Putting the Real Story of Energy and the Economy Together

What is the real story of energy and the economy? We hear two predominant energy stories. One is the story economists tell: The economy can grow forever; energy shortages will have no impact on the economy. We can simply substitute other forms of energy, or do without.

Another version of the energy and the economy story is the view of many who believe in the “Peak Oil” theory. According to this view, oil supply can decrease with only a minor impact on the economy. The economy will continue along as before, except with higher prices. These higher prices encourage the production of alternatives, such wind and solar. At this point, it is not just peak oilers who endorse this view, but many others as well.

In my view, the real story of energy and the economy is much less favorable than either of these views. It is a story of oil limits that will make themselves known as financial limits, quite possibly in the near term—perhaps in as little time as a few months or years. Our underlying problem is diminishing returns—it takes more and more effort (hours of workers’ time and quantities of resources), to produce essentially the same goods and services.

We don’t measure our investment results with respect to the quantity of end product produced (barrels of oil produced, liters of fresh water produced, kilos of copper produced, or number of workers provided with sufficient education to work in high tech industries), so we don’t realize that we are becoming increasingly inefficient at producing desired end products. See my post “How increased inefficiency explains falling oil prices.”

Figure 2. The way we would expect the cost of the extraction of energy supplies to rise, as finite supplies deplete.

Figure 1. The way we would expect the cost of the extraction of energy supplies to rise, as finite supplies deplete.

Wages, viewed in terms of the product produced–oil in this case–can be expected to decrease as well. This change isn’t evident in usual efficiency statistics, because some of the workers are providing new kinds of services, such as fracking services, that weren’t required before.

Figure 3. Wages per worker in units of oil produced, corresponding to amounts shown in Figure 2.

Figure 2. Wages per worker in units of oil produced, corresponding to amounts shown in Figure 1.

Even investment is becoming increasingly inefficient. It takes more and more investment to extract a given quantity of oil or other energy product. This investment needs to stay in place longer as well. The ultra-low interest rates we have been experiencing reflect the poor returns investments are now making.

The myth exists that prices of all of the scarce goods and services will rise high and higher, as the economy encounters scarcity. The real story, though, is that the inflation-adjusted purchasing power of common workers is falling lower and lower, especially in the United States, Europe, and Japan. Not only can these workers afford to buy less, but they can also afford to borrow less. This means that their ability to purchase expensive goods created from commodities is falling.

At some point, this lack of purchasing power can be expected to affect the financial markets, and the prices of many commodities can be expected to fall. In fact, this already seems to be happening.

The likely impact of such a fall in commodity prices is not good. If low oil prices cannot be “turned around,” they will lead to debt defaults, and these debt defaults are likely to lead to failing financial institutions. Failing financial institutions have the potential to bring down the system, because it becomes very difficult for businesses to continue if they are not supported by a banking system that allows a company to pay its employees. Workers also need the banking system to pay for goods and to save for a “rainy day.”

A big part of what has allowed the economy to grow to the size it is today is increasing debt levels. These rising debt levels play many roles:

  • They make high-priced goods more affordable to consumers.
  • They create greater demand for goods, allowing more end-product goods to be produced.
  • They create more demand for commodities required to make end-product goods, allowing the price of these commodities to rise, so that more businesses have more incentive to create/extract these commodities.

At some point, debt levels stop rising as fast as they have in the past (because of a lack of growth in purchasing power because of diminishing returns in investment), and the whole system tends to fall toward collapse. We seem to have reached this point in the middle of 2014. China was raising its total debt level rapidly up until the early part of 2014, then suddenly moderated its growth in debt level in mid 2014. At about the same time, the US scaled back and eliminated it program of quantitative easing (QE). Oil prices dropped starting in mid-2014, at the time debt levels started moderating. Other commodity prices started falling as early as 2011, indicating likely affordability problems.

We are now in the period when many people still believe everything is going well. Oil prices and other commodity prices are low—what is “not to like”? The answer is that the system in not at all sustainable—profits of oil companies and other commodity businesses are down, just as wages of common workers in developed countries are down in inflation-adjusted terms. Companies are cutting back in investment in oil production. Soon oil production will drop. With lower oil supply, the economy will face huge challenges.

Many people believe that oil prices can bounce back up again, but this really isn’t the case, because of growing inefficiency related to limits we are reaching–the need to use more advanced techniques to produce oil; the need for desalination for water in some places; the need for more pollution control equipment that doesn’t really increase the finished goods and services we are producing but instead makes goods more expensive to produce.

Each worker is, on average, producing less and less of the finished goods we really need. Whether we like it or not, standards of living will have to fall. The amount of debt workers can afford decreases rather than increases. This new reality can be expected to manifest itself in debt defaults and increasing financial system problems.

Even if oil prices bounce back up again, it is doubtful that shale oil drillers will be able to again borrow at a sufficiently high rate to increase their production again—what lender will believe that oil prices will remain high indefinitely?

The China Connection

I have been trying to put the real story of energy and the economy together over a period of years. Prof. Lianyong Feng of Petroleum University of China, Beijing, hired me to put together a short course (eight sessions, each lasting about 1.5 hours) on the nature of our current problems for students majoring in “Energy Economics and Management.” The course would be open to everyone choosing this major, including freshman, so I needed to assume a fairly low level of background knowledge. Actual attendees included a number of graduate students and faculty, attending the course without credit.

I put together a series of lectures, which I gave during the second half of March 2015. PDFs of my lectures are also now available on my Presentations/Podcasts page.

These lectures were videotaped by Prof. Feng’s staff, and I am in the process of making You Tube Videos from them, in addition to the original MP4 format. (YouTube videos cannot be seen in China.) My current plan is to give a brief discussion of these lectures, in future posts.

Following the lecture series, I visited several places in China, to see how the economic slowdown is playing out in China. This included visits to Northwest China (Hohhot and Hardin), Northeast China (Daqing and Harbin), and Southeast China (Wenzhou area). In Wenzhou, I visited three different companies attempting to sell electrical equipment on the world market.

From these visits, we could see how the world economic slowdown is affecting China, and how China’s own slowdown in debt growth is adding to the world slowdown. We could also see that the slowdown has not yet run its course China–growth in housing continues, even as the need for it seems to be slowing. College students are finding it difficult to find high-paying jobs in oil and other commodity sectors. The lack of growth in high-paying jobs will provide downward pressure on housing prices as well.

I plan to write a post about this situation as well.

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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486 Responses to Putting the Real Story of Energy and the Economy Together

  1. Pingback: Todos los problemas del mundo...

  2. Pingback: News update | Peak Oil India | Exploring the coming energy crisis and the way forward

  3. Jan Steinman says:

    Play nice in the sandbox, folks. Godwin’s Law means I might be getting out my moderator’s hat.

  4. Don Stewart says:

    Dear Finite Worlders

    When things are tough, it is especially important not to make things worse by our own actions. I participated in a Webinar with Kelly McGonigal, the Stanford psychologist last evening on the broad topic of Willpower. If we know something is good for us, but don’t actually do it, or if something is bad for us, and do it anyway, and never give much thought to what it is we really want, then it pays to listen to Kelly and other researchers. I will give you just a couple of the things I noted in last night’s discussion.

    Willpower is not a virtue, and lack of willpower is not a vice. Willpower is a muscle that we can train and make stronger. Willpower resides in a constellation of locations in the prefrontal cortex. We seem to have extraordinary willpower capabilities because our very complicated social relationships require that we share and cooperate and minimize fighting. When we are well connected to our social society, we have more willpower.

    We have one brain, but two minds. One mind is concerned about ‘wise action’, while the other mind is concerned about ‘instant gratification’.

    Stress drives us in the direction of ‘instant gratification’. Guilt is a form of stress, which drives us likewise to ‘instant gratification’. Young women who were made to feel guilty about eating a doughnut subsequently ate twice as much candy.

    There are two ways to train the brain:
    A. Train the biological response
    B. Strengthen the brain for specific challenges: e.g., quitting smoking

    Training the biological response can be done with a 5 minute meditation exercise. It is best if you are a bad meditator, trying to focus on your breath rather than all those chaotic thoughts. As you struggle to refocus on the breath, you exercise all the neural muscles that you need to also exercise willpower in general. After 5 minutes, the biology of the body changes and makes you less susceptible to the lures of ‘instant gratification’.

    Another response is to adopt the habit of Pause and Plan. This is a more sophisticated version of the Count To Ten advice you probably got from your mother.

    When we are successful, our heart rate variability increases, which is a sign of balance in the autonomic nervous system. If you learn to shift your heart rate variability, then lots of good things happen to your biology.

    A still contentious topic is glucose (blood sugar) and willpower. Roy Baumeister at Florida State did some experiments which seemed to prove that willpower was a depletable resource. Using willpower used up blood sugar, which caused us to be more subject to additional temptations. However, recent research tends to show that the brain monitors blood sugar. If the level is fluctuating, the brain figures that the supply is not dependable, and will tend to try to conserve blood sugar in the face of stresses. Therefore, the solution is to eat a diet which supplies a steady supply of sugar (which would also prevent diabetes, my note). The dietary enemies would be those things which cause a surge in blood sugar, followed by a crash.

    Research shows us that wanting something and liking it after we get it are two completely different brain systems. Wanting something very badly is a poor indicator of actual enjoyment of it after we get it. My note: most all of commerce is about taking advantage of our desires. The Internet, for example, is supported by the advertising which attempts to capitalize on our wants. Since wants have little direct relationship to long term satisfaction, we are vulnerable as consumers. Back to Kelly: the mindful experiencing of the want defuses it, and returns control to our better angels. Sarah Bowen at the University of Washington is a leading researcher on this topic.

    We hate to feel guilty about our bad behavior. Dieters turn to junk food and procrastinators turn to playing solitaire on their computers because they hate to admit that they have been eating badly and procrastinating. When a psychologist intervenes in an experiment where people have fallen off the wagon with soothing words of forgiveness (e.g., everyone does it once in a while, let’s try again), behavior can improve remarkably.

    Secure Attachment ( a term of art) is the best foundation for willpower a parent can give a child. Secure Attachment is not coddling a child. It is instead characterized by a parent giving a child a safe place to come back to after going out into the world and taking risks and learning from successes and failures. It is not about self-indulgence, nor about guilt trips.

    Feeling Like It comes after we Start Doing It. Action changes feeling—courage and willingness rise to the challenge.

    Don Stewart
    PS No transcript, trust me.

  5. Don Stewart says:

    Dear Gail and Finite Worlders

    BC has made an interesting post at Ron Patterson’s blog related to some of Gail’s conceptual graphs in her post. BC’s words are also related to those of BW Hill, in the comments here. Partial quotation:


    ‘What few will say at this point, i.e., they won’t be paid if they do, is that an increasing majority share of US “oil” extraction since 2012 was consumed in order to extract the unprofitable incremental supply at $75-$100/bbl that is not affordable to the rest of the economy to burn and grow real GDP per capita AND sustain unprofitable “oil” extraction at today’s $45-$55/bbl.

    What some call a “glut” of “oil” is actually an unprofitable supply at which neither the shale “oil” sector can afford to produce and consume to produce “growth” of supply that the economy can afford to consume and “grow” real GDP per capita.’

    Don Stewart

  6. edpell says:

    Hello Jan, I do not know if you are a man or a woman (those two choices are listed alphabetically). I had been thinking weather beaten 70 year old Swed but a post said “she” so now I do not know. Are you Mr. Jan or Ms. Jan? Thanks. Mr. Ed

    • Jan Steinman says:

      I had been thinking weather beaten 70 year old Swed

      Hey, suits me! Run with it if it feels right! For some reason, people I’ve conversed with for years online are surprised when they first hear my lack of foreign accent.

      Having endured merciless teasing as a schoolkid, I rather enjoy being gender-ambiguous sometimes. I got assigned to girls’ gym in high school, but they stopped me at the locker room door. 🙁

      This can be especially fun on-line, as someone in this thread tried to tell me all about myself, while getting this one key fact wrong! It tends to bring out latent sexism in guys, who often seem to feel emasculated by women who know stuff other than cooking, cleaning, and having babies. One time, after patiently explaining facts contrary to someone’s belief system, I was accused of “being on the rag.” I once had a public offer of marriage from a guy who lacked a taste for demure women.

      I’m a bit over a decade shy of 70, and my heritage is Swiss/English, not Swedish, but at least you nailed the gender.

  7. Tolstoy's Degenerate Grandson says:

    This is truly frightening.

    CAT is perhaps the most important indicator of global growth because their gear is ubiquitously used in construction projects globally.



    We are very very close to the end game. The only thing keeping this company from collapsing is the QE that they are taping for ZIRP cash that is being used to prop up their shares.

    Anyone still think that QE ZIRP is about helping billionaires? It is the blood (filled with toxins) that is keeping Frankenstein alive.

    • gerryhiles says:

      The Baltic Dry Index is another fundamental good/bad indicator and it is stuck at very low levels.

    • edpell says:

      Holy Crap, you are right, this is frightening. 8% per year “deleveraging”. (/scarc on) In about 120 months we will be positioned for growth. (/scarc off)

    • I visited three companies in China that are selling electrical equipment. One was small and selling only to Chinese small businesses. The other two were trying to sell in the international market. There were having a terrible time. No one wanted/could afford new long distance transmission equipment. If electricity is not growing, it is pretty clear that the world economy has a problem.

