How Economic Growth Fails

We all know generally how today’s economy works:

Figure 1

Figure 1

Our economy is a networked system. I have illustrated it as being similar to a child’s building toy. Ever-larger structures can be built by adding more businesses and consumers, and by using resources of various kinds to produce an increasing quantity of goods and services.

Figure 2. Dome constructed using Leonardo Sticks

Figure 2. Dome constructed using Leonardo Sticks

There is no overall direction to the system, so the system is said to be “self-organizing.”

The economy operates within a finite world, so at some point, a problem of diminishing returns develops. In other words, it takes more and more effort (human labor and use of resources) to produce a given quantity of oil or food, or fresh water, or other desirable products. The problem of slowing economic growth is very closely related to the question: How can the limits we are reaching be expected to play out in a finite world? Many people imagine that we will “run out” of some necessary resource, such as oil, but I see the situation differently. Let me explain a few issues that may not be obvious.

1. Our economy is like a pump that works increasingly slowly over time, as diminishing returns and other adverse influences affect its operation. Eventually, it is likely to stop.

As nearly as I can tell, the way economic growth occurs (and stops taking place) is as summarized in Figure 3.

Figure 3. Overview of our economic predicament

Figure 3. Overview of our economic predicament

As long as (a) energy and other resources are cheap, (b) debt is readily available, and (c) “overhead” in the form of payments for government services, business overhead, and interest payments on debt are low, the pump can continue working as normal. As various parts of the pump “gum up,” the economic growth pump slows down. It is likely to eventually stop, once it becomes too difficult to repay debt with interest with the meager level of economic growth achieved.

Commodity prices are also likely to drop too low. This happens because the wages of workers drop so low that they cannot afford to buy expensive products such as cars and new homes. Growing purchases of products such as these are a big part of what keep the economic pump operating.

Let me explain some of the pieces of the problem that give rise to the slowing economic growth pump, and the difficulties it encounters as it slows down.

2. “Promises,” such as government pension programs for the elderly, and promises to repair existing roads, tend to get bigger and bigger over time.

We can understand how promises tend to grow by looking at an example I constructed:

Figure 4

Figure 4

Suppose a pension program begins in 2010 and gradually adds more retirees. Or suppose a road repair program starts out in 2010 with more roads gradually being added.

The payments made each calendar year, whether for the pensions or the road repairs, are the totals at the bottom of the column. These totals keep growing, even if each retiree gets the same amount each year, and even if each road costs the same amount to repair each year. Admittedly, using 100 for all amounts is unrealistic–this is done to keep the math simple–but regardless of what numbers are used, the sum of the payments each calendar year tends to rise.

If we look at US government expenditures as a percentage of wages, the pattern is as we might expect: government spending rises significantly faster than wages.

Figure 5

Figure 5

3. At least partly because of growing “promises,” it is very difficult for an economy to shrink in size without collapsing.

We can think of many kinds of promises in addition to pensions and road repairs. One such promise is the promise by banks that they will allow depositors to withdraw funds held on deposit in the bank. Another kind of promise is the promise of debtors to repay debt with interest. All of these promises tend to grow in total quantity over time, at least in part because population grows.

If an economy shrinks, all of these promises become very difficult to fulfill. This is the problem that Greece and other countries in financial difficulty are encountering. There is a need to reduce some program or to sell something so that the calendar year payments are not too high, relative to revenue for the year. These payments really represent a flow of goods and services to the individuals to whom the promises were made. “Printing money” does not really substitute for goods and services: pensioners expect that they will be able to buy food, medicine and housing with their pensions; those withdrawing money from a bank expect that the money will actually buy goods and services needed to live on.

If there is a major problem with “making good” on promises, it is difficult to have an economy. It is hard to operate an economy without functioning bank accounts. Even cutting off pensions or road repairs becomes a problem.

4. The over-arching problem as we reach diminishing returns is that workers become less and less efficient at producing desired end products.

When an economy starts hitting diminishing returns, we find that the economy produces goods less and less efficiently. It takes more worker-hours and more resources of various kinds (for example, fracking sand and deep sea drilling equipment) to produce a barrel of oil, causing the cost of producing a barrel of oil to rise. Usually this trend is expressed as a rising cost of oil production:

Figure 6

Figure 6

Looked at a different way, the number of barrels of oil produced per worker starts decreasing (Figure 7). It is as if the worker is becoming less efficient. His wages should be reduced, based on his new lack of productivity.

Figure 7. Wages per worker in units of oil produced, corresponding to amounts shown in Figure 6.

Figure 7. Wages per worker in units of oil produced, corresponding to amounts shown in Figure 6.

There are many types of diminishing returns. They tend to lead to a smaller quantity of  end product per worker. For example, if the population of a country increases, but arable land stays the same, adding more and more farmers to a plot of arable land eventually leads to less food produced on average per farmer. (Some might say that each additional farmer adds less marginal production.) Similarly, mining ores of lower and lower concentration leads to a need to separate more and more waste material from the desired mineral, leading to less mineral production per worker.

As another example, if a community finds itself short of fresh water, it may need to begin using desalination to produce water, instead of simply using relatively inexpensive wells. The result is a steep rise in the cost of water produced, not too different from the steep rise in the cost of oil in Figure 6. Viewed in terms of the amount of fresh water produced by each worker, the return per worker falls, as happens in Figure 7.

If workers get paid for their work, the logical result of diminishing returns is that after a point, workers should get paid less, because what they are producing as an end product is diminishing in quantity. Workers may be making more intermediate products (such as desalination plants or fracking sand), but these are not the end products people want (such as fresh water, electricity, or oil).

In some sense, fighting pollution leads to another form of diminishing returns with respect to human labor. In this case, increasing human effort and other resources are used to produce pollution control equipment and to produce workarounds, such as alternative higher-priced fuels. Again, wages per worker are expected to decline. This happens because, on average, each worker produces less of the desired end product, such as electricity.

Admittedly, less pollution, such as less smog, is desired as well. However, if it is necessary to pay extra for this service, the effect is recessionary because workers must cut back on purchasing discretionary goods and services in order to have sufficient funds available to purchase the higher-priced electricity. Thus, fighting pollution using approaches that raise the price of end products is part of what slows the world’s economic growth pump.

5. When civilizations collapsed in the past, a major cause was diminishing returns leading to declining wages for non-elite workers.

We know how diminishing returns played out in a number of past civilizations based on the analysis conducted by Peter Turchin and Surgey Nefedov for their book Secular Cycles. They found that typically a period of rapid population growth took place after some change occurred that increased the total amount of food an economy could provide. Perhaps trees were cut down on a large plot of land, or irrigation was introduced, or a war led to the availability of land previously farmed by others. When the original small population encountered the newly available arable land, rapid growth became possible for a while–very often, for well over 100 years.

At some point, the carrying capacity of the land was reached. Then the familiar problem of diminishing returns on human labor occurred: adding more farmers to the plot of land didn’t increase food production proportionately. Instead, the arable land needed to be subdivided into smaller plots to accommodate more farmers. Or the new farmers could only be “assistants,” without ownership of land, and received much lower wages, or went to work for the church, again at low wages. The net result was that at least part of the workers started receiving much lower wages.

One contributing factor to collapses was the fact that required tax levels tended to grow over time. Some reasons for this growth in tax levels are described in Items (2) and (3) above. Furthermore, the pressure of growing population meant that groups needed access to more arable land–a problem that might be overcome by a larger army. Paying for such an army would require higher taxes. Joseph Tainter in The Collapse of Complex Societies writes about the problem of “growing complexity,” with rising population. This, too, might give rise to the need for more government services.

Raising taxes became a problem when wages for much of the population were stagnating or falling because of diminishing returns. If taxes were raised too much, low-paid workers found themselves unable to buy enough food. In their weakened condition, they tended to succumb to epidemics. If taxes couldn’t be raised enough, governments had different problems, such as not being able to support a large enough army to fend off attacks by neighboring armies.

6. The United States now has a problem with declining wages of non-elite workers, not too different from the problem experienced by civilizations that collapsed in the past.

Figure 8 shows that on an inflation-adjusted basis, US Median Family Income has been falling in recent years. In fact, the latest value is between the 1996 and 1997 value. In a sense, this represents diminishing returns on human labor, just as has occurred with agricultural civilizations that collapsed.

Figure 8

Figure 8

Wages have been falling to a much greater extent among young people in the United States. Figure 9 from a report by Dettling and Hsu in the Federal Reserve Bank of St. Louis Review shows that median wages have dropped dramatically since 1989, both for young people living with parents and for young people living independently. To make matters worse, the report also indicates that the share of young people living with parents has risen during the same period.

Figure 9

Figure 9

In some sense, the loss of efficiency of the economy (or diminishing returns) outlined in Item 4 is making its way through to wages. The wages of young people are especially affected.

7. Demand for goods and services comes from what workers can afford. If their wages are low, demand for goods of many kinds, including commodities, is likely to fall.

There are many rich people in the world, but most of their wealth sits around in bank accounts, or in ownership of shares of stock, or in ownership of land, or in other kinds of investments. They use only a small share of their wealth to buy food, cars, and homes. Their wealth has relatively little impact on commodity prices. In contrast, the many non-elite workers in the world tend to spend a much larger share of their incomes on food, homes, and cars. When non-elite workers cut back on major purchases, it is likely to affect total purchases of goods like homes and cars. Other related goods, such as gasoline, home heating fuel, and the building of new roads, are likely to be affected as well.

When the demand for finished goods falls, the demand for the commodities to produce these finished goods falls. Because of these issues, when the wages of non-elite workers fall, we should expect downward pressure on commodity prices. Commodity prices may fall back to a more affordable range, after they have spent several years at higher levels, as has happened recently.

There is a common belief that as we approach limits, the price of oil and other commodities will spike. I doubt that this can happen for any extended period. Instead, the low wages of non-elite workers will tend to hold commodity prices down. Because of this issue, we should expect predominately low oil prices ahead, despite the continuing pressure of rising costs of production because of diminishing returns.

The mismatch between the rising cost of commodity production and continued low commodity prices is likely to lead to a sharp drop in the supply of many types of commodities. Thus, the slowing operation of our economic growth “pump” is likely to lead to a situation where the production of commodities, including oil, falls because of low prices, not high prices. 

8. What is needed to raise the productivity of workers is a rising quantity of energy to leverage human labor. Such energy supplies are affordable only if the price of energy products is very low.

The amount a person can produce reflects a combination of his own labor and the resource he has to work with. If energy products are available, they act like energy slaves. With their assistance, humans can do things that they could not do otherwise–move goods long distances, quickly; operate machines (including computers) that can help a worker do tasks better and more quickly; and communicate long distance by means of the telephone or Internet. While technology plays a major role in making energy products useful, the ultimate benefit comes from the energy products themselves.

We have been using a rising amount of energy products since our hunter-gatherer days (Figure 10). In fact, the use of energy products seems to distinguish humans from other animals.

Figure 10

Figure 10

Clearly, cheaper is better when it comes to the affordability of energy products since available money goes further. If gasoline costs $5 per gallon, a worker with $100 can buy 20 gallons. If gasoline costs $2 per gallon, a worker with $100 can buy 50 gallons.

In recent years, with the high prices of energy products, world growth in energy consumption has lagged. It should not be surprising that world economic growth seems to be lagging during the same period.

Figure 11. Three year average growth rate in world energy consumption and in GDP. World energy consumption based on BP Review of World Energy, 2015 data; real GDP from USDA in 2010$.

Figure 11. Three year average growth rate in world energy consumption and in GDP. World energy consumption based on BP Review of World Energy, 2015 data; real GDP from USDA in 2010$.

In fact, Figure 11 seems to indicate that changes in energy consumption precede changes in world economic growth, strongly suggesting that growth in energy consumption is instrumental in raising economic growth. The recent steep drop in energy consumption suggests that the world is approaching another major recession, but this has not yet been recognized in international data.

9. One way of describing our current problem is by saying that the economy cannot live with the high commodity prices we have been experiencing in recent years and is resetting to a lower level that is affordable. This reset is related to low net energy production. 

If oil and other commodities could be produced more cheaply, they would be more affordable. We would not have the economic problems we have today. Energy use in Figure 11 could be rising more quickly, and that would help GDP grow faster. If GDP were growing faster, we would have more funds available for many purposes, including funding government programs, repaying debt with interest, and paying the wages of non-elite workers. We perhaps would not have the problem of falling wages of non-elite workers.

The current “fad” for solving our energy problem is to mandate the use of intermittent renewables, such as wind and solar PV. A major problem with this approach is that such renewables make the cost of electricity production rise even faster, exacerbating our problems, instead of making them better.

Figure 12 by Euan Mearns

Figure 12 by Euan Means. Installed capacity is in Watts (W) per capita.

To make matters worse:

  1. The way our economy works, energy flows in a given year (not on a net present value basis) are what are important, because this is the way we use energy to make goods such as foods, metals, and homes. The energy flows of renewables are very much front ended. Thus, the disparity in energy use on an energy flow basis is likely to be greater than reflected in Figure 12.
  2. What we really need from energy products is the ability to stimulate the economy in a way that adds tax revenue. Either the energy products must produce high tax revenue directly, or they must indirectly produce high tax revenue by stimulating demand for new cheaper goods, produced with the new inexpensive form of energy. This is what I think of as “adding net energy”. Wind and solar PV clearly do the opposite. Thus, they behave like “energy sinks,” rather than as products that add net energy.
  3. Modern renewables that are connected to the grid can be expected to stop working when the grid stops working. This may not be too far in the future because we need oil to operate the trucks and helicopters that maintain the electric grid. If this problem were considered in the pricing of electricity from wind and solar PV, their required prices would be higher.

As I see it, one of the major roles of energy products is to support the growing overhead of our economy; this is what the discussion about the need for “net energy” is about. Thus, we need energy products that are cheap enough that they can be taxed heavily now, and still produce an adequate profit for those producing the energy products. If we find ourselves mostly with energy products that are producing cash flow losses for their producers, as seems to be the case today, this is an indication that we have a problem. We don’t have enough “net energy” to run our current economy.

10. Debt and other paper assets are likely to “have a problem” as the economic growth pump falters and stops.

Debt is absolutely essential to making an economy work because it allows businesses to “bring forward” future profits, so that they don’t have to accumulate a high level of savings prior to building a new factory or opening a new mine. Debt also allows potential buyers of expensive products such as homes, cars, and factories to pay for them on an affordable monthly payment plan. Because more buyers can afford finished goods with the use of debt, debt raises the demand for goods, and indirectly raises the prices of commodities. With these higher prices, a greater quantity of commodity extraction is encouraged.

At some point, it becomes very difficult to support the very large amount of debt outstanding. In part, this happens because of the large accumulated amount of debt. Falling inflation-adjusted wages of rank and file workers add to the problem. In such a situation, interest rates need to be kept very low, or it becomes impossible to repay debt with interest. Even with continued low rates, defaults can eventually be expected.

Once debt defaults begin, commodity prices are likely to drop even further. Such a drop is likely to lead to even more loan defaults, especially by commodity producers (such as oil companies) and commodity exporters. Prices of equities can be expected to drop as well, because the problems of the debt system will affect businesses of all kinds.

Once debtors start defaulting, it will become very difficult to keep financial institutions from collapsing. International trade is likely to become a problem because financial institutions are needed to provide debt-based financial guarantees for long-distance transactions.

Other Information on this Subject

I have written previously and talked about some of the issues raised in this post.

An academic article I wrote that is directly related is Oil Supply Limits and the Continuing Financial Crisis. It was published in the journal Energy in 2012. Scopus shows 30 articles citing this paper.

A series of talks and videos that I conducted in China are now available on this website. These are some links to my presentations:

1. Overview of Energy Modeling Problem

2 Importance of Energy

3 Overview of a Networked Economy

4 Economic Growth – Diminishing Returns

5 Government costs and debt

6. Competition and Resource Exhaustion

7. Twelve Principles of Energy and the Economy

8. Renewable Energy

Videos of these presentations are also available on my Presentations/Podcasts page.

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.
This entry was posted in Financial Implications and tagged , , , , , . Bookmark the permalink.

1,045 Responses to How Economic Growth Fails

  1. Stilgar Wilcox says:

    Gail, maybe there should be a new open thread started to discuss the latest amazing news of stocks worldwide dumping and price of WTI dropping into high 30’s. I think people have gotten too confused with this thread regarding where posts are popping up to do much here. Anyway, it’s maybe an easier way to connect posters during some very interesting news.

    • Fast Eddy says:

      Or maybe what needs to be done is that we add a thumbs up thumbs down option on all posts… if someone get’s too many thumbs down their posting privileges are revoked — and they get to watch from the sidelines…

      The amount of nonsensical posts appearing on FW are breaking world records of recent….

      • Stilgar Wilcox says:

        The non-linear timing of posts on this thread seems nonsensical. I now have to work my way back in history to get the latest postings. It’s like being in a dark cave with a headlamp that is slowly losing power. My concern is other people will lose interest in writing posts at a time when world news is getting very interesting to say the least. I mean, hello China. What the heck is going on there? Their stock market is dropping off a cliff. The US stock market dove in 5 minutes after the opening bell today down 1,000 points, then went back up during trading to just down 159 pts. then dropped to 580 down for the day. That’s crazy stuff. WTI is now at a 38 dollar handle. Huh? Medic, medic!!!

        • Fast Eddy says:

          I pick up alerts for new posts and they are presented in order when I click to FW…

          Re: stock markets —- the central banks and their plunge protection teams are the market … if it drops too much they scream in with money to buy driving the market the other way —- then the market tanks again and in they charge — rinse repeat…

          Not sure why China keeps going down … the PBOC has a bottomless pocket and do exactly what the ECB and Fed are doing….

          • Greg Machala says:

            Like you said earlier and I agree that the owners of the fed are letting it fall. They have got a plan ready to roll out and are going to close the door on the runaway stock markets. What this new plan entails I can imagine.

        • “The non-linear timing of posts on this thread seems nonsensical. I now have to work my way back in history to get the latest postings. ”

          I really don’t understand why you do not simply use e-mail so you only see the new posts, which includes a quote and the name of the person the post is in reply to.

          • Stilgar Wilcox says:

            Because MK, I have enough email to deal with for our two businesses. Also, I’m not on here all the time so it would amount to going through a ton of emails – not for me. I’d rather just rely on the website to be chronologically aligned. But i’ll deal with it as it is if that’s the consensus. If it’s the system most happily embrace, then fine – ‘when in Rome’ as they say. Speaking of which we are going to Italy in the Spring! Rome, Naples, Pompeii, Florence and Venice. 16 days – 2 for travel and 14 for the sights and sounds via high speed train to see the Medici, Vatican, Michaelangelo, DaVinci, Reubens, Renassaince, etc. My wife is a Sculptor & painter so she will be head over heals enjoying the great art.

            • James says:

              It is quite annoying. There seems to a break where everything got posted at the end of all the threads. I believe what’s going on was what Gail suggested earlier; we exceeded the ‘Reply’ limits on a particular thread and everything after that spilled over to the end of threads to prevent the right column limits from exceeding limits (equally annoying if you’ve watched some blogs go virtually vertical in their replies). Perhaps that means we just talk too much? LOL? Anybody? Anybody?

            • Or I should write more posts, so you have more things to reply to.

  2. Ann says:

    I’m going to add this comment to the end of the post just to see where it ends up.

    You’re welcome, James. Eat that fermented food goodness! If you really want your mind blown, read “The Art of Fermentation” by Sandor Elix Katz. I can’t read very much of the book at one time because I run right out and pick more veggies and put them in a gallon jar to ferment. I have shredded kohlrabi and apples in one jar, shredded beets and red cabbage (with orange peel and cinnamon) in another jar, and a simple cabbage pickle in a Japanese pickle press. Plus all my dill pickles in crocks and sun pickles in litre jars.

    All of the above should be in the root cellar, but because it’s been so f’ing hot, my root cellar isn’t cold enough. So all three of my fridges are packed with crocks, jars and presses of fermenting food. I’m going to do some salsa tomorrow because my tomatoes have gone nuts in this heat.

    Now, back to the financial situation. Gail, can you please explain to me how they can bail out the stock market and keep it from crashing, over and over again? Can they keep doing this forever?

    • madflower69 says:

      “Now, back to the financial situation. Gail, can you please explain to me how they can bail out the stock market and keep it from crashing, over and over again? Can they keep doing this forever?”

