the other details involved.

      • garand555 says:

        Our problem is that improvements needed are a cheap energy source that we can use to manufacture viable liquid fuels without using so much of our economic input that we cannot afford basic necessities. While it may be possible to adapt some of our knowledge towards this, I see nothing that would work for 7.2 billion people. However, if it came down to “do or die,” I suspect that all sorts of red tape would get cut, attitudes would change towards new technology, and 17 years would seem like an eternity. But that still doesn’t deal with 7.2 billion people, and it still doesn’t deal with all of the other problems for the environment that our civilization creates.

        • Jan Steinman says:

          “Our problem is that improvements needed are a cheap energy source that we can use to manufacture viable liquid fuels without using so much of our economic input that we cannot afford basic necessities.”

          The present exponential growth can not continue for the next millennium. By the year 2600 the world’s population would be standing shoulder to shoulder and the electricity consumption would make the Earth glow red hot. — Steven Hawking

          Given an infinite source of energy, population growth still produces an inescapable problem. The problem of the acquisition of energy is replaced by the problem of its dissipation. — Garrett Hardin

          We don’t need “cheap energy.” We need fewer people. And energy causes people, not the other way ’round!

          • garand555 says:

            And while I didn’t directly address that, I did allude to it:

            “But that still doesn’t deal with 7.2 billion people, and it still doesn’t deal with all of the other problems for the environment that our civilization creates.”

            And I will also state that we don’t need industrial civilization for humans to wreak havoc on the environment. With or without industrial civilization, there are just too many of us. The problem with this issue is the simple fact that bringing it up brings up images of things like eugenics and dystopian fiction such as Logan’s Run. If we want to have a sustainable future, industrialized with some new form of energy or not, we will have to get over these biases and realize that some form population control is necessary. Otherwise, the population control mechanism is going to be mother nature, and she is ruthless.

          • garand555 says:

            RE: “Energy causes people and not the other way around.”

            That got me to thinking about a lecture that I attended several years ago. I cannot remember the name of the woman who gave the talk, but she was a CS professor at UNM. She had been modeling biological systems, and one of the things that she stumbled upon was a relationship between energy usage and reproduction rates. Specifically, she found an inverse (and non-linear) relationship between energy consumption of animals and reproduction rates.

            IIRC, she was looking at something to do with size when she started on her trek down this road, but it is been long enough that I may not recall correctly. Nonetheless, when looking at an individual animal, size is generally proportional to that individual’s energy consumption. An elephant eats a lot more than an ant, for an extreme contrast. She was also very clear that this was based on population averages, and individuals within a population could vary widely from the average. However, she showed the data, and the conclusion was sound, IMO, that the more energy consumed on a per capita basis, the fewer offspring on average on a species wide level.

            She didn’t stop with wild animals. She also did a comparison among various human populations. I’m sure that you’d agree that Zimbabwe and Bangladesh have very different energy consumption rates on a per capita basis than the US and Europe. She found that the exact same relationship between per capita energy consumption and reproduction rates fit when comparing various human populations. Americans, consuming energy as though they were bigger than King Kong, on average, reproduce less than people in Bangladesh. In fact, if you get population growth data that is disaggregated to exclude immigration, you would find that places such as the US, much of Europe and Japan actually have declining populations sans immigration.

            We have thrown things further out of a natural balance by providing some of the benefits of high energy use populations to the lower energy use populations. Shipping food to starving populations is one example. Providing modern medical technology, and thus extending lifespans is another. I’m not making any sort of moral judgment on that either, I’m just trying to state what is.

            My point here is that energy consumption and population growth is a lot more complex than “energy causes people, not the other way ’round!” Energy *allows* more people, but it does not *cause* them. I cannot deny that with increased energy use came increased population, but there is more to the picture than just using energy to drive cars, produce food and refine metals. It is the role that energy has played in extending our lifespans and reducing infant mortality that we also need to turn an eye to. For the past 100-200 years, energy use has reduced our birth rates more slowly than it has decreased our death rates.

            But, again, I must stress that energy use and population is not as simple as more energy causing more people.

            • Paul says:

              Someone posted this the other day:

              Food availability and population growth

              The people of our culture take food so much for granted that they often have a hard time seeing that there is a necessary connection between the availability of food and population growth. For them, I’ve found it necessary to construct a small illustrative experiment with laboratory mice.

              Imagine if you will a cage with movable sides, so that it can be enlarged to any desired size. We begin by putting ten healthy mice of both sexes into the cage, along with plenty of food and water. In just a few days there will of course be twenty mice, and we accordingly increase the amount of food we’re putting in the cage. In a few weeks, as we steadily increase the amount of available food, there will be forty, then fifty, then sixty, and so on, until one day there is a hundred. And let’s say that we’ve decided to stop the growth of the colony at a hundred. I’m sure you realize that we don’t need to pass out little condoms or birth-control pills to achieve this effect. All we have to do is stop increasing the amount of food that goes into the cage. Every day we put in an amount that we know is sufficient to sustain a hundred mice and no more. This is the part that many find hard to believe, but, trust me, it’s the truth: The growth of the community stops dead. Not overnight, of course, but in very short order. Putting in an amount of food sufficient for one hundred mice, we will find — every single time that the population of the cage soon stabilizes at one hundred. Of course I don’t mean one hundred precisely. It will fluctuate between ninety and a hundred ten but never go much beyond those limits. On the average, day after day, year after year, decade after decade, the population inside the cage will be one hundred.

              Now if we should decide to have a population of two hundred mice instead of one hundred, we won’t have to add aphrodisiacs to their diets or play erotic mouse movies for them. We’ll just have to increase the amount of food we put in the cage. If we put in enough food for two hundred, we’ll soon have two hundred. If we put in enough for three hundred, we’ll soon have three hundred. If we put in enough for four hundred, we’ll soon have four hundred. If we put in enough for five hundred, we’ll soon have five hundred. This isn’t a guess, my friends. This isn’t a conjecture. This is a certainty.

              Of course, you understand that there’s nothing special about mice in this regard. The same will happen with crickets or trout or badgers or sparrows. But I fear that many people bridle at the idea that humans might be included in this list. Because as individuals we’re able to govern our reproductive capacities, they imagine our growth as a species should be unresponsive to the mere availability of food.