      • Tolstoy's Degenerate Grandson says:

        Not sure if I mentioned but a friend who is a partner in a law firm that relies primarily on China business told me recently that business is absolutely horrible, primarily because shipping volumes have been off massively in recent months.

        I have been speaking with people with extensive business networks in China, primarily consumer products, and it is a bloodbath.

        Where is the driver of the global economy now that China is going to pieces?

        if we make the end of the year without a major problem that would be a surprise. Can’t see how we get through to the end of 2016

        • That is my fear–that the end is not too far away, if China is now shrinking rather than growing. I may have mentioned before that the China Daily, while I was over there, was speculating that first quarter growth would be reported at less than 7%. This didn’t happen, but someone at the newspaper must have thought that the economy wasn’t really growing very much.

  8. Kulm says:

    These are what the future will be.

    > We’re in a greater-moderation of no downturns and monotonically increasing growth, which will continue for what will seem like forever. Policy makers have conquered the business cycle; they have conquered the rate hike; and they have conquered the bear market. Next comes the type 1 civilization transition, the singularity, a theory of everything, mind uploading, a halo ring that will encircle the earth, space colonies, a matrix, and much more.

    Actually, I do think these will be obtainable with what energy remaining now, after about 90% of the world’s population is reduced to somalian refugee status requiring very little energy to maintain.

    • Tolstoy's Degenerate Grandson says:

      When this hits you will be one of those people staggering around as if you’d been caught in a road side bomb blast, observing the misery and death around you, and wondering how you got your prediction so wrong.

      • Kulm says:

        Actually there were two extremely famous Chinese poets who experienced something like this during AD 8th century, Du Fu and Li Bai(Li Po), when a rebellion shook the dynasty which was extremely rich and powerful.

        Li Bai was a favorite poet of the Emperor, which means he was somewhat like Steven Spielberg or George Lucas of the day. Du Fu was a low-level govt employee, although because he was such a good poet he was acquainted to Li Bai.

        Both survived the rebellion, which killed about half of the people alive in China at that time. When the rebellion ended the GDP fell to maybe 1/3 of what it used to be.

        Although Li never regained the wealth lost during the rebellion he still retained his fame, and was always able to find someone to sponsor his poetry. Du, having retreated to the family farm (which was protected from the mobs because he was an official, no matter how low ranking ) was as poor as what he was throughout his life, but both found enough strength to compose poetry about the death and miseries around them. Starving people do not write poems, which need ink and pens which tend to be expensive during scarcity.

        • Tolstoy's Degenerate Grandson says:

          Nobody has ever experienced the situation that is headed our way. When this hits the entire world will stop.

    • Tolstoy's Degenerate Grandson says:

      “Policy makers have conquered the business cycle; they have conquered the rate hike; and they have conquered the bear market.”

      I would love to agree with you but that would mean that Bernanke invented a perpetual economic motion machine and this makes the logical part of my brain have seizures.

      If it were so simply what I am left wondering is why in the hell didn’t someone come up with this strategy a long time ago? And why doesn’t Somalia adopt these policies?

      Perhaps it’s like a lot of inventions — the concepts are often so simple that you kick yourself saying why in the hell didn’t I think of that.

      Ben Bernanke for God I say.

  9. edpell says:

    On California, it is not one thing. It is southern republican California Santa Barbara (13, Sur) and south versus northern California (14, Norte) San Luis Obispo and north. The north has enough indigenous water for its people, industry, and some farming. The south is dry. They need desalinization for people and industry. They can not support farming with indigenous water resources.

    • edpell says:

      northern California eco, green, LGBT, democratic, intellectual, artistic, libertarian

    • edpell says:

      southern California republican, military, propaganda.

      Google with its strong agenda setting role should be in southern California not Santa Clara.

  10. Don Stewart says:

    Dear Matthew
    Another question along the line of the conquistadors and the native Americans, and the captives in the WWII camps and the Nazi killers, is the question of why Americans don’t ‘vote the bastards out’. Studies show that the political process in the US is virtually immune to public opinion. Why is that, in a country which is supposedly one citizen with one vote, except that the ‘citizens’ with all the money are corporations or individuals who control corporations, and the real humans have little money?

    Same strategic relationships, same outcome.

    Don Stewart

    • edpell says:

      Don, can you expand on “same strategic relationship, same outcome”, please?

      • Don Stewart says:

        Dear edpell
        The conquistadors has more power as an individual than any individual in the Aztec Empire. The collective citizen of the Aztec Empire had more power than the collective conquistadors, but they had no strategic plan.

        This is something like the Indian Wars on the plains of the US. The rule in the Cavalry was that a big settlement of Indians would scatter before the Cavalry charge just as easily as a small village. The numerical supeority of the large village was not effective. For a variety of reasons, which I have forgotten, the very large village that Custer charged DID NOT scatter. They fought back and their numerical superiority resulted in the slaughter of every cavalry soldier. The cavalry had rifles, but the Indians killed them with ‘a hail of arrows’.

        The French Revolution was a parallel to ‘a hail of arrows’. Circumstances worked out just right for a revolution…which pretty quickly morphed into something else, of course. The citizenry of the US may be quite unhappy with Congress, but what they are continually presented with is a choice between two virtual clones…Hillary making war on Russia or Jeb making war on Russia.

        Ron Paul has a current post talking about the political murders in Ukraine, and how nothing appears in the US media about them, Washington is silent. Putin can point it out, but ‘we all know he lies’. But you can be sure that the latest antics of the Kardashians and such will occupy our media. How is a poorly informed and distracted majority supposed to reach any serious conclusions and vote in the right people and hold them responsible? The media moguls have vastly more power than any ordinary American individual. So the theoretically superior force of public opinion runs a poor second to the manipulation by our modern conquistadors.

        Doin Stewart

        • Compare Cortez to (I think) Cook. Similar thing, tried to attack a bunch of cannibals on an Island. Had armor and black powder guns. Took a lot of casualties and had to flee.

          Once you get to repeaters, revolvers, machine guns and artillery it is very different. Once one soldier can kill dozens of people per minute at a distance, it is very different from a blackpowder weapon that takes 30 seconds to reload. If you could get around or through the armor, archery seems superior to blackpowder to me; the trade-off being, it takes years of training and hard work to be a competent archer, and only a few days to learn the basics of using a musket.

        • Artleads says:

          Glad you pointed to distraction. IMO, the only major subject worth attention is whether or not we survive, and if so, how. So I wouldn’t suggest trying to solve problems. That comes second. The first “enemy” to tackle is distraction. For without the “strategic advantage” of attentive masses, no sane policy can be devised. Hope I’m wrong.

          • “For without the “strategic advantage” of attentive masses, no sane policy can be devised. ”

            Good policy requires attentive masses? I think it would be far easier to get things done if the masses paid even less attention, especially when it comes time to make the hard choices.

        • edpell says:

          Thanks Don.

          If you go to the city of Washington, you will find that almost all of those corporation lawyers and cowardly politicians, members of congress, and mis-representatives of the masses claim, in glowing terms, that they have risen from the ranks to places of eminence and distinction. I am very glad that I cannot make that claim for myself. I would be ashamed to admit that I had risen from the ranks. When I rise it will be with the ranks.—Eugene V. Debs

          What can Labor do for itself? The answer is not difficult. Labor can organize, it can unify; it can consolidate its forces. This done, it can demand and command.—Eugene V. Debs

    • “Studies show that the political process in the US is virtually immune to public opinion. Why is that, in a country which is supposedly one citizen with one vote, except that the ‘citizens’ with all the money are corporations or individuals who control corporations, and the real humans have little money?”

      By the time you get to election, the choices have already been whittled down to two, or one per party in multi-party systems. If you care enough, get involved earlier in the process, and at the smaller scales, such as municipal. If there were a thousand choices on the ballot, it would be pretty chaotic.

      Also, I kind of suspect the democratic process is not as amazing as people claim. Look at California, dealing with the consequences of voter initiatives. Or even Switzerland, where the people voted in a referendum to keep the money from the mining company plundering Africa, and not do anything for the people being exploited.

  11. Don Stewart says:

    Dear Gail and Finite Worlders
    This will take up the question of whether Harari’s simple models of economic history have merit. Does confidence in the future have explanatory power independent of the availability of fossil fuels?

    In this short post, I can’t fill in all the details. See the two chapters The Marriage of Science and Empire and The Capitalist Creed in the book Sapiens. Just a few notes from me.

    Harari poses the question ‘Why Europe?’ and not the Asian empires of the 15th and 16th centuries. His answer is, oversimplified, that the Europeans saw the world as mostly ’empty’ and science as a way to get the leverage needed to conquer it. Christopher Columbus and the Asians saw the world as ‘full’…there was nothing to be learned, just traded for or extracted. Amerigo Vespucci was the first ‘modern man’, in that he recognized that the discovery of the Western Hemisphere opened enormous opportunities for the Europeans. When the British were trying to calculate the distance to the sun, they found that they needed eclipse observations from widely separated places on Earth, and found that Australia and Tasmania were ideal locations. They funded an expedition by Captain Cook to both make the scientific eclipse observations, study the local flora and fauna, and also expand the British Empire. Was the Cook voyage a scientific voyage or a military voyage or just curiosity? It was, in truth, a mixture of objectives which was characteristic of the European voyages of discovery.

    Cortez conquered the Aztec Empire with only 500 men by using the sciences of psychology and sociology along with technological prowess. Read the explanation for the details. With fewer than 200 men, Pizarro conquered the Incas, using a similar method. Both of these expeditions were financed by capitalists in Europe who believed that they could get rich by spending some money now in hopes of future returns. The Spanish government did not know what Cortez was up to.

    The British in India governed a huge country with 600 officers, and an entourage of scientists or warrior/ scientists, such as the officer who decoded cuneiform script and found the answer to the mysterious ancient writing about which the Indians knew nothing. The officer posited that most modern languages arose from this ancient ‘Aryan’ language. Later on, the scientists provided convenient rationales for why these ‘Aryans’ were fair skinned Nordic types. It was also apparent to Europeans that ‘mixing with the locals’ in India had degraded the ‘pure Aryan’ characteristics, and must be avoided. (This is the message from ‘science’ that I was taught in school, and why most of the white people I knew were convinced that we were on the wrong side in WWII…we should have joined Germany in attacking the Soviets and their ‘raceless and religionless’ empire.)

    While most of the Asian empires did not ever make the leap to the sort of audacious, global thinking that Vespucci began until after 1950, a few countries such as Russia did change.

    It is very easy to imagine the fertile soil for the South Sea Bubble that the combination of exploration and venture capitalism unleashed in Europe.

    I will now interject an opinion of my own. While the shift to a venture capital mindset and optimism about future opportunities preceded fossil fuels, that shift needs to be seen with a certain perspective. For example, large ships were a key to things like the Dutch Empire. But large ships require tall, straight trees for masts for the large sailing ships. Tall, straight trees (such as white pine) were fairly quickly exhausted in Britain, and had to be replace by cutting down the white pines in New England. So these rapidly growing empires were NOT free of ecological limits. By contrast, the government of Edo Japan was a sort of ‘steady state’ government, which used strict policing to maintain the forests in Japan…which belonged to the government and were sustainably managed. Thus, the difference between the extractive mindset of the European empires and Edo become apparent. Europe and the US grew rapidly with a combination of extractive economies and optimism about the future, so that Admiral Dewey found no resistance worth nothing when he sailed into the harbor in Japan which was sustainable but slow growing.

    A second point is that the enormous growth in Europe was accompanied by catastrophe in many of the conquered lands. The natives in the Carribean were virtually wiped out. The Central and South American natives declined by perhaps 90 percent. As the natives died, African slaves were imported.

    Third, the growth of output per capita is much more dependent on fossil fuels. While the European empires greatly enriched the Europeans, the output per capita did not begin its exponential rise until fossil fuels became common. Harari says that per capita production in 1500 was 550 dollars, which has increased to 8800 dollars today.

    Does ‘optimism about the future’ have independent explanatory value? I think Harari gives convincing arguments that it does…with the caveats about exactly WHO is benefitting and getting the growth. We can think of very current examples, such as the tight oil bubble and the stock market bubble. Whether these will turn out to be misallocations of capital reminiscent of the South Seas Bubble remains to be seen.

    Another current example is the ‘discovery’ of that foreign land, our gut microbes. When we eat, we are actually mostly feeding our gut microbes…a discovery worthy of Vespucci. We also now understand that the metabolism of plants is similarly dependent on soil microbes and the rest of the soil food web. The article Soil is the Stomach of the Plant, currently at Resilence.org lays out the science for the plants. My recent post on the effects of eating red meat and the production of TMAO by the gut microbes lays out the science for the humans. In both cases, the ‘scientific community’, exemplified by Monsanto, see a golden opportunity akin to that which presented itself to Cortez and Pisarro and the British in India. Rather than tell the humans that they need to live according to Nature’s Plan with biological farming and by eating a diet fitted to our physiology and the gut microbes who are our essential partners, the scientists are cooperating in the Empire Building project of engineering the microbes to permit humans to live in a way that maximizes the profits of Monsanto and company. The parallel with the 600 officers ruling India is obvious.

