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.
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
- 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.
- 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.
- 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.
- 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.
- Our economy is a self-organized networked system that continuously dissipates energy, known in physics as a dissipative structure. Other 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.
- 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.
Where Did Modeling of Energy and the Economy Go Wrong?
- 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.
- 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.
- 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 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 4. Sum of sine waves converging to a square wave. Source: Wolfram Mathworld.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
Conclusion
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” http://www.esf.edu/efb/hall/2009-05Hall0327.pdf
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 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.
Hello Gail, great article as always.
Hello all. I wish i had had enough time to read all that was written on the commentaries, I must confess I just glanced through it. There’s a lot of stuff, from disbelief to scepticism on how things are going to play out. The are fence defense ideas, and what not. May I offer a little comfort from the third world? May I participate with some optimistic ideas–perhaps they’re wrong, hopefully they are not.
First, no matter how much our modus operandi changed, we are the same as we were 350 thousand years ago, and never, never in the history of mankind has our economy made any sense. The burials of the paleolithic had no point–other than cultural–, the same goes for the pyramids–Egyptian culture was slow to adopt another burial method, but the size of the pyramids was greatly reduced after the famouse three–, Cathedrals, or the modern huge Shopping Malls. It’s culture that defines us, not the economy. The economy doesn’t matter, we are, and have always been, crazy monkeys with a slightly changing madness.
Second, we could talk about how inefficient your economy is, and that of the world as a result; how the marginal utility provided by it has actually turned negative–which means you’re not happier with more goods; but, essentially, I just to point out one thing: the U.S., and the world because of it–yes, yes, you are to be blamed–isn’t using ANY resource, not copper, not oil, in an efficient way. The world, the U.S., Europe, Japan, everybody, has become so wealthy, specially, the U.S., that it’s throwing money away, just wasting it. None of you is enjoying your 53 k per capita, you throw it away. I know some people will say they are barely going by with, I don’t know, 40 k a year, but the underlying truth is that you are paying too much in taxes, way too much, and that all that money you paid is being wasted by your governments (I know it’s trite, but, think of your military, powerful enough to conquer the whole world with a snap of its fingers–nuclear weapons not included in the equation–, you don’t need that at all. Not at all), all aid, foreign or internal, is also a waste. And the same is happening all over the world, look at the cities in the middle east, look at those extremely huge buildings, what for? They aren’t addressing housing problems with that, it’s just to show off, and it a waste. China, also, inundated by money printed wealth, has uninhabited cities. This list is endless. What I’m trying to say is: you can throw more than half of the things you have and still be fine, way more than fine. We never needed a pyramid to begin with; although it’s beautiful to behold.
Third, we found out a long time ago that letting people deal themselves with what they need and what they offer is the best way to deal with social economic problems, do so through a market–you haven’t allowed this to happen at all. There aren’t any free markets on the planet. Right now, the U.S., and world economy, is driven by government sponsored debt. Waste and more waste.
Fourth, the coming depression will be severe, unlike anything we’ve seen before. You’ll see misery you never thought you could see. After the first leg down, it will get worse… but, it’s this absurd reality you’ve built that is crashing down, it’s the too high buildings, and the too big malls, with the too big armies, the too big ships, and the too big welfare state. It’s not civilization falling, but this one, and, compared to way poorer previous societies, we have little to show off for our immense wealth.
Finally, societies like the U.S. aren’t really rich, you can only have so much of something, more of that is just waste. You have messed up distribution so bad that coming even, as in the nearing economic disaster, will be extremely painful. Some world societies will go up in smoke, as so many have already (Syria, Lybia, Iraq, Yemen… more coming soon: Venezuela, Argentina, and so on); but the good old U.S.A., although it will face a disaster unlike triple anything you’ve had, including the great depression, will come out leaner and stronger after it. Basically, oil is energy that translates into money, you only need so much of it and you’ll be well off, more energy than that and you grow fat to the point of hurting yourself, but losing half the amount of food, when you only need a third of that–although brutal–shouldn’t be an insurmountable hurdle. A population collapse will begin as soon as this crisis strikes, birthrates will just go flat and down. Every country will face their terrible reality, but it won’t be the end… there has always been more than enough energy for… let’s say: 1900, but why leave it there, let’s go back all the way to the population we had in 1850, that’s 5.5 billion less people, with 1.4 for the whole planet… more than enough if you ask me. And we could even make a cathedral to pass the time, they did that before.
it will be painful, but not the end… we can become efficient. (look at energy comsuption worldwide, and so on and on).
well, here’s hoping I get to see more of you, 5 years from now.
good luck to all.
“but the good old U.S.A., although it will face a disaster unlike triple anything you’ve had, including the great depression, will come out leaner and stronger after it.”
You seem to fail to understand the problem — when this collapse hits there will be no re-boot of BAU – not in a year – not in a decade – not in a century — never.
It won’t be triple the depression — it will be 1000x times — and it will be forever….
Civilization was built on cheap to extract energy.
That game is over. What comes after will not involve oil or gas or electricity. The only energy available going forward will be the burning of trees.
As for the good ol US of A…. this will be the epicentre of a very violent, chaotic desperate world… hundreds of millions of guns and no food do not make for a very pleasant future in this country.
The game was over before any of us was born. Kerouac famously wrote in Dharma Bums “Pretty girls make graves.” That is, life = death. So, the only remaining question really is “How much time is left?”
On an individual level, no one knows if a drunk driver will meet you at an intersection, a desperate criminal has just entered an alley, a great tectonic shift is about to be unleashed, or your kidney’s cells decide to start rapidly multiplying. So, you take what kinds of rational preventative measures provide the greatest returns, and get on with it.
However, on a societal level, even a cursory knowledge of history, economics, etc can provide certain clues and indicators as to the stage of the game. That’s why I constantly assert that we have nothing to worry about until devaluations are implemented. Since there is no way that central banks and their government sponsors can survive a deflationary collapse, the last bullet will be the proverbial printing press.
Secondly, once (hyper) inflation is unleashed, governments will have to implement wage/price controls, rationing, restrictions on travel/assembly and a host of other control measures. Thirdly, government 101 is predicated on divide & conquer; just make sure to recognize and become integrated within your racial, educational, economic, religious, etc. group
Since we haven’t even yet reached devaluation, there’s nothing really to do except watch the show unfold in front of us. For instance, the migrations that have been underway some some time now are finally getting a little press. These events are nothing more than incipient manifestations of resource depletion, energy constraints and economic contraction.
As this meme begins to resonate across a wider population, the fear will be expressed in civil violence to eliminate ‘outsiders’.
None of this is really novel to many here, but it should be emphasized that we’re not very close seeing this play out on the big screen just yet. I’d have to say we’re still 10-20 years away before the veil of innocence is dropped and it’s every man for himself.
10-20 years?
But the layoffs are starting now — the bankruptcies are imminent… China is starting to unravel http://davidstockmanscontracorner.com/chinas-monumental-ponzi-heres-how-it-unravels/
Demand is waning….. and central banks appear to be out of bullets….
I fail to understand how a further devaluation stops any of this…. perhaps you could provide more detail as to how a devaluation will create jobs — which will boost demand and re-inflate the global economy…
Deflation is the enemy. How does devaluation fix that?
Haven’t we already seen massive devaluations — countries seem to be taking turns devaluing their currencies… Jim Rickards has a fair bit to say about this in his book…
Has this fixed anything? Nope.
In spite of devaluations — QE — ZIRP — trillions of stimulus — ghost cities — subprime everything ….
We are entering a deflationary collapse…..
I fail to see how this train stays on the track for more than another year… I wonder if we will even make to the end of this calendar year….
Wishful thinking is a fantastic defense mechanism — I believe the psychologists have a scientific term for this — cognitive dissonance.
“Deflation is the enemy. How does devaluation fix that?”
On a technical level, deflationary driven defaults & bankruptcies cause insolvency. Central bank insolvencies destroy national currencies, thus rendering governments impotent to maintain control, project force, claim a monopoly on violence, etc, etc, etc.
Devaluation aka asset inflation, has the exact opposite effect. By re-valuing $20 trillion in debt to be effectively only $2 trillion in a 10:1 devaluation, governments in effect are declaring a jubilee, but without the legal mechanisms of actually freeing anybody from the legal constructs inherent in continuing debt obligations.
As you correctly point out, devaluation doesn’t really “fix” anything. However, that’s not the point of the exercise; the point is continuity of government. FDR executed a 40% devaluation (almost 2:1) in 1933 after first confiscating US citizen’s gold. Of course, this was hardly a novel approach, as it has been consistently used throughout the ages to give governments sufficient breathing room before the can plunge the country into war.
Again, while the great majority of educated people were going to college, studying for a grades, developing a professional career, building a family, leaders jump the line and begin immediately on the task of keeping the sheep in line.
I can see by my having to explain this that you don’t understand what I’ve been saying. So, let me repeat once & for all: leading central banks will devalue before they allow deflation to threaten national governments. Since we’re not even there yet, we have plenty of time before that bullet is used.
After devaluation, governments will by necessity have to impose emergency powers in terms of wage/price controls, rationing, assembly/speech restrictions, etc. Again, this is very old hat for the PTB – it’s what emergency war powers are for, which by implication suggests what anyone with a clue knows what’s coming down the pike.
So, relax and be happy. The BS going on in the financial markets is just pushing the current limit lines until the next stage is reached before QE whatever is unleashed. Only this time it will be effected without the courtesy of an offsetting loan receivable.
You have consistently overstated the immediacy of the threat. We are still a long way from having our comfortable way of life compromised.
I will rephrase my question:
How does a devaluation allow us to continue to extract oil so that we can maintain BAU?
If it cannot then there is no middle ground — BAU either continues or it collapses.
If it collapses, civilization ends — the system of food production that is driven by BAU ends — billions starve.
There is also that pesky problem if the spent fuel ponds – no BAU = extinction event
If the US raises interest rates, isn’t that the opposite of devaluation?
B9k9 — Elegant perspective, thanks for sharing your thoughts.
The only thing that isn’t so well covered in your comment is the geopolitical component.
There is land power and sea power in geopolitics. The very formation of TPTB is regulated by these dynamics. Land power is represented today by Russia, sea power by Washington. During World War II Germany tried to impose a third position and went on war against the sea power represented by the British Empire, and against the land power represented by Russia. Berlin fought against the main global forces and lost that war. The end was the complete destruction of Germany.
In 1904, Sir Halford Mackinder in “The Geographical Pivot of History”, an article submitted to the Royal Geographical Society that advanced his Heartland Theory, which can be resumed thus: “Who rules East Europe commands the Heartland; who rules the Heartland commands the World-Island; who rules the World-Island commands the world.”
The World-Island, is the interlinked continents of Europe, Asia, and Africa. This is the largest, most populous, and richest of all possible land combinations. The Heartland lay at the centre of the world island, stretching from the Volga to the Yangtze and from the Himalayas to the Arctic. Mackinder’s Heartland was the area then ruled by the Russian Empire and after that by the Soviet Union, minus the Kamchatka Peninsula region.
Outside the World-Island are: The offshore islands, including the British Isles and the islands of Japan. The outlying islands, including the continents of North America, South America, and Australia. The offshore and the outlying islands would be what Orwell called Oceania, forever trying to conquer the Heartland (Eurasia) but forever failing, because despite their temporary dominance of the Oceans, they cannot control the land routes.
The Heartland is impregnable by forces which would need to be supplied from outside. It is true that “the only way to choke China’s land routes is to control Russia. If the US is to stop or control China, Russia must either cease to exist or become a complete US vassal.” But that precisely is impossible.
IF there is devaluation, why would you believe it would be applied uniformly? The periphery will be devalued first but nations that are disconnected from the CB (mostly Iran & Russia) can afford to adopt a different pace in this global slowdown. How much oil is there in Iran? Does anybody really know? What’s the Iran deal all about, does anybody really know? 😉
“Greatest margin call in history”
You have said it yourself “Wishful thinking is a fantastic defense mechanism —”
I am afraid B9K9 may be right and we have to live with the certainty of change and the uncertainty of our capacity to endure change at the same time for a while longer.
So why not, in the mean time, advocate for preparation, ethical adaptation, and calm careful consideration of our options. Why take a sledgehammer to the weakening legs of the current business model while we still depend upon it. Instead lets use the mean time to build new legs and a new, lighter on the land and each other, business model?
Thanks for your thoughts. Getting along with less doesn’t keep the oil pumping, though, and doesn’t keep the grid electricity operating. It just makes commodity prices lower. Somehow, we need a way of producing food, even if it is for 2 billion people.
Rodrigo, wow you have covered a lot of territory.
1) how much energy will be available after a step down
2) How will city dweller feed themselves. Yes, they can give up their vacations to Europe and the Caribbean.
Why do we pick on China for manipulation of the economy? Haven’t we said all along that the fed manipulates stock price, precious metal price, bond price?
I would struggle to identify any part of any economy in any country that is not completely manipulated….
Yup, this is the first time in the history of the world that all the economies are all interconnected and doing the exact same stupid sh*t. All the Fiat currencies are being manipulated along with the financial, and banking system. All the Central Banks are essentially running their respective governments.
In the race to the bottom we have destroyed Earth’s ecosystems. Not a pretty picture and the best we can hope for is Medieval which is highly doubtful.
2015: The Year China Goes Broke?
Theoretically, Beijing can spend all it wants to purchase stocks because it is using its own currency. There are many factors constraining its stock buying, but money is not one of them. The central government, in an essentially no-inflation environment, can run the printing presses forever to buy every listed share, if that is what it chooses to do.
Chinese officials, however, do not have unlimited flexibility when it comes to their other intervention program, the support of the currency. On the 11th the People’s Bank of China, the central bank, devalued the renminbi and then allowed the currency to fall in succeeding days. At the same time, the PBOC, as the institution is known, promised to allow the market to influence the currency’s exchange rate.
More http://nationalinterest.org/feature/2015-the-year-china-goes-broke-13749
Can’t you always turn deflation into inflation just by throwing money at it? I mean money that gets spent not money that gets locked up in a bank. Have the Fed send $100,000 to each person over 17 in US, EU, Japan. Won’t inflation result?
$100,000 is just a guess of course. You would have to do the sums and work out how big is the Output gap. Then divide up that sum – it would be in the $trillions – by the target population.
It’s quite possible theoretically and makes sense economically. Neo-liberal politics would ban it as they don’t want people to get ahead unless its another elite member lining up. Better would be a pension. a lump sum would get wasted. Which is what we have already so just needs adjusting. It has to allow for living.not a part payment because the jobs won’t exist. to supplement it. You’ll need coupons too, for the essentials.
It has to be part of a comprehensive plan, and that of course is the $64,000 question.
John, yes on your point about a need for a stead stream of spending. Yes on limiting the give away to the output gap if we want to avoid inflation. Go well above it if we want to cause inflation.
Infinite growth with finite resources. Won’t work, can’t work, isn’t working. How is it a 10 year old child understands this but our politicians and economists don’t? I suspect reality is catching up very quickly. Don’t forget the Seneca cliff. When this snowball starts rolling it’ all going to unravel very quickly. Good luck.
Agreed! How quickly we don’t know, but if something like withdrawal limits are issued on bank accounts, that could happen pretty quickly, I would think.
A MATTER OF MOMENTUM
A long time ago, a certain rock band released an album titled Three of a Perfect Pair. I’ve never heard the album, but I now know the feeling – because here is Part 4 of the Storm Front trilogy.
To explain, I saw Storm Front as a three-part investigation. It would look at why there might be a financial crash in China; at what its broader implications might be; and at what reactions might be appropriate. Since then, readers have made some very important points; the broader debate is accelerating; and market indicators are making my timing look either good or fortuitous.
As we know, the Chinese stock market keeps trending down, even though the authorities have thrown at it, not only the kitchen sink, but the full might of Chinese law. In itself, this isn’t too important. China’s stock market is pretty modest in comparison with the economy and, in any case, the Index has only surrendered part of its earlier gains. Moreover, stock markets themselves are minnows in comparison with bond and forex markets, which is where the really big money is.
More https://surplusenergyeconomics.wordpress.com/2015/08/20/59-storm-front-part-4-of-3/
China’s stock market wobbles are nothing on the catastrophe unfolding ecologically as we write;
http://www.dailykos.com/story/2015/08/31/1417071/-Much-of-China-Is-Now-An-Unrepairable-Ecological-Disaster?detail=email#
This really HAS to be the end game under way.
Just when you think you’ve seen or read it all. My God what have we done to this planet? And after seeing the incredible environmental damage the solar panel industry has done in China, its proponents would still have China build the entire solar infrastructure for the world? This is pure insanity!!!