      If you print money, you can do it infinitely.. If your money has to have some value then no. The -other- way is how the Russians handled their currency crisis, and the central bank bought up all the cheap currency to raise the price of their currency. Since it went back up, they actually made money on the deal.

      • Fast Eddy says:

        In theory because the central banks can print unlimited amounts of currency they could keep the stock market from collapsing …

        Which has to make you wonder — are the markets down because they want them down?

        However in the long run just keeping the stock markets up will not stop BAU from collapsing … in theory you could have record highs in the markets for so long as the electricity and computers that operate the stock market remain operational

        Meanwhile on the streets you could have riots and mass famine…

        The stock market is not the economy.

        • Greg Machala says:

          “Which has to make you wonder — are the markets down because they want them down?” That is my thinking exactly. Something is about to happen folks. Quite right, the stock market is not the economy. But, it is used as a proxy by the media as a barometer of the economy. This tells me the owners of the fed are ready to tell the people via the mass media that something is amiss. The green shoots are dying. What card they play next, I have no idea. But, I venture a guess that it will be more desperate that bank bailouts.

    • James says:

      Thanks Ann! Reading all I can on fermentation now, and re-exploring the Blood Type Diet, which has always intrigued and worked for me in the past. Question, does a “quick start” in the microwave (in my case, about a quart or so of cabbage, carrots, and onions, waved for 5 minutes or so on HI) preclude, inhibit, work ok, or accelerate fermentation if the resulting mix is refrigerated after sitting on the counter to cool overnight? In my experience, this method has worked very well for providing very tasty mixtures, albeit admittedly, only partially fermented, on a quick and continuous basis. What do you think?

      As to QE and ZIRP, yep, theoretically at least, they can do it forever. But like others have said already, it will certainly debase the currency over time. As Gail has said over and over again, monetary currencies are nothing more than units of measure for energy, whether human, natural/renewable, fossil fuel, nuclear, or whatever. When the energy dries up, so will the monetary currency, one way or another. We’re currently living in the “extend and pretend” phase of human history, where some of us can can continue to extend our profligate energy intensive lifestyles by pretending that monetary limits don’t exist. Like all such human endeavors based on pure foolishness and avarice, it won’t end well at all for anyone involved, but don’t YOU DARE repeat that in polite company!

      Anyway! Thanks so much for all your help Ann! You are TRUE internet community!

      James

  3. Ed_Pell says:

    Oil is too important to be left to the politicians. It is a military matter now. No more weak kneed banker games around oil, now solutions from people who know how to build. 😉

    Before the nasty part there will be some knee slapping funny lines.

  4. Ed_Pell says:

    One up side to being a doomer, the stock markets going way down is non-event, just a yawn you ain’t seen nothing yet.

    • Fast Eddy says:

      The sheeple will see this as just another cycle — perhaps they will believe it is a very extreme cycle — but still just a cycle — things will get better at some point.

      Once the markets capitulate — BAU ends — things will descend rapidly into The Holocaust — there will be no recovery…

      They will likely understand that when the petrol stations and grocery stores close… the ATMS stop dispensing cash — and the electricity goes off.

      There will be a massive WTF moment of surprise —kinda like this

  5. Pingback: Where We Are | More Crows than Eagles

  6. eARTH says:

    oops…

    Key Points

    – Wall Street slides as Dow sheds 500 points

    – FTSE 100 sinks 4.2%, down 260 points

    -Shanghai sheds 8.5%, Hong Kong down 5.2%

    -London mining and oil stocks hammered

    http://www.bbc.co.uk/news/live/business-34002662

  7. ian page says:

    Thanks as always for a tight clear piece.

    High prices for electricity oil and presumably gas result in the diminishing returns, economic slump you describe, We know what sort of prices are “high” , presumably prices in the past were “low” enough . Is there any idea as to what sort of price ranges would allow wages to be high and producers debt to be sustainable, or have we passed some point of no return and is there now no price low enough?

    Ian

  8. Stilgar Wilcox says:

    “It is an old saying in commodities that the best cure for low prices is low prices. Market participants are now asking how much further prices need to fall and how long they need to stay there to bring supply and demand back in to balance and halt the price declines across a broad swathe of different raw materials markets. The fear is that just as the upside of the supercycle brought an unprecedented and long period of historical price highs, the plunge to the downside is shaping up to be equally dramatic and may yet have a way to run.”

    • Fast Eddy says:

      I don’t think it matters how low commodity prices go — there will be no snap back…

      That is because real wages have plummeted — labour participation has collapsed — what jobs are created are part time and low paid —- people are up to their ears in debt — and so are countries and corporations…

      In the immortal words of Roberto Duran… the consumer is saying ‘no mas’

      The deflationary collapse that has been expected — is beginning.

    • The saying, “The best cure for low prices is low prices,” doesn’t apply when we are hitting limits to growth, unless you consider rapid population reduction a good solution. Low prices will lead to collapsed production, currency dislocations, and massive derivative failures. Either banks will fail, or deposits of those having accounts at banks will be written down. Either effect will be very deflationary, causing more defaults. Unless bankers can figure another way around our problem, we may be reaching the end of the road.

      • Stilgar Wilcox says:

        “Unless bankers can figure another way around our problem, we may be reaching the end of the road.”

        QE4? Might as well drink some more Koolaid while the trough still exists to pour more of the funny money into.

        • Ed_Pell says:

          If you want to fight deflation do QE4 as a give away to the workers a completely inflationary move. Say $10,000 per worker. That is only about 1.4 trillion dollars cheap.

          • Fast Eddy says:

            QE has never stopped…. it has just shifted from country to country … the money that is printed does not all stay in that country … it diffuses throughout the global economy….

            So I am not sure if another big round of printing in the US will have any impact… if they do go ahead — and nothing happens — then the fat lady will appear

          • John Doyle says:

            IMO, there is another way round the problem and it is already ready to become operable. It just needs a CB given the word to go for it. Inflation will be of little consequence as it will be inflating a declining economy, so the Fed can “print” the funds required to keep money in peoples pockets, a guaranteed income sufficient to keep food on the table, etc. There would need to be a whole raft of other needs catered for and the government can do it. Or maybe, as mentioned here, the military can take over the reins if the politicians prove useless.

            • Greg Machala says:

              I feel there is one last Hail-Mary pass left in the owners of the fed. I am not sure what it is; but, could be some direct stimulus to people’s pockets. It could be martial law. It could be a WWIII. A depopulation of some kind. I don’t know. But, I don’t think we have seen the last straw yet.

            • You are probably right. Perhaps QE infinity, as well.

  9. Fast Eddy says:

    “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.” – Ludwig von Mises

  10. Stilgar Wilcox says:

    This is a great website, but it needs a techie to straighten out whatever ails it so the posts are sequential.

    http://www.bloomberg.com/markets/stocks/futures

    Meanwhile, last I looked at stock futures for tomorrow at the above link, the DOW was projected to go down 450 points! But there is still a lot of time before markets open. Either the stock market will rally, go flat or dump big – the potential is huge. The Dow lost 530 points on Friday (usually an optimistic buy day) and 1100 points last week. Those are huge drops and we will see if the balloon of overzealous enthusiasm is over or if it can muster yet another stratospheric rise. Will Yellen raise interest rates in September in spite of stock market corrections or go the other way and make a motion to the bullpen for QE4? Should be extremely entertaining nonetheless. And what will happen to oil price? Will WTI drop into the 30’s tomorrow if stocks continue their epic downward slide? Container shipping rates are dumping massively, while other commodities besides oil are also continuing to drop. Hold on to your butts!

    • Fast Eddy says:

      The Plunge Protection team is warming up — big day ahead of them….

      • Ed_Pell says:

        And you said people don’t help people. There is the plunge protection team help all us little folks keep our retirement going. 😉

        • Fast Eddy says:

          I didn’t say people don’t help people — it is obviously better to join together and cooperate to attack and murder and pillage others…. you wouldn’t get very far as an individual trying to fight against an army of 10,000….

          The army of 10,000 and it’s hangers on have rules and police to ensure that they continue to cooperate of course….

    • Unfortunately, the “works” of the site are all on WordPress’s site, which is hard to change.

  11. MG says:

    Is something happening with the atmosphere or the people risk more and more?

    Planes crash, not far from my home, seven people dead:

    http://www.independent.co.uk/news/world/europe/slovakia-plane-crash-parachutists-survive-fatal-midair-collision-by-jumping-from-aircraft-10463442.html

    Shoreham plane crash: Seven dead after Hawker Hunter hits cars:

    http://www.bbc.com/news/uk-34027260

    Two planes crash at Swiss airshow:

    http://www.theguardian.com/world/2015/aug/23/two-planes-crash-at-swiss-airshow-basel

    • Adam says:

      I noticed that too. And there are other types of accidents elsewhere: the explosion in China. A conspiracy by the gods?

  12. MG says:

    The era of the beginning of the LIttle Ice Age (https://en.wikipedia.org/wiki/Little_Ice_Age) gave rise not only to protestantism, but also to one another interesting personality – Jakob Fugger:

    The Richest Man Who Ever Lived
    The Life and Times of Jacob Fugger

    http://books.simonandschuster.com/The-Richest-Man-Who-Ever-Lived/Greg-Steinmetz/9781451688559

    “As one of the leading bankers in Europe and because of his close relationship to the Vatican Jakob Fugger was also engaged in the sale of indulgences.

    For the acquisition of two archdioceses in 1515 Fugger provided a loan of 48.000 guilders to Albrecht von Brandenburg, since 1512 archbishop of Magdeburg and since 1514 also archbishop of Mainz [conflict with Albert of Mainz article which says 21000 ducats]. To repay his debt Albrecht ceded his part of the indulgence granted by Pope Leo X for the construction of St. Peter’s Basilica. Within the scope of the total economic scale of the Fugger business however the sale of indulgences was an insignificant banking operation.[30] Nevertheless it caused considerable potential for conflict due to its moral dubiousness, and its role in the advancement of the Reformation in Germany. The conduct of the Dominican Johann Tetzel who was heavily involved in the sale of indulgences was one of the causes that motivated Martin Luther to formulate his 95 Theses. 1520 Luther wrote in his letter “To the Christian Nobility of the German Nation” (German: An den christlichen Adel deutscher Nation) “Fugger and similar people really need to be kept in check” (German: Man müsste wirklich dem Fugger und dergleichen Gesellschaft einen Zaum ins Maul legen).[31]”

    (Source: https://en.wikipedia.org/wiki/Jakob_Fugger)

    “4.1 Money, Wealth and Modern Banking

    The birth of modern banking took roots over a century or more after Martin Luther broke with the Catholic ban on interest as usury, and his followers questioned the Church`s ban on lending for interest and also the dominance of lending by weatlhy individuals. By the time Pope Benedict, in 1751, gave the Papal ruling (in 1950 Pope Pius XII confirmed the earlies ruling more explicitly), dissident bishops in the Germanic region had already given their tacit consent to lending activities to the Fuggers, based on interest. this blossomed later to become modern banking after a span of several centuries. The removal of the ban on interest was the regulatory framework that fostered the growth of modern banking! The basis of the lifting of the ban on interest was the reasoning by the Papacy that earnings made in the process of lending were described as honest earnings, as the people who do the banking are earning an honest reward for honest work. This was the context of the papal ruling that lifted the ban on interest.”

    (Source: https://books.google.sk/books?id=SkqoA9FfMCEC&pg=PA27&lpg=PA27&dq=fugger+%22ban+on+interest%22&source=bl&ots=aH4SM7-Uck&sig=f5Uu9Fx_fTzllwGWEDlpERGYn1s&hl=sk&sa=X&ved=0CDAQ6AEwA2oVChMIxunr48W_xwIVSD4UCh1W8QEm#v=onepage&q=fugger%20%22ban%20on%20interest%22&f=false)

    My question is: wasn’t the lifting the ban on interest also one of the key factors that accelerated the coal mining, i. e. the start of our modern fossil fuel era extraction?

    • MG says:

      The Little Ice Age and the Coming of the Anthropocene

      http://www.thearwh.org/journal/arwh_2-1_cho.pdf

      “Britain imported wood from Baltic countries and North America, but could not solve the problem of energy scarcity without coal. Fuel prices in the eighteenth century in Europe as well as East Asia increased much more than other prices.
      Consequently, the shortage of fuels became acute regionally and nationally as severe cold climates continued during the LIA. Western Europe and China began to depend heavily on coal as wood became increasingly scarce, while the United States maintained
      its dependency on wood because it had a sufficient supply of virgin and second-growth forests. In particular, the situation was much direr in Britain than other nation-states because of its small size and smaller supplies of wood. Britain entered “a period of energy crisis” in the seventeenth century.38”

    • Stefeun says:

      “My question is: wasn’t the lifting the ban on interest also one of the key factors that accelerated the coal mining, i. e. the start of our modern fossil fuel era extraction?”

      Very possible MG, at least makes much sense, and makes me think of same process about speculation (formerly banned by law) that happened in 2nd half of XIX century, and aimed to help the colonial expansion.

      For France it happened a little bit late, 1885, seemingly under the pressure of rising international trade. Here’s an excerpt from a speech by Jules Ferry before the assembly of deputees in July 1885:

      “In the economic field, I allowed myself to stand in front of you, some supporting figures, the considerations that justify colonial expansion policy with the view of this need more urgently felt by the industrial populations of Europe and especially our rich and industrious country of France, need opportunities.

      Is it something chimerical? Is this is a view of the future, or is it not a pressing need, and we can say the cry of our industrial population? I’m just making a general way what each of you, in different parts of France, is in a position to see.

      Yes, what is lacking in our great industry, the 1860 treaties have irrevocably directed in the way of exports, which lacks more and more are the opportunities.

      What for ? because at her side Germany covers barriers, because beyond the ocean to the United States of America have become excessively protectionist and protectionism; because not only these major markets, I do not say close, but narrow, become increasingly difficult to reach through our industrial products because these large states are starting to pour on our own markets products that don ‘ will not see before. It is not a truth only for agriculture, which has been so cruelly tried and for which competition is no longer limited to the circle of the great European States for which had been built the old economic theories; today you are aware, competition, the law of supply and demand, free trade, the influence of speculation, all that radiates in a circle that extends to the ends of the world. (Very good! Very good!)

      This is a great complication of great economic difficulty.”

      https://translate.google.fr/translate?sl=fr&tl=en&u=http%3A//www2.assemblee-nationale.fr/decouvrir-l-assemblee/histoire/grands-moments-d-eloquence/jules-ferry-1885-les-fondements-de-la-politique-coloniale-28-juillet-1885

      • MG says:

        “Fugger” connection with Slovakia:

        “In 1495, they established the Thurzo-Fugger company, which is sometimes regarded as the first capitalist company in Europe.[5]”

        https://en.wikipedia.org/wiki/Thurz%C3%B3_family

        • MG says:

          The era of the comming Little Ice Age shows that due to the contraction of agricultural production, the need for “selling the future” rose:

          “And Leo allowed the sale of indulgences not only for past sins as had been customary in the past but for future sins (so you could guarantee in advance that your planned affair would not lead to a painful afterlife).”

          http://remus.shidler.hawaii.edu/genes/Bavaria/augsburgfugger/home.htm

          …and the need of the financing via debt creation, too. So the debt creation was stimulated by lifting of the ban on interest, i.e. allowing the participation on the income from future growth by those, who can provide money.

          • MG says:

            The centre of Reformation in Slovakia was the town Levoča:

            http://www.slovenskyraj.sk/vylety/levoca/en.html

            Levoča is situated in the Spiš region that was the economic centre of Slovakia during Medieval Ages. But why? Because before the coming of Little Ice Age, this region had good agricultural conditions. When the conditions worsened, it was the Spiš region, where the Reformation was firstly accepted. After the comming of Little Ice Age, this region started loosing its importance. It became quite cold.

            The similar story as Switzerland, where, after the comming of Little Ice Age, the Switzerland accepted Protestantism and turned to watchmaking and later to banking:

            https://www.hautehorlogerie.org/en/encyclopaedia/history-of-watchmaking/

            “The basis of Switzerland’s banking system was laid by French protestants seeking asylum from persecution in the 16th to 18th centuries. Capital needs of industry and railway infrastructure boosted the banking sector. The unreached political stability of Switzerland’s direct democratic system after 1848 and the stability of the Swiss Franc against inflation was a major factor making the Swiss banking system one of the world’s leading repository for international accounts.”

            http://swiss-government-politics.all-about-switzerland.info/swiss-history-traditions.html

          • Very practical way of raising money for the church! And allowing interest to be paid no doubt raised the amount that could be borrowed.

  13. MG says:

    Drug diet fad emerges among elite (in North Korea)

    http://www.dailynk.com/english/read.php?cataId=nk01500&num=13381

    Another article:

    “Medical care in North Korea is purportedly free but having deteriorated at a rapid pace since the mid ‘90s, most people are required to pay for the medication that is available; in these cases, connections generally prove more advantageous than financial means alone.

    This, according to the source, has contributed to a swelling in opium and other drug users within the country.”

    Source: http://www.dailynk.com/english/read.php?num=13303&cataId=nk01500

  14. I think it was a great post by Don about the dead state economy threshold one the previous page: http://ourfiniteworld.com/2015/08/10/how-economic-growth-fails/comment-page-4/#comment-64572

    In similar vein, as we can observe situation up to this point of time and assume trends into the future, how the energy consumption will be prioritized, lets use this quite unsual yet revealing example of “caste system” in terms of individual claims on energy and propensity to waste resources.

    So for instance, as “independently rich” person (millions to burn per lifetime – not a tri/billionaire) you can pleasure burn say 200 Litres of aviation fuel per hour in something like this:
    http://en.wikipedia.org/wiki/Beechcraft_Duke

    Now, if you are of western/global lower middle class income you can easily pleasure burn in the same aircraft only few hundred watts per hour, depending on your virtual reality setup, very advanced today:
    https://www.youtube.com/watch?v=j6Y2PU6P-As

    However, if money are tight you are NOT of the loop, you can still pleasure burn by watching the above as local/downloaded HD video file on your sub 42″ led tv or even old small crt tube for say 60Watts per hour. And if your are even more ~poor (Syrian refugee level meets charity trinkets) you can still pleasure watch it in HD quality on your 3-4″ cheapo phone for single watts per hour !

    I hope that by now you have catched my drift, the future of next few decades will consist of tiny minority still consuming 100x-1000x-or more resources in comparison to empoverished lower classes glued to various synthethics, be it virtual reality, watching sports, soap TV etc.

    • The most important thing is that such societal development has been predicted by quality scifi novelist many many decades ago. Moreover, we can observe similar situation in “near collapsing” enviornments of past civilizations as well, namely this wedge in personal consumption per head of the elites and the wannabe emulating the rich escapism of the paupers.

    • Fast Eddy says:

      Exactly how can all of this exist in a world that will have no energy?

      • Hm, by the proclamations of panicking early peakers like Prof. Hirsch as of now (2014-15) there should be widespread fuel/energy crises. Did not happen. Simply, can kicking and virtual money helped bring forward future oil/gas production, in addition the system can nicely canibalize itself for a while as the core countries might happily continue in frivolous consumptions, while the rest of the world is pushed under the bus (Syria, Brazil, Africa..)

        In short, the ~similar process which took centuries in the case of the fall of western roman empire will take decades in our current setting. Those insanly and powerfully rich will ride this tiger until the very last second.

        We are NOT in a world of no energy yet!

        • Fast Eddy says:

          Oil is priced at around 40 bucks — and the cost of production is 100.

          We are very close to a world without energy.

          • I expect bailouts or nationalization of oil companies rather than just sitting back and letting oil production collapse. The common people need to feel the fear and pain of a crisis, so TPTB can do it; if they bailed them out early, there would be an uprising. They need to wait until the populace begs for it.

          • madflower69 says:

            Since you -know- we won’t have energy, you also -KNOW- you should be buying some SolarWorld solar panels, and a Chevy volt, or Tesla to go along with them! Don’t procrastinate do it now before we are out!! When the crash comes it will be too late!

            • Ha Ha Ha Ha … you are amazing comedic relief. Keep up the good work!

            • madflower69 says:

              You are the one predicting a doomsday scenario. Therefore, it should be of vital interest to your personal security. I am just helping you out.

            • You really think a Chevy Volt is the way to go if the system is about to collapse? If you are going with the “borrow as much as you can on unsecured credit right before the collapse and hope for the best” strategy, a Chevy Volt on zero down, zero interest, zero payments for five years plan might be something – perhaps better than nothing.