    In my opinion, viewing history ONLY through the lens of fossil fuels, or even resources more broadly, misses an important point. IF the management and scientists employed Monsanto did not have confidence that they could ‘manage’ the political sphere and the perceptions and habits of the population at large, then the ‘colonization’ of the gut microbes world would never take place. Instead, we would have sober advice from people like Richard Heinberg about how we all need to live within ‘natural limits’…reminiscent of the rules laid down by the Edo government.

    Don Stewart

    • “Cortez conquered the Aztec Empire with only 500 men by using the sciences of psychology and sociology along with technological prowess.”

      That’s a bit simplistic. The first thing Cortez did was burn the ships, so the men would have no notion of turning back. The rats fled the burning ships, and the diseases spread ahead of him, killing up to 90% of the population.

      He happened to arrive at the time and in a manner that fulfilled prophecy, and the vast majority of the city-states within the Aztec Empire were oppressed and looking for any opportunity to destroy the empire.

      All he really did was supply artillery support to the tens or hundreds of thousands of indigenous warriors that rose up against the Aztecs.

      The Incas were already dying from these plagues and hiding in their mountain shelters by the time anyone got to them.

      • Don Stewart says:

        You will find that your account differs substantially from that of Harari.

        Harari portrats Cortez as first ingratiuatiung himself into the kings inner circle, then seizing the king as prisoner, using the king as a puppet governor for several months, building alliances with dissidents within the kingdom, starting a civil war, and so forth. In other words, a ‘psyops’ operation such as the US routinely uses today.

        The sheer numbers of warriors in the Aztec empire could have easily overwhelmed the Spaniards by sheer force of numbers, IF they had a coherent plan. This is somewhat similar to the question of ‘why didn’t the people in the camps overwhelm their relatively few Nazi captors?’ And the answers turn out to be complicated.

        Don Stewart

  12. Don Stewart says:

    Dear Gail and Finite Worlders

    I have mentioned kitchen gardens on numerous occasions. Some people opine that they are ridiculous. Here is a new post on our local small farm listserv:

    From: blanked out
    To: growingsmallfarms@lists.ncsu.edu
    Date: Tue, 21 Apr 2015 21:16:00 -0400
    Subject: How to keep kale happy at market?
    Okay, I have to admit that I am stumped and feeling no smarter than I felt years ago when we first started growing and selling kale for local farmers’ markets. It seems that no matter what we try, our kale stands a good chance of wilting down at our afternoon markets. I am ready to hear what other folks do to keep bunched kale happy and perky….

    What we have tried- we display our kale bunches in bowls of cool water at market, we dropped Red Russian because it seemed to wilt the worst, we keep a spray bottle handy to spritz the bunches, and yes, our display is in the shade.

    We had an inch of rain last night (so they were well hydrated), the bunches were cut first thing this morning, then they were immediately re-cut and washed in tub of cold water, packed in a waxed boxes with wet newspaper and placed in the walk-in cooler until market time. Still this afternoon at market we had bunches that wilted down???

    I am too stubborn to quit growing kale, and besides everyone is finally figuring out it is actually good for you! Any ideas?

    thanks, blanked out

    Back to me. I worked on a small farm for a number of years. I have seen first hand the way leafy greens deteriorate beginning the moment they are harvested. I know how many leafy greens are brought back unsold and given to the pigs or the compost pile. The deterioration is also a marker of the deterioration of the valuable micronutrients in the green leaves.

    In my humble opinion, people like David Kennedy (of Eat Your Greens) are exactly correct. Grow them in your yard. Small farms are best suited to growing more stable crops such as sweet potatoes. But even sweet potatoes yield valuable green leaves, which still gives the nod to a kitchen garden. Some of my best friends are small farmers, but I grow everything I can in my kitchen garden.

    Don Stewart

  13. Daniel Hood says:


    The UK’s Department of Energy and Climate Change is for the first time using ministerial powers allowing Energy Secretary to revoke North Sea operating licenses for a Russian zillionaire as Russia threatens new sanctions which would pretty much shut down the UK economy given Russians have controlling interests in the North Sea.

    “The UK is forcing Russian billionaire Mikhail Fridman, owner of the $10 billion L1 energy fund, to sell dozens of newly-acquired North Sea oil and gas assets in the next 3-6 months on fears more Russia sanctions could shut down the gas fields.”

    I’m not sure if the Brits are complete idiots, smart or deluded?


    • Daniel Hood says:


      Tescos one of the largest corporate food retailers in the UK posted the biggest corporate loss in British history, nearly 6 billion squillion, at this rate they’re going to wipe themselves off the map.

      “Tesco will guarantee itself an unwanted place in UK corporate history later when it unveils an annual loss of well over £5bn, one of the biggest ever reported by a British company.”


      • Daniel Hood says:

        The Western Hemisphere is doing incredibly well what with


        Stay tuned and debate fellow doomsters

        • Tolstoy's Degenerate Grandson says:

          From the Daily Telegraph:

          Tesco: Why investors shouldn’t panic

          Shouldn’t that be Why investors SHOULD panic and unload this bankrupt beast?

          And we are told the UK is one of the cleanest shirts in the basket.

          I bet dog food sales are growing as the homeless spend their few pounds on this and cheap rice. Add a little soy sauce and it’s suddenly an exotic dish

          • Daniel Hood says:

            The UK’s FUBARd, it’s just that they’re having a pre-election “woody” where insane promises and lies are being made to the electorate. Wait until after the elections when the real cuts come into force just as the mother of deflation kicks in.

            Gail is so absolutely right it’s not even funny anymore. The only reason Tescos the UK’s largest most powerful retailer is flying full kilt into the ground is because the average Joe is losing his/her financial shirt, instead being forced to shop at discount, budget supermarkets, Aldis, Lidls etc.

            Well that is a clear cut example of economic “diminishing returns”

            Things are diminishing so fast Houdini aint got nothing on the Western hems

        • Daniel Hood says:

          Oh yeah for those on twitter you can follow https://twitter.com/AgritechMedia, focus on
          the food, energy, water security nexus and the surge of interest in the nexus way of thinking about the interdependencies, tensions, trade-offs, but in the wider context of technology, the economy and environmental change.

          We need to start connecting the dots as the forces of gravity (deflating debt/energy) obliterates the rocket (economy) rapidly running out of fuel.

          We’re going to start seeing “uncontrolled flghts into terrain” shortly people!

        • Jan Steinman says:

          Stay tuned and debate fellow doomsters

          Meanwhile, on a tiny island off the west coast of Canada, raw milk herd-shares and goat sales are up significantly. This, after my vet warned me that I might have saturated the market.

          Perhaps some of the sheeple are awakening, and are starting to realize there ain’t nobody gonna feed them but themselves.

          • Daniel Hood says:

            @ JS Haha! Now you know why Jim Rogers said “the stock brokers will be driving taxis, the smart ones will learn to drive tractors for the smart farmers, better still become a smart farmer.” Check out the latest project I’m working on http://fluxiot.com/
            Precision agricultural tools for people who “grow” on water, but at this rate we can count California out the equation. Agreed, we’re going to see a lot more of urban, communal farming as we try to move back to agraria, but it will likely be in flux for a time. 😉

            • Jan Steinman says:

              Check out the latest project I’m working on http://fluxiot.com/

              Interesting, but pretty darn techy.

              It looks like it needs all of human civilization underneath it, no? How do you see this coping with things like the collapse of semiconductor manufacturing, or intermittent electricity?

            • Artleads says:

              Here in the urban southwest, there are endless flat-roof buildings. What it will take for people to use them, I don’t know. Collapse, yes. But that would be almost too late for the massive change of thinking and education it requires to use those roofs wisely.

            • Daniel Hood says:

              It’s simple Jan, it’s likely impossible 7.3 billion people will simply give up on life and die over the next 20-30 years or so unless there’s some huge life threatening event such as nuke war in which case who give a FUBAR anyway, we’re all dead, not much you can do about being dead. That said, assuming that type of existential risk doesn’t materialize we already see the 1st signs of tensions between capitalism versus the collaborative commons “zero marginal cost” society emerging given, (as Gail has correctly warned many times over) we see “diminishing returns” everywhere we look, particularly across the Western hemisphere. Investment in Ag & Foodtech IS investment in the future of the human race, so it makes sense (no pun intended) to focus on the most vital sources of energy for life and help those interested in taking advantage of the tech/networks available. The internet isn’t going away anytime soon in our view.

              Put another way, we’ll have a serious crisis on our hands if innovations don’t materialize when you define the multi-dimensional problems, “how do we collaborate intensively together, but in a sustainable way, to produce more food in the next 30 years than the previous 10,000, against growing, competing populations, 10 billion by 2050, declining resources, energy insecurity, financial instability, climate change, soil infertility, water scarcity, declining yields, ageing farmers, land, distribution issues, and a whole bunch of challenges converging to create the perfect storm? We suspect some urbanites may need simply solutions, networks to tap into to help them grow “on location & on demand”.

              We work off the axioms that we all need food, energy, water maybe some form of money acting as a medium of exchange, unit of account, store of value 24/7, 365 or the alternative is civilization and anarchy are but a few meals apart. Survival is the spirit is the soul as they say.

              Our alternative choices, are to continue in industries that we suspect will collapse first, those that quite frankly aren’t needed, nor solve societies approaching problems, or as some would recommend today, simply give up, put tinfoil hat on and wait to die because “all hope is lost” and we’re facing complete and total, imminent collapse etc. Basically go be perpetually depressed and die in a way that suits you but don’t do much else. We don’t really think that’s useful. Or alternatively with the skills you have, try to focus on stuff you’re passionate about that you know maybe could have high value to someone else even if this is our last half/century etc. We know the mega-macro risks involved, but we don’t care, we’re young (under 40) and don’t see much point in simply talking about collapse sat at home getting super depressed. We’ll try anyway by actually doing something. If we can help to sustain and enhance 1 human life even for a day, as futile as they may sound, it’s worth it, if this is to be our end.

            • Jan Steinman says:

              the alternative is civilization and anarchy are but a few meals apart

              The two are not mutually exclusive. I think functional anarchy is the only alternative to feudalism, in the long run. “Anarchy” does not mean “without rules;” it means “without rulers.”

              Our alternative choices, are to continue in industries that we suspect will collapse first, those that quite frankly aren’t needed, nor solve societies approaching problems, or as some would recommend today, simply give up, put tinfoil hat on and wait to die

              I’ll take “none of the above,” thank you. I think there are, on a local level, many more alternatives than that.

            • We can find others to help and sustain to the very end, I would suspect.

            • Tolstoy's Degenerate Grandson says:

              “Put another way, we’ll have a serious crisis on our hands if innovations don’t materialize when you define the multi-dimensional problems”

              Innovations are what got us to where we are. No way in hell we’d have 7+B people on this planet without innovations.

              And now because of all these innovations, we are up against the wall on dozens of fronts. Water shortages – pollution – expensive to extract resources – depleted fisheries — and on and on and on.

              We can pray for more innovations to get us to the end our lives without starving to deal or eating radiation. But I don’t see how given the severity of all of these problems.

              There is no way out of this. Billions will die. Quite likely everyone.

              That is not negativity. That is just what a logical person comes up with when he rejects wishful thinking.

            • “There is no way out of this. Billions will die. Quite likely everyone.”

              Everyone is going to die eventually, no matter what*. It is just a matter of how and when.

              *Barring transferring consciousness onto The Cloud.

            • Jan Steinman says:

              Barring transferring consciousness onto The Cloud.

              Even The Cloud has to eat, voraciously consuming 3.6% to 6.2% of all electricity generated. Until nanobots come up to speed, The Cloud is going to need us supplicants to continue bringing it burnt offerings.

            • flyonwall says:

              “We work off the axioms ”
              Who is this we we we we you write kemosabe? Are you a elected official or a self proclaimed representative of this imaginary plural group of people? Not one honest “I” in your entire spiel.

              “Basically go be perpetually depressed and die in a way that suits you but don’t do much else. ”

              Bend the truth just enough so you are not depressed. Do whatever it takes so you feel OK. Pop antidepressants ignore any inconvenient realities. Above all continue to squander resources without it there is no meaning. Lazy bastards not squandering resources.

              “try to focus on stuff you’re passionate about that you know maybe could have high value to someone else ”

              Faced with a lack of meaning brought on by the void of the impending end of illusion desperate attempts are made to find meaning.

              “If we can help to sustain and enhance 1 human life even for a day, as futile as they may sound, it’s worth it,”

              How noble. What a coincidence that your noble mission allows your continued squandering of resources.

            • Daniel Hood says:

              @ flyonwall
              “We work off the axioms ” Who is this we we we we you write kemosabe? Are you a elected official or a self proclaimed representative of this imaginary plural group of people? Not one honest “I” in your entire spiel.

              Before you launch a full scale cyber assault, suggest you practice a little personal self control and read through the exchanges as a matter of common courtesy before you jump in button bashing away. You would then clearly have establish who the “we” is.

              The “we” is the team I work with http://fluxiot.com/ as you would have noted in the exchanges.

              No go forth, be depressed and die in the best way that suits you if all your hope is lost, we’ll give your world a miss thanks and hold out for a little longer.

    • Are there buyers for the North Sea oil and gas assets? Does putting them on the market reduce the value of all oil and gas assets (or is the size too small to make a difference)?