Let’s extract that interesting bit of information for Mr Mad Flower:
The first time Li Gengxuan saw the dump trucks from the nearby factory pull into his village, he could not believe his eyes. Stopping between the cornfields and the primary school playground, the workers dumped buckets of bubbling white liquid onto the ground. Then they turned around and drove right back through the gates of their factory compound without a word. . . . When the dumping began, crops wilted from the white dust, which sometimes rose in clouds several feet off the ground and spread over the fields as the liquid dried. Village farmers began to faint and became ill. . . .
Reckless dumping of industrial waste is everywhere in China.
But what caught the attention of The Washington Post was that the Luoyang Zhonggui High-Technology Company was a “green energy” company producing polysilicon destined for solar energy panels sold around the world.
I will take this further — why is China the main country producing solar panels?
1. Because of low labour costs
2. Because China has virtually 0 environmental controls — and is governed by a dictatorship — therefore factories are able to burn the filthiest shittiest coal called lignite.
But that doesn’t matter to those who worship the Solar Jesus — we need to cover half the planet in solar panels …
This position is beyond stupidity … it borders on insanity … a delusional state of being…. IDIOCRACY.
Yes, that is China in a nutshell, and the solar fantasy.
I think it was the super-star architect Richard Rogers (started life, if I am not wrong, as one Riccardo Ruggieri, first a ‘Sir’ now a ‘Lord’ ) , who said that he just loves China, ‘because they don’t hang around and get things done’.
I think he would very much approve of the white-crap-dumping trucks: just ‘ getting things done.’ Regardless of consequences, no restraints.
Asap, and lots of money made……..for some.
“Reckless dumping of industrial waste is everywhere in China. ”
Here I thought you guys knew the mining industry.. That white stuff, is silicon dioxide ie sand/quartz…It makes up 50% of the earths crust.. The silicon tetracholoride reacts with oxygen in water to release the chlorine gas and create silicon dioxide. In otherwords, it is far safer environmentally, especially compared to FF extraction.
The Farmer is right, it is pretty hard to grow stuff on sand.
The manufacturing process also releases silicon tetrachloride, an extremely toxic substance that reacts violently with water, causes skin burns, and is a respiratory, skin and eye irritant. And then there’s sulfur hexafluoride—an extremely potent greenhouse gas, 23,000 times worse than CO2—which is used to clean the reactors used in silicon production. In developed countries, these extreme molecules are usually captured and reused in a closed-loop process, but that’s not always the case elsewhere. There are reports from China, for example, of silicon tetrachloride pollution from new PV cell factories that are springing up in response to the global demand for solar electricity.
Cadmium is a toxic, cancer-causing heavy metal. It’s nasty stuff, but expensive, too—and that means double the incentives to keep it under control and out of the air and water. Cadmium rinsed away during the production of CdTe films could potentially pollute water systems, but it is generally reclaimed and reused in other steps of the thin-film manufacturing process. Still, about one percent of the cadmium used as input is disposed of as waste. And there’s a risk that cadmium could be released from thin-film panels installed in homes in the event of a fire.
Hydrogen selenide, which is used in the manufacture of CIS, is toxic and dangerous even at very low concentrations. Manufacturers are developing new processes that avoid its use, or substitute it with solid selenium, which largely obviates this hazard. Another concern is that selenium dioxide can sometimes form at high temperatures during the manufacturing of these cells. It is a dangerous air pollutant, and can pose health risks to workers.
The main obstacle to large-scale commercialization of solar power boils down to economics. Currently, the solar industry can produce electricity at costs ranging from 15 to 22 cents per kilowatt-hour, but energy customers only pay 7 to 13 cents per kilowatt-hour for their energy, which largely comes from coal, petroleum and natural gas power plants.
With government subsidies in states such as California and cash-back incentives for customers, renewable energy sources such as solar are becoming more popular.
https://alumni.stanford.edu/get/page/magazine/article/?article_id=30242
Solar Panel Makers Continue To Ship Tons Of Toxic Waste Thousands Of Mile Away
http://www.businessinsider.com.au/solar-panel-makers-grappling-with-waste-2013-2
http://static.businessinsider.com/image/51180df0ecad042b6f000007/image.jpg
Among SVTC’s findings:
– Six companies report that their products contain lead, a potent neurotoxin.
– Three companies report that their products contain cadmium, a known carcinogen.
– One company uses nitrogen triflouride, a potent greenhouse gas
– Only seven companies provide recycling free of charge
– Only eight companies said their would support “extended producer responsibility” laws that would require them to take back or recycle their products
http://www.motherjones.com/blue-marble/2010/03/are-your-solar-panels-toxic
Google is such a useful tool — don’t ya think?
we can probably agree it isn’t great, but Coal ash is worse…
http://content.sierraclub.org/coal/disposal-ash-waste
Coal ash contains arsenic, lead, mercury, and selenium, as well as aluminum, barium, boron, and chlorine. All can be toxic. Particularly where there is prolonged exposure, these toxins can cause cancer, heart damage, lung disease, respiratory distress, kidney disease, reproductive problems, gastrointestinal illness, birth defects, impaired bone growth in children, and behavioral problems. In short, coal ash toxics have the potential to injure all of the major organ systems in adults (including pregnant women) and children.
Um…. but you are aware that Chinese solar manufacturers are burning millions of tonnes of the dirtiest filthiest shitiest most-polluting toxic coal …
To create your solar powered nirvana…
Therefore we get to destroy the environment not once but twice — as we seek to honour and worship Solar Jesus by covering the planet in solar panels….
I am starting to break through here?
Are you beginning to understand that Solar Jesus is a fraud? He is really Solar Devil….
Perhaps I will start a retreat here in NZ — a place where those in the Solar Jesus cult can come to be de-programmed….
“I am starting to break through here? ”
Not really. The same silicon is used in all the computer chips too. They actually have the purist veins of silicon. They are going to do it with or without solar panels.
You really couldn’t make this up …
Did it not occur to you that if we didn’t manufacture the solar panels then we wouldn’t have burned the millions of tonnes of coal that was used to make them (releasing epic levels of toxins and increasing global warming) and created all the toxic by-products that resulted from the manufacture of the solar panels.
I am trying to make this as simple as possible — perhaps it’s still a bit too complicated?
Please let me know …. I can always try to explain it as if I were speaking to a 5 year old…. I’ll take out all the big words….
“I am trying to make this as simple as possible — perhaps it’s still a bit too complicated?
Please let me know …. I can always try to explain it as if I were speaking to a 5 year old…. I’ll take out all the big words…”
I don’t know exactly what to say. I am at least 10 years ahead of your thought process. You haven’t brought up anything new or unforeseen. I already tried to explain it to you in multiple ways. I actually foresaw the communication gap, as a problem too.
To be quite frank, my bet was someone like you couldn’t grasp the whole plan before they died. All you are saying to me is I am winning that bet.
madflower69:
“I am at least 10 years ahead of your thought process.”
If you think wind and solar will save us you are definitely not so.
We have sent our pollution to China. I think the Chinese are getting pretty unhappy with the situation.
ConocoPhillips Fires 10% Of Global Workforce, Warns Of “Dramatic Downturn” To Oil Industry
http://www.zerohedge.com/news/2015-09-01/conocophillips-fires-10-global-workforce-warns-dramatic-downturn-oil-industry
Laid off people buy very little….
Then we have
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/09/20150901_PMI4_0.jpg
And:
WTI Crude Crashes 8% – Biggest Plunge Since Nov 2014’s OPEC Meeting
Thanks! I hadn’t seen those.
“…equivalent of about 5.5 billion barrels of oil”
Since the world uses 30 billion barrels a year, that works out to 67 days of consumption. Of course it isn’t oil, it’s NG. What we need is lots of cheap oil. Speaking of which WTI oil is down 3.20 a barrel and the Dow is down 300+ last I looked. Volatility on steroids.
My thoughts exactly. NG and oil are not the same thing. And we consume so much energy now that these “huge” discoveries are just a drop in the bucket. We need cheap oil and a lot of new “huge” discoveries of it every week..
“My thoughts exactly. NG and oil are not the same thing.”
They are not, but they are price dependent on each other because there are some crossover uses. Heating oil, propane, etc are oil based, but you can switch to natural gas.
“And we consume so much energy now that these “huge” discoveries are just a drop in the bucket. We need cheap oil and a lot of new “huge” discoveries of it every week..”
There really is no more, that is why these “huge” discoveries are just tiny pockets. Need to move on to something else while we still have some left to change.
There is nothing else to move to (other than perhaps nuclear) that I am aware of that is as dense or more energy dense than conventional crude oil. Solar panels are not fuel, wind turbines are not fuel. Solar panels and wind turbines are energy capture devices. The nuclear reaction of the sun is the fuel that powers both of them.
NG, crude oil and coal can be burned directly. You can’t do that with solar panels and wind turbines. We need fuel that is as energy dense (and of the right type) to directly replace what oil does to continue running the economy.
What do you suggest we burn in place of NG, crude oil and coal?
“What do you suggest we burn in place of NG, crude oil and coal?”
Even the current system can be improved, it isn’t perfect either.
If we can offset some of the FF use with wind and solar, more power to us. The “final solution” doesn’t mean all one source of fuel. Many times I keep hearing, well it isn’t a one-size-fits all solution. We have never had that anyway, it is just a red herring.
Right now it is merely diversifying energy sources, and making efficiency improvements throughout the whole system. The current system has its own issues so it isn’t like we are replacing a top-notch highly efficient system. We are just including other sources of energy where we can. It isn’t everywhere, nor does it have to be.
Not a good situation! The natural gas has to be cheap to extract, as well, or it won’t be marketable.
Meanwhile … back at the ranch….
THE DECLINE OF THE WORLD’S MAJOR OIL FIELDS
Aging giant fields produce more than half of global oil supply and are already declining as group, Cobb writes. Research suggests that their annual production decline rates are likely to accelerate.
http://www.csmonitor.com/Environment/Energy-Voices/2013/0412/The-decline-of-the-world-s-major-oil-fields
World Largest Offshore Gas Field discovered south of Italy
30 trillion cubic feet of natural gas or energy equivalent of about 5.5 billion barrels of oil
http://www.cbs12.com/news/top-stories/stories/vid_28818.shtml
(1) Can the system hold together well enough to extract it?
(2) If it can, will the price be high enough to extract it? $7 mcf now is not very much, compared to what the price has been in Europe. It is still high by US standards.
Gail — Berlin, 2015-Jun-03 — Siemens awarded record energy orders that will boost Egypt’s power generation by 50%
-Single biggest order ever for Siemens
-Extra capacity of 16.4 gigawatts from natural gas and wind power plants
-Up to 600 wind turbines and rotor blade manufacturing facility
-Trainings and jobs for up to 1,000 people
-Orders expand on memorandums of understanding announced at EEDC
http://www.siemens.com/press/pool/de/feature/2015/corporate/2015-06-egypt/infographic-egypt.png
Displacement of oil-fired generated capacity (electricity) to NG-fired will free up some middle-eastern oil. Probably some LNG plants to be expected too?
Who else produce oil based electricity? I think I saw a chart in this blog.
Lundin30, do you know where Egypt is getting the money to buy this? It is an excellent invest for them. How much of the profits of the new system will trickle down to the average worker in Egypt? My guess like the US zero.
Why would profit trickles down if productivity of the workforce is low? Your question, ultimately, is geopolitical, not financial. Non sequitur.
You are right–quite a bit of the Middle East uses electricity from oil, even though they would be much better off to use natural gas, if they could find some. Onshore wind might even be helpful, if oil is the alternative.
Quite a bit of Africa does as well if they have power at all. The african countries are more receptive to alternatives then the middle eastern ones which is understandable.
Since it is a natural resource that just by chance is sitting in the ground all the citizen of Egypt are due an equal part of the profit, yes? Will the 98% poor be getting checks? Or will it be the Swiss bank account of the top 0.01% that get the checks in Egypt?
Gail,
can you better explain why you believe collapse will occur within one year?
You also wrote about wages and debt and I saw in your previous post the picture about US wages. I’m interest to see wages and debt on a wider scale, say OCSE for example. Do you have the data (or the link to them) so we can see it?
Thanks
Regards
Danny
I said I think that collapse is likely to start within one year–not necessarily that it will be anywhere near complete in that time. In fact, in some ways we are already into it.
What we are living in now is, in effect, a bubble world, founded on debt. It cannot continue, if economic growth slows down too much. This is precisely what is happening now, on a world basis. The US may seem to be doing better than the rest, but even this will “sort out” as well. Debt defaults and derivative defaults will affect financial results everywhere.
I notice financial markets are down again today. We are likely to see a lot more of this in the future.
Hi Gail, you may have written of this before but what do you feel would be a ‘next step’ in the process of a collapse due to lack of affordable energy? You mention market turmoil, defaults and bankruptcies. I suppose the question I am asking is what do you feel the short term would look like once the credit markets lock up?
Pls. define affordable energy, people in the west don’t need cars anymore, computers and phones consumes single watts per hour, don’t like to eat much, mild winters are the norm. The prospect of per capita energy consumption going back to early 1960/1950s is VERY plausible, while keeping the financial system duct taped along the way for some more years.
http://crudeoilpeak.info/europe-oil-consumption-peaked-2005
We don’t have enough duct tape to keep the financial system going. The system can’t just run on oil, unfortunately.
I am expecting that credit markets will lock up, either because of debt defaults or derivative defaults causing problems in banks. At first, there may be one big bank that is mostly affected by big losses, but gradually this will spread.
The government may spend a while trying to figure out what they are going to do, but will quickly discover that if, say, Citibank is affected, authorities can’t just sit around and talk about the problem, or depositors will pull their money out of the bank. If they announce that depositors cannot withdraw funds from Citibank in excess of say, $300 per day, then depositors will start getting afraid to leave their money in all of the other big banks with similar exposure. A $300 per day cap may temporally save Citibank, until authorities can figure out what kind of haircut to deposits will be made, but depositors will pull their money out of JPMorgan Chase, Goldman Sachs, Bank of America, and Morgan Stanley, for example. In not too long, regulators will figure out that they have to put controls on the money that can be withdrawn from essentially any bank, if they plan to haircut deposits of depositors of any major bank.
Trying to limit withdrawals from banks would be a disaster, in terms of the money citizens will have to spend. The number of new cars purchased would drop greatly, for example, even if a way can be found to exempt payroll funds from limitations. Because of the difficulty of running the country without cash, governments will try to figure out ways around the problem. If the problem is very major though, governments will quickly discover that haircutting deposits works even worse than what was tried in 2008. I suppose that there may be more attempts at money printing to prop up banks, so that they can continue to operate as usual.
Somewhere along the line, when governments try to prop up banks, governments will start encountering the issue of foreign deposits and foreign loans. Do governments issue money to cover the losses of depositors from abroad (the Iceland bank situation a few years ago)? How about protecting banks from debt-related losses coming from loans made in $ terms to other countries, or related to foreign issued bonds held on the balance sheets of banks? Should banks be allowed to continue to issue letters of credit related to international trade, especially if there are problems with other countries actually paying for the goods that they order? How about issuing new international loans?
Even if governments figure out a way to prop up their own banks, with respect to transactions inside the country, they are likely to cut back on what they do internationally. These cutbacks internationally will have a very adverse impact on foreign trade. Other governments will retaliate by similarly not offering international services. Businesses with international ties will have a real problem doing business. Foreign made goods will gradually disappear from availability. Without foreign trade, the whole system will collapse, because practically everyone needs replacement parts and imported oil. Large businesses depend on export markets as well.
With lower dollar value of trade, commodity prices will tend to fall even lower, contributing to the collapse in commodity production.
“If they announce that depositors cannot withdraw funds from Citibank in excess of say, $300 per day”
I’d be surprised if this were to happen (although it has happened in Greece and Cyprus) because it would be the opposite of helicopter money and it would result in the mother of all deflationary collapses if it became policy in America — or any other significant consuming country.
I reckon the rapid collapse is triggered by a deluge of insolvencies across the board coupled with mass layoffs as companies fight to slash opex to stay alive… all caused by lack of demand.
We will see literally millions of jobs being shed in a short period of time…
The central banks won’t know which way to turn to plug the holes because the dam will look like Swiss cheese.
Then the tanks roll onto the streets and we get martial law — while the petrol reserves last…
A ray of hope for those in remote locations …. perhaps the masses in the cities will not be allowed to leave — they will be told that help is on the way — just stay at home and continue to watch CNN for updates (or better still – broadcast endless re-runs of dancing with the stars and the people will not even notice anything is wrong) … help will of course never arrive…. and billions will curl up and die…
Just wanted to leave this here……one missed gas tanker:
http://www.cbc.ca/news/canada/nova-scotia/gas-nova-scotia-shortages-analyst-1.3210993
now imagine either few or no gas tankers at all making it to port.