              I’d rather go with a truck powered by wood using a gasifier, then rely on solar PV and lithium batteries. Plus a decent truck would probably be much more practical in a world without road maintenance crews. Better towing capacity, too.

              I think totalitarianism is more likely than a fast collapse, personally.

            • madflower69 says:

              “You really think a Chevy Volt is the way to go if the system is about to collapse? ”

              If I thought the market was going to collapse, yeah. Although I would prefer a VIA Silverado. Then run the gasifier to charge the darn thing. Much easier.

              The battery issue is going to be solved but to get a super long life out of lion chemistry, you just need ultrapure lithium. There are about 20 distinctly different types being researched right now.
              The statement the oil guy said, about batteries being the holy grail, is absolutely correct.
              There is -big- money in finding a good, cheap, reliable battery chemistry. In otherwords, who want to be the next billionaire.

            • Jarle B says:

              madflower69: “The battery issue is going to be solved but to get a super long life out of lion chemistry, you just need ultrapure lithium. There are about 20 distinctly different types being researched right now.”

              Super batteries = fusion power; always right around the corner…

            • madflower69 says:

              “Super batteries = fusion power; always right around the corner…”
              Sort of. Batteries with new chemistries already exist in the lab. Getting them to scale to production is much harder, especially at a competitive cost. Which is slightly different then fusion, where it is theoretically possible. Within the last couple of years, fusion has managed to get as much energy out as they put in. One paper said they got more but it was almost nil.

            • Fast Eddy says:

              Is Musk making edible Teslas?

            • Jarle B says:

              madflower69: “Since you -know- we won’t have energy, you also -KNOW- you should be buying some SolarWorld solar panels, and a Chevy volt, or Tesla to go along with them!”

              I have a feeling there is smarter things to get if preparing for the end of BAU…

  15. Hirsty says:

    Just an observation really. At the moment here in the UK we are experiencing very low inflation, low unemployment, growing productivity (after a very long period of low productivity) and tax receipts are finally rising which offers some hope that the large deficit we have been contending with might finally begin to diminish. How long this goldilocks state of affairs might last is anyone’s guess. Clearly everything is not well with the economy, the prospect of an interest rate rise has just been put back until next year for instance.

    My own hunch is that the low oil price is giving the economy a boost. Now I guess a lot of the cheap oil on the market at the moment must be being produced at a loss and that state of affairs can’t continue… If however oil prices remain low as Gail suggests, what is to prevent our economy to continue to grow?

    • Stilgar Wilcox says:

      Hirsty, lower oil prices seems to only be helping the consumer at the pumps. Think about prices you pay for things – are they going down because the price of oil went down? Here in the US I buy rolls of bubble wrap for my business to ship things. At one time the price of bubble wrap (made from petro chemicals) went way up in price, but now that oil has dropped by half the price of bubble wrap has not gone down one penny. Prices for products and services if you’ll notice only go up and rarely retract to a lower price unless there is a lot of competition. Also governments need inflation to reduce their debt burden, so dropping prices is not encouraged. The world economy balloons to higher prices then expects wages to keep up. They aren’t here in the US. Are they in the UK? The fact the UK and the US have both put off raising interest rates for so long is a sure sign something is wrong. Be thankful for a brief period of positive news but don’t expect it to last. By all accounts of stock markets dropping, emerging market currencies falling and less money being borrowed (deleveraging) with container shipping price dropping, it appears we are on the cusp of another recession. The question is, what can central banks do this time to kick start another green shoots recovery? Another QE? But that’s a trap, right? Diminishing returns has no winners.

    • xabier says:

      Hirsty

      Hence the UK government over-riding, China-style, all planning restrictions at the regional level to push through fracking and destroy what is left of Britain’s beautiful landscapes.

      Regional planners are being told to approve any proposals, or the government will take control of the process.

      In a similar vein, and with the same objective of fostering illusory growth, building construction companies can do more or less whatever they want, with a ‘green and sustainable’ (ie provide a bicycle rack) fig leaf tacked on.

      The planing process has more or less ceased to be relevant. A friend of mine who was very senior in planning and worked for English Heritage is in despair.

      RIP UK, without a doubt. Well, it’s been a good run since 1700.

      Maybe we should hope to sink into the sea like Atlantis. Which will in large part happen as our poisoned oceans rise.

  16. Fast Eddy says:

    Jim Chanos’ Dire Prediction On China: “Whatever You Might Think, It’s Worse”

    “People are beginning to realize the Chinese government is not omnipotent and omniscient. In fact, like many of us, sometimes they don’t have a clue.”

    http://www.zerohedge.com/news/2015-08-22/jim-chanos-dire-prediction-china-whatever-you-might-think-its-worse

    • Rodster says:

      As I’ve said many times that the Chinese are no different than the western banksters.

      • John Doyle says:

        That’s because their economists are western educated and play the same falsehoods wherever they go!

        • Fast Eddy says:

          I knew of people when I lived in Bali who believed in the healing power of crystals … idiots the whole lot…

          Economics is a joke only because it assumes an infinite world — but if you want a world that does not involve living like a primitive man — then there are rules that you have to play by…

          There is no other way.

  17. Ed_Pell says:

    The world is full. It is time to have a world government that limits controls human population. Yes, without energy there will be no structures that large. So, it will be up to local government to control local population numbers. Through control of both reproduction and immigration.

    I look forward to seeing the first nation to make this official policy.

    • madflower69 says:

      You mean like China? I think they get 1 kid.

      • Ed_Pell says:

        My understanding is that this only worked in urban areas and that now money is a way around it.

        Yes, if not for the one child policy the level of pollution in Chin would be far worse assuming a stable economy and government were possible.

        The Chinese are now exporting their population problem by buying up farm land around the world and using it to ship food back to China. Maybe this is the aggressive version of population control. No control rather take resources from others using ones money. When poor people starve in Africa, South America there is no blow back.

        • John Doyle says:

          It’s what we used to call “colonialism” wealth creation by raiding the resources of other lands. Welcome to the 21st Century model. It’s not the only way, there is the corporate financial takeover model perfected by the IMF and World Bank too! It’s all disgusting!

          • Fast Eddy says:

            John – why is it disgusting?

            I assume you are in a western country i.e. on the winning side.

            What’s disgusting about living large ….. because as we know there is not enough to go around — and we don’t do sharing…. everyone wants the private jet, luxury houses and the 10m dollar annual salary for life….

            You could be on the losing side – born in Somalia or Nigeria or Afghanistan…. and you’d be more than happy to rip the heart out of someone on the winning side if it meant you could take what they have…

            Rejoice. You won the lottery.

            • John Doyle says:

              I’m just across the ditch from you, FE. and yes we won the lottery, big time. But what is disgusting is the types who love to shit in the nest, like those who raid third world countries for their assets and instead of spreading the wealth just concentrate it in the 0.1%. We are in the luckiest generation who ever lived but it’s not good enough for some and others are kept away from enjoying it deliberately. Don’t you agree such behavious is didgusting?

            • Fast Eddy says:

              Not at all. I see it as normal.

              History is essentially a very long list of the strong smashing the weak and pillaging them.

              And when the strong become weak – and the weak become strong — the same thing happens…

              Again and again and again and again …. it has always been and it will always be.

              I am not sure where this nonsense about sharing and being kind came from – I suppose the Jesus PR machine had a lot to do with it.

              It is total koombaya bullshit. You either kill or you will be killed — you either pillage or you will be pillaged.

              Screw the third world. You think for a moment these countries would not — if they could — swap places with any of the winners? They’d throw you under a bus in a heartbeat.

              If we didn’t pillage these weaklings someone else would — and then we would be next because if we don’t take we weaken ourselves.

              How the World Really Works

              – The luckiest, fittest, smartest, with the capability for ruthlessness survive – always have – always will

              – Resources are finite and therefore ownership is a zero sum game

              – The strong always take from the weak – if they do not then that is a sign of weakness and a competitor will take from the weak and will usurp the formerly strong dropping them into weakling status

              – Humans tend to group by clan or on a broader basis by nationality (strength in numbers bonded by culture) and they compete with others for resources

              – Competition has always existed (I want it all!) but it becomes fiercer when resources are not sufficient to support competing clans or nations

              – Tribal societies understand these dynamics because they cannot go to the grocery store for their food – so they are intimately aware of the daily battle to feed themselves and the competition for scare land and resources

              – Modern affluent societies do not recognize this dynamic because for them resources are not scarce – they have more than enough.

              – One of the main reasons that resources are not scarce in affluent societies is because they won the battle of the fittest (I would argue that luck is the precursor to all other advantages – affluent societies did not get that way because they started out smarter — rather they were lucky – and they parlayed that luck into advances in technology… including better war machines)

              – As we have observed throughout history the strong always trample the weak. Always. History has always been a battle to take more in the zero sum game. The goal is to take all if possible (if you end up in the gutter eating grass the response has been – better you than me – because I know you’d do the same to me)

              – And history demonstrates that the weak – given the opportunity – would turn the tables on the strong in a heartbeat. If they could they would beat the strong into submission and leave them bleeding in the streets and starving. As we see empire after empire after empire gets overthrown and a new power takes over. Was the US happy to share with Russia and vice versa? What about France and England? Nope. They wanted it all.

              – Many of us (including me) in the cushy western world appear not to understand what a villager in Somalia does – that our cushy lives are only possible because our leaders have recognized that the world is not a fair place — Koombaya Syndrome has no place in this world — Koombaya will get you a bullet in the back — or a one way trip to the slum.

              – Religious movements have attempted to change the course of human nature — telling us to share and get along — they have failed 100% – as expected. By rights we should be living in communes — Jesus was a communist was he not? We all know that this would never work. Because we want more. We want it all.

              – But in spite of our hypocrisy, we still have this mythical belief that mankind is capable of good – that we make mistakes along the way (a few genocides here, a few there… in order to steal the resources of an entire content so we can live the lives we live) — ultimately we believe we are flawed but decent. We are not. Absolutely not.

              – But our leaders — who see through this matrix of bullshit — realize that our cushy lives are based on us getting as much of the zero sum game as possible. That if they gave in to this wishy washy Koombaya BS we would all be living like Somalians.

              – Of course they cannot tell us what I am explaining here — that we must act ruthlessly because if we don’t someone else will — and that will be the end of our cushy lives. Because we are ‘moral’ — we believe we are decent – that if we could all get along and share and sing Koombaya the world would be wonderful. We do not accept their evil premises.

              – So they must lie to us. They must use propaganda to get us onside when they commit their acts of ruthlessness.

              – They cannot say: we are going to invade Iraq to ensure their oil is available so as to keep BAU operating (BAU which is our platform for global domination). The masses would rise against that making things difficult for the PTB who are only trying their best to ensure the hypocrites have their cushy lives and 3 buck gas (and of course so that the PTB continue to be able to afford their caviar and champagne) …. Because they know if the hypocrites had to pay more or took at lifestyle hit – they’d be seriously pissed off (and nobody wants to be a Somalian)

              – Which raises the question — are we fools for attacking the PTB when they attempt to throw out Putin and put in a stooge who will be willing to screw the Russian people so that we can continue to live large? When we know full well that Putin would do the same to us — and if not him someone more ruthless would come along and we’d be Somalians.

              – Should we be protesting and making it more difficult for our leaders to make sure we get to continue to lead our cushy lives? Or should we be following the example of the Spartans https://www.youtube.com/watch?v=eZeYVIWz99I

              – In a nutshell are our interests as part of the western culture not completely in line with those of our leaders – i.e. if they fail we fail – if they succeed we succeed.

              – Lee Kuan Yew is famous for saying ‘yes I will eat very well but if I do so will you’ Why bite the hand that whips the weak to make sure you eat well…. If you bite it too hard it cannot whip the weak — making you the weak — meaning you get to feel the whip….

              – Nation… clan … individual…. The zero sum game plays out amongst nations first … but as resources become more scarce the battle comes closer to home with clans battling for what remains…. Eventually it is brother against brother ….

              – As the PTB run out of outsiders to whip and rob…. They turn on their own…. As we are seeing they have no problem with destroying the middle class because it means more for them… and when the weak rise against them they have no problem at all deploying the violent tactics that they have used against the weak across the world who have attempted to resist them

              – Eventually of course they will turn against each other…. Henry Kissinger and Maddy Albright bashing each other over the head with hammers fighting over a can of spam – how precious!

            • John Doyle says:

              You make it sound even more disgusting. We are certainly capable of being disgusting. Cooperation is better though. As animals we will engineer our own destruction, except we will know better what we do, even if we can’t help ourselves. Imagine you could trust no one, you couldn’t even get out of bed let alone build the prosperity we have today. Do you always carry a weapon everywhere you go?

            • Fast Eddy says:

              Let’s try this again:

              How the World Really Works

              – The luckiest, fittest, smartest, with the capability for ruthlessness survive – always have – always will

              – Resources are finite and therefore ownership is a zero sum game

              – The strong always take from the weak – if they do not then that is a sign of weakness and a competitor will take from the weak and will usurp the formerly strong dropping them into weakling status

              – Humans tend to group by clan or on a broader basis by nationality (strength in numbers bonded by culture) and they compete with others for resources

              – Competition has always existed (I want it all!) but it becomes fiercer when resources are not sufficient to support competing clans or nations

              – Tribal societies understand these dynamics because they cannot go to the grocery store for their food – so they are intimately aware of the daily battle to feed themselves and the competition for scare land and resources

              – Modern affluent societies do not recognize this dynamic because for them resources are not scarce – they have more than enough.

              – One of the main reasons that resources are not scarce in affluent societies is because they won the battle of the fittest (I would argue that luck is the precursor to all other advantages – affluent societies did not get that way because they started out smarter — rather they were lucky – and they parlayed that luck into advances in technology… including better war machines)

              – As we have observed throughout history the strong always trample the weak. Always. History has always been a battle to take more in the zero sum game. The goal is to take all if possible (if you end up in the gutter eating grass the response has been – better you than me – because I know you’d do the same to me)

              – And history demonstrates that the weak – given the opportunity – would turn the tables on the strong in a heartbeat. If they could they would beat the strong into submission and leave them bleeding in the streets and starving. As we see empire after empire after empire gets overthrown and a new power takes over. Was the US happy to share with Russia and vice versa? What about France and England? Nope. They wanted it all.

              – Many of us (including me) in the cushy western world appear not to understand what a villager in Somalia does – that our cushy lives are only possible because our leaders have recognized that the world is not a fair place — Koombaya Syndrome has no place in this world — Koombaya will get you a bullet in the back — or a one way trip to the slum.

              – Religious movements have attempted to change the course of human nature — telling us to share and get along — they have failed 100% – as expected. By rights we should be living in communes — Jesus was a communist was he not? We all know that this would never work. Because we want more. We want it all.

              – But in spite of our hypocrisy, we still have this mythical belief that mankind is capable of good – that we make mistakes along the way (a few genocides here, a few there… in order to steal the resources of an entire content so we can live the lives we live) — ultimately we believe we are flawed but decent. We are not. Absolutely not.

              – But our leaders — who see through this matrix of bullshit — realize that our cushy lives are based on us getting as much of the zero sum game as possible. That if they gave in to this wishy washy Koombaya BS we would all be living like Somalians.

              – Of course they cannot tell us what I am explaining here — that we must act ruthlessly because if we don’t someone else will — and that will be the end of our cushy lives. Because we are ‘moral’ — we believe we are decent – that if we could all get along and share and sing Koombaya the world would be wonderful. We do not accept their evil premises.

              – So they must lie to us. They must use propaganda to get us onside when they commit their acts of ruthlessness.

              – They cannot say: we are going to invade Iraq to ensure their oil is available so as to keep BAU operating (BAU which is our platform for global domination). The masses would rise against that making things difficult for the PTB who are only trying their best to ensure the hypocrites have their cushy lives and 3 buck gas (and of course so that the PTB continue to be able to afford their caviar and champagne) …. Because they know if the hypocrites had to pay more or took at lifestyle hit – they’d be seriously pissed off (and nobody wants to be a Somalian)

              – Which raises the question — are we fools for attacking the PTB when they attempt to throw out Putin and put in a stooge who will be willing to screw the Russian people so that we can continue to live large? When we know full well that Putin would do the same to us — and if not him someone more ruthless would come along and we’d be Somalians.

              – Should we be protesting and making it more difficult for our leaders to make sure we get to continue to lead our cushy lives? Or should we be following the example of the Spartans https://www.youtube.com/watch?v=eZeYVIWz99I

              – In a nutshell are our interests as part of the western culture not completely in line with those of our leaders – i.e. if they fail we fail – if they succeed we succeed.

              – Lee Kuan Yew is famous for saying ‘yes I will eat very well but if I do so will you’ Why bite the hand that whips the weak to make sure you eat well…. If you bite it too hard it cannot whip the weak — making you the weak — meaning you get to feel the whip….

              – Nation… clan … individual…. The zero sum game plays out amongst nations first … but as resources become more scarce the battle comes closer to home with clans battling for what remains…. Eventually it is brother against brother ….

              – As the PTB run out of outsiders to whip and rob…. They turn on their own…. As we are seeing they have no problem with destroying the middle class because it means more for them… and when the weak rise against them they have no problem at all deploying the violent tactics that they have used against the weak across the world who have attempted to resist them

              – Eventually of course they will turn against each other…. Henry Kissinger and Maddy Albright bashing each other over the head with hammers fighting over a can of spam – how precious!

            • Jarle B says:

              Fast Eddy: “everyone wants the private jet, luxury houses and the 10m dollar annual salary for life….”

              No they don’t, many see quite different joys.

            • Fast Eddy says:

              They may say that — because they have not been offered the private jet… luxury houses … and 10M annual salary (inflation adjusted) for life… or because they do not have the means to obtain it for themselves (funny how people rationalize things — the poorest of poor are very good at this …they convince themselves that the meek will inherit the earth — hahahaha…. they will inherit jack shit of course)

              I doubt there would be but a handful of people on the planet who would not take up this offer (of course it could be rejigged for those who might value other material things more — a primitive tribesman might be offered a ship load of tools and weapons every year…)

              It is in our DNA to want ‘more’ — and it is very difficult to override Mr DNA — he usually gets what he wants…

              Perhaps some monks who have convinced themselves that suffering is good — that this world is not real (i.e. they are effectively insane or delusional)… someone nut case like that might turn down the offer….

              But any rational person would take up the offer … in one form or another…. the offer represents higher odds of survival … for Mr DNA….

              There’s a script in this me thinks….

              http://media3.popsugar-assets.com/files/2014/03/19/939/n/1922283/501e394993125088_Pretty-Woman_5.jpg.xxxlarge/i/Pretty-Woman-Movie-GIFs.jpg

            • JMS says:

              C’mon Fast, your obsession with genetics and “Mr. DNA” is absurd. I agree with the most of your opinions, mas you seem to forget that ee are and ever been social creatures. (Indeed, we wouldn’t survive otherwise). And the idea that everyone wants ALL, is preposterous. Personally, I dont want all. Try to offer me that 10 M dollar thing, and you’ll know that for some people money isn’t everything. I earn less than 900 $ month. I could easily earn two or three times more than that. But I prefer leisure than work. And no, I’m not a religious person (in fact, I’m an atheist). IMO, only silly people, without inner or intelectual life, desire the luxuries and the status competion you assume as universal. I don’t think everybody ‘s mind is overcome by the stupid consumerism that the amrican advertisers impinged on many people. That DNA in charge thing is a fantasy of yours, a fantasy not grounded in biology, history, psychology or anthropology. If DNA is always in charge, how do you explain suicide? Or the fact that some people put their life at risk to rescue strangers? Etc., etc….

            • ” If DNA is always in charge, how do you explain suicide? Or the fact that some people put their life at risk to rescue strangers?”

              Mental illness, or DNA self-selecting itself out of the pool.

            • Fast Eddy says:

              I’ve explained this in a lengthy previous post…

              Mr DNA can be overridden — but it is not easy….

              I have overridden Mr DNA — he wanted me to procreate — I explained to him that there was no sense in reproducing because an extinction event was coming … so there was no point.

              Mr DNA generally gets what he wants — as evidenced by the 7.3 billion people on the planet

            • Fast Eddy says:

              “you seem to forget that we are and ever been social creatures”

              Not at all — as I have explained there are tremendous benefits to cooperating — being social….

              Let’s watch two short videos that demonstrate my point:

              https://www.youtube.com/watch?v=PLTuJF6ypv8

              https://www.youtube.com/watch?v=–TMm4DwkkI

              Kinda sucks to be on your own when the gang shows up eh….