      • Daniel Hood says:

        @ Gail, it’s hot off the press so not sure, still trying to figure out the ramifications. What I do know is, the UK Govt deems this an imminent national security threat given. It’s an enforced fire sale, so we’re going to see Russian retaliations for sure, but then this move could always have been political to begin with. No Russian oligarch does anything, anywhere without Putin first giving his blessing, cross him and they tend to end up dead or in prison. Are BP operating with the bears on any projects? Didn’t CEO BP Bob Dudley once get chased out of Russia with threats of arrest?

        “The UK tried to block the purchase, concerned the Russian tycoon and his company could be put on a sanctions list and jeopardized field development in the North Sea, which provides the UK with half of its energy needs.”

        “Both are very short time periods to find a buyer for assets that are aging, expensive, and in production decline.”

        “Product has fallen 6 % per year between 1999 and 2010, the Economist reported. Low oil prices, which have lost more than 50 percent of their value since summer 2014, also make North Sea drilling expensive and borderline unprofitable.”

        As there is little potential for growth in the North Sea, L1 Energy is looking elsewhere.

        Could be why Libya got smashed to pieces a few years ago with the US “leading from behind” France and the UK leading the charge. Turned out well didn’t it? What with the thousands of refugees drowing, swarming off Italy’s coastline. ISIS warned they would send 500,000 refugees across, weaponizing them, seems like they’re following through on that warning.

        What a mess, it’s all turning into!

        • Not having enough resources to go around seems to lead to bad results. We have had close to enough resources since World War II, and that has kept down the size of wars.

          • Daniel Hood says:

            Look what happened to Germany when it was crushed economically into oblivion between WW1 & WW2. Hitler, with an IQ of 140, filled with rage, anger, hatred and just about every negative emotion under the sun exploited national chaos and despair, turned it into a unified, unchallenged hegemonic beast and unleashed hell on an industrial scale. The rest is history as they say.

  14. sirlansolot says:

    Intersting how ideas are introduced todays fantasy tomorows reality

  15. Kulm says:

    The top 0.001%, or about 70,000, own 30% of the world’s wealth.
    The next 0.01%, or about 700,000, own 19%.
    The next 0.1%, or about 7,000,000, own 32%.

    So the top 0.111%, or less than 8 million people, own about 81% of the world’s wealth.

    Out of the remaining 19%, most of them are owned by the next 1%.

    50% of the world’s population own about 1% of the global wealth.


    It does not really take a lot of energy to maintain 8 million people in eternal luxury.

    • Don Stewart says:

      That is a very interesting observation. But I think the world is not so simple.

      Wealth is the accumulated difference between income and outgo. Most people have no net of income above outgo, and so do not accumulate wealth. The very few who are wealthy have high incomes, but do not spend nearly all of their income…instead they accumulate wealth. Since the wealthy do not spend all their income, they do not consume a proportionate amount of energy.

      In addition to the ‘free market’ cycle I describe above, at the present time the Central Banks are giving the wealthy IOUs from the general public, which consists mostly of people without much wealth.

      Don Stewart

    • Jan Steinman says:

      It does not really take a lot of energy to maintain 8 million people in eternal luxury.

      I disagree.

      Who will feed them? Who will work in their factories? Who will clean their toilets?

      ‘Tis a short-lived parasite that kills its host.

      • Greg Machala says:

        I also disagree. You have to define a life of luxury. If that includes modern conveniences like electronics and electricity then you need the infrastructure to provide that. That infrastructure takes a lot of energy and know-how to create and maintain.

        • Kulm says:

          Louis XIV lived in the most luxurious place in Europe which today’s very wealthy would covet. Add some more modern conveniences which are not that hard to implement even without digital tech, and it could be defined as ‘luxury’.

          Except for digital goods, everything we enjoy were already in service by around 1935.

          • Tolstoy's Degenerate Grandson says:

            Most people in advanced countries live far better lives than the kings of past. The most obvious advantage we have is that we have far better medical care than they had. We live in far better accommodation (try a castle in the winter)

            As for slaves we all have hundreds of slaves working for us day and night. We call them ‘oil’

            I would not for a second change places with an 18th century king.

      • Kulm says:

        20 million slaves, requiring very little energy input, will do the job.


        A few of the privileged will make it to the new civilization. Most of the rest won’t.

    • It does take functioning governments though, and the governments have to do something with the 80%.

  16. Christian says:

    Hi Gail and everybody

    And Paul! I got this for you: your Harvard paper draws one of its stronger scenarios on La Hague’s supposed radioactivity releasing capacity, taking it from another terrorism driven paper:


    If we dig further, this paper mentions another one (not linked) the same guys wrote trying to assess the magnitude of the release in case the smaller pool of the facility went dry. Which is very surprising is this assumption they make:

    “The impact analysis is a rather simple evaluation of the order of magnitude, because we assumed identical dispersion conditions as in the case of the Chernobyl accident. ”

    So they conclude La Hague’s release will be directly proportional to Chernobyl according to the amount of fuel involved. Wich means they are neglecting the fact that at a pool there is usually only one flammable material (zircalloy) to be found and that at Chernobyl this have been greatly multiplied by the graphite in the reactor core. Only graphite can explain the 6,000 feet high hot air column that spreaded so much the stuff, you won’t have anything like this with zirconium alone, no radioactive cloud as in Prypiat.

    And about your DC Bureau article, it just makes no attempt whatsoever to back its mega explosion thesis

    I’ve found also an article at enenews supporting the idea the blowing at Daichii 3 core was due to a small criticality event, wonder how many of these could arise in the future. I wrote to IAEA and they sent me many articles where the chances of criticality are estimated and finally expressed in a mathematical way I can’t understand. Would anybody be able to translate it into something like %?

    Good to see all comments are still interesting. It seems moving to Russia looks not as such a bad choice…

    • Tolstoy's Degenerate Grandson says:

      I’d suggest writing the guy who wrote the report and asking him how he came to those conclusions

      Hui Zhang
      Telephone: 617-495-5710
      Fax: 617-496-0606
      Email: Hui_Zhang@harvard.edu

      Surely, given his background and the institution he was working for, he is not just pulling numbers out of his hat.

      • Christian says:

        Thanks, I will. Btw, I can’t see why do you believe Harvard could be the last word on nuclear issues. I’d rather see IAEA in that role, perhaps I’ll send it to them before

        • Tolstoy's Degenerate Grandson says:

          I researched this topic for considerable time. That was the only information I could find – and it is from a very credible source.

          I’d be interested in seeing something credible contradicting this.

  17. Kulm says:

    This is how the people who do matter think.
    >(parts of the original article snipped)

    >Rich, high-IQ foreigners need somewhere to put their fortunes, and the Bay Area real estate market offers among the best combination of rate of return and stability.
    >. Enormous capital circulating in that region from foreigners and newly minted millionaires & billionaires in the web 2.0 boom & stock market boom. It’s a like a free market feeding frenzy there, of people becoming instantly wealthy despite the left insisting that the American dream is dead and America is in decline.

    > America still center of the universe, and Silicon Valley is the center of America, with Manhattan a close second. Everything that is important in the world is going on there. Tesla, Google, Facebook, Snapchat, Uber, Apple, etc – all in Silicon Valley.

    >. America is an economic safe haven, especially since 2008 and 2013. Other countries are rife with a combination of either inflation, deflation, stagnation and corruption – America has none of that. Real GDP growth of 2-3% may not seem great, but it beats all other g-8 nations.

    >No currency risk. (snip)


    The wealthy is concentrating into a few places. The money will flow around.

    Most of the world is actually fairly insignificant economy-wise.

    Let’s be honest. Even if the poorest 80% of the world disappear tomorrow without trace, it won’t really hurt the global economy too much.

    • Daddio7 says:

      The same can be said for the wealthy. If the global economy collapsed tomorrow the 80% will get along fine without us.

      • Kulm says:

        No. They will be at a loss about what to do . Eventually they will fight among one another, and the winner would tend to be somewhat related to the powerful of the older times.

      • Tolstoy's Degenerate Grandson says:

        Oh come now. When the collapse comes this will be over. Provided we are all not dead from radiation poisoning, luxury will consist of finding a can of dog food hidden in a closet in a burned out house. And hungrily scooping it into your mouth with your fingers.

        Anyone who thinks the wealthy will be able to ride this out is spouting nonsense.

        No energy = no civilization, except at a very basic level.

        • The really wealthy and powerful have underground cities to hide in – such as the one in the Urals that the Russians have been building since the 1970s, and is now larger than Washington, DC.

          How long people can actually live in underground bunkers, only time will tell.

          • Kulm says:

            Actually quite a long time.

            There was a family in Serbia who lived underground. They went hiding when HItler invaded on 1941. They were discovered on 1993, after communism fell.

            Somehow the patriarch of the family kept them alive for 52 years underground.

            • Kulm says:

              And to the best of my knowledge, they did reproduce (I think it was the family of a few siblings which went hiding together).

        • edpell says:

          Colonial America had technology. It was 18th century technology. Landed gentry, crafts people, merchants, and laborers.

    • If the poorest 80% of the world disappear, it will affect commodity markets. Prices will drop, and it will be hard to keep production up. The poorest 80% disproportionately buy commodities, especially food. We actually do need them, to keep the commodity markets in balance.

      • Kulm says:

        Big deal . Mr. Billionaire had $1 billion. he now has $200 million. Still a formidable amount.

        • Tolstoy's Degenerate Grandson says:

          He will have nothing. Because all assets that currently have value will be worthless in a world without energy.

          • Except arable land, livestock, guns and ammo, clean fresh water sources. Those assets should appreciate in value, although the dollars will probably be worthless.

  18. Daniel Hood says:

    21:04:2015: NASA Mission Control: T minus 11m and counting…#CaliforniaGroundZero:

    You’ve all watched Interstellar right? https://www.youtube.com/watch?v=UDVtMYqUAyw
    These guys have it absolutely nailed with that movie except we don’t get to find crazy worm holes to crawl through etc.

    This is the best summary yet about the situ report in NotSoSuperCaliFragilisticExpialiDroughtus

    “As if anyone actually needed another reason to move out of the crazy state of California, now it is being reported that conditions in some areas of the state “are like a third-world country” due to the multi-year megadrought that has hit the state. In one California county alone, more than 1,000 wells have gone dry as the groundwater has disappeared. The state is turning back into a desert, and an increasing number of homes no longer have any water coming out of their taps or showerheads.

    So if you weren’t scared away by the wildfires, mudslides, high taxes, crime, gang violence, traffic, insane political correctness, the nightmarish business environment or the constant threat of “the big one” reducing your home to a pile of rubble, perhaps the fact that much of the state could soon be facing Dust Bowl conditions may finally convince you to pack up and leave. And if you do decide to go, you won’t be alone. Millions of Californians have fled the state in recent years, and this water crisis could soon spark the greatest migration out of the state that we have ever seen.

    “The conditions are like a third-world country,” said Andrew Lockman, a manager at the Office of Emergency Services in Tulare County, in the heart of the state’s agricultural Central Valley about 175 miles (282 kilometers) north of Los Angeles.

    “As California enters the fourth year of a record drought, its residents and $43 billion agriculture industry have drawn groundwater so low that it’s beyond the reach of existing wells. That’s left thousands with dry taps and pushed farmers to dig deeper as Governor Jerry Brown, a 77-year-old Democrat, orders the first mandatory water rationing in state history.”

    I’m telling you folks in America, forget anything that happens outside your borders because that clock’s rapidly counting down.


    • Jan Steinman says:

      You’ve all watched Interstellar right?

      Every evening when I go out to milk the goats! The moon is just past new — good time for sky-watching. Jupiter is high in the sky right now, and Venus is an evening star. Mars sits about 40° in the east, and Saturn is just above the SW horizon.

      But I guess that’s more like “Interplanetary” than “Interstellar.”

      Or were you referring to some aspect of popular culture? 🙂

    • Jan Steinman says:

      I’m telling you folks in America, forget anything that happens outside your borders

      YES! PLEASE!

      [jedi mind trick mode]Repeat after me: there is no cool, wet, resource-rich, undefended country to the north of you. It is just a howling wilderness. You’d die there. Best to sit it out where you are.[/jedi mind trick mode]

      • Daniel Hood says:

        Which Californians could hack Alaska? Might as well vacuum pack em off to Mars via Musk’s SpaceX intergalactic trains 😉

        • Alaska isn’t near so cold as it used to be.

          However, I personally would prefer not to see a migration of Californicators to the Last Great Frontier.


      • edpell says:

        It just takes a pipeline to bring that cool fresh Canadian Rocky Mountain water to California. If there are indigenous people in the way well the U.S. death industry knows how to deal with them. Sorry, Jan, it is not me. Money talks everyone else had better get out of the way or as the aliens said in “Independence Day” when asked what they wanted humans to do “die”.

        Hey nobody lives up there it is too cold. The few that do are overly polite and friendly and will never object.

        • Jan Steinman says:

          Hey nobody lives up there it is too cold. The few that do are overly polite and friendly and will never object.

          It appears that somebody in government here made A Big Mistake and gave First Nations people sovereignty over treaty lands. It looks like they are successfully stopping the Northern Gateway, which would have pumped tar sands dilbit to a pristine port at the head of a difficult, twisty passage on the way to China.

          Who would have known that the worthless ground we forced the aboriginals onto would someday be necessary to run pipelines through?

          • Most of British Columbia natives do not have treaties, it is a real mess how they managed in ~230 years to not successfully make treaties. Seems mostly due to provincial government refusal.