              Luckily for the point I’m trying to make here, I have considerable data showing that, as a species, we’re as responsive as any other to the availability of food — three million years of data, in fact. For all but the last ten thousand years of that period, the human species was a very minor member of the world ecosystem. Imagine it — three million years and the human race did not overrun the earth! There was some growth, of course, through simple migration from continent to continent, but this growth was proceeding at a glacial rate. It’s estimated that the human population at the beginning of the Neolithic was around ten million — ten million, if you can imagine that! After three million years!

              Then, very suddenly, things began to change. And the change was that the people of one culture, in one corner of the world, developed a peculiar form of agriculture that made food available to people in unprecedented quantities. Following this, in this corner of the world, the population doubled in a scant three thousand years. It doubled again, this time in only two thousand years. In an eye blink of time on the geologic scale, the human population jumped from ten million to fifty million probably eighty percent of them being practitioners of totalitarian agriculture: members of our culture, East and West.

              The water in the cauldron was getting warm, and signs of distress were beginning to appear.

              More http://www.oilcrash.com/articles/frog.htm

            • garand555 says:

              I suspect that there is some relationship between what the woman I was talking about found and food consumption. Like I say, we made up for lower birth rates by lower infant mortality and increased life spans, but with fossil fuels, we’ve added an extra dynamic to the picture.

              “But I fear that many people bridle at the idea that humans might be included in this list. Because as individuals we’re able to govern our reproductive capacities, they imagine our growth as a species should be unresponsive to the mere availability of food.”

              I suspect you’re right about that. People want to believe that we’re extra super special because we’re human. I also suspect that we’d behave the same way the rest of the animal kingdom does. Somebody on this blog mentioned the Edo period of Japan a few articles ago, so I looked into it. It seems as though they had sound agricultural practices, and once their food production quit growing, so did their population. They comfortably supported 25-30 million people for quite some time. They also had some aspects to their society that are generally associated with the excesses generated by industrial society. It wasn’t until Japan started to modernize that this changed. That tends to support that humans will act like animals under those circumstances.

              It seems that one way to achieve population control is by making it exceedingly costly to get food that is not grown locally in conjunction with intelligent resource management. That ties into what Mark Boslough thinks: It is exceedingly stupid to tax labor (income,) and we should instead be taxing waste.

              Unfortunately, IMO, we are already in a state of population overshoot even without worrying about oil running out and global warming.

            • Jan Steinman says:

              “when looking at an individual animal, size is generally proportional to that individual’s energy consumption. An elephant eats a lot more than an ant”

              No, it’s a second-order relationship, not proportional.

              While it’s true that elephants eat more than ants, if they ate proportionately more, they’d denude Africa and India in a matter of days!

              “a CS professor at UNM… found an inverse (and non-linear) relationship between energy consumption of animals and reproduction rates.”

              I’d like to see that replicated by an ecologist. My experience with CS people (well, “experts” in general) is that they tend to think they know a lot about other fields, simply because they know how to manipulate abstract information.

              But sure, I agree that it is somewhat more nuanced in the case of individual populations, but in the aggregate, you can’t argue that increasing availability of energy has not correlated with more human biomass!

              Part of this is that, as you’ve pointed out, the death rate has decreased faster than births have decreased. That’s still energy causing more human biomass, no?

              So I’m not necessarily conflating energy with birth rate, just with the sheer number of people. Sorry that wasn’t more clear.

              In particular, the WORLD3 models used in Limits To Growth show birth rates actually increasing as resources (energy) and total population decline.

              Traditionally, reproduction was both a slave labour force and an old-age pension. If you replace those with fossil sunlight, it makes sense that birth rate would decline, even as overall population increased.

              So somewhat paradoxically, if the decline of fossil sunlight means we don’t have 200 energy slaves following us around — nor the failure of pension funds, due to reversal of economic growth — we may find the age-old reasons for reproduction re-asserting themselves, even as overall population declines.

            • garand555 says:

              “I’d like to see that replicated by an ecologist. My experience with CS people (well, “experts” in general) is that they tend to think they know a lot about other fields, simply because they know how to manipulate abstract information.”

              That would be poisoning the well. It was interdisciplinary research that included not only CS people, but physicists, biologists, etc… She happened to be the one presenting it. I tracked her down. Her name is Melanie Moses, and here is a paper in Ecology Letters, which while is not hers per se, she is listed as having corresponded on:

              http://cs.unm.edu/%7Emelaniem/pdfs/MosesBrownEcolLet2003.pdf

              (I haven’t read the entire paper yet.)

              The fact that it was interdisciplinary research gets into Tainter’s ideas about why technological innovation won’t stop us from suffering a complexity collapse, but that’s another topic.

              “In particular, the WORLD3 models used in Limits To Growth show birth rates actually increasing as resources (energy) and total population decline.”

              Which is 100% consistent with the research that she presented. Part of my point was that population growth and energy consumption are more complex than it looks on the surface. We see the increase in population corresponding with the increase in energy, and rightfully so, but the relation is more subtle than a simple linear more energy = more people.

              The next question is, now that this relationship that has been observed, under what conditions does it hold true? For example, if we found an alternative to oil, but there were only 250,000,000 on the planet, would other factors, such as a greater per capita availability of food, or a simple greater availability of space override this relationship? What about going the full imaginative extreme and thinking about if we wound up with energy sources ala Star Trek? We’ll likely never know the answers, but it is fun to ponder, and it is also worth noting that if the relationship holds true even in some of the more extreme scenarios, it would be possible to have a stable population at much less than 7 billion if energy use were high enough. Or low enough to bring death rates up. I would say “take your pick,” but that choice may be made for us.

          • Tom Murphy makes some of those same points on his blog.

  28. Stilgar Wilcox says:

    I think you are probably correct Ikonoclast, the collapse will be in fits and starts with varying degrees dependent on locale. I’m also of a mind there may be step down that will be a sizable shark fin drop that gets caught by a concerted response. The problem ultimately is the extent of complexity coupled with 7.2 billion people. What goes up must come down.

    • Stilgar Wilcox says:

      Sorry, this got posted in the wrong location, so I reposted it higher up the thread.

    • InAlaska says:

      I really don’t see how collapse can happen in “fits and starts”. Either we are interconnected or we are not. In the case of our global civilization, everybody needs everybody else to make the system work. Globalization was the death knell of civilization and we won’t know it until its upon us. Contagion in one part of the globe will spread rapidly to all parts. Or as Billy Joel once wrote, “and we’ll all go down together…!”

  29. Christian says:

    Gail, you do great things.

