Deflationary Collapse Ahead?

Both the stock market and oil prices have been plunging. Is this “just another cycle,” or is it something much worse? I think it is something much worse.

Back in January, I wrote a post called Oil and the Economy: Where are We Headed in 2015-16? In it, I said that persistent very low prices could be a sign that we are reaching limits of a finite world. In fact, the scenario that is playing out matches up with what I expected to happen in my January post. In that post, I said

Needless to say, stagnating wages together with rapidly rising costs of oil production leads to a mismatch between:

  • The amount consumers can afford for oil
  • The cost of oil, if oil price matches the cost of production

This mismatch between rising costs of oil production and stagnating wages is what has been happening. The unaffordability problem can be hidden by a rising amount of debt for a while (since adding cheap debt helps make unaffordable big items seem affordable), but this scheme cannot go on forever.

Eventually, even at near zero interest rates, the amount of debt becomes too high, relative to income. Governments become afraid of adding more debt. Young people find student loans so burdensome that they put off buying homes and cars. The economic “pump” that used to result from rising wages and rising debt slows, slowing the growth of the world economy. With slow economic growth comes low demand for commodities that are used to make homes, cars, factories, and other goods. This slow economic growth is what brings the persistent trend toward low commodity prices experienced in recent years.

A chart I showed in my January post was this one:

Figure 1. World Oil Supply (production including biofuels, natural gas liquids) and Brent monthly average spot prices, based on EIA data.

Figure 1. World Oil Supply (production including biofuels, natural gas liquids) and Brent monthly average spot prices, based on EIA data.

The price of oil dropped dramatically in the latter half of 2008, partly because of the adverse impact high oil prices had on the economy, and partly because of a contraction in debt amounts at that time. It was only when banks were bailed out and the United States began its first round of Quantitative Easing (QE) to get longer term interest rates down even further that energy prices began to rise. Furthermore, China ramped up its debt in this time period, using its additional debt to build new homes, roads, and factories. This also helped pump energy prices back up again.

The price of oil was trending slightly downward between 2011 and 2014, suggesting that even then, prices were subject to an underlying downward trend. In mid-2014, there was a big downdraft in prices, which coincided with the end of US QE3 and with slower growth in debt in China. Prices rose for a time, but have recently dropped again, related to slowing Chinese, and thus world, economic growth. In part, China’s slowdown is occurring because it has reached limits regarding how many homes, roads and factories it needs.

I gave a list of likely changes to expect in my January post. These haven’t changed. I won’t repeat them all here. Instead, I will give an overview of what is going wrong and offer some thoughts regarding why others are not pointing out this same problem.

Overview of What is Going Wrong

  1. The big thing that is happening is that the world financial system is likely to collapse. Back in 2008, the world financial system almost collapsed. This time, our chances of avoiding collapse are very slim.
  2. Without the financial system, pretty much nothing else works: the oil extraction system, the electricity delivery system, the pension system, the ability of the stock market to hold its value. The change we are encountering is similar to losing the operating system on a computer, or unplugging a refrigerator from the wall.
  3. We don’t know how fast things will unravel, but things are likely to be quite different in as short a time as a year. World financial leaders are likely to “pull out the stops,” trying to keep things together. A big part of our problem is too much debt. This is hard to fix, because reducing debt reduces demand and makes commodity prices fall further. With low prices, production of commodities is likely to fall. For example, food production using fossil fuel inputs is likely to greatly decline over time, as is oil, gas, and coal production.
  4. The electricity system, as delivered by the grid, is likely to fail in approximately the same timeframe as our oil-based system. Nothing will fail overnight, but it seems highly unlikely that electricity will outlast oil by more than a year or two. All systems are dependent on the financial system. If the oil system cannot pay its workers and get replacement parts because of a collapse in the financial system, the same is likely to be true of the electrical grid system.
  5. Our economy is a self-organized networked system that continuously dissipates energy, known in physics as a dissipative structureOther examples of dissipative structures include all plants and animals (including humans) and hurricanes. All of these grow from small beginnings, gradually plateau in size, and eventually collapse and die. We know of a huge number of prior civilizations that have collapsed. This appears to have happened when the return on human labor has fallen too low. This is much like the after-tax wages of non-elite workers falling too low. Wages reflect not only the workers’ own energy (gained from eating food), but any supplemental energy used, such as from draft animals, wind-powered boats, or electricity. Falling median wages, especially of young people, are one of the indications that our economy is headed toward collapse, just like the other economies.
  6. The reason that collapse happens quickly has to do with debt and derivatives. Our networked economy requires debt in order to extract fossil fuels from the ground and to create renewable energy sources, for several reasons: (a) Producers don’t have to save up as much money in advance, (b) Middle-men making products that use energy products (such cars and refrigerators) can “finance” their factories, so they don’t have to save up as much, (c) Consumers can afford to buy “big-ticket” items like homes and cars, with the use of plans that allow monthly payments, so they don’t have to save up as much, and (d) Most importantly, debt helps raise the price of commodities of all sorts (including oil and electricity), because it allows more customers to afford products that use them. The problem as the economy slows, and as we add more and more debt, is that eventually debt collapses. This happens because the economy fails to grow enough to allow the economy to generate sufficient goods and services to keep the system going–that is, pay adequate wages, even to non-elite workers; pay growing government and corporate overhead; and repay debt with interest, all at the same time. Figure 2 is an illustration of the problem with the debt component.

    Figure 2. Repaying loans is easy in a growing economy, but much more difficult in a shrinking economy.

    Figure 2. Repaying loans is easy in a growing economy, but much more difficult in a shrinking economy.

Where Did Modeling of Energy and the Economy Go Wrong?

  1. Today’s general level of understanding about how the economy works, and energy’s relationship to the economy, is dismally low. Economics has generally denied that energy has more than a very indirect relationship to the economy. Since 1800, world population has grown from 1 billion to more than 7 billion, thanks to the use of fossil fuels for increased food production and medicines, among other things. Yet environmentalists often believe that the world economy can somehow continue as today, without fossil fuels. There is a possibility that with a financial crash, we will need to start over, with new local economies based on the use of local resources. In such a scenario, it is doubtful that we can maintain a world population of even 1 billion.
  2. Economics modeling is based on observations of how the economy worked when we were far from limits of a finite world. The indications from this modeling are not at all generalizable to the situation when we are reaching limits of a finite world. The expectation of economists, based on past situations, is that prices will rise when there is scarcity. This expectation is completely wrong when the basic problem is lack of adequate wages for non-elite workers. When the problem is a lack of wages, workers find it impossible to purchase high-priced goods like homes, cars, and refrigerators. All of these products are created using commodities, so a lack of adequate wages tends to “feed back” through the system as low commodity prices. This is exactly the opposite of what standard economic models predict.
  3. M. King Hubbert’s “peak oil” analysis provided a best-case scenario that was clearly unrealistic, but it was taken literally by his followers. One of Hubbert’s sources of optimism was to assume that another energy product, such as nuclear, would arise in huge quantity, prior to the time when a decline in fossil fuels would become a problem.
    Figure 2. Figure from Hubbert's 1956 paper, Nuclear Energy and the Fossil Fuels.

    Figure 3. Figure from Hubbert’s 1956 paper, Nuclear Energy and the Fossil Fuels.

    The way nuclear energy operates in Figure 2 seems to me to be pretty much equivalent to the output of a perpetual motion machine, adding an endless amount of cheap energy that can be substituted for fossil fuels. A related source of optimism has to do with the shape of a curve that is created by the sum of curves of a given type. There is no reason to expect that the “total” curve will be of the same shape as the underlying curves, unless a perfect substitute (that is, having low price, unlimited quantity, and the ability to work directly in current devices) is available for what is being modeled–here fossil fuels. When the amount of extraction is determined by price, and price can quickly swing from high to low, there is good reason to believe that the shape of the sum curve will be quite pointed, rather than rounded. For example we know that a square wave can be approximated using the sum of sine functions, using Fourier Series (Figure 4).

    Figure 3. Source: Wolfram Mathworld.

    Figure 4. Sum of sine waves converging to a square wave. Source: Wolfram Mathworld.

  4. The world economy operates on energy flows in a given year, even though most analysts today are accustomed to thinking on a discounted cash flow basis.  You and I eat food that was grown very recently. A model of food potentially available in the future is interesting, but it doesn’t satisfy our need for food when we are hungry. Similarly, our vehicles run on oil that has recently been extracted; our electrical system operates on electricity that has been produced, essentially simultaneously. The very close relationship in time between production and consumption of energy products is in sharp contrast to the way the financial system works. It makes promises, such as the availability of bank deposits, the amounts of pension payments, and the continuing value of corporate stocks, far out into the future. When these promises are made, there is no check made that goods and services will actually be available to repay these promises. We end up with a system that has promised very many more goods and services in the future than the real world will actually be able to produce. A break is inevitable; it looks like the break will be happening in the near future.
  5. Changes in the financial system have huge potential to disrupt the operation of the energy flow system. Demand in a given year comes from a combination of (wages and other income streams in a given year) plus the (change in debt in a given year). Historically, the (change in debt) has been positive. This has helped raise commodity prices. As soon as we start getting large defaults on debt, the (change in debt) component turns negative, and tends to bring down the price of commodities. (Note Point 6 in the previous section.) Once this happens, it is virtually impossible to keep prices up high enough to extract oil, coal and natural gas. This is a major reason why the system tends to crash.
  6. Researchers are expected to follow in the steps of researchers before them, rather than starting from a basic understudying of the whole problem. Trying to understand the whole problem, rather than simply trying to look at a small segment of a problem is difficult, especially if a researcher is expected to churn out a large number of peer reviewed academic articles each year. Unfortunately, there is a huge amount of research that might have seemed correct when it was written, but which is really wrong, if viewed through a broader lens. Churning out a high volume of articles based on past research tends to simply repeat past errors. This problem is hard to correct, because the field of energy and the economy cuts across many areas of study. It is hard for anyone to understand the full picture.
  7. In the area of energy and the economy, it is very tempting to tell people what they want to hear. If a researcher doesn’t understand how the system of energy and the economy works, and needs to guess, the guesses that are most likely to be favorably received when it comes time for publication are the ones that say, “All is well. Innovation will save the day.” Or, “Substitution will save the day.” This tends to bias research toward saying, “All is well.” The availability of financial grants on topics that appear hopeful adds to this effect.
  8. Energy Returned on Energy Investment (EROEI) analysis doesn’t really get to the point of today’s problems. Many people have high hopes for EROEI analysis, and indeed, it does make some progress in figuring out what is happening. But it misses many important points. One of them is that there are many different kinds of EROEI. The kind that matters, in terms of keeping the economy from collapsing, is the return on human labor. This type of EROEI is equivalent to after-tax wages of non-elite workers. This kind of return tends to drop too low if the total quantity of energy being used to leverage human labor is too low. We would expect a drop to occur in the quantity of energy used, if energy prices are too high, or if the quantity of energy products available is restricted.
  9. Instead of looking at wages of workers, most EROEI analyses consider returns on fossil fuel energy–something that is at least part of the puzzle, but is far from the whole picture. Returns on fossil fuel energy can be done either on a cash flow (energy flow) basis or on a “model” basis, similar to discounted cash flow. The two are not at all equivalent. What the economy needs is cash flow energy now, not modeled energy production in the future. Cash flow analyses probably need to be performed on an industry-wide basis; direct and indirect inputs in a given calendar year would be compared with energy outputs in the same calendar year. Man-made renewables will tend to do badly in such analyses, because considerable energy is used in making them, but the energy provided is primarily modeled future energy production, assuming that the current economy can continue to operate as today–something that seems increasingly unlikely.
  10. If we are headed for a near term sharp break in the economy, there is no point in trying to add man-made renewables to the electric grid. The whole point of adding man-made renewables is to try to keep what we have today longer. But if the system is collapsing, the whole plan is futile. We end up extracting more coal and oil today, in order to add wind or solar PV to what will soon become a useless grid electric system. The grid system will not last long, because we cannot pay workers and we cannot maintain the grid without a financial system. So if we add man-made renewables, most of what we get is their short-term disadvantages, with few of their hoped-for long-term advantages.


The analysis that comes closest to the situation we are reaching today is the 1972 analysis of limits of a finite world, published in the book “The Limits to Growth” by Donella Meadows and others. It models what can be expected to happen, if population and resource extraction grow as expected, gradually tapering off as diminishing returns are encountered. The base model seems to indicate that a collapse will happen about now.

Figure 5. Base scenario from 1972 Limits to Growth, printed using today's graphics by Charles Hall and John Day in "Revisiting Limits to Growth After Peak Oil"

Figure 5. Base scenario from 1972 Limits to Growth, printed using today’s graphics by Charles Hall and John Day in “Revisiting Limits to Growth After Peak Oil”

The shape of the downturn is not likely to be correct in Figure 5.  One reason is that the model was put together based on physical quantities of goods and people, without considering the role the financial system, particularly debt, plays. I expect that debt would tend to make collapse quicker. Also, the modelers had no experience with interactions in a contracting world economy, so had no idea regarding what adjustments to make. The authors have even said that the shapes of the curves, after the initial downturn, cannot be relied on. So we end up with something like Figure 6, as about all that we can rely on.

Figure 6. Figure 5, truncated shortly after production turns down, since modeled amounts are unreliable after that date.

Figure 6. Figure 5, truncated shortly after industrial output per capita (grey) and food per capita turns down, since modeled amounts are unreliable after that date.

If we are indeed facing the downturn forecast by Limits to Growth modeling, we are facing  a predicament that doesn’t have a real solution. We can make the best of what we have today, and we can try to strengthen bonds with family and friends. We can try to diversify our financial resources, so if one bank encounters problems early on, it won’t be a huge problem. We can perhaps keep a little food and water on hand, to tide us over a temporary shortage. We can study our religious beliefs for guidance.