Thanks! It is all of the specific requirements of individual areas that make a huge difference–place, type of gasoline. Having gasoline available most places doesn’t make it available everywhere. There seem to be several outages a year, generally in areas not well served by transportation and refineries.
I feel that collectively as a global economy we are into the collapse phase. This can be seen in many places: China, Japan, Venezuela, Greece, Yemen, Syria, Egypt, Libya, Iraq, Italy, Spain, Portugal, Hungry to name a few. Volatility in commodities is also a sign of destabilization and collapse. China, which was the growth beacon of the global economy, is now gridlocked and I would say dysfunctional (due to draconian steps to prop up growth). Unemployment, pollution, ocean acidification, inability to recover from natural disasters (Katrina), droughts, species die off, debt levels … there is just no where left to grow without causing more destructive growth. The only direction from here is de-growth.
Greg
There’s a lot left to destroy yet…..
Plenty of (once) good agricultural land being destroyed here to build apartments for the expected hordes of Chinese graduate students at the university -3,000 of them.
Sites of special scientific interest and nature reserves being handed over by the UK government to the frackers.
All regulations and planning restrictions being over-thrown in pursuit of GDP.
I’m reminded of desperate people burning the furniture, doors and floorboards of a house: form outside, no change…….
It looks like China is the lynch pin… https://surplusenergyeconomics.wordpress.com/2015/08/20/59-storm-front-part-4-of-3/
Greg, unfortunately de-growth doesn’t work well either.
De-growth = deflation. It appears to me that defation (de-growth) is what is going on right now. And any new growth it seems is destructive growth…which help either.
The issue at hand is that the “bubble world” properties have been known for decades, suddenly China came as megatrend for the 2000s and as if like magic every dark cloud has been cankicked for a decade or two, perhaps even more..
So, where to get the sense of correct evaluation of the current situation now?
As mentioned before, there are many ways to extend cankicking some more, for instance if in today’s world of 7B sould 1B goes very hungry, why not squeeze it some more, let say focus consumption on small minority of global pop, perhaps even bellow 2B consumers (the rest goes to hell), voila problem solved, you have suddenly cankicked 3-5decades of more credit and consumption to go.
Was it today or recently as Putin announced he plans to step up from todays ~50% to ~100% of non U$D payments for his revival block of former USSR member countries for 2025-30, plus the wider global alliance of BRICS. So there you have it, one example of some sort of official can kicking plan and projections.
The people who own the world (int. capital beyond central banks) at least in this current interpretation are at the helm continuously at least past 200-400yrs depending on how deep you want to analyse this, so to assume we are suddenly at the end of this road is given the large time scale a bit naive, perhaps more realistic worldview is that we are to enter important crossroad shortly, that’s very likely if not selfevident.
WorldOf, yes, squeeze out 6 billion and the 1 billion can go on for a while longer.
“I said I think that collapse is likely to start within one year–not necessarily that it will be anywhere near complete in that time. In fact, in some ways we are already into it.”
Thanks Gail for clarifying your position on collapse.
“I notice financial markets are down again today. We are likely to see a lot more of this in the future.”
https://www.google.com/?gws_rd=ssl#q=dow
Dow minus 459 on the day! Brent oil down 5.40 a barrel. The volatility is getting wild and an analogy could be drawn with an engine that is so worn to the limit it’s many parts are beginning to move wildly and will soon cause one or more parts to fail. Once the engine of the global economy ceases up into strong contraction, it will take the equivalent of explosions in the cylinders to get it going again. Of course that is a mechanics last ditch effort to get some more life out of damaged engine, so don’t expect too much or for very long.
I agree. And the derivatives that have been issued are likely to behave badly with so much volatility.
Apocalyptic scenes now in CEE as thousands head swarm of ME refugees is denied access in front of Budapest capital city main railway station to depart (without papers and tickets) to Germany/Austria. Nice architecture by the way, the current situation would be described as bad scifi few decades or century ago..
live feed: http://www.rt.com/on-air/trains-stopped-hungary-border/
Worldofh.
Indeed. When very young, we dreamt of life being a fairy story: we live to be bit extras in a bad scifi Doomsday pot-boiler…..
More seriously, has anyone seen a good explanation of why this sudden rush, NOW?
Have the Turks started kicking the Syrians out? I have a feeling someone is playing strategic games with these poor people……
And perhaps that a lot of non-refugee Balkan hopefuls are tagging along in the hope of reaching EU Wonderland.
“More seriously, has anyone seen a good explanation of why this sudden rush, NOW?”
Russian military in process of setting up in Syria. They will be going after ISIS and rebels trying to oust Assaud. Sorry no link, but saw that on zero hedge earlier today. Any escalation will inevitably mean more mayhem for Syrian citizens.
I don’t know if it is a sudden rush. It may just be reported on now more so than in the past. I can remember reading about Middle East refugees entering Europe as far back as the Iraq / Afghanistan war in early 2000’s. I think the problem now is the sheer numbers are becoming problematic for gov’t funding to handle. So, it has to be stopped and the humanitarian agencies of the world are crying foul so the media begins to pay attention. I think Gail has mentioned the possibility of refugees fleeing failed states as being a part of a larger negative feeback loop that brings down the global economy.
At some point, countries have to start saying, “No.” Even Greece seems to be getting refugees. If it can’t take care of itself, how can it take care of refugees as well?
I’d say there are several ingredients at play here. Firstly, it is true most of the refugees are concentrated in Turkey, Jordan, Lebanon and few other places in the ME. This sudden EU bound rush could be explained as partly the chosen destination for people with already established family connections there, don’t forget it’s the official german policy to import at least .5M people yearly to keep the aging economy going, now they get double that, and are apparently happy in their politicaly correct pretend paradise. Also there must be some “hidden” factor of organized migration all the way, it reminds us of dear colonel’s prophetic last words around 2011 if he is killed the north african people smuggling route would just explode, and he was correct as it did just that. Plus don’t forget there are very dubious activities going on like both Italian gov. navy and various int. “charities” patrol boats boarding refugees just few miles of the coast of Libya !?, it’s completely insane, when in the next step they let them go north and not force them settle in first safe place of landing, i.e. in Italy. So, it smells there is some serious undercurrent to destabilize Europe in this way, somebody is paying for it and providing intel, and it’s apparently not done by Russia/China..
ps and the only piggybacking folks from Balkan seems to be the Kosovans, which is tiny outlier mediaval like enclave somewhere downthere, perhaps performing some “spice” infiltration biz along the way in this refugee chaos as well, otherwise normal traditional Balkan people are fine bunch (former Yugo, +Bulhars, Greeks,..) no need to worry about them ..
WorldofH
Actually, I saw a statistic – from the Germans I think – of around ‘40% to 50% being from the Balkans.’ Most interesting……
De-stabilisation of Europe may be one element. Getting support for further intervention in Syria another. UK politicians on the nominal ‘right’ are quick to say ‘If you don’t like this, we have to save Syria’ these days: that followed the killings in North Africa, too.
Looking at films of the migrants, they are very well fed and fit: something doesn’t quite add up.
Glencore’s $31 Billion Debt Weighs on Trader Amid Commodity Rout
“There’s a very good reason to be worried” about Glencore’s balance sheet, said Richard Knights, a mining analyst at Liberum Capital. If commodity prices deteriorate further the company “could be looking at ratings downgrades, cutting dividends or, further down the line, even potential rights issues.”
http://www.bloomberg.com/news/articles/2015-08-14/glencore-s-31-billion-debt-weighs-on-trader-amid-commodity-rout
If commodity prices stay where they are now — Glencore will collapse….
Ouch!
The low commodity prices has been very concerning to me as well. I am amazed that Glencore hasn’t collapsed yet. The longer the commodity prices stay down the more dangerous the situation becomes in terms of fueling a death spiral of deflation.
“The longer the commodity prices stay down the more dangerous the situation becomes in terms of fueling a death spiral of deflation.”
We have been in a death spiral for the last 40 years in the states. Minus the tech sector boom it has been mostly downhill. We are trying to claw our way out of it. The tech sector has helped considerably and in fact is part of the technology driving the efficiency and renewable sectors.
It is just different applications of the same technology, there is a tremendous crossover ripple effect.
We have absolutely not been in a deflationary death spiral for decades — on the contrary — the central banks have maintained inflation through various policies including debt based ‘growth’ — subprime bubble based ‘growth’ — and of recent QE ZIRP based ‘growth’
We are only now entering the deflationary death spiral – central banks look powerless to stop this from happening.
But what is the point of a collapse for Glencore? Someone else will come and pick up the jewels in the basket. I do not see a problem with bankruptcies…
The problem is that the cost to extract resources is higher than what they can be sold for.
Because there are no jobs being created… because incomes have collapsed… because people are up to their ears in debt…..
If Glencore cannot make it work then why would any other company?
Bankruptcies threaten the entire resource extraction industry — from miners to oil companies — that means layoffs — which reduces demand for resources even further — which means prices drop further…. which means more companies layoff staff and/or go bankrupt…. and so on ….
This results in a deflationary death spiral…
Quite a lot of the properties will never be developed. Extraction of minerals depends on prices being high enough, just as extraction of oil and gas.
You always use “market terms” like “prices”. As Nicole Foss says: There does not exist any market since 2008. Everything is rigged. If Glencore can not make a buck in extracting resources they can push up stock prices by buyback schemes. The resources WILL be extracted, even if we have to build one coal fired power plant besides each oil well. You wil see it. Money can make the world go round as it has no laws like thermodynamics. As long as money is there (helicopters over saudi arabia) the resources will be extracted “at all costs”. The “price” plays no role as we have no more “price discovery process”. This will only play out when thermodynamics win in the end but this will take a very long time until the net energy is negative. We still have a long way to go for that to happen. Coal is not energy negative for at least 50 years. In germany they build the power plant directly besides the coal mines and the mining equipment is electrical powered by the plant itself. Lubricants will not run out due to oil extraction.
The problem is not that we are out of resources — nowhere near — or that we lack the tools and methods to extract what is left.
The problem is that we are out of cheap to extract resources… and that is what is collapsing the global economy.
I fail to see how sticking a coal plant next to every mine fixes that problem.
Energy extraction requires BAU which and — sorry to inform you and Nicole — requires a fully functioning financial system and global economy.
You can’t pick and choose which parts can continue to function and which do not matter.
They all matter — the supply chain matters — the financial system matters. Pull one leg of the chair out and the whole thing collapses.
There exists actually nobody except some 150 doomers here that wants to pull one leg of any chair of BAU.
7 Billion people are trying to run BAU for as long as possible and the people that have some power will do ANYTHING that the chair will hold. They could issue a law that all credit is deemed an asset. Be it multiplied by -1 and thus spendable on the economy.
Money has no natural laws. The mechanics of it can be changed in any way required at the strike of a key and it will be (is beeing ?) done before the chair looses a leg.
I prefer not to see the leg pulled… and I hope the central banks have more tools in the box… we will soon find out
Drop this into a google news search to get at the full story for free:
India warned to beware gloating over China crisis
An example of the nonsense — seems he’s not aware that China’s export markets are collapsing…
http://www.ft.com/cms/s/0/c5848690-4fd1-11e5-8642-453585f2cfcd.html#ixzz3kSpc4MV0
Arun Jaitley, Indian finance minister, portrayed India as a new engine to power the world economy as China slowed, while Arvind Panagariya, who heads the new Niti Aayog state planning body, said the scope for India to capture export markets from China was “potentially huge”.
China Factory Gauge Slips to Three-Year Low in August
http://www.wsj.com/articles/china-august-manufacturing-pmi-slips-1441070881
South Korea exports plunge 14.7%
Biggest fall in 6 years as China slowdown hits country’s economy
http://www.ft.com/cms/s/0/3297921a-5057-11e5-8642-453585f2cfcd.html
from behind the wall:
South Korea has suffered its heaviest fall in exports for six years, bolstering expectations that the central bank will cut rates next week to tackle a rapidly darkening outlook.
Exports fell 14.7 per cent last month from a year before, the trade ministry said on Tuesday — the biggest decline since August 2009. Domestic consumption also slumped, pulling imports down 18.3 per cent in their biggest drop since February. The trade surplus fell to $4.35bn from $7.72bn in July.
http://www.7robots.com/wp-content/uploads/2015/07/16_race_to_the_bottom.png
Australia’s outlook get the treatment in this piece as well. Slow growth is the norm now;
http://insidestory.org.au/our-smallest-recession-our-weakest-recovery-has-australias-potential-growth-rate-shrunk.
You mention South Korea exports off 14.7%. The above article said SK grew 20% between ’07 and 2014. Sounds like history’s up for them too.
What we are seeing is a world wide slowdown, deflation due to demographics and neo-liberal policies destroying spending power. Our current problem is that we are not spending enough [not entirely a bad move!] but not what our economies need to move forward. I think this is structural and we will never ever return to any boom times.
I agree. It is structural. I think that it has its roots in the amount of net energy available to the economy. The global economy has been running on debt, faith, momentum (and QE) post 2008. But, the middle class, the jobs, they are disappearing.
The momentum is gone. There is no where left to grow, The net energy is downward trending. Wages are down as service jobs don’t pay well. I don’t see how this ends well. Deflation is hard to stop once it starts. Deflation was a huge fear in 2008 and anything was fair game to keep it deflation bay. How much longer can it be fought back is anyone’s guess.
“The net energy is downward trending. Wages are down as service jobs don’t pay well. I don’t see how this ends well. Deflation is hard to stop once it starts. Deflation was a huge fear in 2008 and anything was fair game to keep it deflation bay. How much longer can it be fought back is anyone’s guess.”
Technology progress stopped stagnating because of investments in efficiency and renewable energy. Most of our societal advancement in the last 20 years have been driven by the tech industry. They are also driving the efficiency and renewable sectors because there are -huge- crossovers in technologies that are applicable to both fields.
I don’t know if it is enough at this point to stop whatever economic progress especially in the short term but it is enough to slow trends, and possibly will be enough to reverse trends. Most of the new systems pay for themselves in <10 years, and after that, they produce energy with a cost basis of about zero. It is similar to the old coal plants that have fully depreciated but they have input costs.
Deflation = inability to service debts = bankruptcies = collapse of the global financial system.
Once we hit the tipping point everything will flip over within days — as it nearly did in 2008.
The central banks are doing everything they can to put off this tipping point — therefore when it is reached there will be nothing they can do this time around.
Every last bullet will have been fired — they will have thrown the gun at the beast (deflation) — the kitchen sink — rocks — sticks — furniture — little old ladies – babies — everything and anything….
I noticed that. Thanks. The indicator for manufacturing seems to indicate slight contraction; services continue to expand, but less rapidly.
“The cornucopians and techno-narcissists would like to think that we are transitioning into an even more lavish era of techno-wonderama — life in a padded recliner tapping on a tablet for everything! I don’t think so. Rather, we’re going medieval, and we’re doing it the hard way because there’s just not enough to go around and the swollen populations of the world are going to be fighting over what’s left.”
http://kunstler.com/clusterfuck-nation/say-goodbye-to-normal/
… life on a padded recliner tapping for everything….. +++++!!!!!! ha
Reminds me of a guy who is backing a pet robot roll out… telling me about the road show and the interest from Dubai to LA…. I listen… thinking… WTF….
http://new.testmagic.com/wp-content/uploads/2011/04/The-Scream-by-Edvard-Munch-Close-up-266×300.png
Collapse of the financial system within appoximately a year. A bold forecast. A lot of tricks have indeed been used to save it these last years. But somehow I find it hard to grasp. A timescale of 10-15 years of gradual decline followed by a collapse seems more reasonable. It would be interesting to get a more elaborate version of why we risk a collaspe within such a short time-span. What could actually trigger it?
Christopher, what Gail wrote was:
“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.”
Quite different does not necessarily infer collapse, but it will be interesting to see what the situation is in a year from this article. As we all know, it’s very hard to predict when something will occur.
Like an earthquake, it could be any time. Could be within a year, or could be multiple times within the next 10-15. But the process is already well underway and relentless. All the political and economic maneuverings are the ‘tell’, if your not attuned enough to see the rest.
Reblogged this on River of Compassion.
I am starting a new company Alaska Coal. Our motto “powering the world”.
Part of our value statement “the pollution stays in Alaska”.
We expect the Chinese will find this very appealing.
How about, “powering the world…off a cliff.”
http://www.theglobeandmail.com/technology/technology-video/worlds-first-electric-helicopter-takes-flight-in-germany/article15584945/
Fantastic!!!