    A friend worked all his life on steel design. Meanwhile, he built up a good collection of knifes, both of his invention and others. It was mainly composed of survival knives, and the group’s jewel was an impressive piece of steel holding thirty features, tools and weapons alike. The handle housed a fishing set, needles and so on; and in case all this was to be proven insufficient, a cyanide pill was packed at the end of the slot. I wonder where that knife happens to be right now, it would be good to have such a magic pill at reach.

    Remember Soylent Green movie? In real life Soylent has become the trade mark for a “food substitute”, and raised some millions last year heading industrial scale. In their site, they ask “What if you never had to worry about food again?” Rosa Labs, the company owning the brand, said the first shipment of US based orders would occur this month.

    Site: https://campaign.soylent.me/soylent-free-your-body

    • Jeremy890 says:

      And to think I’ve been living solely on Eggos all these years!
      Great idea and having a supply of Soylent might come in handy, but to depend on the post office supply chain?
      Oh, In Florida there was an article about alternatives to a cyanide pill. Appears the latest fad is buying a clear plastic head hood and going to one of the chain stores and buying a small container of helium. Anyway, why worry? I am amazed at the lack of concern of fellow co workers, especially the young. Better let me be free of anxiety and stress and enjoy the few youthful free years. Like Gail stated, everything is baked in the cake and we are waiting for it to come out of the oven.

    • That is pretty bizarre with respect to naming a food substitute “Soylent.”

      And I appreciate your compliment.

  30. Ikonoclast says:

    I am in two minds about David Korowicz’s paper “Trade-Off” which I have read through once. I understand his points and I agree that systemic global collapse is a certainty given the inter-connectedness of the system. However, I am not sure if I see the collapse operating with one smooth “shark fin” curve on the way down to zero where zero means no civilization. “No civilization” literally means no cities, just hunter-gatherers and maybe some subsistence settlements at stone age level. We might well get there but not via one single plummeting “shark fin” curve from summit to zero.

    I think an alternative possibility is a collapse with punctuated equilibria. My proposition is that when a system like the global economic system collapses or reduces complexity it will proceed in reverse order to the build up. Furthermore, whilst the build-up was smooth, more or less, the collapse will be composed of sudden, very nasty drops and then periods of relative equilibria where a modified system functions passably well, more or less, for a brief time historically speaking.

    Collapse will reverse the order of development of complexity. As globalisation was the final, highest stage of complexity, it will be the first level to collapse. Korowicz’s model seems to propose that collapse from that point will be a “shark fin” curve collapse. That is, no lower level of complexity will survive, even briefly, the collapse of higher level complexity. There is I admit considerable force to his argument here. Even at one’s local level, one depends on a supermarket using a JIT (Just in Time) inventory system to draw goods from distant points; points which are often overseas. Transport fuel from oil is a vital part of that system. Thus it seems feasible that a world-wide fuel shortage leads to a cascading collapse in all kinds systems at all levels.

    This cascading collapse theory of Korowicz’s seems to imply that there is no adaptive resilience in our entire social, governmental and economic system or that it will be totally overwhelmed. It seems to imply that once collapse starts there will be no effective adaptive reactions at all and that no secondary or ancillary systems or methods can be commenced or pursued to halt (even for a while) the collapse. While positing total interconnectedness he is also positing zero effective reactivity and adaptiveness. If complex human systems were that un-reactive and un-adaptive, one might think they would immediately collapse in any conditions of total war.

    On the other hand (I am arguing Korowicz’s case here), our historical position is unique now. At the time of the last total war (WW 2), the world was a long way from resource exhaustion and limits to growth. We could afford, as it were, to destroy a lot of capital goods and people because much more and many more of both could be re-generated from a still large bank of natural capital; forests, fisheries, wells, mines etc. The Americas and Australasia remained largely productive and undevastated by war and could produce for the allies. American men, materiel and resources kept Britain and Russia in the war (Lend Lease, Atlantic and Murmansk convoys and so on). Now, we can afford no great losses because they can never be made up again. Thus Korowicz’s total systemic collapse thesis does carry considerable weight.

    Nevertheless, I see global collapse initially carrying with it “only” those countries which are not still substantially self-sufficient. Phase one, which has already commenced, is a differential resource shortage. Resources are tight (like peaked conventional oil) but the “big gorillas” (Russia, China and USA) are still getting enough or almost enough. The “little yapping allies” like Australia and UK ride on the coat-tails of a big Gorilla (US in their case) and so get enough for the time being. Medium, small, backward and peripheral countries without enough allies or on empire fault lines start to experience problems; Tunisia, Syria, Egypt, Yemen, Syria, Iraq, Afghanistan, Ukraine, Venzuela and so on. This is phase one.

    Phase two will see global trade in key commodities collapse, especially and first in oil and food. More nations will fall into the “export land” category as Egypt has for example. They will use all domestic oil and gas and food and have none to spare for export. Of the big gorillas, Russia will be self-sufficient in oil for quite a while yet, China will buy as much oil as it can (from those who are still trading like Russia and Saudi Arabia) and the US will survive on a mix of US, Canadian, Meso-American, South American and Saudi oil. Countries like Japan and Sth Korea will struggle to secure oil in phase 2. The EU likewise will struggle, though Germany may well do deals with Russia for oil.

    With the collapse of globalism, regionalism will take hold with regional hegemons controlling matters. The US will continue to dominate the Americas and two oceans (Atlantic and Pacific). Russia will become the central Asian-European hegemon excepting China. Australasia will likely find a way to survive as a US ally in the Western South Pacific. Australasia holds the southern flank of the western Pacific just as China and Japan hold and contest the northern flank. It will eventually be in the USA’s interests to blockade sea routes to China and limit its access to oil (to keep remaining Arabian oil for itself. Russia may well judge the weakening of China as being in its interests too and limit its oil exports to China. China will collapse without access to resources from the rest of the world as China is in severe ecological and resource consumption overshoot.

    Russia, USA, Brazil and Australia have enough resources or access to enough resources to decline in a managed way IF they apply the right policies and build workable regional systems. The rest of the world will collapse very badly at this point (phase 2) there is little doubt about that. Eventually, Russia, USA, Brazil and Australia may well collapse totally too (phase 3). Each phase could last 10 to 20 years or maybe as little as 5 to 10 years from now. I suspect the shorter time spans are more likely.