      • edpell says:

        As a member of the TPP Canada no longer has “people” it only has corporations and profits.

        • Jan Steinman says:

          As a member of the TPP Canada no longer has “people” it only has corporations and profits.

          Yea, well, we were never more than “subjects to the Crown,” anyway.

      • Jarvis says:

        Thank God you didn’t mention we have one of the biggest land mass of any country and only 34 million people and a defence force of 100,000 – yikes Portland could annex us!

      • V65.83 says:

        “undefended country “Well I would think the keeper of the great white north would but up a bit of a row. They didn’t do too terribly in WW2. It would be pretty hard to portray the McKenzies as trrists. Of course if you have no water and someone else does.. thirst helps stimulate the imagination. Heres a Idea! They are all french anarchists, splinter members of ISIS. Their fiendish plan conceived in between raping adolescent girls that they then sold into slavery is to bring down the upholders of democracy by withholding water from them. I can smell the cluster bombs already. Its clear whats needed. A humanitarian water pipeline from BC to Vegas. What sort of monster would deny people humanitarian aid?

        • Jan Steinman says:

          All of that bombing and such is unnecessary. We already have a puppet government.

          • V65.83 says:

            “All of that bombing and such is unnecessary. We already have a puppet government.”
            No Jan dont be modest. I think your idea of saving BC from the trrists is worthy of consideration especially since as you say Canada is a vassal state and does not feel the need to defend its resources. Goat meat for all! Huaaa. I just hope that post collapse the mega humans in the seatac area dont see fit to cross that bit of water to sample the delicacy of goat meat and Victoria women. Black ball has a piraty sound dont you think? What was that zombie flick in Everett Wa. where they held up in the mall then made a run for a boat and the islands?

    • We forget that “fixing” these problems would take a huge amount of energy and mineral resources. We would likely need many, many huge desalination plants and pipelines to try to work around the California drought. It couldn’t be done, even with $20 barrel oil, I expect.

  19. Stefeun says:

    * 1177 B.C.: The Year Civilization Collapsed, by Eric H. Cline *

    This is a book about the global collapse that happened at the end of the Bronze Age.
    An excerpt from a review (http://press.princeton.edu/titles/10185.html):
    “In 1177 B.C., marauding groups known only as the “Sea Peoples” invaded Egypt. The pharaoh’s army and navy managed to defeat them, but the victory so weakened Egypt that it soon slid into decline, as did most of the surrounding civilizations. After centuries of brilliance, the civilized world of the Bronze Age came to an abrupt and cataclysmic end. Kingdoms fell like dominoes over the course of just a few decades. No more Minoans or Mycenaeans. No more Trojans, Hittites, or Babylonians. The thriving economy and cultures of the late second millennium B.C., which had stretched from Greece to Egypt and Mesopotamia, suddenly ceased to exist, along with writing systems, technology, and monumental architecture. But the Sea Peoples alone could not have caused such widespread breakdown. How did it happen?

    In this major new account of the causes of this “First Dark Ages,” Eric Cline tells the gripping story of how the end was brought about by multiple interconnected failures, ranging from invasion and revolt to earthquakes, drought, and the cutting of international trade routes. Bringing to life the vibrant multicultural world of these great civilizations, he draws a sweeping panorama of the empires and globalized peoples of the Late Bronze Age and shows that it was their very interdependence that hastened their dramatic collapse and ushered in a dark age that lasted centuries.”

    It confirms that the recipee for a global collapse is a global interconnectedness/interdependance (which is necessary for an increase in complexity).

    Some also highlight concomitant factors,
    like Linda Marsa insisting on the prior changes in climate, in a short sci-fi essay (http://aeon.co/magazine/society/welcome-to-earth-population-500-million/),
    “But a 2012 study revealed that surface temperatures of the Mediterranean Sea cooled rapidly during the years around 1200 BCE. Archeological records suggest this precipitated a severe drought that led to food shortages, mass migrations, and internal rebellions by poor and agrarian peasants. Ultimately, the major cities of these once-thriving Bronze Age societies were destroyed by invading armies likely fleeing their own drought-stricken homelands, prompting the loss of culture, languages and technologies. The result was the first Dark Ages – the late-Bronze Age crash – when these once-sophisticated and complex societies ceased to exist. It took centuries to recover and rebuild.”

    or François Roddier who additionally blames the unique currency (see §.12 of the presentation he made on March 12; google translation of the transcription: https://translate.google.com/translate?sl=fr&tl=en&u=http%3A//francois-roddier.fr/pdf/Shift-Roddier.pdf),
    “12. The economic transitions:
    Like animals, man tends to deplete natural resources. Maltus had seen it. Historically, it started with the depletion of arable land. Then there was the case of raw materials. The end of the Bronze Age is located at 1177 BC. JC 13 . The precise date can surprise. Physicists speak of abrupt transition. This was indeed the case.
    Everyone today knows that our oil resources have reached their peak production. But oil has become one of our major energy resources. It means that the energy prices will rise inexorably. Therefore its inverse, the temperature T of the economy (Section 10) will decrease and go below the critical point. This leads us to an economic transition.
    This is reflected by the growing debt of the society. The case of a society isolated or largely dominant, does not pose too many problems. This society re-issues currency because it can support a devaluation. The problem arises when several states conduct trade with the same currency. This was the case in 1177 BC where different Mediterranean civilizations were committed in intense trade with a single currency, the gold. This is the case today in Europe where different countries are engaged in trade business with a single currency the Euro.”

    No doubt that many conditions are required for a collapse, which can then be triggered by any trivial detail, but IMHO what determines the amplitude of the crash seems to be the level of inteconnectedness. Today we’re globally tight-coupled.

    • Jan Steinman says:

      Brilliant work, Stefeun! I never knew about the abrupt end of the Bronze Age. I do recall something about iron being somewhat inferior, but more plentiful and able to be worked at lower temperatures, thus reducing the amount of wood needed. In other words, civilization devolved from bronze to iron, rather than evolving.

      Panarchy theory describes a loop in three dimensions, and notes that interconnectedness and resource use increase to a point where they cannot be sustained, resulting in rapid dissolution. If too much resource is consumed or damaged, the next time through the loop is at a much lower amplitude.

      This also fits in well with Tainter’s theory that, at some point, a civilization becomes so complex that all its resources are devoted to maintaining that complexity, leaving little or nothing left over for stuff like, well, food, for example.

      Isn’t it great to live in such interesting times!

      • Stefeun says:

        Thank you Jan,
        it wasn’t a real work, though, I just quoted texts written by others.
        Your mention of the Panarchy cycle is interesting, as there seems to be a great similarity with the Carnot-type thermodynamical cycles F.Roddier describes in his presentation (which I haven’t been able to fully grasp, so far).

      • Iron, you just need the iron and charcoal to make it. Bronze, you need tin and copper, which often occur far away from each other. The Greeks and Romans probably got Tin from England and Copper from what is now Turkey, for example, which is quite a long supply chain with the ships and sails they had at the time.

    • This is another one you should flesh out for a blog article SF!


      • Stefeun says:

        Thanks RE, but I won’t, as it’s not my production and my historical knowledge is unsufficient (and I didn’t even read the book!).

    • richard says:

      From the Q&A …
      ” On the other hand, when one thinks about it, that in itself makes sense — civilizations have survived droughts; they have survived famines; they have survived earthquakes; they have survived invaders; but in almost every case, they only had to handle those disasters one at a time. So, when there are multiple disasters all at once, that’s when civilizations might not be able to outlast and survive them. And that seems to have been the case at the end of the Late Bronze Age.”

      Seems like this was _not_ a collapse caused by Complexity – though the prologue is intriguing. Thanks Stefeun, great find, another book to read … 🙂

    • richard says:

      @Stefeun … “When the wealth gradient reaches a critical value, economic cycles are self
      organize.” – Roddier (11 Economic Cycles)
      Has this gained something in translation?

      • Stefeun says:

        not that I’m fully sure of my understanding, but I think F.Roddier doesn’t talk about economic activity, but about economic cycles, ie the full loop development/production/obsolescence/transition (in the latter 2 phases a parameter is decreasing, resp. the potential and the volume).
        I agree that his phrase is prone to misunderstanding, but I’m pretty sure that he doesn’t mean that inequalities create economic activity. I know he’s convinced that the so-called “trickle-down” theory is utter nonsense.

        As for your previous comment, I didn’t say that collapse was caused by complexity, my point was rather to say that the magnitude of the collapse is directly related to the level of interdependance/interconnectedness, that is slightly different.
        Kinda like the domino effect, if they’re distant enough to one another, one of them can fall without impacting the others, but if they’re too close, the initial shock propagates to all dominoes.

        • Don Stewart says:

          Dear Stefeun
          The Google translation of the article left a little to be desired. But the thought I had as I read about the ‘inequality’ requirement is similar to the statement that at a uniform temperature, there is no flow.

          So if I am a farmer growing wheat, and you are a farmer growing beans, and we are both getting maximum productivity from our land and our capital and our skills, then we will trade with each other. If our farms, our land, our capital, and our skills were identical, then we would not trade. Each of us would simply grow some wheat and some beans and use ourselves what we produce. We would avoid the costs of trade.

          Don Stewart

          • “We would avoid the costs of trade.”

            It totally depends on what school of economics you believe in, whether trade is a frictional cost or whether trade is the most important thing in the world.

            If you specialize, you can be better at a smaller number of skills, but on the other hand, if you focus too much on specialization, you end up with monoculture farming.

    • Tolstoy's Degenerate Grandson says:

      Thanks for the recommendation. I’ve been using the Audbile service when driving and this book is available:


    • Interesting! I looked at the Roddier article, and found it especially interesting. This is the clearest explanation I have run into regarding the parallels with the situation in chemistry.

      Roddier talks about the need for two currencies, but it is not clear to me that this solves the problem–interchangeable currencies are close to equivalent. Also, in our current situation, Roddier talks says, “What we are proposing here is to create a two way metabolic: one related to fossil fuels; one related to renewable energy.” I don’t think that Roddier understands that most of what is called “renewable energy” is, in fact, part of the fossil fuel system. This supposedly renewable energy also draws down irreplaceable stocks of high quality ores. Totally renewable energy is way too close to the empty set, at least in comparison to what we are used to.

      Also, Roddier seems to see a second circular economy taking the current economy’s place. With the amount of truly renewable energy available and degraded state of resources, this would support very few. Also, humans have evolved to use more energy than they receive from food. A “circular economy” is not possible for this reason. It also could not include any minerals mined from the soil, since concentrated mineral ores are a one-time gift. Even reprocessing does not fix this problem, because there is always a loss, even in recycling. I think his attempt at salvation doesn’t work. His diagnosis seems to be right, though.

      • Stefeun says:

        I agree, Gail,
        and I’m convinced that Roddier knows that humans and their domesticated species will soon have to live within the solar budget (far lower than current “fossil budget”).

        I think his purpose is not to avoid the unavoidable crash of BAU, but to help mitigate the negative effects of the collapse.
        From this point of view, his proposal is not stupid at all, because complementary currencies have interesting virtues, as the economist Bernard Lietaer has been showing for years (Roddier’s theory somewhat confirms Lietaer’s semi-empirical findings).

        Lietaer denounces the “positive interest rates” and promotes a diversity of currencies:
        “The use of positive interest alone is responsible for driving (1) the short-term thinking that drives our economic decisions, (2) the relentless pressure for economic growth which feeds hyper-consumerism; (3) growing inequities; (4) the greed and rampant speculation which regularly make the front page of our media, (5) and the weakening of social ties and erosion of community.(…)
        Promoting a healthier monetary system requires the use of three different kinds of currencies alongside our national currencies: (1) an inflation-proof global complementary currency designed to stabilize the world economy; (2) business-to-business currencies designed to counteract the effects of conventional money shortages during periods of economic crises and contraction; and (3) community currencies that address a variety of social problems and strengthen the fabric of society.”

        “A number of pioneering governments, businesses and communities around the world have successfully experimented with new monetary systems for years, and with great results. We have at our disposal all the monetary tools we need to reduce poverty, clean up the environment, and provide access to meaningful work, housing and health care. It is now time to use them on a larger scale. A world of sustainable abundance is actually possible, but only if we are willing to upgrade our monetary system so that we can begin to leverage true human wealth, which is our energy and creativity. Will you please join me in making sure that we do not miss this opportunity? Your own future, the future of your children, and of this extraordinary planet is at stake.”

        Unfortunately, B.Lietaer seems to completely miss our energy problem. Such alternative monetary systems -more or less related to gift economy- can for sure improve the social link and wellbeing of the users, but our main problem remains, i.e. the decreasing (crashing?) net energy input in our global system, which will lead to the disappearance of our actual main currencies. Maybe they can help during the transitory phase, however, if ever the path “from here to there” lets some room for islands or steps of stability.

        • The gift economy is what existed before current financial systems. I expect that is what we really will have to transition back to. To transition back to this, we need to operate is such small numbers that we know everyone else (thus, fewer than 150 people). A gift economy can co-exist with the current economy, and in fact does, through families and churches. But I am doubtful about another different financial system making a difference.

    • Kulm says:

      Egypt, which was like the United States of now, survived, thanks to Ramses, the pharaoh Hollywood loves to hate (even though he probably had nothing to do with Moses).

      Such will be the fate of the elites. A hero will save them.