Even when the oil stops…. we will still be able to fling bales of $100 bills out of helicopters…
Electric plane, helo, car, and sail boats. I say let’s put electric generators on top of the 5000 gigatons of coal in Alaska and use transmission lines to bring it to US and China.
Buried in shallow trench (3 feet deep) bipolar DC lines. 100 lines of 2GW each to China and 100 of 2GW each to US. Lines at 2 million per mile, 6000 mile lines. Total 2.4 trillion dollars for the lines. Better than helo money it keeps giving for decades to comes.
Give a person a bundle of 100 dollar bills they keep warm for a few days. Give a person 5000 gigatons of coal they keep warm for decades.
Ed,
FYI, Alaska is actually in the US!
“FYI, Alaska is actually in the US!”
It would actually be much cheaper just to install solar and wind then run the power lines. It is exactly why India is installing 175GW in distributed solar and wind in the next 5 years.
OK, poorly worded. To bring it to the lower 48 and China.
heehee
Wow! Where does the energy/money come for all of this come from? Anything we do requires real resources. The people who work on this cannot work on other jobs. It makes other kinds of production of goods and services go down.
I would hope the drop in oil prices provides a boost to many sectors of the economy along with the families who are getting some relief. Deflationary,Collapse,Ahead, Deflationary Collapse Ahead?
A person would hope that a drop in oil prices would provide a boost to some sectors of the economy, but this isn’t really happening. Read my post, http://ourfiniteworld.com/2015/07/22/nine-reasons-why-low-oil-prices-may-morph-into-something-much-worse/
The USA keeps exporting their recovery to China.
‘The USA keeps exporting their recovery to China.”
(and other countries.)
Some claim this is a ploy in order to make chinese yuan the new reserve currency, obiously they are missing the systemic point of view
The thing is…
Commodity prices including oil have been collapsed for many months now — and that is not giving the economy a boost — as one would expect…
The old nag is used up …. he’s laying on the ground … you can kick him … whip him… shoot him with adrenaline… jolt him with electricity … water board him…. don’t matter… he’s done… and just waiting to die…
Say Goodbye to Normal
http://kunstler.com/clusterfuck-nation/say-goodbye-to-normal/
He is coming to the same conclusion that I am.
Ahh, the good old days, show trails with tortured confessions
http://money.cnn.com/2015/08/31/investing/china-arrests-markets-crash/
Government officials have also been placed under arrest, including Liu Shufan, an official with the China Securities Regulatory Commission, who has been accused of bribery, fraud and completing under-the-table deals. At least four senior executives from Citic Securities, a top Chinese investment bank, were arrested on insider trading charges.
Roughly 165 online accounts have been shut down over related violations, according to state media.
Wang, Liu and the Citic executives have confessed to the accusations, according to state media. Suspects are sometimes coerced or forced into signing confessions in China.
It’s not uncommon for people to be arrested in China for spreading rumors on any platform. In the past, Chinese authorities have punished individuals that allegedly spread false information about a bank’s solvency or incited crowds to protest.
Oh that American markets were that simple! Here the criminals are simply put in charge and given a huge MSM megaphone, all the better to drown out any naysayers preemptively. China is as America does for the most part financially, so blaming the Chinese for government corruption is a bit too close to comfort for my tastes. Are the Chinese corrupt? They god-damned well better be if they want to keep up!
They found the sole quilt culprit that caused the meltdown
Wang was arrested on August 25 for “fabricating and spreading false information about securities and futures trading.” A Xinhua report said that Wang had confessed to writing a false report on China’s stock market. According to Xinhua, Wang admitted that his story “caused panics and disorder at stock market, seriously undermined the market confidence, and inflicted huge losses on the country and investors [sic].”
On Monday, CCTV aired a video confession from Wang, in which he said he was “deeply sorry” for his actions. “At such a sensitive time, I should not have published a report that negatively affected the market,” Wang said, saying he had “caused great losses to the country and to investors” all for the sake of “sensationalism.”
http://www.zerohedge.com/news/2015-08-31/man-responsible-chinas-stock-market-crash
“They found the sole quilt culprit that caused the meltdown
Wang was arrested on August 25 for “fabricating and spreading false information about securities and futures trading.” ”
I get how panic spreads, and it could be true.. it just seems implausible only one person was involved. To me it kind of seems like a cover up. Since if you found the misinformation, they would have issued a correction statement much earlier.
Blame the expendable low totem pole underling(s).
Makes good press, like sending to jail Bernie Madoff for the misdeeds of our own financial crisis.
Heh, it works for me and keeps the rabble (sheeple) mute.
Speaking of criminals, Dick Cheney was on TVEE with his daughter saying Obama was weak! All while displaying an American flag.
God Bless America!
http://www.huffingtonpost.com/2015/04/08/dick-cheney-president_n_7024596.html
Dick Cheney: Obama Leaving A ‘Terrible Burden’ For Next President With Iran Deal
I couldn’t make this stuff up if I tried.
Comedy Central in prime time
There is always a need for a scape goat.
Michael Jones above had a good quote…‘There is PLENTY of blame to go around”…..
Pity help us all, when political scapegoating no longer has traction. Scaping goats could possibly end up being the major pastime. Countries, states, counties, minorities, religions, races, wealthy or those with a badly cut suit…..all fair game.
Another good image of this strange feeling in this strange period:
by Kurt Cobb
http://resourceinsights.blogspot.co.uk/2015/08/anxiety-turns-to-fear-markets-energy.html
From that article Stefeun is the following paragraph which is unfortunately very true. “Hidden from view”, seems to the problem with most of the MSM analysis of what is causing so many fiscal problems.
“But hidden from the view of most is the role that increasingly expensive energy has played since the beginning of this century in slowing economic growth. The shorthand way of understanding this is that in the last century we extracted all the easy-to-get fossil fuels. Now we are going after the hard-to-get remainder which are costly to extract. That takes resources away from the energy-consuming part of the economy and creates a drag on economic growth. Hence, a dramatically slower economy in 2015 after four years of record or near record average daily prices for the most critical fossil fuel, oil. (The recent drop in oil prices is primarily a reflection of slowing demand that comes from a slowing economy.)”
Just pulling down the two movies referenced in the article – thanks Stefeun
It is easy to be fearful, if a person understands that we really need energy supplies.
Eventually fear gives way to resignation… and then all that’s left is the waiting…
Eddy, This reminds me of the Litany Against Fear, by the author of Dune, Frank Herbert.
LITANY AGAINST FEAR
I must not fear.
Fear is the mind-killer.
Fear is the little-death that brings total obliteration.
I will face my fear.
I will permit it to pass over me and through me.
And when it has gone past I will turn the inner eye to see its path.
Where the fear has gone there will be nothing.
Only I will remain.
Options traders have never been so pessimistic on China’s stock market, betting the government’s renewed effort to prop up share prices is doomed to fail.
http://www.bloomberg.com/news/articles/2015-08-30/if-the-options-market-is-right-china-s-stock-rescue-is-doomed
http://assets.bwbx.io/images/ivr.Me8oIdrw/v2/-1x-1.png
An earlier article said that PE ratios were absurdly high. This situation is hard to maintain.
I think the US market is 19x (which is massively high) …. and China 53x….
I am in agreement with Gail about her response to what is to come. I don’t see myself as a survivalist mainly because I don’t have the skill sets and I’m thinking the only way I could survive as a currently 58 year old man is to belong to a community. Having an existentialist outlook helps me maintain sanity. Thus, I work to live in the present, enjoy what industrial civilization offers until I can’t. I don’t believe radically changing my life to live as an ascetic will make any difference in outcomes. I try to avoid doing ridiculously wasteful things, but I do enjoy good food, what companionship I can find, and while I think about tomorrow, I try not to live there. I meditate and work, use the internet and the phone, meet with friends.
Yes, it was always true that we were going to die. Its not like, if it weren’t for peak oil then we wouldn’t die.
Death is the return to the nothingness from which we came and there can be no “problem” for what is nothing. For eternity we did not exist and for eternity we shall no longer exist.
It is not like we did not always know that.
The only difference is the time left, so why not enjoy it while we can?
There is no point getting down or panicking about it like it wasn’t predetermined and always inevitable – or like it even really matters.
Oscar Wilde — ‘The mystery of love is greater than the mystery of death.’
“The final mystery is oneself. When one has weighed the sun in the balance, and measured the steps of the moon, and mapped out the seven heavens star by star, there still remains oneself. Who can calculate the orbit of his own soul?” ― Oscar Wilde, De Profundis
OTOH, incredibly puerile and solipsistic tripe.
Between preparation unto the possibility of survival and poetry, who can say which is more important? The poet Leon Staff wrote from the Warsaw ghetto: “Even more than bread we now need poetry, in a time when it seems that it is not needed at all.” Maybe it depends on the type of planet one believes s/he lives on: a prison, an insane asylum, a hospice.
Vikings, and the Germanic peoples in general, were known for their appreciation of poetry: survival toughness and the arts combined!
The founder of the Mughal Empire would merrily cut heads off in battle, but pause on a journey to take in the beauty of wild tulips and write a poem about them.
Nicely put Xab, the warrior and upper caste have always indulged and promoted music, poetry and the arts generally, the Norman courts, the papal states, medieval Spain, hell even England. Poetry has always been part of the exalted, sublime being of the violent and domineering aristocracy.
As you say, poetry and war lords/ bands are hardly contradictory, rather they tend to go together. I fear there may be a myth to the contrary in north America, as if poetry is even a pacifist movement (lol). It is like how they try to co-opt words like “co-operation” and “organise!” as if that isnt exactly what hierarchical, warrior societies do.
Likewise there is no contradiction between existential insight and war-lording. Indeed I would think that they complement each other nicely. If life is ultimately in vain and does not really matter, then who even cares how many we kill while we live large?
I wanted to play some Norman courtly songs by Gothic Voices but their record company doesn’t tolerate copyright transgressions and it isnt on youtube. So here is some of the Cantigas of Alfonso the Wise of Castile (who warred against Portugal and Granada.)
https://www.youtube.com/watch?v=nj5Bc8zwwU0
“From a young age Alfonso X showed an interest in military life and chivalry. In 1231 Alfonso traveled with Pérez de Castron on a military campaign in lower Andalusia. Writing in Estoria de España, Alfonso describes having seen St. James on a white horse with a white banner and a legion of knights fighting a war above the soldiers of Spain.[5] This vision of a heavenly army fighting in Jerez and participation in military campaigns likely left Alfonso X with a high degree of knowledge and respect for military operations and chivalric knights. Alfonso’s respect for chivalry can also be seen in his writing of Spanish law. Spanish Chivalric conduct was codified in the Siete Partidas (2,21) where he wrote that knights should be, “of good linage and distinguished by gentility, wisdom, understanding, loyalty, courage, moderation, justice, prowess, and the practical knowledge necessary to asses the quality of horse and arms (Siete Partidas, 21,1-10).”[6] These efforts to make a codified standard of chivalric conduct were likely meant to both encourage strength of arms (prowess) and to restrain the use of violence for only just (state-sponsored) usage.”
eARTH
Always like a little Cantiga: Virgin Mary popping up all over the place to sort things out.
Days of Old Castile: ‘Palabras cortas, hechos grandes’. (‘Short on words, but big in deeds’).
And a nice little sing song on the days off.
When Napoleon invaded 500 years later, the French learned that the Spanish were still quite handy with edged weapons. These days, it’s just the Moroccan and Latino thugs……
By the way folks, don’t go to Morocco on holiday, a new crime wave of ‘dispossessed youth’ (ah, poor things) chopping people up with machetes. They have police links. And guess what, their own Facebook pages. The Middle Ages is up to date in Morocco. Seen it in the Spanish press, but not the anglophone.
Is there a place for any other description? Like paradoxically the best place for human beings in the whole, 13.8 lightyears in diameter, time-space called The Universe?
The actual diameter of the universe is very hard for us to imagine. For comparison, the sun is about 8 light minutes away, Pluto 5.3 hours and the nearest star just over 4 light years. The Milky Way galaxy is size is still not determined exactly but estimates range between 100,000 and 180,000 light years. There are smaller close by galaxies but the nearest large galaxy, Andromeda is 2.5 million light years away. You had the 13.8 correct….”Thus, while scientists might see a spot that lay 13.8 billion light-years from Earth at the time of the Big Bang, the universe has continued to expand over its lifetime. Today, that same spot is 46 billion light-years away, making the diameter of the observable universe a sphere around 92 billion light-years”.
Great description of mine philosophy of life too. Thank you.
Funny how that applies to money too!
It comes from thin air and expires into thin air also.
eARTH,
For those who find inspiration in JRR Tolkien, this quote may help:
“I wish it need not have happened in my time,” said Frodo.
“So do I,” said Gandalf, “and so do all who live to see such times. But that is not for them to decide. All we have to decide is what to do with the time that is given us.”
Nicely put.
I did visit a couple of what were hoped to be “transition” communities, and researched some on the Internet. My reaction was that these particular ones were hopelessly inadequate for what they claimed to do. This did not increase my interest in joining one of them. One of the groups wanted to have each member build a very expensive home with the group, so as not to bring property values in the area down. More planning had gone into a place to walk dogs of members than where food would come from.
I really don’t get these transition communities — from what I can see they try to bring together people who live in cities and have minimal or no survival skills (i.e. yuppie greenie types who shop at Whole Foods)… and assume that by gathering together with like-minded people that they will magically transition to living in a grim world of violence, starvation and disease…
Why not instead buy a home with arable land in a remote community with people who are already walking the walk….
Northeast Kingdom in Vermont for example.
Parts of south central Alaska are pretty good, too. More land and far less people.
From zero hedge is the article below:
80 Year Old Woman Trampled To Death In Venezuela Supermarket Stampede
Submitted by Tyler Durden on 08/30/2015 – 21:55
“With 30% of Venzuelans eating two or fewer meals per day, social unrest is mounting rapidly in President Nicolas Maduro’s socialist utopia. As WSJ reports, soldiers have now been deployed to stem rampant food smuggling and price speculation, which Maduro blames for triple-digit inflation and scarcity. “Due to the shortage of food… the desperation is enormous,” local opposition politician Andres Camejo said, and nowhere is that more evident than the trampling death of an 80-year-old woman outside a state-subsidized supermarket.”
What’s so unfortunate about Venezuela is at one time Exxon had an agreement with Chavez to process their Orinoco heavy oil, but after Exxon had spent billions getting set up to process that gunk, Chavez tried to renegotiate the terms. Exxon said no and Chavez was unmovable in his demands so Exxon walked away from their investment and took the situation to international court. I don’t know if there was a settlement, but the problem now is the heavy oil is just sitting there whereas it could have been used to help the economy and the people who are now in a desperate situation.
Imagine what would happen here in the USA if there were food shortage? If people in countries accustomed to shortages react this strongly to food shortages then what would happen here in the USA?
“Imagine what would happen here in the USA if there were food shortage? If people in countries accustomed to shortages react this strongly to food shortages then what would happen here in the USA?”
It is hard to imagine a food shortage in the US. Part of the design of our ethanol program is to take grain commodities off the market we can’t actually sell to countries like Venezuela because they have imposed trade limits against us. (180 countries have tariffs and limitations or bans against importing any of our grain commodities. I think 165 countries have limitations on our lubricants.)
I think what we are seeing in Venezuela is a different flavor of breakdown then what looks to await us in North America. You are very correct in saying that Venezuela is partly responsible for not allowing tariff-free food imports but the situation in a complete collapse scenario is that there will be little food around to import for anyone and the means to produce more food locally will drastically diminish. I used to be married to a beef farmer and we worked just shy of 300 acres and had 150 head of Charolaise. Everything we did was with Diesel and without it the amount of land we could work would probably be only a couple of acres (with no cattle). On the farm we had a 6500L Diesel tank which would get us through most of a year and we were lucky in that we used no petro inputs on the fields (only manure). So if we play the ‘suppose game’ with this scenario then let’s assume every farmer in North America has a full tank of Diesel on their farm when the collapse hits and every acre would produce a ‘normal’ yield without chemical fertilizers (not very likely due to the disastrous expansion of factory farms) and let’s also assume that the years seed deliveries have already been made. So if all farmers really stretch and substitute human labor wherever possible and no crazy mobs of starved ‘Fund Managers’ and Baristas from the cities pillage the fields then you MAY be able to squeeze a couple years of harvests out of the land. So now what? There is no more Diesel left anywhere, no food outside of the country to import and unless the farmers are incredibly well versed in seed saving (the vast majority I knew were not) then suddenly after an incredibly optimistic two years the food basically stops and this is if absolutely EVERYTHING is 100% perfect. Let’s go a bit further, lets also assume for this scenario that all the crops being planted are earmarked for direct human consumption (instead of for oils, animal feed, high-fructose corn syrup…etc) and the food produced does not rot and adequate long term storage is available then you may be able to stretch things to four or five years and this is with absolutely everything happening 100% in our favor and there are miraculously no pillaging hordes, no crop failures, no ‘appropriations’ by government, no greater societal breakdown and no mechanical issues that can’t be fixed (we had one year then the seed drill broke six times when we were seeding the feed corn).