  18. eARTH says:

    (Scientists Measure Spooky Drops in Air Pollution Over the Middle East)

    This report may interest finite worlders.

    It seems that Islamic State is inadvertently doing its bit for the climate. Air pollution levels have plummeted in the Middle East since 2010 due to, among other things humanitarian crises. It is one of those scenarios where “evil” shows its “good” consequences.

    When lots of people securely enjoy industrial civilization, they cause mass pollution — and lots of dead and displaced people without the usual ‘necessities’ of life produce a lot less. It seems to support what Gail says, that climate change predictions may not have the degree of urgency that they sometimes appear to demand.

    If the financial system goes belly up and the global economy crashes, if lots (and lots) more people die, and the present trend toward mass and widespread inter-communal warfare continues to heat up, then it is of course likely that the anthropogenic impact on the climate will lessen, at least in the short term effects.

    Judging by what is currently going on in the Middle East, everyone is going to end up fighting everyone else when the fan hits. The widespread genocide at the end of the Linear Pottery culture comes to mind.

    On the other hand, the present mass exodus from Syria to northern Europe and the “good” welcome offered to the immigrants by the soft-hearted liberals has the “evil” effect of adding millions more consumers and their pollution to this region.

    The naïve “moral” view that “good” leads to “good” and that “evil” leads to “evil” seems pretty well discredited by current events. Our idea of the “good” would have to be refined in accord with the need to control and to massively reduce the human population, and that would mean that we stopped all the wide eyed do-gooder nonsense.

    I reckon that modern liberal industrial civilization could not think its way out of a paper bag. The UN projects that the human population will reach 9 million within 30 years, that it will go to 11 million by the end of this century, and that that would be OK.

    Our best bet now is probably that nearly everyone die through some ‘humanly unavertable” circumstance. It is pretty ridiculous that things have come to this but at least there is, ironically a ‘bright side’ to it. Our own civilizational demise is now our best shot at ‘salvation’.

    http://gizmodo.com/scientists-measure-spooky-drops-in-air-pollution-over-t-1725666240

    Air pollution is decreasing over parts of the Middle East. But researchers say that for most Middle Eastern cities, the clearer air is actually a symptom of conflict, not a sign of progress.

    A team of atmospheric scientists led by Jos Lelieveld discovered that in most of the Middle East, nitrogen oxide emissions had been increasing more or less steadily until about 2010. But then that trend suddenly reversed. Using atmospheric data from the Ozone Measurement Instrument on NASA’s Aura research satellite, Lelieveld and his colleagues compared nitrogen oxide emissions over cities in the Middle East with economic data from the World Bank and the timeline of major political and economic shifts in the region.

    What they found was actually a little spooky: as war disrupted life in major Middle Eastern cities, the air pollution usually associated with driving, power generation, and industrial applications plummeted.

    “It is tragic that some of the observed recent negative NO2 trends are associated with humanitarian catastrophes,” wrote the researchers in a paper published this week in the journal Science Advances.

    By looking at transient gases in Earth’s atmosphere from a satellite orbiting 700 kilometers above the surface, the scientists were able to see the impact of UN and U.S. sanctions on Iranian oil shipping, the movement of refugees from Syria into Lebanon, and the impact of the Islamic State on Iraq.

    […]

  19. Why the oil industry is doomed
    Then the bottom dropped out of the oil market, and prices plunged starting in June of last year.

    Oil prices of $90 or $100 a barrel have been cut by over half — a six-year low for the overall market. On Wednesday, The Wall Street Journal reported that, thanks to the plunge, plus complicating factors, the price of the Canadian oil sands specifically has fallen to a remarkable $24 a barrel.
    Projections indicate that the Alberta producers need an overall oil market price of $44 to $50 just to break even over the long term, and around $80 a barrel to justify starting up new projects. Needless to say, all new developments have been suspended, and ongoing projects are “bleeding cash” on every barrel they sell.

    …. Geological studies of the current oil and natural gas booms suggest the economically viable stuff in those reserves will tap out in a decade or two.
    China and the global economy will eventually recover. Moreover, the price fall-off is already driving the oil industry to cut back investments in long-term production. Half the rigs in the U.S. have shut down, 100,000 oil workers have lost their jobs, and manufacturing of the heavy machinery used by the industry has been curtailed as well. On Wednesday, a federal auction for drilling rights in the Gulf of Mexico attracted fewer bids from oil companies than at any time since 1986.

    Obviously, oil production — especially offshore production started from scratch with the purchase of a lease — is not the kind of thing one just switches to the “on” position. When the oil price returns to normal, producers will have an ugly time ramping supply back up to keep even, driving the price even higher.

    • Greg Machala says:

      “Geological studies of the current oil and natural gas booms suggest the economically viable stuff in those reserves will tap out in a decade or two.” To that I would add “if the economy can continue to function and finance it.” Of that I am not so sure of anymore.

      • madflower69 says:

        “To that I would add “if the economy can continue to function and finance it.” Of that I am not so sure of anymore.”

        I don’t think we can finance it long term either. In fact, I would say FFs are on the decline, and they are being replaced by cost competitive alternatives.

  20. Vpk says:

    This just in from the MSM Business teletype
    The Oil Price Tag That Investors Say Would Signal a Global Recession
    China, which is currently experiencing an economic slowdown, propelled roughly half of the annual world growth in oil demand over the last decade. “[T]he whole damn thing is driven by China. When the investment cycle turns down, everything goes down,” Andy Xie, a former economist for Morgan Stanley, told the Globe and Mail.

    So what exactly is too low when it comes to oil prices? According to a recent survey of investors, the tipping point may be around $30.

    Convergex, a brokerage house, recently surveyed 306 professional investors about what oil price would signal a global economic recession. Roughly a third of their respondents named a price of between $26 and $30.
    http://www.forbes.com/sites/anaswanson/2015/01/22/the-magic-number-that-investors-say-will-signal-a-global-recession/

    Don, I wish to thank you for your discussion on “shortonoil” BW Hill analysis and the dynamics to our economy/society. Especially in regard to agriculture. Also, his time frame and mentioning selling his D.C. residence and buying three others locations for the downfall. Sounds a lot like our own Fast Eddy! Is it possible or just a coincidence?
    FE do you known BW Hill?

    • Don Stewart says:

      Dear Vpk
      Thank you for the kind words.

      As for any connection with Fast Eddy. If you get a chance to have any discussion with Hill about a future without oil, you will find that he has a wide-ranging mind. I wish that the Doomstead Diner could arrange one of the interviews they keep promising us.

      Don Stewart

    • Fast Eddy says:

      I do not.

  21. MG says:

    The more we proceed towards distant resources, the more we need machines and technology. And in doing this, we need more and more external energy and less and less human energy, as we procedee into more and more hostile environments…

    • Greg Machala says:

      Yep raising interest rates will turn that chart right around All this talk I hear about the fed raising rates I just don’t see that happening.

    • John Doyle says:

      Cities used to produce a large percentage of their fresh produce within their boundaries. I think for New York it was 25%. that scourge of cities called “developers” have razed most areas once given over to market gardens, and we will pay sooner or later!

      • madflower69 says:

        They also razed all but like 6 gas stations. You make a lot more money for a 400 2k/mo apartments then you do gas in the same space. With vegetables, you probably couldn’t make enough in a year to cover 1 months lot rent. Actually I do find that we import a lot of fruits and veggies from other countries, that percentage grew last year.

      • Artleads says:

        I think we would need something very different today. Population has skyrocketed, for one thing. But I have trouble with the concept in my planetizen link. IMO, we’ve run out of open land to build new cities (even food producing ones) on.

        • John Doyle says:

          My reasoning is that we will need to farm within walking distance. Big cities will be death traps for food supplies, and of course all food sources within walking distance will get raided, but that will only put off the famine for a few days. Once time has passed in hunger, 30 hours, food will be all consuming! It will be survivors who have to start farming and that assumes they have seeds and know how.

          • Artleads says:

            I agree with Don Stewart that the hedge against this is community solidarity. I’m saying that most places can be reorganized incrementally (inexpensively) into a network of somewhat self-sufficient hubs. The hubs will have reason to cooperate between themselves. In no sense am I talking about individuals going it alone. The fantasy that we could ever do that was a product of the excesses of Western Industrial Civilization. That is over now, although so few seem to realize it.

      • Artleads says:

        Comment on article on Planetizen.com

        http://www.planetizen.com/node/80407/next-steps-city-freeways

        “People in cars fear density because they perceive density to inevitably mean “more cars in the way.” Transit is a way out of this dilemma…”

        I admire the research, planning, diagramming for this article. A lot of its ideas seems viable. But not all. An underlying assumption is indeed that you can rationalize industrial civilization (IC) and make it work better. Can that be done?

        IC is run on fossil fuels (FFs), which are now badly depleted. The easily procured FFs are gone. The economic system it’s part of is teetering. The latter requires perpetual growth on a finite planet lest it collapse. IC has caused the planet to warm to the point where seas are rising and there is one climate catastrophe–floods, droughts, fires, etc.–after another. Warming is caused primarily by the trapping of CO2 in the atmosphere. There are 404 parts per million of this gas in the atmosphere now, more than any humans in the past have endured. Warming is also melting the Arctic (which no previous humans have experienced) , and as that melts, warming, due to the “albedo effect” of the lost ice, will skyrocket. It get much worse than this. There is no known way to alter this dreadful unraveling, but I look to planning to mitigate the calamity that it is reasonable to expect, and to do nothing to make matters worse.

        My preference would be to do much of what’s advocated in this article while conserving energy to the max. I would hold onto the buildings and the roads while augmenting and reconfiguring them. But I don’t even know how that would work. If cars are not built, millions of people lose work, affecting the entire economic chain. From all I can discern, the economic system that keeps us all warm and comfy is destined, relatively soon, to collapse.

        My highly optimistic scenario is to use FFs, while we still have them, to make post-collapse more endurable. That does not require an economic order based on fossil powered commuting. Bicycles en masse, as in Mao’s China, might work. That could use the roads that are here already, through configuring them differently. Telecommuting (while it can be done) on a major scale, would help. Home deliveries also. Anything to lessen mass transportation needs. (Of course, I would recommend using currently AVAILABLE resources to maximize public transportation too!!!) A revolution in urban food growing would be required, and all hands would be needed to make a suddenly less mobile society work for a while.

        Sprawled out LA would need backyard and roof gardens galore. It would be overgrown and crowded with trees. Alas, the water for all this is nowhere in sight, but we can dream.

        With material change so delimited, what will need more attention is behavioral change. This requires different kinds of people to get involved in planning. But as I’ve cautioned, I’m simply dreaming.

        • Artleads says:

          Don Stewart has repeatedly talked about people movers to replace cars. I wonder if that could be above ground “subways” that use the freeways? (One is talking about an immediate-post-collapse scenario with angels from heaven who choose to behave rationally, and when there is enough momentum from IC still to do a few industrial things.) And would car makers get into the people moving business?

  22. Don Stewart says:

    Interguru
    If you are interested in the Ellen MacArthur Foundation view of agriculture in Europe, see

    http://www.ellenmacarthurfoundation.org/books-and-reports

    You are interested in Growth Within: a circular economy vision for Europe

    Down load it and page down to the Agriculture section, which starts on about page 70.

    As with the miserable efficiency of internal combustion automobiles in moving people, industrial fertilizers are also miserably inefficient. See this statement from one of the graphics:

    FERTILISER UTILISATION 95% of fertilisers do not provide nutrients to human body

    One of the advantages of using the soil food web to provide fertilizer to plants is that the soil food web uses a ‘just in time’ system. The nutrients are locked up in the bodies of the microbes, who are attached to the soil with glues…so they don’t wash away in rain. But the plant makes sugars which attract the microbes to the root zone, where some of the them get eaten, which releases much of the nutrients which were in their bodies. The plants quickly take up the nutrients that they made the sugars to attract

    So you see that this is a much more efficient system than manufacturing a lot of synthetic fertilizer, or mining it, and dumping it on a field in soluble form where it goes down the Mississippi and makes a dead zone.

    Don Stewart

    • Stilgar Wilcox says:

      What would be cool is if instead of 95% of fertilizers not providing any nutrition, add genetic modifiers to make people smarter and better looking with great immune systems.

  23. Stilgar Wilcox says:

    http://www.bloomberg.com/energy

    WTI –1.31 to 40.01 (almost sub 40!)

    Brent –1.47 to 45.15

    https://www.google.com/?gws_rd=ssl#q=dow

    DOW curently -310.50 to 16,680.19, keeping in mind not many days ago it was more than 18,000
    It’s dropping fast along with other stock markets around the world, including China. Where’s our ‘recovery’? Will Yellen still raise rates next month?

    • Fast Eddy says:

      I am going to ignore the carnage and head to the ski hill now….

      • Stilgar Wilcox says:

        Good idea, because the DOW ended down 530 pts!

        I’m really disappointed too because I was starting to like all the smoke and mirrors fiscal desperate acts to conjure up growth by Zirp and fabricating new QE money for the wealthy to spend in the name of trickle down in hopes of turning green shoots into a real recovery. I liked the idea of something for nothing, of kicking the can down the road while whistling a victory song. But alas it seems as though reality always has the last word. You mean to say there actually is a price for all this phony generated minimal growth in the face of diminishing returns. Nah, I still want to drink the koolaid and fantasize there are no limits or boundries to what we can do if we just print enough mullah, greenbacks, texas T. You all enjoy the recession now, ya hear?

    • Greg Machala says:

      WTI was deep into the thirties yesterday. Truly scary stuff. The longer this goes on the more I fear we will become trapped in a deflationary death spiral. Even if by magic “Ole Bessie” the economic growth engine was restarted, the reserves that built up would be rapidly depleted. Then, we are back at shortages and chaos. It would be a no way out, no win situation. God help us all if the general public had even a faint grasp of what has been creeping up on us all these years.

      • madflower69 says:

        “The longer this goes on the more I fear we will become trapped in a deflationary death spiral.”

        Nah. There is competition in the market place, so high prices means people will switch to electric, and that lessens demand, which drives prices back down.

  24. Don Stewart says:

    Gail
    Here are two examples of how BW Hill uses the results of his model to help him understand the current situation. This is much more flexible than any strictly Hubbertian analysis (with or without nuclear) or EROEI bottom-up model.

    Both comments at Peak Oil…Don Stewart

    A deflationary crisis is now baked into the cake. One look at the petroleum industry confirms it. Determining how the industry, or any oil producer is fairing is quite simple. You take their profit that was generated during the last high priced year (such as 2013) and divide by the number of barrels produced. That gives profit per barrel for that year. Then subtract the difference in per barrel price between now, and then. That gives present profit, or loss per barrel. The present spread in prices is now about $55. If you find a producer that was making $55/ barrel in 2013, they were making a 43% profit on their gross sales. The industry has historically turned a 5 to 10% profit on gross sales.

    The Etp Model, which is a best case scenario, projects a downward trend in petroleum prices from 2012 forward:

    http://www.thehillsgroup.org/depletion2_022.htm

    The WSJ is probably being optimistic, losses over the next four year will probably be greater than $6 trillion. Even if prices revert to our curve above, the industry will never be able to recoup the losses it is now taking. The oil age will end when producers can no longer make a profit producing petroleum.

    ————-

    By our calculations it will cost the world’s economies $39 trillion over the next ten years to keep oil production operating. That would translate into an expansion for the balance sheets of the world’s CBs by about 3 times. To accomplish its present balance sheet explosion they have needed to buy up a good sized portion of the world’s sovereign debt. In essence the world’s CBs are rapidly running out of liquid assets to acquire. Since a debt backed currency can only be backed by debt, when you run out of debt to acquire you have run out of currency. The expansion of the monetary system is not infinite; nothing is!

  25. Don Stewart says:

    Dear Gail and Finite Worlders
    To understand the issues in BW Hill’s ‘BAU economy’ assumption, I suggest that you spend a few minutes watching this video with Joel Salatin.

    http://www.resilience.org/stories/2015-08-21/joel-salatin-synergy-between-nature-science-and-technology

    By using appropriate technology, Salatin and his family have multiplied the production of beef and birds from grass by 5 times. They are doing it with no chemical fertilizers. The key is a very scientific intervention to optimize the metabolic cycle in their fields. The intervention results from both basic scientific knowledge and also microchip precision in terms of controlling electricity.

    The Ellen MacArthur Foundation study identified Industrial Agriculture as one of the wasteful industries which needed overhauling, and Joel shows us how to do that in the meat and egg and milk part of agriculture. This is not ‘anti-science’ or ‘reverting back to the 19th century’. It is very much 21st century….but discarding the wasteful and harmful practices of the 20th century.

    Purists will complain that there aren’t going to be any chicken netting or the wires which control the cows, and there won’t be any tractor or pickup to move the bird houses. And that is the crux of the issue. The Ellen MacArthur Foundation believes (or assumes) that a concerted effort on the part of humanity can still rescue us from collapse through the strategic selection of where we use fossil fuels and materials. I’m pretty sure Gail and Fast Eddy will dismiss that idea as preposterous.

    You can make up your own minds on that.

    IF all the agriculture in the world were converted to something like the Polyface Farm model, we would produce a whole lot more food using a whole lot less fossil fuels and materials. That would challenge the ‘BAU assumption’ which underlies BW Hill’s models. It would not stop depletion, but it would certainly slow it down.

    Don Stewart

    • interguru says:

      IIf all the agriculture in the world were converted to something like the Polyface Farm model, we would produce a whole lot more food using a whole lot less fossil fuels and materials”

      There is a hole in this scenario. Polyface recycles all the animal waste on the farm itself. If all animal husbandry were done on this model where would the fruit, vegetables and grain farmers get their fertilizer, if not from fossil fuels? Traditional farmers were desperate for fertilizers. Chinese farmers put decorative outhouses along the road to persuade travelers to leave their waste there.

      • “If all animal husbandry were done on this model where would the fruit, vegetables and grain farmers get their fertilizer, if not from fossil fuels? ”

        One of the most important changes we could make (but probably do not have the time for, and after collapse, lack the resources for) would be to recover urban sewage back into usable fertilizer.

        The problem is non-agrarians – people who eat and poop somewhere other than where the food is produced.

        One solution is seaweed, since most sewage and petro-fertilizers find their way into the ocean eventually. The Caribbean is having more weeds wash up as the sea around them gets warmer – we’ll see if they learn to use it as a resource instead of as a problem.

        • madflower69 says:

          “One of the most important changes we could make (but probably do not have the time for, and after collapse, lack the resources for) would be to recover urban sewage back into usable fertilizer. ”

          We used to do that around here. I don’t know if it is still legal because of the pathogens, and virus. It needs to be sterilized, and it doesn’t count as organic fertilizer because of the heavy metals, and other crap we eat and use as medicine.

          Scotland actually has the biggest waste treatment facility, but I think they burn most of it for energy then use the ash for fertilizer.

        • Greg Machala says:

          There are a lot of things in hindsight that we as a society could have done better. I think your right about electrifying personal transport if that would have been done at the start. And, the battery technology would have been there to do it before gasoline became the fuel of choice. I feel “BAU” would have lasted a bit longer. Certainly recovering sewage into fertilizer would be beneficial and cheaper to do before our current infrastructure was in place. I think it all goes back to human nature of taking the easiest paths and picking the low hanging fruit first and not thinking too much about the future.

          • ” the battery technology would have been there to do it before gasoline became the fuel of choice.”

            No, they did not generally and would not use batteries for public transit. Using systems like trolleys and trams with overhead lines makes far more sense than using chemical batteries. Alas, the automobile industry won by hook and by crook.

            • madflower69 says:

              They did and do use batteries for personal and public transport.
              https://en.wikipedia.org/wiki/Nickel%E2%80%93iron_battery#Uses

              They have traditionally used the nickel -iron or edison batteries, which have basically an unlimited life, as they can be easily revived if they go bad. Detroit Electric was an extremely popular car.

              “Clara Ford, wife of Henry, whose Model T all but decimated the electric car, drove a 1914 Detroit Electric. (What her husband made of the fact that she wasn’t driving a Ford is lost to history.) The Detroit models could run 80 miles on a single charge, with a top speed of about 20 ”

              The great depression actually killed the electric car. They were more expensive, but more reliable then gas engines.

              As far as public transport, there is a company that retrofitted subways with regenerative braking. I know they were looking at using supercaps, I don’t know if they used batteries or backfed the grid.

