What Greece, Cyprus, and Puerto Rico Have in Common

We all know one thing that Greece, Cyprus, and Puerto Rico have in common–severe financial problems. There is something else that they have in common–a high proportion of their energy use is from oil. Figure 1 shows the ratio of oil use to energy use for selected European countries in 2006.

Figure 1. Oil as a percentage of total energy consumption in 2006, based on June 2015 Energy Information data. (Inverted order from chart originally shown.)

Greece and Cyprus are at the top of this chart. The other “PIIGS” countries (Ireland, Spain, Italy, and Portugal) are immediately below Greece. Puerto Rico is not European so is not on Figure 1, but it if were shown on this chart, it would appear between Cyprus and Greece–its oil as a percentage of its energy consumption was 98.4% in 2006. The year 2006 was chosen because it was before the big crash of 2008. The percentages are bit lower now, but the relationship is very similar now.

Why would high oil consumption as a percentage of total energy be a problem for countries? The issue, as I see it, is competitiveness (or lack thereof) in the world marketplace. Years ago, say back in the early 1900s, when countries built up their infrastructure, oil price was much lower than today–less than $20 a barrel (even in inflation-adjusted dollars). Between 1985 and 2000 there was another period when prices were below $40 barrel. Back then, the price of oil was not too different from the price of other types of energy, so an energy mix slanted toward oil was not a problem.

Figure 2. Historical World Energy Price in 2014$, from BP Statistical Review of World History 2015.

Oil prices are now in the $60 barrel range. This is still high by historical standards. Furthermore, much of the financial difficulty countries have gotten into has occurred in the recent past, when oil prices were in the $100 per barrel range.

While countries with a large share of oil in their energy mix tend to fare poorly, at least some countries with a preponderance of cheap energy fuels in their energy mix have tended to do very well. For example, China’s economy has grown rapidly in recent years. In 2006, its share of oil in its energy mix was only 23.0%, putting it below Norway but above Poland, if it were included in Figure 1.

Let’s look a little at what it takes for an economy to produce economic growth, and what goes wrong in countries with high energy costs. I should mention that high energy costs can occur for any number of reasons, not just because a country’s energy mix includes a large proportion of oil. Other causes might include a high percentage of high-priced renewables or high-priced liquefied natural gas (LNG) in a country’s energy mix. The reason doesn’t really matter–high price is a problem, whatever its cause.

What Is Needed for an Economy to Grow

The following reflects my view regarding what is needed for an economy to grow:

1. A growing supply of energy products, either internally produced or purchased on the world market, is needed for an economy to grow.

The reason why a growing supply of these energy products is needed is because it takes energy (human energy plus supplemental energy) to make goods and services.

The availability of today’s jobs is also tied to the use of supplemental energy. High-paying jobs such as operating a bull-dozer, producing large quantities of food on a farm using modern equipment, or operating a computer, require supplemental energy in addition to human energy.  While jobs can be created that use little supplemental energy to leverage human energy (for example, manual accounting without electricity or computers, growing food without modern equipment, or digging ditches with shovels), these jobs tend to pay very poorly because output per hour worked tends to be low.

To obtain growth in the number of jobs available to workers, a growing supply of energy products to leverage human energy is needed. Looking at the world economy, we can see that historically, growth in energy consumption is highly correlated with economic growth.

Figure 3. World GDP in 2010$ compared (from USDA) compared to World Consumption of Energy (from BP Statistical Review of World Energy 2014).

In fact, we tend to need an increasing percentage growth in energy supply to produce a given percentage growth of GDP because the y intercept of the fitted line is -17.394, rather than 0.000. Back in 1969, 1.0% growth in the consumption of energy products produced 2.2% GDP growth. The fitted line implies that recently, the amount of GDP growth associated with one percentage growth in energy consumption is only 1.2% of GDP. This poor result is taking place, despite all of our efforts toward increased efficiency. Thus, as time goes on, we need more and more energy growth to produce the same level of GDP growth. This is a rather unfortunate situation that world leaders don’t mention. They tend to focus instead on the fact that the growth in GDP tends to be at least a little higher than the growth in energy use.

2.  This growing energy supply must be inexpensive, in order to be able to create goods that are competitive in the world market. 

Human energy is by its nature expensive energy. Humans require food, water, clothing, and housing to support their biological needs–we are not adapted to eating entirely uncooked food, or to living in climates that get very cold in winter, unless we have protection from the elements. Thus, wages must be high enough to cover these costs.

Cheap supplemental energy provides a great deal more leveraging power than expensive supplemental energy. If we can leverage human energy with cheap energy such as wood or fossil fuels, it is easy to bring down the average cost of energy. (This calculation is made on a Calorie or Btu basis, for the sum of the energy provided by human labor plus that provided by supplemental energy.) If we are dealing with supplemental energy that is by itself high-cost, it is very difficult to bring down this weighted average cost. This is why high-cost oil, or for that matter high-cost supplemental energy of any kind, is a problem.

If human energy can be leveraged with increasing amounts of cheap energy, it can produce an increasing amount of goods and services, ever more cheaply. In fact, this seems to be where economic growth comes from. These goods and services can be shared with many parts of the economy, including government funding, wages for elite workers, wages for non-elite workers, payback of loans with interest, and dividends to stockholders. If there are enough goods and services produced thanks to this increased leverage, all of the various parts of the economy can get a reasonable share, and all can adequately prosper.

If there is not enough to go around, then there are likely be shortfalls in many parts of the economy at once. It is likely to be hard to find good paying jobs, for ordinary “non-elite” workers. Governments are likely to find it difficult to collect enough taxes. Governments may lower interest rates, or may take other steps to make it easier for businesses to continue their operations. Even with lower interest rates, debt defaults may become a problem. See my post, Why We Have an Oversupply of Almost Everything. The entire economy tends to do poorly.

Ayres and Warr provide an illustration of how an increasingly inexpensive supply of energy can lead to greater consumption of that energy–in this case electricity–in their paper Accounting for Growth: The Role of Physical Role of Physical Work.

Figure 4. Ayres and Warr Electricity Prices and Electricity Demand, from “Accounting for growth: the role of physical work.”

There is a logical reason why falling energy prices would lead to rising use of an energy product. If a person can afford to buy, say, $100 worth of energy and the cost is $1 per unit, the person can afford to buy 100 units. If the cost is $5 per unit, the person can afford to buy 20 units of energy. If it is the energy itself that aids growth in economic output (by moving a truck farther, or operating a machine longer), then lower energy prices lead to more energy consumed. This higher amount of energy consumed in turn leads to more economic output. This greater economic output is frequently shared with workers in the form of higher wages because of the workers’ “higher productivity” (thanks to the leveraging of cheap supplemental energy).

When it comes to the cost of energy production, there are “tugs” in two different directions. In one direction, there is the savings in costs that technology can provide. In the other, there is the trend toward higher extraction costs because companies tend to extract the cheapest resource of a given type first. As the inexpensive-to-extract resources are exhausted, the cost of resource extraction tends to rise. We can see from Figure 2 that oil prices first began to spike in the 1970s. After some temporary “fixes” (shifting much electrical production away from oil to cheaper fuels, shifting home heating from oil to other fuels, and starting new extraction in Alaska, Mexico, and the North Sea), the problem was more or less solved for a while. The problem came back in the early 2000s, and hasn’t really been solved. Thus, most of the tug now is in the direction of higher costs of production.1

Once oil prices rose, Greece and other countries that continued to use a high percentage of oil in their energy mix were handicapped because their products tended to become too high-priced for customers. Wages of customers did not rise correspondingly. Potential tourists could not afford the high cost of airline tickets and cruise ship tickets, because these prices depended on the price of oil. Even when oil prices dropped recently, airline companies have not reduced airline ticket prices to reflect their savings.

Because of the high-cost energy structure, manufacturing costs have tended to be high as well. With fewer tourism jobs and few possibilities for making goods for exports, the number of good-paying jobs has tended to shrink. Without enough good-paying jobs, Greek demand for fuel products of all kinds dropped rapidly. (Demand reflects the amount of goods a person wants and can afford. Young people without jobs live with their parents, and thus do not buy new homes or cars, lowering consumption.)

Figure 5. Greece’s energy consumption by fuel, based on BP Statistical Review of World Energy, 2015 data.

Other countries that were positioned to add huge amounts of inexpensive energy were able to continue to grow. The country that did this best was China. It was able to cheaply and rapidly ramp up its coal supply, once it entered the World Trade Organization in 2001. If Greece now adds production of goods, it needs to be able to compete in price with China and other goods-producers.

Figure 6. China’s energy consumption by fuel, based on data of BP Statistical Review of World Energy 2015.

3. If the energy supply that a country plans to use is cheap, it doesn’t matter whether the energy supply is locally produced or not.

If the energy supply that a country is locked into using is expensive, then using locally produced high-priced energy is “less bad” than using imported energy, but there is still a problem.

If a growing supply of cheap energy is available, this can be used to leverage local human labor to produce inexpensive goods. This works well, regardless of whether the fuel is imported or not. Because imported energy “works” in such a situation, many island nations (including Cyprus and Puerto Rico) were able to develop their economies using oil as the energy base. These island nations typically did not have natural gas available, unless they imported expensive LNG. Coal and nuclear were also difficult to use, because power plants of these types are built on too a large scale to be suitable for on an island. But oil generally worked well, even if imported.

Greece includes 227 inhabited islands, and thus is faced with many of the problems of an island nation. Back when oil was cheap, oil was an easy solution. It could be used for electricity and for many processes that require heat, such as baking bread, dying cloth, making bricks, and recycling metals.

If a county is using imported oil, once oil becomes high-priced, there is essentially nothing that can be done to fix the problem. Devaluing the currency doesn’t work, because then oil becomes higher-priced in the new devalued currency. As a result, it still is prohibitively expensive to make goods, even after the devaluation. In fact, devaluing the currency also tends to make other imported energy products, such as LNG and solar PV panels, more expensive as well.

With respect to previously purchased renewables, the ongoing cost is typically the debt payments for the devices used to generate this energy. How devaluation will affect these payments depend on the currency the debt is in. If these debt payments are in the country’s own currency, then devaluing the currency will not affect the payments (so devaluation won’t help reduce costs). If debt payments for renewables are in another currency (such as the dollar or Euros), then devaluing the currency will increase the cost, making the loans more difficult to repay.

Even for an oil exporter like Saudi Arabia, high-priced oil is a problem, for a number of reasons:

  1. If the oil exporter uses some of its oil itself, the revenue that would have been gained by selling this oil abroad is lost. The government may be able to purchase the oil for essentially the cost of extraction, but it loses the extra revenue that it would gain by selling the oil abroad. This revenue could be used to fund government programs and new oil investment.
  2. The countries that import this high-priced oil tend to find their economies depressed, leading to less use of the oil. Thus, oil exports tend to become depressed.
  3. The price of oil may fall (and in fact has fallen, and may fall more), because of low demand. With low prices, it becomes difficult for exporters to collect enough revenue for government projects and investment in new supply.

The reason why locally produced high-priced oil is “less bad” than imported oil is because jobs related to producing the oil tend to stay in the country. This is a plus, in itself. If there is a currency devaluation, wage costs and other local costs will be lower, making the energy product less expensive to produce. Unfortunately, production costs (including taxes needed to support government services) may still be above the market price, because of depressed demand.

4. Debt helps increase demand for goods. But to make the debt repayable, these goods need to be made with low-priced energy products. 

Ramping up debt for a country helps, but only if, with this debt, the country is able to profitably sell more goods and services in the world marketplace. Greece seems to have added debt, but wasn’t able to use this debt to create goods and services that could be sold cheaply enough that their prices would be competitive in the world market.

China clearly has been willing to add huge amounts of debt to support all of its new industry and new homes it has built with the coal it has been extracting. There is no doubt that the growth in China’s debt has played a major role in extracting growing quantities of coal. Now China’s coal consumption is slowing for a number of reasons including overbuilding of factories, too much pollution, and higher cost of coal production. China’s slowdown in energy consumption is leading to a slow-down in economic growth, and may even lead to a hard crash.

Greece has added a lot of debt in recent years, but it has not been used for ramping up the use of a new cheap supply of energy. Instead, much of Greece’s debt seems to be for purposes such as bailing out banks. This doesn’t really tell us what is/was wrong with the economy to begin with. I would argue that high-priced fuel tends to make it difficult to make any kind of goods or services inexpensively enough to compete in the world market, and this is at least part of the problem. The result of this is that companies, no matter what they invest debt in, have a difficult time being profitable.

The Greek government tries to cover up the country’s problems with programs that are funded by debt. Hidden subsidies may be occurring in several government-owned energy-related firms: Public Power Corporation of Greece (Greece’s largest electric utility), Hellenic Petroleum, DEPA Natural Gas, and ADMIE Grid Operating Company. There have been proposals to privatize these companies because they are poorly run. Whether or not they are poorly run, I expect that it will be very difficult to run them profitably, simply because of the inherent high-cost nature of the products they produce and workers’ lack of disposable income. This problem reflects the high cost of the underlying products they are producing.

There have been some proposals to try to get energy costs down, including a proposal to install a new lignite coal-fired electric power plant. There is also a plan to connect four of the islands to the electric grid, so that the islands won’t have to depend on oil-fired electricity. Even if these changes are made, it is not clear that Greece’s energy costs will be low enough to produce goods that are competitive in the world market. For one thing, airplanes and cruise ships operate using oil, not electricity produced by lignite, so will not be affected by additional inexpensive lignite electricity production.

From everything I can see, Greece’s debt needs to be written off. There is no way that the country can change its system to repay it. Greece can perhaps repay a little new debt, if it is channeled to support low-cost energy production to substitute for current high-cost energy.

Conclusion

Most people don’t understand that our world economy runs on cheap energy. High-priced energy is not an adequate substitute, even if the high-priced energy is “low carbon” or claims to have a reasonably high EROEI (Energy Return on Energy Invested) ratio. Our world economy is sensitive to prices and costs, even if the current “politically correct” discussion ignores these matters.

Economies that are part of our current system can’t get along without energy supplies, either. Humans have used supplemental energy since our hunter-gatherer days, when we learned to control fire. In fact, the use of large amounts of supplemental energy seems to be the way we are now able to support a world population of 7+ billion people.

Given that the world economy runs on “cheap” energy, adding expensive energy production, no matter how “green” it may appear to be, does not solve a country’s financial problems. In fact, it likely tends to make its financial problems worse. There is no way that high-priced energy will produce goods and services that are competitive in the world market. In fact, it is doubtful that high-priced energy will return a high enough “profit” to pay its own way, in terms of having the ability to pay suitable taxes to support required government services, such as schools and roads. High-priced energy is instead likely to need government subsidies, both for initially building the devices and for helping citizens pay the ongoing cost of electricity.

Greece clearly has a lot of problems besides its high-energy cost, including excessive pensions and inefficiently operated state-owned companies. To some extent, I expect that these other problems reflect the difficulty of creating goods that can compete profitably in the world economy. If there is no way businesses can successfully compete in the world economy, I can see why leaders would do whatever they could to keep the system operating. This might mean adding more debt, keeping staffing at government-operated companies at higher levels than needed, and providing overly generous pension programs.

The thing that Greece has going for it is a relatively warm climate and a history of doing well with relatively little supplemental energy. Ancient Greece was known for its philosophy, literature and theatre, music and dance, science and technology, and art and architecture. Northern Europe, because of its cold climate, was not able to do very much until it added peat moss and coal as supplemental energy. Once these cheap supplemental energies were added, Northern Europe was able to industrialize, while Southern Europe lagged behind. If we are running into obstacles now with respect to fossil fuels, perhaps the advantage will again go back to people who live in warm enough climates that they can mostly live without supplemental energy.

Note:

[1] While cost of oil production is rising, oil prices are not necessarily rising to match the cost of production, and in fact, have fallen below the cost of production. This occurs because costs are now too high relative to wages, so oil isn’t affordable. This is an important story in its own right, and is likely to eventually bring down the whole system. See for example my post, Ten Reasons Why a Severe Drop in Oil Prices is a Problem.

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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1,257 Responses to What Greece, Cyprus, and Puerto Rico Have in Common

  1. Don Stewart says:

    Dear Gail and Finite Worlders
    I have previously commented about the power of real time feedback to change behavior, and noted the webinar tomorrow with Dr. Maskell to try to sign up doctors for some new technology. I also noted Philip Ackerman-Leist’s comments about homesteading and the importance of prompt feedback. Here is a little more from Maskell describing what many doctors see as the dilemma:

    Leverage Technology To Leapfrog Conventional Medicine – An Intro To LivingMatrix
    I’ve spoken with a number of practitioners who think that it is nearly impossible to enroll new patients who are coming from the conventional medical system.

    Mainly because conventional solutions offer quick relief to symptoms, and it can be challenging to get patients to see the bigger picture.

    Tomorrow, we’ll be showcasing a technology that is helping to convert patients… through tracking health patterns through visual information. All while saving doctors and health professionals time, energy, and headaches.

    Don’t miss this opportunity to join us live.

    Back to me. Advances in scientific understanding, rational explanations to patients (or potential homesteaders), sensors, and real time results are the change agents.

    As a way of illustrating the problems. I just listened to two cardiologists talking about arterial plaque measurements. There are two measurements: a CT scan and an ultrasound. The ultrasound is cheap enough that one of the cardiologists does it routinely every year with his patients. He has identified those patients who have achieved reductions in arterial plaque equal to a 10 year reverse aging, and studied the life style factors which are making them younger. Yet insurance will seldom pay for these tests. ‘How does it make more money for insurance companies?’ This is the depth of the sickness afflicting American medicine.

    While an annual test is not real time feedback, if you were told that your arterial plaque was at dangerous levels and was increasing, and that blood pressure was another good indicator, and that you could buy a simple device to monitor your blood pressure, and that certain life-style changes could both shrink your plaque and reduce your blood pressure, might you not change your lifestyle and save your life?

    Don Stewart

    • 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.
      Gail Tverberg says:

      I read recently that recommendations for prenatal ultrasounds are being scaled way back because of evidence that they can damage infants–I believe it was through tests on animals, treated equivalently.

      I don’t think that just because a test is cheap, we should necessarily use it. Is it safe? Does it run up the number of doctors’ visits? Maybe it is helpful, but I don’t see a problem with patients paying for it themselves.

      • Don Stewart says:

        Gail
        A high percentage of bypass and stent surgery, which is mostly paid for by Medicare and Medicaid, is repeat business. I have a friend who is a coronary unit nurse, and she says that some people are on their 6th or 7th procedure.

        The two cardiologists say that lack of insurance coverage for diagnostic tests causes 95 percent of the cardiologists in the US to NOT offer the test at all.

        As for safety, I think a fetus in a water filled womb is different than an adult with a patch on their neck. Maybe somebody can prove its dangerous, but I don’t think anyone has as yet. A CT scan is different, in that it exposes the patient to radiation.

        If you object to diagnostic tests, then how do you go about dealing with the psychology of humans which shows that we respond to evidence. A high cholesterol score, which is also a diagnostic test, DOES NOT prove that the patient has anything wrong at all. A high score on the carotid artery score definitely shows the patient that they are headed for coronary trouble.

        Whether insurance should pay for diagnostic tests is a moral and practical question. To the extent that the public is going to pay for coronary interventions which cost tens of thousands of dollars, a few dollars spent on a diagnostic test which has the power to change behavior makes eminent sense.

        Don Stewart

  2. Artleads says:

    Apologies if this is too trivial for OFW, but it did bring up thoughts about energy and organization:

    https://www.youtube.com/embed/qybUFnY7Y8w

  3. http://www.zerohedge.com/news/2015-07-19/shell-warns-oil-price-recovery-take-5-years

    Shell Warns, Oil Price Recovery To Take 5 Years

    “For the near term, van Beurden pointed to one key forecast that this year will see more worldwide demand than in 2014. “Compared to last year, the International Monetary Fund expects the global economy to grow [in 2015],” he said. “So global oil demand is expected to grow as well.”

    But he stressed that many oil producers also are reluctant to explore and drill for oil because of smaller profit margins. Therefore, he said, “Supply … may even decline.” As for Shell itself, though, he said, “We’re determined to avoid a start-stop approach to investment.”

    As for the global market, Van Beurden said that at best, “a rapid recovery could occur if projects are postponed or even canceled. This would lead to less new supply – not so much now, but in two or three years. Combined with economic growth, the market could tighten quickly in this scenario.”

    But he pointed to one major snag in that view: U.S. shale oil. A boom in North American production over the past few years helped to create the glut that led to the steep decline in oil prices that began a year ago. OPEC, under the leadership of Saudi Arabia, decided to fight shale producers with a price war, hoping that keeping prices low would make shale extraction, already costly, unprofitable.”

    But if shale producers cut costs and take other steps to keep producing, van Beurden said, “With moderate economic growth, prices could stay low for longer.”

    I wonder if any of these oil producing corporations or countries have considered the possibility that consumer affordability will not rise high enough again in the future to continue to increase oil supply. That from here we are probably consigned to using mostly existing supply until the fat lady sings.

    • Don Stewart says:

      Stilgar Wilcox
      My guess is that neither the countries nor the companies can actually admit that they might be cash cows. BW Hill has mentioned that he believes Saudi Arabia recognized the truth, and is trying to maximize cash while they can. I have no idea whether that is true. It is consistent with their behavior. But other explanations such as their war with Shia and the speculation that they are at war with the US shale industry are also consistent with their behavior.

      Don Stewart

      • “BW Hill has mentioned that he believes Saudi Arabia recognized the truth, and is trying to maximize cash while they can.”

        Don, how likely is it the industry has seen the feedbacks hit the world economy at higher oil prices and got shocked into panic by realization we are near or at peak, therefore might as well sell this stuff while there’s a market, an economy to use the stuff. Once the economy contracts this next time whenever that may occur, it will be like giving resuscitation to a patient and then oil will likely sell super cheap. “I’ve got this super tanker docked out there that’s full of API 45 out of the Middle East. I started the bidding at 50 million and now I’m down to 80 bucks. I just need enough to get some black market grub and a bottle of water.”

    • Belgium better get to buying oil futures. Who would not participate in helping a “recovery”?
      “Combined with economic growth” Economic growth as energy consumption declines?
      The boom part of cycle is no longer possible yet it remains like a carrot in front of a donkey just out of reach. The “economy” a magical unicorn like creature. Only our greatest Shamans can coax it out of its cave. The only boom left is the kind that gets lowered.

    • 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.
      Gail Tverberg says:

      Eternally optimistic. There is no other option.

      I think the situate is worse than “consigned to using mostly existing supply until the fat lady sings.” The financial system collapses, and the fat lady sings rather quickly.

  4. Don Stewart says:

    Dear Gail and Finite Worlders

    I have been reading the book Up Tunket Road: The Education of a Modern Homesteader. Written by Philip Ackerman-Leist. I highly recommend it to anyone worried about Collapse.