Some people believe that it is possible for groups of survivalists to continue, given adequate preparation. This may or may not be true. The only kind of renewables that we can truly count on for the long term are those used by our forefathers, such as wood, draft animals, and wind-driven boats. Anyone who decides to use today’s technology, such as solar panels and a pump adapted for use with solar panels, needs to plan for the day when that technology fails. At that point, hard decisions will need to be made regarding how the group will live without the technology.

We can’t say that no one warned us about the predicament we are facing. Instead, we chose not to listen. Public officials gave a further push in this direction, by channeling research funds toward distant theoretically solvable problems, instead of understanding the true nature of what we are up against. Too many people took what Hubbert said literally, without understanding that what he offered was a best-case scenario, if we could find something equivalent to a perpetual motion machine to help us out of our predicament.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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1,514 Responses to Deflationary Collapse Ahead?

  1. Fast Eddy says:

    The 2008-09 Fixes Are No Longer Available

    In summary, the fixes for the 2008-09 recession are no longer available in the same scale or effectiveness. Expanding debt to push up demand and investment, rising state deficit spending, massive monetary stimulus programs—all of these now face limitations.

    This means the central banks and states have very limited tools to reignite growth as global recession trims borrowing, investment, hiring, sales and profits.


  2. Pingback: Staan we aan het begin van een wereldwijde deflatoire crisis ? Deel 3 | Paradoxnl's Blog

  3. alturium says:

    Hi Gail,

    Awesome article. I just wanted to say…

    I am your #1 Fan! ( no, too reminiscent of Misery)[DELETE][DELETE]

    I love your articles! (sounds a little pathetic) [DELETE][DELETE]

    I geek out on your analysis! ( *sigh* really pathetic) [DELETE][DELETE]

    Thank you, as always. You are awesome! ( okay, words fail me again *sigh* )

  4. Fast Eddy says:

    Haven’t read this yet … but I suspect it would be useful reading for those who believe bad stuff always happens somewhere else…

    Logavina Street: Life And Death In A Sarajevo Neighborhood
    by Barbara Demick, John Edmond Costello

    Logavina Street was a microcosm of Sarajevo, a six-block-long history lesson. For four centuries, it existed as a quiet residential area in a charming city long known for its ethnic and religious tolerance. On this street of 240 families, Muslims and Christians, Serbs and Croats lived easily together, unified by their common identity as Sarajavans. Then the war tore it all apart.

    As she did in her groundbreaking work about North Korea, Nothing to Envy, award-winning journalist Barbara Demick tells the story of the Bosnian War and the brutal and devastating three-and-a-half-year siege of Sarajevo through the lives of ordinary citizens, who struggle with hunger, poverty, sniper fire, and shellings.

    Logavina Street paints this misunderstood war and its effects in vivid strokes—at once epic and intimate—revealing the heroism, sorrow, resilience, and uncommon faith of its people.

  5. Stilgar Wilcox says:

    “In mid-2014, there was a big downdraft in (oil) prices, which coincided with the end of US QE3 and with slower growth in debt in China.”

    Gail, I went back and read your article again and found the above sentence. What is written there is true, but would just add the end of US QE3 also coincided with the beginning of a rise in dollar currency value. This put more pressure on emerging growth countries as it cost them more of their currency to purchase oil.

    One of the global economic concerns with the Fed raising interest rates in September (should that actually occur) is that it should also have the effect of raising the value of the dollar, adding even more pressure to emerging growth economies.

    • As I see it, the end of QE3 was one of the causes of the rise in US currency. If the US decides to raise its interest rates, that will likely make the US dollar rise higher yet.

      When other currencies are lower, it becomes more expensive to buy oil and other imported goods in those currencies. So that by itself is part of the fall in currency prices including oil. Raising interest rates will likely make commodity prices fall further–assuming everything stays together.

      • Stilgar Wilcox says:

        That makes for a very big decision by Yellen. Interesting how on the one hand she could begin to raise interest rates, which would indicate confidence in the economy, but also risk further damage, OR at the opposite end opt for QE4 if all hell seems like it is beginning to ensue. It’s like she’s standing on top of a very unsteady fence knowing the pitfalls of going in either direction, yet as we know in this ongoing saga of declining net energy there are no easy choices.

  6. dolph9 says:

    Yes but how exactly do you front run the action? With complete control of the markets, they can simply turn everything on a dime.

    By the way in response to a different poster’s question on how can America be doing so well, let me just say that I don’t buy, for a second, any of the data that comes out on the economy anymore. This goes for the whole world, but particularly China and America. I assume that we are in a permanent depression that will never end, and all of my decisions are informed from that. I’ve been burned by these people. I’ve decided to never let it happen to me again.

    For what it’s worth there is a simple way to hedge against both deflation and hyperinflation. It’s not perfect, but it will probably work. That is, to keep your wealth distributed between cash, and gold. If deflation wins, your cash will retain value, if hyperinflation wins, gold will be valuable. If neither is valuable, by definition the system has collapsed and you don’t need to worry because nobody else will have anything of value either. Perhaps prepping is for the third case.

    • madflower69 says:

      “For what it’s worth there is a simple way to hedge against both deflation and hyperinflation. It’s not perfect, but it will probably work. …”

      Covered calls work too.

  7. B9K9 says:

    John Drake said on August 26, 2015 “Hubbert was relying on nuclear energy to take over fossil fuels as the primary energy source for an expanding high tech civilization. Admiral Hyman Rickover, the father the US nuclear navy, was also very much aware of the strategic importance energy sources.”

    And there you have it – an excellent summary of our situation that essentially negates the need for any further discussion. I mean, really, what’s the point, other than passing the day in as pleasant of manner as possible?

    Suggestion: remove the personalities, and substitute the PTB as a convenient identifier. Let’s be frank – the human condition has **always been** framed by competition for scarce resources. Rulers are schooled in this eternal truth, so while “good citizens” (ie the ants) dutifully study hard, develop professional careers, go into debt, pay taxes, raise children, believe in imaginary friends, etc, the PTB focus on reality.

    Reality dictates history – the graph Hubbert was describing was probably first drawn somewhere in deep history at man’s earliest homesteads as resource depletion began to manifest itself and populations began to move. Likewise, Rickover’s awareness of resource constraints was first realized after forests were denuded to build homes, light fires, construct boats, etc.

    The real point I constantly try to make is that none of this is new to those whose job it is to understand these things. Therefore, the actions we see taking place at a geo-strategic level merely confirm (a) they are well aware; and (b) are already moving the pieces. In other words, they “go to work” each day – a reasonable astute person can merely observe these meta characteristics to deduce likely outcomes.

    The game for us is to stay one step of them – after all, they have to actually “work” (that is operate a military, run a trading desk, watch economic indicators, etc), while we are free to see clearly both what is occurring – and their reactions – and simply front run the action.

    • The Truth says:

      Reality is that, for all the abundant gifts, humanity cannot even come close to imitate the manifest magnificence of ONE living cell.

      Talk about your EPIC FAIL.

      No lessons were learned.

  8. Fast F Eddy says:

    Damian McBride is the former head of communications at the British treasury and former special adviser to Gordon Brown, erstwhile Prime Minister of the U.K. Yesterday he tweeted some surprising advice in response to the plunge in global equities markets.;

    Advice on the looming crash, No. 1: get hard cash in a safe place now; don’t assume banks & cashpoints will be open, or bank cards will work.

    Crash advice No. 2: do you have enough bottled water, tinned goods & other essentials at home to live a month indoors? If not, get shopping.

    Crash advice No. 3: agree a rally point with your loved ones in case transport and communication gets cut off; somewhere you can all head to.

    Evidently, McBride interprets the wipe-out of over $3 trillion in total global market cap during the three-day rout as a prelude to a much broader and deeper financial crash that will precipitate civil unrest.

    • B9K9 says:

      I will take the opposite trade – we will see a massive devaluation, rendering cash & cash equivalents worthless.

      A deflationary collapse ends both the PTB and MIC. Inflation keeps them in the game; in fact, it provides the rationale for more control since price controls, rationing, restrictions, etc will all have to be managed.

      You & I and a host of others here know there isn’t any solution, so the only question is time. All animals (and imagine plants as well) are genetically programmed to attempt to survive to the bitter end. If we extrapolate that characteristic, then we can surmise that groups will exhibit the same rationale.

      Therefore, simply bet on the method that extends power & control the longest. Simple, huh?

      • Fast Eddy says:

        The best bet anyone could have made since 2008 would have been to buy the index … don’t fight the Fed….

        What “Smart” Money? Hedge Funds Underperform Market For Seventh Straight Year

        “After roughly matching the S&P 500 through most of 1H 2015, funds lowered net exposures as the market declined in late June and failed to benefit as the index rebounded in July. The typical fund has returned +0.5% YTD, with equity long/short funds rising 1.3% and event-driven funds falling by 2.0%.”

        • B9K9 says:

          Consider the “Rake’s Progress” as an analogy of our collective debasement. In 2008, the Fed saw fit to still play lip service to the notion of offsetting debt in order to balance the books: debit loans receivable (US treasury bonds), credit funds available (federal reserve notes aka cash, checking, etc).

          As we all know, in this manner, the Fed – along with its BIS allies in the UK, EU, JP & PBOC – was able to inject $10, 20, 50(?) trillion into the global economy. But, but even with ZIRP & longer duration (essentially rendering the debt burden moot), the balance sheets still look “scary” because of all that debt.

          The problem, as is constantly stated by Gail, yourself, and a host of others, is what happens when the economic high wears off after the artificial inflation? If markets actually operated as a true price clearing mechanism, then of course we’d have a deflationary collapse once everyone realized the $trillions of notes receivable were never going to be re-paid ie they were entirely worthless.

          But let’s go back to the Rake’s Progress – after the initial denouement, what is left other than continuing upon the path that is before us so that we may ultimately meet our destiny? Once the Fed sheds the pretense of the need for an offsetting debit (ie loans receivable), they will be free to invent any valuation necessary to keep the flow of funds available to the debtors. In other words, outright money printing aka hyper-inflation aka social disruption aka emergency war powers.

          Money printing keeps the PTB in the game – a deflationary collapse renders their beautiful world entirely moot. That’s why we have nothing to concern ourselves with until we reach that stage. When we **do** get to that stage, then it’s simply a function of making sure one is properly aligned with their corresponding class/group formed by race, education, economic prospects, geography, etc.

          You shouldn’t have to fear the warlords – any person who knows how this is going down should be preparing to be part of the ruling warlord group. Sheesh! It’s not like anyone doesn’t know how this is going to play out. Global population needs to get down around 500m – you’re either going to be part of the solution (solution) or part of the problem (dead).

          • Fast Eddy says:

            War lords are very fickle fellows….. see Tony Soprano ….

            Remember the episode where the father of one his kid’s friends (owner of a sporting goods store) tries to make friends with Tony the War Lord….

            It didn’t end well.

            To be a War Lord you cannot be a kind, understanding type….

          • The Truth says:

            Interesting, but in today’s world of instantaneous transactions your scenario would result in a dissecting aortic aneuryrism, economically speaking – when FAITH FAILS

        • “Smart Money” doesn’t exist, come on?
          There were people with several scalps under their belt already after ~similar experience of 3-4decades in investment cycles (or longer for very “old money” families). For them it was a no brainer to put money into apples, googles, and teslas and strike 20-30x bagger in each cycle. After several cycles (say only 3rounds: 30x30x30x) they are billionaires from a relatively tiny starting pool of capital. They get burned ocassionally as well, but if you track these people, they recommended specifics at given time with high degree of probability to success.

          The point is that such situation was made possible exclusively by exponential energy/raw resources exploitation megatrend, and tiny minority was able to piggyback on the event. Are they going to keep the smarts for a new era, complete paradigm shift after PO, I don’t know, usually the rulling/owners cast is shaken up during these phase shifts throughout history.

          • Fast Eddy says:

            If you don’;t beat the index — you are a failure as a hedge fund manager.

            Simple as that.

            And nobody is beating…. nobody.

  9. Stilgar Wilcox says:

    Here’s an interesting article on why the oil industry needs a 1/2 trillion dollars to pay off current debt which will be hard if oil price remains down, although it has gone up some in the past 2 days.

  10. Stilgar Wilcox says:
    WTI up $3.00 bucks a barrel today along with yesterday’s rise, it’s gone from a 38 to 45 handle in just 2 days. But on what is usually an up day on the stock market, it’s down at present -100. Seems like we have entered a bear market in which the overall trend is down. Dow still -2000 pts from its pre correction high of about 18,500.

  11. Stilgar Wilcox says:

    That’s an article on Brazil sinking into a worse than expected recession, which last qtr. was -1.9% GDP.

    Japan is also in a recession by a similar number, China’s GDP is much lower than it use to be but difficult to know exactly how much because of doctored data, European countries are clocking at .4 or 4/10ths of 1% but the US just posted a recent adjustment to the last qtr. to +3.7%, however some say it was the result of built up inventory, i.e. over-production, in particular vehicles. How can the US be doing so much better than the rest of the world? Or is our temporary fortune going to turn down this qtr. or next?

    • madflower69 says:

      I think it is because Japan and China are dumping their foreign currency reserves to help prop up their economies, which is mostly USD they gained from the trade imbalance. By doing so, it is similar economically to the US taking on more debt to pump more money into the system, but it didn’t cost us anything.

  12. CJS says:

    Gail, I hope you’re wrong. If you’re right, then as a 20 year old person, I’ll spend the majority of my life as a subsistence farmer using pre-industrial technology. My eventual wife may die in childbirth, my children may die as infants, my parents certainly wouldn’t survive a collapse.

    Surely there is something we as a society could do to insulate ourselves from the forces you subscribe. For example, it seems clear globalized supply and distribution chains are too expensive, and that production needs to be localized. Would a major initiative localize agriculture, energy production, and industrial activity (e.g. concrete and steel production), while sharply discouraging consumerism help to at least offset the effects of declining energy supplies?