    Punctuated equilibria for Russia, USA, Brazil and Australia will mean collapse via a series of new, semi-permanent stable system states, each state lasting as little as 5 to 10 years. Then there will be another crash to a lower state. In each semi-permanent stable state, the politicans and citizens will claim or believe that the national crisis is over and things will continue OK or even get better again. Then, another crisis will hit and batter people (and populations) down to a lower level again.
    The end-point is difficult to predict.

    • Stilgar Wilcox says:

      I think you are probably correct Ikonoclast, the collapse will be in fits and starts with varying degrees dependent on locale. I’m also of a mind there may be step down that will be a sizable shark fin drop that gets caught by a concerted response. The problem ultimately is the extent of complexity coupled with 7.2 billion people. What goes up must come down.

      • CTG says:

        Hi to all and many thanks to Gail, Jan, Ikonoclast, Paul, et al for the information posts. This is probably one of the best forums without any “uninformed comments”. I have followed the peak resources forums since 2004 but I did not participate in any discussions until now as I believe there are many points that I can contribute. I work in a semiconductor factory in South East Asia and I can give you some points from the perspective of an engineer working in a factory.

        In the financial crisis of 2008 (post Lehman), our factory was nearly shutdown for the very simple fact that we cannot get our spare parts and supplies. The reason – letter of credits are not acceptable as banks do not trust each other. In our factory, if we miss any process steps, the product will not function and there are hundreds of steps in it (high complexity). The spares for the high tech machines comes from every part of the world – China, USA, France, Japan, Korea, etc. So, when any of the parts were out of order (which is quite frequent due to the complexity of the machine) and we cannot get it, it was bad news for the factory.

        It was because of the Central Bank printing (Fed, BOJ, etc) that managed to instill the trust back and credit was given again and commerce flowed again. Now, I am not too sure if this will work again as Central Banks have been printing like crazy. Basically, a lot of manufacturing, be it simple ones like making shirts (I have seen a few high tech laser cutter in that factory), toothbrush, paper to the high tech ones like semiconductors and cars is highly complex and a single problem will bring the entire production line down.

        There are points that I would like to bring out for discussion, especially when it comes to “catabolic collapse” (small step wise collapse) which I feel will not happen

        1. Supply chain and JIT. Our factory is a prime example where a simple part shortage will bring the entire factory down. In the 1940s, 1950s, you can still buy a “Made in Australia” t-shirt or a “Made in UK” toothbrush. Everything is localized. So, even if UK or Japan disappears, the people of 1940s may not be even aware of and it does not matter as life goes on. Now, not a country, be it developing like Thailand or UK/Germany can survive alone. Close the borders and see what happens. Globalization has painted human civilization to the corner and there is no resilience. Do you still produce your own toothpaste, wires, transistors, dresses, fertilizers, paper or any mundane and simple stuff?

        2. Skills – We are too specialized. As an example, our machines are designed by a company but the expertise is scatter everywhere. Motors are designed in Japan, robot in Germany and assembled in China. If you have a problem with the robot, the Japanese guy will help you (via conference call to Japan). Scaling up, I would say that after a collapse, all equipment, be it wind turbines, solar cells, hydroelectric generators, water turbines, etc would be useless. because no one knows how to repair or even operate it. It requires special skills. If there is a die off and the only person in town pass is not available, then all is lost. In my factory, I don’t even know how to operate other department’s machine due to the complexity of the machines and process. There is no way you are going to call up GE Japan for the spoil water turbine in the hydroelectric bank. Even if you can them up, you don’t even know how to start or repair it.

        3. Complex supply chain – I would pin point globalization as one of the greatest “hidden threat” to civilization. Our machine requires parts that is made in Japan and in that plan in Japan, they use machines that is designed in Singapore and parts sourced from Canada, etc. Everything is interlocked and a cog out of this massive supply chain wheel will ensure that everything is down. In a post collapse world, you may have a shoe factory in town but do they have the raw materials like rubber? How about the machine parts? Can they get the spares from the suppliers who are also in need of spares for their machines? This is a never ending chain and if one part is not available, the whole chain collapses. Even if Russia has lots of natural resources, do they have the skills (if many engineers, geologists and other skilled people died off) and the machine/tools to extract the resources? We don’t even need to look at complex industries like petrochemical or pharmaceuticals. Just look at making nails, cloth, paper, hand tools. Do we have the expertise, materials, skills, knowledge and machines to produce them. In developed countries, all these are exported to China, Vietnam, Thailand, etc and probably none available locally (or for that matter in the country).

        For developing countries, they too are dependent on other countries. Due to mass production, simple items like plates, toothbrushes are produced by high-speed, high volume machines and when the parts spoil (which can be frequent), then all will be lost as no one knows how to make a toothbrush without using machines.

        4. Speed of information dissemination – in 1900, during the Tunguska comet crash, no one knows and everyone carried on with their lives. Now, with internet, a bank problem in India or the Crimean war (looks like potentially may set off WWIII) may cause the whole world to crash financially. Information spreads too fast for humans to comprehend. People may take drastic actions due to this extremely fast “speed of information spread”. Our brains are still wired for hunter-gatherers’ lifestyle.

        4. Interconnectedness – this is also a killer. Imagine if there is a large asteroid crashing to earth in 1 month’s time and it was leaked out. People would stop working as they want to spend the last days with their loved ones. The truck driver stops, the bank teller stops, the cashier at the supermarket just took unpaid leave, the engineer at the power plant stops working. Guess what – the whole society collapse in 3 days – no food (no supermarket), no water, no money, no electricity, no public transport, etc. The same does for “deadly virus” attack – no one wants to get infected and stays at home. Before long, all will be dead due to starvation. This will not happen in 1900 as “information dissemination is slow'”, products/food are locally sourced/made (no globalization), mass public transport (cars, planes, etc) is not very good and interconnectedness is low. Some are may collapse faster and some are not.

        5. Electricity/internet – everything requires electricity. If it is out, then everything is out. Fuel pumps, water pumps, refineries, supermarkets, banks require electricity to operate. In 1960s, we still have banks that use paper and pen and it takes days to get the cheques cleared. Now, we depend on electricity to operate ATMs and internet to have instantaneous money transfer halfway across the world. If there is a Carrington event or EMP attack and the transformers or electricity production facilities are damaged, then we are in deep depp trouble. The “speed of information dissemination”, “interconnectedness”, “specilaized skills”, supply chains, JITs, globalization will work together to ensure that die-offs will be fast.