    To set the stage: Philip, a native of North Carolina, was working as a farm manager high in the Italian Alps, in the Tirol in the late 1980s. The farm was a museum of old farming methods, which were beginning to die out in this remote region. For example, one of the women working at the farm said that when she was young, they never thought about recycling. Everything they had came from the soil, and it returned to the soil when they had used it up. The farms on these high mountains existed right at the edge of what was possible. For example, they plowed straight up and down the hill, using a series of pulleys to move the plow. They had learned how to cut the grass in the high meadows very close so that when the inevitable winter avalanches roared down the hill, they didn’t take the sod with the snow and ice.

    A young woman from North Carolina came to work at the farm, Cupid did his work, and soon they were a couple back in North Carolina at his grandparents farm. But neither of them liked the flat, hot, sandy soil of the Sandhills, and so they moved to northeastern Vermont and bought a place to homestead.

    Philip is a student of philosophy and of ecology, and he learned a great deal about farming and gardening, both in Austria and in North Carolina and on the homestead in Vermont. Thus, he brings an observant and reflective eye to everything he experiences. He has also studied traditional farming in the United States at various museums, including the Museum of Frontier Culture in Staunton, VA.

    As a place to begin, I suggest you google the museum and click on the variety of frontier farms they have assembled. Please note the key role of transportation as the farms become more modern and more prosperous.

    One of Leist’s first tasks was to define ‘homesteading’. For example, one of his students went to live a very simple life on a boat. Does that qualify as ‘homesteading’? It wasn’t what he was doing in the Vermont mountains, but if it wasn’t homesteading, what was it? His search for an answer led him to a book which said ‘it is the act of homesteading—the daily and seasonal rituals—that provides its allure and rewards…it is the spiritual practice of homesteading, not so much a common belief system, that seems to pervade the disparate and diverse homesteading population.’

    I’ll add two cents worth from another perspective. I recently listened to two cardiologists talking about heart attacks, and the role played by stress and the failure to deal with it. One of the cardiologists remembered that a couple of decades ago a spiritual leader had told her: ‘Information leads to knowledge; but practice and meditation leads to transformation’. Meaning that all the information in the world is useless in the absence of transformation…which happens as a result of practice.

    Many people on this site are convinced that Joseph Tainter has identified an enemy in the form of complexity. I read as Capra and Luisi struggled mightily to define complexity…and failed, in my judgment. Leist talks about how many people take up homesteading seeking ‘the simple life’, and find that life as a homesteader is anything but simple.

    I think part of the definitional issue is that a cubical serf may have a very simple job and trade money for everything they need, which is a pretty simple life, but be part of a very complex web of monetary relationships on a global scale. A 90 percent self-reliant homesteader, such as Will Bonsall, leads a family life thousands of times as complex as the cubicle serf, but is part of a pretty simple economic system. Australian Aborigines led a life which we find to be unimaginably complex, but their economic system was extraordinarily simple.

    Leist comments about modern Ecology: ‘The reverberations of any ecological pebble thrown into our ever expanding pool of knowledge go deeper and farther than we ever anticipated, often with unanticipated results…Ecology is shifting away from an approach that could be characterized as unidirectional and deterministic to a study of complex, nonlinear systems.’ So…if you want simplicity, it can only be found in the human built world…not in the world of Nature. A move back toward Nature is a more toward more complexity and less predictability.

    Leist observes: ‘This shift is not necessarily simple for us to swallow. After all, we are finite human beings in search of predictability. That predictability helps us understand not only the natural world, but also our role and responsibility within it…Our hunch is that predictability is now more likely to be accurate if we think of systems and not just species.’

    Then Leist takes on the issue of overconsumption: ‘The path toward reducing our vast appetite for gadgets is probably not as simple as merely adopting the meager diet prescribed by consumptive asceticism. Studies indicate that dieting of any type seldom works over the long term, unless the rewards are quickly evident and sustained.’

    My note: Please see my recent posts about bad lifestyle habits and the profound impact of near real time feedback using sensors and information technology.

    ‘Whether we like it or not, we humans operate at least in part on the basis of immediate mental, emotional, and physiological rewards, and our consumptive habits are no exception. Our best chance for changing our consumptive habits and our technological excesses is for us to find ways to rewire our rewards—to be cerebral and celebratory as we collaboratively craft a world that makes sense.

    I reject the notion of homesteading as a search for simplicity. But I do believe that homesteading involves a rediscovery of simple pleasures: hard work, good food, comforting shelter, meaningful values—and a covey of friends and family with whom to reflect and celebrate.’

    Leist quotes Carlo Petrini of Slow Food: ‘Pleasure is a universal right, and responsibility a universal duty.’

    He quotes an ecologist: ‘The wisest approach is to conserve energy as much as possible through the development of our most efficient technologies, and to reduce and eventually cease frivolous, unneeded energy consumption.’ This advice is echoed in the work of the Ellen MacArthur Foundation and the various recommendations reviewed by Capra and Luisi (to single out some that I am familiar with.)

    I want to conclude by noting that Leist comes out in the same neighborhood as Nate Hagens: reprogramming those neurotransmitters and hormones. Which circles us back around to the notion that transformation through ‘meditation and practice’ will be required. Which leads us into the very thorough job that Leist does in explaining what he and his wife and their neighbors have been practicing for the last couple of decades.

    My coda to the book would note that humans will have to adjust to the energy and the resources available to us. Suppose we are going to have to move backward to some of the model farms in Staunton. Which ones? The Native American farms, or the farms of 1850 which were connected to the world by rail and water? Will we live in an Ellen MacArthur Foundation world with far fewer cars? Or a world with no transportation during seasons which are cold and wet? We probably cannot accurately predict the answer to those questions. But making the social and psychological transformations that are practiced by homesteaders of many different stripes is probably excellent training for whatever comes.
    .

    Don Stewart

    • bandits101
      bandits says:

      Two excellent posts Don.
      Complexity is like comparing flying a jumbo jet to a airplane of the 1920’s. The Jumbo is probably easier to fly, it can actually fly itself. A great percentage of pilots were killed learning to take off and land compared to actual combat. Nowadays nobody gets killed during training, statistically speaking. Determining their comparative complexity is simply a no brainer. Then again like you say it is relative. And like I always say, EVERYTHING is relative.

    • Artleads says:

      I suspect that the native ways of farming were wiser, in that their farmers likely knew how to listen and respond to all the cues from the world around them. Nature must not have been separate from anything else about their lives.

    • Stefeun says:

      Don,
      thanks for challenging thoughts about Complexity.

      Let me try something: maybe we’re talking about 2 different kinds of complexity, let’s label them Natural and Artificial.
      In Nature the energy input is constant (or, at least, cannot be increased at will). Natural biological complexity is therefore obtained by trying to get the best out of this given energy-flow, taking advantage of every tiny possibility to fill in niches, interacting with living and inert environment, thus limiting the waste to -almost- only very diffuse waste heat. The adaptations are made by constant adjustments of the structures (populations, individuals, migrations, …) mostly by succession of generations.

      In our Artificial world we’re trying to avoid death (at least hide it), and make everything possible to keep our structures alive, even when no longer adapted to a changed environment. To achieve that, we tighten the links and create additional energy-consuming “patches”, sub-structures that help the main one keep going, and thereby, growing*. This is possible only because we are able to increase the energy input.

      Rather: this has been possible because we were able to increase the energy input. We’ll soon have to get back much closer to the “solar budget” and re-learn how to get the best out of it.
      *: the main source of problems is solutions. Nature simply adapts.

    • Thanks for bringing attention to this book (and Todd waste water treatment above), glancing over the reviews I’m not sure how much “practical how-to” information regarding “mountain homesteading” is there inside the book content vs. zen/philosophy by Philip Ackerman-Leist. Could you elaborate please? With few notable exceptions there is not that much info/books available on this topic, generally you end up with the silly notion of buying low gravity center alpine tractor (uber expensive).. lolz..

      • Don Stewart says:

        worldofhanuman
        I would consider Ackerman-Leist’s book more about the education process, as the subtitle indicates. For example, they buy a run down shack from a minister who used it in the summer. The foundation is bad, so they shore it up with methods which worked fine in North Carolina. But they don’t work well in Vermont. The south side of the shack gets warm while there is still snow on the north side. This causes the whole structure to tilt to the south. As they were building their permanent house, they were in a race with collapse of the shack.

        Another example is the purchase of two oxen. The oxen turn out to have minds of their own, and outweigh him 10 to 1. He remarks that the animals they had tended to run their lives, rather than the other way around. You can compare with Will Bonsall over in Maine, who never had animals because they are too much work. Jan Steinman would not be without his animals. My daughter complains, but currently has 37 chickens and ducks on her city lot. Love can make us do strange things.

        For ten years they had no electricity and only an outhouse. Getting up at night to go to the outhouse when it is 20 below zero must be an education in itself. Being unable to get a vehicle up the mile long road to their house during mud season teaches lessons. Learning that frozen ground and snow make moving heavy objects easier is a lesson he didn’t learn in North Carolina. Seeing their first solar panel and figuring out how valuable it might be was an educational experience.

        But if you want advice for how to deal with the effect of short and erratic summers on crops, I’d go elsewhere.

        Don Stewart

        • Jan Steinman
          Jan Steinman says:

          Another example is the purchase of two oxen. The oxen turn out to have minds of their own, and outweigh him 10 to 1. He remarks that the animals they had tended to run their lives, rather than the other way around… Jan Steinman would not be without his animals.

          You don’t have to buy steel-toed boots around goats!

          On the other hand, they don’t like pulling a plough, although I’m cobbling together a harness and cart so they can haul their own manure around.

    • Jan Steinman
      Jan Steinman says:

      I read as Capra and Luisi struggled mightily to define complexity…and failed, in my judgment.

      Complexity is easily hidden — abstraction is a form of complexity.

      A 10,000 acre field of wheat seems, at first take, to be pretty darned simple. And yet, look below the surface to see what it takes to support this unnatural situation — mechanized agriculture and petrochemicals come to mind quickly, but also the finance industry that allows a farmer to purchase inputs before harvesting, the entire government, which supplies the crop insurance without which the finance industry would not lend, the transportation industry that brings inputs to the remote farmsite and hauls away the grain, the processing industry that turns the raw grain into products useful to consumers, the distribution industry that apportions the resulting products and makes them available to consumers… the list goes on and on.

      Abstraction is a form of complexity. When you push a little icon on your iPhone and a text message displays, it seems very simple, but we all know that all of human civilization sits behind that little icon.

      I’m not surprised Capra and Luisi had problems with complexity. In looking through their bibliography, I see vast holes you could drive a autonomous self-driving car through! No Donella Meadows, who wrote an inspired textbook (Thinking in Systems: A Primer) on the subject of systems thinking, let alone no mention of her groundbreaking systems work with husband Dennis (et. al.) (Limits to Growth). Also missing is Joseph Tainter, Ivan Illich, Jim Merkel, Dmitry Orlov, John Naisbit, et. al.

      On the other hand, they seem to be enamoured of Bill McKibben, and give passing mention of Richard Heinberg, Jared Diamond, and even Helen Caldecott.

      So as a treatise on “systems thinking,” I’m finding Capra & Luisi to be lacking at this point. So far, the first quarter of the book seems to be a history of non-systems thinking and the problems that brings, easily eclipsed by James Burke (The Axemaker’s Gift), Ivan Illich, John Michael Greer, and many others.

      I’d encourage people to check out Donella Meadow’s Thinking in Systems: A Primer before attacking Capra & Luisi. Too bad they didn’t read it first, before writing a systems thinking book!

      • Don Stewart says:

        Jan Steinman
        I checked Mobus and Kalton on Donella Meadows. They use a quotation from her:

        ‘A system is a set of things–people, cells, molecules, or whatever–interconnected in such a way that they produce their own pattern of behavior over time. The system may be buffeted, constricted, triggered, or driven by outside forces. But the system’s response to these forces is characteristic of itself, and that response is seldom simple in the real world.’

        The also include her in ‘some more examples of systems thinking’.

        Capra and Luisi don’t use the particular quote from her, but much of their book is an exploration of those themes. They trace much back to the Odums in terms of living systems.

        I suggest you take a look at 16.2.2, Are Ecosystems Autopoietic? ‘It may well be that the pathways and processes in ecological networks are not yet known in sufficient detail to decide whether these networks can be described as autopoietic’, but then add that it would make a very interesting discussion. If we take Meadows quote above as claiming that ecological systems are, in fact, autopoietic, then we simply have to look at the discussion by Capra and Luisi to decide whether we consider the question proven or not.

        Let me take up the question of ‘simplicity’ and ‘complexity’. Look at Figure 7.1 and tell me whether that drawing of a ‘simple’ microbe represents complexity or simplicity. Humans do not have all that wiring. As Dr. Oz has stated, ‘we humans have outsourced our digestion to our microbes’. Our microbes can do things we cannot. Does that mean they are more complex than us?

        Bacteria can fix nitrogen at room temperature. Humans can’t do that by a long shot. Does that make nitrogen fixing bacteria ‘more complex’?

        When I think about Tainter, I tend to think that his definition of complexity is really about doing things the hard way. Instead of letting the microbes fix the nitrogen, we do it with very inefficient methods which create lots of pollution. I think it is indisputable that, if we lose fossil fuels, we will be forced to go back to letting the microbes fix nitrogen. But whether we label it ‘more complex’ or ‘less complex’ is pretty arbitrary. We tend to assume that whatever we humans are doing is the height of sophistication and complexity…but I don’t think a clear examination would support that.

        As for Heinberg, Capra and Luisi cite Heinberg as noting the problems with energy, pollution, and financial barriers. That’s pretty much what the Limits to Growth people talked about, except they didn’t talk about the financial aspects (to my knowledge). Limits to Growth did calculate the impact on population. I can’t remember everything Richard has said about population, but in general he is not calling for higher population on Earth. I don’t know if he has talked about Overshoot.

        I’m not knocking Donella’s book or The Limits to Growth, but they can’t mention everything. I believe they think the Odums were the main innovators in terms of ‘they documented the movement of energy and materials through the system in a series of flow diagrams’.

        A review of Richard Heinberg’s book states:
        Unlike previous authors, going back to Thomas Malthus, then later Dennis and Donella Meadows, Herman Daly, and more recently, Tim Jackson and Gus Speth—to all of whom Heinberg gives their due—he’s not just saying that economic growth should stop or that it will stop. He’s saying that it in fact has stopped, whether we like it or not. Discussion in the popular media aside, this is not a choice. Physical laws dictate that all living things must stop growing at some point and, our adamant resistance notwithstanding, the human species has reached that point.’

        So, if there is a conflict between Meadows and Heinberg, I don’t know what it is.

        Capra and Luisi discuss Lester Brown, Bill McKibben, and Amory Lovins. All three contributed blurbs to Thinking In Systems.

        So, what’s the problem?

        Don Stewart

        • 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.
          Gail Tverberg says:

          The original Limits to Growth study is a study of physical quantities of things. It doesn’t use a financial system. It never mentions GDP, or growing GDP. It certainly doesn’t consider the idea of debt, or needing to pay back debt with interest. The analysis is basically an engineer’s view of what collapse might look like.

          Now that I think about it, “Peak oil” is really a petroleum engineer’s view of how oil might “run out.” So there is a lot in common between the LTG analysis and the Peak Oil analysis.

          Neither of these views is 100% right, because they miss the financial aspects of the problem.

        • Jan Steinman
          Jan Steinman says:

          So, what’s the problem?

          It seems to me that Capra and Luisi take an unnecessarily narrow view of systems thinking.

          That could be forgiven if one were writing an unapologetically “point-of-view” book, but the first few chapters pretend to be a “broad brush” book, as do the 19 pages of references that do not refer to many of whom I think are the best system thinkers on the planet.

          No matter, I’ll continue wading through it with an open mind. My first thought at looking at the references was bewilderment at not seeing names I expected, but that was soon replaced with “Cool! Some new thinkers to meet!”

      • 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.
        Gail Tverberg says:

        I too liked Donella Meadow’s book better than Capra and Luisi’s.

  5. Don Stewart says:

    Dear Gail and Finite Worlders
    Here is a follow up to the BW Hill post that I recently copied into this space. A very basic challenge to economics as most people think they understand it….Don Stewart

    “Short… I’m not an economist, but for what I know, when demand doesn’t change when the price is changing, that means that it’s inelastic!”
    No change in quantity supplied with a change in price is perfectly inelastic. The curve is vertical on a P/Q plot. Price has fallen by 50%, and there has been almost no increase in product supplied. The product is now almost perfectly inelastic.
    “Actually, oil has a very small positive elasticity.”
    A positive elasticity would mean that a change in price would bring about a large change in quantity supplied, or demand would increase with declining price. That has not happened! Your statement that oil has “a very small positive elasticity” is completely refuted by the data.
    “Also, demand move very slowly on price variations. It’s just that you can’t switch quickly from a ressource to another, like you could switch from rice to wheat when price is to high.”
    With price declining there would be no switching to another resource. Your argument that demand would be slow to react because of the need to switch to another resource has zero merit. That could only apply if price was going up. It is not; it is going down.
    Point being is that the Econ 101 curve is not working in the present situation, and never has worked. Price is going down but demand is not increasing. Over the last 100 years production has gone up, demand has gone up, and the price has gone up. If demand had not gone up, as production and price increased there would now be billions of barrels of unsold oil. Since 1960 production has increased by 1214%, and price as of 2012, 3,470%. Demand increased along with both increases. For that to happen the demand curve had to be sloping in the wrong direction. Presently, the only increase in demand is in the Petroleum Production System itself, which we calculate is now 2.5% per year.
    No matter how much one wants to sugar coat the present situation, in essence, the petroleum industry has run out of expanding market. The price is now so low that producers can no longer replace extracted reserves. $50 oil is not going to buy new fields. When the present reserves have been completely depleted the oil age will be over!

    • $50 oil is not going to buy new fields. When the present reserves have been completely depleted the oil age will be over!

      Im not sure that $50 oil will even support pushing out and refining the muck on existing reserves but credit will. Credit might support some new fields if EROI is high enough. All of this new dakota montanna oil was pushed out with credit. Price really isnt a factor anymore. As long as money works credit will be used to extract. Maybe Belgium will invest a large amount of its GDP in oil futures. I think your right for the most part once reserves are gone its the end but not because of price. The patient stopped breathing some time ago but as we all know the machine can keep the patient alive for a considerable amount of time 25 to 50 years would be my guess.

      In the meantime 99.9999999% of people dont believe in finite resources whether its the Prius drivers or the drill baby drill head bangers.

      http://www.cnbc.com/2014/01/04/us-to-achieve-energy-self-sufficiency-by-2020-exxon-mobil-ceo.html

      • Fast Eddy says:

        “The patient stopped breathing some time ago but as we all know the machine can keep the patient alive for a considerable amount of time 25 to 50 years would be my guess.”

        Interesting thought… can we maintain BAU for a considerable amount of time (decades?) even though the price to extract and refine is well beyond the price the oil sells for…

        Quite possibly — and that’s why the unraveling will not happen because we have run out of oil — it will most likely be because the economy simply grinds to a halt and we end up with a deflationary collapse.

        As we have seen with China — if things go sideways — and the central banks do ‘whatever it takes’ — the band aid will hold… even if an arm is severed…

        Can we do this for decades? (that would be awesome!)

        • Victor says:

          Is it possible to extend the system until the limits will be gone ? It seems to me chimeric to believe that “money print” could be save us for several decades. How can we face to the falling price and make believe all is ok for tomorrow ? Negatives cash flow and debt explosion are already issues for our economy and it will be more and more difficult to print money just for curb the bleeding.
          It’s same thing that a patient that will be very sick and which depend only on medical care (blood infusion and medical machines). It’s not possible to maintain in life so long. One day he will have a heart failure and all his life system will stop roughly. In a worldwide economic system like ours, the interconnection between all parts of economics institutions and complexity are truly an obstacle for the continuity.
          It would be just enough of a pebble that everything crashes and stops. Think it could last 20 years is unrealistic and too optimistic widely for me.

          • Stefeun says:

            Agreed, Victor,
            Debt also is prone to diminishing returns, and we’re already seeing its productivity decreasing fast. More and more of it is required for smaller and smaller results.
            As it sems the only way to “fix” it is by taking more debt, something has to give up.

          • Fast Eddy says:

            Victor — I agree with that — I cannot see how this can possibly go on for 20 years.

            What I am trying to work out is what the trigger is.

            Looking at China one would have thought that the panic sell off had the potential to crash the train….

            But nope — the PBOC defies gravity by shutting down the market and mopping up any shares that anyone tries to sell …. and threatens jail to anyone who shorts the market…

            So we get a standoff.

            This leads me to drop a stock market crash as the trigger — all the institutional money already knows the markets are a joke — they know they would blow up in a second with central banks support — so they just go along for the ride (shorting or staying on the side lines is pointless — the central banks will not allow a major correction or crash… the market MUST go up… and they know that if they do crash then the world is over…)

            Debt doesn’t seem to matter —- Greece is the perfect example — if you can’t pay then you suffer.

            Revolution? Not allowed

            The PTB will not hesitate to gun people down in the streets — look at Egypt — I am told by friends who live in Cairo that after the revolution failed the people turned on anyone who dared to oppose ‘Mubarak 2’ — the rationale was that revolution was futile and only lead to chaos and greater poverty….

            Could the trigger occur when the glut of oil turn into a supply issue because prices do not support oil exploration — prices spike — and the economy collapses (see 2008) with the central banks powerless to act?

            My money is on the deflation scenario. Too many people without work and declining wages — cause prices to fall — and there is nothing the central banks can do…. We get insolvencies on such a broad scale that the PTB end up trying to stick fingers into holes in the dyke… and eventually the dyke ends up like Swiss cheese and the wall of water comes crashing through…

            • Victor says:

              “My money is on the deflation scenario. Too many people without work and declining wages — cause prices to fall — and there is nothing the central banks can do…. We get insolvencies on such a broad scale that the PTB end up trying to stick fingers into holes in the dyke”. I agreed with you Fast, but it seems Central Banks will do all they can do to delayed the SHTF and that’s our situation now but for how long now ? Is it possible to see the trigger happen ? The closer we are from the abyss, the more it moves away and away and away until the last move.

            • kesar0 says:

              Good description, Victor.

            • Personally, I bet on rising food prices / food shortages as the trigger. Both China and North America are having droughts, that could last years. You can print all the money, buy all the paper commodities, stocks and bonds you want, but you cannot print food. Hungry people are more likely to do rash things.

            • Fast Eddy says:

              Good point.

              California is pumping like mad … not sure how long this can continue before the farms stop producing … California is a massively important supplier of food… and a very big economy (8th largest by GDP) … so if they collapse that would be a hit nearly equivalent to the UK going down…

              Raging food prices as a result of this could result in raging crowds… people will accept just about anything but when they can’t feed their families… anything can happen.

              However let’s look to Cairo for the model…. tens of thousands took to the streets… and the PTB had them gunned down…

              If they storm the Bastille this time they will be dispersed by tear gas and a hail of live rounds.

              The policy has been determined – Zero Tolerance for unrest — shoot first — do not negotiate.