      • Don Stewart says:

        Interguru
        Fruit, vegetable, and grain farmers would get their plant nutrients from the soil food web plus recycled food waste plus human urine plus humanure, plus strategic use of plants which host nitrogen fixing microbes. In my opinion, the fruits and vegetables are best produced at the level of gardening. Grains and grain like crops plus oil seeds and edible nuts are best done at the level of a commercial farm. The grains, etc., are also the most easily transported.

        There are systems which use chickens as an integral part of homestead fertility management. Those systems don’t usually involve beef cattle, but may include a milk cow. Rabbits fit very well into a home scale system.

        The key is to think in systems…which is very well explained in the video.

        Don Stewart

        • Ann says:

          A hundred kilometres north of me it will freeze tonight. I may get off without that, or maybe it will freeze here, too.

          I’m so tired of reading that if we just get back to gardening in our backyards, everything will turn out fine. The weather is going insane. July was so hot here that I could only go out and work in the garden during the morning because the afternoons were so hot I couldn’t stand up. We’ve had no rain all summer so I had to buy battery-operated timers and put them on all my hoses and keep watering every day. It’s so dry that the grasshoppers, which were just a nuisance last year, are a downright plague this year. They ate all my cucumber vines and have started on the beets, the beans and the potatoes. This cold weather will probably stop that for now. The cabbages didn’t grow in the heat. The parsnips never even came up. My chickens can barely walk around. The weeds are rampant because I can’t spend all day working out there. My apples are too small. The cherries were fine, the pears and plums look fine, but I’ve had to water all the trees every day. My water bill is horrendous and the river is dropping fast. Without electricity I’m totally hooped.

          All this from one degree C of warming. Because there is a forty-year lag in the effects of greenhouse gasses, if industrial civ collapses tonight, we’ve still got 3 degrees to go from what we’ve put into the air. The oceans are ruined, whales washing up on the shores of Alaska, Washington and BC, the shellfish industry in Washington has collapsed.

          The bears are now coming down the mountain behind my house to wait by the river for the salmon to come. Bad news, they’re not coming. The heat in the rivers on the west coast in Washington and BC is cooking the fish before they can come up to spawn. The bears will start on the neighbourhood dogs soon. Last year the bears sent two dogs to the vet for stiches. My neighbour has lost mature sheep to a cougar. It was shot two weeks ago, but she still loses lambs to coyotes.

          Oh yes, permaculture will save us! Sorry. What will grow in your area now will not grow there in the years to come. Back to hunting and gathering? What if there’s nothing to hunt or gather? There won’t even be enough for the grasshoppers to survive.

          • Don Stewart says:

            Ann
            I agree with you that climate change is serious. So, I think, is ‘the end of civilization’ as described in the Toby Hemenway talk serious, and the equations in the Hill model and the current crisis in commodities including oil serious.

            The only advice I’ve heard which seems to offer some hope is to ‘double the size of your garden double the depth of the topsoil, and double the organic content of the soil’. I would also add that one has to use more season extension protection against frosts and hot sun. Some combination of watering from a pond or well and shade cloth to reduce stress on the plants.

            It’s not a happy prospect…but I think it is the best we can do. On a happier note, my daughter has so many ducks and a few chicks in her back yard that she can’t count them. And I have been busy putting in my fall and winter garden, and the chilcren I meet are all impossibly cute and inspiring as they learn about the world.

            Don Stewart

            • madflower69 says:

              “The only advice I’ve heard which seems to offer some hope is to ‘double the size of your garden double the depth of the topsoil, and double the organic content of the soil’.”

              I use grass clippings about 2ft tall for mulch and add lots of lime, it knocks down the weeds, adds nitrogen, it holds moisture, and it breaks down nicely. If it is dry, and it is going to rain, you prick the top of the pile with a pitchfork, otherwise I don’t do much. Not even weeding. The lime is really important though. It is cheap, and balances the pH of the soil, so it can hold more nitrogen from rainfalls. I’ll be honest, I hate weeding, I weeded once, and this is my best crop of tomatoes by far. And I don’t even like tomatoes.

              Biochar helps improve the soil and adds moisture too. I did a fall cover crop of radish’s last year and that worked really well. They break up compacted soil, add green manure, and reclaim nitrogen. The soil worked up extremely nice, so I didn’t bother to till a second time.

              For cold, or longer seasons, you can look at hoop houses. They are pretty cheap but they extend the season, or let you start earlier. It is basically plastic around pvc pipe in a semi-circle. You can get an extra month or two of growing season.

            • Don Stewart says:

              madflower69

              Dealing with climate change is composed of six parts:
              *Grieving for the good old days when we had reliable seasons and reliable rainfall patterns
              *Deciding that you are simply going to have to build some infrastructure to deal with the unreliable climate….cheap stuff like hoop houses and drip tapes
              *Getting tired of putting the infrastructure up and down all the time (hoop houses inhibit pollinators and it never rains in them so you have to constantly mess around with the irrigation)
              *Investing in some more expensive infrastructure (big tops which let in the pollinators and keep the rain off the tomatoes, a sort of permanent irrigation system with reliable water which doesn’t require you to be constantly fiddling with it, etc.)
              *Being very clever about designs which minimize work, but also being very aggressive about maximizing production in every season even though it requires work.
              *Understanding that weather extremes put stress on your plants and make them more susceptible to insects. So planting biodiversity strips which are home to lots of predators, and doing what you can to keep your plants comfortable. Flower growers have historically used some tricks….usually labor intensive tricks.

              So far, around here, we are keeping production up…but at the cost of more infrastructure and more work which means we have to charge more.

              Don Stewart
              PS I’ll add one thing about the Salatin video. Joel has been working to add topsoil to his place for decades. The family began with some very degraded land 50 years ago…huge gullies, not enough soil to drive a T post into, etc. They have now built a deep topsoil. That is one reason why they can stock so many cows…dry spells don’t deplete the water in the soil to the same extent that it depletes their neighbors who don’t follow conservation practices. Joel has also used smart grazing to keep the weeds under control, and encourage a lush and diverse pasture. Unfortunately, you don’t figure all that out one fine Wednesday…you have to work at it for a while.

          • Ed_Pell says:

            Ann, yes, the weather here in NY state is turbulent. Hot one week, cold the next week. Winter was extra cold, spring was late, summer unusually wet, fall seems to be coming on unusually early. No local skiing anymore as their was 40 years ago. Across road drainage pipes on secondary road had to be dug out and replaced with larger pipes due to heavier rain falls. I myself am desperate to move to a warmer place due to harsher winters and my age

            As you say massive builtin momentum still to come even if BAU stops now. 5000 gigatons of coal in Alaska maybe not much capital of money or energy to develop but still can be dug by hand by the Chinese.

            Yahoo, just call me Major Kong.

          • Artleads says:

            My gardening style is a lot like madflower69’s. But I don’t use lime. In NM it might not be as useful as elsewhere. I use piles of weeds to make mulch. There is no limit to how high I would like it, just as long as the plants get light. Oddly enough, I’ve had NO weeds, none whatsoever. I do no-till planting. throwing in the soil betwixt and between the mulch. I plant in clumps in slight depressions, so that a single water outflow (end of hose) gets water to several plants. Jerusalem artichoke grows fast and shields pepper, eggplant and low lying plants. (One kale and one squash seem to be over shielded.) One eggplant’s leaves look like Swiss cheese. Lots of baby grasshoppers. I hope the growth cycle ends before theirs matures. I drape tomatoes over gigantic green onions that overwintered. It’s the best tomato season I’ve ever had. I twist and twine everything together, growing as densely as I can. I check the growth two or three times, ritually, each day. I wash my hands over a bucket, and throw the water wherever seems to need it. No irrigation system. Gray water from the kitchen for the bed with tomatoes, etc. Had my gray water plumbing been better planned, I wouldn’t need to water anything. Spinach seeds were a bust. Seedlings have worked quite well, but they cost more and I wish I could have planted more with better irrigation. But what I have isn’t bad for the almost unbelievable lack of work involved. I hope not to use plastic, but to cover everything with foot high piles of weeds when it gets cold. My wife has a small, quite productive hoop bed with non-plastic covers that (apparently) can prevent winter freeze. It will be interesting to see what results.

            • madflower69 says:

              Lime helps depending on the soil type well technically cation exchange capacity, but it balances the acidity of the breakdown process to hold the nitrogen better. It controls the smell, and keeps the bees and flys out of it. It can help hold nitrogen in the soil from t-storms as well. It helps “loosen” compacted soils. I actually started t use it almost exclusively a few years ago because I was too cheap to buy fertilizer when it skyrocketed, and that is when I started collecting all the grass clippings too.

          • InAlaska says:

            Ann, you are so right. Up here in Alaska, we had the hottest July on record. No rain. Grasshoppers everywhere. We had record crops of tomatoes, potatoes, cucumbers, peas, zuchinnis, etc. etc. And this is Alaska! We’re having Ohio weather in Alaska. Now its August and we’re having tsunamis of rain. Its freezing here now at night, but we’ve got another month to get things out of the garden, canned and smoked. However, what is it going to be like here in 5 years or 10? We can’t predict it but we know we can’t rely on it either. The Inuit have a saying that the weather is not itself. That it has become a stranger. I have seen this stranger now with my own eyes.

            • Fast Eddy says:

              Again — this leads me to believe that the PTB know something that they are not telling us — the reason that nothing is being done to prepare for the end game is almost certainly because they have determined we are facing an extinction event.

              Could be the spent fuel ponds issue — could be that they know that 7.3B people fighting over almost no food will put an end to us — or perhaps we have hit the tipping point on global warming and even if we stop now it will be futile…

              Or it could just be a combination of all of the above

              It’s kinda like being a right fat bastard riddled with heart disease — diabetes — and cancer … saying screw it — I’m gonna eat an entire cake for dessert with every meal — and wash it down with a family size bottle of cola….

            • InAlaska says:

              Eddy,

              I tend to think its all of the above, and throw in a few pandemics, global financial meltdown, and the stray meteor, and you have a recipe for not doing anything!

            • Greg Machala says:

              Wow, that is a real eye opener there. Seems to me like this is evidence of the “pollution” side of burning fossil fuels. Some would say it isn’t “proof” though. But it seems everything in nature has good and bad effects. The longer I live the more it seems that when a person experiences something unusually good (modern luxury lifestyles) – one should expect to pay the price later from some other unexpected consequence (death, pestilence and disease). But I am cynical so ignore me.

    • Salatin’s model is dependent on various ext. outputs such as sawdust and other composting/bedding stuff beyond the supply from his own farms (dozens tons y/y), solvent yet dispersed customer base with stable demand, microchips for guarding the cattle/pigs etc. Overall, I think it’s a great model, which could have been implemented in 40s/50s, most of the knowledge was there already. However, nowadays, the fossil agro system can’t reheal by 2decades of intensive pasturing without major food distribution problems, too many people locally, globally. In the future with even less available energy, such system will need more manual work, but more or less it is a doable approach in some sort ot neo 16-18th century fall back energy descent collapse scenario..

  26. Fast Eddy says:

    Moments ago said burst bubble came to roost when Deere reported EPS of $1.53 which beat expectations modestly, if down 35% from a year ago, yet which missed on the top-line with revenues coming in weak at $6.84bn, vs consensus expectations of $7.17bn. The one sentence summary: Deere revenues down 22%, profits down 39%.

    “John Deere’s third-quarter results reflected the continuing impact of the downturn in the farm economy as well as lower demand for construction equipment,” said Samuel R. Allen, chairman and chief executive officer.

    http://www.zerohedge.com/news/2015-08-21/deere-sales-miss-profit-tumbles-forecast-cut-company-blames-bursting-us-farmland-bub

  27. Fast Eddy says:

    Commodities as China’s Manufacturing Slows http://www.bloomberg.com/news/articles/2015-08-20/asian-futures-fall-amid-u-s-stock-selloff-as-oil-mired-in-slump

    As we inch closer to the edge…. (nice to be off the powder keg and back in NZ this evening….)

  28. Fast Eddy says:

    Greek elections coming … time to hand the baton to https://en.wikipedia.org/wiki/Golden_Dawn_%28political_party%29 ???

  29. Fast Eddy says:

    China: Weakened foundations

    Facing a slowdown, and with policy options running low, Beijing’s leaders broke an old taboo and devalued the renminbi

    Filling villas and hotels

    On a remote patch of swampy farmland about halfway between Beijing and the port city of Tianjin, which was hit by deadly explosions last week, the enormous “Jingjin New City” villa development provides a visual aid for anyone trying to understand the challenges facing China.

    A little beyond the Kai Xuan Men — literally “Arc de Triomphe” — entrance gate and adjacent golden statue sits an astonishing 800-room Hyatt Regency built to resemble a European palace.

    Fewer than 10 per cent of the rooms are occupied on any given night, according to staff. The indoor tennis arena and other facilities were locked up and rusting this week. Just seven years after the hotel opened, the building is falling apart and the balconies of many rooms have tall weeds growing on them.

    From those balconies guests can look out over what property agents boast is “Asia’s biggest villa complex”, spread over 15 square kilometres. More than 2,000 villas have already been built, hundreds are still under construction and there are plans for another 4,000. The vast majority of the existing villas, built with generous loans from state-owned banks, are empty and some appear abandoned.

    The Jingjin development is just part of a much larger 105 sq km planned residential zone — nearly twice the size of Manhattan — and around its edges smaller villa complexes, with names like “Dream Life in Europe”, are frozen in various stages of construction.

    “We’ve stopped building and selling villas because nobody is buying,” says the caretaker at the “Dreamland of Town” development on the edge of Jing-jin New City. “I’m not sure if these will ever be finished and put on the market.”

    Much more http://www.ft.com/intl/cms/s/2/1c2eefb6-4655-11e5-b3b2-1672f710807b.html#axzz3jQnIzSIK

    • Just think about how many jobs the creation of this hotel and the villas provided, even if no one lives in them. The question becomes: What does one do for an encore? Pay workers to take the hotel and villas down?

      • John Doyle says:

        That is precisely what I have said. China is far more worried by having workers angry for lack of work that empty cities are not a problem. They could and maybe would demolish them and rebuild again! Terrible for resource depletion of course, but that’s not their concern.

        • James says:

          Exactly! Or, think of it this way. China has demanded workers (humans) be brought into this world which cannot be sustained, and must now tell them that their services (lives) are not needed after all. Unfortunately, human “services” are rather more easily eliminated than human “lives,” and therein lies the conundrum.

          • madflower69 says:

            “China has demanded workers (humans) be brought into this world which cannot be sustained, and must now tell them that their services (lives) are not needed after all.”

            I think they are more worried about some sort of revolt personally.

  30. Don Stewart says:

    Dear Gail and Finite Worlders
    Tacking onto my last post about the end of the oil age, shortonoil has just posted this tidbit on Peak Oil:

    ‘By our calculations it will cost the world’s economies $39 trillion over the next ten years to keep oil production operating. ‘

    This indicates, I think, a couple of things. The first is the primacy of energy…if we try to print money to keep the oil flowing, we will gut what we think is our wealth. The second is that we really are at the end of an age. Nothing is going to be the same.

    Don Stewart
    PS For extra points, debate the proposition that our wealth is already gone, so we might as well print the IOUs to steal the digital wealth from the billionaires.

    • Ed_Pell says:

      On the extra points question. Yes and no. Yes printing money and giving it to group A is theft from all other groups. So far the fed gives to the owners of global banks. So steals from you and I, yours and mine.

      Printing to reassign ownership can be a zero inflation operation. If printing were spent on real physical goods it would create inflation. Printing to allow the ultra rich to acquire ownership of all assets reduces wealth that us little people can use to buy stuff driving deflation.

    • madflower69 says:

      I agree with “we really are at the end of an age”
      I don’t see any country -wanting- to eat any portion of the 39T dollar cost to keep oil flowing. In fact the world race between major countries is really who can get off oil the fastest partly for that reason.

      Big Oil is Featuring the Tesla Model S on their magazine cover now
      http://www.hybridcars.com/why-big-oil-is-worried-about-ev-batteries-and-tesla/

      They are basically saying they are more scared of battery technology, then any other technology calling it the “holy grail”, because it makes battery powered cars viable. A battery powered car means they lose business, they can’t possibly get back.

      The hybrid supercapacitors are fairly dangerous if they can get a high enough density, and maintain the instantaneous, millions of cycles. People are working on it, some products are already starting to filter into the market.

      • James says:

        Electric cars are little more than another futile attempt to spur economic growth where none is possible. Even if they were viable, they’d take generations to filter through the current shrinking economy in the usual method – top down economically – enough to make an actual difference. Time we do not have. The collapse is imminent. Any proposals other than immediate fixes – which must necessarily be rather local and minimal – are just so much pissing in the wind.

      • Greg Machala says:

        Too little too late. When the wheels begin to come off the FF wagon, there will be so much chaos there will be no organized effort to continue (or resources to continue) the development of electric cars. Instead, all efforts will be redirected to the basics: food, water and shelter. Consumer transportation is only a small fraction of the total FF consumption. Just electrifying consumer automobiles will not change the dynamic, especially this late in the game. If we tried to electrify automobiles it would hasten the collapse of the FF wagon.

        • “Consumer transportation is only a small fraction of the total FF consumption”

          Half of all oil goes to power personal automobiles. Probably 1/6 of all Fossil fuels. I would not consider that insignificant.

          ” If we tried to electrify automobiles it would hasten the collapse of the FF wagon.”

          Electric cars, if they ever ‘pay themselves off’, would take many years. Unless you are talking about renewables, if they are charged with coal power plants, it is just shifting from one fossil fuel to another. At the very least, they keep up oil demand in the near term (to create the cars themselves) to keep BAU rolling a little longer.

          • madflower69 says:

            Electric cars are actually more efficient then their Fossil Fuel equivalents namely because motors are more efficient then engines, and you can do regenerative braking so there is less energy loss stopping and starting. The conversion of FF to usable energy is also more efficient on the industrial scale. So if you are looking at total over FF savings for operation, you are actually looking at a bit more. It just isn’t oil.

            Second, if you have an electric car, which is a major household energy cost, you are more likely to try to curb that cost somehow.

            • “Electric cars are actually more efficient then their Fossil Fuel equivalents namely because motors are more efficient then engines”

              yes, we just discussed this. You either need to burn fossil fuels to make electricity, or you need renewable – if there is suitable land, $30 trillion and 250,000 sq kilometers for USA alone in thermal solar.

              “you can do regenerative braking so there is less energy loss stopping and starting”

              you can do that with a hybrid, or with a pneumatic system, too.

              “The conversion of FF to usable energy is also more efficient on the industrial scale.”

              Yes, except you must add losses for transmission, charging the batteries, discharging the batteries. Plus the embedded energy in the batteries, and their limited life cycle.

            • madflower69 says:

              “You either need to burn fossil fuels to make electricity, or you need renewable – if there is suitable land, $30 trillion and 250,000 sq kilometers for USA alone in thermal solar.”

              It is only 25,000 sq mi to power the entire earth from solar.
              http://www.csmonitor.com/Environment/Energy-Voices/2014/0729/How-many-solar-panels-would-it-take-to-power-Earth

              I am guessing that area drops every year because of efficiency and other sources of energy being added. Especially given in the states Wind and Hydro are far bigger.

              “you can do that with a hybrid, or with a pneumatic system, too. ”
              Hybrid you already have the motors and circuitry, might as well go all out.
              Pneumatic was being done in larger vehicles where the weight and size of tank and the pneumatic system doesn’t make much difference, but the efficiency of the electric is pretty darned high, up to 90% so not really worth going analogue. I am not sure the company doing pneumatic is still even in business.

              “Yes, except you must add losses for transmission, charging the batteries, discharging the batteries. Plus the embedded energy in the batteries, and their limited life cycle.”

              Typically not much electric is lost during transmission, hot days it will be higher then cold ones for sure. Roundtrip battery efficiency is >90%, inverters are 97-98% efficient. The batteries lifecycle is the drawback with the current generation, but that is over 1000 charge cycles for >80% of the charge. You can do a lot more cycles if you are willing to drop to 50% of the charge. The energy density/weight and cost are also factors.

            • That is an interesting article; going to read the paper now. I based my numbers, just for electric cars in the United States, based on current oil used for personal transport (light vehicles) and the actual real-world performance of the thermal solar plant Ivanpah. I used thermal solar, since it seems we will run out of steel, glass and salt (or run into prohibitive bottlenecks and price spikes) much later than using lithium and rare earths to make battery-based solar PV, which longer term studies show may never reach break-even EROI.