        We are too globalized and interconnected. We need others and just a small cog out of the wheel will cause disaster. We are not as resilient as we were in the 1950s. I would say that if collapse happen in 1950s, then we will have uneven collapse where some areas will collapse and some areas not. Now, every part of the world, be it is small village in India (their farmers depends on the local grocery stores for some of the food and fertilizers, their motorcycles requires oil and parts from China or Japan) or a large city like London, we need a complete chain of supports for out daily lives and if any parts are taken away, it will fall apart rapidly.

        2008 Lehman Brothers’ collapse was a wakeup call but unfortunately, no one took heed. The printing goes on and yes, it buys us another day. I am grateful to be alive every day and treat every day with joy and live life the fullest. I had many different opinions and outlook for diminishing resources until today where I feel – are we alone in the universe? If alien lifeforms follows out style (greed, short-termism), then it is unlikely that we have an advanced alien life form in the universe. Indeed intelligence is a lethal mutation.

        • Steve Rodriguez says:

          I hold hope (cannot we exist without it?) that our intelligence lags our full potential. We have much to learn from collapse. And yes, I suspect you are right, the bottom will drop out on globalism. But that does not equate with a complete loss of knowledge or failure to adapt in all regions. The size and location of these regions is what we hope to know. But where this potential to grow and learn persists within those regions will be randomized and difficult to predict. The value of individuals will increase as the value of the network, even if temporary, decreases.

        • Thanks for your “boots on the ground” post. You can give kinds of real life examples that it is hard for David Korowicz and others writing about the interconnectedness of our society to tell about. I am afraid you are right. As an engineer, you see things as they really are.

          Nearly everything we have is so complex, and requires so many inputs from elsewhere that without a very interconnected world, we would lose essentially all fuels, all electricity, and all manufactured goods in not very long. Even recycling would likely be beyond us, because it usually requires heat and transport. We certainly couldn’t repair a modern wind turbine or a failing inverter for a Solar PV system. The question is how much people can do without much in the way of inputs–Can people use what they still have that is working (shovel, wheel barrow, seeds) to grow some food? How about finding and boiling water? Can they supplement what they grow with wild food? It looks like a challenge, most everywhere.

          • Paul says:

            Those are logical conclusions.

            In terms of preparing for what is coming I think Jan mentioned stocking up on tools and other things that we take for granted.

            I am trying to put myself in that mindset and imagine what I might need when the shops are empty. And I am buying multiples of everything – saws, hammers, chisels, shovels, picks, axes, pots, pans, large water containers, tarps, loads of books, extra canned foods, jars, etc…

            I still think it is useful to have some physical gold – it may prove useless but perhaps not – certainly more useful than owning stocks or bonds… which are definitely going to be worthless (but can be used as wall or toilet paper in a pinch)

          • CTG says:

            Gail, I fully agreed with you on the fact that “debt” will be critical. Without any credits, suppliers will not supply anything and the supply chain will be broken as what I have experienced in 2008.

            As engineers, we can be resourceful and improvise but there are many things we cannot do as it is way too complicated and at times “proprietary” and you have no idea how it works. Gone were the days when people can just open up something and reverse engineer. It is far too complicated now.

        • xabier says:

          CTG

          Your experiences and examples from industry show that Korowicz is far from being an alarmist.

          Not only has globalisation reached a pitch of dangerous fragility, but most developed regions are now unable to manufacture even the most basic goods, let alone the whole of more complex machinery and devices.

          This is a key feature distinguishing this epoch from any other that has gone before. When Rome collapsed, most basic items could still be made – not in the old slave factories but by rural people themselves, smiths, tanners and woodworkers. Urban centres decayed or vanished at different times in various locations, the arts mostly disappeared and communications were disrupted, but the solid base of an agrarian civilisation endured.

          The hollowing-out of manufacturing capacity which has taken place post-WW2, and in fact mostly over the last few decades with transfers of production to developing Asia and the poor regions of Eastern Europe is something that the proponents of industrial civilisation in the 19th century would never have envisaged. Nor would the ruling elites have permitted it, given the intense armed rivalry of national states each requiring its own industrial independence to survive.

          • CTG says:

            Xabier, enjoyed all your posts and comments. It is almost possible to share this kind of information with others. Even my wife finds that I am “pessimistic” and things will work out well. We are just too dependent on others for our lives and the dependency can stretch across the other side of the globe….

            • Interguru says:

              I was just talking to a friend who is quite up on all the issues we are talking about, but he feels that the world financial confidence game ( in both senses of the word ) can go on forever.

            • xabier says:

              CTG

              If people in general really understood what was going on in that 2007 -2008 period they would be pessimists too, I dare say. So effective and prompt was the action taken to ensure that credit lines remained open and goods continued to move internationally, that, ironically, the crisis itself passed almost unnoticed by the general public – only the side effects (not wishing to minimise them!) have registered: loss of employment, destruction of savings, etc.

              Maybe it is the case, too, that some matters are so fundamental they can’t readily be discussed: difficult to raise and too worrying to contemplate. And we are now most of us removed from the realities of production in a way inconceivable before, except to the very highest elites: how do you take note of the fact that an industry has vanished from your country, or couldn’t function without the global supply chain if you are not actually in it?

    • Paul says:

      I see your point however what I always get stuck on when I find myself being optimistic is the food issue.

      How do you feed 7.2 billion people when you do not have cheap oil and gas (or perhaps any oil and gas because exploration and extraction stops because nobody can afford to buy and there is no capital to invest) to continue to industrial farm?

      Combine that with total chaos as the global financial system and supply chains crash — and I can see how Korowicz is likely to be correct that we go off a cliff rather than tumble down a hill — hit a flat spot – then tumble again.

      It would be nice to be wrong.

      • Ikonoclast says:

        Well, I am still saying 4/5 ths will go off the cliff. The remaining 1/5th might last a while declining all the while, up to 50 years for the luckiest. That hardly makes me an optimist.

        As I say, I believe Russians, Nth Americans, Brazilians and Australians can hang on for some time. That is due to the remaining distribution of resources coupled with not too high populations in those zones relative to those zones’ resources. It also takes into account military power. Remember, collapsing slowest in a collapsing world makes you relatively more powerful as time goes on. Russia and USA will become relatively more powerful simply by having the capability to collapse slower.