  20. Steve Jermy says:

    Hi Gail,

    This is a fascinating analysis, and the question is how do the consequences show up in the monetary system, as deflation or inflation or stagflation? A very difficult question to answer, I know, because it in turn depends on the imponderable of what will the Fed and other central banks to in response to continuing reduction in prices – commodities, wages and discretionary expenditures?
    My guess is that they’ll try to generate inflation, through further QE, perhaps helicoptered in as Steve Keen suggests, with the possible quite different outcomes that either it doesn’t work, and deflation sets in; or it overworks, and hyperinflation sets in; or deflation is followed by inflation.


    • I think the result will be “none of the above”. Governments will fail; goods won’t be available; banks will close. We think in terms of what we have known before, but they don’t really don’t match up with what is coming.

      One scenario we can understand–derivatives and debt defaults will hobble banks. Governments will not be able to take on more debt to bail out all of these banks. Instead, they will take the majority of accounts in many banks to offset the losses. Businesses will be unable to pay their employees. Even those who thought that they had money in the bank will find that it has mostly disappeared, or is lost to $100 per week withdrawal limits. Supposed insurance on accounts won’t really work.

      Another scenario: The electrical system mostly stops working. Banks can’t figure out what deposits and loans people had. We need to start over.

  21. Tolstoy's Degenerate Grandson says:

    The problem with radiation:

    Four years after an earthquake and tsunami destroyed Japan’s Fukushima nuclear plant, Tokyo Electric Power Co. is still at work trying to clean up the scene. This month TEPCO sent two specially-designed shape-shifting robots into the Fukushima No. 1 nuclear reactor to assess the damage.

    The first of the unnamed snake-like 60 cm (24 in) robots—which use wheels to roll along in a “C” shape and convert to an “I” shape to shimmy through pipes—got stuck after moving about 10 meters (pdf) into the reactor’s ruins on April 10, and was abandoned. The second robot, which took a different route yesterday, completed its mission, but was also abandoned after it suffered damage to its camera from the high radiation levels.

    Even if the robots hadn’t been damaged, a Pixar-style “WALL-E” ending was never in the cards: As IEEE Spectrum notes, the robots became so radioactive that they would have been permanently stored in a shielded box if they had returned from their missions.

    Before their demise, the robots—designed by the International Research Institute for Nuclear Decommissioning and Hitachi-GE Nuclear Energy—measured radiation levels of 5.9 sieverts an hour. By comparison, brief exposure to levels of 10 sieverts per hour would cause death within a few weeks for humans.


    Keep in mind that Fukushima is still being cooled by thousands of tonnes of water being pumped onto the melted cores. If that were halted we the release of radiation would be astronomical and unremitting.

    Of course post collapse we could ask for volunteers to pour buckets of water on this nightmare, replacing them each shift as they died like those robots.

    • If there is one thing that could come from a mass awareness of the situation, it would be a mass drive to dry cask as much fuel as possible now, and to have dry casks on hand to continue the process as soon as fuel is cool enough to be dry casked.

      It seems amazing to me that there is so much complacency within the nuclear power industry.

      • Stefeun says:

        One thing that amazes me in this case is the design: they placed the spent-fuel pond above the reactor:
        “The (spent-)fuel assemblies are situated in a 10 meter by 12 meter concrete pool, the base of which is 18 meters above ground level.”

        18 meters high!! I assume they have been reluctant to place it higher…
        And of course:
        “The pool was exposed to the air after an explosion a few days after the quake and tsunami blew off the roof. The cranes and equipment normally used to extract used fuel from the reactor’s core were also destroyed.”

        So before even thinking of dry-cask, they first must imagine how to remove the rods, some of which are likely distorted, moreover.
        “Tepco initially planned to take two years before reducing the schedule to one year in recognition of the urgency. But that may be an optimistic estimate.”

        The quotes are from the Reuters article already linked by TDG (http://www.reuters.com/article/2013/08/14/us-japan-fukushima-insight-idUSBRE97D00M20130814)

        • Reactor #4 has had all the spent fuel rods removed as of December, 2014.


          The other three reactors, 1, 2 and 3, the spent fuel ponds were not damaged or leaning, so they are “safe”, plus the reactor cores of all three melted down so they are too radioactive to work on.

          I was referring more to the >1000 operational reactors in the world, that the spent fuel ponds should have any racks that have sat for 10+ years dry casked, which would also lower the total amount of rods in the ponds, reducing the heat and in some cases, maybe eliminating the need for constant active cooling.

          The spent fuel ponds were originally designed to passively cool, without needing circulating pumps constantly running. As they kept loading them tighter and tighter with more and more fuel, we end up with the situation we have now where a couple hours without cooling and they start boiling off water and separating oxygen/hydrogen, forming an explosive mixture.

          • Tolstoy's Degenerate Grandson says:

            It would appear that one core would be all that is needed to destroy the world, based on the information below.

            In comparison, Fat Man and Little Boy weapons dropped on Hiroshima and Nagasaki contained less than a hundred pounds each of fissile material – See more at: http://www.dcbureau.org/20110314781/natural-resources-news-service/fission-criticality-in-cooling-ponds-threaten-explosion-at-fukushima.html

            A typical 1 GWe PWR core contains about 80 t fuels. Each year about one third of the core fuel is discharged into the pool. A pool with 15 year storage capacity will hold about 400 t spent fuel.

            Is this not the ultimate hubris? Man believed in his brilliance to such an extent that he assumed he could always innovate his way out of the most complex problems.

            Even Edgar Allan Poe couldn’t come up with something so nightmarish.

            This is one subject that stays on FW. I would not dream of suggesting to anyone that this is what awaits us (at risk of being shipped to the asylum).

      • Tolstoy's Degenerate Grandson says:

        That would appear to make sense. Yet not only is that not happening, we are producing more spent fuel every day and more nuclear reactors are being built.

        So one has to ask the question – why?

        I believe the answer is that it does not matter if we continue down this path. Based on this information we are already dead no matter what we do once the collapse of civilization comes

        In comparison, Fat Man and Little Boy weapons dropped on Hiroshima and Nagasaki contained less than a hundred pounds each of fissile material – See more at: http://www.dcbureau.org/20110314781/natural-resources-news-service/fission-criticality-in-cooling-ponds-threaten-explosion-at-fukushima.html

        A typical 1 GWe PWR core contains about 80 t fuels. Each year about one third of the core fuel is discharged into the pool. A pool with 15 year storage capacity will hold about 400 t spent fuel.

        If I know this you can be damn certain the PTB are very much aware of this.

        • gerryhiles says:

          Hi TDG, this may help you out a bit: http://enenews.com/tv-radioactive-waste-spilling-pacific-ocean-after-power-outage-hits-fukushima-radiation-expert-plant-radioactive-unstable-never-be-contained?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+ENENews+%28Energy+News%29

          BTW I assumed that [profanity deleted — moderator] was probably a global extinction event within the first month of the accident happening and joined Enenews shortly thereafter, but got banned after a few months because I called the “alternative energy/technology/survivalist, etc,” commenters “muppets”.

          I still follow the site – get near-daily updates – for obvious reasons and I notice that there are FAR fewer “alternative” types around.

          • Tolstoy's Degenerate Grandson says:

            Gerry – here’s an interesting observation I have made.

            I have corresponded with ‘Tyler’ at Zero Hedge over a letter that he published that vehemently stated that the US woes are due to corruption and stupidity within the government and central banks – and that all would be well if those could be eliminated.

            I submitted a letter stating that the problems are all related to the end of cheap to extract oil and that there was no solution.

            He disagreed and left it with ‘the central bankers are stupid – that is why we are where we are’

            Of course he cannot go where man has never gone before. He can NEVER accept my ultra-logical argument because it would make his website irrelevant because the site is entirely about moaning and bitched about the PTB and the MSM.

            If he were to take the position that energy is the problem then the discussion would be over.

            In parallel we have the Finite World blog. I have presented very strong evidence from an eminent scientist stating that a single fuel pond left unmanaged would result in an atomic explosion many thousands of times larger than the Little Boy bomb.

            This renders all discuss on this blog irrelevant. So members choose to disagree (without any facts) or worse, simply dismiss it because all discussion of the finite world would need to end.

            Rather amusing how the human psyche operates. If we don’t like that 1+1=2 … we make it equal 1098, or 2877654, or 0.

            Too bad the mind cannot conjure up find of a few trillion barrels of cheap oil!

        • Jan Steinman says:

          In comparison, Fat Man and Little Boy weapons dropped on Hiroshima and Nagasaki contained less than a hundred pounds each of fissile material

          Apples and oranges comparison. No, not even that — more like apples and concentrated malic acid comparison.

          A nuclear weapon is a highly efficient device, painstakingly designed and crafted by thousands of scientists and engineers to produce the biggest bang for the least amount of material. A cooling tank is a random assortment of industrial garbage, albeit garbage capable of producing considerable heat.

          One might just as well note that computer chips and sand are both made of silicon, so all the ocean beaches are about to turn into giant computers.

          I’m not defending nuclear power here, of which I am vehemently opposed. But neither do I take kindly to needless fear-mongering.

  22. Siobhan says:

    What a Kaisa Dollar Debt Default Could Mean for Creditors
    Kaisa Group Holdings Ltd. may miss $52 million of interest payments on two of its offshore bonds, becoming the first Chinese real estate company to default on its U.S. currency debt.

    • Thanks! It is hard to believe that all of the debt associated with the large amount of housing in China will ever be repaid, even with lower interest rates and extended payment terms.

    • Siobhan says:

      China government firm’s default shocks market — Is more to come?
      HONG KONG (MarketWatch) — Chinese power-equipment maker Baoding Tianwei Group made history this week, becoming the first-ever Chinese government-owned company to default on its debt.
      The news came just one day after another milestone, in which Kaisa Group Holdings 1638, -1.89% became the first Chinese real-estate developer to default on a U.S.-dollar-denominated bond. But it was the Tianwei case that holds far greater implications for Chinese markets: State-owned enterprises (SOEs) such as Tianwei are traditionally seen as enjoying implicit government support and therefore possess lower default risks.

      • I agree–this is a shock. But this debt is not a direct government debt, so that might be the excuse. Not all of the debt outstanding can be paid.

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  24. Don Stewart says:

    Dear Gail and Finite Worlders

    This will be an attempt to expand a little bit on Toby Hemenway’s essay:


    I want to begin with four examples of real world problems. Two of them involve me, while the third I steal from Harari’s book Sapiens. The fourth I steal from Jean Martin Fortier, a small farmer in Quebec.

    First, consider the plight of an older male whose brain agility is not what it once was. He is trying to set the table with utensils for two people. Now, ordinarily, there are still some unused utensils already on the table from a previous meal. The problem the old guy has to solve is to get the correct utensils on the table with a minimum of wasted effort. A little reflection will reveal that this is a two by four problem: two place settings by four different utensils (knife, fork, small spoon, soup spoon). Do you think that the old gentleman can look at the table, commit the 8 data points to short term memory, turn around to the utensil drawer, pick out the needed utensils, and then place them where they are needed? The answer is that about the time I turned 70, that task exceeded my declining abilities.

    If you treat this as an industrial engineering problem, you can think of many solutions. For example, always pick up 8 utensils and put the unused utensils back in the drawer. That is a sort of ‘abundance’ way of solving the problem. But it doesn’t seem to me like a very elegant solution. Another possibility is to recruit my wife to stand at the table looking at what is needed, and yell at me…a solution all too frequently chosen by long time married couples.

    My solution is to count the number of each utensil I need, regardless of which place setting needs it. So I remember that I need one knife, one small spoon, no forks, and two soup spoons. I get them from the drawer, turn around, and let the visual cues tell me where to put them.

    My solution is, I think, a sort of ‘permaculture’ solution. It’s a design that works for me to accomplish the work I need to do with efficiency and pleasure. I get a little burst of good hormones when I successfully complete the task.

    Second, consider the problem of planting what Carol Deppe calls her ‘harvest all’ crops. ‘Harvest all’ crops are densely seeded, grow rapidly, and are harvested quickly as greens…which are the most efficient use of sunlight. BUT, they are annuals…which grow like weeds because they are weeds…but also leave the soil uncovered between crops. If one has a thunderstorm while the soil is uncovered, one is almost certain to lose some soil to water erosion…as happened to me last night. How to prevent the soil erosion? I think there are only two potential solutions. First, one can swear off annuals and only plant perennials. That will work, but designing a highly productive perennial system is not child’s play. Second, one can build some sort of structure which prevents the soil from eroding. For row crops, at the garden scale, a wood chip mulch works well:


    But I am dealing with a broadcast of annual seeds. Wood chips are not the solution. So I am messing around with row covers suspended above the garden plot. The idea being that the row cover dilutes the power of the most destructive force on Earth…a raindrop hitting bare soil. My solutions are not yet ready for prime time, but I’m working on it.

    Third, consider the ruins of Gobekli Tepe, from 9500 BC. The foragers who built it had quite a sophisticated society and ability to construct. What they built had no obvious utilitarian purpose. ‘That leaves us with the theory that they were built for some mysterious cultural purpose that the archaeologists have a hard time deciphering….Only a sophisticated religious or ideological system could sustain such efforts.’ ‘Gobekli Tepe suggests that the temple may have been built first, and then the village later grew up around it.’