            • Fast Eddy says:

              I will not be surprised if you ignore this.

              Replacement of oil by alternative sources

              While oil has many other important uses (lubrication, plastics, roadways, roofing) this section considers only its use as an energy source. The CMO is a powerful means of understanding the difficulty of replacing oil energy by other sources. SRI International chemist Ripudaman Malhotra, working with Crane and colleague Ed Kinderman, used it to describe the looming energy crisis in sobering terms.[13] Malhotra illustrates the problem of producing one CMO energy that we currently derive from oil each year from five different alternative sources. Installing capacity to produce 1 CMO per year requires long and significant development.

              Allowing fifty years to develop the requisite capacity, 1 CMO of energy per year could be produced by any one of these developments:

              4 Three Gorges Dams,[14] developed each year for 50 years, or
              52 nuclear power plants,[15] developed each year for 50 years, or
              104 coal-fired power plants,[16] developed each year for 50 years, or
              32,850 wind turbines,[17][18] developed each year for 50 years, or
              91,250,000 rooftop solar photovoltaic panels[19] developed each year for 50 years

              http://en.wikipedia.org/wiki/Cubic_mile_of_oil

            • madflower69 says:

              “Allowing fifty years to develop the requisite capacity, 1 CMO of energy per year could be produced by any one of these developments:”

              I get what you are -trying- to say which is that is seems like it is too big of mountain to climb and too expensive so don’t bother.

              The info is from like 2006, and the price, size, efficiency/output is way off. For 15k you can get a complete 6.8kw array with a grid-tie inverter with nice American made equipment shipped to you with technical support for planning and installation. Right now. Either you can cut the cost in 1/3 or cut the number of systems by 1/3. If I use commercial installation prices, I could cut that number considerably. Just using the retail price, that cuts the original cost estimate of 68T to 22 Trillion for the planet over 50 years, or <2 years of the US GDP for a CMO, and that doesn't include any other sources. Solar isn't even the biggest renewable source.

              I am sure the wind estimates are similar, the price of wind energy dropped significantly and the output increased. GE just increased the output of their turbines by 20% with an electronic control adjustment.

              This takes care of 74285 of those solar systems:
              http://www.bloomberg.com/news/articles/2015-08-20/sunedison-solar-power-beats-gas-with-colorado-s-biggest-project

              It seems like a daunting task, but if everyone puts a little bit in. It doesn't take that long. Most of the money is just an investment, and are normal costs, they are just accounted for a little different.

            • John Doyle says:

              I don’t think you are really doing your sums. A cu mile of oil is, remember c.35% of our annual energy use when other sources are factored in, coal,gas etc. The figure in the other article said 25,000 sq, miles would do the earth’s needs. The actual figure from 1 CMO is 335,000 Sq Miles assuming each panel is 3′ x 6′. That is a lot bigger than Texas! And it’s only I CMO.
              As for doing nothing about it. It’s up there with rearranging deck chairs on the Titanic. It really depends on how much of the Titanic stays afloat! And, again, we still need oil!

            • madflower69 says:

              “The figure in the other article said 25,000 sq, miles would do the earth’s needs. The actual figure from 1 CMO is 335,000 Sq Miles ”

              The 1 CMO is using old data. It is a lot smaller now due to improvements in technology.
              The costs have also decreased significantly.

              As far as being on the Titanic. There were some survivors. I don’t want to go down with the ship. And really the design flaw in the titanic was that the ballast tanks weren’t sealed compartments. Had they been sealed, it wouldn’t have sank.
              The lesson is fix the design and you don’t sink.

            • “The lesson is fix the design and you don’t sink.”

              Except you are not at the dry dock working on a blueprint. You hit the iceberg 30 minutes ago, and are busy laughing and putting ice chunks into your liquor glasses with the other first class passengers, and dismissing the ship staff who are trying to tell you the ship is in danger.

            • madflower69 says:

              “Except you are not at the dry dock working on a blueprint. You hit the iceberg 30 minutes ago, and are busy laughing and putting ice chunks into your liquor glasses with the other first class passengers, and dismissing the ship staff who are trying to tell you the ship is in danger.”

              The Captain and part of the Ship Staff are telling you we are in danger, the other half are paid by the company that put the iceberg there, and are telling you everything is okay, and making up stories so you believe them and mocking every attempt by others to inform you there is danger, and we need your help.

            • Fast Eddy says:

              If you got it — you would have refrained from posting this nonsense.

            • madflower69 says:

              And if -you- got it, I wouldn’t have to try and decipher your nonsensical posts.

            • Fast Eddy says:

              Let’s watch something we can all understand:

            • John Doyle says:

              You, mate, are the comedian here. Your posts are mostly unrealistic fancy. You never give up but every time you never make good sense. You say a CMO is less now because the post was from 2009. Why don’t you also say daylight saving rots the curtains? Get real, you are not contributing any worthwhile posts, not one!

            • madflower69 says:

              “You say a CMO is less now because the post was from 2009.”
              The area used and price are far different for an equivalent CMO using something besides oil.

              38% of the energy used in New Zealand is renewable. You must be losing the argument there as well.

            • John Doyle says:

              “The road to hell is paved with good intentions” like renewables.

            • The paper (http://www.dlr.de/tt/Portaldata/41/Resources/dokumente/institut/system/projects/Ecobalance_of_a_Solar_Electricity_Transmission.pdf) uses theoretic performance of solar systems. Going with the real-world performance of Ivanpah so far, and seeing that the Sahara is pretty similar to Nevada (http://www.dlr.de/tt/Portaldata/41/Resources/dokumente/institut/system/projects/reaccess/ssedni60.jpg) I estimate the real space needed would be 5,750,000 square kilometers. The cost would be about $690 trillion USD in today’s USD.

              The United States currently uses 19 million barrels of oil per day, so about 10 million barrels worth just for personal transportation, which is the numbers I used to get 250,000 square kilometers and $30 billion. The World uses about 100 million barrels per day, which is ten times that amount; oil makes up about 38% of the World’s energy. Fossil fuels as a whole make up about 83%. 83 / 3.8 ~= 23, so you need 6670 * 23 = 153,410 Ivanpahs.

              Keep in mind the current system requires perpetual growth or it falls apart. I think it would be far more practical to wait until a partial collapse. If totalitarian governments are able to establish and maintain power during collapse, once there is 90% depopulation and 90% less energy use per capita, it would be far more feasible to roll out large scale solar projects. only 1500 Ivapahs worth needed at that point.

            • madflower69 says:

              “Going with the real-world performance of Ivanpah so far, and seeing that the Sahara is pretty similar to Nevada”
              Ivanpah, while it is making enough to pay for its loans is a bad example. It is real world, for sure, but when it was commissioned SolarPV was far more expensive then Solar Thermal, it is no longer the case, and wasn’t even the case by the time they completed it. That is how fast the market changed.


              “Keep in mind the current system requires perpetual growth or it falls apart. I think it would be far more practical to wait until a partial collapse. ”

              The problem with waiting until a partial collapse is you don’t have the technology or the resources to develop the technology. Second, I don’t want a totalitarian government. It is just not a world I want to live in.

              The second problem is that oil technology has the law of diminishing returns working against it, and development has really stagnated because of the supply limits. There is really not much potential for growth in that industry. Alternatives have massive opportunity for growth.

            • “Ivanpah, while it is making enough to pay for its loans is a bad example. It is real world, for sure, but when it was commissioned SolarPV was far more expensive then Solar Thermal, it is no longer the case, and wasn’t even the case by the time they completed it. That is how fast the market changed.”

              using guesstimate numbers, let’s say solar thermal is $0.30 per kwh, and solar PV is $0.05 per kWh. Then, solar thermal storage is $0.05 per kWh, and chemical battery storage for solar PV is $0.30 per kWh. They both work out to about $0.35 per kWh. If they are currently the same price, I\m willing to bet that at large scale production, thermal solar would run into shortages and push commodity prices up less than solar PV, since steel, glass and salt are much more abundant / easy to get to than rare earths, lithium, etc.

              yes, if someone makes a huge breakthrough in chemical battery storage – or any means of storing electricity – that would be a game changer. However, it does not seem prudent to me to plan for a breakthrough that may not be possible.

            • madflower69 says:

              “I’m willing to bet that at large scale production, thermal solar would run into shortages and push commodity prices up less than solar PV, since steel, glass and salt are much more abundant / easy to get to than rare earths, lithium, etc.”
              Correct, but thermal solar storage has its own issues. The first of which is it is highly corrosive and higher pressure. It is also extremely high temperature. The last issue is it doesn’t react very fast. it still takes time to spin up the turbines and start producing electric, and the last issue is you have to locate it near the source.

              Two of the neater applications I have seen recently are solar thermal + geothermal, which I think someone in france or italy came up with. And the other is in Oman where they are using solar thermal for advanced oil recovery since it uses a lower temperature steam.

              We are actually working on both battery chemistry and thermal storage for a variety of reasons, but one of the focus’s is using cheap, plentiful resources. Silicon is probably the most promising, but it is really hard to work with because it expands and contracts.

              We are also working on better circuitry for integrating batteries, which for the grid might be more important then the actual storage technology.

              There is a lot going on. Improvements will come the problem is so gigantic, that I don’t think waiting for the perfect technology that solves the whole worlds problem is worth waiting for. There are things we can do now that are profitable. Next year we might have new technology that blows the current stuff out. No one knows for sure. 🙂

            • “$690 trillion USD in today’s USD” –Wow!

              Total wages and salaries of the US population amount to about 7.7 trillion currently. World GDP is something like 50 trillion. $690 trillion can’t happen. I hope that amount includes the interconnecting transmission lines, and the storage to handle to the huge surge of electricity at one time of day.

            • ” I hope that amount includes the interconnecting transmission lines, and the storage to handle to the huge surge of electricity at one time of day.”

              Cost and land area only includes building ~153,000 times the capacity of Ivanpah. Building out a global HVDC smart grid with localized storage, charging stations, etc would definitely push this into the low quadrillions, assuming no inflation and no increase in commodity prices. That is to say, it is extremely unlikely that we can get 250 million barrels of oil equivalent in energy every day from solar. Spending 10% of world GDP per year, it would take 1000 years, and we definitely don’t have the fossil fuels to tide us over that long.

            • madflower69 says:

              Ultility scale turnkey(everything included) tiltable fixed panel solar was 1.77/watt at the end of 2014 in the US down like 10-15% from the beginning of 1014.
              1 barrel of oil equivalent (BOE) is 1.7mw or 1700000w
              For US transportionat it was 10,000,000 barrels using your estimate.
              so 10,000,000 *1700000 * 1.55 /solar insolation hours.. which I assume you used 6 since you mentioned sahara..

              For 6hours it is 4.4 Trillion dollars for the US now. If you use 4.2 insolation hours which covers almost all of the US it is 6.3 Trillion.

              US oil imports cost the US roughly 200B last year and a high of 500B in 2006, so you are looking at paying for that system in 17-31 years using todays prices, just by decreasing the expense side of the ledger.

            • I don’t care about just the Capex, we need to know how much per watt it costs to produce dispatchable electricity by solar energy. That includes operation, maintenance, etc. Please provide a real-world example of dispatchable solar power via photovoltaics at utility scale.

              As we previously discussed, with solar PV, the panels are cheap but the storage is expensive. With thermal solar, harvesting the energy is expensive but storing it is cheap.

              The Tesla Powerwall is $3000 for 7 KWh storage (daily cycle), and has a 10 year warranty; MTBF unknown. Does this include all costs, or are there huge government subsidies involved? Also unknown.

              The Average American Household uses 30 KWh per day – http://www.eia.gov/tools/faqs/faq.cfm?id=97&t=3
              So you will need 5 powerwall units. Using your $1.77 per watt price and assuming 6 hours average daily, you will need 5000 * $1.77 = $8850 for the PV system, plus $15,000 for the batteries. If the two together last an average of 15 years, that works out to about $1600 per year, not including taxes, installation, any repairs or maintenance. If you live in the Sun Belt, that seems actually pretty reasonable. If you can cut your power use to half the current average, and get down to $75 per month, that’s quite good.

              123 million households at $23850 per household is just $3 trillion to get all households running on solar, assuming the land is free, zero transmission losses, and no grid upgrades needed.

              Now for transportation. 10 million BOE times 1.7 MWh per BOE = 17 TWh per day. 6 hours of sunlight means you need about 3 TW of PV, at $1.77/w would be $5.3 Trillion. In addition, you need 17 TWh / 7 KWh = ~2.5 billion powerwalls worth of batteries, at $3K each is $7.5 trillion in batteries. So $12.8 trillion in PV and batteries for personal transportation.

              In theory, the US could double the national debt and provide all of its current energy needs from solar PV + Tesla Powerwalls and Tesla cars. Of course, everyone would need to buy an electric car.

            • daddio7 says:

              The sad thing is the national debt will double in the next ten years and all of it will be squandered on the same things the first 18 trillion was.

            • madflower69 says:

              “The sad thing is the national debt will double in the next ten years and all of it will be squandered on the same things the first 18 trillion was.”

              China owns 3 trillion of it. Other countries hold 6 more trillion of it.
              Yeah we squandered it on foreign goods. We got our oil and cheap crap from china with it. We forgot to sell anything to get it back.

              Oh but wait, if we did deflation of the USD, it should make our good worth more overseas and we can balance the trade deficit that way! We can give all the money to rich people because they are successful with it and can create jobs for everyone.

              That is where a lot of our money and jobs went. Bad policies. We gave them money to outsource our jobs.

            • madflower69 says:

              “I don’t care about just the Capex, we need to know how much per watt it costs to produce dispatchable electricity by solar energy. That includes operation, maintenance, etc. Please provide a real-world example of dispatchable solar power via photovoltaics at utility scale.”

              Ivanpah, isn’t a good example either. There is no storage built into Ivanpah.

              I haven’t found much on operational costs. I can’t imagine there are a whole lot with PV. I think turnkey solutions are fairly well automated these days. There are actually window washing devices for the panels. Like a roomba type of thing. Everything else is all solid state.

              “As we previously discussed, with solar PV, the panels are cheap but the storage is expensive. With thermal solar, harvesting the energy is expensive but storing it is cheap.”

              In theory storage is cheap but it was cut off Ivanpah, because it was too expensive like 500M-1.5B extra.

              “The Tesla Powerwall is $3000 for 7 KWh storage (daily cycle), and has a 10 year warranty; MTBF unknown. Does this include all costs, or are there huge government subsidies involved? Also unknown.”
              There maybe some subsidies available for storage, but I don’t know if they are federal or not. California and NY have subsidies for sure. It is on the plate in Oregon also. Some utilities subsidize storage as well.

              The powerwall is all inclusive for DC-DC, so you need an inverter, which would be like part of your solar array if you got the right one, or one that is extensible.

              “So you will need 5 powerwall units. Using your $1.77 per watt price and assuming 6 hours average daily, you will need 5000 * $1.77 = $8850 for the PV system, plus $15,000 for the batteries. ”

              The 1.77 figure is actually the 2014 Q1 figure, the 1.55 is the Q4 figure.. I didn’t change the content of the message after I realized it. My bad.. 22 cents resulted in like a .5 trillion dollar savings off the total.

              You also aren’t going to get the 1.55 at home. That was utility grade solar, consumer prices are like 3.48/watt dollars higher. You CAN get a lot closer if you can do community solar. That gives the opportunity to buy into a much larger install.

              http://www.greentechmedia.com/articles/read/solar-pv-system-prices-continue-to-fall-during-a-record-breaking-2014

              “If the two together last an average of 15 years, that works out to about $1600 per year, not including taxes, installation, any repairs or maintenance. If you live in the Sun Belt, that seems actually pretty reasonable. If you can cut your power use to half the current average, and get down to $75 per month, that’s quite good.”

              Wasn’t the full cost you calculated for all your electrical needs?

              “123 million households at $23850 per household is just $3 trillion to get all households running on solar, assuming the land is free, zero transmission losses, and no grid upgrades needed.”

              The lack of grid upgrades saves everyone a lot of money..

              “Now for transportation. 10 million BOE times 1.7 MWh per BOE = 17 TWh per day. 6 hours of sunlight means you need about 3 TW of PV, at $1.77/w would be $5.3 Trillion. In addition, you need 17 TWh / 7 KWh = ~2.5 billion powerwalls worth of batteries, at $3K each is $7.5 trillion in batteries. So $12.8 trillion in PV and batteries for personal transportation.”

              Correct, except grid storage is most likely cheaper then personal storage.
              Either way storage prices and solar prices are most likely going to fall more.

              “In theory, the US could double the national debt and provide all of its current energy needs from solar PV + Tesla Powerwalls and Tesla cars. Of course, everyone would need to buy an electric car.”

              I agree it is a lot more then anyone wants to spend all at once. The object right now is to drive down the price, and figure out what does and doesn’t work. Cars have finite useful lifetimes, so it is more like planned obsolescene with those, but the latest generation of cars needed to go through a full cycle, so there could be improvements made for the next cycle. You don’t want to be overextended and have to recall. The all new volt and leaf are coming out. The all new Malibu hybrid uses a bigger version of the new Volt drivetrain. They trimmed the battery pack, most likely because it was too expensive to include or they are worried about actual supply of batteries.

              You also don’t need to fix the whole energy problem with just solar. Geothermal, ocean thermal, ocean waves, biofuels, etc can all fill in too.

              Solar is actually good for peak use times, so you can cut a considerable amount of peak time usage with solar without storage since that is during the day. You also have to be careful about -which- utilities are complaining. Some just create energy, some just distribute energy, some do both.. Some are cooperatives, some are commercial..

            • “There is no storage built into Ivanpah”

              You’re right, for some reason I keep mixing up details from Ivanpah and Gemasolar.

              “Wasn’t the full cost you calculated for all your electrical needs?”

              The $23850 is based off of the needs for the average American home. I simply divided this into months over 15 years to get the monthly cost. This is for the household only, not counting industry or transportation.

              “Correct, except grid storage is most likely cheaper then personal storage.”

              If you want to power electric cars using grid storage instead of putting batteries in the cars, they’re going to need to be like street cars or bumper cars. That would make the cars lighter and lower operating costs, lower personal ownership cost, simpler vehicles with less maintenance, at the cost of only being able to operate on roads that have been upgraded with overhead power lines of some sort, or embedded wireless power transmission or something.

              “Either way storage prices and solar prices are most likely going to fall more.”

              Only if the prices for the commodities stays low or goes lower; if the price of lithium doubles due to a need to extract from sea water instead of from salt flats, and the price of rare earths increases because we have to mine it in America under strict environmental regimes instead of getting them from toxic Chinese mines, those costs will go way up.

            • madflower69 says:

              “If you want to power electric cars using grid storage instead of putting batteries in the cars,… ”
              I was actually talking about an at home solution. 🙂 but since you brought it up.. It will most likely be wireless, and I can’t imagine upgrading all the roads this century, so you still need batteries in the cars, but the uk is testing wireless roads.
              http://money.cnn.com/2015/08/18/technology/uk-electric-cars-roads/

              “Only if the prices for the commodities stays low or goes lower; if the price of lithium doubles due to a need to extract from sea water instead of from salt flats, and the price of rare earths increases because we have to mine it in America under strict environmental regimes instead of getting them from toxic Chinese mines, those costs will go way up.”

              It also doesn’t have to be lithium.. It is the best we have right now though. There is some room where scaling and improving the manufacturing process can help drop costs too.

              Imergy has the vanadium flow batteries, which only have a 75% roundtrip efficiency, but they can be cycled endlessly in either direction with an infinite lifetime supposedly… They might be better for utilities even with the efficiency hit. But they really haven’t scaled their manufacturing yet and there was one other issue with them, besides vandium being one of those rare hard to source materials..

              “The $23850 is based off of the needs for the average American home.”
              alright 30000wh/4.2 hours =7142
              7142*3.48 (residential cost) = 24857
              24857/15 years = 1657 /12 months == 138/mo
              900kwh/138 == 6.5c/kwh without storage.
              storage is
              15000/15 /12 = 83/mo .. 900/83 == 10.8c/kwh
              so 17.3c/kwh which is less then you pay in Germany, cali, nyc for electric, half as much as Hawaii.
              Cali it is actually less because you have more hours of sun.