        Russia will enough resources for itself for another 50 years at least. USA will need considerable resource help from Canada, Brazil and Australia to do the same. There will be alliance benefits for these nations in standing by the USA.

        I don’t believe the whole world will go in the first collapse. That’s like believing all humans will die in a single great epidemic. That is never the case. There are always resistant pockets of population. With civilization, the resistant pockets will be the currently strongest with the greatest reserves; large regions still well resourced internally across the spectrum of all major resources, thus capable of regional autarky, for a time.

        At the same time there might be a kind of bifurcation in survival. The resource rich regions which are not too over-populated will survive with some civilization intact. But people is some very poor areas of the world may survive too where there are basic resources. For example, some survival of the poorest will likely occur in tropical Africa by going back to a jungle tribal existence. Or in Java by going back to 19th C techniques. However, the poor in ruined countries like say Syria or Haiti have no hope. In Haiti, their half of the whole island is so denuded and eroded you see the spot difference between it and the Dominican Republic in satellite photos and see exactly where the border is from space.

        • Paul says:

          There is also the issue of the thousands of hot nuclear ponds around the world that need cooling… I have read that if the pools in Fukushima along overheated and exploded that would have 100x the impact of Chernobyl…

          One would hope that the ‘Plan B’ involves somehow prioritizing the maintenance of the nuclear swimming pools….

    • One way I see the downslope as different from you is that I see the collapse of central governments occurring after not too many years, because it will be too difficult to cut back benefits and costs of the current system sufficiently. Thus we can’t talk about the US, and Russia, or perhaps even China. Instead, there will be many smaller units, with varying kinds of local warlords or other inexpensive governance. Different countries may have financial systems, but they won’t necessarily be interchangeable. After several years, electricity and oil won’t generally be available. The question is what types of agriculture and water delivery systems can up developed and maintained under such conditions? We won’t have enough draft animals or acreage for draft animals, among other problems.

      Other details may include nuclear power plants that have stopped operating but have lots of spent fuel in ponds that are not being tended. And local fighting over resources that seem to be available.

      I have a hard time seeing these kinds of conditions supporting a world population of 1 billion. But will population drop all the way down? It is hard to know. There may various groups that succeed in local areas, using different models, depending on the particular area.

      • John Drake says:

        At page 11 of his 2005 “Long Emergency” JHK indicates that a potential Plan B might involve the deployment of “designer” viruses against “superflous masses” after having inoculated an elite of select survivors.

        That “methodology” might allow a rapid and relatively controlled planetary population drop to a level where a high tech civilization would be sustainable for a relatively long period of time using the remaining positive EROEI fossil fuel reserves. It would also allow the survival of a high tech elite capable of taking care of the currently existing +400 nuclear fission power plants and +1000 cooling ponds for highly radioactive spent fuel.

        The objective would essentially be to enable high tech human civilization to survive until aneutronic controlled thermonuclear fusion is achieved and able to take over from fossil fuels to power electricity generation and transportation. A longer term objective would be to identify one or more virgin “other Earths” circling around nearby stars (the Kepler satellite or a more sophisticated military version has probably already done that) and finding a way to rapidly send exploratory crews followed in short order by colonists. The physics of faster than light space travel is also being currently looked into in some discrete “black labs”.

        Of course, there is always the possibility that the implementation of the above mentioned experimental population reduction biotechnology might backfire and result in the creation of a global zombieland…

        • Jan Steinman says:

          “survival of a high tech elite”

          Yea, but who would clean the toilets? Who would sew the cheap clothing? Who would grow the food?

          It’s typical of elitists to dismiss the value of the vast pyramid of humanity, upon the apex of which they sit.

          Every such person should be require to read Yertle the Turtle.

        • Ann says:

          Yes, this idea has been explored in Oryx & Crake, by Margaret Atwood. Worth reading.

        • This line of thought is getting into the over-the-top area. I expect there is a real possibility of any kind of bacteria morphing in an unintended way, and making the situation come out much worse than planned.

          Getting an economy “restart” with a much smaller population would seem pretty difficult. The population would be widely scattered, but the number of roads and electrical transmission lines wouldn’t go down proportionately (or at all). Oil pipeless would remain as long as in the past, and would need repair because most were installed years ago. (In fact, all of these things would need repair.) We would need to ramp up debt again, to get the system going well enough to extract what would now be considered sufficiently high EROEI reserves. It would be hard to get the economy to “grow” because so much would be needed for maintenance (assuming other hurdles could be overcome).

          • Christian says:

            Have to selectively immunize a precise amount of people according to each profession, task or job, not to be missing something important the day after. It’s to save a sample of general population and all TPTB. People as me and Gail, who are doing nothing upon capitalist standards, would be among the casualties, of course. After this, and to help people forgetting their pain for relatives lost and such, babies, growth and consumption are decreed untrammeled. The system continues for a couple of extra decades and then another population crash. In time, they would abandon some areas, countries and finally entire continents. This until TPTB must finally clean their toilet.

          • John Drake says:

            The implementation of a Plan B à la JHK would of course require some detailed preparatory thinking and most likely a new “war type” of leadership and economy…

            In order to be able to maintain a functioning coherent society, most presently occupied cities and large parts of the planet would need to be deserted so that you can concentrate the remaining resources in some well selected areas. Of course, you would need to have a full spectrum of skills assembled and in particular sufficient specialized resouces to safely take care of the current +400 nuclear fission plants and +1000 cooling ponds for highly radioactive spent fuel rods to avoid blowups and widespread radioactive planetary contamination.

            After “D Day” only clearly defined previously identified strategic planetary assets would need to be maintained (for example key oil fields, mines, pipelines, ports, roads and airports). Outside specifically designated living, producing and agriculture areas, the natural forces of Gaia would be free again to slowly make a grab back.

            All the available remaining human, technical and energy resources would then be focussed on developing a high EROEI energy source to substitute for the remaining but now more slowly declining fossil fuel reserves. Hopefully, controlled aneutroninc thermonuclear fusion reactors would be developed before the remaining high enough EROEI fossil fuel reserves are exhausted.

            Once this objective had been achieved, human population would be allowed to once again expand. But relatively rapidly, on a historical scale, the fundamental limits to growth
            issue would confront human civilization if it limits itself to Earth based resouces.

            Hence, the need to eventually spread human civilization to the resource rich “oher Earths” circling around other stars throughout the known Universe.