              There is too much at stake to allow a food riot kill off BAU

          • “It seems to me chimeric to believe that “money print” could be save us for several decades. ”
            Money printing has been going on a long time. If you say that money printed started when Nixon went off the gold standard over 4 decades. In actuality it has been going on much longer than that.
            So from a empirical stand point “money printing” does not instantly render currency worthless, that is a fact. The term “money printing” is rather imprecise. Yes money is created with nothing to back it but another debt instrument but there is always another debt instrument on the books. Bonds on the books of the fed for $. As things get worse the measures get more extreme and the risk of hyperinflation grows bigger. Stocks on the Japanese CB books for yen for instance.

            However it seems clear to me that these are measured devaluations and localized to where they are applied. When Belgium decides to invest 50% of its GDP in US treasuries it doesnt out any money in my pocket. Far from it- as less energy gets to the economy the economy contracts. Localized applications of credit do not result in large amounts of cash in the peoples hands contrary to the popular Ben Bernanke helicopter cartoon. FE point about deflationary collapse is well taken but the term ” deflationary collapse” is once again vague. That is my big problem with all of these collapse arguments. They have a well thought out line of reasoning to a point then they in essence say “then the SHTF”. So what is the collapse mechanism in a deflationary collapse? Its clear that credit can be created and applied where needed to keep the patient alive food stamps ecetera. Whats going to fail that brings on the spiky hair mutants? Uncomfortable silence. Our paradigm our conditioning is imaginary things end. Credit is not imaginary as long as its traded for real shit.

            We got told Santa is not real. Were upset because we thought $/credit were real. Work hard and prosper. Now that we find out santa isnt real we want him to disappear. He is still as real as when we acquired all of our possessions and wealth via santa however. No one wants those to disappear eh?

            Its been a long time since USA produced anything. Yes we transform oil calories to food calories.
            Yes we are pretty good at blowing shit up. Yes we have the “service” industry a polite term for cannibalization of existing wealth. We dont manufacture, we dont program and we really dont do shit, Yet we all still eat. Yet we all still enjoy a very posh lifestyle. Weve been in resource depletion deflation for sometime. No collapse. Credit will get critical resources out of the ground. Wheres the problem?

            I think its important to realize localized applications of credit only affect where they are applied.

            At some point there just wont be enough energy being consumed to sustain industrial civilization. Yes then collapse occurs.

            “How can we face to the falling price and make believe all is ok for tomorrow ?”

            Sounds like a personal problem to me. 🙂 Besides of the beaten path blogs like this no one gives a shit.

            FE you are going to get your wish. I see the probability high that collapse will not occur in your lifetime. Party on.

            • Jan Steinman
              Jan Steinman says:

              I see the probability high that collapse will not occur in your lifetime. Party on.

              Of course, there are two very different ways in which that statement could be true. 🙂

            • Fast Eddy says:

              B9 – yes money has always been printed — the cash in your wallet had to come from somewhere…

              The difference here is what is being used for — it is not being flung out of helicopter doors — only an idiot would believe that the Fed would ever do something like that.

              Also you would need thousands of helicopters if you wanted to fling trillions of dollars out the doors.

              But make no mistake the money is being flung into the economy — and it is in the hands of the people:

              – QE drives the stock market — corporations tap into the free money and buy back stocks — if not for QE then the markets would blow to pieces

              – pension funds remain solvent on the basis of this — so there you have literally trillions of dollars handed out to pensioners courtesy of QE

              – subprime auto loans put cars into the hands of people who could never get a loan for a car

              – subprime home loans — they’re back! and made possible by QE http://america.aljazeera.com/articles/2014/12/17/subprime-lendingisback.html

              – interest rates are kept at record lows only because of QE — again that puts incredible amounts of money into the pockets of people — increase rates to a more normal 5% and the entire world would collapse into insolvency

              So you are wrong on this.

              In terms of resources depletion is not the issue — that started the moment the first tea spoon of oil was extracted.

              What is different now is that the cost of extraction exceeds what people can pay for the oil.

              The central banks are sucking the life blood out of the general economy to compensate for that…

              It would be like my coffee outfit that loses $5 on every cup getting subsidized by the local council … it would mean the roads and bridges go to pieces … the police force and firefighting brigade gets halved … street lights get turned off … etc…. so that I can continue to serve coffee…

              So what is happening is the entire economy is rotting away so that we can continue to extract oil that nobody can afford…

              QE ZIRP are the policies that allow that to continue…

              But meanwhile — as expected — as the global economy rots — demand collapses — see iron ore, copper, milk, etc… see the Baltic Dry — there is massive demand deflation happening…

              Eventually the termites eat out the entire supporting structure —- yet even still the outside looks ok … the stock markets keep hitting records… we continue to pump oil and sell it at a massive loss … but the entire building at some point falls.

            • “The central banks are sucking the life blood out of the general economy to compensate for that…”

              Whoops this where you lapse into metaphor because you have no specific facts.

              “But make no mistake the money is being flung into the economy — and it is in the hands of the people:”
              “But meanwhile — as expected — as the global economy rots — demand collapses — see iron ore, copper, milk, etc… see the Baltic Dry — there is massive demand deflation happening…”

              Ok FE which is it, If money is being flung into the hands of the people we wouldnt have demand destruction. Where is all this money being thrown into the hands of the people going if its not being spent? I sure dont see any of it, nor do my kids or anyone else I know.

              So you have two contradictory arguments
              1. demand destruction
              2 money in the hands of the people

              Demand destruction is a fact. Money in the hands of the people is a myth. Why do you have a problem with reality? humming a little too much Joan Baez? 🙂

            • Fast Eddy says:

              “The central banks are sucking the life blood out of the general economy to compensate for that…”

              I would assume it goes without saying that if the amount of energy that goes into producing a barrel of oil increases dramatically — that leaves less energy available for the general economy (Gail has written extensively on this)

              Examples:

              – infrastructure such as roads and bridges start to fall to pieces
              – social services such as police and fire services are reduced
              – salaries have dropped in real terms over 10% since the crisis started

              Obviously the trillions that have been pumped into the hands of the people is not enough. In spite of these unprecedented handouts… demand is falling….

              If you work out the reduction in salaries of employed people across the US and reduce that by 10% — then work out what the salaries would have been for the 20% or so who are unemployed…

              That will give you an idea of what would be required to compensate for the demand that has been lost.

              I suspect the number would be in the double digit trillions.

              There are limits to the amount of ways you can try to offset trillions of dollars in lost demand….

              They are giving away cars…. houses…. if you have a sprained ankle you can get disability cash …. can’t find a job — go back to school and get paid for that…. they are giving money to companies to prop up their stocks… they have reduced interest rates to zero which is essentially making money free for the taking….

              I am not sure what else they can do.

              The Fed can’t really stuff 50k into everyone’s bank account …. the Idiocracy would tune in to how seriously bad things are if they did that….

              Let’s turn this around… imagine what GDP would look like if:

              – subprime auto loans were not allowed (25% of new car sales are subprime)
              – interest rates were 5%
              – companies could not access 0 interest money to buy back stocks
              – mortgage rates were 5%

              If you want to go bigger picture on this — we could discuss how what China has done pouring more concrete in 3 years than the US has in a century — and how that is a massive helicopter drop to the world (think mining jobs… commodity related jobs… etc…)

              Conclusion: the Mother of All Helicopter drops kicked off in 2008 and continues to this day.

              And it is failing — as expected.

              The global economy requires a growing supply of cheap to extract oil in order to continue. There is no more cheap oil to be found.

              Therefore the global economy will collapse.

              1+1=2. Always.

            • Jan Steinman
              Jan Steinman says:

              Where is all this money being thrown into the hands of the people going if its not being spent? I sure dont see any of it, nor do my kids or anyone else I know.

              Sorry, you missed the boat. Someone on this list was recently offering people a free private jet and millions of dollars!

            • “I would assume it goes without saying that if the amount of energy that goes into producing a barrel of oil increases dramatically — that leaves less energy available for the general economy (Gail has written extensively on this) ”
              Of course. What has this got to do with central banks ?“The central banks are sucking the life blood out of the general economy to compensate for that…”
              Your points about auto and student loans are well taken but once again demand destruction can not exist if the people have lots of money. The amount of money that is reaching consumers from credit creation is much much less than that which was created from easy energy.

              Did Joan Baez ever do a doom song. Eve of destruction perhaps? 🙂

              Deflation ala depression. Thats where we are. Now how will collapse come about? Energy will be extracted with credit. Food will be produced with that energy.

              “Therefore the global economy will collapse. ”
              Well there it is. The signature of every immediate time doomster. “Then the SHTF” Why not put it at the top of the post rather than the bottom? I am a medium to long term doomster. Face it FE your threatened by a medium to long term collapse scenario. You want collapse in your lifetime. You want the dark side that you imagine so much despite your protestations to the contrary. If not the reality of immediate collapse the threat of it so the wave of emotions created by your dark fantasy’s are potent..

            • “demand destruction can not exist if the people have lots of money”

              But they don’t have ‘lots of money’ that is the problem — in spite of trillions of stimulus the standard of living of most people has dropped dramatically… because there are very few jobs… spending power is dropping….

              And this is manifested in enormous collapses in the prices of commodities… people who have less money buy less which leads to demand deflation.

              If you look at recessions in the past they generally occurred when the price of oil spiked…. that knocked back growth … the price of oil fell… and we began the cycle over a again

              This is not a cyclical thing — this is the rock sinking to the bottom of the ocean. Growth is not coming back.

              So commodity prices are almost certainly going to remain low — in fact barring some sort of massive new stimulus (can China built more ghost towns please) I see no reason why the prices would not fall even further.

              Here in New Zealand the price of milk powder — the biggest export – dropped a whopping 13% last month — and has been dropping for many months now — most milk producers are insolvent with milk at this price.

              Already most producers of most commodities are losing money at these prices.

              At some point — when they see that there is not going to be a recovery in prices they will start to slash staff….

              But that will only make the macro picture worse because consumption will drop even further…. commodity prices will plunge….

              Companies will slash through the bone …. they’ll cut their arms off … and legs… and torsos… until all that is left is the head….

              Obviously the end result is a total collapse of the economy.

              We are at this very moment in the midst of a deflationary collapse — and the central banks appear to be powerless to stop it.

              Perhaps they can give us another blast of stimulus…..

              But at some point you push the string…. and everything unwinds very quickly …. and those who think this is not possible…. will be eating bark and grass the rest of us…

  6. historian, Gail is suppose to raise her total for oil reserves based on your recollections from an article you read, but have no link?

  7. historian says:

    Hi Gail

    The other day, I read a newspaper article analyzing why the shale oil business aren’t going bankrupted by now as most people predicted at the time of oil price crash last year. They are still going on with such debt burden which have been said they have to carry. The article said the reason they are holing out is mainly because of the technological innovations they have kept making in the field. By such innovations they could reduce their overall operating costs: they could drill two wells with the cost of drilling one previously, and making it longer at the same time. It said such a cost reduction enable them to manage to get along somehow, adding more remarkable ones still to come by further innovations.

    It stands to reason that eventually the cost will be reduced to the point where the boundaries between conventional oil and unconventional oil become meaningless. If that is the case, you should extend the available or possible oil reserve you mentioned in your previous post. Then your theory of immediate oil crisis or shortage loses its ground, doesn’t it?

    Always appreciate your unique and well organized perspectives in various fields.

    • bandits101
      bandits says:

      Do you have any facts? Does the article have any facts?

      • historian says:

        The shale industry that was supposed to be bankrupt by now is still operating. Isn’t that a hard fact? They are still alive, whether in good shape or not!

        • “The shale industry that was supposed to be bankrupt by now”
          What is bankrupt? Is bankruptcy when debt exceeds assets? If so if the assets are “valued” higher than the entity is not bankrupt. France is not bankrupt. The implications of a bankrupt France are very painful. So its not bankrupt.

          “is still operating. ”

          Bankruptcy is denial of credit.
          It is arbitrary and always has been.

          As long as the items needed to operate are provided by credit a organism or entity will continue if credit is available.
          Credit is infinite.
          Resources are finite

          Providing the shale industry with credit trades something with no inherent value for something of great value. So shale is not bankrupt.

          Gales insistence that there will be financial collapses seems to stem from a belief that bankruptcy is not a arbitrary decision, a belief that solvency exists and that this idea is based on physical fundamentals. Gail is obviously a very honest smart individual. Gail would you care to comment?

          Denial of credit ala bankruptcy will occur only when the pain of doing so is greater than the pain of not doing so. Arguments about EROI aside, EROI is real not arbitrary solvency as determined by physical law.

          Everything of importance will be triple A (AAA) rated till the very end. Just like subprime. AAA Just like Greece. AAA Then the resources stop.

        • Jan Steinman
          Jan Steinman says:

          The shale industry that was supposed to be bankrupt by now is still operating. Isn’t that a hard fact?

          Keep watching.

          Tom Whipple reports that what has been keeping the shale wildcatters alive is futures contracts.

          They’ve been delivering oil at $90 a barrel to people who thought it was going to be at $120+. Those are the people who are getting the “haircut.”

          But Whipple reports that many futures contracts are expiring in the next six months.

          Keep watching. Something that cannot go on forever, will not.

        • Fast Eddy says:

          Historian — I am starting up a little venture here in New Zealand… the plan is to open up 100 coffee shops in the next year.

          I will be selling the best of the best coffee with a special twist — every cup comes with a sprinkle of 18 carat gold dust on the top…

          Each cup will cost me $10 — but because few will be able afford this coffee I will be selling the coffee for $5 per cup (I will just make up the difference by selling massive volumes…)

          As the CEO of the venture I will be paying myself 500k per year + a private jet + car and driver and a 500k expense account.

          I am seeking a limited number of investors (say 5000) to put up $25,000/share each to support my new venture. I will sell maximum 49% of the equity (I will retain the other 51%).

          My business model is the shale industry — seeing as how that is working out so fabulously.

          This is your chance to get in early.

          How many shares would you like me to put aside for you?

          • Close. More like the price of a cup of coffee went up to $14, so based on a projected cost of $9 per cup including paying off the debt, you borrow money and open the coffee shops, hoping to make a profit. However, the price drops due to all the new supply, but customers don’t buy any more coffee than before.

            Now, the price of coffee is down to $6. The cost to make the coffee and service your debts – interest only, is $5, so you keep making coffee; however, the principle is never paid down, you just keep rolling it forward until the price of a cup of coffee goes back up.

            In unrelated news, my bank just let me know, that I’ve been such a good customer, they’re going to let me do interest only payments on my unsecured line of credit cards! It works out to $50 per month per $10,000, and I don’t have to pay down the principle! Not so long ago, it was nearly $400 per $10,000 as minimum monthly. They don’t want the principle paid off anymore, it seems.

          • historian says:

            Yeah you’ve got the point. Leave some share for me I will willingly take it sometime later when all the messes are cleaned up.

            By the way, why do you think the shale oil industry we all know was going to die soon is still in business? Do you know the real reason? Don said it is because of the future contracts agreed before the oil price plunge last year. But it is not. They already used up the money they got from the contracts. They always need new cash in hand to maintain the business. That they are still in business means there has been continued influx of money to the sector, as opposed to our expectation. That is the reason behind the fact that they are holding out.

            It means there were investors there. Do you think they are gullible enough to waste their money into seemingly hopeless sector? I don’t think so. They invested their money because they saw opportunities there.

            • Jan Steinman
              Jan Steinman says:

              why do you think the shale oil industry we all know was going to die soon is still in business? Do you know the real reason? Don said it is because of the future contracts agreed before the oil price plunge last year.

              Actually, I think it was Tom Whipple, quoted by me to Don.

              Whipple probably knows ten times as much about the oil situation as me, Don, and you put together.

            • Fast Eddy says:

              The industry remains alive because we need oil – even expensive oil — to keep BAU limping along.

              So the Fed funds this pig’s run for the Ms Universe Pageant — it orders the MSM to tell the world the pig is so pretty… and so sexy … it hires the best make-up artists on the planet to make that old pig look lovely…. it puts a wig on the pig and has cat-walk hair stylists try to make her look like a Victoria Secret model… Chanel dresses her up …

              Investors — who are not much different than sheep (or lemmings) believe the pig is Ms Universe…

              The Fed knows the pig is a pig but they have no choice — they need to fund this charade… to create momentum in the markets … so that the stupid money follows….

              Of course when you do something like this you take capital out of the other parts of the economy … and it suffers….

          • historian says:

            Fast Eddy
            It is too early to say, but there will be major mergers and acquisitions in the sector, seeking the scale of economy. I think things will look different by that time

            • Fast Eddy says:

              Steve Coll in his excellent book Private Empire mentions how Exxon purchased shae play XTO for 41 billion … and their market cap dropped virtually the same amount a few days later…

              http://breakingenergy.com/2013/05/30/timing-was-off-for-xto-deal-says-exxon-ceo/

              Merging and acquiring don’t turn a pig into cinderella…

            • 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.
              Gail Tverberg says:

              LOL!

    • be very wary of ‘newspaper articles’
      check any ‘facts’ three times from 3 different sources
      after that you may have a chance of being right.
      Saudi Arabia and “Saudi America” produce roughly the same volume of oil
      Saudi Arabia does it with about 1600 oilwells, Saudi America needs around 500,000 wells.
      There you have your “EROEI” in simple, easy to understand figures. No ‘technological innovation’ is going to change that to any great degree

    • 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.
      Gail Tverberg says:

      I think we are just dealing with longer time lags than some people expected in how these things play out–it really has nothing to do with costs being lower (even if they are somewhat lower because of technological innovations). The companies are still in a very much cash flow negative situation, even with the hedges that they still have in place, and even with recent technological innovations. Some companies have been able to sell more stock, rather than simply take on more debt to cover this continuing cash flow “hole,” because stock buyers are optimistic that prices will go back up soon. But the fact remains that the hedges will run out and the low oil prices will eventually work their way through to reduce the value of the oil reserves that are acting as collateral for their loans. Once this happens, companies will find themselves unable to add more debt. They may need to sell assets to any available buyer, because they will be in danger of breaking loan covenants, once the low value of the oil works its way back to the valuation of the amount of oil they have in the ground as collateral to borrow against.

      The cost issue is not the boundary between conventional oil and unconventional oil. The cost issue is how much buyers can afford to pay. We need oil that is low enough priced that the world economy can grow by a high enough rate so that it can push the price of oil and other commodities back up. We are still a long ways from that point. In fact, I am doubtful that that time will ever come. We know that the world economy could grow when oil was at $20 per barrel, but it is not at all clear that the world economy can grow without a lot of stimulus/added debt at cost levels much above $20 per barrel. We have been using a huge amount of economic stimulus for a long time, without ever really focusing on this point.

      • historian says:

        I recently read several articles taking positive positions about the prospect of shale oil. But in the meantime they did admit its limits and disadvantages. Considering the recent development of events, it seems to me that things are going in the different direction from your predictions. I am not sure it is just a matter of time lag because it was too extended to accept as such. Maybe there are some reasons of the delay I don’t know yet.

        Maybe it would be better things are kept as usual anyway.

        • urbangdl says:

          My guess is a political one, the US afraid of loosing its relative strong position thanks to the bluff on shale oil, it is now trying to keep the status quo against saudi Arabia and Russia to make them loose money as well. That is a shallow reasoning but we cannot ignore the present implications by only looking to the future end.

  8. This should interest our own Fast Eddy;
    http://www.thepublicopinion.com/news/associated_press/south_dakota/convention-celebrating-laura-ingalls-wilder-starts-thursday/article_83bee0fa-a76f-5e9e-a522-ad7eeb29583c.html?mode=jqm

    Convention celebrating Laura Ingalls Wilder starts Thursdayj

    BROOKINGS, S.D. (AP) — Fans of Laura Ingalls Wilder are flocking to Brookings for the annual convention that celebrates the life and work of the “Little House” author.

    The third annual LauraPalooza starts Thursday at South Dakota State University and runs through Friday.

    The gathering brings together fans and academics to discuss the literary, cultural and historical impact of Wilder and her books.

    The Brookings Register reports that more than 150 people are expected to attend.

    There will be a silent auction of Wilder-themed items as well as a reception for authors and artists.

    Pamela Smith Hill, who edited Wilder’s autobiography, is scheduled to be the keynote speaker.

    The book was released by the South Dakota State Historical Society Press and has sold more than 100,000 copies.

  9. Hard to convince folks when they read headlines like this;
    $2 gas will be back after Iran nuclear deal
    http://local12.com/m/news/features/top-stories/stories/-2-gas-will-be-back-after-Iran-nuclear-deal-168743.shtml
    . drivers can look forward to $2 gas later this year, thanks in part to the Iran nuclear deal announced Tuesday.

    Gas may only dip a few cents when the Iranian oil first starts to flow again, but by September drivers could see big savings.

    “Once we get past Labor Day, we should see gas falling by 10 to 15 cents a month,” said Tom Kloza, chief oil analyst with the Oil Price Information Service. “By December a lot of places are going to see gasoline at $2 or less.”

    Iran hasn’t been able to sell oil to the United States since 1995. Most major Western countries imposed sanctions within the last five years aimed at curbing Iran’s nuclear program. Instead it’s been selling to China, India, Turkey and other developing markets.

    Crude oil and gasoline prices were both initially lower Tuesday on news of a deal between six major powers and Iran, though oil edged higher later.

    “[Iran] will only add to the oil glut on the market and increase the selling pressure,” wrote Naeem Aslam, chief market analyst at Ava Trade

  10. Artleads says:

    Magnificent help, Don. Here’s a rough draft of what I aim to email to the board. You can scroll down to the heading:
    RESEARCH ON WATER TREATMENT PROJECTS

    Dear Board Members,

    PRESENTATION AT THE AUGUST 13 BOARD MEETING

    Org has accepted the invitation to present at the next board meeting to be held on August 13. The planned presenters are G, M and me. I will briefly state what my interests around water are, and why I wish to present them to the rest of the board. G will give a history of Org, and what it has done regarding water catchment. M will speak in more engineering terms, and try to solicit ideas from the board.

    DO WE NEED AN EARLIER MEETING?

    But before we get to the August 13 meeting, the county is seeking out capital improvement projects to do in Town. The occasion for doing that is an August 3 meeting at the Community Garden. I believe L has suggested to the county our need for a community center and a water treatment facility. The water treatment facility issues would seem to tie in with what Org wishes to present.

    I am wondering whether we need a special meeting prior to August 3. Would someone contact J to inquire? In other words, how does the water coop come to the August 3 meeting prepared to make requests or suggestions to the county?

    RESEARCH ON WATER TREATMENT PROJECTS

    Meanwhile, I will add further information supplied by a poster on Gail Tverberg’s ourfiniteworld blog. These have to do (I believe) with biological water treatment projects.

    BIOLOGICAL (?) WATER TREATMENT EXAMPLES

    1) Living Machine at Oberlin College:

    Here is a link to the Living Machine at Oberlin College. There is another video which shows how the machine sits in the campus, right next to an auditorium.
    https://www.youtube.com/watch?v=fmdsBlWwST

    2) The Omega Institute:

    http://www.greenbiz.com/blog/2011/08/11/four-greenhouses-point-future-urban-building
    At the Omega Institute, they hold yoga classes inside the greenhouse. It’s really very attractive. I don’t know how much they cost.

    3) Albert Bates’ and the Audobon Society systems:

    (No links)
    Both are undoubtedly cheaper, since they work by gravity and a succession of pools. But you don’t get the gorgeous greenhouse that you get with Todd’s system.