    • Steven Rodriguez says:

      I’ll go out on a limb here and suggest that unless our larger institutions can simultaneously earn trust, educate and scale to regulate on carrying capacity basis, localization will not be the panacea some expect. After the inevitable secession of local markets to rule by gangs and strongmen, carrying capacity conflicts will be dictated by brutal strokes of arbitrary aggression, both foreign and domestic. But I firmly believe this is a choice, not some coercion of nature (biomolecular or otherwise).

    • greg machala says:

      We have been insulating ourselves from the natural forces of nature for many years now. And, increasingly so, to the point we see our world as “normal.” It is not normal at all, it is an aberration. It takes massive amounts of energy (and ever increasing amounts of energy) to continue to insulate ourselves from the natural world. I am almost 50 and I feel really badly for folks your age. I really hope that we can hang on to modern lifestyles (BAU – buisiness as usual) for as long as possible.

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  15. Rob wisehand says:

    First time I encounter your posts, Gail. They seem to have reached Italy via facebook …
    You recognize apparently the “value” of the 1972 Limits to growth study, however you say basically that there is no escape … how would you rate/evaluate the scenarios by Jorgen Randers (actually, one of the LTG team at the time) in his “2052 – Global forecast” book?

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  18. Daniel Hood says:

    Global debt jubilee coming or WW3, these are the only alternatives. If anyone thinks for a second the US, Europe, China, Russia et al will simply “collapse” into the abyss without shifting blame then think again. I would also argue we’ve been in the “process” of obvious collapse since 2007/8. For 7 years policy makers have been fending off crisis after crisis across energy, finance, economy, social, geopolitical.

    About to get a whole lot worse.

    “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 a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”

    So it’s either raise rates “voluntary abandonment of further credit expansion” and trigger collapse, witnessing the expedited shif away from the $$$ as world reserve currency given there will be many many angry Gov’ts of the world directed at the Fed and therefore the US, or QE4 which will see the total catastrophe of the the US $ as world reserve currency.

    This thing could still play out over more time you exect, given most will abandon reality.

    • Whatch the individual top players as well.

      For instance, how would you evaluate that quite evident recent drive of Russia to substitute as much foreign/import goods and systems infrustructure as possible? Apart from the obvious and very visible military buildup at all levels air, navy, missiles, .. (incl. the only competing global dual use sat network), they are ALSO pressing very hard with domestic credit card system (own microchips), mainframe computers, food production, various light industries (transportation manuf. joint ventures), energy projects etc.

      This could be easily dismissed as pet projects of some sort paranoid modernizing leadership OR it could perhaps evaluated as drive for some form of autarky and or at least preping for future of regional/continetal hegemony. I gather it’s connected to Orlov’s recent observation if you pissed them off, they just take the ball go home and don’t play with you anymore. On the other hand we can see increasingly more frequent oneway VIP visits of ME/Gulf states to make some deal at the Russia imperial court.

      But the bottom line for me is that Russians likely expect nasty times ahead, not discounting completely insane people inside US/EU power structures in times/decades of reset, so perhaps there is a solid overarching reason to be worried from this observation.

      • madflower69 says:

        “But the bottom line for me is that Russians likely expect nasty times ahead, ”
        They are actually going through a recession right now. In part because of the trade embargo, but also in part because their economy depends considerably on higher commodity prices for oil/gas, and steel.

        They however have almost no debt.

      • Ed says:

        Russia is not cutting contact with the outside world. They are selectively cutting off US and EU and counter balancing with increases in trade with China, ME, BRICS in general.

      • xabier says:


        The whole history of Russia has been one extended tragedy, aggression by outsiders, aggression by the State, and therefore hard times (by our pampered standards) do not intimidate them one bit as far as I can tell. Life is a bitch, but have a party when you can is a very Russian mind-set.

        A good friend of mine is heir to a substantial food import business in the Federation: well-travelled, cosmopolitan and intellectual, a talented linguist, he nonetheless remains very simple in habits and actually feels rather uncomfortable with luxury. Only bread, cheese and some ham for dinner? No problem, in fact a feast as long as there is some home-made fruit vodka to go along with it. Worth emphasising that this is a member of the wealthy elite. I know of some wealthy people in the West who live like this, but they are rare, and no one at all in the middle class, who would feel degraded without their little luxuries.

        More generally, sanctions have drawn the Russian Federation closer together, stimulated domestic food production, and after an initial reaction of apprehension, they are comfortable with them. Orthodox Christianity is strongly resurgent, seen as patriotic. They are an unbending people. Further pressure will provoke a strong reaction not to the benefit of the West. There are elements in Russia which truly hate and abominate the West, and would not fight shy of war: if people don’t like Putin, they would like his likely replacements still less…..

        I take Orlov with a pinch of salt these days though, as he has become an obvious and rather crude propagandist for Putin. His blunt sarcasm is very Russian, but his cockiness and conceit most unattractive. I would not care to share bread and cheese with him.

    • richard says:

      Getting rid of the debt solves only half the problem.
      As Leviticus states, land redistribution is also part of the Jubilee.

    • kesar0 says:

      I agree with the first part of your post.

      The last paragraph – I totally disagree. US has two things: 9 trillion non-US credit and the biggest military potential on this planet. The hegemon will not abandon the position until the final conflict arrives. Then… who knows or even cares. Not so good anyway.

    • greg machala says:

      Debt jubilee, WWIII and I would add a third possibility martial law.

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  20. Fast Eddy says:

    “When things get really bad — you need to lie” Jean Claude Juncker

    US stocks surged on strong GDP numbers. The NYSE and Nasdaq surged for a second straight day after second-quarter GDP growth was revised up to 3.7% from 2.3%, and new data showed that jobless claims fell more than expected. Investors may welcome the news, but it also makes a Fed rate hike more likely sooner.

    Things must be REALLY bad….

  21. interguru says:

    Thoughts on a transcontinental flight.

    I recently flew from Washington DC to Los Angeles for my grandson’s 1st birthday. I was thinking of the amount of carbon I was putting into the air. If you look at the marginal amount, caused by my additional weight on the plane — it is trivial. You can get a more realistic number by taking the plane’s total fuel use and dividing by the number of passengers. This is a non-trivial amount, but even had I forgone the trip, the fate of the world would still be the same. I relaxed and watched a movie.

    At the airport, waiting to be picked up I marveled at the crush of people, cars, busses, vans, and taxies. An unending stream passed me. I wondered how our descendants, sitting around a campfire, would talk of this scene. Their first words would be a mixture of jealousy and anger. Jealousy coming from wishing they could have lived then, rather than in their much bleaker present. Anger at us for squandering all the world’s resources and leaving them with nothing.

    This brought me to a science fiction novel I read as a young teen, City by Clifford Simak. It is a story told by a group of dogs after man disappeared from the planet, cause uncertain . For some reason the book left a strong impression and still haunts me sixty years later.

    I will let Mr Wikipedia ( go from here.

    City is a 1952 science fiction novel by Clifford D. Simak.The novel describes a legend consisting of eight tales the pastoral and pacifist Dogs recite as they pass down an oral legend of a creature known as Man. Each tale is preceded by doggish notes and learned discussion.
    An editor’s preface notes that after each telling of the legend the pups ask many questions:
    “What is Man?” they’ll ask.
    Or perhaps: “What is a city?”
    Or: “What is a war?
    There is no positive answer to any of these questions.”

    Oh well, my son’s car just emerged from the scrum to pick me up. You will have to continue the thread yourself.

    —————– a few days later.

    My grandson’s birthday party was a success — he turned 1. My son bought a house in the rapidly gentrifying area of Del Rey in west Los Angeles. It is surrounded by already very gentrified areas, Venice, Marina del Rey, Culver City and Santa Monica ( motto: “Fortunate People in a Fortunate City” ). I am watching the 1% in their home territory, Actually I can see the 1% five miles from my house, in Bethesda Md. Still the Los Angeles 1% dress with much more panache than the dowdy Washington DC 1%.

    This reminds of a passage I read in a recent ( highly recommended ) novel The Water Knife by Paolo Bacigalupi . It takes place in a very parched American Southwest, where states are fighting over water not only in the courts, but with militias, with a weakened US government unable to intervene. Some states have collapsed, such as Texas, sending millions of refugees to other states which have fortified their boundaries. The refugees are in camps supported by FEMA and the Chinese Red Cross. Here is a discussion of what they leave behind in their flight.

    “You can have any of the clothes the renters left. ….. There’s good stuff in them, high end designer and sh*t. … You can dress classy, Prada and Dolce and Gabbana, Michael Kors, Yan Yan.. I use it for rags mostly”

    I already have lived by biblically allotted threescore and ten, I something happens I can accept it. I fear for my children and grandchildren.

    • If you fear for your relatives’ future, why do you fly for such trivial reasons and why do you allow them to make their home in a desert? If this isn’t a perfect example of the uncontrollable bizzarro-thinking that dooms us, I don’t know what is. I’m only 55, grew up in the US, and I don’t recall any such thing as birthday parties for one-year-olds. Much less birthday parties for one-year-olds that required adults to take a plane flight in order to attend.

      Holy Mother of God.

      • interguru says:

        It wasn’t the party! I stayed two weeks to help my son and daughter-in-law. I want my grandson to know me and me to know him. They are my anchor since my wife died a few months ago.

        • interguru, I don’t mean to single you out. You have to agree it is an unprecedented and unsustainable scenario. We “can” use the energy, and so we do.

          I am constantly bugged by (for example) the “permaculture” students I’ve come across in local venues. They’ve all been to Nepal and Guatemala, etc., etc. They’re going to go to Washington State, and then British Columbia and then India. They just see that as normal! When I was growing up, we were lucky to have one vacation a year 2 hours’ drive away, and a “treat” was going to HoJo’s and getting the “Mr. Twist”. I know this sounds all Monty-Python-esque.. “WE lived in a cardboard box in the middle of the road”… but there is something important here.

          • Fast Eddy says:

            And the we have this travesty

            Parents fly in (business class no doubt) from California and other Koombaya havens … to check on their kids a few times per year…

            But … these clowns actually believe they are saving the world… (heaven forbid that you suggest they are anything but green….)

            Welcome to the Green Cult!

            • Geez Louise. I would be impressed if there were one every few blocks and you could walk to it.

            • Fast Eddy says:

              The Green School and the flying business class in themselves don’t bother me — it’s the Cult that I find offensive…. the holier than though bullshit …. and the unwillingness to recognize that they are not green at all…

              Kinda like the hipster jack-ass Tesla driver cravate waving in the wind…. who pulls up to Starbucks and orders the Low Fat Fair Trade Latte… and figures he is doing his part to save the world…

            • Jarle B says:

              Yes, the green hipsters consuming more than they need and thinking they are “green” are offensive, but those knowing about the finite world and still consuming more than they need are even worse. Yes, I know consuming less won’t save us from our destiny but it will feed more for longer.

            • madflower69 says:

              “The Green School and the flying business class in themselves don’t bother me — it’s the Cult that I find offensive…. the holier than though bullshit …. and the unwillingness to recognize that they are not green at all…”

              I agree to a point but it goes both ways. There is also a cult of FF lovers too. While the pseudo-greenies aren’t completely green, they are actually doing what they can do economically to move in that direction. The FF lovers are impeding the progress of civilization.

              Really what I am saying, and in fact our government policies reflect there is a middle ground. Obama didn’t come out and say we are going to be 100% renewable by 2030. We are just going to cut back on emissions by 30% over 2005 levels which is just about our highest levels ever. Most of which can be made up with increased efficiency. 🙂

              What those pseudo-greenies are doing is helping to create a market for green tech, that drives the market, which drives the price of the newer technology down for everyone else. In reality, you should be thanking them.

            • James says:

              In reality, you should be thanking them.

              I reality, the cult of green just continues to foster the delusion of BAU. They’re nothing more than continued kicking of the can.

            • madflower69 says:

              “They’re nothing more than continued kicking of the can.”

              Coal kicked the can 150 years. Another 150 years from renewables should be good enough.

        • P.S. I’m sorry for your loss… Maybe you should move out there permanently, or vice versa? Your grandson is not going to “know” you from a single encounter at one year of age, I hate to say. Seriously, a combined household has a bit more flexibility and resiliency than two separate ones hundreds or thousands of miles apart. Best wishes.

      • Fast Eddy says:

        In light of the energy situation which will destroy civilization long before global warming gets us — and the fact that we must grow or we collapse …..

        This is rather a moot point… and a completely uncalled for criticism…

        And unless you are living like a hunter gatherer living in a cave then you are in no position to throw darts at others.

        You are aware of how much energy is required to make the internet possible — and you are happily typing away on FW….

        We are all part of the problem.

        • You’re right (to a point)… Where’s the virtue, though, in not pointing out some of these extreme behaviors (you just pointed out the extreme pseudo-green school.. what’s the diff? I guess the difference is that the green-school parent isn’t posting here, so is fair game?).

          My sights are set higher: I’m interested not in individual frailty but what are the underlying forces that inexorably conduce us (all of us) to what can be seen as reckless short-term behavior.

      • greg machala says:

        I think your being a bit harsh. I would assume the plane was probably a large commercial airliner which would have flown with or without him anyway. So, how much carbon did he add? Probably very little. How much carbon would he have added if he did a video conference on a computer and the plane flew without him? Its all moot really. At this stage we are living off the embedded energy in the infrastructure that has been built. We may as well make the most use of it we can while it lasts.

    • Fast Eddy says:

      “You can have any of the clothes the renters left. ….. There’s good stuff in them, high end designer and sh*t. … You can dress classy, Prada and Dolce and Gabbana, Michael Kors, Yan Yan.. I use it for rags mostly”

      I need to stuff my entrails back into my gut after reading that!!!