              Once it is paid for, you get a few years of free electric before you have to start over although your batteries will probably be gassed. and there are some inefficiencies and degradation of the panels, I didn’t figure in.

              And now that I have done the math even if they charged you 10 bucks a month for solar panels +20 service connection fee, it is 50 dollars cheaper per month then owning the batteries.

          • Greg Machala says:

            OK let us say that 1/6 of the total FF use is for personal transport. There still must be a period (perhaps decades long) where FF use would have to increase significantly to build out this new infrastructure. One would still need to continue to devote 1/6 of FF to continuing the personal transport. Then, what happens after the new infrastructure is built will we be able to then eliminate this 1/6 of FF consumption or would we be committed to consuming it based on the potential for job losses. The way the economy is currently structured we can’t contract without recession and job loss. If we pursue any projects which increase consumption of FF resources I just don’t see how we can reduce FF use in the future and continue “growth” in the economy. I just see electrifying the personal transport infrastructure as using FF faster.

          • madflower69 says:

            I forgot about ViZn they make iron-zinc redox flow batteries. 75% roundtrip efficiency. common materials..They are focusing on utility scale deployments and they are going to deliver the largest one yet to Ontario.
            http://www.viznenergy.com/vizn-energy-systems-2mw-zinc-iron-redox-flow-battery-system-selected-by-hecate-energy-for-ontario-ieso-project/

        • Fast Eddy says:

          Perhaps before we hit the wall we could squeeze out one last Mad Max movie — featuring Mel Gibson prancing about in a Tesla — shopping at Whole Foods — talking on an iphone — surrounded by a world of carnage…

          That seems to be what some people on this forum thing is possible….

          • Ed_Pell says:

            Matthew, 30 trillion dollars now that is a QE4 and as energy has become national security and it is now the military that needs to spend 30 trillion we are all set. Let’s remember what Nuland said we do not give a F*** about the rest of the world just like Fast Eddy says. The military will procure all needed resources for the project including slave if need be.

            I have a friend who is retired army. He has been building RE energy on military bases for the last two decades. He see the US divided into 17 regions just like Texas is a stand alone electric region with military stand alone energy system for black restart capability if the grid goes down. Time for the kids to hand the job over to the adults.

  31. Stilgar Wilcox says:

    https://www.google.com/?gws_rd=ssl#q=dow

    Dow down today 358 points!!! It ended at 16990 below 17,000, keeping in mind it had reached a zenith of 18,500. not long ago. So it is definitely gone bearish. Looks like our stock market could only ignore strong economic signals, including emerging market stock markets crashing of late, for so long. Good luck to those going long.

    • Fast Eddy says:

      China down 4%+ today ….

      You gotta love this … http://www.bloomberg.com/news/articles/2015-08-21/what-a-chinese-population-boom-would-mean-for-the-stock-market

      Let’s cheer for 10 billion people on the planet!!! Just imagine how rich we can be…

      • Greg Machala says:

        Ahh but Grasshopper what would it mean for resources?

        • Fast Eddy says:

          That would be the obvious question — but you’ll never see it in the MSM…

          I had to laugh when ‘the bloomberg oil expert’ vehemently insisted that low oil prices were as a result of a supply glut … nothing to do with demand issues…

          The obvious question should have been — but what about all the other commodity prices that are collapsing — is there an oversupply of everything?’

          When growth stops — you very quickly get a supply glut because producers produce based on expectations of infinite growth — unfortunately when that does not pan out — you very quickly end up with a deflationary death spiral…

          It would appear as if that is what is happening now — just like a turd in the toilet bowl at first is moves very slowly then it spirals quickly down the hole…. we are in the slow spiral phase now…

  32. Pingback: Mer av samma gamla vanliga | Förändringens tid

  33. Don Stewart says:

    Dear Gail and Finite Worlders

    This will be an attempt to bring some coherence to the discussion of whether oil prices are due to rebound, or may remain depressed, and oil ultimately fade from the economy. Will prices increase as oil becomes scarce?

    Let’s look at a simplified production system for widgets. The widgets are made in the United States, and sold in the United States. The components of the complex adaptive system which produces and consumes the widgets (in this toy model) consists of:
    Oil production, processing, and distribution (quantified by BW Hill)
    Oil consumption by workers driving to work and consumers driving to stores to purchase the widgets (quantified by the Ellen MacArthur Foundation)
    The factory building and machinery
    The workers in the factory
    Money to grease the skids

    We first need to get some ideas about the numbers we are looking at. Here is an excerpt from BW Hill’s introduction to his model:

    ‘The methodology employed by the study is termed “exergy” analysis. Exergy in the vernacular of the science of thermodynamics means: “the maximum amount of work that can be extracted from a system”. The system under study is a unit of petroleum. The maximum amount of work that can be extracted from a unit of petroleum is calculated using the physical properties of the crude oil in question, and equations that have been derived from studies of the First and Second Law. These values are then used in the construction of a mathematical model that can predict the status of the world’s petroleum reserve with a much smaller margin of error than can be provided by the quantity approach.

    The smaller error results from a much more compact model than what is produced by the quantity approach. To be implemented, the quantity approach requires the evaluation of thousands of values; usually many of them are not precisely known. The energy approach (the ETP model,Total Production Energy) requires only three. The model is derived from the fundamental physical properties of petroleum, First and Second Law statements, and the cumulative production history of petroleum. To generate values the model requires the mass of crude removed over a period of time, the mass of water removed, and the temperature of the reservoir. Although somewhat complex from a mathematical perspective, it employs only one value of which we are not very certain; that is, petroleum’s production history.

    Petroleum production is a process. The process includes the extraction, processing (refining), and distribution of crude oil and its products. Each step of the process requires an input of energy to be completed. As time progresses the needed energy input increases. This occurs because of entropy production (a Second Law mandate) in the process. When the needed energy input exceeds the exergy of the petroleum, the petroleum can no longer act as an energy source. It has lost it primary value as a commodity. This is denoted as “the dead state”; the point when no additional work can be extracted from the system (a unit of petroleum).’

    Hill’s study has some bar charts (Graph 1 in his study) which portrays the emerging problems with oil:

    ………………………………………..1930 2005 2030
    Gross Energy/ Gallon (000 BTU) 140 140 140
    Net Energy 139 135 130
    Deliverable Energy 138 80 40

    (All the numbers are my eyeball reading from a graph)
    The big decline is not in the return at the well-head, but in what it costs to deliver the energy to the pump. The cost of operating the society that is able to process and deliver the petroleum products to the pump. By 2030, oil will have reached the ‘dead state’ where it costs as much energy to produce a barrel as the barrel contains.

    Please note that some wells will reach the dead state before others. Thus, as particular wells reach the dead state, we can expect total production to decline.

    Hill’s model takes us from the reservoir to the pump. Now let’s look at the situation from the pump to an automobile carrying humans to work in the factory or to buy the widget in a big box store. I take these data from an Ellen MacArthur Foundation study, whose principle purpose is to explain the need for changes which increase the efficiency with which we use resources. Again, the numbers are my eyeball reading from a graphic:

    Of the energy from the fuel at the pump, 80 percent is used while idling the engine and in engine losses. The sum of transmission losses, auxiliary power requirements, rolling resistance, aerodynamic losses, and overcoming inertia account for around 18 percent of the energy which was in the fuel at the pump. Thus, about 2 percent of the energy which was in the fuel at the pump is actually used to move the human passenger in the car.

    As you can see, the use of internal combustion automobiles to move a human (e.g., to go to work, to go shopping) is a grossly inefficient use of petroleum. The graphic (which I can’t reproduce here) does not take into account things such as the road network or expenditures for a military to dominate oil producing countries, but it does show some of the qualitative costs, such as traffic jams and auto accidents.

    One of Hill’s graphs (which I won’t show because I haven’t seen it in the public domain) indicates that further production of oil will generate no additional GDP by the year 2017. After 2017, we would be better off as a society to not try to increase oil production.

    If we combine the insights from the Hill study and the MacArthur study, we can see that the way we have been producing GDP (at least in the US) is quite problematic. We are using an increasingly inefficient petroleum system to get gasoline and diesel in the pump, and we use a car and truck system to move humans to both produce the widgets which account for the GDP and to consume the widgets.

    What happens as the ability of the petroleum system to provide us ‘deliverable energy’ (see definitions above) declines? Even a small decline can make the car and truck system unaffordable. The percentage of energy in the reservoir which gets delivered to the pump is declining, and the percentage of the energy in the pump which moves the humans is already very small. We are on our way to the end of ‘Happy Motoring’.

    I have not looked, in this brief note, at things such as moving gravel with trucks, or making steel. The reason is that these are likely much more efficient in terms of the work done. The driver of an 18 wheeler is a small part of the load. The driver of a car IS the load…John Doe delivered from his house in the suburbs to the office building on the interstate.

    When we look at the government’s efforts to ‘get the economy moving again’, we find things such as road projects, subsidizing suburban housing, subsidizing sub-prime auto loans, and subsidizing college education… teaching skills which will require driving in cars to do jobs. These all seem doomed to failure in light of the patterns we see above.

    BW Hill is fond of saying that looking at barrels is misleading…and we can say the same thing about counting as GDP the automobile taking a human to work or to consume. As energy available to us declines, our society may survive or fail based on its ability to rethink energy and how we measure well-being.

    Yet fixing things is not simple. Reconstructing industry the way it existed in the 1950s, with housing for workers and shopping all within walking distance, would require a massive change in mental perspective and a lot of capital. For the sake of simplicity, let’s assume that nothing like that happens.

    Then what will happen? Driving to a job and driving to a mall will no longer make any economic sense for more and more people. Many people will be unemployed. The government’s revenues will decline and most likely the subsidies listed above will stop. The demand for petroleum will sink, and prices will not recover. Meanwhile, the oil companies are stuck with debts they incurred to produce expensive oil. Therefore, we can expect that they will have cash flow problems and many will go bankrupt. Their assets will be purchased for pennies on the dollar.

    Will the write down of asset values in the bankruptcy process make oil profitable again? The problem is that the depletion curves produced by Hill’s model continue to get worse. The only long term solutions involve massive redesign of our society. And with oil no longer an energy source, we can expect that that society is going to be very much more dependent on solar energy of the old-fashioned kind, and not nearly so rich as what we are accustomed to.

    If driving to work is prohibitively expensive in terms of energy, what is likely to happen? I think it will be some combination of working from home and robots replacing humans. The robots can be expected to decrease employment, which brings all kinds of problems.

    One final thought. Is energy driving this ship toward the rocks or is debt driving the ship toward the rocks or is political and social dysfunction driving the ship toward the rocks? (Or maybe it’s all Putin’s fault?) My answer is that energy is foundational. When deliverable energy stops growing, with a rigid and wasteful social and economic structure, then bad things are going to happen. As the available energy declines, that rigid social and economic structure will fracture and fail. If it resets, it will do so at a much lower energy consumption level.

    Don Stewart

    • The issue I see is that deliverable energy needs to be growing fast enough. The economy is killed by the slowdown in growth of deliverable energy, because when this happens, it is not possible to keep leveraging human labor to a greater and greater extent. This is what brings down the economy.

      BW Hill has jumped on the Hubbert bandwagon. The Hubbert curve describes a very particular situation–when another energy source comes on in sufficient quantity to completely replace fossil fuels cheaply, before collapse occurs. It is not the situation we are facing.

      • Don Stewart says:

        Gail
        You completely misunderstand BW Hill’s perspective. He does use some hubbert curves in his models, but he DOES NOT expect nuclear energy to save the world. He is quite pessimistic about the prospects for humanity. In one of his posts on Peak Oil, he said that he has sold his house in the DC area and bought land in three different locations. When things fall apart, he will decide where to escape to.

        You are simply reading some of your preconceptions into his model. The model may be a good guide to the future or a bad guide…but don’t mischaracterize it.

        Don Stewart

        • I am saying that Hubbert’s model is only valid in a situation when we another fuel takes over first. This was perhaps a reasonable belief when Hubbert wrote. I am not saying that BW Hill believes this, only that he uses the Hubbert model, which has limited validity.

          The situation we are facing is overshoot and collapse, not “peak oil.” Collapse comes because growth in energy supply (or net energy supply) slows too much. I don’t see BW Hill analyzing this issue.

          • Don Stewart says:

            Gail
            I think you are simply not looking at Hill’s actual model. You are projecting preconceived ideas onto it.

            As I have told you many times, Hill uses a two stage model. The first is from the producer’s perspective, with shortages of oil driving the rice up to 500 dollars and more by 2031. The second stage is ‘what the economy can pay for’, which is driven by the available energy and through that the work which generates GDP. The second stage has been in control since 2012, according to Hill. The implications are that there is going to be a lot of stranded investment in oil production, and lots of financial damage through things like hedging, derivatives, and bankruptcies. There will also be a lot of pain for those whose livelihoods depend on the oil business. You can see the rather bitter references to geologists working at Dairy Queens over at Peak Oil. If Hill’s model is correct, the damage will extend into the 38 percent of GDP that he says is directly dependent on oil, such as automobiles and highway construction and, I suppose, industrial farming. Industrial farming has a very negative return on the energy invested in it.

            Hill has not created a model of ‘how collapse will play out’. You and John Michael Greer and James Kunstler and many others do that. Hill gives us a ‘best case’, from which we can fall short for many reasons, including the Israelis starting WWIII. But the ‘best case’ puts stringent limits on what can be accomplished. When I discuss Hill’s model, I try to explore the assumptions that are in it, such as a static economy. Hill assumes that it is either impossible, or we simply won’t, go back to the economy of 1930 where each barrel of oil was so tremendously productive economically. We are stuck with the Ellen MacArthur economy where oil is mostly wasted. People can make up their own minds about that assumption. They can also make up their own minds about whether we can actually achieve a world where each barrel of oil is precious. Hill doesn’t dictate how we think about such questions.

            Forget your issues with EROEI studies and Hubbert curves and look at his actual study.

            Don Stewart

          • madflower69 says:

            “The situation we are facing is overshoot and collapse, not “peak oil.” Collapse comes because growth in energy supply (or net energy supply) slows too much.”

            I am actually kind of confused because all we have done over the last 10 years is increase the supply of energy and improve efficiency (which also has the effect of additional supply.)

            We shouldn’t be facing a collapse, because we have an oversupply.

            What I think we are seeing is a market correction. People are divesting in coal, oil, gas.
            People see the writing is on the wall. Last month sales of Hybrids/bev/phevs were up to 3% of the US total even with low gas prices and high overall sales. Coal is collapsing in a big enough way that even Tony “Australia is going to fix their economy by investing in coal” Abbott, has backed away considerably from coal in support of renewables.

            What hasn’t really changed is the numbers like the DOW Industrial is made up of 30 stocks, which include Exxon and Chevron, who are both down 30% for the year. Nor the economist mindset, that they can just look at FF numbers to make a snap judgement on the economic status. It doesn’t work that way anymore. You have to look at more metrics now. Sadly, I doubt anyone knows how to look at the metrics. I doubt they have taught it in classes for the last 80 years, since there wasn’t a reason. In fact, there probably isn’t a well-established economic theory that incorporates renewables.

            • James says:

              In fact, there probably isn’t a well-established economic theory that incorporates renewables.

              Unfortunately there’s a lot of hard physical evidence and theory that does. Renewables aren’t an answer for continuing BAU at all, and thus won’t prevent systemic collapse of a system wed to cheap and plentiful fossil fuels.

            • kesar0 says:

              “Well established” is the key factor in the question. Anything outside mainstream narrative is not well estabished. Therefore the sentence is true. It might be shocking for madflower. He didn’t find the second part of the sentence “economic theory that incorporates renewables” yet. This blog is good place to start.

            • madflower69 says:

              “Unfortunately there’s a lot of hard physical evidence and theory that does. Renewables aren’t an answer for continuing BAU at all, and thus won’t prevent systemic collapse of a system wed to cheap and plentiful fossil fuels.”

              It can’t possibly be BAU. It is more disruptive. It is more like the transistor in the fact we replaced tubes with transistors or the next generation technology.

              The oil industry collapsing is like the US steel industry collapsing in the 70s, we ran out of iron, we ran out of coal. Then Japanese steel was cheaper.

            • interguru says:

              “In fact, there probably isn’t a well-established economic theory …”

              One thing we should have learned from 2008 is that economics is a branch of philosophy, not math or physics. Piketty’s book, “Capital”, contains a total of one equation. All these elaborate mathematical models stand on a flimsy foundation of some philosophical assumption. And they all eventually fail. These models come from physics envy, where models do work.

              As Gail has so perceptively noted, all our standard economic models are built on an unstated assumption of abundant resources, and are now failing. Debates over economic models are like arguing over the best menu selections on the Titanic.

            • kesar0 says:

              “Debates over economic models are like arguing over the best menu selections on the Titanic.”

              Well said.

            • Fast Eddy says:

              That’s a Fine World hall of fame one-liner!

            • James says:

              The oil industry collapsing is like the US steel industry collapsing in the 70s, we ran out of iron, we ran out of coal. Then Japanese steel was cheaper.

              Actually, the oil industry collapsing is more like the world reverting to the year 1850 again overnight, with the prognosis for further equally disruptive reversals immediately thereafter baked in as well. In short, it’ll be nothing like anyone currently alive has ever experienced.

            • Our economic system behaves in a peculiar way. We need to get more and more wages back to workers, if the system is to keep growing (because with more wages, the workers can buy food, clothing, new houses, motorcycles, cars–this creates the necessary “demand” to keep the system going). Young people living at home indefinitely with their parents don’t add much “demand” to the system.

              One problem is that the “overhead” of the system keeps skimming off more of the (energy) profits produced. This overhead is used for a variety of purposes–more expensive oil extraction (because of diminishing returns), growing payments to the elderly, growing healthcare costs, growing costs of advanced education. Unless the worker is producing more and more, through the increased leveraging available by using more and more mechanization (made possible by energy products), the worker’s wages., net of taxes and mandated health care payments fall. The workers can’t afford new homes and cars, so that the world economy slows, as it does now. The prices of fossil fuels drop, as do the prices of other commodities.

            • madflower69 says:

              “One problem is that the “overhead” of the system keeps skimming off more of the (energy) profits produced.”
              We are correcting the part of the system where the oil companies are skimming off the top. The government skims enough.

              The second correction is trying to give our workers opportunity for better jobs.Not necessarily white collar jobs, but above minimum wage service jobs. I know two gas station attendents that recently left their jobs for 16 dollar an hour jobs at a factory with paid health insurance and they are ecstatic about it.

              These are the same types of jobs we keep outsourcing to China and we really need them back to help workers increase their wealth. It has a side effect, that we might not be importing something from China, and adding to that deficit too.

            • madflower69 says:

              “Actually, the oil industry collapsing is more like the world reverting to the year 1850 again overnight, with the prognosis for further equally disruptive reversals immediately thereafter baked in as well.”

              Maybe! The electric motor was invented in 1832 and the first gas engine was invented in 1873. Ford’s first car used an electric motor, and electric cars were extremely popular through the 1920s with about half the market until the great depression.

              Perovskite was discovered in 1839, which can be used with solar panels, and VW maybe using it for batteries.

              The funny part is most of our industry uses electric now. We switched most of it in the 70s. It is just the industrial chemicals, and the transportation. Most of the industrial chemicals uses a handful of standard building blocks. They will use whatever is the cheapest. Transportation is quite a bit trickier.

        • Don:

          M. King Hubbert made a model showing a symmetrical curve that descends the same as it rose, based on the assumption that nuclear would take over. Without nuclear providing several hundred million barrels of oil equivalent in energy, the down side of the slope will be a Seneca Cliff, a rapid collapse to near zero.

          The good news is, we could be only a month away from finding out!

          • Don Stewart says:

            Matthew Krajcik
            One of Gail’s objections to the model is that it treats oil as an energy source, and going to zero is a very bad thing. As I understand Gail’s objections, she thinks that we might continue to produce oil using coal and natural gas even if the oil was a net negative. Because oil has very valuable transportation uses.

            My answer to her objection is that if Hill’s model has given us an accurate assessment that one of our major energy sources is about to go negative, it has done yeoman work and deserves a pat on the back. Getting into the fine details of exactly how the collapse unfolds is beyond it’s capability.

            Don Stewart

            • madflower69 says:

              “As I understand Gail’s objections, she thinks that we might continue to produce oil using coal and natural gas even if the oil was a net negative. ”

              We aren’t going to. It is unrealistic to produce a generic product to refine into high priced finished products when the synthesis process produces the products directly.