That puts a little bit of perspective on things for the permaculture people…. I am in complete agreement
Sorry, I don’t think so!
At least we have to define precisely what we are talking about here..
Usually permaculturists (PO/collapse selfaware) know very well that you have to invest not insignificant amount of fossil energy into reshaping the landscape into land formation, which will help increase agri yields into decades/centuries if not till the terraforming events of next ice age. So you invest cheap fossil today, reap benefits longterm thereafter.
Obviously if you enter large scalish permaculture projects at the time of advanced PO issues, the picture would be quite different in terms of the ease and speed how to use power of fossil energy on your land.
Please, lets not make this fine blog/comment section just another case of “doom next friday guaranteed” hangout.
‘We can ignore reality, but we cannot ignore the consequences of ignoring reality.’
Or restated as — we can dance around the fire thumping the koombaya drum — and believe all will be wonderful
But then the vicious tattooed gang of murderers bust through the gate — smashes your head in with a rifle butt — rapes the women — consumes the food — and puts a yoke around your neck and tells you to get out in the field — or your wife and kids die….
The koombaya world will be blasted into a million pieces by the violence and suffering….
My notable contribution to the discussion today will be recommending this book http://www.goodreads.com/book/show/347610.King_Leopold_s_Ghost
The Belgians did exactly what I am suggesting above — they caged the families of men in villages — and raped and tortured them if the men did not harvest their daily rubber quotas from the jungle….
They also cut off the hands of anyone who protested… here – have a look :
http://www.digitaljournal.com/img/4/9/8/8/0/7/i/8/5/8/p-large/congo-hands.jpg
Oh but that could never happen in Koombaya Land….
No of course not…. you will be left alone to harvest your organic oats while spending spare time dreadlocking your hair… and listening to We are the World on your hand crank stereo…
http://assets.storenvy.com/product_photos/80163/Love_Peace_original.jpg
Your unalloyed pessimism and misanthropy (cheerleading for this to be an extinction level event and the annihilation of human consciousness) is quite consistent. I suppose it’s Mr DNA’s personal survival strategy manifested in your unique psyche, eh?
Hey @worldofhanuman, I’m not here peddling doom next Friday, what I am trying to do is outline the challenges that we are looking at. My first degree is in Environmental Sciences from UofGuelph and I specialized in Hydrology and Agriculture issues (wrote my Honors thesis on Conservation Tillage) and for many years when I was married and helping with the farm work I was working hard to try and convince people of the value of permaculture and I still believe in the value of permaculture and if we as a culture began these practices fifty or even thirty years ago I think we would be in excellent shape right now. The issue is that time and again I saw farmers small and large get pushed out by huge corporations, their lands ruined in the name of profit. Right out of University I worked a contract with the Government of Alberta where we were locating, banding and capping abandoned agricultural wells and I saw the tens of thousands of acres of feedlots, I watched the feed corn conglomerates spray roundup on the fields just before harvest and saw in the span of a few days everything that wasn’t GM corn wither and die. I feel that we are so very late in the game and I don’t know if we even have five years before everything really unravels. I may be wrong (and I really hope I am) but there are some huge challenges that we face and we have a huge number of people who think that BAU can go on forever. I now work in electrical engineering and I have seen across North America a massive drop off in business, huge projects being cancelled, day-to-day being scaled back and clients going under or massively ‘right-sizing’, I saw the same things in 2008 only this time there is no more central bank ammunition that I know of and I’m not sure they can stop the credit markets seizing up this time. I wish that we as a culture had better practices and I do know individuals who do, heck I’m headed up to my Parents homestead this weekend to help set up another hoop-house and I personally helped them with the planning of their gardens to minimize water/nutrient loss and maximize yield. The issue at hand is that there are over 7.3 Billion human beings on Earth and the vast majority of them are currently being fed by farming practices that are unsustainable and require fossil fuel inputs and even if every farmer begins to change right now (which they won’t because it doesn’t look like most people even see that there is a problem) we would be hard pressed to enact enough change to continue providing for everyone if there was a sudden drop off in petro inputs.
“I still believe in the value of permaculture and if we as a culture began these practices fifty or even thirty years ago I think we would be in excellent shape right now”
I’ll take issue with the above.
The world demands/needs cheap food (see Tunisia 2011 for what happens when food prices rise) — and the reason the green revolution happened was that it delivered massive crop yield increases — and made farming on marginal land feasible https://en.wikipedia.org/wiki/Green_Revolution
This kept the price of food very low…
If not for the Green Revolution Malthus’ predictions would have come true long ago… there is no way we could have fed an exponentially increasing population using permaculture methods… cheaply or at all — there simply would not be enough food produced.
That said I am on record as stating that Norman Borlaug – the father of the green revolution — will go down as the biggest mass murdered in the history of the world….
He will be responsible for the death’s by starvation of billions — he may have set the stage for an extinction event with his ‘green revolution — that resulted in us being able to feed billions more humans — using methods that were unsustainable.
If we had not invented this green revolution — we would have collapsed decades ago — but we would not have had 7.3B people ….
This is a game changer — the overshoot is epic — even without the spent fuel ponds one has to wonder if this is not an extinction event….
What will all these hungry people do to the planet when faced with starvation? No doubt they will tear everything edible out of the ground — kill everything that moves and eat it (including each other)…. burn everything that can burn to cook and keep warm…
No, Norman Borlaug said his method would give humanity a 30 year window to get its house in order. He was ignored. It’s like blaming Marx for the devastation in WW2.
He gave us the tools that allowed us to grow the population to 7.3B+ And these tools he gave us will result in billions dying…. simple at that
What did he mean by ‘get our house in order’ – can you provide a reference so I can get some context for this.
Fast Eddy,
It appears that Norman Borlaug was well aware of the population issue and his role in allowing it to continue. Here is a reference from Wikipedia.
“Besides increasing the worldwide food supply, early in his career Borlaug stated that taking steps to decrease the rate of population growth will also be necessary to prevent food shortages. In his Nobel Lecture of 1970, Borlaug stated, “Most people still fail to comprehend the magnitude and menace of the ‘Population Monster’ … If it continues to increase at the estimated present rate of two percent a year, the world population will reach 6.5 billion by the year 2000. Currently, with each second, or tick of the clock, about 2.2 additional people are added to the world population. The rhythm of increase will accelerate to 2.7, 3.3, and 4.0 for each tick of the clock by 1980, 1990, and 2000, respectively, unless man becomes more realistic and preoccupied about this impending doom. The tick-tock of the clock will continually grow louder and more menacing each decade. Where will it all end?”[31]
On one hand he was making it possible for billions more people to live on the planet… meanwhile complaining we need to control population growth…
Kinda like selling you crack cocaine and telling you not to use crack cocaine because its bad for you
Same could be said of inventors Thomas Edison or Oliver Evans (refrigeration) and a host of others that made “progress” possible.
Reminds me of a press conference on TVEE with Obama concerning the financial crisis and the reporter wanted specific legal action against certain industry heavyweights.
You know what his response was?
‘There is PLENTY of blame to go around”
PS Didn’t know the Belgian Congo was part of Koombaya Land.
Wassama…? Afraid to eat bugs?
There are food shortages already here in the US, which we conveniently camouflage by reducing quality. All food is not created equal.
“There are food shortages already here in the US, which we conveniently camouflage by reducing quality. All food is not created equal.”
I don’t consider it a shortage. It is mostly a cost issue. There is a big difference between having no food, and having affordable food. But I hadn’t been food shopping in a while, and holy cow, prices haven’t gone up but the packages are a lot smaller.
Speaking of smaller what did they do to watermelons? and why?
Yep, GMO corn syrup in high dosage for all!
Today’s version of soilent green.
http://www.imdb.com/title/tt0070723/
It will be even worse soon enough. Even timing in the movie is quite correct according to Gail’s prediction.
Apparently Soilent Green movie is set in 2022. I didn’t remember that.
James,
Yes, I have noticed that the HoHo’s are smaller than they were when I was a child. And the box of Captain Crunch is much smaller. My poor nutrition choices as a child, aside, it is true that either the portion size or the delivery size has shrunk, while the price has gone up.
Good for Chavez! Who knew he was nascent environmentalist? Look at this way, leave it in the ground now and hurt X amount of people while helping Y amount of people due to it’s lack of use. Burn it now and help X amount of people while allowing Z amount of people more to be born, thereby hurting X + Y + Z amount of people in the near future. Choices. Once you’re in overshoot they’re ALL bad. Albeit some more than others.
Fast, any land for sale in your neighborhood?
Lots of land east and west of Nelson …. not aware of anything for sale near where we are.
Was staying at a B&B while skiing on the weekend and met some people from Golden Bay — they were telling me that there are quite a few people living off the grid and in self-sustaining situations…
The area is all farming — also there is a big mussel industry (so food not an issue) — it’s also quite remote — I’d recommend you have a look around Takaka
Check the various property sites
http://www.realestate.co.nz/residential/all/nelson-bays/tasman/takaka
http://www.trademe.co.nz/browse/categoryattributesearchresults.aspx?134=8&135=51&136=2569&153=&132=PROPERTY&49=0&49=0&122=0&122=0&29=&123=0&123=0&search=1&sidebar=1&cid=5748&rptpath=350-5748-
Fast, thanks. It is beautiful.
Of course one option would be to try to time this thing …. assuning NZ would be a better place than most to survive this… would be to jump on a plane and take an extended vacation in a place like Golden Bay … I believe tourist visas can be extended while in the country http://dol.govt.nz/immigration/knowledgebase/item/1112?utm_source=newzealandnow.govt.nz
At some point nobody will be doing anything about those who overstay the visa….
China’s securities regulator asked brokerages to step up their support for share prices by contributing 100 billion yuan ($15.7 billion) to the nation’s market rescue fund and increasing stock buybacks, according to people familiar with the matter.
http://www.bloomberg.com/news/articles/2015-08-31/china-said-to-ask-brokerages-to-boost-market-and-buy-back-shares
Many will see this as normal — and an opportunity to front run things and make money … which will be worthless in the very near future …. but it will make them happy in the meantime…
I would like to express what I think of this in a song…
http://www.zerohedge.com/news/2015-08-30/did-fed-intentionally-spark-commodity-sell
This was something I suggested a number of months ago — the problem of course — is that lower commodity prices have not kick-started growth….
If this was an intentional policy — then the PTB are running very short on options … have to wonder what they’ll reach for next in the tool kit…
“…the problem of course — is that lower commodity prices have not kick-started growth….”
A sure sign of stagnation, pushing on a string.
This is interesting as I read the central bankers were meeting this weekend and woopie the oil price goes up!
I hadn’t thought about that.
Food stampedes… coming soon to a grocery store near you
http://www.telegraph.co.uk/news/worldnews/southamerica/venezuela/11832443/Woman-80-trampled-to-death-in-Venezuelan-supermarket-stampede.html
And once the grocery stores are emptied…. guess where the hordes will be stampeding next…
Preppers may want to get their hands one of these — along with 100,000 rounds of ammo:
I was reading a book this summer on the history of the collapse of societies, from the Assyrians to the WRE to the more modern examples of the USSR and South America. One of the things that stood out and really concerned me vis-à-vis prepping is that in many cases when things really begin to fall apart there is a very established pattern of the elites looting and pillaging their own people. In the early days of the ‘grid-down’ part of our collapse we could easily see police and military personnel (either working for the ‘government’ or for themselves…..Katrina anyone?) going door to door taking what they want from those who still have something. Some people will undoubtedly try and resist and this will just add to the chaos. In the waning days of the Western Roman Empire we saw the legions pillaging Roman settlements and leaving the people they were supposed to be protecting to starve. When Yugoslavia collapsed into civil war the armies not only pillaged the countryside but within six months there wasn’t a single fish in the lakes/streams left and every large mammal and bird had been hunted to local extinction. There is nothing wrong with prepping but I don’t think anything other than blind luck will determine who survives what is coming (if anyone).
This reaffirms the thought that when the system collapses those who have and are busy prepping their farms will have Zombies at their gates when the hungry need to eat. If you can’t defend yourself from the violence with opposing violence you will be easy prey. Which is what FE has been saying for sometime now.
Hm, that’s the problem with crazy oversimplification again, lolz.
When Yugo broke up, perhaps somewehere deep inside one southern/balkan province of the entire federation with open civil war conflict there was a small valley inside (down there in Bosna?) where people strip it bare in few months time when under siege from the encircling hills around. Certainly NOT the picture of the entire country!
Slovenia is a member of EU now and it’s basically another Alpine rich country like Austria, another former Yugo fed state Croatia is the darling of world billionaires setting themselves up there for wineyard estates, beach resorts etc.
Perhaps, the statement in the book was made by a Bosnian and I don’t think it was one of absolute truth everywhere in Yugoslavia or even Bosnia but I think it captures his experience vividly. He talks about trying to hunt through the winter of 1992 and seeing no deer or even signs of deer, his family survived on handouts but he lost several family members to disease. One of my friends in High School in the 90’s was Croatian and she actually headed back in 1997 to help her family re-open their resort on the coast and her emails to me spoke of a lot of money flowing into the country. What I was trying to make was a statement that there are no definitive ways of surviving, there are always factors we don’t account for an prepping is no guarantee of survival, luck and local conditions play a huge role.
The total U.S.deer population in 2014 was about 32.2 million
http://www.deerfriendly.com/decline-of-deer-populations
The Congressional Research Service put the number of civilian firearms ownership in the United States at 310 million back in 2009: 114 million handguns, 110 million rifles, and 86 million shotguns. http://dailycaller.com/2014/11/04/gun-ownership-by-the-numbers/
“elites looting and pillaging their own people” —- we are definitely seeing that with the epic levels of corruption as bankers scramble to get as much as they can before it all crashes down..
No doubt when violence becomes the currency — the military-types will be the new bankers… the only way to argue with a gun is with a gun….
Since we are all going to die anyway — I reckon it would be better if there were some event that quickly and painlessly put us all out of our misery in one go …. rather than having to endure the cruel holocaust that awaits the unlucky survivors…
Such a situation is going to bring out the absolute worst in people.
Sometimes I wonder it if will bring out the worst in people or if it is just the reality of human nature. When resources are plentiful ( and in the West resources have been plentiful for at least a few generations now) we get along OK. However, when resources are scarce we fight light cats in a sack. Energy has put almost all of us in a state of virtual reality.
Agreed. We are like pet dogs who get a large can of Alpo every day. We have no need to rip each other apart to get food…
When the Alpo doesn’t arrive …. Mr DNA will assert himself because he will be in a battle to survive … and our violent vicious side will show itself.
Someone asked upthread what kinds of things someone should stock up on. Others can fill in the requirements for growing food, storing food, shelter and protection. As for health care, there won’t be any, so you’re on your own. Here’s a list I put together for another source:
Drugs: antibiotics, antibiotic ointments, anti-fungals, medication of any kind that you can get your hands on. Pain killers of all kinds.
Birth control pills and abortifacients. Read up on herbs with these properties as well.
Equipment: Splints, suturing supplies, surgical tools, Celox blood stopper, lots and lots of bandages. Get yourself a huge first aid kit and a trauma kit if you can find one.
IV needles, tubing and IV fluids for re-hydration and blood transfusions.
Needles and syringes of all sizes. You can get these at a veterinary supply house and may even be able to get old-fashioned glass and stainless steel ones that can be sterilized and re-used. You’ll also see refrigerated penicillin there, as well.
Smelling salts. Butterfly closures. Forceps, tweezers. Magnifying glasses. Binoculars.
Bulk over the counter medications, especially for stomach ailments will be highly valuable, and can be bought wholesale.
Organic medicinal teas last for years in a cool dark place.
Kerosene, lanterns, candles, gasoline, diesel, blankets, clothes, stockpiles of food and water.
Cash and coins. Other currencies.
Disposable gloves, masks and lots of soap and detergent. Pressure cooker to sterilize
equipment.
Safe supply of drinking water because supply will be intermittent as facilities deteriorate. A water purification system or big pots to boil water.
Keep lots of Bic lighters on hand. Propane, butane, solar or wind power, batteries of all kinds.