    4) Brea College Wetland System

    Here is Berea College’s wetland system at an elementary school in kentucky.
    http://bcnow.berea.edu/wetland-sewage-treatment-system-installed-at-tyner-elementary-school/
    Similar, but bigger, than Albert’s system or the Audobon system.

    5) John Todd’s Living Machine:

    https://www.youtube.com/watch?v=hb5YZXYojSU
    ‘John Todd, an ecological designer based at the University of Vermont, has worked to create simulated wetlands and water ecosystems that treat wastewater ‘biologically’. Granted, most sewage treatment plants also treat wastewater primarily with biological methods, since bacteria do 80 to 90 percent of the work. However, John Todd’s Living Machines incorporate various versions of organisms,–from bacteria to snails to fish to plants–into a progression of sequential ‘living’ tanks inside a greenhouse. As the wastewater moves through the tanks, beginning with anaerobic and aerobic bacteria, the water becomes visibly and quantifiably cleaner. The end result is that the water comes out of the system in compliance with EPA standards, and, in the process, the solid wastes are broken down and consumed by the living organisms in this ecological train of events.’

    • Don Stewart says:

      Artleads
      I reviewed Albert Bates installation and found that it is for greywater, not sewage. I misremembered.

      The Oberlin and Omega Institute are both John Todd projects.

      If you search for it, you can find John Todd himself with a YouTube talk on his Living Machines.

      Good luck…Don Stewart

      • Artleads says:

        Don,

        Todd gives a video presentation in one of the links. When it’s all talking and philosophical, I tend to listen to the whole thing. Technical stuff not so much. 🙂 And people’s attention span these days…well you know how that goes. So I just sent it out for what it’s worth. It will be by the grace of God that anyone looks at anything at length. If the board acts in even the smallest way to forward my direction, that will be enough incentive to remain on the board. I think I’m learning to make a proposal and then back off. As if it didn’t matter to me the least bit what people did with it. On to the next thing.

        I’m really just a catalyst. Very superficial. An idea guy only. 🙂 So I figure I’ve done enough. The board can take it or leave it…as long as they throw me a small bone. If one or two people embrace the direction and can put some energy behind it, I’d be glad to join in and help. Otherwise…on to the next thing. Thank you so much, Don!

  11. Don Stewart says:

    Dear Gail and Finite Worlders
    A post from BW Hill on Peak Oil News. I think this is a radical challenge to conventional thinking….Don Stewart

    ‘The price of oil has fallen by 50% over the last year, and consumption has barely moved. Using the old Econ 101 theories (that obviously don’t work) that implies that the price of oil is almost completely elastic; the P/Q curve is flat. Economists have been telling us for years that it is perfectly inelastic; the P/Q curve is vertical. Performance over the last year unequivocally demonstrates that they they have been barking up the wrong tree for a long time.
    In actuality, the price of oil has historically been driven by its value to the economy. Oil was worth more to the economy than what the producers were charging for it. Demand has followed supply for the last 100 years because of that situation. As production went up, so also did consumption. Three years ago, because of the effects of depletion, that changed; the price of oil became higher than its value to the economy. Its price fell, and producers began pumping frantically to make up for the difference in lost revenue, which depressed prices even further.
    2012 was a point of criticality. It was the point where falling price (temporarily) increased production, but that decline in price had no impact on the economy. The energy supplied from petroleum did not increase, thus the economy did not improve, so demand stayed the same. The world of petroleum is now Topsy Turvy: declining price increases production, but it does not increase demand. For those attempting to explain this phenomena using supply/ demand curves it has turned into a quagmire. For those using energy balance equations, it all makes perfect sense.’

    • 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.
      Gail Tverberg says:

      Thanks!

      “2012 was a point of criticality. It was the point where falling price (temporarily) increased production, but that decline in price had no impact on the economy. The energy supplied from petroleum did not increase, thus the economy did not improve, so demand stayed the same.”

      I am not convinced this statement is true. If I look at the annual average prices for Brent they are 2011 = 111.26; 2012 = 111.63; 2013 108.56. For WTI, annual average prices are 2011 = 94.88; 2012 = 94.05; 2013 = 97.98. This does not look to me like “falling prices” in 2012, for one thing.

      • Don Stewart says:

        Gail
        I think you are failing to get his point. The point is that the cost of producing petroleum now exceeds what the economy can pay for it. Therefore, production can only go up when the producers are seeking cash flow at any price. But the increase in production will be temporary, as the producers will figure out that new investments to produce oil are not paying off.

        These are, of course, very broad statements of the kind that come out of a mathematical model. They don’t prove that Shell may not spend billions in the Arctic. And trying to pin down 2012 as the year prices started down is seeking precision that the model doesn’t have. Hill’s forecast of falling prices in 2013 has turned out to be remarkably accurate, so far. But the need for cash flow causing increased production is driving prices lower. That is predictable from the model, but is not part of the model. The model has no idea how long shale, for example, can continue to lose money.

        Don Stewart

        • Jan Steinman
          Jan Steinman says:

          production can only go up when the producers are seeking cash flow at any price. But the increase in production will be temporary, as the producers will figure out that new investments to produce oil are not paying off.

          Tom Whipple points out there is a lot of hysteresis built into the system.

          Shale oil being produced today is being rewarded upward of $90 a barrel, based on futures contracts. Back when oil was at $120, $90 seemed like a good deal!

          Whipple notes that we’re long enough in cheap oil that futures contracts priced at reasonable amounts for shale producers will begin to expire soon. He points to the fall as the start of the real credit pinch for shale wildcatters.

  12. Don Stewart says:

    Artleads
    Here is a link to the Living Machine at Oberlin College. There is another video which shows how the machine sits in the campus, right next to an auditorium.
    https://www.youtube.com/watch?v=fmdsBlWwSTU

    You can see why I called it ‘high tech’.

    Don Stewart

  13. Don Stewart says:

    Artleads
    Here is Berea College’s wetland system at an elementary school in kentucky.

    http://bcnow.berea.edu/wetland-sewage-treatment-system-installed-at-tyner-elementary-school/

    similar, but bigger, than Albert’s system or the Audobon system.

    Don Stewart

  14. Don Stewart says:

    Artleads
    Here is a description of John Todd’s Living Machines from page 66 in Philip Ackerman-Leist’s book Up Tunket Road:

    ‘John Todd, an ecological designer based at the University of Vermont, has worked to create simulated wetlands and water ecosystems that treat wastewater ‘biologically’. Granted, most sewage treatment plants also treat wastewater primarily with biological methods, since bacteria do 80 to 90 percent of the work. However, John Todd’s Living Machines incorporate various versions of organisms,–from bacteria to snails to fish to plants–into a progression of sequential ‘living’ tanks inside a greenhouse. As the wastewater moves through the tanks, beginning with anaerobic and aerobic bacteria, the water becomes visibly and quantifiably cleaner. The end result is that the water comes out of the system in compliance with EPA standards, and, in the process, the solid wastes are broken down and consumed by the living organisms in this ecological train of events.’

    At the Omega Institute, they hold yoga classes inside the greenhouse. It’s really very attractive. I don’t know how much they cost. Albert Bates’ and the Audobon Society systems are undoubtedly cheaper, since they work by gravity and a succession of pools. But you don’t get the gorgeous greenhouse that you get with Todd’s system.

    Don Stewart

  15. Don Stewart says:

    Dear Gail and Finite Worlders
    I have commented on the potential for sensors and information technology to displace a lot of energy use. From driverless, leased, electric automobiles to health care innovations, I think all of us should be aware of what is happening.

    I very recently commented on the offshore oil workers in the Gulf of Mexico who dramatically change their habits when they see near real time measurements of their health and are able to correlate those measures with their behaviors. And I briefly reviewed the experience of a veteran doctor who was recruited to be part of about a hundred people who were intensively monitored for a period of about a year.

    Here is an entrepreneur who markets stuff to doctors. I warn you, he is from someplace in the British Empire….make of that what you will. If you want to see what he is selling, you can sign yourself up.

    Chronic disease accounts for perhaps 16 percent of the GDP in the US. It is conceivable that that GDP could be almost completely displaced by sensing and information technology. I haven’t seen an energy impact study, but I wouldn’t be surprised at 10 to 1. If energy crashes before this movement gets off the ground, then the displacement will never happen. If the world continues to increase energy production, then the money saved on chronic disease would go to something else…maybe everyone will vacation every year in the tropics. But if the world production of energy is due to decline rather steadily, then with some luck we might match the decline in production with some declines in demand.

    Don Stewart

    ‘You’ve likely heard that 60% of the brain is involved in processing visual information.

    Health consumers are increasingly engaging with technologies that give them health information in real time, in a highly visual form.

    The visual information allows their brain to process the benefits and implement changes quicker.

    How could you more effectively fulfill this desire for visual information? And as an added bonus, what if it could help you get better results, while saving time?

    On Monday July 20th, 5pm PST/8pm EST, we will discuss how you can easily implement this new technology in your practice!

    → Click here to join us on Monday!

    When you have technology that visually tracks your patient’s health history, progress, and outcomes over time, you can:
    Make better decisions about how to consult with or treat your patient
    Increase patient engagement by visually showcasing the results
    Have dynamic conversations and increase patient engagement
    Collaborate easily with other practitioners

    The new generation of tech-savvy health consumers are looking for doctors who can provide these types of solutions.

    The choice is yours: Are you the practitioner who delivers it to them? Or will you shuffle papers around all day and store everything in your head?

    You could be the practitioner that these patients are searching for – find out how at our online event “Leverage Technology to Leapfrog Conventional Medicine – An Intro to LivingMatrix”

    → Click Here to Register

    We developed this webinar to give you the inside look at how technology is evolving & upgrading the practitioner – patient relationship and experience.

    Don’t miss this live opportunity to get your questions regarding the fit of technology in your practice answered.

    See you Monday,

    James

    James Maskell’

  16. Stefeun says:

    The Global Land Grab: International Aid – A Smokescreen for Multinationals Looting Nations’ Wealth
    Giving With One Hand And Taking Everything With The Other

    http://www.globalresearch.ca/the-global-land-grab-international-aid-a-smokescreen-for-multinationals-looting-nations-wealth/5462895

  17. Great article on world indebtedness:

    http://www.zerohedge.com/news/2015-07-17/bankruptcy-planet-accelerates-%E2%80%93-24-nations-are-currently-facing-debt-crisis

    The Bankruptcy Of The Planet Accelerates – 24 Nations Are Currently Facing A Debt Crisis

    “According to a new report from the Jubilee Debt Campaign, there are currently 24 countries in the world that are facing a full-blown debt crisis…

    Armenia
    Belize
    Costa Rica
    Croatia
    Cyprus
    Dominican Republic
    El Salvador
    The Gambia
    Greece
    Grenada
    Ireland
    Jamaica
    Lebanon
    Macedonia
    Marshall Islands
    Montenegro
    Portugal
    Spain
    Sri Lanka
    St Vincent and the Grenadines
    Tunisia
    Ukraine
    Sudan
    Zimbabwe
    And there are another 14 nations that are right on the verge of one…

    Bhutan
    Cape Verde
    Dominica
    Ethiopia
    Ghana
    Laos
    Mauritania
    Mongolia
    Mozambique
    Samoa
    Sao Tome e Principe
    Senegal
    Tanzania
    Uganda

    When you throw all forms of debt into the mix, the overall debt to GDP number for China is rapidly approaching 300 percent.

    In Japan, things are even worse. The government debt to GDP ratio in Japan is now up to an astounding 230 percent. That number has gotten so high that it is hard to believe that it could possibly be true. At some point an implosion is coming in Japan which is going to shock the world.

    There are now more problem areas in the world, rather than stable situations. No major nation in the West can repay its debts. The same is true for Japan and most of the emerging markets. Europe is a failed experiment for socialism and deficit spending. China is a massive bubble, in terms of its stock markets, property markets and shadow banking system. Japan is also a basket case and the U.S. is the most indebted country in the world and has lived above its means for over 50 years.

    So we will see twin $200 trillion debt and $1.5 quadrillion derivatives implosions. That will lead to the most historic wealth destruction ever in global stock, with bond and property markets declining at least 75 – 95 percent. World trade will also contract dramatically and we will see massive hardship across the world. ”

    We have to wonder how much more debt can build up before all hell breaks loose?

    • 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.
      Gail Tverberg says:

      Thanks! The list of countries is concerning. With low commodity prices, I expect it will grow longer and longer.

  18. edpell says:

    ‘The 11,653,000 families with incomes of less than $1,500
    received a total of about 10 billion dollars. At the other
    extreme, the 36,000 families having incomes in excess of
    $75,000 possessed an aggregate income of 9.8 billion dollars.
    Thus, it appears that 0.1 percent of the families at the top
    received practically as much as 42 percent of the families at
    the bottom of the scale.’
    page 148, 1934, nothing has changed, it is still the 0.1%

    • edpell says:

      From the point of view of social well-being it is per·
      fectly obvious that if the population is not stabilized before that
      time it will continue to expand until finally checked by the lack
      of the means of sustenance, with a standard of living comparable
      to that of India or China. On the other hand if the population
      is too small there will not be enough people properly to man and
      operate a high-energy civilization. Between these two extremes
      there is an optimum population, and that optimum is probably
      about the size of our present population.
      page 160, present population of US in 1934 was about 126 million!

      • edpell says:

        The Technocracy folks do not talk about how the population will be controlled, nor do they talk about a response to depleting resources. They do at least mention both in passing.

    • kulmthestatusquo
      kulmthestatusquo says:

      It was at the height of the depression.

      From about 1945 to about 1973, the gap was considerably closer in the developed world and there were fewer billionaires.

      Many older people thought that era was eternal, but the 1973 oil shock struck.

  19. edpell says:

    Gail, there was a movement in the 1930s called Technocracy Inc..
    From wikipedia
    “In 1932, Howard Scott and Marion King Hubbert founded Technocracy Incorporated, and proposed that money be replaced by energy certificates. The group argued that apolitical, rational engineers should be vested with authority to guide an economy into a thermodynamically balanced load of production and consumption, thereby doing away with unemployment and debt.”

    Holy cow!

    • edpell says:

      “Stated conversely, if we did not consume energy-coal, oil, gas and water power-at this or a similar rate, our present industrial civilization would not exist. Ours is a civilization of energy and metals.”
      from page 106, of the 1934, Technocracy Study Course.

    • edpell says:

      “As we have pointed out previously, no physical process
      can continue to grow at a compound interest rate for more than
      a limited period of time. The limitations of our natural resources
      on one hand and of our physical ability to consume on the other
      both require that this be so.”
      page 142

      • dirtchild says:

        “As we have pointed out previously, no physical process
        can continue to grow at a compound interest rate for more than
        a limited period of time. The limitations of our natural resources
        on one hand and of our physical ability to consume on the other
        both require that this be so.”
        Well there it is. The problem was brought to the attention of all omost a century ago in terms that all that read at a 4th grade level could understand. We chose Las Vegas over Walden. We chose cognitive dissonance. We chose extinction. Wow. All I can say is wow.

        • TKK says:

          homo sapiens did not choose any more than a bee chooses to pollinate.

          Pay attention!

          • She wolves in the wild will bear few pups when prey is scarce.
            Perhaps there is innate biological intelligence that has been overwritten in the human brain?
            Just because we humans “think”, does not mean we are intelligent. I consider our species as crafty and cunning. Now all we need is a direct line of brain thought intelligence.

          • dirtchild says:

            “homo sapiens did not choose any more than a bee chooses to pollinate.

            Pay attention!’
            While I certainly think it is a possibility that man has no free will I am far from sure. In light of the facts we discuss here It is very hard to find a path to walk that does not have negative impact. I find the argument against choice is usually voiced to support desire and continuance of behavior that has negative impact.

            Last week i ran into a neighbor. She mentioned her husband was having a hard time. His ancient tractor was broke and they had to get the hay in. Im not a spring chicken, hes ten years older than me, I went by. We knocked it out in two hours. I dont see how he could have done it by myself.

            So what motivated. Pleasure in my idea of who I am? Ego? There is that but the other side is that our actions do have impact. That neighbor went from stressed and hurting his body to able to provide his considerable family with sustenance. To that neighbor my decision to help is real. In my life I have received help. Sometimes when I desperately needed it. Help is not a abstract concept to the people animals or plants who need it.

            So if you believe that we have the choice and or able to choose about our individual actions and those actions do have impact then it would seem reasonable that the same principles apply as a group.

            For me there is only one thing that justifies my existence. Service. Service to the planet. Service to people plants and the environment. To negate choice is to negate our ability to act on compassion.

            Based on this, my belief system, I reject the idea that it is our inherent destiny to lay waste to the planet that we had/have no ability to act on compassion in the past present or future. It seems self evident to me that the same unique qualities of our species could be used to act on compassion instead of acting to consume all we encounter. Is this change probable? No. That fact causes me great sadness. Today I will serve. Thats all I know.

            • xabier says:

              dirtchild

              Well said.

              ‘True religion (or ethics) is not prayers, or rosaries, or pilgrimages, but the service of man. The greatest man is he who serves.’

              There is always a choice. Those of us who have been altruistically helped in times of need know that it creates a sacred obligation to do the same ourselves.

              Egoists, though, might not be able to help themselves or others; I grant them that. 🙂

          • Fast Eddy says:

            Yep — Mr DNA makes our choices for us — and his priorities are:

            – getting us laid
            – getting us fed

            If there is any freedom of choice involved it’s blond or brunette… Italian or Thai…

  20. Adam says:

    In recent months I’ve seen lampposts without lamps appearing on our streets. Only recently did I stop to wonder what they were. They are each marked “Temporary CCS feeder”. Apparently CCS means carbon capture and storage. I can’t find any web site explaining how they work, though. Not that it matters much – they ain’t going to save the world.

  21. Fast Eddy says:

    I can’t figure an angle that ties in with this article so my only rationale for posting this is I’d like to see Gail hit another 1000 comments….

    https://www.youtube.com/watch?v=dOibtqWo6z4

    I think the word to describe this would be … juxtaposition…

    • Only 1000? That is chicken feed compared to over 14,000 we marked in the comment section of the webrag “Rolling Stone” article by Bill McKibben that went viral
      ‘Global Warmings Terrifying New Math”
      Now that is a topic that can fan the flames

  22. Artleads says:

    Hi Don,

    I know you are a most consistent poster, with lots of information to share. We’ve also discussed my participation (on the board) with the local water coop. My issues on the board are not the routine ones, which I fancy can be done much better by others. I’m more interested in broad and general matters that tend to get excluded in BAU. So, a couple of my issues:

    1) Septic Systems.

    Each property has it’s own septic system. The capacity to add more septic is very challenged. I hear of at least one property where the system is backing up. Somebody is pushing for a town-wide system that perhaps works through a reed bed (which I know nothing about). They also want to add flush toilets in the business area (rather than be limited to porto-potties commonly used for guests now). Green modernity, I guess. What do private septic systems contribute vs what a public one might?

    2) Compost Toilets.

    I and a neighbor have been considering how compost toilets can be attractive to guests through doing things to move those neurotransmitters rather than depending on technology. We’re considering signs about water conservation, rigorous maintenance (which would require an extra employee to clean latrines regularly during the day), and even murals. I don’t have a question about this. Just noting it FYI.

    Unfortunately (or not) my solutions are a lot more trouble and work,, as opposed to getting big bucks (incurring debt?) to have an out-of-sight-out-of-mind technological fix.

    • As far as my experience and understanding of composting toilets, they are really intended for low volume usage. Okay for one or two people. Not a good idea for a business area of town.

      There is no magical way to add more capacity; at some population density, it will probably have to go on BAU or flush partially strained sewage out to sea.

      If a person clogs their septic field from putting stuff down the toilet they are not supposed to, it seems pretty clearly that property owner’s job to fix it. I guess that is part of the problem; people have to be responsible for themselves, and if they screw up, it affects other people.

      Obviously, borrowing money and spending millions on a massive sewage project (someone else pays, someone else does the work) is the most attractive to your average person.

    • Don Stewart says:

      Artleads
      You definitely don’t want to listen to me about sewage systems in arid climates.

      Now that you have been warned, I’ll just suggest a few things which have worked in humid climates.

      I visted a very nice toilet system at an Audobon Reserve in Florida. The sewage was fed into a wetland which looked wonderful. The system was out in the middle of nowhere. I don’t think any electricity or diesel was involved.

      Albert Bates built a wetland system at The Farm in Tennessee. He said that it harvested lots of phosphorus from shampoo, so gave excellent fertilizer. He thinks all subdivisions should have such systems for each hundred or so houses.

      For a high-tech solution, look at the system at David Orr’s college in Ohio…Antioch, I think. There is a similar system at The Omega Institute on the Hudson River. And little Berea College built a self-contained system decades ago. I’ve been in some of these buildings, and they are wonderful habitats for humans.

      Duke University has changed their system to separate solid waste from urine, with special toilets. I am sure you can find something on these with a little research.

      If there are no sewers in the city, then those will require lots of bucks to dig up the streets, etc. Something more like the Audobon system might work best. Establish a special district which has such a system, the system paid for by taxes on the property owners or businesses in the district. If the businesses have to pay the taxes to support it, you are likely to end up with an economical, as opposed to a gold-plated, system. The town’s interest is that the reed bed or other treatment method yields water which can be used on a garden. Since humans today pollute their bodys so heavily, it will probably require a remedial mycologist as a consultant.

      Don Stewart

    • Artleads says:

      Matthew and Don,

      Huge thanks for your informative responses. I want to share some of this with the board.

  23. kulmthestatusquo
    kulmthestatusquo says:

    The longed-for financial crash will not happen.

    All these dollars now floating around the world must go somewhere.

    In fact these dollars are being used to gobble homes from small owners, and most areas worth living are now owned by the top 2%.

    Plus all the financial assets are mostly owned by the top 2%. They will not do too badly when everything is cut by 50%, although most of the rest won’t survive.

  24. Fast Eddy says:

    Hedge Fund Giant Paul Singer: China Crash Is Way Bigger Than Subprime

    Hedge fund manager Paul Singer said that China’s debt-fueled stock market crash may have larger implications than the U.S. subprime mortgage crisis, echoing warnings from fellow billionaire money managers Bill Ackman and Jeffrey Gundlach.

    The threat to markets from the country is a bigger concern to Ackman, who runs Pershing Square Capital Management, than Greece.

    “China is a bigger global threat by far,” Ackman said Wednesday at the conference. “The Chinese stock market is a fairly remarkable phenomenon and I think kind of a frightening one.”
    Ackman said he’s worried about China’s lack of transparency and questioned the reliability of its economic statistics, the same day that China said gross domestic product rose 7 percent in the last quarter.

    “If you look at the Chinese financial system, you look at shadow banking, you look at the amount of leverage, you look at how desperately they worked to keep the stock market up. It looks worse to me than 2007 in the U.S,” Ackman said.