            As strategic Earth based resources irremediably vanish, the objective of finding a way to colonize “other Earths” will become more pressing. This issue is already being considered in discrete groups and methodologies to reach the new “high frontier” are currently being looked into.

            Humans are Gaia’s children. She would be most pround to see her childs one day freely walking among the stars

            • Paul says:

              I don’t see this happening

            • You may think all of these things can happen for high EROEI energy sources, but it really depends on how long we can keep the financial system and other critical parts of today’s economic system working. If we can’t keep things working together, it doesn’t matter how high the EROEI is. EROEI is simply a measure of how things work today. I think of them as being similar to taking measurements of today’s sofas and chairs. If you have to move, and can’t take today’s sofas and chairs with you, then today’s measurements don’t really matter.

              I have been saying that they only things that continue to work after a crash have very short supply chains–for example, cutting down a tree for fuel with an ax. EROEI doesn’t measure length of supply chain.

              I don’t think we are going to have to worry about populating other earths. Instead, we will need to worry about walking to the nearest stream for water.

  31. Paul says:

    Another idiotic story (top headline of course) on alternative energy…. and we wonder why most are nonchalant about the end of cheap oil…

    Is pee-power really possible?

    Could the answer to future electricity demand be right under our noses? Jonathan Kalan looks at the new research behind urine-generated power.

    http://www.bbc.com/future/story/20140312-is-pee-power-really-possible

    • There doesn’t seem to be much real understanding of what we need, in terms of (1) liquid fuel that operates today’s equipment, (2) timing, (3) price, and (4) quantity. If you take the simple view of, “It’s all good,” then everything blurs together.

      • Paul says:

        Pee is good for compost – perhaps the BBC might do a story on that – it is at least useful knowledge 🙂

  32. Stilgar Wilcox says:

    Gail, you wrote: “Slowing growth in China is likely to mean that world economic growth is slowing. This will add to stresses, making failure of the system more likely than it otherwise would be. We can cross our fingers and hope that Janet Yellen and other central bankers can figure out yet other ways to keep the system together for a while longer.”

    Along with the rest of this latest article/post, it sounds like a cliff’s edge is eminently close. Not sure how to read it any other way. However QE is still being pushed at 65b (or is it 55b now?) a month with another Fed meeting in a few days to determine if tapering should continue by 10b increments. I keep thinking some kind of stock market correction or other negatively changing financial data will take place to dissuade Yellen from continuing to taper before getting to zero. But even if they decide to continue QE, like you write in so many words, QE can only hold interest rates low for so long.

    • Paul says:

      What I wonder is if the Fed is not secretly supporting the stock market with outright purchases of equities.

      During past iterations of QE whenever it was scheduled to end the stock market immediately started to tank – and of course new rounds of QE were announced soothing the markets.

      Not this time – they have tapered and the markets keep hitting new highs.

      Strange.

      There is precedent for this – in 1998 during the Asian Financial Crisis Hong Kong’s bow-tie Donald Tsang engaged in outright government purchasing of stocks in a successful attempt to prevent HK from joining Indonesia and Thailand in the gutter.

      That was not done in secret though – as Jean Claude Juncker famously said a couple years ago “when it gets bad enough – you have to lie”

      I’d take that a step further – you lie and you do absolutely anything that delays the collapse.

      • Stilgar Wilcox says:

        Interesting observations Paul. I have been perplexed by the buoyancy of the stock market in spite of initial tapering, so you may have something there. Of course the question then becomes where did the money come from to buy stocks and how long can they keep it up? I also wonder if the dollar has remained as strong as it has in spite of so much QE, by manipulating the price of gold. There are rumors of manipulation by central banks and if they are willing to pump the stock market while tapering, I suppose any strategy has credibility in these desperate times of peak plateau.

        • Interguru says:

          “I have been perplexed by the buoyancy of the stock market “.

          QE is producing tons of unemployed money with nothing to do except to inflate asset bubbles. The stock market is just one of the many bubbles happening. The art market, New York and London real estate are others.

          • Paul says:

            The big banks are able to access massive amounts of money from the Fed at Zirp – we are told they are parking it back at the Treasury and make a bit of interest — how far fetched would this conversation be:

            Bernanke: Hey Jamie, Lloyd etc… we are going to give you guys a lot of free money hot off the printing press

            Jamie/Lloyd etc – yippee – we love free money!!!

            Bernanke – but one condition – I want to you to use that cash to ramp the stock market – no matter what happens you buy that market – I want to see record highs on a regular basis

            Jamie/Lloyd etc – yippee – can we pay ourselves big bonuses and eat truckloads of caviar and drink kegs of the best champagne????

            Bernanke – yes – of course – you can also hire $1000 call girls and purchase sacks of the finest colombian blow. One other condition – I get to come to all the parties and I get first choice on the call girls

            Jamie/Lloyd – yippee — um hang — what happens if the market crashes —- we could lose everything!!!

            Bernanke – now that’s a stupid question fellas – you know I’ve got your back — I’ll simply screw the pensioners and savers — and the taxpayers — and you’ll get bailed out again.

            Jamie/Lloyd – yipppee – this is so totally awesome — we truly are masters of the universe – we are just so &^^%% smart — congratulations Lloyd – no – congratulations to you Jamie — no to you Lloyd – you are the smartest man in the room —- no, no – you are Jamie — nooooo everyone says you are Lloyd —- ya I know but really we both know you are Jamie….

            And the moral of the story is DON’T FIGHT THE FED!

          • Stilgar Wilcox says:

            “I have been perplexed by the buoyancy of the stock market “. Interguru, you took my sentence out of context by splitting it in half. The full sentence reads, “I have been perplexed by the buoyancy of the stock market IN SPITE OF INITIAL TAPERING, so you may have something there.” The point was in spite of tapering, and I am fully aware of the other the many asset bubbles generated by QE. Taking a sentence and splitting it is something politicians do to each other, but we don’t need to do that here on this message board.

            • Interguru says:

              Sorry. I did it inadvertently, not to troll. This is one the few blogs where the discussion is serious and worth reading, and I want to keep it that way.

    • It is hard to know how this will play out. It is really a combination of QE around the world and Chinese debt creation at play. So it is possible that the US can temporarily cut back in its buying of debt, if there is enough debt creation elsewhere–for example, if China debt creation keeps increasing. Of course, is business is slowing down, this doesn’t work so well.

      You are right though–credit problems don’t seem too far away. I know the yesterday’s chart of the day shows stock market margin debt up at new highs. If interest rates start rising, this could turn around quickly.