      That quote needs to go on the tombstone of civilization … spacemen who come across the planet in a billion years only need read that and they will understand why we went extinct

      • SymbolikGirl says:

        When I was in High School in the ’90’s I spent my senior year doing a co-op at an environmental education centre up in Temagami (Northern-ish Ontario) and was exposed to the stereotypical green ideas for twelve straight months. A lot of the ideas weren’t necessarily bad, living more simply, less materialistic, more in tune with the natural world. But the point of contention I had was that everyone was convinced that if everyone just put up solar panels and washed their clothes in cold water, everything would be fine and the world could continue to enjoy perpetual growth. I always argued with some of the other staff there because they really didn’t appreciate the scope of the problem, I always argued that an electric furnace at an aluminum mill ate more power than a field of solar panels and to live the way they wanted to we needed huge amounts of fossil fuels…..I never did convince them but I was an 18-year old girl with dreadlocks and a strong opinion so that may have been part of their lack of intellectual respect. 😉

        • madflower69 says:

          “But the point of contention I had was that everyone was convinced that if everyone just put up solar panels and washed their clothes in cold water, everything would be fine and the world could continue to enjoy perpetual growth.”

          If everyone put up solar panels, it would create a glut in electrical production.

          Literally in the US, I think it was like if 5% of the rural property owners greater then like 2.5 acres put in 1/3 of an acre of solar panels, it would cover the US electrical consumption.

          I agree there are issues with solar, but the “ideal” isn’t exactly that kooky especially now that the price of solar has dropped considerably.

          Aluminum refining is an extremely energy intensive process, it uses a lot of electricity. I do get your point, there is a middle ground though.

          • Steven Rodriguez says:

            Apples and Oranges maybe, but Lavoisier, a contemporary of Ben Franklin’s, was melting led with a giant magnifying lens.

            • madflower69 says:

              The french built a solar furnace to melt steel in 1970. You can find youtube videos of people melting glass with the magnifying lenses from led tv’s.

              The refining process for Aluminum actually requires electricity so it is apples to oranges. But your point is well taken, there is a lot of energy that can be harvested.

          • Ed says:

            Let’s just ballpark it. For the US if I remember right about 1TW continuous. So since panels only get about 6 good hours per day in Nevada and the like we need 3TW of panels. If we fold the cost of pumped hydro storage for night and the cost of transmission lines from Nevada and the like to the mountains for pumped storage and back to NYC lets call it $15/watt. That gets us to 45 trillion dollars, real dollars, not Fed computer dollars. Where will the US get that from? Let’s say 1 trillion dollars per year from much higher taxes??? For 45 years???

            • Ed says:

              We also need to know what fraction of the worlds aluminum , concrete and silicon production we will be diverting/consuming each year for the next 45 years.

            • Ed says:

              Also what fraction of the US work force will be needed. May need more H1B visas.

            • madflower69 says:

              “if we fold the cost of pumped hydro storage for night”

              Pumped hydro is a losing proposition, and it is really expensive. You can get the same 75% efficiency out of flow batteries and 92% out of lion batteries, and put them anywhere on the grid. And as a bonus you get immediate reaction times which simplifies operation.

            • madflower69 says:

              “Let’s just ballpark it. For the US if I remember right about 1TW continuous. ”
              It isn’t continuous demand anywhere in the US, except maybe a factory/industrial.
              It looks more like this:
              Except that is showing the effects of solar without storage.

              As you can see from the graph, because solar is right in the middle of peak demand, you can cut electric use by 1/2-1/3 without storage.

              Utility scale turnkey systems can be as low as 1.55/w and residential 3.48/w.

              Whatever we end up with won’t be all from a single source no matter what we do so trying to run ballpark numbers on a single source is kind of crazy.

          • Ed says:

            Yes, you and I can buy PV panels for 0.5$/watt. If we just consider power when the sun is blazing above 1TW costs $500 billion no transmission lines, no , no fixture to hold the panel, no power control or conditioning, … sure not bad, just print it.

            • madflower69 says:

              ” If we just consider power when the sun is blazing above 1TW costs $500 billion no transmission lines, no , no fixture to hold the panel, no power control or conditioning, … sure not bad, just print it.”

              1TW is 1.55T as a turnkey operation or 1.55/w
              You can do your house for 3.48/w or less, turnkey (I am using the Q4 2014 numbers for both) which with 4.2 hours of sun gives you a ~6.5c/kwh amortized over 15 years.

              That is on par for the cost of a new coal plant according to the EIA which puts a new coal plant around 6c/kwh. Which is why there is a correction in the coal market. ie like -30% for the year.

        • Fast Eddy says:

          Difficult to convince people who believe in the Solar Jesus…. their matrix is extremely powerful

          • madflower69 says:

            You mean Ra. It is a movement that is extremely hard to stop because it is cost effective.

          • greg machala says:

            Yes the solar matrix is powerful. But, it is a proven fact that solar and wind turbines and the electric grid just DO NOT MIX!!! I don’t see how people can miss the point that you HAVE TO HAVE coal and natural gas power plants to balance the grid. The more intermittent power that is added to the grid necessarily means more coal and natural gas power plants have to be added to stabilize the grid. Germany is a living example to this paradox. The whole idea of solar and wind on the grid is absurd.

            Now using solar panels to power a pump might buy you something useful locally. But, as Gail mentions, once the pump fails your SOL and better be prepared to live without it.

            • madflower69 says:

              “But, it is a proven fact that solar and wind turbines and the electric grid just DO NOT MIX!!! I don’t see how people can miss the point that you HAVE TO HAVE coal and natural gas power plants to balance the grid.”

              They mix with the grid. They just accentuate the whole issue with the piss poor, inefficient 1920s frequency regulation methodology. We are testing solutions in Cali and Hawaii. But otherwise for the most part I agree, there are hurdles to jump.

              “Germany is a living example to this paradox.”
              They are a great example of an awesome implementation of a half-baked plan. Frequency regulation was literally an afterthought in Germany. They were all too worried about storing electric for use in the winter.

            • Fast Eddy says:

              The German Solar Disaster: 21 Billion Euros Burned

              Spain’s disastrous attempt to replace fossil fuels with Solar Photovoltaics

              What’s a beleaguered utility to do when forced by the government to close its profitable nuclear power plants?

              It turns to lignite, a cheap, soft, muddy-brown colored form of sedimentary rock that spews more greenhouse gases than any other fossil fuel.

              The Essen-based company, founded in 1898 to produce power for Germany’s industrial heartland, has had no choice except to ramp up production from its profitable coal-fired plants, most of which burn lignite.

              The result: RWE now generates 52 percent of its power in Germany from lignite, up from 45 percent in 2011. And RWE isn’t alone. Utilities all over Germany have ramped up coal use as the nation has watched the mix of coal-generated electricity rise to 45 percent last year, the highest level since 2007.


              Dirtiest Coal’s Rebirth in Europe Flattens Medieval Towns

              Europe’s appetite for cheaper electricity is reviving mines that produce the dirtiest type of coal, threatening to boost pollution and raze villages that have survived since medieval times.

              Across the continent’s mining belt, from Germany to Poland and the Czech Republic, utilities such as Vattenfall AB, CEZ AS and PGE SA are expanding open-pit mines that produce lignite. The moist, brown form of the fossil fuel packs less energy and more carbon than more frequently burned hard coal.


            • madflower69 says:

              lol you wrote that so long ago the link for spain doesn’t work anymore.

            • Fast Eddy says:

              Works fine for me:

              The German Solar Disaster: 21 Billion Euros Burned

              Date: 19/06/13
              Thiemo Heeg, Frankfurter Allgemeine Zeitung

              Large German companies such as Siemens and Bosch are abandoning the solar industry. Their strategies resulted in debacles – their investments in solar power companies cost them billions.

              The author and former television journalist Franz Alt is a militant solar lobbyist. On his website, the 74-year-old, who wrote his doctoral thesis about Konrad Adenauer, gushes: “The sun sends daily 15,000 times more energy than all six billion people consume currently. This offer, we feel, is a godsend. We use the energy from the boss himself very much. It is environmentally friendly, climate-friendly, it’s free and yet sufficient for 4.5 billion years. We assure you that the sun has never sent us a bill.”

              Could it be that Alt has solar panels on the roof (and thus has benefited from the lush subsidies for solar power for years), but no solar stocks in the portfolio? If he had, he would see the thing about solar energy being “free” a bit different: because the sun does send an invoice after all. Although not to him; but to the broad band of small shareholders, for example, who believed in the growth of the industry in the good times and eagerly bought shares – or to many large corporations which also invested in solar power and solar heat, and now withdraw disillusioned from their investments.

              Green strategy resulted in debacle

              Recently, Siemens had to make this expensive experience. On Monday, the group announced that the solar division will shut down. By the spring of next year, the loss-making division is to be completely closed. Thus, a final attempt, lasting seven months, to find a buyer was ultimately unsuccessful. Affected by this decision are 280 employees, most of them in Israel. With the purchase of the Israeli company Solel, CEO Peter Löscher entered the market for solar thermal systems, from which he had expected rapid growth. The strategy resulted in a debacle: All in all, Siemens lost around one billion Euros. The closure alone will cost the company a double-digit million amount.

              For Bosch too, the eclipse came faster than expected. In March, the automotive supplier announced its withdrawal from the business with solar cells and solar modules. The production will end in early 2014, as will its sales and development. Due to the withdrawal, 3,000 employees at locations in eastern Germany, especially in Thüringen, are facing unemployment. Bosch board chairman Franz Fehrenbach, the main man in charge, had been driving the entry into the solar business since 2008 . When the Frankfurter Allgemeine Sonntagszeitung asked him “Is the industry doomed to die?”, he answered depressingly, “For Germany, it looks like it is, unfortunately.”

              The reasons for pulling out of solar are similar to those of the other manufacturers of solar modules and cells, which, one after another, slipped into the red or even had to file for bankruptcy since the end of 2011: Bosch had failed to restore the competitiveness of the division Solar Energy – because of the strong price erosion of up to 40 percent. The investment in the photovoltaic industry has cost the electronics company even more money than Siemens: around 2.4 billion Euros. Additional costs will be incurred by the social plan. The company has fully depreciated a total investment of 1.56 billion Euros by the end of 2012. In addition, there were also operating losses of 750 million Euros.

              Capital losses of more than 21 billion Euros

              Compared to what investors have lost as a result of their investments in solar stocks, however, these sums are almost negligible amounts. The former stars at the stock exchange, SolarWorld and Q-Cells, have destroyed tens of billions of capital. In December 2007, the solar cell and module manufacturer Q-Cells, listed with a market value of more than 11 billion Euros, was one candidate for promotion to the first tier in the stock exchange. As sufficiently known, this did not happen after all.

              Instead, the company had to file for bankruptcy in 2012 and was bought by a Korean company; the private investors lost practically everything. SolarWorld AG, whose founder Frank Asbeck was called Sun King in the good times, now depends on new investors.


        • richard says:

          @SymbolikGirl – Good on you.
          It’s the times that I kept schtum that I really really regret.

        • I don’t think the beliefs of environmentalists have changed.

          The other issue is that even if we all save 5% or 10%, with world population growth, we soon get back to the same place. We have not stopped the population growth issue. Also, new pollution is added to old pollution. Even if it is at a 90% or 95% level, it is still a problem.

          • greg machala says:

            Yes, and we will keep getting back to the same place faster and faster. The exponential growth problem is like running into a wall ( or through the ceiling on graph paper ).

  22. Anotherplayaguy says:

    It all becomes moot when the electrical grid goes down. At that point we have about two weeks: the amount of time we can keep nuclear power plants cool using diesel backups.

    Well, probably longer as death from radiation poisoning takes a while.

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  24. Sidney F Gale says:

    There are many truths in what Gail says, but some glaring errors in assumptions and conclusions as well. And in general the tone is far more apocalyptic than warranted, and with no particular time frame to give it meaningful context. i say all of this with two important preambles: I have followed Gail for a number of years from Gail’s posts on the OIl Drum to now. I have followed the economy’s steady decline since 1975, when, as an auditor with a major multi-line insurance carrier, I read a sobering report by a group of actuaries that projected the bankruptcy of all the Fortune 500 companies of that time by the year 2000 if they continued their retirement benefit plans as constituted at that time. That treatise, not widely distributed at that time, led to the steady churning of the employee population over the ensuing decades to the situation that we have today as companies shed their staffs to shed their responsibilities and dodge their own conceived financial sink-holes.

    Let’s start with the premise of a ‘self-organized’ system. What exactly does that mean and imply? I would counter that we have a semi organized system that has lost what little semblance of balance it may have had and that it is careening toward a crash. Semi-organized in that it is directed to a degree, but not entirely. To the extent that it is not directed, unintended consequences occur as a systemic response from quasi autonomous actors. But the problem is that the directed components of the economy which call the tune have been grossly mismanaged and will lead to a crash. We both agree on that. And it may occur soon. Totally possible. Or we may continue to proceed in a long, steady unraveling as we appear to be now and have been for forty years. We will only know, as with prior pronouncements on Peak Oil, in the rear view mirror.

    Will oil stop flowing and the grid collapse and will we return to candle-making for light? I suspect not in the current so-called advanced economies. The financial structure may collapse at some point, but society will continue to exist, though in a radically altered and unpleasant form. The financial system will be reconstituted by fiat, probably with much fragmentation and in a feudalistic structure, but it will be reconstituted. Oil will be pumped at great economic and environmental expense, but it will be pumped, and the grid and its appendages will continue to function in some manner. This will happen because needs will trump wants, by some authority’s definition, and a value system and rationing of critical resources and services will be decreed, not through a ‘self-organizing process’ guided by the Invisible Hand of Capitalist free enterprise in a quasi democratic society, but by an iron fist from a derived power filling the socio-political vacuum.

    Yes, the world is finite. Yes, we will ultimately run out of critical resources, some day. Yes, there will be horrible death and destruction from natural and human cataclysms, but societies will adapt and endure at some level until the lights finally do go out.