    More http://davidstockmanscontracorner.com/hedge-fund-giant-paul-singer-china-crash-is-way-bigger-than-subprime/?utm_source=wysija&utm_medium=email&utm_campaign=Mailing+List+Mid+Day+Thursday

    • Rodster says:

      I was reading a blog post on KWN and John Ing is bullish on China. Really? I guess these guys are hoping for the continuation of BAU even if it means China is driving the Bus. The entire system from West to East is corrupt and interconnected. When one falls all the dominoes will tip over. China can’t even provide enough fresh drinking water for it’s citizens.

      http://kingworldnews.com/10-countries-now-facing-default-as-global-crisis-escalates-what-to-expect-from-china-europe-and-the-u-s/
      “The Chinese also continue to push the renminbi forward as one of the premier currencies of the world. For anyone who would suggest that China will change its long-term plans and strategic goals because of the recent stock market action, they simply do not understand how things work in China.”

      • Fast Eddy says:

        I can understand why he would be bullish — China says it will do ‘whatever it takes’ …. and I do not doubt that…

        So you might as well trade based on that comment…

        Because if ‘whatever it takes’ fails to prevent the country from collapsing then it won’t matter what position you took….

    • 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.
      Gail Tverberg says:

      Another worrisome article!

  25. Greg says:

    Prof. Albert Bartlett:The biggest failure of the human race is not only the failure to understand the exponential function. I feel Albert Bartlett missed two more parts of the misunderstanding.
    In other words: “The biggest failure of the human race is our failure to see modern society as a non-linear interconnected system that is dissipative in nature.” The non-linear (aka exponential function) being one of three parts most people miss; Our (artificial) ecosystem is also interconnected and dissipative. Once one begins to see the big picture one soon realizes how precarious our position is right now.

    • Fast Eddy says:

      The thing is…

      We can easily understand the exponential function with regard to population and the impacts on a finite world….

      A 5 year old would get that.

      Our leaders and planners are definitely are aware of these issue.

      But why don’t we do anything about it?

      As I and others have indicated — we have no free will — we are run by a dictator who cannot be opposed — his name is Mr DNA.

      Mr DNA dictates that we survive and procreate and that translates into our uncontrollable desire for more.

      ‘Sex sells’ Why? Because Mr DNA is buying.

      That we are where we are is no mistake. We have done EXACTLY as expected. There was never a choice in the matter.

      The only difference between humans and other organisms is that we discovered how to turn fossil fuels into food — kinda like rats stumbling upon a shipload of grain that had washed up on an island…

      I’d like to say the result would be the same — that like the rats…. when the food is gone we’d simply set upon each other tearing each other to pieces … cannibalizing each other… or weakening and dying from starvation or disease until we reduced our numbers to come in line with what the planet could support (and that number would be extremely low since we ruined the soils)

      But there are those pesky spent fuel nuclear fuel ponds…. the rats would not have had to contend with such things…

      • I think culture is far bigger a player than DNA. Some cultures have chosen to expand less quickly than their resources allow. Others have expanded as fast as they could – Arabs growing ten-fold in 70 years, for example. Unless you can find some evidence that they have a genetic mutation that makes them breed faster, it seems purely a result of culture.

        You brought up Haiti versus Dominican Republic. Do you think the differences are purely genetic?

        • edpell says:

          Mathew, in the US we have gone in three generations from six kids per couple, to two or three kids per couple, down to one or zero kids per couple. Mostly culture and some environmental pollution.

        • 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.
          Gail Tverberg says:

          In Secular Cycles, Peter Turchin says that the reason population has grown so fast in Moslem countries is because the religion allows up to four wives. In practice, this means that those financially well off enough can have up to four wives. If only one wife were allowed, many of the poor men would not marry, leaving many of the women unmarried. Allowing up to four wives allows the population to expand more quickly, because those who can afford more wives are allowed more wives.

      • ‘the uncontrollable desire for more’—says it all
        its precisely why I gave my book its title– The End of More http://www.amazon.co.uk/dp/B00D0ADPFY if anybody wants to read how we got on this crazy gravy train
        the miilionaire doesn’t need his second million
        the billionaire doesn’t need his second billion
        but they both fight like crazy to get hold of it.
        they think they have free will in their business dealings—but ultimately they do not

        • Fast Eddy says:

          They don’t need it but it is difficult to turn one’s DNA off….

          These uncontrollable urges for more were hard-coded into us from the start…

          I don’t see this propensity for more as a problem — as it is necessary for survival …. of all species

          Where I see the problem is when a species encounters a situation where there is too much … as in the rats and the shipload of grain….

          See the impact of finding/stealing massive amounts of gold on Spain….

          And then we have the mother of all disasters — the harnessing of fossil fuels….

          Our DNA went on a feeding frenzy … which has manifested itself in gargantuan endless mountains of ‘stuff’…. in bodies bloated with obesity… and a species that is so divorced from its natural state of being that like an animal that was born in a zoo — we would be dead within days if stripped of our stuff and plopped into the forest.

          Too much more is never good — it causes our DNA reacts like a drug addict who is walking along the beach in Florida and this washes up:

          http://i.kinja-img.com/gawker-media/image/upload/s–Rf22aDY5–/c_fit,fl_progressive,q_80,w_636/i2qt15qudp4eeb6kyinl.jpg

    • 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.
      Gail Tverberg says:

      Yes, indeed our position is precarious, and very few understand the nature of the problem. It is easier to assume we don’t really need energy, and what little we do need will come miraculously from “renewables”.

  26. Stefeun says:

    Vegan propaganda!
    I’m abusively ironic, they don’t pretend to save the world. We may disagree on the philosophy, but the facts exposed in this short video about livestock are clearly showing that we don’t focus on the problems by order of priority.

    “environmental agencies not only do not focus on animal agriculture, the absolute most devastating and pervasive single cause of multi-dimensional environmental destruction, but they actually refuse to even acknowledge it.”

    Everything Wrong With Environmentalism In 11 Minutes
    http://www.bitesizevegan.com/environmental-societal-impact/everything-wrong-with-environmentalism-in-11-minutes-or-less/#comments

    Full transcription below the video (useful to double-check the astounding numbers). Lots of refs.

    • Jan Steinman
      Jan Steinman says:

      Vegan propaganda!

      Typical vegan reductionist non-sense, written in a fact-free belief zone.

      For instance:

      if we completely stopped all use of gas, oil, fuel, electricity, et cetera, and never used them ever again, we would still exceed our carbon equivalent greenhouse gas emissions of 565 gigatons by the year 2030 just with the impact of livestock alone.

      Say what? We eliminate all fossil fuel, and somehow livestock emissions are going to continue?

      I lost my suspension of disbelief right there. We all know that if fossil fuel use stopped tomorrow, all those livestock would be dead in less than a week — problem solved!

      • Stefeun says:

        Of course Jan,
        all that kind of mono-activist movements miss the fact that all our problems are interconnected.
        But in this one, I actually found that they didn’t pretend to have the miracle solution, and otoh they give numbers and proportions that aren’t often heard.

        You may think they’re too extremists, and they probably are, but for my part I’ve hard time being hostile to them because what they’re fighting in priority is the industrial/intensive farming/breeding, which indeed is a calamity at all levels.

  27. Pingback: Revue des blogs – jeudi 16 juillet 2015 | Veille énergie climat

  28. Stefeun says:

    Good post by End_of_More (02 July):
    “The End of the Oil Age.” and the end of the food age (my add)
    http://collapseofindustrialcivilization.com/2015/07/02/the-end-of-the-oil-age/

    Hope it’s not confidential, as I see that End_of_More has showed up here yesterday but didn’t link to his (nice) work.
    Lots of interesting insights and links in the comments section as well.

    • Fast Eddy says:

      That is one of the best articles I have ever read on this issue – thanks

      • Is that so? Quess which “fool” (as you call him) wrote this in the book
        “Oil and the Germs of War” back in 1928!
        “Oil is one of the most vitally important of all the resources,
        yet it is scattered capriciously over the various continents. Its
        products find a ready sale in every corner of the globe, and its
        refining, transport and retailing have proved one of the most
        lucrative of modern businesses. Oil profits, heaped up in a
        comparatively few hands, have added immensely to the invest-
        able surpluses that drive the masters of modern business toward
        financial imperialism . Furthermore, and this is the essential
        point, oil has lately become the very latch-key to imperial
        power, so that its possessor literally has the riches of the world
        at his feet. The struggle for oil-bearing lands has therefore
        reached a stage so acute that it has actively involved every
        nation seeking to qualify in the race for world supremacy”

        P.S. You can read the whole book on the website http://www.walden.org

        • kesar0 says:

          Thank you. I didn’t know this book.

          • Jan Steinman
            Jan Steinman says:

            Thank you. I didn’t know this book.

            YAY!

            Any day we can introduce someone to Henry David Thoreau is a good day, indeed!

            • Wow, FE is slipping, Jan; he has yet called Henry David Thoreau a “fool”
              Come on, FS, make my day…..

              Thanks kesar0 and Jan for the support, we shall represent!

          • Fast Eddy says:

            “Oil is one of the most vitally important of all the resources, yet it is scattered capriciously over the various continents. Its products find a ready sale in every corner of the earth”

            I stand in awe of this revelation…. (uh… not really)

            • You are impressed easily and like always are unable to read beyond the first page.
              What do they call that…oh yes, arrested lack of development!
              Thanks FS for the laugh as always.
              Please continue….

            • Jan Steinman
              Jan Steinman says:

              Thanks FS for the laugh as always. Please continue…

              Some people live for the attention of others. When two people do that with each other, it’s called co-dependence.

              You can’t be in such dire need of a laugh! There are plenty of people on this list to engage in a positive, enlightening manner!

            • Did not disappoint,
              Do not adjust your screen….

            • Such was the ostensible motive behind the move of Standard
              Oil into France . But this was mere camouflage. In Mesapo-
              tamia and Persia there were oil reserves estimated to equal the
              total oil reserves of the United States . These reserves were
              largely in British controlled territory, but under the San Remo
              agreement, there was a chance for French interests to share
              in their development. Beside, the French government was the
              only real rival that the British Government had left in Europe
              and the Near East, and as the competition between the two
              was very intense,, there seemed nothing more logical than for
              the Standard Oil interests to use the French Government to
              secure a share of Near East oil concessions .
              The way in which the drama developed is thus summarized
              by a keen observer who has spent the past ten years studying
              this very problem :
              “The war between the Greeks and the Turks was only that
              in name. It was actually, as everyone aware of the inner facts
              knows, a war between England and France. The Greeks were
              armed and financed and supported by England and transported
              in English ships . The Turks were armed and transported and
              largely drilled and officered by French. And all of this was a
              struggle between these two powers for possession of the re-
              serves of oil . In the struggle France was supported and even
              dominated by American financial interests . To push the matter
              back to its last analysis, the war between Greece and Turkey
              was actually a war between the Shell-Royal Dutch Oil Co.,
              which is now the property of the British Government, and the
              Standard Oil Company of America which now largely operates
              the French Government and which owns the twelve leading
              newspapers of France. . . . . . Whoever controls the oil
              supplies of the world will control the world economically and
              politically, and the whole world is being plunged into chaos
              over a struggle for this control.”

              From the book by Scott Nearing titled “Oil and the Germs of War” published in 1928

              The more fool you FE

            • Jan Steinman
              Jan Steinman says:

              From the book by Scott Nearing titled “Oil and the Germs of War” published in 1928

              Oh, that fool!

              I’ll bet Scott would be proud to join ranks with Ed Abbey and Henry David Thoreau!

              Personally, when people start calling me names, I take solace that they can no longer argue with my words.

            • 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.
              Gail Tverberg says:

              Enough of this name calling.

        • that conflict over a vital resource is inevitable can be figured out by anyone taking the trouble to stop and think about it. I take no exclusive credit for that.
          It works just as well for two dogs fighting over a bone as armies fighting over oilwells
          The British in November 1918 ignored the armistice in the territory that is now Iraq, and marched on to take the oil rich territories around Mosul in direct confrontation with pre-agreed French Interests. Lloyd George and Clemenceau nearly came to blows over it at the Paris peace conference.
          The British began their conversion of warships from coal to oil well before 1914, knowing the advantage it would bring in terms of power, and that there would have to be control of oil producing lands, which at the time was the middle east.
          we have been fighting on and off there ever since
          The fighting will go on

          • Fast Eddy says:

            Well worth watching:

          • xabier says:

            Only today the former British Empire is reduced to intervention in the region with a few clapped-out Tornados held together with tape and tacks, and some drones (constituting apparently the entire UK force, 12 I think). Diminishing returns of Empire indeed.

            A government minister tried to talk this all up as ‘the new Battle of Britain’, against a ‘fascist’ enemy (that nice Mr Assad of Syria and the Isis loons who are trying to kill him – wonderful logic!)

            I actually met the commander of the Tornados at a dinner party last year, very nice chap who was dragged away from his desk job at the Ministry to command in action again as he’d got rusty, like the jets themselves.

            Never a whisper in all the dubious rhetoric about oil and gas resources, of course.

            And the fact that Allied bombing and drone missions kill many mulitiples of innocent civilians as compared with the official targets, increasing the risk of terrorist retaliation in Britain, quite apart from the horror of those deaths.

            Oil and blood and so it goes on, with most of the public not seeing or caring about any of the connections.

            • i agree with your sentiments
              but the fighting over resources, in particular oil, will go on until there’s none left to fight over because humankind, collectively speaking, knows no other way—saying that we should, could or must is wish-politics.
              right now the chinese are squaring up to fight over 11 billion barrel oilfield in the south china sea
              1 billion barrels is less than a month’s worth of world supply.

            • “1 billion barrels is less than a month’s worth of world supply.”

              I doubt the Chinese are worried about world demand. They just need to offset the decline rate for Daqing.

            • Fast Eddy says:

              I have no problem with this situation.

              We are like a pack of 20 wild dogs who get fed only enough for 6 dogs….

              You need to do whatever it takes to make sure you are one of the 6.

              There are no rules — there is no room for kindness — that would only result in one of the other dogs ripping your throat out and getting your share of the food.

    • Thanks for the kind words guys—makes the pain of head-banging-against-wall seem worthwhile

      • Rodster says:

        Excellent article although with what we are doing to the environment (land, air and sea) I wonder if anyone will be alive on this planet when industrial civilization is all over.

        • the biggie is the question over nuclear power stations
          they need constant monitoring and attention, and that can only be done with the backup of industrial complexity.
          If we follow the myth of downsizing, they will blow. There will be nothing to stop them.

          • Rodster says:

            Not only do we have to worry about NPP but nuclear waste as well as those spent fuel rods require maintenance as well. But something more ominous and sinister is happening and that’s weather warfare as a byproduct of geoengineering.

          • Fast Eddy says:

            Funny thing ….

            When I was researching what would happen in a situation where we were unable to manage a spent fuel pond — electricity down — generators kaput — water boiling off…. basically just left there….

            For the life of me whatever I plugged into that magic hole I could find absolutely nothing… no surprise there though — why study something that we believe is ‘impossible’

            BAU will never end — the safeguards are multi-layered — we will always be able to manage these things…

            However there is one situation that has been studied that has direct relevance — a TERRORIST ATTACK!!!…. so I put that into the magic hole….

            And lo and behold the magic hole spit this back at me:

            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).

            Everyone can read the entire report here — don’t worry that the facts point to an extinction event when BAU collapses and we cannot manage the thousands of fuel ponds around the world…

            Mr Cognitive Dissonance is standing by to protect you from despair and depression.

            http://belfercenter.hks.harvard.edu/publication/364/radiological_terrorism.html

            • If two spent fuel ponds are near each other, they don’t cover twice the area, they simply contaminate the same area twice as much. If 1000 spent fuel ponds go up, that’s only 95 million square kilometers of exclusion zone, minus the massive amount of overlap since most of it will be in America and France.

              “And the third angel sounded, and there fell a great star from heaven, burning as it were a lamp, and it fell upon the third part of the rivers, and upon the fountains of waters;

              And the name of the star is called Wormwood: and the third part of the waters became wormwood; and many men died of the waters, because they were made bitter.” Revelations 8 10-11 KJV.

              By amazing coincidence, Chernobyl means Wormwood. The Orthodox do not have Revelations (Apocalypse) in their canon, plus the Soviets were atheist, so they probably weren’t as concerned.

            • daddio7 says:

              After some research I learned that the water in the cooling pools is safe to swim in. It is used to shield and cool the fuel rods but is not contaminated with radiation. I also learned that China is building a facility to use spent rods as a heat source.

              People are very nervous about anything concerning radioactive objects so getting permits to transfer the rods using public roads is imposable. In a national emergency the rods could easily be transported and dumped some place where there is plenty of water.

            • Fast Eddy says:

              Once again …. a spent fuel pond that has its high tech cooling system operating is not dangerous…. I assume you could even drink the water…

              BUT – the problem occurs when the water boils off because the high tech system that circulates the water stops functioning — and that is what is going to happen when BAU goes down ….

              The water quickly boils off and the whole thing blows to high hell….

              Once the fuel is uncovered, it could become hot enough to cause the metal cladding encasing the uranium fuel to rupture and catch fire, which in turn could further heat up the fuel until it suffers damage. Such an event could release large amounts of radioactive substances, such as cesium-137, into the environment. This would start in more recently discharged spent fuel, which is hotter than fuel that has been in the pool for a longer time. A typical spent fuel pool in the United States holds several hundred tons of fuel, so if a fire were to propagate from the hotter to the colder fuel a radioactive release could be very large.

              http://www.ucsusa.org/nuclear_power/making-nuclear-power-safer/handling-nuclear-waste/safer-storage-of-spent-fuel.html#.VUp3n5Om2J8

              According to Dr. Kevin Crowley of the Nuclear and Radiation Studies Board, “successful terrorist attacks on spent fuel pools, though difficult, are possible. If an attack leads to a propagating zirconium cladding fire, it could result in the release of large amounts of radioactive material.”[12] The Nuclear Regulatory Commission after the September 11, 2001 attacks required American nuclear plants “to protect with high assurance” against specific threats involving certain numbers and capabilities of assailants. Plants were also required to “enhance the number of security officers” and to improve “access controls to the facilities”.

              The committee judges that successful terrorist attacks on spent fuel pools, though difficult, are possible. If an attack leads to a propagating zirconium cladding fire, it could result in the release of large amounts of radioactive material. The committee concluded that attacks by knowledgeable terrorists with access to appropriate technical means are possible. The committee identified several terrorist attack scenarios that it believed could partially or completely drain a spent fuel pool and lead to zirconium cladding fires. Details are provided in the committee’s classified report. I cannot discuss the details here.

              http://www.cfr.org/weapons-of-mass-destruction/nuclear-spent-fuel-pools-secure/p8967

              If any of the spent fuel rods in the pools do indeed catch fire, nuclear experts say, the high heat would loft the radiation in clouds that would spread the radioactivity.

              “It’s worse than a meltdown,” said David A. Lochbaum, a nuclear engineer at the Union of Concerned Scientists who worked as an instructor on the kinds of General Electric reactors used in Japan. “The reactor is inside thick walls, and the spent fuel of Reactors 1 and 3 is out in the open.”

              http://www.nytimes.com/2011/03/16/world/asia/16fuel.html

              If you don’t cool the spent fuel, the temperature will rise and there may be a swift chain reaction that leads to spontaneous combustion–an explosion and fire of the spent fuel assemblies. Such a scenario would emit radioactive particles into the atmosphere.

              Pick your poison. Fresh fuel is hotter and more radioactive, but is only one fuel assembly. A pool of spent fuel will have dozens of assemblies. One report from Sankei News said that there are over 700 fuel assemblies stored in one pool at Fukushima. If they all caught fire, radioactive particles—including those lasting for as long as a decade—would be released into the air and eventually contaminate the land or, worse, be inhaled by people. “To me, the spent fuel is scarier. All those spent fuel assemblies are still extremely radioactive,” Dalnoki-Veress says.

              It has been known for more than two decades that, in case of a loss of water in the pool, convective air cooling would be relatively ineffective in such a “dense-packed” pool. Spent fuel recently discharged from a reactor could heat up relatively rapidly to temperatures at which the zircaloy fuel cladding could catch fire and the fuel’s volatile fission product, including 30-year half-life Cs, would be released. The fire could well spread to older spent fuel. The long-term land-contamination consequences of such an event could be significantly worse than those from Chernobyl.

              http://science.time.com/2011/03/15/a-new-threat-in-japan-radioactive-spent-fuel/

            • daddio7 says:

              What I’m trying to say is other than being hot and radioactive the rods are inert. Take the things and dump them in deep water. Supposedly they are being saved for repossessing. If that is unlikely take them off shore and send them to the bottom. They then can’t catch fire and be a problem.

            • Fast Eddy says:

              If we don’t mind poisoning the oceans and killing everything in them…. that might be a solution…

            • After 50, 100 years, whatever, the casing will decay and let all the radioactive particles into the ocean. With ~40 year half lives for the isotopes, there would still be ~25% remaining. Plus any plutonium, etc that takes many thousand years to break down. Good chance salt water would corrode it faster.

            • dirtchild says:

              “After some research I learned that the water in the cooling pools is safe to swim in.”
              Leslie Corrice says its great for enemas also!

            • Fast Eddy says:

              Yes I’ve seen the article about swimming in a spent fuel pond…. perhaps this same person could try walking on the fuel rods when the water is boiled off — that would impressive!

            • edpell says:

              Daddio7, I share your opinion on spent fuel rods. Just place them in naturally sourced water, river, large lake, ocean.

            • Fast Eddy says:

              I reckon if you set up a stereo next to each pond and put on the following music …. all will be fine … as in Lost where they had to keep pushing the button …. you must be sure to restart the song forever —- otherwise…..

      • Artleads says:

        Tainter believes we need to switch from technological to sociological innovation.

        • er—humanoid beings have been around for (maybe) a couple of million years—give or take
          in all that time, conflict has invariably and inevitably been about resources. land–animals etc.
          We have less than a generation’s worth of our prime resource left (oil) without which most of us won’t eat. starving people get very tetchy–to say the least.
          To believe that our ‘sociological behaviour’ is going to change in the next 25 years is stretching credibility farther than a greek banker’s iou

          • Artleads says:

            Well, I don’t know. For some reason, you included Tainter’s interview with his voicing of that view.

          • Fast Eddy says:

            Smart fellow that Mr Tainter… but it appears that even he can’t get through this without a puff on the hopium pipe…

            I want to puff the pipe and feel groovy too … but whenever I try I don’t catch a buzz…. darn!

      • xabier says:

        End

        A very good read indeed!

        But don’t worry, I don’t think religious nutters will be coming for you as you still seem to fear – my bet is on crazy ‘governments of national unity’, formed in crisis, ostensibly liberal-socialist and atheist or non-confessional, at least in western Europe.

        In the US there might be a gloss of ‘God Bless You America’ -ism, but that will just be window-dressing, as it has always been, for raw power politics.

        In Eastern Europe a strong Orthodox revival seems to be underway, athough in Russia that is counter-balanced by the huge Muslim communities, and then there are all those Muslims in Britain, France, etc, , but they won’t dominate in the West for a few generations yet except in some major cities.

        And those generations are most unlikely to be born anyway…..

        • edpell says:

          xabier, “And those generations are most unlikely to be born anyway…..” this is a profoundly depressing statement. Sadly, I do agree with it.