              We already can make gas/diesel/jetfuel from biomass. There are a number of companies in the US that already do it, and even more worldwide.

            • “My answer to her objection is that if Hill’s model has given us an accurate assessment that one of our major energy sources is about to go negative, it has done yeoman work and deserves a pat on the back”

              I think the world would have been a better place without it. Personally, I have benefitted quite a bit in the short term, but the world as a whole has definitely suffered due to humans finding fossil fuels.

            • Without fossil fuels, there wouldn’t be very many of us.

          • Greg Machala says:

            We live in an artificially create ecosystem. Almost no one currently alive in the Western World has ever lived outside of this artificial bubble. We are literally all bubble babies. It is almost like living in a virtual world. And the internet is a virtual world inside of another virtual world. We are so far removed from reality it isn’t even funny. Reality will bite us very hard.

            • Fast Eddy says:

              And when the bubble busts it will be like dumping billions of babies into the jungle…

  34. interguru says:

    Global electric power grid spanning continents and even oceans

    An article in IEEE Spectrum talks about a super-grid to swap electric power for continental distances. The introduction says it all

    “Let’s Build a Global Power Grid
    With a little DC wizardry and a lot of cash, we could swap power across continents”

    (note: DC is direct current, not Washington )

    http://spectrum.ieee.org/energy/the-smarter-grid/lets-build-a-global-power-grid?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+IeeeSpectrum+%28IEEE+Spectrum%29

    • Ed_Pell says:

      The sun is always shining somewhere. Here in NYS they want to build a 150 mile 1GW transmission line for 1.3 billion dollars. Let’s see 200GW over 24,000 miles is 32 trillion dollars. That is just for US electric, not transport, not heat.

      • Ed_Pell says:

        Now that is a stimulus package. Not sure the fed can marshal 32 trillion of REAL PHYSICAL assets though.

      • interguru says:

        The gist of the articles is that these transmission lines can be built a significantly lower cost with new DC technology.

        • madflower69 says:

          No, he was just spouting his mouth off lobbying for a global grid. Pulsed HVDC has been used for quite a few years and the article really didn’t present anything newsworthy.

          Tesla actually realized his mistake with AC and pulsed DC would work better, but I think that was a number of years after Westinghouse had run with AC. I think it was while he was working on his wireless intercontinental electric transmission project

    • The proposed global power grid is a very fossil fuel dependent system, both for building the wires and maintaining them. No doubt helicopters would be needed for repair in many places. These don’t run on batteries, the last I heard. (Even if they did, the batteries are built using fossil fuels.) So this is a very fossil fuel dependent system.

      In theory, connecting together electric grids can help reduce the needed world electrical capacity (for a given amount of electrical usage) because the variability of world energy consumption and production should be lower than the variability of the local pieces. In a way, it is a more elaborate version of what has been happening on a more local scale, using AC wiring. If this were being proposed 20 years ago, and if it could be shown to reduce cost per kWh of electricity, I can see it would make sense. Now, I don’t think it does. We are too close to fossil fuel limits.

      • Greg Machala says:

        I agree that we are too close to fuel and resource limits at this point in time. The rate that we are producing energy resources is flat out. There is no longer spare capacity to devote to building out a new electrical supply system. Everything comes from the fossil fuel supply chain. If this infrastructure is built, it still has to be maintained and the jobs that were created would have to persist. I think society would be better off by not even messing with renewable or an other structural changes at this point in time. I feel that would buy us a little more time rather than burning up the last remaining reserves of energy on fruitless pursuits.

  35. Fast Eddy says:

    The Fed rigs the bond market. The cronies rig the stock market. Here is how it works…

    The C-suite cronies buy shares of their own companies in the open market and then cancel them. This increases the earnings per share of the remaining shares, pushing up their value. In turn, this makes the cronies’ stock options more valuable… triggering big bonus payouts.

    Bearish money manager John Hussman at Hussman Funds elaborates:

    http://wolfstreet.com/2015/08/19/wall-street-is-running-out-of-time-and-money/

    • John Doyle says:

      Have you seen this book by Bill Bonner?
      “Hormegeddon” [Too much of a good thing leads to disaster”]
      Unfortunately I’ve only got a pdf, which won’t download here,
      but it’s a good read. Available from Amazon.

      • James says:

        John,
        I think the title pretty much speaks for itself.
        James

        • John Doyle says:

          It is an apt title and yes we all should understand what too much of a good thing will lead too. But it’s a very entertaining read, with a few holes in his understanding of money [surprise surprise.]

    • Greg Machala says:

      It works until it doesn’t anymore. I see this share buying scam as a shining example of destructive growth. Our modern world has changed from productive growth to destructive growth and increasing amounts of pollution. I cannot see how this share buying scam is productive growth. Therefore I see this as more evidence that collapse isn’t very far away.

  36. Ed_Pell says:

    The cost of pumped hydro storage is about $1,000,000,000 per GWHr of storage. NYC consumes 20GW per hour. One hour of NYC storage 20 billion dollars. One week of cloudy days 168 billion dollars of storage. The cost of 120GW* of transmission lines about 120 billion dollars. Cost of 120GW of panels and fixtures 180 billion dollars. Total 168+120+180, 468 billion dollars.

    22.8 billion per year capital cost (over 60 years at 4% for transmission and storage, 30 years for solar) and say 1% maintenance cost of 4.7 billion for a total cost per year of 27.5 billion. Gives a cost of electric of 15.7 cents per KWHr. Not bad.

    * using a factor of three because we get 6 hours of bright sun in 24 hours and we need extra to cover the cloudy days another factor of two, total factor 6. 20GW*6=120GW

  37. Fast Eddy says:

    The Next Leg Of The Commodity Carnage: Attention Shifts To Traders – Glencore Crashes, Noble Default Risk Soars

    Commodity trading giant Glencore may have top-ticked the commodity supercycle with its 2011 IPO, but it’s been downhill ever since (66% downhill to be precise if measured by the tumble in the stock price), culminating this morning when the Baar, Switzerland-based mining and commodity giant reported a first half net loss of $676 million, compared with net profit of $1.72 billion a year ago.

    Revenue tumbled 25% to $85.7 billion after the company admitted China’s economic slowdown had caught the company “by surprise” and that no one in the mining industry “can read China” at the moment. The result: GLEN stock had plunged by 9% as of the last check, wiping out $3 billion in market value, and down a whopping 44% in the past three months, substantially underperforming its peers Rio Tinto (which Glencore once tried to acquire) and BHP Billiton.

    http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/08/glencore%20stock_0.jpg

    More http://www.zerohedge.com/news/2015-08-19/next-leg-commodity-carnage-attention-shifts-traders-glencore-crashes-noble-default-r

    • We have too many parts of the economy down–oil, natural gas, coal, metals, some foods. It would seem like the commodity problems would at some point lead to debt defaults and transfer to rest of the economy–perhaps through haircuts to bank account balances, as banks fail. With bank account balances, demand for all kinds of goods would drop.

  38. eARTH says:

    This new anthropology study may be interest to finite worlders.

    There has been a myth, encouraged by Marija Gimbutas (famous also for the IE Kurgan hypothesis) in the 1970s, that Neolithic farming cultures were pacifist, even matriarchal. Of course the obvious problem with the pacifist farming scenario is that farming populations expand their numbers beyond what their land can support and so communities then fight it out over lands.

    A new study backs up other findings of mass graves at the end of the Linear Pottery culture. It is not clear why there was widespread genocide at the end of the LBK, it could have been due to climatic changes that made the land less productive and less able to support the previous communities.

    There would seem to be an obvious analogy there for what happens when a material culture approaches its end, for us industrial civilization…

    Warfare and torture in the last years of the LBK

    Mass grave reveals prehistoric warfare in ancient European farming community

    Shattered skulls and shin bones of 7000-year-old skeletons may point to torture and mutilation not previously observed in early Neolithic, Linear Pottery culture

    http://www.theguardian.com/science/2015/aug/17/mass-grave-prehistoric-warfare-ancient-european-farming-community-neolithic

    quote:

    In the 1980s, a number of similar mass graves were found in Talheim, Germany, and Asparn, Austria. The latest grim discovery bolsters evidence for prehistoric warfare in the final years of the culture, and points to torture and mutilation not recorded before.

    “This is a classic case where we find the ‘hardware’: the skeletal remains, the artefacts, everything that is durable we can find in the graves. But the ‘software’: what people were thinking, why they were doing things, what their mindset was at this time, of course was not preserved,” Meyer said.

    The scientists’ best guess is that a small farming village was massacred and thrown into a pit nearby. The skeletons of young women were absent from the grave, which suggests that the attackers may have taken the women captive after killing their families.

    It is likely that fighting broke out over limited farming resources, upon which people depended for survival. Unlike their nomadic hunter-gatherer ancestors, people of the Linear Pottery culture settled into a farming lifestyle. Communities cleared forests to farm crops and lived in timber longhouses alongside their livestock.

    The landscape soon became full of farming communities, putting a strain on natural resources. Along with adverse climate change and drought, this led to tension and conflict. In acts of collective violence, communities would come together to massacre their neighbours and take their land by force.

    Lawrence Keeley, an anthropologist at the University of Illinois in Chicago, said that alongside Talheim and Asparn, this latest massacre discovery fits a pattern of common and murderous warfare. “The only reasonable interpretation of these cases, as here, is that a whole typically-sized Linear Pottery culture hamlet or small village was wiped out by killing the majority of its inhabitants and kidnapping the young women. This represents yet another nail in the coffin of those who have claimed that war was rare or ritualised or less awful in prehistory or, in this instance, the early Neolithic.”

    […]

    see also: https://en.wikipedia.org/wiki/Linear_Pottery_culture

    • xabier says:

      The Neolithic ethnic cleansing might be well applied to my village:

      The older people of both sexes are an obstacle to change, devoted to sterile chemical-drenched gardens and car culture, and malicious and scheming to boot!

      The young males who live off social security and petty theft deserve a knock on the head and wouldn’t be missed.

      No pretty females, although most would make breeding stock and decent labourers which is the object of the exercise.

      Me? I can be the image-painting, idol-carving shaman. And the Gods will strike you down if I don’t get first helping in the communal feast!

    • Thanks! We don’t know whether the issue was climate change or simple overshoot and collapse caused by rising population relative to arable land.

      • eARTH says:

        Gail, Paul and Xabier are my guri.

        Yes I went for a walk in the woods one day with my family and everything was totally real. I barely noticed at the time and I have rarely looked back since, and modern Brtish State already knows that it is defeated. That is why there is all this panic.

        (don can write a poem here.)

  39. Jarle B says:

    In Norway there’s an election this autumn. Some of the political parties have noticed how our main source of income is no longer what it was and voices that we need to find other things to do. No mentioning of the fact that “other things” doesn’t generate money like oil and that we have quite different times ahead. It’s laughable – at the moment none of the parties will get my vote.

    • Ed_Pell says:

      Jarle, I read an article today that said the Chinese Government is looking to the “internet of things” to boost a slowing economy” hahahahaha. Yeah, Wujin, look I can turn off my kitchen light using my smartphone. [/scarc on] Now that is wealth.

    • I am sure that being a politician in Norway will take some creative talking in this next election.

      Let’s hope too, that the securities that Norway has put away hold their value. The time when oil loses its value is likely to be followed in the not too distant future by the time when bonds start defaulting and stocks drop in value as well. That will also be interesting to explain.

      • John Doyle says:

        Norway is a monetary sovereign country. That wealth fund they started is completely unnecessary.
        Their CB can pay at any time any sum in their own money for any expense. Having a weath fund simply give banks opportunities for fees and charges. They like people to be so ignorant!

        • The value of the Norwegian Kroner depends on the value of oil and also on how much money they are printing. http://www.xe.com/currencycharts/?from=NOK&to=USD&view=10Y

          I wouldn’t count on your strategy working.

          • John Doyle says:

            It is simple logic, Gail. The Kroner is entirely dependent for its existence on the government creating it. It is the God of the Kroner. It can spend or ruin it entirely without limit. It creates the currency by spending on or purchasing something required. It can do it today it can do it in a decade, it has NO NEED for a storage of kroner at any time, never, ever, ever. It is strictly ad hoc.

            • Lizzy says:

              John, is this the Modern Monetary Theory? If so, I’m not sure how this works in a globalised system? I think I understand a bit about this (used to read Australian writing on it), but I never quite got the part where the Norwegian Government’s (for example) decision on the exchange rate has any validity in other currency areas.
              Can you enlighten me on this? Thanks.

            • John Doyle says:

              Lizzy. As I just said on another reply, what Norway, or any sovereign nation, does is independent within it’s own currency orbit. The US is different as it’s the main Reserve currency and also because it’s the only currency in which trade is designated in its dollars. The US can make a big difference. We are seeing that China can also do that now.
              It’s not MMT territory, which only describes imports and exports and not currency movements. MMT can apply to any sovereign nation’s currency and finance within the country itself.

            • James says:

              John,

              “God of Kroner,” aside, neither Norway, the US, the EU, or anyone else can artificially enforce their self-proclaimed “currency” to be worth anything other than what the great mass of people who trade with it (or not) accept to be. But of course you know that already.

              Might as well call them “John Doyle’s Boners,” and at least trade in actual hypothetical “goods?”

              James

            • John Doyle says:

              Of course James. But I’m just the messenger. I don’t make any of this up.

          • InAlaska says:

            If Norway can develop its own refining capacity, sufficient for its domestic fuel needs, it won’t need a strategy. It can make its own fuel oil and gasoline. This will power its fishing fleet and its border patrol. It will be a good place to be come the great collapse, along with New Zealand and Alaska.

            • interguru says:

              Where will they get their spare parts?

            • Fast Eddy says:

              How would one keep an oil platform and refinery operational post collapse?

              https://upload.wikimedia.org/wikipedia/commons/5/51/Anacortes_Refinery_31911.JPG

              Even if you could operate one of these (you can’t) — what would you use the gasoline for — cars break frequently — where would the spare parts come from?

              This is all total nonsense. When BAU busts we dial back at least a couple of hundred years.

              But with 7B+ people — and no food or energy.

              Are you ready to suffer and die?

            • Jarle B says:

              “How would one keep an oil platform and refinery operational post collapse?

              Even if you could operate one of these (you can’t) — what would you use the gasoline for — cars break frequently — where would the spare parts come from?”

              Our not so old Toyota had a flat battery earlier this summer. Absolutely nothing worked – even the gearbox needs electricity for it’s computer etc, so no way to push start. We got it jump started, but what if the gearbox computer breaks and there is no spare in sight?

            • Jarle B says:

              InAlaska: “If Norway can develop its own refining capacity, sufficient for its domestic fuel needs, it won’t need a strategy. It can make its own fuel oil and gasoline. This will power its fishing fleet and its border patrol. It will be a good place to be come the great collapse, along with New Zealand and Alaska.”

              We have the refining capacity to serve our own needs ( https://en.wikipedia.org/wiki/Mongstad ) . Problem is, the North Sea is a harsh place – do you think we can keep the oil flowing if the rest of the world stops?

  40. Stilgar Wilcox says:

    http://www.bloomberg.com/energy
    Wednesday the 19th:
    WTI -1.94 to 40.68
    Brent -1.82 to 46.99
    Oh my! WTI almost into the high 30’s.

  41. Fast Eddy says:

    In Brazil, General Motors Co. has been halting factories and laying off thousands. Latam Airlines, the region’s biggest, is cutting flights. And the world’s third-largest planemaker, Embraer SA, is delaying its biggest new aircraft.

    In the midst of its deepest economic and political crisis in a generation, Brazil is contending with a business climate so punishing that major projects across numerous sectors are being frozen or shrunk, while small businesses slash prices and shift focus.

    Brazil’s carmakers also have watched demand plummet, with sales down 20 percent in the first half of this year compared with the same period in 2014, carmaker association Anfavea said. Both GM and Volkswagen AG are temporarily shuttering factories and putting workers on leave. They declined to comment.

    More http://www.bloomberg.com/news/articles/2015-08-18/from-planes-to-cafes-brazil-s-economy-on-hold-as-crisis-deepens

    • Rodster says:

      I thought the BRICS were going to save the world from the evil western banksters?
      /sarc

    • John Doyle says:

      As long as Brazil avoids the charms of neo-liberal austerity the economy can ride it out. It just has to spend even with some rise in inflation. Deficit spending is the only panacea and will stop rioting and general bad behaviour. But Dilma and Co have to understand money to act.

    • The Brazil situation certainly is not helping world demand for commodities. I don’t know how much US$ denominated debt Brazil has–whatever it is, it would seem like there is a rising risk of default.

      • John Doyle says:

        It is sheer madness to have debt denominated in a foreign currency. But there are so many ignorant politicians today this mismanagement of the economy is downright dangerously incompetent!

        • James says:

          Easier said than done, don’t ya think? But actually, incompetence is at least matched by corruption and greed at this point, in my estimation.

          “Never leave to random stupidity what can better be ascribed to pure avarice,” is my motto from here on out.

          I think it’s a winner.

          • John Doyle says:

            Sure James. It’s almost never anything but incompetence, but sometimes driven by malfeasance and greed.

  42. Fast Eddy says:

    How the Worst Performing Oil Companies Are Making More Than Exxon

    http://assets.bwbx.io/images/ioSGWoweLsmU/v2/-1x-1.png

    Goodrich Petroleum Corp., the biggest loser in the Bloomberg Intelligence index of North American independent producers, sold its output for $86.49 a barrel in the second quarter, according to data compiled by Bloomberg. Halcon Resources Corp., which is down 49 percent this year, reaped $81.18. Compare that with Chevron Corp., which received an average $54.26, and Exxon Mobil, which got $56.90.

    The reason: lack of cash. Smaller companies with riskier credit bought insurance against an oil crash, which locked in higher prices and reassured lenders that they’d get paid back. The hedges have been critical as oil dipped more than 60 percent since June 2014 to a six-year low below $42 a barrel.

    More http://www.bloomberg.com/news/articles/2015-08-19/oil-patch-s-biggest-losers-sell-crude-for-more-than-exxon-mobil

    • John Doyle says:

      Does that signify the sellers realising well over the base price are costing the derivative part of the financial economy? That’s where all the wagers go and where investors absorb losses. It’s all off balance sheet so no one outside that coterie of players gets to see the full picture [?]. Someone is paying but if it’s there then its small beer compared to the min $800 trillion tied up in derivatives etc

    • I can believe that small companies were more inclined to hedge their results than large companies.

  43. Fast Eddy says:

    Germany Struggles With Too Much Renewable Energy
    http://www.zerohedge.com/news/2015-08-18/germany-struggles-too-much-renewable-energy

    Contradiction:

    The German Solar Disaster: 21 Billion Euros Burned
    http://www.thegwpf.com/german-solar-disaster-21-billion-euros-burned/

    Britain, Germany, Italy, Japan and France burned more coal between 2009 and 2013 and demanded poor countries slash their carbon emissions
    http://www.theguardian.com/environment/2015/jun/08/five-g7-nations-increased-their-coal-use-over-a-five-year-period-research-shows

  44. Ed_Pell says:

    Anglo-Saxon poem ‘The Ruin’ circa 8th century:

    The city buildings fell apart, the works
    Of giants crumble. Tumbled are the towers
    Ruined the roofs, and broken the barred gate,
    Frost in the plaster, all the ceilings gape,
    Torn and collapsed and eaten up by age.
    And grit holds in its grip, the hard embrace
    Of earth, the dead-departed master-builders,
    Until a hundred generations now
    Of people have passed by. Often this wall
    Stained red and grey with lichen has stood by
    Surviving storms while kingdoms rose and fell.
    And now the high curved wall itself has fallen.

    http://aeon.co/magazine/science/searching-for-the-archaeologicalruins-of-alien-civilisations/

    • xabier says:

      Ed

      I look at the 13th century door in the local church, (with special marks in the ironwork to deter witches, from my experience of the villagers it didn’t work) or at the nearly-1,000 yr old tower of the church in town opposite the pub -where from time to time I may be found – and find myself wondering how many more years will they last for.

      The remains of a large Roman settlement have been found nearby while a huge development is being built for Chinese students, 3,000 of them.

      After the fall of Rome, it simply disappeared from the records and came as a complete surprise.

      The same might soon be true of that development, if it is ever finished…..

    • InAlaska says:

      Ed. I love this poem. It reminds me of Ozymandius, by Shelley. “look on my works, ye mighty, and despair.”

Comments are closed.