    I don’t presume to know when that might happen, nor can Gail. But I believe that we still have options to some degree. We can still make things better or worse. As an auditor, I am a cynic by professional experience, if not by nature. But given that as a baseline, I reject the level of futility and surrender that is evidenced in this post and many of the responses.

    If we strive to survive, we may.
    But if we choose to fail, we will.
    But that’s just my opinion.

    • James says:

      Good points in general, but like all of us, I think you might have read a few things into Gail’s post that she may or may not have intended.

      But I’ll begin at the end:

      If we strive to survive, we may.
      But if we choose to fail, we will.
      But that’s just my opinion.

      That’s a nice sentiment, but it presupposes that “survival” implies the continuation of first world industrial culture/madness, and that its failure implies its abandonment and/or failure by other means. Safe to say you don’t even consider its failure inevitable and the most logical choice on any grounds for rational humans its abandonment? While that might be true for the 7B+ of us, are 7B+ of us even remotely feasible? Ask yourself that same question about a similarly skewed number of deer for example, and imagine the answer.

      In that light, is Gail overly apocalyptic in this post? Certainly not to my ears, and in fact I thought she was remarkable even-handed, as is her customary style.

      Will oil pumping and grid collapse forestalling proceed at great expense in the foreseeable future to maintain the appearance of BAU? Almost certainly, for as long as humanly possible at least. I don’t believe that Gail discounts this possibility in the least.

      As an auditor, you’re certainly entitled to your (at least somewhat) informed opinion, but as a fellow human with an MBA and Accounting and Finance undergrad degrees (as much as I hesitate to mention them, I consider them totally irrelevant to this discussion), I have to respectfully disagree with your conclusions.

      Might I suggest that your use of the phrase “I reject the level of futility and surrender that is evidenced in this post and many of the responses” speaks volumes more about your level of acceptance of admittedly exceedingly bad news than it does your rational analysis of it?

      • Sidney F Gale says:

        In response to James, a few points of clarification, hopefully.

        I do not dismiss Gail’s fundamental premise about the finite nature of our existence.
        Nor do I disagree that we as a planetary system may be ultimately doomed.
        Nor do I disagree with the conclusion that as a society we are profoundly ignorant of the true operating implications of social, environmental, technological and economic systems that we create.

        What I do disagree with is the inferences of when and how we get to the ultimate destination, and the sense of futility that seems to pervade the discussion.

        I am not optimistic about the future that faces my two grandchildren, and that is about as far a planning horizon as I care to ponder. But within that planning horizon we most definitely have options as to how we can proceed. The system that we have will most definitely not be in place. It is being kept going on life support, but is beyond redemption. The question is what replaces it and to what (and whose) purpose, and when.

        The main flaw in Gail’s conclusions are that they are rutted in the analysis of the system that is, as if it is the only system in which the future can play out. The current crisis in the oil and financial markets is not intrinsic. It is a result of a series of stupid choices that were made at critical points of power. Better choices could have been made.k

        The supply of fossil fuels and other critical elements is an intrinsic constraint. We cannot alter that, but we have choices of how to work within those constraints, leading to possibilities of alternate futures in time and quality of life.

        I don’t see social disintegration into small tribal communities as a viable solution within the time horizon of this century, although it may be the result. Our challenges are too big to be mitigated by a near total disintegration of the social and political structure. It will most lilkely morph to something else by necessity, but to what?

        We may only be buying time, or we may buy enough time to discover solutions that today we cannot imagine, just as few imagined at the beginning of the last century a manned space station at the end of that century.

        Gail speaks of inevitable failure of the current paradigm as a given from which we cannot escape. She may be right. But I suggest it is not necessarily a destiny but a choice. What other paradigms can we build in the time available? If we do not choose, someone will be glad to do so for us, and we will likely not welcome the choice.

        Our current society is built on considerable greed and waste at all levels of the food chain; not merely the 1%. And the greatest, most precious resource wasted is our time. That is correctable to some significant degree. And in that waste lies the resource for alternative futures.

        Contemplate that.

        • Steven Rodriguez says:


        • Fast Eddy says:

          “It is a result of a series of stupid choices that were made at critical points of power.”

          Absolutely not. We do not choose — our DNA chooses.

          Let’s revisit Rat Island — the ship of grain washes up — the rats going into a feeding frenzy eating up the grain — reproducing into the thousands — the ship is emptied — most of the rats die.

          Humans have done exactly the same thing with oil.

          There have been those who have screamed – STOP – THINK ABOUT WHAT YOU ARE DOING!!! — but that has had about as much effect as screaming STOP!!! at the rats ….

          We have done — and we are doing – EXACTLY what our genetic code demands that we do.

          The difference between us and the rats is that we figured out how to replenish the ship of grain by applying technology to grow a great deal more grain ….

          Unfortunately the technology was limited by the finite nature of our world — so all that we have done is overshot the natural limits that are imposed on the rats — and we now have 7B+ people — and we will soon have virtually no food — because industrial farming is 100% dependent on a never-ending supply of cheap oil and gas.

          Try to shake off the cognitive dissonance/normalcy bias/fear …. and consider that….

          • timl2k11 says:

            Have you read “The Selfish Gene” by Dawkins? Pretty good book on our relationship to our DNA.

        • xabier says:

          Sidney Gale

          Good points, cogently expressed.

          However, in general I do not see any sign of intelligent, imaginative and plausible exploration of alternative – and maybe more hopeful – paradigms by our rulers.

          What I do see -for instance in Britain and the ‘advanced’ world in general – is a doubling down on the current failing paradigm, in desperation, or in obtuseness.

          Therefore, pessimism would seem to be entirely justified.

          Not fatalism, then, just realism…….

          I nonetheless hope that the best in mankind will survive, somewhere and in some form.

    • madflower69 says:

      “Will oil stop flowing and the grid collapse and will we return to candle-making for light? I suspect not in the current so-called advanced economies.”
      Is this because we don’t have any honeybees that make wax we can use anymore? Most candles are made of paraffin these days which is from oil, so that material won’t be available either. Which just leaves tallow and I won’t bother to ask what you are going to kill to get it.

      Just saying .. 🙂

      • And who has a true idea of what the difference is between the lumens of a single candle made with very-hard-won ingredients, vs. a cheap current lightbulb?

        650 to 700 lumens is a 60w bulb, which is something like 50 “candle power”, the definition of which is based on pure whale-oil “candles” (lasting a limited number of hours).

        Light is mostly a luxury, rarely a necessity.
        Currently plenty of beef tallow around to make candles, though. It’s pretty cheap at the moment.

        I like to reflect, sometimes, on old-time-y sayings. One that I’ve heard in both an English and an Italian version is: “The game’s not worth the candle.”/”Il gioco non vale la candela” Though my current perception can only scrape the surface, I find it worthwhile to try and cast thoughts into a time when a tiny energy budget was a real fact of life.

        • Stefeun says:

          Have it also in French: “Le jeu n’en vaut pas la chandelle”

        • xabier says:

          Lidiaseventeen and Stefeun

          That proverb is straight from the days of gambling at cards by candlelight.

          I was struck by the words of the young mistress of an artist in the 19th century, of peasant origin, who was amazed that people could would sit up at night talking, drinking and singing at an inn by candlelight:

          ‘If I had been born rich, I suppose that I’d know how to do that’.

          For her, when the sun went down and once the evening cooking fire was out, it was time for bed. So spoiled by the oil age are we that we tend to think that good candles are something simple and therefore ‘cheap’. As of course they are today, comparatively.

          • Steven Rodriguez says:

            Depending on your latitude and the time of year…oh the long days of a northern summer!

          • richard says:

            In Ireland, prior to electric light, as night approached, it was customary to set aside a bottle of whiskey and prepare some soda bread mix. As winter darkness fell, and some parts of Ireland are not far south from the Artic Circle, you went to bed.
            Around midnight, you might wake, as neighbours knocked on the door. Time to throw some more turf on the fire, set the griddle, and bake the soda bread.
            Party On!

    • urbangdl says:

      whatever happens it must be clear for everyone that we got ourselves into this mess. Failure to recognize our problems drives us away from any window of opportunity, panic won’t do us any good likewise expecting for things to get sorted out by someone else is not helpful either, everyone has to actively do something about it.
      Debating about the theories is redundant and useless, unless we learn from them and start acting.

    • Fast F Eddy says:

      Here’s the thing….

      Collapse is guaranteed. I think we all agree on that.

      Problem 1:

      We have 7B+ people who eat only because we have had access to cheap to extract oil and gas which we have used to grow massive amounts of food.

      Soon these inputs will not be available — roughly 98% of all arable land on the planet is farmed with said inputs — land farmed with said inputs is effectively dead — it will grow nothing without years of organic inputs (that is FACT)

      Where will the organic inputs come from when 7B ravenous humans kill and eat everything that moves — burn everything that is combustible to keep warm…. including bark and grass (I understand North Koreans have some excellent recipes…)

      Problem 2: Try as I might I could not find any research on what happens if a spent fuel pond was taken off the grid permanently…. I suppose that is because in our arrogance this is something nobody can imagine happening…

      Well it is going to happen.

      This analysis is the closest thing I could find that explains what would happen if one of these facilities were taken off the grid – permanently.

      It is sobering reading.

      These are only two of the intractable problems that I foresee when collapse occurs. No doubt there are plenty more….

      Might I suggest that you are massively underestimating what is coming. This will well and truly be a holocaust…. it is quite likely going to be an extinction event.

      • SymbolikGirl says:

        Eddie, no worries dude! We all need to follow a simple plan, just break into your emergency Whiskey (you DO have emergency Whiskey right?!?), put your favorite tune on if you still have power and see where this insanity takes us. I want humanity to survive as much as anyone but what we are facing is so much bigger than all of us and I’ve learned to just accept what the future throws at us. If the ponds go up they go up, if the miraculous happens and hero engineers at enough plants manage to keep a workaround going until the rods are no longer a threat then we’ll do our best to survive, really as I see it it’s all we can do.

        • Fast Eddy says:

          YES! YES! Of course — I have emergency whiskey — multiple cases of single malt… piled in the garage…. Also some bottles of NZ champagne…

          One would not want to be on the deck of the Titanic without a drink… that would be terrible form….

      • The Truth says:

        it is quite likely going to be an extinction event.

        For saps, definitely.

    • greg machala says:

      Today’s power grid takes computers. Computers are now required for almost everything in modern life. Computers are made from globally sourced components. So is the electric grid. It isn’t simple at all. It is just the opposite – very complex. I am with Gail with respect to the grid going down shortly after the financial system collapses. No financial system, no trade, no spare parts, no grid. Combine this with the panic and rioting that will ensue when the financial system collapses I don’t see how the grid stays up very long.

      • Fast Eddy says:

        When the grid stops functioning — and your lights go out —- they will never come back on again…

        That will signal the beginning of the holocaust.

  25. Today dropped in a Book Store and came across a copy that is apt for this topic of discussion

    Benjamin Roth A Diary The Great Depression

    Just started reading the entries and found it worthwhile in every regard. Not only does Mr Roth, who is a Lawyer by profession, understand the dynamics of the depression, but in reflections years later makes remarks of the situation and what he should have done with his money or if he had more money.
    Also, the editor provides an overview of the period in segmented stages.
    Here is a review
    Benjamin Roth, James Ledbetter
    PublicAffairs, 2009 – Biography & Autobiography – 256 pages
    In the early 1920s, Benjamin Roth was a young lawyer fresh out of the army. He settled in Youngstown, Ohio, a booming Midwestern industrial town. Times were good – until the stock market crash of 1929. After nearly two years of economic crisis, it was clear that the heady prosperity of the Roaring Twenties would not return quickly.
    As Roth began to grasp the magnitude of what had happened to American economic life, he set out to record his impressions in a diary – a document that would grow to span several volumes over more than a decade. Penning brief, clear-eyed notes on the crisis which unfolded around him, Roth struggled to understand the complex forces governing political and economic life. Yet he remained eager to learn from the crisis. As he wrote of what is now known as the Great Depression, “To the man past middle life it spells tragedy and disaster, but to those of us in the middle thirties it may be a great school of experience out of which some worth while lesson may be salvaged.”
    Roth’s words from that unique time seem to speak directly to readers today. His perceptions and experiences have a chilling similarity to those of our own era. Fearful of inflation and skeptical of big government, Roth yearned for signs of true recovery, and eventually formed his own theories of how a prudent person might survive hard times. The Great Depression: A Diary, edited by James Ledbetter, editor of Slate’s “The Big Money,” and Roth’s son, Daniel B. Roth, reveals another side of the Great Depression – one lived through by ordinary, middle-class folks, who on a daily basis grappled with a swiftly changing economy coupled with anxiety about the unknown future.

    Link for Amazon

  26. Ed says:

    One point that does not get much explicit mention is the fact that humankind has become large urban. All the wise and potentially useful idea we share offer little hope for the 60-80% in the cities. Today urban farming means fresh salads for upscale restaurants using pumped water, electric grow lights, hydroponic chemicals delivered by FedEx. Try growing 500 pounds of potatoes per year per person using sunlight, dirt, and gravity feed water in a city.

    • Steven Rodriguez says:

      Funny you should mention Potatos…500 lbs where I live could be grown on about 1000 sq feet using mostly rainfall and a little supplemental water (about 3800 gallons or about half of what I could collect from my roof) for the month of may. Course, you have to get about 30lbs of seed Potatos first…..

      • Steven Rodriguez says:


      • Ed says:

        So central park can feed 36,000 people. There are a few other area of open ground lets round up to 100,000 people in Manhattan.

      • Rabbits really liked my sweet potatoes this year.

        • xabier says:

          Dear Gail

          Shoot the rabbits?

          • An idea; I don’t have a gun. Or trap the rabbits, and have rabbit stew.

            • Steven Rodriguez says:

              10% of the population is the general rule for mammals, but rabbits and hares may be the exception. The lagamorphs are very efficient converters of veg to meat.