Flashlights. Water purification tablets. Toilet paper. Matches, firewood, wood cookstove, cooking utensils. Potassium iodide tablets.
Lots of un-iodized salt. Lots of chlorine bleach, vinegar, isopropyl alcohol, iodine and hydrogen peroxide for wound sterilzation.
Go to a college bookstore and find a textbook of medicine. Learn to read it. Take a good first-aid course.
Can anyone add to this list?
Interesting. I think most would be best advised to just be nice and hope that their neighbors are in relatively good humor, or at least unarmed if their not. In big cities, it’ll likely come down to scavenging and networking skills as the hierarchy gets reduced several notches in one fell swoop.
I was at Wally’s World earlier and they have a sale on 308 shells…
The list could be unlimited — tooth brushes — floss — tooth paste — axes — shovels — solid fencing — water buckets… etc etc etc….
Unfortunately no matter how much you have — you will run out — and fairly quickly — because others will not have what you have and you will be forced to share …
Of course Wally’s World will be raided immediately…. so forget about that….
It’s kinda like being blasted into space with a one way ticket… there ain’t no resupply ship coming…
So eventually no matter how well one prepares… we will soon be living without most if not all the tools of BAU that we have stockpiled…
I would suggest aviation fuel as it lasts for 5 years. I think supply of heirloom seeds is a good idea as a shoe box full could feed a neighbourhood.
“I would suggest aviation fuel as it lasts for 5 years. I think supply of heirloom seeds is a good idea as a shoe box full could feed a neighbourhood.”
I would highly recommend putting the seeds in the freezer. They lose viability over time, but less if they are in the freezer. You will want high germination rates.
That is why you are supposed to save the seeds from one generation to the next.
Hi Ann, since you are a medical practitioner are you able to recommend the best all round antibiotic? Is there one that has a longer shelf life than others?
I’ve stockpile a few …. on the recommendation of a chemist in Hong Kong (where you can buy such things without a prescription):
Dhatrin – for UTI
Erdon 100 TR – anti-inflammatory / pain (cannot buy heavy duty pain kills OTC in hk…)
Reichlin – for cuts/wounds
Fluconazol – yeast infections
Zimax – throat infections
This is woefully inadequate … but I suppose better than nothing …
I probably should add a suicide pill to that collection ….
I have one of those already….. .40 cal pill
I have a 308 with quite a few boxes of bullets (Wally’s World had a sale the other day!) … but there must be a more peaceful way…
Speaking of Wally’s World — no work today due to a public holiday in Hong Kong — Mr DNA is nagging me to go for the second time this week to the food wholesale warehouse (for the second time this week) — and buy MOAR…
He is telling me that he is looking at the deflationary environment engulfing the world and that I should not be so sanguine and assume the Wizard might have one last trick up his Sleeve…
He insists that the food will be eaten long before the late 2016 expiry date…. so not to be concerned about having too much ….
There is no resisting Mr DNA….
http://nzbusiness.co.nz/sites/nzbusiness.co.nz/files/Businessmans-ear-being-pulled.jpg
Ann, why un-iodized salt? This is the first time I have seen this distinction made.
Cannot ferment vegetables with iodized salt
Why un-iodized salt? Because if you need to give someone IV fluids, you need dextrose and un-iodized salt. My list above is for health care. It’s not a list of all the things that might be usefu.
That is a good point, about the leaders pillaging.
People tell me I should add a small fence to keep rabbits out of my garden. But if fences are useful and in short supply, wouldn’t the fence be stolen as quickly as anything else?
Rabbits are very edible.
Food Theft.
Little story (but not a fairy tale) from Spain:
In the Civil War period, a family found themselves vey short of food as the father was away fighting. It seems they stole from neighbours in their village.
Then they disappeared.
It would appear that the mother and her seven children were murdered by their neighbours, and thrown down a pothole.
The authorities dropped the matter.
If the matter was raised in later years, people clammed up. There is some talk of going down to get the bones, over 80 years later, to give them a decent burial.
Such events are not uncommon in mountain villages with handy ravines for disposal…….
I hate to mix fantasy with real life stories but… I once and only once hear a song on a local country music station. It was a Hillbilly telling about his life. He grows marijuana and the federal government tries to stop him and his neighbors. But it is an isolated community and the government man gets killed and rolled into a ditch. When the neighbor comes by and see the body he does the neighborly thing and rolls the body further into the ditch out of sight. So you see Fast people can be kind and thoughtful of others.
Back to the real. If it is life or death and there is no functioning legal system then people will do what they have to do. I say they did the right thing.
Xabier, what is up with Europe and allowing endless refugees? Which seem close to the same issue not the same intensity at the moment but…. We in the US have a few tens of millions that we would like to send to Europe.
Which reminds me of my favorite political moment of all times. The US press asks the Chinese PM what about the Jackson Vanick amendment and refugees? To which the Chinese PM said “how many million do you want?”
It is completely impossible to get to the bottom of this migrant issue in the EU: all the news sources are biased and have an agenda,and there are many strands to it.
But I strongly suspect that certain interest groups, at the state level, are using the refugees for political – even geostrategic- ends.
Which is not to say that they are not perfectly genuine refugees under the terms of the various international conventions governing such matters.
As for your Latinos and others in the US, please keep them: we have Columbian, Moldovan, Turkish, Chinese, Arab and African thugs here already……….
Xabier, what is up with Europe and allowing endless refugees? Which seem close to the same issue not the same intensity at the moment but…. We in the US have a few tens of millions that we would like to send to Europe.
What you need is a fence that will keep starving hordes from pillaging your garden….
I’ve not seen anything like this at Wally’s World…. perhaps they are available online? 🙂
Too gloomy we need a OFW sing along.
Well, Chinese officials have ended their support of the stock market via buying shares and now will focus on those evil profiteers
http://www.cnbc.com/2015/08/30/china-to-abandon-attempts-to-boost-stock-market.html
authorities are planning to sharpen their focus on investigating and punishing individuals and institutions they believe have taken advantage of the state bailout to make profits or have obstructed the government’s attempts to shore up the market.
Late last week, the country’s securities regulator summoned senior officials from 19 brokerages, equity exchanges, futures exchanges and government-controlled industry associations, and ordered them to step up oversight of the markets.
The regulator said 22 cases of insider trading, market manipulation and “spreading market rumours” had been handed over to the police.
Last Tuesday, following a 22 per cent fall in China’s stock market over four trading days — the worst drop for almost 20 years — police detained 11 people suspected of “illegal market activities”.
They included eight managers from Citic Securities, one of China’s largest investment banks; two officials from the China Securities Regulatory Commission; and a journalist from the respected financial magazine Caijing.
Suppose that bullet solution may work
What a mess. So, 11 people caused a 22% drop in China’s stock market?
Thanks!
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.
“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.”
Technically we are paying good wages to the people in China, Japan, Canada, etc. The problem is we can’t continue to do it.
We have a whole generation of people who want to buy foreign things because they think they are better. They don’t even want to buy the stuff they produce to support themselves. They would rather support the Canadians or Chinese by taking out debt.
It isn’t saying a whole lot, except there are a whole bunch of people who grew up taking a free ride through the 80s
This is an important point that many people miss.
Point #4 of “Where the modeling of energy and the economy went wrong” deserves a post of its own…
——————————-
[“We can’t say that no one warned us about the predicament we are facing. Instead, we chose not to listen.”]
Refusing (or fearing) to acknowledge our “mistake”, our “shortcomings”, our cowardice really — will only compound the problem. The story will have to be told competently and compellingly, to at least attempt to partially exorcise the fear and anxiety in the population…
Point 4 of “Where the modeling of energy and the economy went wrong” is “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 say that Point 4 needs a post of its own. I would agree with you. This is the where an awfully lot of assumptions go wrong. Everyone assumes that “discounted cash flow” is a good model of the future, but this is only true if economic growth continues forever. This is something that people just don’t understand
Why we need to lie to ourselves about the state of the economy
http://www.smh.com.au/comment/satyajit-das-column-20150825-gj7bcy.html
Here’s another so called financial expert who says that what China is doing is all part of the plan. It makes me smh when I hear and read stuff like this.
John Ing:
“So when you look at the ripple effect, what the Chinese are doing is very strategic. This is all part of a reserve currency plan. They already have a reserve currency and reserve swaps with 28 other countries. But what the Chinese want is for their currency to become like the euro and the yen. So the IMF discussions are also very important to China.”
http://kingworldnews.com/warning-this-global-collapse-will-be-unlike-anything-in-recorded-history/
I suppose the experts can rationalize just about anything — the only plan I see is a plan to hold off the collapse another day… week… month… year…. nothing beyond that…
From that article:
“Every sixth American farmer was affected by famine. People were forced to leave their homes and go to nowhere without any money and any property. They found themselves in the middle of nowhere enveloped in massive unemployment, famine and gangsterism.”
“Here is what a child recollected about those years: “We changed our usual food for something for available. We used to eat bush leaves instead of cabbage. We ate frogs too. My mother and my older sister died during a year.” (Jack Griffin).”
Keep in mind — what is coming is going to be exponentially worse than the Great Depression — and it is going to be permanent… there is going to be total unemployment …. virtually all farmland will produce nothing when the chemical fertilizers are not available….
There will be no ‘New Deal’ — there will be no Bono appealing for food aid…. there will be little or no food — anywhere… and 7B+ people looking for their next meal…
The outlooks is grim…
“They found themselves in the middle of nowhere enveloped in massive unemployment, famine and gangsterism”
Oh kind of like our inner cities already!
*queues up N.W.A.’s Greatest Hits.*
Gangsterism is the government. Massive unemployment 25% says shadow stats. Famine well two out of three ain’t bad.
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Malaysia is in meltdown mode.
“Malaysia Bans The Color Yellow As Protests Swell Into The Hundreds Of Thousands”
The anti-government protests that swept through the Malaysian capital of Kuala Lumpur on Saturday continued unabated on Sunday after tens of thousands of demonstrators camped in the streets overnight.
http://www.zerohedge.com/news/2015-08-30/malaysia-bans-color-yellow-protests-swell-hundreds-thousands
The yellow revolution? No possible argument against yellow as it has no meaning and no policy.
Oh great, another failed State for Islamic State to take over. Anyone fancy another Arab Spring? Another Iraq, Syria, Libya and possibly Afghanistan and Pakistan? Go on Western media, lets have another liberal democratic “revolution” in a Muslim country and see what happens next. No excuses any more. I know, who even cares at this stage of the game. Keep the BS flowing strong.
Malaysia is a former oil exporter that is having problems. For a while, rising natural gas use helped take up the slack, as did rising coal use. But now, even these don’t seem to be enough. You can look at graphs by clicking on the Malaysia section at this link. http://mazamascience.com/OilExport/
These problems are not all of the country’s problems, but I expect that they contribute to the situation.
Another former energy producer is failing. Wow, this is more evidence that our global economic system is already collapsing. Countries are failing worldwide: Greece, Yemen, Syria, Libya, Iraq etc.
A Canadian diplomat told me over coffee in Sana’a 4 years ago that Yemen would shortly be out of oil — that water shortages were about to become a huge problem because most people including those in the capital live at elevation and the only way to get water there was by using energy intensive pumps (and desalinization)…. that the population was continuing to quickly rise….
He actually said “In both the short and the long term — Yemen is f*&^ed.”
And here we are….
The PTB have a very good idea which countries are about to catch fire…. and why….
I can see no way that Yemen can avoid collapse. It has way too much population, a horrible climate, and falling oil and water supplies.
Just thinking about that Yemen trip…. I had booked a guide to go into the hinterland for a week including http://trekity.com/wp-content/uploads/2012/07/2271829554_4675283ec5_z-640×265.jpg
But never made it because I came down with a brutal bit of food poisoning compounded by a warning from the diplomat that the guide might ‘shop me’ to the bad guys…. ‘make sure when you get stopped at the check points you tell them you are Canadian – NOT American’…..
And to think … I might have missed out on the end of the world if not for a gut bacteria…. 🙂
Yemen is not on my list of places I would like to visit.
I just smh every time I read the so called experts make excuses for what the Chinese are doing to their economy and currency. How could you trust a Nation or economy after what the Western cabal have done to the pleebs that somehow the Chinese will get it right and undo all the wrongs of the current financial system. Trusting the Chinese is like marrying a pornstar and hoping she remains faithful.
John Ing: “So when you look at the ripple effect, what the Chinese are doing is very strategic. This is all part of a reserve currency plan. They already have a reserve currency and reserve swaps with 28 other countries. But what the Chinese want is for their currency to become like the euro and the yen. So the IMF discussions are also very important to China.”
http://kingworldnews.com/warning-this-global-collapse-will-be-unlike-anything-in-recorded-history/
“John Ing: “So when you look at the ripple effect, what the Chinese are doing is very strategic.”
Right. Very strategic. They also realize most people in the US are stupid. Look at the Tea Party most of those people are voting for people who don’t support them, and in fact are undercutting them with their policies.
The transition from resource based extraction to sustainable [even if that sustainability is just eking out resources for a couple of centuries] is inevitable- historians will, in future centuries look back at the event in the same way we look back at industrial slavery or the rise and fall of civilisations and like a wiki page that/our history is wrapped up in a neat summary.
I’m fascinated by history, and really fascinated about the history in making which is now- it is like I’m a time traveller experiencing it in real time. The question is not how we will resolve our energy/AGW issues because there is no surprise fix- fusion isn’t going to fix it, more debt is going to fix it and magic physics busting energy machines aren’t going to fix it. We have a tool box of fixes, none are as good a oil but they do all have their own advantages.
Unfortunately stupidity has dogged humanity- even something as benign as debt in Greece has demonstrated that advanced economies idea of a cure just makes things worse.
Personally I see the collapse as a slow train wreak rather than a sudden crash- it starts with local government not fixing potholes and shutting libraries and incomes progressively declining as it has happened over the last few years. And debt is limitless [I’m reminded of Tokyo home 40 year mortgages to hand to your children] until everyone stops believing in it.
Visitors to this site are looking for detail and given projections can only give possible outcomes- people are the key- do we end up seeking comfort in religious like dogma whether it is a golden age like ISIS or hope in magic free energy like CAT and other snake oil like shale- do we become better people? do we become selfish and battle for resources?
The variable is how we collectively respond- things are different to past ages, we have super communication so ideas can move as fat as twitter but we still can be drawn to stupid. Of course if we did the right thing it may not work, it may buy us a few more decades but I don’t think we are at a point of eventuality of how we deal with it and how long it takes.
“We have a tool box of fixes, none are as good a oil but they do all have their own advantages.”
Some of them beat oil. 🙂 The major problem at least in the US, everyone got pissed off because people just can’t comprehend the problem and thought it was the same wasteful government spending the Republicans do. If they just would have remained quiet, instead of vehemently opposing it, our economy would be 2x better off right now.
In 2008 when Lehman went down the global economy was seized up — trade was for approximately 3 days in a state of limbo — products were left sitting in the factories or in the ports — because counter parties did not trust each other…
The only reason you did not notice this was because it lasted only a very short time — remember the big central bankers meeting during that period — what happened was they decided to back every single financial institution on the planet — the message was ‘nobody fails’
They also decided on the mother of all stimulus packages — lead by China which poured more cement in 3 years than America has in the last 100.
That is what stood between us — and literally the end of the world as we know it — between life and death for billions if not everyone.
Nothing more.
The central banks have done absolutely everything to try to stop a repeat of 2008 — as one analyst stated recently (I forget the article….) the next crash will be 20x worse than 2008 … because the central banks have engaged in polices far more destructive than those that lead to the 2008 crisis…
The bubbles are epic … the central banks are the stock market — they are the bond market — they are the economy ….
But of course as we are seeing — as we expected — they have failed…. the trillions bought us 7 years — and perhaps one more….
But like a dam with a small hole in it …. the pressure is building …. and the central banks are approaching the point of being completely out of ammunition ….
I don’t know what the actual event will be that triggers the 2008 moment on steroids… but once we reach that moment what happens next will not be slow and drawn out…. it will quick (days… at most weeks) and it will be cataclysmic:
http://www.lisburncathedral.org/sites/default/files/dam.jpg
I’m not complacent and the next crash will have fewer fixes to implement- certainly low interest is spent as a fix but debt’s only ceiling is belief it will never be paid off.
The key currency nations and Euro bloc can just print more money to pay the interest on government bonds so the notion of the US, UK, EU, Japan etc going bankrupt despite being widely held as a belief is nonsense. Of course printing money tends to devalue currencies although oddly the $, £ , € appear to be worth more.