    • 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.
      Gail Tverberg says:

      Thanks! Good post!

    • dirtchild says:

      “Skip the last bit about making money off of this…”
      Why its the purpose of the article?
      Light on the facts heavy on the doom.
      FE your posts are better documented than that article.
      Doom is coming invest in walnuts.
      Zero hedge is a interesting little controlled piece of media.
      Doom is coming Kim says so.

      • Fast Eddy says:

        The problem I have with ZH is that they believe that if we could rid the system of extreme corruption and stupidity we’d somehow be back on track…

        I submitted the following letter in response to some BS letter than someone had penned mocking the Fed’s policies….

        Dear Ben and Janet,

        In 1998 oil was 12 bucks a barrel – and within a few years it was over 30 and climbing.

        Of course you would be aware that:

        HIGH PRICED OIL DESTROYS GROWTH
        According to the OECD Economics Department and the International Monetary Fund Research Department, a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices. http://www.iea.org/textbase/npsum/high_oil04sum.pdf

        THE PERFECT STORM (see p. 59 onwards)
        The economy is a surplus energy equation, not a monetary one, and growth in output (and in the global population) since the Industrial Revolution has resulted from the harnessing of ever-greater quantities of energy. But the critical relationship between energy production and the energy cost of extraction is now deteriorating so rapidly that the economy as we have known it for more than two centuries is beginning to unravel. http://ftalphaville.ft.com/files/2013/01/Perfect-Storm-LR.pdf

        And instead of standing back and allowing the global economy to collapse under the weight of oil that was racing upwards in price because we were approaching the peak of conventional oil production (which happened in 2005), I would like to thank you for dropping interest rates and opening the money spigot that lead to the housing crisis.

        Of course the crisis was a bad thing but it was better than the alternative – total collapse of civilization.

        Of course 147 oil was the Mother of All Nightmares and something had to be done about that so you created the shale myth and fueled it with easy money. That reversed peak oil by adding nearly 10 million barrels of oil to global supply.

        Agreed … this is a Ponzi scheme that would not exist without ZIRP. But that is the point. If it did not exist we have collapsed because oil supply had peaked.

        But as we know shale was never a long play because the wells deplete dramatically in about 2 years. So we are now approaching peaks in both conventional and non-conventional oil production. We are in the last gasp phase because there is no alternative to oil, particularly cheaply extractable oil.

        Ben – when you stepped down you said – and I paraphrase your comments :”I know a lot of people are pissed with me to the point of hatred for what I have done. But when you see the reasons why I did what I did you will thank me.

        And I knew EXACTLY what you mean when you made that coded statement.

        So I’d like to than Ben and Janet for getting me another 6+ years of being alive and being able to enjoy the comforts of modern society. I’d like to thank them for delaying the descent into ‘The Road’

        It has been a wonderful 6+ years because I recognized that we were at the end of our rope in 2008 and I have used these years to travel extensively, to enjoy a little better bottle of wine or cut of meat.

        You recognized that the end of civilization (and the likely extinction of the human species) is what is at stake. And you took action to kick the can as far down the road as possible.

        I am surprised that we have gotten 6+ more years out of this — I thought we might get one or two at best.

        But you and your team have been incredibly creative in coming up with new ways to prolong BAU squeezing every ounce out of this dry stone. It must be incredibly difficult to go against every tenet of economics in doing this — this goes beyond thinking out of the box — it’s more along the lines of desperation economics. Anything goes because if you follow the rules of days gone by we all lose.

        Thank you Ben, thank you Janet.

        It did not get published… after some back and forth it ended with these comments from Mr Durden

        “Do you think the ultra-wealthy are so stupid/corrupt that they’d run these policies to enrich themselves”

        Yes

        (I then suggested that since we were unable to agree using words that we meet in a neutral location and drop the gloves…. and settle things that way …. I did not hear back on that…. just kidding!!!… it is impossible to beat Cognitive Dissonance out of someone… even a smart fellow like Mr Durden)

        • dirtchild says:

          “The problem I have with ZH is that they believe that if we could rid the system of extreme corruption and stupidity we’d somehow be back on track…”
          Yes. End the fed, Free market fans, In a truly free market all of their precious possessions would not be owned by them. Every single piece there is either using that psychology to sell a product or augmenting that psychology. Im so very special. Im a secret member of fight club. And the vast majority believers in entitlement to infinite resources with one group or another keeping them from their entitlement. Really a quite remarkable psych op sales site. Plagiarizing the hell out Gail’s work without even a mention… Not that the swine there appreciate it…

          • Fast Eddy says:

            I believe Gail authorizes ZH to re-publish her articles…

            The fact that ZH does not understand the true nature of the problem we are facing does not so much concern me … the site is a useful antidote to the mind-numbing BS spewed by the MSM outlets…

            • 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.
              Gail Tverberg says:

              I am not sure I really authorized them to republish my work, except through my Creative Commons license which pretty much allows anyone to republish my work. If I wrote and complained, I am sure that they would stop.

          • As far as I can tell, all of Gail’s articles on ZeroHedge have: “Submitted by Gail Tverberg via Our Finite World blog” right in their header.

            • 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.
              Gail Tverberg says:

              But Zerohedge found them without my submitting them. The only place where a person has to really submit an article is Resilience.

        • All the major libertarian thinkers insist that if we just abolish all the central planning and let the markets clear, utopia will break forth all over the world. They are unable to accept that “letting the markets clear” means a >90% die-off and if done quickly and recklessly, nuclear apocalypse.

          They seem so insistent on the “non-aggression principle” and think that free markets can solve everything. It is amazing. Does anyone really believe a starving person who cannot afford food will just sit down and die quietly? There are probably lots of people who still believe the Arab Spring was about a desire for democracy, and not just people mad they cannot afford to buy food.

          • bandits101
            bandits says:

            Matt I think when the real crash comes….that is when the supermarkets are emptied, there won’t be time to organize meaningful armed protests and other violence.
            What has happened overseas is the culmination of years of declining BAU. Anger has time to develop, they still suppose there is light at the end of the tunnel if they can destroy their perceived oppressors. They blame the autocracy or the government or anything for that matter that they can scapegoat for the cause of their misery.

            When real disaster strikes IMO, the shop shelves will be stripped quite quickly, then shock and bewilderment will hit. You can imagine, schools closing, children begging parents for food, the sick and injured requiring medicine and attention, people stranded as transportation winds down and so on. Most will jam the phone lines and wait for government assistance, by the time of realization that help is not coming most will overcome and weakened by starvation.

            There have been numerous famines over the centuries, people do just lay down and die. Just because a group can organize doesn’t mean they will automatically find ways to feed themselves.

    • dirtchild says:

      If zerohedge could find a really hot doomstress TV announcer they could make a killing, a brunette of course with heavy purple/ black makeup/clothes. And leather lots of animal scins. Maybe with beetlejuice as a co announcer. I might have to buy a tv- not.

      • Fast Eddy says:

        I have traded emails with this Tyler Durden character on occasion and I have suggested usurping bloomberg cnBS with a zero hedge channel….

        An expensive proposition — unlikely to be picked up by cable and unlikely to get much traction in the way of advertising … (no company wants to associate with the truth…)

        Maybe RT could use the Max Keiser slot renaming it the Zero Hedge hour…

        • dirtchild says:

          “I have traded emails with this Tyler Durden character on occasion” how does he come across or is it short and sweet? Human or bot? 16 year old in moms basement? To be honest sometimes I wonder about you FE but im just generally suspicious of any presented character.

          • Fast Eddy says:

            Despite speculation that “Tyler Durden” is a pseudonym of Daniel Ivandjiiski, who was penalized for insider trading in New York in September 2008, Ivandjiiski denies being a founder of Zero Hedge. Rather, he says he is one of several writers contributing to the site under the pseudonym.

            https://en.wikipedia.org/wiki/Zero_Hedge

            I believe some articles are penned by others and posted using that name … some would be finance people who have something to say but if they said these things on the MSM they’d never be invited back.,..

            But generally I think there is one person responsible for most of the content on that site. There is an over-riding theme and style on most of the articles …

            Does Fast Eddy frighten you?

            BOO!

            • dirtchild says:

              “Does Fast Eddy frighten you?”
              In my life I have had occasion to meet truly frightening humans. Humans who enjoy inflicting pain and suffering. Humans who are driven by forces beyond what they are willing to explore. You Eddy are not frightening to me. I enjoy your writings. I worry that you will never forgive yourself. I have a hard time forgiving myself for the sins of my species also. Nor is their much that is frightening to me beside a slow death or imprisonment. Humans who truly enjoy frightening other humans or causing them pain exude that energy. If you are unaffected by it and not a easy mark they quickly lose interest. Fright to some extent in one of its meanings is a measure of the appreciation of the power to destroy. I appreciate the power of wild animals. Humans are pathetic in comparison. Mostly fright as it is commonly encountered is a product of fear. Most fears are self created. Fear of losing. Fear of losing love. Fear of beliefs collapsing. Once the inevitability of these events is accepted in a real manner the phenomena known as fright becomes rather empty. Many people are threatened by that also. They enjoy the horror show.

            • Fast Eddy says:

              I fear/dread the day that BAU collapses … and the electricity goes off.

              Sometimes I turn the power off and sit out on the balcony looking down the valley at the lights of the town below … and I imagine the day when there will be only blackness… and terrified families…

              Frightening… disturbing… thoughts…

    • Don Stewart says:

      Fast Eddy
      Who ever told you that ‘organic farming’ was sustainable? A typical ‘organic’ field in California is practically indistinguishable from a conventional field right next to it.

      To get sustainable, one has to farm, or more correctly garden, like Will Bonsall. That is, it has to be local, involve only surface tillage as a regular practice, use little or no pesticides and herbicides, and build soil carbon and fertility, and involve intense recycling of nutrients. Healthy soil biology will be a prime consideration. A rich environment will assure plenty of pollinators, predators, etc.

      ‘Organic’ certification involves a list of ‘thou shalt nots’. Many of the things in the list above are positive actions.

      From a consumer’s perspective, the main advantage from the ‘organic’ label is that if you don’t know where your food is coming from, at least you will know that you won’t be exposed to toxins of various kinds. If avoiding toxins is worth the extra money, then you choose the ‘organic’ label. Most of the people I buy from are not certified ‘organic’.

      Don Stewart

      • Fast Eddy says:

        If you sell into a market (i.e. take nutrients off the property and exchange them for money to be used to purchase BAU ‘stuff’) then of course what you are doing is not sustainable.

    • 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.
      Gail Tverberg says:

      Organic food is invariably more expensive, indicating more energy (including human labor, which eventually goes to buy goods and services) is likely used in its production and transport. This should be a red flag.

      • Don Stewart says:

        gail
        If you confuse the ‘Organic’ label with ‘organically (biologically) grown food’, then you will end up with the absurdities that the authors of articles like this one want you to believe.

        How much does it ‘cost’ to grow an organic tomato in your back yard? It never gets the ‘organic’ label, is not grown in a gigantic mono crop field in California, and all that water is not shipped across the country.

        Sure, it takes some labor to grow the tomato in the back yard. Alternatively, the person could have been watching television, which is a sedentary activity, which promotes all kinds of disease. How did you account for the decreased medical expenses.

        Even considering the ‘organic label’ tomato from the mono crop field in California. It doesn’t have the pesticide residues which have been shown to promote inflammation and hormonal damage sufficient to trigger chronic disease. How are you accounting for that?

        This is an absurd discussion. The starting point MUST BE healthy food and healthy lifestyle. How to produce it doing as little damage as possible while doing as much good as possible. As an example of good, building up soil and carbon sequestration in the soil rather than the converse.

        Don Stewart

        • 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.
          Gail Tverberg says:

          I meant the organic food found in grocery stores, shipped in long distances. It often is packaged to a greater extent than the “regular” produce as well.

        • Like that one guy likes to say (name escapes me at the moment) “If you think Organic is expensive, have you priced out cancer lately?”

        • urbangdl says:

          “McGee says, because so much of today’s organic farming is done by corporate entities responding to consumer demands, not by activist farmers trying to counteract the impacts of conventional agriculture”.

          Guess for a developing country with more farmers this is half true

          • Don Stewart says:

            Dear urbangdl
            We are currently in a complex situation:
            *Many subsistence farmers are not very proiuctive. And they don’t take advantage of what they have. So we get things like the Leaf for Life Foundation and a group of small farmers from North Carolina going to Jamaica to teach more productive methods.
            *Agro-Ecology is getting more recognition as a good way for small farmers to take more control over their own future.
            *In the meantime, we have the land-grabs by the global corporations, which are devastating to local communities.
            *In the US, the well informed and the well to do increasingly understand the horrible effects of the dominant food system.
            *But money still talks in politics. Obama can explode with anger when Europe doesn’t toe the USDA line.
            *Medical researchers now understand that the human body is an ecosystem…not a machine.
            *But money still talks, and the Trans Pacific Partnership is much about funnelibng more money to drug companies.

            Last night I listened to a cardiologist talking to a woman who has been promoting home cooking for the last 15 years or so. They agreed that the ideal meal involves harvesting some stuff from your garden and then preparing it for your family. That’s the conclusion I came to quite a while ago. But that does’t make any mnoney for anyone, and so it is hard to get real political traction.

            Add in all the complexities surrounding Peak Everything and the situation is very complicated indeed.
            Don Stewart

            • urbangdl says:

              Couldn’t help but think in that space movie in which they are traveling to reignite the sun’s fusion process, in the mean time they have to grow their own food and do only the necessary to preserve oxygen and resources. Unless we discover artificial hibernation or cryogenic dream, the only way to do manned interplanetary expeditions would be establishing a microenvironment in which everything is measured, but that is another story.
              If we cannot manage it here on Earth how could we possibly do it in space or in another planet.

            • Jan Steinman
              Jan Steinman says:

              that space movie in which they are traveling to reignite the sun’s fusion process

              Wait! Wait! Let me guess the punch-line: they only traveled at night!

              It seems to me that food supply would be the least of your worries on a trip to the sun, but I haven’t read the book.

      • Fast Eddy says:

        Ironically… most people who shop at Whole Foods probably believe they are doing their part to save the world…. if they drive a Tesla then doubly so….

  29. Rodster says:

    Lets hope China doesn’t try to fix it’s water insecurity crisis like their stock market bubble.

    http://www.zerohedge.com/news/2015-07-15/forget-stocks-china-trying-centrally-plan-its-way-out-another-black-hole

  30. Fast Eddy says:

    It’s not working … down again on the open today…

    China Stocks Slump Over 10% Post-Intervention: Derivatives Dealers Reveal $150 Billion In “Questionable” Exposure

    “Right now, dealers are going through their books trying to work out what their positions are worth,” explains a major participant in the Asian derivatives market as Reuters reports the suspension of hundreds of mainland China stocks has created disputes between banks and their clients over the valuation of billions of dollars of equity derivatives.

    “In the end, someone is going to have to call the value of those deals, and someone else will lose out,” and with over 1000 stocks still suspended, and Chinese stocks now 12% off post-intervention highs, ISDA – the body that represents the world’s largest dealers – is worried that at least $150 billion of outstanding OTC equity derivatives on mainland-listed shares may not have the appropriate language to deal with these events. After 3 days of “you will never learn” rises, margin debt declined following China’s great data last night and the continued good news is bad news sell off today.

    http://www.zerohedge.com/news/2015-07-15/china-stocks-slump-over-10-post-intervention-debt-gdp-hits-record-high-derivatives-d

    • 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.
      Gail Tverberg says:

      Not so good!

  31. Don Stewart says:

    Gail
    If I lived in Minnesota and was worried about a Crash, I would seriously check out Mike Oehler’s track record with underground houses. A simple 12 by 12 might be a lifesaver, and, depending on the obnoxiousness of the local laws, might very well pass as a tax-free root cellar.

    Don Stewart
    http://permies.com/t/48625/wofati-earth-berm/Mike-Oehler-Cost-Underground-House

    • Yes, indeed, or watch this video about “Dug Out Dick”‘ who lived in Idaho in the ground, grew his own food and lived simply.
      Mr. Zimmerman has since passed on and his homestead is back in hands of the State.
      http://video.idahoptv.org/video/1476705673/

      hy did he do it?
      The Wall Street Journal, no less, has run an article commemorating Richard Zimmerman (1916-2010). The 94 year old “Dug Out Caves in Search of Pay Dirt, Then Rented Them,” says the headline.

      Dugout Dick was his widely used nickname and he created a cave condominium.
      He was the last of Idaho’s river-canyon loners that date back to Territorial days. Other locals swore he was the most self-sufficient individual they knew.

      Dugout died in his cave on Idaho’s Salmon River also known as the River of no Return.At one time a prospector, Mr. Zimmerman excavated with pick and pry bar a network of more than a dozen caves. He rented out the ones he didn’t live in by the day or by the month and serenaded his tenants with tunes plucked out on a battered old guitar. His lifestyle paradoxically garnered international publicity, including a feature in National Geographic and invitations to appear on “The Tonight Show.“

      “He’s the most well-known person in our county since Sacajawea,” said Fred Snook, referring to the Shoshone woman who served as a guide for the Lewis and Clark expedition. Mr. Snook, an attorney in Salmon, Idaho, once helped Mr. Zimmerman evict a cave tenant who fell behind on his $15 monthly rent.
      Raised in Indiana and Michigan, Mr. Zimmerman left home as a teenager to ride the rails. He picked up itinerant jobs cutting firewood and herding cattle. After serving in World War II, he settled in the wilderness of central Idaho and began prospecting. It was while excavating a claim 18 miles south of Salmon in 1948 that he was inspired to set up housekeeping in his mine.
      In those days there was a small population of “river hermits,” as they were locally called, many with colorful nicknames like Cougar Dave and Wheelbarrow Annie. Some were draft dodgers, others just loners. Even in this company, Mr. Zimmerman cut a distinctive figure, rail-thin and sporting a long white Santa beard and red miner’s helmet. He was often spotted hitching a ride into Salmon.
      After moving in to his cave, Mr. Zimmerman kept on digging, even though there is no evidence he struck pay dirt. He used castoffs like old doors and car windshields to make the caves more livable.
      “You bump your head a lot when you live in a cave,” he told the Idaho Statesman in 2002.
      He planted an orchard and a garden, where his cave tenants sometimes helped out. A windmill he constructed drew irrigation water from the river. His favorite dish of goat yogurt mixed with nettles became a local culinary legend, but he stopped keeping goats when they ate his books.
      When Mr. Zimmerman grew frail in recent years, a friend put him in a nursing home in Salmon, but Mr. Zimmerman walked out and hitched a ride home.
      Although living in abandoned mines on federal lands is frowned upon, the government made an exception in Mr. Zimmerman’s case, said Richard Buster of the Salmon office of the Bureau of Land Management. The remaining renters will now have to find caves of their own. The BLM plans public meetings to air a range of options, from demolishing the caves to installing an interpretive exhibit.
      http://www.off-grid.net/events/dugout-dick-rip/

      • Artleads says:

        Interesting. Abandoned mines soon will be the in thing (no pun intended).

      • xabier says:

        Goats eating books! Oh dear, Jan. Something bad about goats at last.

        • Jan Steinman
          Jan Steinman says:

          Something bad about goats at last.

          I ain’t never seen a thing that didn’t have both advantages and disadvantages.

          I rarely look at videos. Don’t have time. But I assume the “bad” is environmental?

          I note also that Mark Shepard (Restoration Agriculture) dislikes goats. His objection seems to mostly be that they are harder to manage than cattle.

          Unlike cows, goats will eat young fruit trees that you’re nurturing! But also unlike cows, goats will eat young alder, willow, birch, scotch broom, wild rose, etc. that are invading your machine-created field that you now have to maintain by hand…

      • dirtchild says:

        Winter in the bitteroots in a cave up the salmon? Count me out. Zone 7 climate zone I believe.

        • Did you watch the video link I posted?
          Dugout Dick made it very clear that his dwellings were warm in winter and cool in the summer, even in the extreme climate zone of Idaho.
          This is a vision of the “good life” in post collapse society.
          He seemed well fed /happyfrom his garden/orchard and goat(s) (when he kept them).
          To stay alive till his age of 94 is a testimony of the lifestyle he lead. After all he ‘escaped” from a nursing home to return to his dugouts!
          We well be so fortunate to have it as good.

          • dirtchild says:

            “Did you watch the video link I posted?”
            Have you ever been in the bitter roots? I have extensively not just on the salmon but many of it other rivers. As well as off the rivers although it gets real tough off the rivers. Have you set one foot in the bitter roots in even late October? Counting on a snow melt off before July is risky. Just keep a eye on the the temps of Salmon or Darby throughout the winter like i have for about three decades and you will have a better idea of what you speak. Those are the miamis of the area.. Dugout dick was a cool dude im sure. You do realize that my expressing my personal preference has absolutely nothing to do with dugout dick dont you? He wanted to die in his piece of the woods more power to him. The bitter roots has been a place where many eccentrics including myself have gone to find wilderness. Its wilderness for a reason.
            Go to the bitter roots in late october or april. I double dog dare you. walk the walk. Bring your snow shoes. Then go back in July. Its rough enough then. Bring your machete. Cache your food high. Walk the trail of the Nez perce as they tried to escape genocide running from washington to the bitter root valley like I have. Feel that piece of woods. Then talk.
            Now Darby is a nice place to be in the winter, as long as you have about 10 cords of wood cut with a stihl saw.
            Being in the bitter roots in the winter aint no joke.

            • Thanks for the “Heads Up”, sounds like a place to explore.
              RIP Mr. Dugout Dick Zimmerman. He was the real deal.
              Oh, the BLM couldn’t wait to bull doze his place and the dwellings he created.
              Talk was to leave it as a heritage tribute to the man.
              The PTB won’t have none of that from a person that is able to live largely outside of BAU.
              Can’t have the rabble get any strange ideas. Can we now?
              Dirt child, thanks again for the post.

  32. Don Stewart says:

    Dear Finite Worlders
    If you are tired of being fat and sick and tired, and paying taxes to treat others who are fat and sick and tired, and sick of politicians who know where the money comes from but wouldn’t know the public interest if it fell on their head from a great height…

    then you need to listen to this interview by Dr. David Perlmutter with Dr. Gerard Mullin of Johns Hopkins.

    http://www.drperlmutter.com

    Scroll down a little bit and find the Dr Mullin article. Click on Read More, and then start the video.

    If you have never listened to Perlmutter, I want to acquaint you a little with his style. Her serves up softball pitches which he knows the answer to already. He is not stupid, and could easily answer many of the questions instead of the interviewer. But his style allows him to get a focused answer which makes narrative sense without a lot of wandering around.

    I also want to comment on the bit at the beginning about ‘how are your colleagues at Hopkins reacting to all this?’ Hopkins has had a reputation as a hard core reductionist medical school. Non of that holistic stuff. But you will hear that Dr. Mullin has been given tenure. So is this the new, holistic friendly Hopkins?

    Also pay attention to Dr Mullin’s answer near the end about where he expects things to go over the next few years. As I heard him, he expects lots of research into mechanistic treatments such as fecal transplants. But what he himself suggests is treating with food…which is by far the cheapest and simplest approach.