            • Fast Eddy says:

              There are fairly simply fencing solutions that can be used — we put wire around the base of our fruit trees for now — will be installing proper fencing around the gardens that keeps sheep as well as small varmints out — and the chickens…

              Unfortunately I am not aware of fencing that will keep out the hordes of starving people who are certain to show up when the grocery stores shut….

            • greg machala says:

              There ya go! Meat and potatoes!

  27. i1 says:

    With all due respect to the author, true deflation is not possible with an irredeemable currency, as the temptation to expand the money supply is absolutely irresistible. This fact is particularly difficult for citizens of the U.S. to come to recognize, as they enjoy the benefits of exporting inflation via dollar rule.

    All talk of a deflationary boogieman, reinforces the dollar’s status as king. What we are witness to at present, is an orchestrated effort by the central banks to create illusions of value amongst the vulgar, retain power, and to keep the system afloat for their masters’ heirs.

    • James says:

      Until another factor(s), whether political, economic, or military-strategic, introduces itself, and redeemability becomes a secondary consideration, at least.

    • So what do we do for resources? Isn’t that what it is all about?

      • greg machala says:

        “All talk of a deflationary boogieman, reinforces the dollar’s status as king”

        When resources run out, the power goes out, when the power goes out, your house becomes worthless, when your house is worthless it has deflated. If the power never comes back on, everything that is worth something in dollar terms today is mostly all worthless (cars, computers, iPhones, high rise buildings, parking lots). This is not what the owners of the Fed want.

        The dollar is not “king” and never was and never will be. The dollar is backed by the availability of energy (mostly fossil fuels) to do useful work to produce the things we need in our artificial and material world. The most brilliant scheme ever construed was to require all oil to be traded in USD. It is that combination that is king. And it is that combination that has made the USA top dog. The power and energy in oil is the real king though and the dollar is its proxy.

        When oil looses its value so will the dollar.

  28. ZL Sickels says:

    Gail, I appreciate your research and analysis. Of all the peak-oil experts online, I find that your predictions are among the gloomiest. Your focus is on the problems we face, but I think it would also be great to hear more of your advice on what to do now. Or, is it too late to do anything meaningful and productive to save humanity as we know it?

    • dolph9 says:

      Yeah I like Gail but she has been light on practical solutions.
      My list is relatively short, but doable:
      1) try to minimize debt, and get your personal wealth into a mix of cash/gold/property/physical goods
      2) relocate away from the desert and coastlines, and to areas with good climate/water/demographics
      3) if you feel your situation vis a vis water/food is in danger, then think about storage and perhaps growing some of your own food, though I don’t think this is for everyone
      4) get your health in order, quit the destructive habits and become active
      5) get practical skills and an income stream; if you already have an income stream think strongly whether you want to keep it going or try to learn something new and get a head start on the competition; reduce expenses and think, what is the simplest, least complex way to get something done
      6) think about home and personal security and if it needs to be upgraded then do so; hunker down and be anonymous, avoid making a scene or rallies/riots/demonstrations, avoid politics and don’t post your life on the internet
      7) learn to let go of some things; 50% of what we do is completely wasteful, stop doing it and stop obsessing about what other people are doing, most people don’t have a clue and never will
      8) strengthen relations with family and friends you can trust; break way from those who you know you can’t
      9) enjoy what’s left of the fossil fuels and don’t obsess over alternative/renewable energy; if you don’t burn the fuels to live a good life (or to prepare, or both), somebody else will

    • Jarle B says:

      What to do: Lament the deeds of the human race and then try to do good things for as long as possible.

    • I think that you can do productive things with your own time. These might include continuing projects you are working on that you find satisfying, going on a trip, contributing to or helping with a charity, and strengthening ties with family and friends.

      I am doubtful that humanity (as in 7.2 billion of us) can be saved. Perhaps there are things a group of people can do to “save themselves” for a while, but I am not the best one to give advice on that. I don’t think the task is easy.

  29. Stilgar Wilcox says:

    “We don’t know how fast things will unravel, but things are likely to be quite different in as short a time as a year.”

    Gail, great comprehensive overview of current situation. “A year”, well, we shall see. I’m at a point where I can see the writing on the wall like many others here, but the timing of this still eludes me. Volatility of stocks and oil (with WTI up today ~$4.50) is a record setting roller coaster that probably tells us something about the health of the system, as in not good, but bandaids and bailing wire, it’s holding together and need it to thru april 2016 for our 16 day trip to Italy. Taking advantage of the last of the oil age to the hilt. Grab the brass ring while it’s available because tomorrow it might not be.

    • Yes, timing is a real question. It becomes hard to make long term plans. The Chinese folks want me to come back to China for another month next spring too.

    • greg machala says:

      I would expect volatility to increase in the prices of all commodities and stocks as we get closer to the limits of growth. The swings I would think would be wilder up and down and the spans of time between the downward and upward swings would become shorter and shorter until the system flies apart. This has already been happening. We are well into the last few oscillations before the financial system flies apart.

  30. louploup2 says:

    “we chose not to listen” (last paragraph). There’s a lot of that, but also a lot of brainwashing as described in great detail in Higg’s book, “Collision Course: Endless Growth on a Finite Planet.” TPTB have the will and resources to encourage ignore-ance. The elites power and will to follow this path is one result of inequity, a socio-economic pattern in ‘late stages’ of civilization that appears to be a significant contributing cause of many prior collapses (mentioned in Overview Item 5).

    • Thanks for the link. I didn’t read the whole article, but noticed this highlight, “A sustainable steady state is shown to be possible in different types of societies.” What? How? Hopefully the authors did better on the rest of the article.

      I do agree that increasing inequality is related to collapses, but I am not sure that it has anything to do with the elite’s power and will. I wonder if it isn’t the outcome of how a networked economic system works, when there is no longer enough to go around. The elite hoard their wealth, so have much less impact on commodity demand than when higher wages are given to non-elite workers.

      • louploup2 says:

        As I recall the study (and Tainter?) I think the relationship between inequity and collapse is the break down of systems for the distribution of resources. Distribution doesn’t have to be 100% equitable, but it does have to get enough calories and other necessities to everyone or stability is put at risk.

        As for “different types of societies” I am reminded of Jared Diamond’s “The World Until Yesterday: What Can We Learn from Traditional Societies?” — it’s not copyrighted; pdf available for free.

  31. Pingback: Deflationary Collapse Ahead? - Deflation Market

  32. madflower69 says:

    This article is sort of saying what Gail is saying, but relative to China

    If you look at it from the -other- perspective, it should increase the world economy, as they are selling off their foreign currency reserves and investment is leaving their country. So other economies should have more money to work with without having to create it. They have increased their debt 20T over the last 8 years, etc.

    Their market seemed to bounce yesterday/today off their Dec 2014 support price. I don’t know if that will hold or not. It might not.

    • Fast Eddy says:

      The market moves because the PBOC are manipulating it…. if the PBOC did not intervene the China markets would implode (likewise for every other market in the world if the central banks stayed out of the game)

      The fact that markets go up should not be taken as a sign that confidence has been restored

  33. J. J. says:

    Omgosh! What a long and convoluted article! Takes a lot of hard work, sore back & shoulders, and dedication to research this issue in it’s entirely. But here’s the bottom line: since money is “etheral” (this is, created from thin air based on non-existing assets) it can go back to where it came from with one stroke on the old keyboard. They (The plunge protection team) can kick that can down the road for a VERY long time. The question we as human beings must ask ourselves, how much longer are WE GOING TO ALLOW the large corporations to run the world, create wars for profit, poison our skies, make glaring “mistakes” protecting our environment for superfund cash, harm our children while we are trying to do the right thing to protect them against disease, allow big banks that are “too big to fail,” AND “too big to jail” to launder drug money while others are treated as less than human by thug police for less than a joint, when our media is forced to lie to the public about how the whole world is now being affected by the (continuing) Fukashima disaster…. the list is endless.
    We’re also seeing a lot of chatter about end of the world type stuff – prepping for war. What would be the purpose of this war other than to be “King of the Hill” — the one with the finger positioned over the control of all humans by controlling their ability to buy and sell.
    I hate to say it because it sounds so woo-woo, but we’re really going to have to start thinking with a higher consciousness. The big lie is that you HAVE to have what they tell you that you have to have. Take Social Security number. Isn’t it true that only people in DC must apply and that others apply voluntarily? Isn’t it true that you DO NOT have the ability to opt out of social security – the money is taken out of your check and it is saved FOR YOU for your retirement?
    Isn’t it true that you, under the Constitution, have the freedom of choice? If you don’t want to take a type of medicine, well then, that’s your choice. And yet WE ALLOW our government to “improve” our water with Fluoride – for our own good. Fluoride is rat poison. It’s what Hitler put in the water at the concentration camps to keep the inmates calm. We do not have the choice to take this “medicine” or not because even if you don’t drink it, it is absorbed thru the skin.
    And the last thing is the government secrecy. There seems to be a whole “secret society” who know things the average Joe isn’t allowed to know. Again, the lies and corruption are against everything we believe to be just and true in America and it seems the train has gone off the tracks.
    I went out with night vision goggles the other night and, to my surprise, saw dozens of lights flying around in the sky. I know the difference between airplanes (with red/green flashing lights), birds, bats, insects and satellites and what we were watching. Satellites in particular, do not stop and change direction like these lights. Satellites do not fly in pairs, nor do they split. Satellites do not fly in formations, nor do they come close to the ground and shoot up again. These things and more were witnessed by a large sky-watching group.
    It’d be foolish to think that the military isn’t seeing what I’m seeing here. What is the government hiding and why are they hiding it? Why did the government hold a Congressional hearing on flying saucers 65 years ago and then outright debunk any UFO when there have been reports made by credible witnesses? Isn’t it time Congress held another hearing to determine if what we’re seeing is a threat to our national security? It’s not about the lights in the sky – it’s about the lies on the ground.
    Lies upon lies upon lies. It’s why Trump is so popular right now – he’s pulling back the curtain on what REALLY happens. It’s way past time.

    • James says:

      Not nearly. The really good stuff – 9-11 – is still hiding in plain sight. And NO ONE dares mention it.

      • greg machala says:

        In the end it doesn’t really matter. We all know the owners of the Fed will stop at nothing to keep this show on the road. They will lie, cheat and kill millions if it keeps BAU humming along. There is nothing that is off the table with the people in positions of power. I believe we have only seen the beginning of the descent into the abyss. Desperation is what comes next and that is very unpredictable.

        • Fast Eddy says:

          Distasteful … but I am ok with that…. because if they don’t do those things… we collapse now and die now…

  34. madflower69 says:

    One thing this article and the comments have made clear is the “doomers” cannot possibly be Republicans in the US. They want to take out Planned Parenthood again which contradicts the doomer philosophy.

    • louploup2 says:

      The Republican pathology is hard to figure out. An earlier post did compare Trump’s behavior with the fascists (or “right wing populists” to use a less button pushing term) who emerge in times of crisis; that feels right. The libertarian end (Rand Paul) less so, and the others just seem to be exhibiting craven power mongering of the typical politician (“me! me! me!”).

      • James says:

        The “pathology” will and is coming from the left, not the right. The Rs are a mere side-show.

        • Steven Rodriguez says:

          Left and right, while sometimes a useful typology, is also a metal trap. Human perspective limited to internal consistency, especially with respect to the time dimension.

    • dolph9 says:

      Well more broadly I would say that in theory most doomers should be apolitical.

      Are you arguing that doomers should be Democrats? Big taxes, big government, big immigration, big welfare? At a time when the pie is shrinking and shrinking and this whole thing is going to go down?

      People move to the right because the right gives lip service to nationalism, and at this time nationalism is going to be big because the trust horizon is going to shrink.

      Internationalism —> nationalism —> localism.

      • louploup2 says:

        I think the political fault lines have changed so much the two main parties no longer reflect actual dynamics very well. At the national level, the Ds have become the neoliberals (corporatists), and the GOP, who started that trend in the 70s (see Powell Memo) culminating with the election of Reagan in 1980, has largely been captured by right wing populists. That leaves us liberal Ds at the state and especially local level largely unrepresented at the national level. It is a huge struggle to get the national D party to advocate for traditional left populist (liberal) policies. And all that goes without discussing the cooptation of large parts of the environmental community and much of the remaining organized labor community.

        In my experience here (Seattle) the left has not infrequently come into coalition with the local Rs who have also been abandoned (small percentage as they have become), and they tend toward libertarian anyway. It was exactly this coalition (left, leftist Ds, libertarians, “moderate” Rs) that succeeded in getting a strong popular vote in 2013 changing our city council election system to districts in the face of local oligarchs (TPTB) opposition. A couple good sources on urban political-economy are Logan and Molotch, “Urban Fortunes” (1987), and G. Wm. Domhoff’s site,

        • madflower69 says:

          “I think the political fault lines have changed so much the two main parties no longer reflect actual dynamics very well. At the national level, the Ds have become the neoliberals (corporatists), and the GOP, who started that trend in the 70s (see Powell Memo) culminating with the election of Reagan in 1980, has largely been captured by right wing populists.”

          The Republican went way off to the right, and you can make a legitimate argument about Reagan Republicans policies being in line with communism.

          The dynamics really shifted because of the Tech boom. Overnight you had 1000s of millionaires who are mostly out of the box thinkers, running multi-million dollar companies in their jeans, t-shirts and tennis shoes. A lot of them were fairly liberal thinking and leaned towards the democratic side. It balanced the money out between the two parties and countered the conservative think tank groups like ALEC.

          The difference is this:
          You come up with a crazy off the wall idea, that may or may not work..
          The Republicans are like “this is the way we have always done it”
          The new group of millionaires are like “That sounds awesome! Do it! *writes check*”

          Musk has a car company. Google is working on an autonomous car. Amazon is working on drones.
          These aren’t exactly the classic 80s accountant run, squeeze every penny out of the bottom line types of companies that stifle creativity. They are very forward looking companies, that are always looking for an edge or new idea for a new product, and are willing to take a risk.