There is no shortage of money- if you are rich and this is reflected in inflated share value, property and luxury items like art. Of course real incomes amongst the majority have been in decline.
I don’t subscribe to a sudden crash of civilisation simply because most people believe in the system. Things will happen of course, bad things like mass unemployment, and life savings being worth a fraction of their previous buying power and if the worst happens then a ‘war’ footing by government will drill the oil, and run the tractors, and put the unemployed to work.
the long decline will not be pleasant which makes the lack of planning let alone action rather shortsighted.
Corporate profits are falling — when that happens corporations layoff people
http://www.zacks.com/stock/news/188176/layoffs-continue-at-caterpillar-cat-owing-to-mining-slump
http://www.businessinsider.com.au/ibm-watchdog-more-layoffs-this-month-2015-6
http://www.cnbc.com/2015/09/01/conocophillips-announces-massive-layoffs.html
Governments can print all the money they like — but as we have seen — this will never result in a recovery…
The more they print the less impact it has…. as we are seeing the stimulus policies of central banks are starting to push on a string — in spite of pumping out trillions of dollars… the economy is sinking… corporate profits are sinking … the central banks are pushing on a string ….
Laid off people do not consume — which means even less consumption – lower corporate profits — more layoffs — bankruptcies… more layoffs…
That is how you get a very rapid and complete collapse of the global economy.
That is what is starting to happen now.
Feel free to explain how we stop this…. I am sure the central bankers are all ears….
It is clear we hit peak economic growth sometime ago- the last 8 years is proof that cheap energy drove growth and cheap debt was no replacement. There has been some catch-up with developing nations but the reverse is kicking in as in Brazil, a kind of glass ceiling.
The issue is not how much a failure the current system is or that things will change- they will the issue is speed of decline and or transition. As I started my post the process is inevitable- however the ability for failed systems to prolong their life is great- Rome didn’t collapse in a day.
That process is the fascinating, scary, exciting thing, we are living in an historic moment. In the grand scheme of things 5 years or 50 still looks awfully fast in the historic rear view mirror.
I think, personally [!], I would be very surprised if anything kicked off beyond another credit/market crash in the next decade. A guess of course.
We will have to see whether collapse is fast or slow. If the financial system is adversely affected, it seems to me that this collapse could be much worse that past collapses. For one thing, we are much more dependent on international trade.
“We will have to see whether collapse is fast or slow. If the financial system is adversely affected, it seems to me that this collapse could be much worse that past collapses. For one thing, we are much more dependent on international trade.”
We obviously aren’t very good traders since we seem to be losing money at it every year.
Our trade deficit seems to be increasing. With a stronger dollar we might get a bit tanked, although that might be partially offset by lower oil import costs.
We are right about the max of trade deficit that we can handle without total slowing down so I do get where you are seeing a slowdown.
Thank you as always for the time you give to reply- and yes I would agree the next crash will be new territory: a big bump down but just one of many.
Gail,
why do you think collapse will be within a year? Do you have some data to better explain it?
Also you mentioned about wages plateau and too high debt and I saw in the previuos post interesting data about US wages. Do you have data or link for a more wide population wages and private debt and nations debt (i.e.: OCSE or something similar)?
Thanks
Regards
Danny
Danny – while we wait on Gail — some food for thought…
We have entered a deflationary death spiral — demand is down because wages are down and global employment is worsening…
Stimulus programmes particularly those in China are slowing dramatically (building things nobody needed which return 0 eventually results in a credit crisis… and must be discontinued…)
Deflation = layoffs and bankruptcies — which leads to more deflation as laid off people do not consume which reduces demand — which leads to more layoffs etc etc…
http://davidstockmanscontracorner.com/chinas-monumental-ponzi-heres-how-it-unravels/
http://wolfstreet.com/2015/08/29/china-entering-a-recession-not-just-a-hard-landing/
http://www.reuters.com/article/2015/07/06/us-china-markets-idUSKCN0PG06B20150706
http://www.zerohedge.com/news/2015-07-06/peak-desperation-china-bans-selling-stocks-pension-funds
http://qz.com/445477/to-save-its-stock-markets-china-is-putting-its-whole-financial-system-at-risk/
I’d be surprised if we get another year of BAU based on where we are now. The central banks appear to be unable to do anything to boost demand — all they seem to be able to do is stop the stock markets from crashing by being the buyer of last resort — they print money and use it to bid up the markets…
They appear to be very nearly out of bullets….
We have been depending on China for economic growth. We have been depending on other developing nations for economic growth. This isn’t happening.
We have had very low interest rates, thanks to QE, since 2008. These should have fixed things long ago, but they haven’t. Now, when things get worse, there is no other way to fix the economy. Low interest rates were always our fix, but they are already very low.
Too many things are coming together at once. Others are noticing this as well. This is a link to Charles Hughes Smith’s article on the subject http://www.peakprosperity.com/blog/94160/heres-why-markets-suddenly-become-so-turbulent
We no longer have good ways of fixing the turbulence. I am afraid we will see bank defaults, caused either by debt defaults or derivative defaults or both, and there will be no way to fix them. The debt defaults come because commodity prices are so low, and have been for quite a while. It takes quite a while for these low prices to “feed back” through the system. Starting in October, we should be seeing more of the feed backs.
We can’t know the timing exactly, but the turbulence in the markets indicates that the problems are already being felt there.
He left out demographics. 10,000 US citizens go into retirement every day. They spend less. On top of that we have the depredations of the 0.1% so the stretched remnants of the middle class, and the 48million poor – those getting food stamps, are simply unable to add much to spending.
We have therefore deflation because there is not enough money circulating in the economy to go near getting inflation. It’s almost like the paradox of thrift. Saving or spending less results in less income for the economy and no new net savings. It becomes a self perpetuating spiral towards depression.
“We have therefore deflation because there is not enough money circulating in the economy to go near getting inflation. It’s almost like the paradox of thrift. Saving or spending less results in less income for the economy and no new net savings. It becomes a self perpetuating spiral towards depression.”
Correct. We need the jobs/money back we send to China, Canada, etc to boost the economy, which creates the money to spend here since they aren’t trading evenly with us. This creates the jobs that gives the lower incomes the money to spend so we dont have to keep bailing everyone out.
If it is oil, manufacturing, or just not purchasing the goods, it all works the same and stops the spiral.
The Republican ideal of sucking the life out of the economy for short term profits is sucking us dry.
“The Republican ideal of sucking the life out of the economy for short term profits is sucking us dry.”
Wait a second, both parties stink to high heaven and both parties are equally responsible for the mess we face. Nowadays it’s Diet Coke vs Diet Pepsi as the two party choices. And last I remember the guy who Obama appointed to a cabinet post that’s responsible for job creation is none other than Job Czar Jeffrey Immelt. Who was offshoring jobs to China when running GE.
“Wait a second, both parties stink to high heaven and both parties are equally responsible for the mess we face. ”
I am going back to the 80s to Reagan/Bush.
I blame them. 16 years of trickle down economics and outsourcing pretty much took its toll on our country. It wasn’t going smooth even in the late 60s either.
Bush was the last person to get the trade deficit close, but all the Republicans complained.
If you think you got covered, read this
https://www.washingtonpost.com/world/asia_pacific/how-farmers-from-rural-china-bet-on-the-stock-market-and-lost/2015/08/29/a16f8492-4cb8-11e5-80c2-106ea7fb80d4_story.html
Old-timers in Nanliu have known war, famine and revolution, and note, gratefully, that things are getting better by the year. Young people leave to find work in the city, sending home enough money for new clothing, smartphones and two-story homes.
But farming is tough, unstable work, and many here still struggle. By the time this year’s rush began, Nanliu was home to a handful of small-time investors trying to supplement what they earn on the land. The number swelled dramatically after the rise of the benchmark index sent stories of fast fortunes spreading through the fields and the local leader got involved.
Nan Xinglao, 64, a retired village schoolteacher who with his wife, Wang Caiwa, 62, tends a crop of apple trees, corn and wheat, followed the market for months before opening a trading account, wary about losing what he had saved from his modest salary, and their 10 mu (1.6 acre) plot.
Nan was nervous, but tempted: Farming was hard on the body, and he longed for a chance to use his mind. A word from the village chief, a distant relation, convinced him that the time was right. The chief, he heard, knew about stocks — he would learn the rest.
Ignoring the protests of his wife, Nan invested 80,000 RMB ($12,500), about half of what they had saved over the years. Like millions of other first-time investors, he saw quick results and doubled down, borrowing money from his sister, his two children and a couple of friends, so he would not miss out, he said
Guess what happened?
I am afraid I can guess.
Such people are no longer visiting Hong Kong to shop … that’s why a $200 hotel stay now sells for $85….
The interesting problem in our energy decline is the fact, that the disappearance of external energy that the humans use has different outcomes than the majority expects:
1. Getting e.g. more land for cultivation means in fact the need for more work and energy inputs from the side of the human being, as we loose water due to climate change and depletion of aquifiers or as the more and more protection of crops against more diseases and insects, brids and other animals is needed.
2. We are loosing energy in general, so it means we are less and less able to keep e.g. so big portions of land cultivated. The weeds or forest, together with the insects and animals become stronger than ourselves.
Summary: This dichotomy of energy decline, i.e. that we need more and more, but we have less and less energy brings us to the conclusion that it is not important whether you own/have more or less, but whether YOU HAVE ENERGY.
It means that you can save yourself by leaving out some unnecessary activities out of your life, that are energy suckers – e.g. (what might surprise you) sports that require high energy inputs and outputs or social activities that have purely entertainment function etc.
The point is that more and more human inventions and social structures that were created and maintained based on the high inputs of cheap energy are disappearing. They are becoming like “void shells”. Trying to save them (what may look like important at first sight) is complete energy loss…
The words of this song by Paul Simon, written during the era of US energy decline in the middle of the 70s, are very instructive:
“Slip slidin’ away
Slip slidin’ away
You know the nearer your destination
The more you’re slip slidin’ away”
Yes, we are less able to cultivate large tracts of land without as much energy.
In fact, our abilities are slip sliding away.
“Yes, we are less able to cultivate large tracts of land without as much energy. ”
Tractors have gotten more aerodynamic and are more efficient, then they were ten years ago. They are using frewer trips acrossed the fields, etc. So we are doing it with less energy in some cases. However, getting people to have enough money to afford the higher priced equipment is another story.
It is actually about the same story as solar panels. Not enough money at the bottom, mainly because we are sending it all overseas for other items.
“Tractors have gotten more aerodynamic,”. They could be shaped like a brick for travelling at 5km/h. You are living in a dream. A dreamworld of technological marvels saving the day. Engineering got the world into this mess and humans have been engineering from the time our ancestors chipped flint. Now you see engineering as the solution……how utterly droll but mostly naive. You remind me of “Nick” from The Oil Drum and “Nick G” from Peak Oil Barrel. Ten years ago he was telling everyone to “just buy a Prius”, thought it was the solution to everything from global warming and over population, to peak oil and economic collapse. Now all electric cars and wind mills are the great white hope.
“They could be shaped like a brick for travelling at 5km/h.”
Maybe in your country, it doesn’t make any difference because they move that slow. In our country, our tractors in the field go 15-25km/hr and 72kr/h down the road.
“u are living in a dream. A dreamworld of technological marvels saving the day. ”
At least I actually know wtf I am talking about.
“Aerodynamic tractors”, you have got to be kidding. They are designed to pull, they could be ploughing into a hundred knot gale and not change gear. Up hill, down hill, through mud and heavy ground. They are work horses, with air conditioning, GPS, air ride seats and any amount of fat tires you desire.
https://www.youtube.com/watch?v=cE5WDl_YNbU
Bonus link: https://anthonyburtglujhsag.files.wordpress.com/2013/07/flying-tractor.gif
“At least I actually know wtf I am talking about.”
Some strange new meaning of “know” that I haven’t previously been aware of…
You know when the stock indices have red coloured arrows for a drop …. and green for a rise…
I reckon that to inspire greater confidence we simply reverse those colours…
Then even when the markets are collapsing the sheeple will see a sea of green … and believe all is well.
You KNOW what I am say’in…
“Tractors have gotten more aerodynamic…”
Ha ha!
I am sorry, I do not have time to respond to all of your comments. Hopefully others will. Or start reading some of my other posts.
The incomes of farmers are down 36% from last year, if I remember correctly. That doesn’t leave farmers much for buying tractors. We have a low price crisis pretty much everywhere. We cannot afford higher energy prices of any kind, even the higher prices that have already flowed into the economy, and that is now affecting incomes. Solar panels are a no-go for this reason. All cost comparisons need to take into account the intermittent nature of the energy supplied, as well as the fact that it is wholesale, not retail electricity.
I am sure that at least part of tractor inputs are sourced from overseas as well–for example, steel. This contributes to the lower wage problem.
“We have a low price crisis pretty much everywhere. We cannot afford higher energy prices of any kind, even the higher prices that have already flowed into the economy, and that is now affecting incomes. Solar panels are a no-go for this reason. ”
It actually costs -less- for solar. You can pay back the entire system in 7 years, and minus windex, you have no other costs. With FF’s you have a tremendous outlay of cash, then you need to supply it with FFs which have a variable price structure.
I read what you say, but the diminishing returns on fossil fuels is causing a technology stagnation, which is causing an economic stagnation.
Investing in Solar is more like investing in bonds. You build it knowing, almost exactly what you are going to get out of it.
Investing in FFs is more like investing money pink sheets. You build it, and you can guess what your input costs are, but you don’t know for sure. Sometimes you win big, other times you lose.
There is a huge technology ripple effect between various sectors with renewable energy and efficiency, that fossil fuels at one time had. They no longer drive new technology which leads to societal advancement and gives our intelligent people big problems to work on. that is the real deflation and real diminishing returns.
With the renewables, you are seeing the technology advances play off each other.
It depends on perspective. If you are planning on dying or committing suicide within a year, then FFs are probably your best investment, but I would argue spending time with my family or doing something fun would be a better use of the time and money.
Renewable energy and efficiency are for those folks at are planning on being still being around in 10 years and want their money for future use.
“It actually costs -less- for solar. You can pay back the entire system in 7 years, and minus windex, you have no other costs.”
Take a rest, we’re not buying.
It doesn’t actually cost less for solar. The numbers you see have subsidies built in them. They also give way too much credit for the electricity that is made with the solar panels. The amount the solar panels actually save is close to the price of the fuel, which is something like 3 or 4 cents per kWh. You can’t pay the installed cost of solar panels with electricity at 3.5 cents per kWh for 7 years.
The main obstacle to large-scale commercialization of solar power boils down to economics. Currently, the solar industry can produce electricity at costs ranging from 15 to 22 cents per kilowatt-hour, but energy customers only pay 7 to 13 cents per kilowatt-hour for their energy, which largely comes from coal, petroleum and natural gas power plants.
With government subsidies in states such as California and cash-back incentives for customers, renewable energy sources such as solar are becoming more popular.
For example, here at Stanford, the Palo Alto Utility Company gives us students the option to purchase all our electricity from wind and solar farms for only 1 cent more per kilowatt-hour than we would pay for energy generated from conventional sources. (Solar actually costs 5 cents more per kilowatt-hour to produce.)
https://alumni.stanford.edu/get/page/magazine/article/?article_id=30242
“Currently, the solar industry can produce electricity at costs ranging from 15 to 22 cents per kilowatt-hour, but energy customers only pay 7 to 13 cents per kilowatt-hour for their energy, which largely comes from coal, petroleum and natural gas power plants. ”
How old is that information? Oh wait that article is prior to 2010 that is when the guy who wrote the article was planning on graduating in 2010.
The last info I got was solar (installed systems) was 1.55/w for utility solar, and 3.48/w for residential (2014q4) Which for residential puts the cost of solar at roughly 6.5c/kwh. The article itself alluded to before any tax incentives, but I am unsure.
Solar energy is responsible for just a fraction of 1 percent of U.S. electricity, and it costs nearly twice as much to produce as natural gas, says Diana Furchtgott-Roth, Director of Economics21 at the Manhattan Institute.
http://www.ncpa.org/sub/dpd/index.php?Article_ID=24450#sthash.KsHmEuIl.dpuf
But countries with large amounts of renewable generation, such as Denmark and Germany, face the highest energy prices in the rich world. In Britain electricity from wind farms costs twice as much as that from traditional sources; solar power is even more dear.
http://www.economist.com/blogs/economist-explains/2014/01/economist-explains-0
The only reasons solar exists is a) government subsidies b) idiots in the green lobby who force governments to waste money on these subsidies.
Funny when solar is not renewable energy — nor is it at all green — it is an industry that is fired by dirty coal and which creates toxic cancer causing by products.