    This is yet another case where information may be destroying a very expensive medical model.

    Don Stewart

  33. Don Stewart says:

    Dear Gail and Finite Worlders
    I have commented that sensing and communications may eviscerate certain business models, leading to lower energy consumption. Steven Masley, a cardiologist in Florida, was interviewing James Maskell, whose TEDx talk I linked to a day or so ago, today. Maskell related the story of workers on oil rigs in the Gulf of Mexico. They tend to have atrocious health habits. Somebody (their employer?) fitted them with sensing devices (like an Apple Watch?) which relayed their health statistics very frequently. Health workers could sit down with them at the end of the day and review how their health markers had behaved during the day.

    So what the workers were getting is very quick feedback…not exactly real time but close enough that they could remember what they were doing. Seeing the results of a smoke or a cheeseburger with fries is reportedly having a very large effect on their behavior.

    Maskell said that ‘information is cheap’, and Masley chimed in that ‘cardiac events costs tens of thousands of dollars’. There is no doubt that prevention is cheaper than treating symptoms. And Masley said that most people don’t understand that treating symptoms does nothing for the underlying disease.

    However, I do want to relay some information from an RT article a few days ago. Somebody has calculated that if 2 billion people have their genome sequenced, the data set could be larger than YouTube. Part of the issue, as I understand it, is that it is hard to use data compression with genome sequencing. If a few digits are dropped in a You Tube because the compression is ‘lossy’, who cares? But a lossy compression of genetic information is probably unacceptable.

    In short, we now have the ability to sense, generate, and transmits enormous amounts of information. We are no longer talking about ‘sugar is bad for people’, we are talking ‘see how that doughnut you ate affected your health markers’. And that amount of information is not trivial. But there is also little question that it is far more likely to promote a change of behavior than a Sunday sermon. It has the ability to eliminate 90 percent of the cardiac events, according to Masley.

    Don Stewart

  34. Pingback: Grexit a caminho dos BRICS? | PINN

  35. Fast Eddy says:

    WSJ Notes “Chances That China’s Data Is Real Is Very Low” Then Promptly Scrubs It

    Now you see it: “The chances that that data is real is very low,” said Alicia Garcia Herrero, Natixis’s chief economist for the Asia-Pacific region. “Would you publish GDP data that looks south at this point in time? I don’t think so.”

    Now you don’t.

    http://www.zerohedge.com/news/2015-07-15/wsj-notes-chances-chinas-data-real-very-low-then-promptly-scrubs-it

  36. There is a new interview with Nicole Foss. Deflationary crash first, followed by depressionary intermezzo with 90% real estate crash, draconic/punishing retrospective laws/taxes etc., aprox. five years after the crash no oil for ordinary people. Hard assets era emerges, which she didn’t elaborate what’s about in this particular talk.
    http://www.theautomaticearth.com/2015/07/navigating-the-perfect-financial-storm-with-nicole-foss/

    • Stefeun says:

      Thanks World, worth listening, as always with Nicole Foss.

      She says -among many other straight insights- that financial behaviour knows only two extremes, it’s either complacency, or panic.
      People always react too late, because their normalcy bias tells them the warnings aren’t credible, until the reality proves them they indeed were. I think that such pattern applies well beyond finance (and suspect that’s what she meant as well).

      • There should be part2 of that interview up shortly. Anyway, I listened to her older interviews (5yrs? old), and it seems the message has not changed much. Among other things I guess the very important one is that during the turmoil one should expect pretty nasty things from the dying governmental structures (sucking taxes and resources), perhaps that’s the historical clue when people start to seek protection from local proto feudal warlords than crazy centralized gov, basically pushed to exchange one nasty yoke for another one, albeit more local and a bit more predictible at that.

      • Artleads says:

        Is normalcy bias a product of civilization?

        • kesar0 says:

          Yes. Live would be unbearable without it. I mean for most people.

          • Fast Eddy says:

            I don’t really see normalcy bias as protecting our koombaya worlds… rather I see cognitive dissonance as they key defense mechanism …

            We can see this in play on this forum constantly — when likely outcomes of collapse are asserted — most people run behind a wall of denial — the wall takes many forms — for some it’s god and the afterlife… for some it’s a small farm… others hide behind hubris…

            None of these make any sense… but of course that does not matter … cognitive dissonance is functioning perfectly and as the dictator DNA expected.

            This is how DNA deals with the paradox of how its marching orders aimed at surviving and procreating — result in collapse and possible extinction…

            Basically it blocks out all logic — it allows us — no matter how brilliant the person — to believe 2=2=7 ….

            And no matter the facts… there is no convincing a person it is 4…

            What is amusing is that people will read the comments above … and some will agree … but even though I have exposed the magicians trick…. they will still fall for it over and over and over…

            Like I was saying … DNA is all powerful….

            I was dropped down a flight of stairs as a young child and my DNA was damaged… so I am unable to comprehend how anyone could ever believe 2+2=7… I lead a life of exasperation as a result…

        • Stefeun says:

          Artleads,
          I’d say yes, but when we come to talk about “normalcy bias”, it’s to refer to the dysfunction of a brain process.

          Each of us (and animals as well) must re-create our environment mentally in order to have the appropriate reactions. The world we perceive is not the real world, it’s our environment as our mind tells us it is.
          So we have internally built a sort of modelization, and in order to cope with everyday’s life we must keep some parametres constant; we just cannot re-make the whole construction at every moment.

          The problem occurs when one of the parametres has to be adjusted widely (change in the environment, discovery, …), in order to be consistent with the new perception, so much that it questions a big part of our mental construction. In many cases, our mind prefers to convince us that our perception is mistaken, or finds some way around to avoid considering it as it is (or as it should be perceived normally).

          • Don Stewart says:

            Dear Stefeun, Artleads, and even Fast Eddy
            The question is deeper than it might first appear. Consider this:
            http://www.choralnet.org/view/424456

            If you search in PubMed for the original study, you find that amateur singers react differently than professional singers. Professional singers have an increase in arousal…essentially they are working. Amateur singers make a lot more oxytocin, which is the hormone of bonding. So those Japanese work groups and drinking groups who begin to sing come together in ways that they would not in the absence of singing. In other words, oxytocin helps us actualize the potential for cooperative behavior.

            I was just listening to Dr. Anna Cabeca talking with Dr. Stephen Masley about the connection between heart health and sexual activity. The connection is profound, because, just like singing, sex causes us to release certain hormones which have very positive effects. One effect is the release of oxytocin, which makes the couple bond stronger, and the suppression of cortisol, the stress hormone which makes us wired and tired and fat. Another is the creation of more nitrous oxide, which is good for arteries.

            So…all you medieval theologians, what is the ‘true’ nature of humanity? Is it the narrow, cramped world of those who never sing Kumbaya and never make love and have heart attacks at 50? Or is it the expansive and connected world of those who sit around the campfire singing Kumbaya and then make love before drifting off to sleep and live to be healthy in their 90s?

            This is not a trivial question. Humans have significant powers to make the world we want to see.

            Don Stewart

            • Jan Steinman
              Jan Steinman says:

              I don’t think I have ever sung “Kumbaya.”

              But I sing to our goats while milking them. Mostly sea chanties by Stan Rogers.

              Perhaps that makes their oxytocin levels increase. Perhaps there’s less cortisol in the milk, making it healthier for use. Perhaps it just feels good, which is reason enough.

            • Don Stewart says:

              Jan
              The last time I sang Kumbaya was about 40 years ago at YMCA camp. My children and the dog loved it. But I think the best was square dancing in the barn. One New Year’s Eve we walked down to the barn through the woods, just as it was beginning to snow. A couple of hours of dancing by candlelight, about 3 inches of snow on the ground, moon out, walking home through the woods and fields. Still gives me a good feeling.

              Don Stewart

            • Fast Eddy says:

              For me… listening to that song triggers a gag reflex … similar to when I get a whiff of Southern Comfort (all due to drinking a beer mug of that filth in a dare in grade 8…)

            • Jan Steinman
              Jan Steinman says:

              A couple of hours of dancing by candlelight, about 3 inches of snow on the ground, moon out, walking home through the woods and fields. Still gives me a good feeling.

              And with a bit of luck and a lot of preparation, one can continue to have such experiences after the bottleneck event!

            • Artleads says:

              Or maybe doing what feels good is healthy.

            • Jan Steinman
              Jan Steinman says:

              Or maybe doing what feels good is healthy.

              Abraham Lincoln said:

              When I do good, I feel good; when I do bad, I feel bad. That’s my religion.

              and also:

              You are about as happy as you decide to be.

            • Fast Eddy says:

              I typed into the magical hole on my screen the following : correlation cognitive dissonance and happiness

              If you try you will get this:

              Scholarly articles for correlation cognitive dissonance and happiness
              … some people happier than others? The role of cognitive … – ‎Lyubomirsky – Cited by 713

              it links to a PDF….

              I did not read it but I suspect the conclusions will be that those with high levels of Cognitive Dissonance tend to be happier…

            • dirtchild says:

              “But I sing to our goats while milking them. Mostly sea chanties by Stan Rogers.”
              Uhh maybe that explains that hoof to the head?
              Just kidding I think thats awesome.

          • Artleads says:

            This makes sense. I was trying to put a sociological spin to it. Like suggesting that people who lived entirely from the land had to learn to adapt as the land changed, and that this ability to adapt was the norm. Whereas, in an artificial (civilized) society, the conditions for life were abstract, making for inflexibility. But I’ll go with what you say.

            • Stefeun says:

              Social organisation can be viewed as just another (higher?) level of complexity, and a part of our environment, that we also have to modelize in our brains. Some more parametres to take into account, but not a big deal, as wolves and many others do it too (at a simpler level, though).

              Then there’s the issue of the speed at which the environment changes. If it’s slow and gradual, as usually the case in Nature (except volcanoes and other catastrophes), the structures have time to adapt smoothly.
              In our artificial world, it goes much faster, and even if our cultural evolution is rapid too (compared to biological evolution), I’m afraid we’re reaching the point where it can no longer keep up with the many changes we’ve triggered.

              At that point, our social organisation either falls apart, or creates a higher level of complexity in order to cope with the problems. I don’t see what the latter could be (too many interlinked problems, this time), and anyway higher complexity means more energy, which we haven’t.
              Just wild thoughts.

            • Fast Eddy says:

              Yet good thoughts…

            • Artleads says:

              ” …don’t see what the latter could be (too many interlinked problems, this time), and anyway higher complexity means more energy, which we haven’t.”

              Isn’t there social energy? Or energy created through systems of order? People stranding in line in queue manifest less dissipation (?) of energy than a free-for-all. Isn’t the saving of energy also the production of energy?

              As to the interlinked problems; I suspect they can best be resolved through trained, cultivated intuition. They can’t be thought through. And this intuition is present in various forms of art and ritual. (Unfortunately, art now is not concerned with anything serious.) Don talks about geometry being indispensable for solving complex problems. I find this a most interesting subject to pursue.

            • Stefeun says:

              Artleads,
              you say “Isn’t there social energy? Or energy created through systems of order?”
              I don’t really understand “social energy” (group dynamics?), but for the rest, the answer is clearly: no.

              Energy is a physical property, that -at our level- cannot be created, only dissipated, consumed from high grade until waste heat. Systems of order do not create energy, it’s actually the other way round: order is created by the flow of energy.
              More precisely, the energy flow creates structures with increased order inside, and increased disorder outside. The organised structure helps dissipate the energy faster (hence also produces more waste around it).
              When the energy flow decreases, the most complex structures collapse first.

              You can optimize a sub-system, increase its efficiency so that less primary energy is required for same output, but experience shows that the spared energy is then used elsewhere in the system, and often even leads to an increase in overall energy consumption.
              Unfortunately, it seems impossible to cap the energy use, globally and in the long run.

              WRT “social energy”, I’m afraid that what bonds individuals together, helps create a structure (a group) that eventually will burn more energy than the sum of isolated individuals.

            • Don Stewart says:

              Dear Stefeun and Artleads
              Without trying to argue too much, let me suggest some ways to think about the issues.

              Philip Ackerman-Leist has written a very good book called Up Tunket Road: The Education of a Modern Homesteader. The author is a very good ecologist, so, for example, he can look at an old stone fence in Vermont and tell whether the rocks came from a pasture or cropland. Part of his message is that attitudes and beliefs are important. For example, he identifies this problem with a typical suburban family in the US:
              ‘[material wealth] tends to dilute the notion that a home is where people work together for sustenance and meaning’.

              Now Capra and Luisi identify ‘cognition’ as one of the key elements in all life…not just human life. Cognition and ‘meaning’ as used by Ackerman-Leist are very closely related if not identical concepts. Capra and Luisi include a section 14.3.4, with the title Autopoiesis in the Social Domain. They give no clear answer as to whether we can observe the same self-organizing principles in society that we can observe in cells. They say it is a subject of intense investigation at the present time. Parenthetically, Ackerman-Leist uses the term ‘maximum entropy’ to describe the organization of a modern, wealthy society.

              Now organization is not the same as the throughput of energy. Instead, it makes life possible. So Life requires both energy and materials but also organization. I don’t think it makes any sense to use a simplistic model that traces everything back to energy. It’s true that Life can’t exist without energy, but it also true that Life can’t exist without organization, and organization is cognitive…it has meaning.

              So humans do not ‘create energy’, but they definitely do ‘create life’ using both energy and materials. I suggest that if you start with energy and move forward, the issues become murky. If you start with life and move backward, everything is more clear.

              Don Stewart

            • Jan Steinman
              Jan Steinman says:

              I’m afraid that what bonds individuals together, helps create a structure (a group) that eventually will burn more energy than the sum of isolated individuals.

              I have to disagree with you on this.

              We have (through chance more than choice) a 2,700 sqft house. It costs the same to heat it for two people as it does for a dozen, so by forming a group, we save energy. Our group has a motor pool, instead of each individual having her own car. Adding individuals adds more hot water demand, but non-proportionately, as we share washer loads and do dishes together. (Some of us even shower together, but we would probably do that even if living alone.) Our electric bill is decidedly not proportional to the number of people sharing the house, therefore, the energy used per person goes down, not up.

              But perhaps I simply misunderstood your point.

            • 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.
              Gail Tverberg says:

              The social energy that comes to mind for me is reciprocal agreements that existed among hunter gatherers and people in groups before our modern age. If they expected to stay in the group, they had to follow the rules of the group; otherwise they were thrown out. If the agreement was that all food that was hunted/gathered was to be shared, and the person didn’t live up to the rules, the person would be thrown out. In many ways, these agreements corresponded to debt. They are what allowed promises to be made and saw to it that citizens actually kept those promises.

            • Stefeun says:

              Jan,
              (answering here because your comment isn’t in my mailbox)
              I think your point with your big house refers more to economies of scale: you have quite important fixed costs, to run and maintain the building, so it’s better to split those fixed costs onto more people. Each individual adds a little bit of consumption, but also pays his share of the fixed costs, I assume.
              Then you can determine an optimal number of people, so that your house runs efficiently and so that you can dedicate more time and energy for other purposes.

              From a different angle, suppose you were alone, you may not be able (or wishing) to run such a big house, and you wouldn’t have gathered this team capable of productive work (run the house and generate some surplus, I hope).

              I didn’t integrate things like commuting with an individual car in my consideration, but clearly a huge part of the energy we consume in BAU is pure waste. So yes, it very likely outcompetes your optimized organisation (but not for good reasons).

            • Artleads says:

              Stefeun and Don,

              Wonderful thoughts. I need to understand the difference between energy and organization. You have both helped to explain it, although I could still be clearer…

            • Artleads says:

              Let’s say that organization *inside* the system makes it conserve energy. What then makes it obligatory for the system to cause more waste outside? It sounds as though people are automatons who can’t see the big picture or the whole.

            • Don Stewart says:

              Artleads
              Every living system is a ‘dissipative system’. It captures energy…with organization or structure…and uses that energy and leaves lower quality energy as a waste product. So thermodynamic laws are not violated on a cosmic scale. But at the scale of, for example, Earth, the laws of thermodynamics do not prevent Earth from being a very productive, living planet.

              Consider a ray of sunlight hitting the surface of the Earth. Suppose the surface is just bare rock. Then the solar energy ends up as low grade heat and eventually dissipates to outer space. Now suppose that Nature creates some plants to intercept the solar energy and make photosynthetic energy. The plant is able to intercept the solar rays due to the organization or structure of the plant (Capra and Luisi distinguish between organization and structure, but I’ll leave them fuzzy.). The organization and structure was created from previously received solar energy working on the materials at hand and with the cognitive goals of the plant guiding everything.

              Humans do similar things. We cut down a forest, which supplies little food for humans, and plant farms and gardens instead. The farms and gardens will supply more food for humans. There is no magic involved. The same sunlight strikes the surface. But humans have used their cognitive capacities to replace, say, pine trees, with perhaps corn. Both pine trees and corn turn sunlight into plant products, but the corn is more human friendly in terms of food.

              All solar energy is going to dissipate someday. But on its journey, humans and plants and ants and termites can intervene to cause the energy to make products favorable to themselves.

              Don Stewart

            • Artleads says:

              “All solar energy is going to dissipate someday. But on its journey, humans and plants and ants and termites can intervene to cause the energy to make products favorable to themselves.”

              Very fine explanations. (The average person needs that kind of simplicity.) This sounds a little bit like when rain falls and drains off your land. It is always trying to evaporate or drain away. But through our “cognitive” intention, we can slow the evaporation and run off and store it in tanks, or block its path so it permeated the soil, or ladle the ground with mulch to slow evaporation…

              Solar energy: The desert is one spectacular place to dry things. But we have no drying industry which could provide economic benefit. Cognitive organization is lacking? Every south facing wall is spectacular for growing vertical farms. But such farms are statistically non-existent. Same failure.

            • Don Stewart says:

              Artleads
              I have a garden on a south facing wall. I am not only statistically insignificant, my wife claims I am truly insignificant. 🙂

            • Stefeun says:

              Aah! Yours too…

            • Stefeun says:

              Artleads,
              I wanted to quote the same sentence from Don’s comment, because it connects what both of us are saying in this thread: there are many ways to use/dissipate a given amount of useable energy.

              We can simply burn high grade fuels directly into heat (the lowest form of energy) and get some mechanical energy in the process, this is what internal combustion engines do, as well as most of our industrial devices,
              or we could try to imitate natural processes that are using every possible niche to take the best advantage of each step of the energy dissipation.

              Your analogy with the way water rainfall is used is very good: it can either go straight into the river, or penetrate the topsoil and be used in several different ways before eventually evaporate.
              Another example is phosphate, that is recycled up to 70 times by Nature (iirc Don’s data), while in our industrial Ag it’s used only once, moreover with a surplus that is simply washed away, lost.

            • Artleads says:

              Don,

              Just to fill in your info on the arid west… 🙂

              https://archive.org/details/VirginiaOBrien-TheWildWildWest

    • 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.
      Gail Tverberg says:

      I wish a transcript were available. I have a hard time finding time to listen to audio. Does she think that with this deflationary crash, banks would still be operating, and people’ bank account balances would still be there, when they expected to spend them? How would the system still “be there” sufficiently to have a hard asset era?

      • Don Stewart says:

        Gail
        She thinks that governments will do whatever they have to do to keep the banks operating for as long as they can. For example, bail-in’s with the depositors’ money. Another current example is the Obama administration changing the law very quietly to permit convicted felons (the TBTF banks) to continue to write mortgages.

        Then, finally, the whole financial/ governmental house of cards collapses, and we enter a period when only real assets will be tradable.

        Don Stewart

        • Jan Steinman
          Jan Steinman says:

          bail-in’s with the depositors’ money.

          Makes me glad I don’t have any! 🙂

        • 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.
          Gail Tverberg says:

          Thanks! I can see that governments would like to keep banks going as long as possible, even if it is with a fraction of the balances in the post. Exchanging real assets without an intermediate financial system would seem like a real challenge. It could be done at a market, where everyone comes to trade small items, and prices are marked in some common unit (bushels of wheat). It is harder to see how bigger things could be easily traded.

          • Don Stewart says:

            Gail
            I think Nicole believes that the final stage, physical asset trading, will be tiny compared to today. For one thing, she sees fossil fuels going away. Probably other material shortages as well. It’s a ‘post collapse’ scenario.
            Don Stewart

      • Jan Steinman
        Jan Steinman says:

        How would the system still “be there” sufficiently to have a hard asset era?

        That is really the “big question,” no?

        Certainly, much of the gross financial worth of the world is in mere fluffery: worthless or vastly inflated investments, excess marketing for products people don’t need, bureaucrats regulating problems that shouldn’t exist, etc.

        So when you strip away all that, what do you still have of value? Look to Maslow’s Hierarchy to find out. We’ll need food, but not delicacies from 10,000 kilometres away. We’ll need shelter, but not suburban palaces nor vacation homes. We’ll need basic health needs, but not heroic measures that provide a few paltry years of low-quality life. We’ll need creative outlets, but not 40,000 people going to the Super Bowl.

        So it seems to me that the basis of a new economy can be derived from basic human needs, no? I don’t have the data nor the experience to break that down, but one should be able to come up with a ratio of essential-to-non-essential goods and services, and thus predict how much deflation can happen without impacting basic human needs.

        Of course, there’s a lot of complications involved, but it appears to me that no one is taking such an approach to modelling a future economy.

        • dirtchild says:

          “We’ll need creative outlets, but not 40,000 people going to the Super Bowl.”
          That suggestion alone would end any public figures career.

        • Artleads says:

          Among the privileged (most people who blog on computers, etc.) it’s rarely understood how minimal and few are people’s basic needs. Some enlightened self interest, a bit of creativity, and hardly any money at all would do the trick.

      • Reverse Engineer – Reverse Engineer is Admin and Chief Cook & Bottlewasher on the Doomstead Diner Blog & Forum, and hosts the Collapse Cafe Video Discussions and Podcasts, and the Frostbite Falls Daily Rant spleen venting Collapse-tainment show. Fans of George Carlin, Bill Hicks and Rick Mercer tend to like the material, Academic folks, not so much.
        Reverse Engineer says:

        Try http://otranscribe.com/
        Google also has a transcriber, but you gotta use Google Chrome, and I hate Google. lol.
        RE

      • Fast Eddy says:

        I have looked a few articles on the Automatic Earth (I think they get republished on ZH sometimes)… and I have concluded they do not come anywhere near to understanding the problem we are facing and the implications.

        There is no other commentator in this space that I am aware of who comes remotely close to Gail on any of these issues.

        They generally all suffer from some degree of normalcy bias — they are unable to understand the true nature of what is about to hit us (and some of them – yoo hoo Chris Martenson — try to make money selling hopium …. shame shame shame)

  37. edpell says:

    We need some terminology for electric sources. Everyone if fond of saying PV has the same levelized cost as coal, nat gas, nuclear. This may be true for the six hours a day when the sun is shining brightly but not true at midnight. We need to know the cost of various sources for base load service, 24 hours per day. To those who ask do we need 24 hours per day, here in New York in the winter 0 degrees I NEED my electric powered heat pump to work and my oil fired electrically operated backup furnace to work 24 hours per day.