        • Fast F Eddy says:

          Of course the real power in America lies with the men who own the Fed…. the political parties exist to deflect attention from these men when the sheeple are upset.

          Take Iraq for instance…. everyone hated Mr Bush after that one…. no problem — trot out Mr Hope and Change.. even give him the Noble Peace Prize —- he’ll fix things!

          Rinse repeat….

          That is the beauty of ‘democracy’ — the people never show up at the castle gates with pitch forks because they don’t even know there is a castle…. (and the king and his court relax and drink champagne and eat caviar and pull the strings in complete anonymity)

          And they believe that changing course is as simple as voting for the other candidate…

          One would have thought after watching Mr Obama’s performance this would be rather obvious….

          “I care not what puppet is placed on the throne of England to rule the Empire, … The man that controls Britain’s money supply controls the British Empire. And I control the money supply.” Nathan Rothschild

          “Once a nation parts with the control of its currency and credit, it matters not who makes the nation’s laws. … Until the control of the issue of currency and credit is restored to government and recognized as its most sacred responsibility, all talk of the sovereignty of parliament and of democracy is idle and futile.” — Mackenzie King, Canadian Prime Minister 1935-1948.

          • Jarle B says:

            “… trot out Mr Hope and Change.. even give him the Noble Peace Prize —- he’ll fix things!”

            When our Nobel comity gave the prize to mr “we have a drone”, I lacked words and still do.

      • James says:

        Agreed. As the overall thrust of Gail’s post reaffirms, all politics (that can actually get electoral traction anyway) is currently irrelevant. Once you take the exponential growth paradigm off the table, all else becomes just so much posturing for audience applause.

        Come to think of it, THAT could very well be the Presidential State of the Union Address from here on out, although I imagine the applause would be muted.

      • madflower69 says:

        “Are you arguing that doomers should be Democrats? ”
        Nope. Just saying that if you want less people to fight for the pie, then planned parenthood is probably not a great option to get rid of.

        Both republicans and democrats like big taxes and big spending.
        The dems are actually pushing for more localized food which is a localized economy.
        The renewable energy and electric cars should help lower overall costs of energy and transportation. It was never going to be immediate, and the fact renewables compete with FFs pricewise now is just amazing. It should also help boost local economies as well.
        The health care reform was actually a republican plan, which is actually addressing small business insurance issues. IE you can’t break from your 8-5 job to start a business because you lose your health insurance. As well as trying to figure out a way to lower health care costs, and offer potential for changing mediare/medicaid programs.

        So far all I have seen from the Republicans is we need to give more of our cash to Canada for oil, which doesn’t solve any of our countries issues. It doesn’t even create many long term jobs muchless increase our technology base.

      • Steven Rodriguez says:

        Immigration and intolerance of immigrants is a good example of tribal conflicts that will be increasing if we fail to recognize and participate in supra tribal mediation (or regulation). This is not a spectrum disorder. It is a choice to collaborate and act (govern and be governed) in concert with human rights principles established by the UN. These principles are the legacy of the earlier attempts at distilling the essence of civil society from the greeks to modern constitutional democracies. The choice is between tribal conflict and institutional collaboration scaled to respective resource and governance carrying capacities.

      • greg machala says:

        I am a realist. Some would say that I am a doomer though. And I am apolitical (if that is even a proper English word). I believe the whole Democrat vs Republican posturing is deliberately perpetuated via the education system in this country to get the American people to fight each other rather than the government itself. The news media uses conservative and liberal terms as if there is nothing in between those two extremes and one is right and the other is wrong. Just another way to make things appear as if we have a real choice when in reality there is no choice. Presidents are selected not elected. Yada yada yada.

        • Fast Eddy says:

          Or to keep the hordes from burning down the castle where the real power lies (the owners of the Fed)….

          Direct their anger at the president — all the sheeple to blow off steam by voting one guy out — and replacing him/her with someone who promises to right the wrongs….. etc etc etc….

          Absolutely brilliant!

    • Of course they are not “doomers”. Their base lies in Xtian dominionism and triumphalism. Fundamentalist Muslims have the same attitude about Europe: they’ll prevail through sheer out-breeding of the competition. Could work… it’s a perfectly legit evolutionary strategy albeit one for previous times. All I know for sure is that they are going to out-breed me.

      • And that doesn’t even get into the pretty relevant aspect that a good majority believe that the Earth is not going to be their final resting place and, as such, is utterly disposable. “I don’t recycle, because Jesus is going to come and clean up the planet”, said one lady..
        Well, alrighty then!

  35. Gary says:

    Great post and yet another very timely warning. I wonder what will come of my Federal Thrift Savings Plan

    • I don’t think we can pick out one investment that will do a whole lot better than others. (Possible exception–actual physical currency of your country–it can probably be traded, even if the government of an area disappears.) Our problem may be a lack of things to buy, or lack of internet access and lack of electricity, or we may not even be here ourselves.

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  40. richard says:

    Hi Gail, I’m going to add some numbers that may look like I disagree with your thesis, but I’m just looking at the US finances. When other economies, resources and population changes are added, the picture will change. Great article BTW, and too many interesting comments to deal with individually.
    Financially, not much happens over the next 12 months. Ten years from now, prices have doubled, output has halved, unemployment has doubled. After that it gets ugly. This isn’t a forecast, it almost certainly will not hit the figures suggested, but you mentioned that the financial side was missing from the Limits To Growth, and this might form a base case.

    • I don’t think prices double–that is a big part of the problem. They fall. This is what brings down production quickly.

      • richard says:

        Yes. I’m still trying to think this through, these figures and the close causal link from oil to GDP suggest that after 2017 oil production will fall ten percent each year. I’d guess that would need a steady $50 oil price with price inflation elsewhere. This Reuters piece adds an extra twist to the calculation:
        “But the fuel economy standard was cut to 26 mpg in the late 1980s, and left unchanged at 27.5 mpg between 1990 and 2010, as concerns about energy security waned.

        In response to soaring oil prices and climate concerns in the 2000s, however, the federal government has implemented regulations raising the standard to 34.1 mpg in 2014 and will increase it to 56 mpg by 2025.”

        So, how likely are these efficiencies to be realised? And would that feed directly through to transport and to macro consumption?

        BTW, there is a consistency in the above post. If the quantity of money or credit in the economy increases or remains constant, and the economy contracts, prices tend to rise. It’s the MV = PT thing. I tend to agree with you though, I just don’t yet see how it works.

        • We don’t have as long as until 2025 or whatever. Also, these standards are funny, in that they give credit for Flex Fuel cars as if they use only 15% as much fuel as they really do.

          In fact, average fuel economy has recently been decreasing, because more people are buying pickup trucks and SUVs.

          Think about the situation, though. Our problem is lack of demand, not too much demand. Raising fuel economy works the wrong direction for solving our problems.

          • madflower69 says:

            “Raising fuel economy works the wrong direction for solving our problems.”

            It depends on what problem you are trying to solve.

            On the bright side if India can get its 100gw of solar up by 2022, it will create a BOE equivalent of roughly 240-300k/barrels a day in production!

          • richard says:

            “We don’t have as long as until 2025 or whatever.”
            I think that is what the numbers are trying to say. A rerun of 2008 every year for the next ten years will not be pretty.
            Fortunately, I’m old enough not to care much, and I’ve found that most people don’t care until it is too late.
            “Think about the situation, though. Our problem is lack of demand, not too much demand.”
            I think we may be looking at different things. Even so, people can look at the same facts and take diametrically opposed positions.
            “Raising fuel economy works the wrong direction for solving our problems.”
            I’ll take the position that it is already too late. But if there is a solution, it had better come via innovation,
            I’ll summarise by saying that this can’t happen, but I can’t see how it can’t not happen.

        • madflower69 says:

          “In response to soaring oil prices and climate concerns in the 2000s, however, the federal government has implemented regulations raising the standard to 34.1 mpg in 2014 and will increase it to 56 mpg by 2025.”

          CAFE actually uses a mathematical formula to determine what the vehicle efficiency should be based on footprint of the car. CAFE of 34.1 might mean an EPA sticker of 26.

          The new 2016 malibu hybrid is supposed to be around 46-47mpg.

          The iconic gas guzzling Vette gets 29 highway..The Z06 supercar version only gets 24 because it is wider and has a bigger engine.. but that isn’t terrible for a car that is only 110HP shy of what nascar allows.

          • greg machala says:

            Trucks and SUV’s (1/2 ton) are the problem not Corvettes. There are 100’s of times more trucks on the road than Corvettes. And a Z06 is just one in a million on the road. A drop in the bucket. Combine that with the reality of a 1/2 ton truck mileage of 15city 17hwy @70MPH and there is the bulk of the personal transport fuel consumption.

            • madflower69 says:

              “Trucks and SUV’s (1/2 ton) are the problem not Corvettes. There are 100’s of times more trucks on the road than Corvettes”

              I agree. And I would further state most people with those vehicles don’t have a need for them.

              However… I would note that mileage is improving. The dodge ram turbodiesel is 29mpg, and the F150 is 25 highway, and the silverado is 24mpg. The 2006 silverado got 19, so there is improvement.

            • Jarle B says:

              “However… I would note that mileage is improving. The dodge ram turbodiesel is 29mpg, and the F150 is 25 highway, and the silverado is 24mpg. The 2006 silverado got 19, so there is improvement.”

              Hurrah, we are saved!

            • greg machala says:

              The new trucks do not make their claimed mileage. I have friends that have the new Ford and GM gas trucks and they do not get 23/24 hwy … not at 70MPH. They can reach the stated 23/24 at 55MPH. At 70MPH in normal highway driving the best the Ford and GM gas trucks got was 19MPG. The Eco-Diesel Dodge may do better I have yet to test it out. I knew the numbers were bogus on the new trucks. There is simply too much wind drag.

            • richard says:

              Thanks. That tends to confirm my thoughts. You can only do so much with weight and rolling resistance, and after that aerodynamic drag and its coefficient take its toll.
              That pushes up the probability of lower speeds and driverless transport, unless rail or water transport expands.
              These lower fuel consumptions have some fine print attached.

            • richard says:

              More on vehicle fuel efficiency, oil futures, and a $20 oil price forecast – they say $30 oil is affordable long term iirc. Almost a year old though.
              “So OPEC faces a future where its product, oil, is now inevitably losing market share to gas. It made a terrible mistake by allowing prices to rise to unaffordable levels in 1974-1985. And since 2005, it has repeated the same mistake. Energy users have choices, after all. Many have chosen to abandon oil for gas or other fuels. Those tied to oil have reduced consumption by improving energy efficiency. Even the US has finally moved to adopt European fuel efficiency standards for its auto fleet. Since 1980, US passenger car fuel economy has risen 27%, from 26 mpg to 33 mpg. And this trend is accelerating as today’s more efficient cars replace older models. The standard for new vehicles will be 35.5 mpg (15.09 km/l) in 2016.”

  41. James II says:

    Banks and financial institutions are cancer promoters in that they accelerate exponential growth by lending a multiple of new money based upon some small percentage of collateral. For instance, you could pledge a plot of forest as collateral for purchase of equipment to cut and consume the forest. Then, if things go well, you can pledge your equipment as collateral to purchase a much larger plot of forest. But eventually there’s nothing remaining to eat, the cancer dies, and so too does the ecosystem. The natural collateral and fossil fuels get consumed as the cancer expands until all that remains is a greatly oversized rusting infrastructure, a denuded landscape, and enough CO2 gas in the atmosphere to shift earth’s thermostat beyond the habitable zone. It doesn’t help that humans, released from their previous limitations by technology expect growth to provide expanding families with jobs and the “American Dream”.

    You can get a little more biological/systems perspective at

    In regards to prepping, someone mentioned that OTC antibiotics packaged for aquarium owners are available and that seems like a good idea. Couple those with an inexpensive microscope and the ability to do blood/sputum smears and you may be able to do some rough diagnosis. Better than nothing. Doing cultures in a sterile environment with specialized media will be problematic.

    • James says:

      Great link! I’ve long compared industrial civilization to a fully metastasized malignancy as well, albeit in off-hand, rather flippant manner. It’s nice to see that serious people are making that connection too. Like names think alike I guess!

      • James says:

        And absolutely great work on that blog by the way! Perhaps I need to move over and become James II now? I plan to be a regular reader of your blog now. Fantastic insights!

    • Ann says:

      Better than aquarium antibiotics – go to a farm store and get vet supplies without a perscription. Get sulfa by the gallon jug. Get boilable syringes and needles. See what they have for horses and dogs, but you’ll have to read the fine print and calculate by kg or pound for a human. You just might save a life.

      • I’ve used fish antibiotics, tetracycline and it was effective
        Tetracycline, is used to treat bacterial infections, including pneumonia and other respiratory tract infections; acne; infections of skin, genital and urinary systems; and the infection that causes stomach ulcers (Helicobacter pylori). It also may be used as an alternative to other medications for the treatment of Lyme disease and for the treatment and prevention of anthrax (after inhalational exposure). Tetracycline is in a class of medications called tetracycline antibiotics. It works by preventing the growth and spread of bacteria. Antibiotics will not work for colds, flu, or other viral infections.

        A friend treated his abscess tooth and it also worked well.

  42. Jake says:

    Great article Gail. I have a very simple question, and I believe it is one of the most, if not the most important question that needs to be asked.

    How should one prepare for what is coming?

    • Steven Rodriguez says:

      They are a minority here, but go back through the posts here and you will hear voices and find links that talk about more fruitful ways to invest you emotional and physical energies. First of all: prepare to govern and be governed; organize and be organized; and, mot importantly, prepare your mind. The cooler heads will prevail.

      • Fast Eddy says:

        There is a good chance that post collapse slavery will make a huge come back…. the only reason it ever mostly disappeared was because oil was a more efficient slave….