    One of Harari’s main points in the book is that a religion or ideology is necessary to get large numbers of people to work on a project for the common good. A small band can get by just doing favors for each other, but the thousands of nomads who built Gobekli Tepe did not all have interpersonal debts sufficient to repay them for all the labor they expended. Therefore, there had to have been a religion or ideology.

    Official ‘Permaculture’ has some Principles. The Principles are an attempt to put in place an ideology (I wouldn’t call it a religion) which can facilitate the coordinated efforts of a large number of people. The picture of the circle of people in the Resilience article was not in Toby Hemenway’s essay…it was added by Resilience. However, it is not out of place, because something similar probably happened regularly at Gobekli Tepe.

    Toby is fond of showing the painted streets used for neighborhood parties in Portland, OR. Projects and rituals and celebrations like the painted streets which bring people together in a common purpose are also probably very similar to what happened at Gobekli Tepe.

    Fourth, I was at a farming conference back in February. The permaculturist Peter Bane was our guest of honor. I had, about a week before, heard Jean Martin Fortier talk at the Duke Gardens. Several people at the conference were complaining about the difficulty of making any money with a small farm. Jean Martin and his wife make a pretty good living on their very small farm. Jean Martin is one of the most disciplined farmers I know. When he designed his farm, he located the toilet centrally to minimize the time spent walking to the toilet. This attention to detail and efficiency marks everything he does. He has also succeeded in building his soil carbon level up to 14 percent…as compared to less than 2 percent on the average farm in North America. I remarked to Peter Bane about the designed location of the toilet. Bane told me, ‘that’s why he is successful’.

    I think Toby Hemenway is right that permaculture is much more about engineering than it is about science. Efforts to try to make permaculture into a scientific enterprise are probably futile. Science can reveal to us the importance of a soil food web and high carbon content in the soil…but the engineering methods used to achieve those goals will vary farm by farm and plot by plot. The achievement of the goals requires that we have a good set of tools in our kit. Mollison and Holmgren laid out some tools 40 years ago. They also gave us the Principles, which they hoped would facilitate cooperation among large numbers of basically Anarchist people. But their books should never be taken as some Gospel. Following instructions is likely to just get you into trouble.

    My take on our situation is:
    A. The systemic threats to humanity’s continued existence are real.
    B. We have a fairly good set of tools dealing with food, water, and shelter. Most people, however, are woefully ignorant of the tools which will likely be required in the not too distant future.
    C. We currently have the best system ever devised to foster global cooperation…the globalized system of capitalism. However, Peak Everything may lay waste to Global Capitalism. It is time to think very deeply about Gobekli Tepe.

    Don Stewart

    • Stefeun says:

      Thanks Don,
      my pick off Toby Hemenway’s article:

      “What a relief to find that a whole-systems approach could tie together the many disparate pieces of my life.”
      my comment: what a shame we have chosen to manage everything in the exact opposite way. Or maybe we had to, then the shame is to have been unable to oppose any significant resistance, in aggregate.

      Another interesting text by Toby Hemenway, published on OFW 2 years ago: http://ourfiniteworld.com/2012/12/26/is-sustainable-agriculture-an-oxymoron/

    • edpell says:

      Don, unfortunately the belief that ties the U.S. together is war, fear, and death. One might just say Satan for short.

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  26. Just to let everybody know, I have Revamped the Diner News Page and now have Tickers running from all the major Collapse and Econ/Climate/Energy Blogs, including Our Finite World.  It’s very easy and quick now to check for articles on all these sites.  The Links bring you to the site originating the article.

    Also, on the Diner Blog Right Nav Bar, I also am running feeds from my two favorite Off Site Commentariats to Poach, here and on Economic Undertow. 🙂

    Currently, all the feeds are only updating once a day, but we are working on speeding that up.

    The Diner Collapse Newz Page has its own URL, DOOMSTEADDINER.COM


    Also we are editing a Podcast we did with Gail right after she disembarked the plane from China. 😀

    Should be by next weekend.



    • Rodster says:

      Nice site except it brings my laptop to a crawl and that’s even with Flash and Javascript disabled.

      • You need to upgrade. lol.

        Seriously, it is intensive of dynamic memory. If you are running a lot of background Apps or have a lot of open windows, it will slow you down for sure. However, I am working with and end-of-lifespan 3 year old laptop, and even with full flash and java running, it moves OK as long as I am relatively clean with what else I am running.

        It’s not near as bad as Zero Hedge. With all the scripts they are running, it locks me up all the time.

        Try first off rebooting, and then also go to your Start Menu to see what shit your laptop is running in the background, which is usually a lot these days because every damn app you load comes with some feedback loop to keep tabs on your usage. Uninstall all the garbage and it should run OK on a decent computer.


        • Jan Steinman says:

          Nice site except it brings my laptop to a crawl and that’s even with Flash and Javascript disabled.

          You need to upgrade. lol.

          Woa, am I the only one suffering from cognitive dissonance here? The notion that a website devoted to the end of civilization as we know it requiring state-of-the-art hardware in order to even view is pretty strange to me!

          I am working with and end-of-lifespan 3 year old laptop, and even with full flash and java running, it moves OK as long as I am relatively clean with what else I am running.

          Pass. My computer is over ten years old. I don’t plan on replacing it. Ever. (I might get a couple more of the same model as a spare cache.) If a site behaves badly or slowly, I just move on.

          Meanwhile, my website has an average page load of under 70kB, including all images and scripts (a wee bit of Javascript to run the image pop-ups on the buttons).

          Uninstall all the garbage and it should run OK on a decent computer.

          Perhaps time to take your own advice, RE?

          Just as people have informal competitions to see how frugal they can be, perhaps you can “uninstall all the garbage” from your website, so it will “run OK” on a frugal computer?

          • JS, I have ZERO problem with the hypocrisy involved with using high tech/energy intensive media as we attempt to disseminate the information that everyone needs to know before the Internet Goes Dark TM. This is a race against time now, and you use everything available to get the message out.

            Did Gail not just take inummerable Plane flights not only to/from China, but around China as well gathering and disseminating information? This is less hypocritical? What?

            In a few years, your 10 year old laptop and my 3 year old one will be equally useless waste in some landfill somewhere. UNTIL then though, my 3 year old one runs all the scripts and does a decent job with getting the message out. If I need to buy a new one and upgrade again, I will do so. The better the tech I have, the better able I am to disseminate information. The better the tech you have, the better able you are to receive said information.

            I’ll make use of this stuff so long as it is available to use. This is CFS.


            • Tolstoy's Degenerate Grandson says:

              ‘Disseminate the information’

              What information — that we are all about to die? That there is nothing that can be done about this?

              I don’t see why anyone wants to disseminate this information – to what purpose?

              To say ‘look you idiots – you are about to suffer and die — wake up!’

              And wake up to what? Wake up to have this bitter knowledge lurking behind every thought, every decision, every waking moment? To have this awareness charge in the moment one thinks of planning for any sort of future knowing there is no future for oneself or one’s children?

              This knowledge should be locked into a steel box and dumped into the deepest ocean trench.

              This knowledge is a pox to those who have it. Unfortunately, once the epiphany has been had, there is no unseeing this terrible truth.

              I envy those who are able to believe that solar and wind or thorium or some other nonsense will save the day. What a precious talent that is

            • “What information — that we are all about to die? That there is nothing that can be done about this?” TDG

              Has anyone ever mentioned to you that you emanate a lot of NEGATIVE WAVES?

              I don’t agree that EVERYBODY will die, just MOST people will die.

              I also don’t agree nothing can be done about it.


            • Tolstoy's Degenerate Grandson says:

              I can thump on a drum and spout positives while dancing about the fire as we all share a loaf of bread and a jar of peanut butter if you like.

              But I like facts.

              And the facts are we are about to enter a situation where there will be no energy (beyond using trees for fire) or industry — and we have thousands of spent fuel ponds scattered around the planet.

              They require a fully functioning BAU with supply chains, spare parts and energy to manage them.

              That is very obviously not going to be possible.

              Therefore we are facing an extinction event:

              Containing radiation equivalent to 14,000 times the amount released in the atomic bomb attack on Hiroshima 68 years ago, more than 1,300 used fuel rod assemblies packed tightly together need to be removed from a building that is vulnerable to collapse, should another large earthquake hit the area. http://www.reuters.com/article/2013/08/14/us-japan-fukushima-insight-idUSBRE97D00M20130814

              The problem is if the spent fuel gets too close, they will produce a fission reaction and explode with a force much larger than any fission bomb given the total amount of fuel on the site. All the fuel in all the reactors and all the storage pools at this site (1760 tons of Uranium per slide #4) would be consumed in such a mega-explosion.

              In comparison, Fat Man and Little Boy weapons dropped on Hiroshima and Nagasaki contained less than a hundred pounds each of fissile material – See more at: http://www.dcbureau.org/20110314781/natural-resources-news-service/fission-criticality-in-cooling-ponds-threaten-explosion-at-fukushima.html

              A typical 1 GWe PWR core contains about 80 t fuels. Each year about one third of the core fuel is discharged into the pool. A pool with 15 year storage capacity will hold about 400 t spent fuel.

              To estimate the Cs-137 inventory in the pool, for example, we assume the Cs137 inventory at shutdown is about 0.1 MCi/tU with a burn-up of 50,000 MWt-day/tU, thus the pool with 400 t of ten year old SNF would hold about 33 MCi Cs-137. [7]

              Assuming a 50-100% Cs137 release during a spent fuel fire, [8] the consequence of the Cs-137 exceed those of the Chernobyl accident 8-17 times (2MCi release from Chernobyl). Based on the wedge model, the contaminated land areas can be estimated. [9] For example, for a scenario of a 50% Cs-137 release from a 400 t SNF pool, about 95,000 km² (as far as 1,350 km) would be contaminated above 15 Ci/km² (as compared to 10,000 km² contaminated area above 15 Ci/km² at Chernobyl).


              Blather on as much as you like about my negativity. But unless you have a solution to managing these monsters, then you are nothing but white noise.

              Have you noticed that the PTB are (other than militarizing the police) doing nothing in anticipation of the end of days.

              Their only response to the fact that we have hit the end of growth is to pour out more money to try to keep delay collapse as long as possible.

              They know what I know.

              They know that there is no possible way to manage these spent fuel ponds and that when they explode they will shower the planet for decades with massive amounts of radiation that will kill everything that moves.

              Just because you don’t want this to happen. Just because it is unthinkable. Just because your mind can deploy the defense mechanism known as cognitive dissonance permitting you to actually believe that 1+1 = 3 and not 2.

              Well, that does no dispel the facts.

              Unless you are a cockroach (do they really survive high radiation doses?) then you will not be around for very long post collapse. None of us will

              Given that not a single one of us is equipped with the knowledge or the mental facilities to live in what will be very primitive post collapse conditions, I expect most will welcome death.

            • Perhaps we should instead be focusing on what we can do today instead, since none of us can really fix the spent fuel problem. Maybe it is this bad, maybe it isn’t. Worrying about it doesn’t really do any good.

            • gerryhiles says:

              I agree with not worrying about things we can do nothing about, which is why I get on with things I can affect “as if” there wasn’t resource depletion, a crazy financial ‘system’, possible nuclear war, Fukushima and so on and on.

              I know that what I write and other things I do will have zero global impact, but discussion is interesting in its own right and what I am mainly focussed on now is about obtaining justice in a local context of aged care, which I cannot help doing because I’m just being myself.

            • Jan Steinman says:

              Maybe it is this bad, maybe it isn’t. Worrying about it doesn’t really do any good.

              Worth repeating!

              On the other hand, it may be worth having some simple precautions. There is a much greater chance of a continuous build-up of background radiation levels, punctuated by acute spikes. One can do certain things to ameliorate that.

              On still yet another hand, an asteroid could come crashing into the Earth. I find that equally worthy of my excess worry.

            • richard says:

              @TDG … “The problem is if the spent fuel gets too close, they will produce a fission reaction and explode with a force much larger than any fission bomb given the total amount of fuel on the site.”
              And you have a link to a reputable source or the calculations for that? … Thought not …
              I’ve also read that the quickest way to solve the problem is to simultaneously explode three or four tactical nuclear devices at Fukushima … I doubt that would work, but TBH that’s somewhat above my pay grade …

            • Tolstoy's Degenerate Grandson says:

              Feel free to ask the guy who wrote it:

              Hui Zhang

              Senior Research Associate, Project on Managing the Atom

              Telephone: 617-495-5710
              Fax: 617-496-0606
              Email: Hui_Zhang@harvard.edu


              Hui Zhang is a Senior Research Associate at the Project on Managing the Atom in the Belfer Center for Science and International Affairs at Harvard University’s John F. Kennedy School of Government. Hui Zhang is leading a research initiative on China’s nuclear policies for the Project on Managing the Atom in the Kennedy School of Government. His researches include verification techniques of nuclear arms control, the control of fissile material, nuclear terrorism, China’s nuclear policy, nuclear safeguards and non-proliferation, policy of nuclear fuel cycle and reprocessing.

              Before coming to the Kennedy School in September 1999, he was a post-doctoral fellow at the Center for Energy and Environmental Studies, Princeton University from 1997-1999, and in 1998-1999, he received a post-doctoral fellowship from the Social Science Research Council, a MacArthur Foundation program on International Peace and Security. From 2002-2003, he received a grant for Research and Writing from the John D. and Catherine T. MacArthur Foundation. Hui Zhang received his Ph.D. in nuclear physics in Beijing in 1996.