  33. OrdinaryJoe says:

    Gail I would also like to thank you for your efforts. Yours is the only explanation for what is occuring (Deflation with massive money printing) that I have found. The way that you tie together energy and econony is exceptional. Your writing is concise and appears to be without agenda. Your writings have the ability to have people come to a understanding of our species situation. My belief is the planets only chance is divine intervention or an evolutionary event. I am thankful that I have an appreciation of where our species is at with a mininum of delusions and I thank you for that. I try to consume less and spend time in meditation every day asking that our species somhow come into balance with nature. It may be pollyannaish but at this point I do not see a solution outside of an intervention greater than ourselves. It is sad, we have the capabilty to experience beauty as expressed in nature yet we are numb to its destruction.

    • You are welcome. Glad you think my writings are helpful.

    • xabier says:

      Yes, we do seem to be the animal that seeks to build beautiful palaces, and creates mostly cess-pits.

      Meditation seems to be a sensible response these days. At least one can find peace and balance within oneself if not in the outer world, in which the madmen are in control (or believe themselves to be).

  34. B9K9 says:

    Gail, further upstream you mentioned your “project”. By this, I assume you’re referring to your ongoing analysis and reporting. Question: what if someone in a position to know sat down with you and stated that everything you’ve written about is true, including the expected outcomes and projections. What would you then do? I mean, there would no longer be any reason to research, think and write, right?

    The reason I bring this up is because I believe the ongoing events in Syria, Russia, Iran, et al are all indicators that the jig is indeed up, and it’s ending sooner than many people were expecting. Years ago, when ZH first got started, I used to mention that the Fed/Bernanke was pursuing their self-destructive policies (ZIRP, QE, etc) with the hope of buying time for some kind of miracle(s).

    That miracle, of course, was either developing technology to economically extract tight reserves, stumbling across another Ghawar, Cantarell, etc, and/or somehow, someway, figuring out a safe/effective means of generating nuclear energy. Sadly, none of those miracles have come to pass, which is why time has indeed run out.

    Now, the question for the PTB, is what do they do to maintain control in the face of these facts. Well, the first thing you do is attempt to simultaneously acquire & deny access to precious proven (economical) reserves. As one would guess given the current state of affairs, the remaining major resources happen to be sitting within Russian borders/spheres of influence. So, not only must we somehow figure out how to acquire ‘their’ resources, but we must actively pursue means of also denying them the same. A two-fer as it were.

    Secondly, and I’ve stated this before, we need to reset the dollar system on something like a 10:1 basis to get our balance sheet back in order. A devaluation of that magnitude would be a monumental shock to the system, which is why it really couldn’t be pulled off without some kind of emergency powers in place to manage price controls, rationing, etc.

    And numbers 1 and 2, and you get war. Years ago, someone quite naive asked, “war, what is it good for?” Obviously, if you have to ask the question, then you don’t have a clue about how the world works.

    So, for all of those who are citing reduced capex, or projecting 20015-2017 when it becomes obvious that the tight resource plays are quickly plateauing or are no longer economically viable, I think all you have to do is observe global events **today** and realize they are basically telling you you are RIGHT. But they aren’t going to wait that long to where it becomes obvious to every Tom, Dick & Harry; they need to act soon in order to have everything in place when the hammer drops.

    That being said, what use is there for speculation, analysis, etc? Consider how appropriate the old adage of ‘it’s the journey, not the destination’ is. It means, if everything you suspected is true, then nothing more need be discussed; it’s simply settled, and now we have to live with it.

    • Ikonoclast says:

      “According to the Federation of American Scientists, an organization that assesses nuclear weapon stockpiles, in 2013, Russia possessed an estimated 8,500 total nuclear warheads of which 1,800 were strategically operational.[2] The organization also claims that the U.S. had an estimated total 7,700 nuclear warheads of which 1,950 were strategically operational.” – Wikipedia.

      Russia is untouchable. Attacking Russia leads to a full nuclear exchange and the end of world civilization immediately (as opposed to it ending some time later by collapse).

      • B9K9 says:

        Ikon, there’s a very good reason why the US/NATO needs to have core offensive capabilities as close as possible to mother Russia eg Ukraine, Poland, etc: to initiate a de-capitation strike. With a first option strike only 30-60 seconds away on the table, then the US/NATO would be in position to utilize its extensive ant-ballistic missile defensive shield to catch any stragglers that Russia might be able to launch against the West.

        Once it was fait accompli, it wouldn’t matter how many people might be appalled, aghast or generally opposed. It happened, and now it’s over. The deal would be done, and the West would get their resources, just as Mein Kampf outlined.

    • I suppose the issue is getting the story figured out, and documenting it. It is not like I have terribly good solutions–it is not clear they exist. But if I get the story figured out, then others can at least work at solutions for the real problem, not some make-believe or misunderstood version of the problem.

      At this point, I have written a fair amount about the story on Our Finite World. It would be nice to get the pieces of the story documented in a book, and I am working in that direction.

      I have certainly met a lot of interesting people along the way. It seems like as I go along, if one door closes, another opens. I suppose some people would want to set up a consulting practice, talking about the issues for example.

      • B9K9 says:

        I guess my point could be made clearer by way of analogy: let us assume you were a Japanese blogger in 1941 by the name of Gail-yu. You had correctly analyzed the situation whereby Japan expansion was being severely resource constrained due to the US oil embargo (as a result of Manchuria), and had basically one remaining option, which was to shoot for Indonesian oil supplies.

        However, again as you had correctly surmised, there were a couple of problems inherent in this “solution”. One, the British would have to be neutralized in Singapore; and two, the US navy would need to be eliminated from the western Pacific. Well, as fate would have it, you, Gail-yu, nailed it spot on for your blogger community: a dual strike would be necessary.

        Attaboys & a round of congratulations all around. But wait, the day after Dec 7th happens, your blog is turned off, you’re isolated and sent off to an internment camp, and all your followers who were critical of this potential policy are quickly rounded up and given two options: joint the fight or take a bullet right then & there.

        I think you can see where this is headed. I put it to you this way: you’ve correctly figured it out, but what does it gain you? My dad, the agency guy, had two great lines, both of which I frequently reference:
        1. The prize for intelligence is the booby prize; and
        2. He who complains has already lost

        #1 makes sense with respect to the analogy I presented above: what does it gain you to be right? To become a target?