        Be prepared for violence – extreme violence.

        • James says:

          Agreed. Slavery’s actually still alive and well, it’s just been off-shored out of sight. But Americans are wage slaves as well, where there’s still any employment opportunity remaining, anyway.

        • Just what our Furheur is looking forward to as a means to ‘exercise’ Mr DNA

        • Rob says:

          It must be noted that slavery ended in the US prior to the widespread use of oil. Other inventions had more to do with the abolition of slavery, such as the cotton gin.

    • My approach is, “Get as much out of life now, while you can. Don’t worry a whole lot about preventing the inevitable.”

      Of course, I knew about the problem quite a while ahead. I do have a garden, but I am not convinced that I could ever grow enough food for my family. (It is harder than it looks, especially if a person doesn’t plan to put up metal fences, or use netting that might not be available, or depend on the city water system, or use other modern “helps” that are available thanks to fossil fuels.) I don’t live in a great farming area. My family does not want to be disrupted from their jobs to move to another area, and if I were to spend a lot of time on preparations, it would take away from my writing.

      There are a lot of other people who want to try to somehow work around the current problems. I am not the best person to give you advice on how to do this. Mostly, they would like to store up a lot of fossil-fuel made tools, food, and other supplies, and use them until parts break. I can see a point to keeping some supplies on hand, to tide a person over a temporary shortage of water or food, but storing up a huge amount of food doesn’t work well as a long-term strategy.

      It is hard to hold on to paper assets. A person can diversify, so that if one bank fails, you will still have funds elsewhere. But if there is a major problem, it will be hard to work around. The best choice is perhaps to spend what money you have now. Give money to charities that you like, or go on trips to visit friends and relatives. Or if you really have the skills and inclination to try to garden/farm, buy some land.

      Build relationships with those around you, so you are not alone. Join a church or other organization, as a way of making friends.

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  44. Harry Gibbs says:

    “At a time when the oil price is languishing at its lowest level in six years, producers need to find half a trillion dollars to repay debt. Some might not make it.”

    It’s amazing, the lack of joined-up thinking. The demise of the oil industry means the demise of industrial civilization as we are structurally dependent on a steady inflow of 90+ million barrels p/d. – but no mainstream journalist seems inclined to make this leap of logic.

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  49. Fast Eddy says:

    Fires erupting everywhere…

    “Hot Money” Flees Latin America, Triggers Currency Bloodbath, Risk of Mega Debt Crisis

    • SymbolikGirl says:

      Just as we saw with the collapse of the Western Roman Empire the hinterlands and weakest ‘provinces’ are falling first. The centre is still holding together for now but we can see the outer reaches like Greece, Brazil, Spain, and the M.E. just being abandoned by the powers that be. With the Romans this process took generations, with a brittle high-energy system like ours it’s happening in a matter of months and years.

      • Fast Eddy says:


        The thing is…

        Because of the interconnected financial system and supply chains… even a fairly small country such as Greece can set off a fire storm ….

        Look at Lehman — not even a country — but letting it go was like injecting the global economy with a massive dose of cyanide….

        • SymbolikGirl says:

          I’m in complete agreement with you, it’s just a matter of time before a key domino falls and the crash propagates through the system like in 2008 except the world has nothing I can see in their arsenal to stop it. Every outlier nation that falls into Chaos is like removing one stick from the greater structure, the only question is which one will be next and will it be the one to make the whole edifice come down. My current bet is on Deutche Bank but who knows?

    • urbangdl says:

      Not yet, people involved on finance belive this is just another cylcle… the rest of the people is stil in BAU.

  50. urbangdl says:

    It came to my mind and I already know is not that easy but couldn’t help but think about this:
    oil is basically liquid energy, it came from the sun and changed chemically thanks to gravity over millions of years using biomass making a savings account.
    In counter part we know the sun will certainly shine for the next 100 years, gravity will be there and so will the heat from the earth’s core, in other words every day we get free intermitent energy . we still get free services all over nature, in form of rain which cleans and desalinates sea water, in form of gravity that makes possible rivers to flow bringing fertile sediments, the insects and bugs and fungi that transforms death organic matter, in form of trees which exchange carbon dioxide into oxygen, in form of volcanic ashes that brings back minerals and fertilizes the earth.
    And everything still works.
    Are we not capable of designing a system that works within those paramenters following the cycles of nature with the knowledge and experience we have gotten so far?
    Can’t we focus our efforts on:

    – make a full redisign of economy applying thermodynamics and ecology.
    to work for self contained but communicated communities.
    -making a sustainable manufacture process to keep renewables working for health and science.
    – research on ways to store energy, without expecting surpluses.
    – research on biological materials, for manufacture.
    -make those rare materials last for at least 50 years.
    – research on recycling even if it was screwed up by our current system.
    -ration and manage materials and energy.
    -train people to be less dependent on energy and more selfsuficient.
    -keep order and justice working.
    -bringing out the best of us..
    -make people understand how lucky we were during the easy energy era.
    -work on those scientific advances that could pay a decent EROEI.
    -planing for degrowth and bring back population to a sustainable level.
    -learn from our past mistakes.
    – take DNA into the equation as Fast Eddy would point out.
    – work on those useful skills that keept ancient civilizations alive.

    We cannot save our way of life that is for sure but as someone said previously: “many things will depend if we take the attitude of us and them or if we act as everyone”.
    I believe we are certainly capable of achieving degrowth and depopulation in an intelligent manner.

    • James says:

      I believe we are certainly capable of achieving degrowth and depopulation in an intelligent manner.

      That’s certainly an optimistic viewpoint! Not one many people share, nor which current global events seem to support, however. IMO, since the growth was largely random and ad hoc all along the way (not surprising, given the enormity and complexity of it all), the collapse (given that it will come exceedingly reluctantly at every step) will be exponentially more of the same. In fact, it will likely only reach it’s “orderly and planned” stage once it’s overwhelmingly undeniable and certain PTBs take it unto themselves to “manage it” in their own best interests.

    • Steven Rodriguez says:

      “achieving degrowth and depopulation in an intelligent manner” = coordination at all scales = government usurping political power held by inefficient private sector that holds global currency captive = strong logical vision such as you describe empowered by global awakening. Odds of this happening? – As Jasper above notes: there is no accounting for human behavior. Models are often wrong. We rely on them to identify the sides of the box. But what is outside the box? The meanderings of the visionaries.

    • J. J. says:

      Oh, really? See also: The Georgia Guidestones

    • Urbangdl, that might have been the case 50 years ago, but no longer.

      You say, “And everything still works.”
      Everything does not “still work”. The oceans are overfished, acidified and, in the case of the Pacific, radioactive. You talk about insects.. where are they? Where are the moths that used to be around the streetlights? We all know about the bees and butterflies. I live in a fairly rural area and I don’t even need screens any longer. Trees come down left and right. Those in the east are rotted; those in the west are rotted and burning. We have no real comprehension of how much we’ve broken, irreparably.

      If you live in an urban area, and you still see pictures of flowers and trees and animals in books and magazines, or on your phone or your TV, it’s easy to underestimate the severe impacts which are undeniably manifest to anyone who spends any time at all actually out-of-doors.

      Right off the bat, when industrial agriculture stops, you are going to have a logical bare minimum of 40% mortality, seeing as 40% of the nitrogen in our bodies is a product of the industrial process that turns nat. gas into fertilizer. That terrifying figure is extremely optimistic, based on two assumptions: 1.) that shortages are perfectly co-ordinated and not across-the-board (if everyone has 40% less food than that needed for survival, mortality is not 40%, but 100%), and 2.) that the rest of the folks have the land access, tools and know-how to quickly, if not immediately, begin feeding themselves without those kinds of external inputs (in a changing climate and with a degraded landscape).

      “Each year the Haber-Bosch process produces millions of tonnes of ammonia for the fertiliser industry by direct hydrogenation of nitrogen with hydrogen gas over a catalyst. However, this process needs temperatures of around 450°C and pressures of 300 bar, consuming vast amounts of energy.”

      • Fast Eddy says:

        The ‘green revolution’ was our Rubicon…

        Norman Borlaug will be responsible for the death of billions….

      • Stilgar Wilcox says:

        “Where are the moths that used to be around the streetlights?”

        lidiaseventeen, I’m glad someone finally asked that question. Our family moved into a rural setting 15 years ago here in CA and when we first lived here there were so many moths it was astonishing, including preying mantis. But now there are almost none, except for this one species of very small moths that are now in small numbers. I have a clue as to what may have happened. About 10 years ago I noticed a neighbor down the street had a massive bug zapper that was constantly zip-zapping moths into the ethers. My guess is they became extinct in this area due to his and other bug zappers. But maybe that’s what happened countrywide, even worldwide. What also happened is the mosquitos are gone, which is nice in a way cause we can sit on the back deck without getting bitten, but it also caused the bats disappear as well. I’d rather have the bats and get bitten once in a while. Humankind is wiping out most of the other species. It’s too sad to think about much, except to hope a reduction in our numbers and technology post collapse may allow many of these dwindling species to recover before becoming permanently extinct.

        • Stefeun says:

          Now when you travel by car you no longer need to regularly clean the windscreen to wipe it off of crashed bugs.
          Birds are also hit ; I assume it is -at least partly- connected:
          “Common European bird numbers crash due to habitat destruction
          EUROPE has an estimated 421 million fewer birds today than it did 30 years ago, a study has found.”

          • No lightening bugs at all where I live now. When I was a child it was a joy to see them flicker at night in the woods. Now even in the forest they are no longer, sad

            • greg machala says:

              So true. They were once so many of them. I haven’t seen one in years. Trees that used to buzz with bees when I was a kid now are quiet even in full blossom. No butterflies or bees at all. Just really really sad. Roundup is probably the cause.

      • xabier says:


        As someone who spends every available minute out of doors in a rural area of England, I can only concur: ancient trees sick from heat stress, air pollution, the spread of new diseases caused by global trade and rising temperatures; enormous, seemingly permanent cracks appearing in the soil where never seen before; hardly any bees, butterflies, even in my garden which I am ensuring is rich in food for them.

        One grieves at this more than at the thought of one’s own death.

        No one driving through would perceive any of this, it all looks green and lovely, eternal ‘Old England’.

        • Steven Rodriguez says:

          The pain of grief and loss on this site is sometimes overwhelming. I find I am able to visit and post less and less frequently. However, it is through participating here that I have managed some equanimity with respect to harrowing reports from Europe and the middle east, but also respecting whatever horrors lay in my future.

          My recent insistence on focusing on governance at all scales as necessary triage may seem a sort of denial. Certainly there is room here for expressions of anguish – Fast Eddy being the best example. (F.E. – I do not mean this as a swipe – my anguish overwhelms me at times too.) My focus on preparation I plan to hold to the bitter end. I sense it is the only thing that will prevent me from losing my humanity as I face the inevitable – however it manifests.

          • Gary says:

            Grief IS the caring response to this unfolding tragedy

          • Fast Eddy says:

            I don’t have any anguish … just disappointment that I wasn’t born a few decades earlier…. because there is still more I would have like to have done…

            Oh to be 75 … the old unit breaking down … and having a front row seat to the end of history… that would be the way to go I tell you …. better to burn out than to fade away….

          • We always have choices. And we only need to take one day at a time.

            Even if things are bad in one way, they are likely good in another. I see my mother in a nursing home. This is no way to spend a person’s life either. (She cannot stand well enough to get from her bed to the wheel chair, so she needs to be in a place with the equipment to help her.) We are avoiding this kind of outcome, as well as the worry about saving enough for retirement, and probably quite a few other of our current worries.

            • xabier says:

              Dear Gail

              Very true. I said to a friend the other day, very well aware of the problem and rather anxious, that if things do unwind in the near future, it is actually quite a liberating situation: no need to worry about long-term illness, pension provision, etc. Nor even wicked and corrupt governments.

              Living for the day is a wise strategy.

              I’ve found that I sem to strike people as very cheerful, and they are surprised if I give a hint of my real assessment of our situation. No sense in spreading gloom.

            • Fast Eddy says:

              Also the smug ‘smartest people in the room’ types who believe humans are so smart and that we will always save the day with more technology … and the economists and their acolytes who do not believe there are limits to growth…

              Well…. they will get a great big does of ‘I told you so’…. (although I suspect they will go to their graves still believing the cause of this was the politicians or the socialists or the capitalists … anything but what the real cause is…)

              I can’t deny … there will be a touch of schadenfreude when this goes down…. unfortunately the victory will have a rather heavy Pyrrhic taint….

            • madflower69 says:

              “Well…. they will get a great big does of ‘I told you so’…. ”
              only if we are living in NZ

    • Quite a bit of human energy use is “baked into the cake.” We need to eat at least some cooked food–we have been doing this for something like 1.8 million years, and we are adapted to cooked food. Our brain couldn’t be as big (and our teeth and gut as small) without it. We also need protection from the cold. We need some way to fight off contagious diseases, in our close living quarters. We need some form of transportation.

      What we really need is a whole new system, and for that, we would have to start over (or very close to start over–because we now know more than we did years ago). Theoretically, we could do what was done, say, 500 years ago, but it would be very difficult to transition. Our buildings we have today are designed for electricity, for example, with elevators and water pumped to the top. We need transportation, and horses wouldn’t work. There aren’t enough horses, and they would make too much of a mess.

      We also have way too many people, now. Probably at least 10 times too many, or even more than that. Resources are more depleted now than they were 500 years ago.

      If we didn’t have way too much population, degrowth would be a whole lot easier.

      • Fast Eddy says:

        “We need transportation, and horses wouldn’t work. There aren’t enough horses, and they would make too much of a mess.”

        I’d hate to be a horse when 7B+ human predators are hungry….

      • urbangdl says:

        Food scarcity and diseases are a problem, transportation? walking is sufficient.
        And the most terrible thing about being many is panic and selfishness.

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