    We need to numbers the “leveized cost” and the “base service cost”. The base service will include storage for PV to service midnight. Yes, we can get into more detail with nuclear providing base load and PV providing day time peak load and hence needing less storage but still not zero storage.

  38. MG says:

    Interesting case from the Czech Republic: 21-year old man abused around 50 girls (some of them even 10 years old) contacting them via social networks:

    http://tn.nova.cz/clanek/rekordni-pripad-zneuzivani-mladikovi-podlehlo-az-50-divek.html

    What is interesting about this case, is the fact that the young man lives in the area of the Czech town Trutnov. The brown coal mining and later textile industry mark the history of this region. The town Trutnov had thanks to the biggest flax mill in Europe around 1850 the highest population growth in the given region at that time. The definitive end of the textile industry here came with the cheap production from Asia after 2000.

    http://trutnovinky.cz/zpravy/aktuality/2014/brezen/slava-a-konec-textilniho-prumyslu-v-trutnove-aneb-od-prosperity-k-upadku/

    Such sexual predatory behaviour in the region where generations of women worked in the textile industry and lost job opportunities and thus the social status of women was fatally undermined is not a mere coincidence. Surely, the guy and the girls had similar problems in the imploding society, when they participated in such acts…

    • MG says:

      Just to add an explanation, according to the article in Czech, the game was going on this way: the young man contacted them via social networks and persuaded them to send him their nude pictures and videos. Then it escalated to sexual intercourses. Now they arrested him. The girls are victims. One must be naive to believe in such easy explanations about abuse when the story surely has deeper implications of the energy and industry decline and the subsequent implosion of the society…

      • MG says:

        Why the Czech republic became such an industrial center in the past? Not only because of the black coal deposits on the border with Poland, but also because of the fact that its brown coal deposits on the border with Germany has the highest quality in EU:

        http://www.ceskatelevize.cz/ct24/ekonomika/300325-cesko-ma-nejkvalitnejsi-hnede-uhli-v-cele-eu/

        The calorific value of brown coal mined in the Czech republic is up to double the quality of the brown coal mined in other EU countries, i.e. including Germany (table No. 2 in the given article).

        One must not wonder, when such quality deposits are depleting, that a big overshoot and sophisticated society is crumbling and imploding…

        • MG says:

          The given table No. 2 shows also Greece (“Řecko”). Among EU countries used for comparison in this table, the calorific value of the brown coal mined in Greece is in the lowest range (3,8 – 9,6 MJ/kg).

        • 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.
          Gail Tverberg says:

          Yes, quality of coal deposits is declining everywhere I am sure that distance to markets is increasing as well, also adding to costs.

          This was our cheap energy source, but its cost of production and delivery has been increasing as well.

  39. Don Stewart says:

    Dear Gail and Finite Worlders
    I’d like to consider the 340 trillion dollars of financial assets we now have in the world (excluding derivatives), and ask what the value would be after the crash.

    There isn’t going to turn out to be any very satisfactory answer. For one thing, we have a fiat money system. So the ‘value’ may turn out to be whatever the Central Bankers want it to be. Central Bankers can create monetary values, but cannot create real values.

    But let’s try to think together about the real value of stocks and bonds and real estate, after the Crash. The next wicked question we have to consider is ‘what is the nature of the Crash?’ Is it a 20 percent fall in the value of the stock market? Is it the disappearance of fossil fuels? Is it the collapse of the governmental systems which underlie the assets, such as the laws governing corporations and land ownership? For the sake of argument, let’s assume that fossil fuels simply disappear and we are required to live on a solar budget, but that governments make it through the collapse and continue to provide reasonable law and order and also enforce property rights.

    I spent this morning reading in Capra and Luisi about three plans for dealing with our systemic problems: Plan B by Lester Brown, Reinventing Fire by Amory Lovins, and The Third Industrial Revolution by Jeremy Rifkin. I would also like to add in the video that I linked to this morning, a TEDx talk by James Maskell about the revolution which is both possible and urgently needed in the treatment of chronic disease. While chronic disease is now a worldwide problem, it is most acute in the US where it accounts for around 16 or 17 percent of GDP (another 3 or 4 percent of GDP is spent on acute medical care, such as caring for broken bones). Additionally, I’d like to refer to the Ellen MacArthur report (which I have previously linked to) on the rebuilding of automobiles and cities and agriculture. And I will throw in this summary of some historical data from Edo, Japan, which is an example of a basically horticultural society:
    http://www.colorado.edu/cas/TEA/curriculum/imaging-japanese-history/tokugawa/essay.html

    For example, Amory Lovins was involved in retrofitting the Empire State Building in NYC, reducing cooling costs by one third with a payback period of 3 years. Obviously, the retrofit resulted in an increase in the value of the Empire State Building simply because it reduced the cost of operating the building. However, this doesn’t tell us a lot about the value of the Emprie State Building after the end of fossil fuels. For example, will we still be able to pump water up to the top floors? Will we have sewage plants to treat the human waste? Will the subways which bring workers to the building continue to operate? If the answer to any of these questions is ‘No’, then the value of the building will be near zero…suitable only for salvage by probably uncontrolled means.

    The one major retrofit discussed by both Brown and the MacArthur Foundation and Maskell that would continue to have value is converting farmland from chemically farmed deserts to biological agriculture. Any humans who survive the Crash will need to eat. And biological agriculture leaves the soil capable of cleaning water for drinking, and providing wood for building.

    But this leads us to the question of ‘How Are Wages Determined?’, and so influence market values. We start with the simple observation that wages cannot exceed the productivity of the society. If you read the history of Edo, referenced above, you find considerable growth both in agricultural production and also artisanal production and trade. But they were starting from the very low level of the Warring States. And Edo never got primary agricultural producers to be less than 85 percent of the population. The farmers in Edo did not get wages, but they were able to sell some of their agricultural products to the other 15 percent of the population. While I haven’t found any source which gives me a measure of the total amount of money circulating, it must have been pretty small. Their currency was precious metals. They did have debt…many Samurai became very poor by going into debt…but I don’t think that a Samurai’s debts could be monetized and traded and rehypothecated.

    My guess is that a society which is 85 percent primary agricultural production cannot afford very many Empire State Buildings, regardless of how energy efficient we make them.

    In addition, let’s look at the plans to ‘super insulate’ buildings., and compare that strategy with the building strategy in Edo. The buildings in Edo were quite porous, so that space heating or space cooling were out of the question. Instead, they used strategies for heating bodies and insulating bodies in the winter, and integrating living and working spaces with outside air in the summer. About the only assets we have which would be useful in an Edo strategy would be long underwear.

    While a village blacksmith would be a very handy person to have around in an Edo strategy, a shiny factory out in the countryside would be next to useless.

    I was watching Andrei Tarkovsky’s 1962 movie about a 12 year old boy who is a spy for the Soviet Army in WWII. I noticed that a grain field has an old wind powered mill sitting in the middle of it. My conclusion is that, perhaps in Czarist days, transportation was so poor that people built these windmills very close to the production. In my childhood, many small towns had flour mills, and the small creeks and rivers near where I live now have many abandoned mill sites. So my guess is that a huge flour mill in Minneapolis may have a very low value after a Crash. A mill that size would simply need more feedstock than can be moved to the mill, even if it could be operated by water flow from the Mississippi.

    If you read about the roads in Edo, you find that the newly appointed Shoguns promptly improved transportation by road and by water. However, the roads generally did not permit wheeled vehicles. I suppose because wheels create ruts in roads which are not hard surfaced. Consequently, transportation was overwhelmingly by walking for light loads and by water for heavy loads. Reverting to that patterns would make much of our transportation infrastructure valueless. People would walk down paved highways for a very long time, but if there are no heavy wheeled vehicles on them, I don’t think they would work as turnpikes. They just become, as was the case in Edo, an infrastructure of the commons.

    I will conclude by saying that the question of whether investing remaining fossil fuels in the sorts of futuristic enterprises discussed in Capra and Luisi makes sense depends on the nature of the Collapse. If Collapse means a 20 percent correction in the stock market, then they probably make sense. If Collapse means the end of fossil fuels, they probably don’t make sense (except for the agriculture programs). If we think of Collapse in that latter context, then the focus should probably be on Lifeboats.

    Don Stewart

    • Interesting, centuries ago Europe has had a vast network of river transportation in both directions, upstream route was provided by donkey/animal draft power along the river banks.
      Impossible today, only very tiny part of these has not been destroyed by roads, dams and other modern infrustructure. But it might return in longer timeframe, centuries/millenia after the concrete crumbles..

    • 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.
      Gail Tverberg says:

      I might mention too that Tokyo/Edo has a very mild climate. Much of the world is not as fortunate. Long underwear is a solution where it never gets very cold. In fact, it rarely seems to get very hot either.

      There is a reason why civilizations flourished in areas that didn’t require too much heating/cooling, back before fossil fuels.

      • Don Stewart says:

        Gail
        Comparisons to Raleigh, NC
        Tokyo Raleigh
        Jan 46/36 51/32
        July 84/73 89/69

        So Tokyo has a more maritime climate while Raleigh has a more continental climate. But they are not remarkably different. Nights in Tokyo can be more sweltering in the summer and it doesn’t warm up as much during the day in the winter. t would add that many log cabins in the mountains were very poorly chinked. While the mountaineers could burn as much firewood as they could cut–but the Edo people had to strictly ration firewood–the mountaineers still could not really heat a room the way we can do so today with fairly well insulated houses. Joel Salatin in Virginia remembers waking up on cold mornings with the water in the toilet bowls frozen.

        If you want to see really tough people, I imagine the Plains Indians would take the prize. They packed lots of people into a teepee to keep warm.

        Don Stewart

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  41. Don Stewart says:

    Dear Gail and Finite Worlders
    It is very clear that we can no longer continue to extrapolate patterns of behavior. Here is a clear-headed, radical proposal to reform healthcare. Hint: grow a garden to heal your microbiome (which means you have to heal your garden soil first).

    Don Stewart
    http://functionalforum.com/building-healthcare-from-scratch-2/

  42. Fast Eddy says:

    For those who think that we will have electricity post BAU…. and of the Solar Groupies in the crowd….

    Seeing as the collapse of the grid will signal the end of BAU …. how can we possibly have electricity post collapse….

    UK faces worst power crunch in a decade this winter

    Closure of three power stations increases risk of blackouts and forces UK to rely on emergency measures

    New solar farms had been built but that was “not useful on a dark winter evening”, he said.

    http://www.telegraph.co.uk/news/earth/energy/11740134/UK-faces-worst-power-crunch-in-a-decade-this-winter.html

    Really — solar panels don’t work in the dark — you don’t say….

    Do not underestimate humans — we can solve anything — if we put our minds to it — so I am sure that we can invent some sort of moon panels — that work at night….

    Oh right…. what happens when there is cloud or no moon….

    We can invent Night Panels — they would be able to generate power from being exposed to the colour black…

    The possibilities are endless… we are limited only by my imagination….

    • The ultimate solution would be solar panels in an array orbiting the Earth at the Clark Belt. Then they can relay to each other and down to Earth by microwave. At least 10 times more energy harvested without the atmosphere in the way, and constant 24/7 production without using batteries.

      It sounds like the Soviets figured out this finite world thing way ahead of time; working on trying to get the solar panels in space, make factories to produce spirulina to feed everyone, and building giant underground cities.

    • JMS
      JMS says:

      LOL. You are not thinking big enough. There’s just one moon and millions of stars. So I think we would be much better served with Starry Panels.

      • Fast Eddy says:

        How about we build a pipe to the sun and suck the energy directly from the source?

        When someone is able to make any of these things work I am all ears … of course then they can start work on the next big thing — making more fresh water cheaply

      • 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.
        Gail Tverberg says:

        Our problem is as much low world economic growth as anything else. How are these going to fix that low economic growth?

  43. Fast Eddy says:

    “Everything Is Awesome” In China – Retail Sales, Industrial Production, & GDP All Mysteriously Crush Expectations

    Retail Sales increased 10.6% YoY (smashing expectations of a 10.2% YoY Gain); Industrial Production rose 6.8% (crushing expectations of a 6.0% YoY gain); and the big daddy of goalseeked data, China GDP managed to rise 7.0% (comfortably beating expectations of just 6.8% but still the lowest since Q1 2009). Now it is up to the markets to decide if good data is bad news because it gives the government less excuses to throw more “measures” at the market; or is good data, good news as it “proves” the economic fundamentals underlying massively exponential gains in Chinese stocks (and excessive valuations compared to the rest of the world) are justified. When the data hit Chinese stocks were at the lows of the day, and for now, it appears good data is bad news as stocks are not bouncing at all.

    CHINA’S GDP ‘NOT OVERESTIMATED’, NBS SHENG SAYS

    http://www.zerohedge.com/news/2015-07-14/everything-awesome-china-retail-sales-industrial-production-gdp-all-mysteriously-cru

    One quick question… What exactly are the Chinese suddenly producing so much of? Because its not steel, its not houses, and its not being exported overseas…

    http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/07/20150714_china7_0.jpg

    • 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.
      Gail Tverberg says:

      The containerized freight index is a big worry.

    • Well, the green line; China Industrial Production YoY, is sharply rising on that chart, so maybe containerized freight just hasn’t caught up yet? China’s always been a bit of a mystery, so maybe their stats are just as mysterious. In any case, it probably is true that relatively low oil prices will spur some added economic growth worldwide.

      The question to my way of thinking is once oil supply does drop at some future point and price rises, will the higher price be sufficient to generate enough new supply or will oil supply then descend from a peak? I also wonder how accurate producers expense per barrel are when they broadcast them to the public. Are those numbers being skewed higher than actual costs? Are oil producing countries accurately reflecting oil costs when they claim they need X dollars a barrel, or are they skewing those numbers much higher because they simply want more money and they want the public to think higher per barrel prices are necessary to keep the oil flowing.

      All this “We need mo money” bit may be accurate or it may be a PR campaign. It might even make for a good topic for a future article by Gail to try and answer some of those questions.

      • 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.
        Gail Tverberg says:

        I am doubtful price will rise enough, for long enough, to make a difference in future supply. Instead, we will see an increasing number of pieces of the world economy fail. Greece is on the list, but also some of the oil exporters that can’t live with low priced exports.

  44. Fast Eddy says:

    http://www.stuff.co.nz/science/70253378/pluto-data-streams-in-from-new-horizons

    Yawn… another unmanned space probe….

    What we need the world needs to distract the idiocracy from foreboding of economic doom is a rallying point — something to captivate them…

    What we need is a new Reality Tee Vee Show. And I have just the thing…

    How much money does American Idol generate in a season? Well I guarantee you this will beat that by 10,000 times.

    It works like this:

    People vie for the right to be the first person to go to Pluto — one way of course because there is no coming back….

    Each contestant has to explain to a panel of idiots and an audience of idiots why they deserve to be the ONE.

    The winner gets strapped into a Tesla sponsored rocket ship packed full of freeze dried KFC sponsored food… and off they go…

    An on board camera feeds live footage of the person on the way to Pluto — talk shows bid for the rights to the first interview … and the networks bid for global rights to the daily broadcasts…

    The idiocracy would be lovin this!

    And since it takes years to get to Pluto — the idiostronaut on board would be the last human alive — because when the earth’s economy collapses the fuel ponds extinct all humans leaving him/her to sail about the universe until the KFC runs out….

  45. Endgame says:

    I’ve had an abrupt shift of focus to something altogether more pressing.

    I watched the MSM TV report on the Iranian deal. The Iranians were clearly as happy as sandboys…but,….BUT when I saw President Obama’s face I had the very clear and distinct impression I was looking at The Picture of Dorian Grey.

    So I thought: Shit, Oh Dear, they are really going to do it.

    “This is not good, Mav.” – Goose

    PCR has been saying the same thing, and now I have seen it for myself.

    Now all you have to do is consider whether Russia and China will sit on the sidelines…

    • edpell says:

      China has to show the world how it protects its energy suppliers ie Iran. If it does no better than it did with Libya then KSA and the rest will stay with US and forget about the BRICS. Now China is into the whole saving face no direct confrontation so they will use bribes to the US elites. Will it be enough to offset Zionist/Israeli bribes the world waits with abated breathe to find out.

    • bandits101
      Bandits says:

      IMO if the USA was smart they would have sold Iran all the nuclear weapons they wanted years ago. Call their bluff in essence. The Iranians are not fools, they like every nuclear armed nation is aware of the MAD principal. Pakistan has nuclear weapons, why wasn’t that an endgame scenario, why haven’t they attacked their Indian arch enemies?. If Iran chose to attack with nukes they would be totally annihilated, there could be no other outcome.

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  47. Don Stewart says:

    Dear Gail and Finite Worlders
    Charles Hugh Smith mentions this data today in his blog:

    ‘Global equities now total $64 trillion and debt securities (bonds, etc.) total $95 trillion. Global real estate totals $180 trillion. Once the risk-on euphoric trust in central banks’ omnipotence fades and risk-off selling begins in earnest, how much would central banks have to buy of this $340 trillion to keep the bubble inflated?’

    http://www.oftwominds.com/blogjuly15/policy-extremes7-15.html

    Don Stewart

    • 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.
      Gail Tverberg says:

      Great article! Thanks!

      • Stefeun says:

        Great article by Charles Hugh Smith, I agree.
        I just finished watching the 23min video, good as well, but as a conclusion CHS seems to consider the soon-to-come crash as “an opportunity for a reset of the whole economy and improvement of our institutions”. I’m afraid he’s fit for a bad surprise, if ever this is what he really thinks.

        • Don Stewart says:

          Stefeun
          Smith lives very frugally. You may have noticed that those who live self-reliantly and frugally, including Jan Steinman, are a lot less concerned about financial collapse. They tend to see the collapse of Global Financial Capitalism as an opportunity.

          Not arguing, just observing….Don Stewart

          • Stefeun says:

            OK Don,
            I understand and don’t blame anyone.
            Just said that, in my opinion, the “wave” will be much bigger than most of us are expecting, or can imagine. Maybe I’m wrong.

          • Fast Eddy says:

            Don – those who welcome the collapse are the true doomsters… they tend to be extremely bitter about the way the world has turned out….

            I used to be pretty irritated/frustrated with the state of affairs — American Idol, Facebook, shopping, Paris Hilton, endless war, torture, resource depletion, pollution and so on

            But then I realized that we did not choose to end up like this … our DNA made these choices for us… we want to survive as a species — combine that with our big brains and you get things like the Green Revolution .. the Industrial Revolution ….

            No goddamn way was our DNA going to lose a bet with to Malthus!

            Of course the supreme irony is that our DNA —in the battle to prevent a die-off is about to have a joke played on it — no die off — probable extinction …. heheheheh… too bad for you DNA…

            If the hard core doomsters would realize that:

            1. this was always meant to be
            2. living frugally is totally pointless on every single level (unless of course you haven’t the means to live any differently)
            3. that hoping for the end of BAU is almost certainly a death wish — or at least a one way ticket to Haiti on steroids…

            They would not doubt be more concerned about the end of BAU — and they would be far less frustrated with the state of affairs and realize there is no sense in trying to fill in the ocean with a tea spoon.

            I would note that almost all people on the planet don’t buy into the collapse doomsday theory — I’d suggest that is because they understand what collapse means — it is unthinkable to them because they understand there is no koombaya…. there is only death — or Haiti on steroids.

            • Don Stewart says:

              Fast Eddy
              You need to read the section of Capra and Luisi titled ‘You Are Not Your DNA’.
              Don Stewart

            • Fast Eddy says:

              You’ll need to convince me otherwise…. because the facts as I see them overwhelming indicate that we are no different than any other organisms in terms of our behaviour …

              Except for the fact that in our quest to survive and procreate we have been able to figure out ways to manipulate our environment to provide food for 7.3 billion people.

            • Don Stewart says:

              Fast Eddy
              You need to look at the science.
              Don Stewart

            • Lizzy says:

              Actually, FE, I have a theory about DNA. I think DNA was the first form of “life” on earth (too complicated and robust for it to have been developed by chance); and it’s alien in origin.

            • Stefeun says:

              Lizzy,
              and who would have made these alien entities that have produced the DNA and brought it on Earth?

              Water, plus some C and N atoms, and storm-lightnings, are sufficient to synthetize amino-acids (the bricks of the living), as Stanley Miller has shown in his famous 1953 experiment:
              “Stanley Lloyd Miller (March 7, 1930 – May 20, 2007) was a Jewish-American chemist who made landmark experiments in the origin of life by demonstrating that a wide range of vital organic compounds can be synthesized by fairly simple chemical processes from inorganic substances.”
              https://en.m.wikipedia.org/wiki/Stanley_Miller
              You can also google “prebiotic chemistry” for more detailed info.

              Time was also required, many trials and failures before reaching an arrangement robust enough and that could replicate safely. On Earth, it took almost one billion years (1,000,000,000) for the first and most simple form of what can be called “life” to appear.

            • Jan Steinman
              Jan Steinman says:

              Except that DNA probably evolved from RNA as a copy-integrity mechanism, and RNA probably assembled from amino acids.

              DNA itself doesn’t last very long. I buy your theory that amino acids, delivered by comets, brought alien life to Earth. But it’s pretty doubtful that DNA could have survived an interstellar journey.

            • Fast Eddy says:

              How about this …. perhaps the other planets — which are basically burned out rocks whizzing about the universe …. were at one time inhabitable by some sort of life form…. no necessarily earth clones… but worlds capable of supporting life…

              DNA was the building block of that each type of life form that established itself on that planet … if the planet was hot then DNA manifested itself in a life form that could deal with that… if the planet had some gas other than oxygen the life from that emerged could live in that environment and so on…

              Perhaps earth is just the latest planet that DNA has latched onto ….and when DNA is finished with the earth it will move on….

              I can see a movie here…. or at least a Star Trek episode….

            • Lizzy says:

              Yep, Stefeun, he was a very clever man. I’m not that clever, yet as far as I can see, no-one has definitively shown the origins of life. The building blocks, yes, they can be constructed, but life? You ask who developed and brought DNA to the earth? Don’t know! My ‘theory’ is not fully formed. I should have said “I have a thought, an idea” not a theory.

            • Stefeun says:

              Lizzy,
              I’m not very clever either, so I’ve got to make do with simpe ideas: a flow of energy is able to create some organized structures. Some of these structures -strangely- have the ability to replicate. The ones that thrive are those that dissipate the most energy and whose resilience is improved along time. Complexification is a very gradual process.

              My point is: it could work, so it probably did.
              And Life as we have it today is simply a combination of what has worked better so far. What didn’t work, or no longer worked, disappeared. Could have been very different under other conditions, and is likely to be quite different in near future.

            • 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.
              Gail Tverberg says:

              When a lot of energy us available, a lot of self-organization seems to go on. This is related to dissipative structures. A hurricane is an example, but so is life of all forms.

            • urbangdl says:

              I agree with Don, is not just about DNA. there are logic premises to challenge that perspective, however they do not offer an straight answer either.

    • Yes, Donald, that was a very to the point review of what is going on here.
      Thanks!

    • kulmthestatusquo
      kulmthestatusquo says:

      Most of them are owned by the top 1% of the world.

      They won’t rock the boat.

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