              Dr. Zhang is the author of several technical reports and book chapters, and dozens of articles in academic journals and the print media including Science and Global Security, Arms Control Today, Bulletin of Atomic Scientist, Disarmament Diplomacy, Disarmament Forum, the Non-proliferation Review, Washington Quarterly, Journal of Nuclear Materials Management , INESAP, and China Security. Dr. Zhang gives many oral presentations and talks in international conferences and organizations.

              Cognitive dissonance is such an interesting phenomenon.

              When the facts are potentially so damaging to the psyche of an individual, to the extent that they might drive someone to deep depression, even suicide, this defense mechanism is capable of convincing the brain that 1+1 does not = 2.

              Those are the facts my friend. And they are presented by one of the leading experts in nuclear energy.

              It took me a very long time to find this article. Trust me, there is not much out there on this topic because of course it is unthinkable to suggest that these ponds might be left unmanaged.

            • Rodster says:

              @Richard: I don’t think blowing up nuclear fuel rods with tactical nukes is a good idea.

            • I have a SOLUTION to the Spent Nuke Puke Fuel Rod Issue. 😛


              We take all the spent fuel, Glassify it, then drop it into Boring Capsules which we drop into the Marianas Trench in the Pacific in a Subduction Zone. The capsules will bore to a depth of 1000 feet beneath the Ocean Floor, and then gradually over time they will be absorbed into the Mantle of the Earth, with the most dense elements like Plutonium eventually ending up in the Core of the Earth with the rest of the Uranium down there.

              This will take the Nuke Puke out of the Biosphere Environment and allow for healthy regeneration of the Planet.


            • Tolstoy's Degenerate Grandson says:

              OR — why not just mix the spent fuel rods with cheap hamburger and feed them to cockroaches?

        • Rodster says:

          You need to fix the bloat, LOL. No other site brings my laptop to it’s knees.

          • Jarvis says:

            There is always the Marianas Trench. You would have to think at some point those in charge would shut down and transport these fuel rods to a more permanent deep water storage. I’m sure they won’t get it all but living on an island on the pacific coast the radiation from Fukushima has finally arrived and it is negligible. Dilution is the solution.

            • I thought of the Marianas Trench myself J, see above. I added glassifying & boring the material into the crust in a subduction zone so it doesn’t actually dissolve into the ocean water.


        • Daniel Hood says:

          I’ve got the intel core i7 inside my Dell and your site’s still clogging up!

      • Daddio7 says:

        Try using Google Chrome. My 8 year old computer bogs down with Firefox but opening the site with Chrome works fine.

        • I am using Firefox with a 3 year old Laptop. Site runs OK. Probably would run faster and better with Chrome, but I wanna hold onto Firefox if I can because it is Open Source.

          There are sacrifices to be made either way. I could pull all the scripts off and make the pages load faster on older and slower computers, but I cannot do that and ALSO provide feeds from all the major collapse websites.

          What I recommend is this. If you don’t want to get your system set to handle the scripts and not bog down, simply don’t hit that page on the Diner, it’s the only one using that much scripting. The Homepage has some now also, but not as much as the Newz page does..I haven’t had complaints on the Homepage yet.

          The downside for the user if you do not set to handle the scripts is that you have to go about surfing the old fashioned way, jumping from website to website to scan for information. This is time consuming, trust me I know because I have been doing that for the last 8 years since I woke up to collapse. LOL. Now, I just go to the Diner Newz Page and see what comes across the Ticker. I see something interesting come across the ticker, I click on it and it brings me to the website. It’s much faster and easier.

          It really is not that hard I think to get even an older computer to handle this stuff, just might take a little additional RAM and upgrading the OP system. I’m pretty sure I could get it to run on my older laptops without too much trouble there, but what’s the point to that? You need to replace these things every 3 years or so anyhow because they plan the obsolesence into them. At least if you want to access all the latest and greatest techno-gimmicks you do.

          Anyhow, it’s your choice, it’s up and it runs fine although I want to get it updating faster. If your computer won’t handle it, this is YOUR problem, not MY PROBLEM..


          • OK folks, try it now.

            I stripped out the rich text html in the body of the snippets, which was messing with the page formatting too. Also made the snippets shorter. Still has the links to the original articles.

            Loads faster and cleaner now, should work on even dinosaur computers. LOL.


            • richard says:

              Just tried the doomstead.com link … 100% of 2GHz CPU until I closed the tab …
              and that’s with a load of stuff blocked, so I’d guess it’s the images/video that is
              demanding resources.
              Hmmm … Google has very little on the landing page (unlike Bing) … just sayin’

            • It’s only using 43% of my CPU with a dozen other sites open in windows and 69! background processes running. No idea why it is consuming so much of your CPU time.

              New UPDATED list of feeds:

              Doomstead Diner,Economic Undertow, Our Finite World, Econintersect, Zero Hedge, Global Research, Salon, Collapse, Futurology, History, OilPrice, Resilience, The Slog,Wolf Street, Daily Impact, Renewable Revolution, Archdruid Report, Club Orlov, Clusterfuck Nation,Resource Crisis, Peak Prosperity,Daily Collapse Report, Prepper, Bullets Beans Bullion,Bison Prepper, SHTF Plan,TEOTWAKI,Economic Collapse,Land Destroyer,Vineyard of the Saker, Collapse of Industrial Civilization,FEASTA,George Washington,Nature Bats Last, Ambrose, Of Two Minds,Naked Capitalism,Russia Today

            • Daddio7 says:

              The Doomsteaddiner site still bogs my 2.6 Athlon 64 X2 dual core with 3 gigs memory computer using Firefox. 56% of cpu time. Using Chrome 48% but the animations are smooth and all the graphics load. Great site, Chrome’s free, end of discussion.

            • Jan Steinman says:

              should work on even dinosaur computers

              On behalf of all us who choose to be dinosaurs, thank you! (I might even try it now.)

          • Why not use mainly server-side scripting instead?

          • Lemme know if it works for your JS. If it works for you, anybody not currently living as a Bushman in the Kalahari should be able to make it work


    • Tolstoy's Degenerate Grandson says:

      It is not good etiquette to constantly spam another blog with self-promotion.

  27. Don Stewart says:

    To Jan Steinman
    At Auschwitz, the exchange rates were as follows, with cigarettes being the currency of choice:
    Loaf of bread 12 cigarettes
    10 oz package of margarine 30 cigarettes
    a watch 80 to 200 cigarettes
    one quarter of a galling of alcohol 400 cigarettes

    Courtesy of Harari
    Don Stewart

  28. Don Stewart says:

    Dear Gail and Fellow Finite Worlders

    Charles Hugh Smith has an interesting observation in his note to his subscribers this weekend.

    ‘This increasing dependence of “good” entities on players making risky bets and manipulating markets has created perverse incentives to keep the financial bubble-blowing going with government backstops and changing the rules to mask systemic leverage and risk.

    The government must prop up markets, not just to insure the cash keeps flowing into political campaign coffers, but to save pension funds and the “wealth effect” that is now the sole driver of “growth” (expanding consumption) other than debt.

    To maintain the illusion of growth and rising wealth, the financial markets must continually reach greater extremes (see below): extremes of debt, leverage, information asymmetry and valuations. These extremes destabilize markets, first beneath the surface and then all too visibly.’

    Harari, in his book Sapiens, gives us the economic history of the world in a nutshell. One the left are three circles connected by arrows. The first circle is labeled ‘Little Trust in the Future’, the second circle is labeled ‘Little Credit’, and the final circle is labeled ‘Slow Growth’. The slow growth then feeds back into the ‘Little Trust in the Future’ circle.

    On the right are three circles, featuring ‘Much Trust in the Future’, ‘Much Credit’, and ‘Fast Growth’.

    Let me make an aside and then I will come back to the central point. One can take the position that the ‘fast growth’ was enabled solely by the fortuitous discovery of fossil fuels. Alternatively, one can take the position that plenty of credit enabled the exploitation of fossil fuels, and will enable the exploitation of other energy sources in the future. Harari makes no ringing declarations, but I suspect the latter alternative is what he favors. The opposite side would be represented by Gail and John Michael Greer whose current post talks about all the failed ‘replacements’ for fossil fuels we have seen in the past few decades.

    Back to the main point. Smith is giving us a picture of a desperate attempt to maintain the illusion of Fast Growth which feeds into Much Trust in the Future. The ‘dangerous bloggers’ that Congress investigates and Obama castigates fail to see the glorious prospects awaiting us if we can just get the debt bubble sufficiently inflated.

    Harari says that we currently live in a single, global civilization. The drivers from diversity to uniformity have been commerce, religion, and empires. Over the centuries, the number of distinct civilizations has fallen quite rapidly. However, the uniformity of the civilization does not prevent conflict. Harari points out that the St. Bartholomews day massacre of protestants by Catholics in France killed more Christians than the Roman Empire killed over hundreds of years. The Pope in Rome was so pleased by the news of the massacre that he had a special room decorated to celebrate the great victory. (The room is now closed to visitors.)

    Russia and the US are currently about like the protestants and the Catholics. A couple of hundred years from now only learned historians will understand whatever differences they had. Yet those differences could wipe out humanity and much more.

    If we are reaching limits to growth in multiple arenas, the question becomes ‘What happens to the single global civilization?’ It’s hard to imagine that the three pillars of modernity (commerce, religion, and empire) will vanish. My guess is that they will fragment into similar but politically separate pieces, with wars similar to those between the protestants and Catholics being the rule. I cannot see that ‘Trust in the Future’ can survive to fuel ‘Much Credit’, and so we will get ‘Slow Growth’.

    Don Stewart

    • Our big problem, as I see it, is that we need some sort of “system” that works. When our current one doesn’t work, we will need to piece together whatever we can to make something work. I have a hard time seeing that we will be able to put together enough pieces of our current system to provide “slow growth.” In particular, an international financial system is going to be hard to replace.

      And yes, I do agree with the need to have the massive growth that supports insurance, pension plans, and banking. As you know, I came to this from the actuarial end of things. The need for growth is very apparent from this perspective.

      • Don Stewart says:

        Let’s suppose that the System crashes and 95 percent of the people die and financial assets become worthless. There are no fossil fuels available, nor any high-tech solar panels or wind turbines or hydroelectric dams. But 5 percent of the people figure out how to survive in the new world.

        Since humans are clever, and since they learn over time and pass that learning on to others and the next generation, productivity will gradually increase from a very low base. But nobody will have much faith in the future, and won’t be willing to gamble the farm on financial speculation. (Some might trade it for strong drink…but that’s another problem.) The dominant stories will be about the ‘lost golden age’.

        We would be back the world of ‘slow growth’ that Harari describes.

        Don Stewart

        • If we are back to slow growth, we will still soon hit limits. Rising population and constant soil available for agriculture leads to diminishing returns. So does trying to kill more wild animals (including fish) because of rising population. If we are trying to use non-renewable resources (metals, other minerals from the ground), we will have the depletion problems we had before, and rising population will add to them.

          Slow growth just puts off hitting limits again. If we could figure out a way to (1) have zero growth except in a narrow band offset by shrinkage during some periods, and (2) use only renewable resources (including soil) within its capacity for renewal, we might have a magic formula.

          But even in the stone age, we didn’t only use renewable resources in their capacity for renewal. We killed off the large megafauna and burned down forests. We exhausted the desirable stones that could be found on the surface. Ugo Bardi talks about an underground mine from 40,000 years ago, IRRC in Extracted: How the Quest for Mineral Wealth is Plundering the Planet.

          • Don Stewart says:

            Two points about ‘slow growth’. First, Harari is giving us tools for understanding, not prescriptions. IF people do not have faith in the future, for whatever real or imagined reason, then there will be slow growth and not much in the way of financialization. IF there is faith in the future, people will go into financialization and promises to pay and so forth. IF the expectations are realized, as they mostly were for the last couple of hundred years, then an upward trajectory at a rapid rate will be realized. IF the expectations are not realized (perhaps because the world turned out to be all to finite), then financial ‘assets’ will simply disappear.

            Second point. Take a look at the history of Edo Japan. Japan emerged from the wars of the Middle Ages at a very low point. I think the population was about 15 million. The establishment of a strong but flexible central government, plus peace, allowed the country to grow. Population increased to about 30 or 35 million, and then STOPPED GROWING. The government used media such as agricultural bulletins to make peasants all over the country aware of newly developed methods. Improvements from the terrible conditions of the Middle Age wars came easy for several decades, and then the rate of improvement declined as the low hanging fruit had been harvest. After that, improvement and growth were limited to what the slow increments of new technology and better organization could yield.

            I have never heard that Edo Japan had any financial bubbles such as the Tulip Mania or the South Sea Bubble. Partly, I imagine the lack of bubbles was connected to the social rigidity. Farmers were born as farmers and died as farmers. The Samurai were reduced to becoming umbrella repair specialists and similar modest professions. Tradespeople did not borrow money to found chain stores. The government did not issue lots of debt in order to fund a mighty military capable of conquering China (that came only after Dewey brought them ‘enlightenment’.)

            In short, I think it is quite possible humanity may again enter a stage of ‘slow growth with only modest expectations for the future’, but getting there probably requires the total destruction of our current mindset…just as getting to Edo required the collapse of the ‘warring states’ mindset of the Middle Ages.

            Don Stewart

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