Yet the Solar Jesus groupies would have us cover half the earth in these environmental travesties….
“Solar energy is responsible for just a fraction of 1 percent of U.S. electricity, and it costs nearly twice as much to produce as natural gas, says Diana Furchtgott-Roth, Director of Economics21 at the Manhattan Institute.”
It might be twice as much as fracked natural gas from an already depreciated NG system so like 4c/kwh, not 2.-3c. Wind is actually in the 2.5c/kwh range.. What she neglects to mention is after the panels are fully depreciated in 7 or so years, the cost is 0 or considerably less then NG.
And it is over 1% now. At least as far as we count it. Like every system under 1mw or 5mw isn’t even part of the US solar production numbers. So our production is quite a bit higher then we report.
The problem with the above quote is that it was written by someone who was planning to get his bachelor’s degree in 2010. That means (a) the article is at least five years old –in fact the chart shown is from 2003 and (b) the credentials of the author are not very good.
In a field that is changing so rapidly, we need more up to date information.
“The amount the solar panels actually save is close to the price of the fuel, which is something like 3 or 4 cents per kWh. ”
Okay, so you make an investment to save fuel costs. You now have an object that can save you money for pretty much as long as you own the object. If I just spend the money for fuel, I have nothing left.
You might find this interesting:
http://www.renewableenergyworld.com/articles/2015/09/energy-storage-surging-as-more-u-s-states-look-to-batteries.html?cmpid=renewable0942015&eid=291099688&bid=1169128
Energy Storage Surging as More U.S. States Look to Batteries
Companies deployed 40.7 MW of storage capacity in the second quarter, the most in more than two-and-a-half years and a ninefold increase over the same period a year earlier, according to a study released on Sept. 2 by Boston-based GTM Research and the Energy Storage Association.
…
Utilities are starting to implement storage systems in part to better manage the intermittent power supplies that come from wind and solar systems. The technology is also becoming popular with commercial customers such as building owners and factories that use stored power during peak periods to lower their utility bills.
Here’s David Graeber’s essay on this topic;
“A Practical Utopian’s Guide to the Coming Collapse”
http://www.thebaffler.com/salvos/a-practical-utopians-guide-to-the-coming-collapse
It seems to be an excerpt from a longer work.
Yes, It’s just an exerpt, but a good piece. The full work is listed at the bottom of the article.
http://www.telegraph.co.uk/finance/economics/11831426/Citigroup-braces-for-world-recession-calls-for-Corbynomics-QE-in-China.html
Professor Zhiwu Chen from Yale University told the same event that China will be doing well if it can contain its slow-motion crisis to mere stagnation for the next 10 years, given the dangerous levels of debt in the system.
“If the Chinese government is able to manage a Lost Decade with very low growth – or no growth – without an economic crisis, it will be a policy achievement,” he said.
If China falls, and takes Japan with it, and they revolutionize. That could possibly mean There are several trillion in bonds of US debt with no owner.
If the world is told that China’s economy is resizing to a low growth or no growth model then the system will crash and burn. China’s fudged economy is what kept the hamster moving faster and faster with the illusion that all was well.
I agree with Rodster. And I am feeling very uneasy these days.
http://www.bloombergview.com/articles/2015-08-24/why-oil-producing-countries-keep-on-pumping
Why Oil-Producing Countries Keep on Pumping
Here’s some of that article that mostly confirms what we already knew:
“The main impact of the current lower prices has been to cut back on developmental drilling of new oil wells, rather than slowing the flow of oil from existing wells. Thus, the impact of lower prices today is expected to be on future oil production, rather than current production. This requires more patience on OPEC oil producers and a willingness to maintain steady production until the demand catches up with the current supply levels.”
The big oil producing countries keep on pumping, even though prices are at a six-year low: Don’t they know they’re only making things worse? Chances are they do — each has its own reasons to continue — but this won’t go on forever. Someone will blink in the next year or so, most probably U.S. shale producers.
Production in Saudi Arabia, Iraq and Venezuela is at or near the highest level in a year. Russia, now the biggest crude producer in the world, increased its output by 1.3 percent year-on-year in January through July, and is pumping 10.6 million barrels a day. U.S. production has dipped slightly in recent weeks, to 9.3 million barrels a day from the June peak of 9.6 billion, but it’s still substantially higher than a year ago, when prices were more than twice as high.
The simplest explanation for this phenomenon is that the producers need the cash; the lower the price, the more they need to sell to maintain revenue. Among the trio of top oil producers — Russia, Saudi Arabia and the U.S. — this need-for-cash argument works best for Russia. Last year, as crude prices began to tank, it quickly floated its currency. Since then, the ruble has devalued in lockstep with oil, so that every extra barrel sold produces the same revenue in rubles, which is the currency of the government’s budget. As a result, Russia has no reason to cut production, even if it probably will suffer a future decline in output, because its major oil companies have sharply reduced investment.
The main impact of the current lower prices has been to cut back on developmental drilling of new oil wells, rather than slowing the flow of oil from existing wells. Thus, the impact of lower prices today is expected to be on future oil production, rather than current production. This requires more patience on OPEC oil producers and a willingness to maintain steady production until the demand catches up with the current supply levels.
At that point, U.S. drillers will find it difficult to pay back their combined $235 billion of debt. By then, the added technological and financial efficiency unleashed this year will have peaked. New credit will be less readily available and the shale drillers won’t be able to repeat their feat from the first half of 2015, when they raised $44 billion through bonds and share sales. Even if their break-even costs are lower than previous estimates, the low crude prices make them look unattractive to lenders and investors.
The Saudis may be temporarily thwarted by production decreases in those oil economies unable to hold their corners in the price war, such as Nigeria, where production has been in decline since last fall. Lost production in these countries may send prices up again slightly, giving U.S. frackers a little more breathing space. But until either the U.S. shale industry or Saudi Arabia has triumphed, the onlookers — even big ones like Russia — won’t be able to benefit from higher oil revenue.
Great article. I actually agree with most if it. Especially if you add “part” of this one comment.
“The oil producers keep pumping because they will have reserves that will be shut in due to carbon and the replacement of crude with non-carbon renewables. Better to sell now when there is still a market for it, than to hold it down to zero.
There is nothing the oil producers can do about the oil price other than to bluff that they don’t need to sell”
Chevy Volt == 2 dollar gas(@15c/kwh) Add solar panels to your house and it is 1 dollar gas.
One of my goals is to add solar panels to our house and replace one of our ICE’s with an EV. We don’t commute any longer so it is hard to justify the expense of an EV but the solar panels to reduce power bills and as a hedge against collapse would be great.
“One of my goals is to add solar panels to our house and replace one of our ICE’s with an EV. We don’t commute any longer so it is hard to justify the expense of an EV but the solar panels to reduce power bills and as a hedge against collapse would be great.”
I want my parents to get solar panels with battery backup. It saves money, but also eliminates the need for a generator in the winter if the power goes out because of an ice storm since they have electric heat.
You miust fit in that retiree group, that are actually the perfect customers for PHEV or EVs. Typically drive within a local range, and typically are responsible enough to plug them in, and aren’t in always in a hurry.
Hybrids are only a couple grand more, so in the more expensive range but not out of the question range.
Actually we’re still working M69, but do not have to drive far except every few weeks down into the throes of that mechanized energy zapping machine, the SF bay area. But your point is taken that most of our driving is local, so an PHEV or EV does make sense. The trouble is in crunching the numbers with vehicles that are paid off. Getting a new or used EV costs more than just driving what we already have. But then again, if collapse occurs and we can’t charge an EV, then we are at the whim of a local fuel station that may not be open and I don’t like that idea either. So we’ll have to pull the rip cord sooner or later and get solar. I know in the long run if there is collapse it won’t make too much difference, but some power for some time will be better than no power. And some vehicle we can charge will be better than an ICE with no fuel.
But here’s where it gets interesting. Let’s say we are in a post collapse period and we’ve got solar panels and an EV. Do we turn on the lights at night and stick out like a beacon in an otherwise fairly dark neighborhood while hungry citizens rummage through abandoned homes? Do we drive around looking for foodstands selling fruit and vegetables to buy some with one ounce silver coins, with people looking at the EV and the silver wondering where the heck do they live and following to later break in, etc. It gets very interesting because none of us live in a vacuum, so anything resembling BAU post collapse will be in great danger from those without.
“But here’s where it gets interesting. Let’s say we are in a post collapse period and we’ve got solar panels and an EV. ”
If you convince your neighbors to get an EV and solar as well, it reduces the likely hood of them trying to take your stuff post collapse. 🙂 There could be 10 other people in your neighborhood, that are thinking about solar, but are afraid of what the neighbors think about it. Or someone fairly popular is against it. Usually solar is installed in clusters, like one neighborhood will be covered in solar, and the next one over has zero. The same with EVs. Extoll the virtues, and skip over the “post collapse” since you will sound like a lunatic to them.
The -other- thing you can do is hydroponics in the basement for some food, with LED lights. LED lights last 20 years and use very little electric. They are fairly popular in the Marijuana industry.
“Getting a new or used EV costs more than just driving what we already have. But then again, if collapse occurs and we can’t charge an EV, then we are at the whim of a local fuel station that may not be open and I don’t like that idea either. So we’ll have to pull the rip cord sooner or later and get solar. ”
At some point, a car depreciation stops, and repair costs kick in and you have to replace it out of necessity.
What I really like about the Volt is the fact that, although it isn’t officially supported for safety concerns, it can act as a backup generator with storage. So you can hook it into your inverter.
Which covers power outages from natural causes. You still need gas at some point to do it, but because the engine can automatically kick on to fill up the batteries, it sips gas relative to other generators.
The safety concerns are carbon monoxide poisoning because people will be stupid and run it in their garage, since that is the shortest electric run. Plus, you are dealing with extremely high voltages for the the most part.
You point out another reason we decided not to install full solar … we are up on the side of a hill overlooking a valley — I can see the lights of the town of 5000 or so twinkling away 10km in the distance….
And like moths to a light…. they will come….
We are staying with low tech solutions — wood stove/wet back for heat, hot water, cooking…. piling in truckloads of extra compost…. lots of extra tools and hardware… boxes of bullets for the hunting rifles … medicines… a large thick-glassed green house …. robust irrigation systems (one gravity – one solar pump powered) ….seeds… dry foods… etc…
Mr DNA is leading me around by the nose from shop to shop making sure I stockpile what he needs….
“We are staying with low tech solutions”
You should check out the hot water systems they are putting together with use 2L soda bottles. I think South America somewhere. It is a rooftop hot water convection system. It is very low cost..
Stilgar
Being followed back and robbed is exactly what would happen in all likelihood without very careful precautions.
I suggest http://www.themodernsurvivalist.com, which is much better than it might sound: first-hand account of dealing with gold and silver trades in a failing economy, and dangerous society: Argentina.
Crime , kidnappings, food and water shortages, power cuts, it’s all there. I have Argentinian relations, and can confirm the accuracy of it.
The blog author has only a few odd hang-ups which are easily discounted, and largely due to the stress of the Argentine environment.
The rest is very solid and widely applicable. It is not a typical prepper site.
I would think actual experiences in Argentina (and perhaps other collapsing countries–FSU, North Korea, etc.) would give a better idea as to what happens than people’s wishful thinking as to what happens.
North Korea is as good a bench mark as we have — or perhaps Haiti — however things will be far worse than either of those countries…
Both of them still have electricity much of the time — medical care — food — petrol — police ….
When the holocaust hits we won’t have any of the above….
The situation we are facing is well and truly unimaginable — without precedent.
Fast, don’t forget to cache some of the good stuff just in case.
I am considering installing solar panels on the roof and powering a disco ball and stereo system — with the intention of being New Zealand’s only remaining disco house in the post collapse world (talk about a gold mine!)
In conjunction with this I will plant 3 hectares with potatoes and bottle high grade vodka…
Fast Eddy’s Groove House… everyone is welcome!
http://www.australamusements.com.au/images/lighting/Discoballs.jpg
Count me in, I’ll bring my Gloria Gaynor and Bee Gees records.
https://s-media-cache-ak0.pinimg.com/originals/1c/90/f5/1c90f5e8f74c840076a1990fd568f437.jpg
Not really. We need oil to maintain the roads and the rest of the system that even electric cars use. Unless we can keep the price up high, the system tends to crash. We need roads as well.
We aren’t eliminating fossil fuels. We are just reducing their use when it makes sense, either by efficiency improvements or replacements.
At some point maybe we can have a discussion about totally eliminating fossil fuels, but in the mean time, we are just excaberating the fossil fuel and related economic issues by trying to maintain BAU in the industry.
It is made worse by the fact we keep having to prop it up and it is removing money from our economy. Fix the problem, and the economy improves, maybe not totally, but it is moving in a better direction, not perpetually backwards like the last 40 years.
Flower you are just regurgitating the old BAU lite meme and you simply ignore what you don’t want to hear. There was/is absolutely NO deliberate drive to reduce the use of FF’s, it’s a sham. Every alt-e device is designed to prolong BAU and therefor the use of FF’s for as long as possible. Your solar panels and Volt electric vehicle ADD to the problem. Instead of “Joe down the road” not driving his car because of a lack of fuel, your use of an electric coal car has allowed him to use the hydrocarbon’s that you do not.
For a mental exercise assume that energy generated by Alt-E devices had to be offset by an equivalent amount of sequestered FF. So if a btu of energy is generated by a windmill a btu of coal must be placed off limits forever………Do you see it happening, do you understand the consequences if it was actually mandated. Do you understand how Alt-e devices and electric vehicles are parasites, on the back of a world developed and maintained by cheap fossil fuels. Those fossil fuels feed cities of tens of millions of people, with their fertiliser inputs, delivery systems and maintenance regimes.
If you need some perspective, stand on a run-of-the-mill, ten lane overpass in the peak for an hour or so. See if you think BAU lite is possible.
“Your solar panels and Volt electric vehicle ADD to the problem. Instead of “Joe down the road” not driving his car because of a lack of fuel, your use of an electric coal car has allowed him to use the hydrocarbon’s that you do not. ”
Ohh but you are missing a lot.. We are trying to reduce oil imports since that sucks 200-500B/yr out of our economy, and we have to keep borrowing money to prop it back up.
The emissions standards are designed specifically FOR coal because we have a LOT of it. The emissions standards were written specifically so if you upgraded from the old 30% eff plants to the 40% efficient plants, we could hit the target with increased capacity for electric vehicles.
What happen?
The utilities, and the coal industry have sued the government like 5 times.Claimed they couldn’t cycle plants, claimed they this and that, which was all proven wrong in a massive foot dragging campaign. They didn’t want to give up their 30% efficient coal plants for the brand new 40% efficient coal plants, because they would have to raise rates because the old ones are paid for.
In the meantime, solar and wind have both have had -incredible- unpredicted price drops along with fracked NG so coal is actually MORE expensive. Now they the “coal” states are trying to do a blockade of the emissions standards again. Even though all new capacity in like the last 10 years has been NG or Renewable energy. There is one plant under construction that is having issues with financing, i think it has been under construction for like 5 years.
We actually specifically tried to put alternative energy in the poor regions like the applacians and such that have a lot of coal to help people try and move forward.
They fell on their own sword. Now they probably want us to bail them out again. They call everyone crooks, but it was just terrible business decisions on their part.
Even the NG industry is taking pot shots at them.
Do you feel sorry for them? I sure as hell don’t.
It’s like screaming into the wind…. all you’ll get is a bad case of laryngitis…
“There was/is absolutely NO deliberate drive to reduce the use of FF’s, it’s a sham. Every alt-e device is designed to prolong BAU and therefor the use of FF’s for as long as possible. ”
At least in the US, it was actually designed to allow for the development of technology to make moving off FFs at a reasonable cost to society possible. Knowing full well the technology didn’t exist at a reasonable price and some of the technology didn’t exist at all to pull off a complete solution.
So far we are 5+ years ahead of cost projections for most of the technologies we will need.
We didn’t want to be like Germany with an incomplete plan, and be forced to rush around to find band aid solutions for predictable problems that could be isolated and fixed before a massive deployment. Germany can get away with it because they are a much smaller country and their energy prices are higher. (It isn’t a knock against them, just a different style of development that clashes extremely hard with our very conservative energy sector, and the fights would be far more brutal.)
Good article!
“Citigroup Chief Economist Thinks Only “Helicopter Money” Can Save The World Now”
http://www.zerohedge.com/news/2015-08-29/citigroup-chief-economist-thinks-only-helicopter-money-can-save-world-now
China has bungled its attempt to slow the economy gently and is sliding into “imminent recession”, threatening to take the world with it over coming months, Citigroup has warned. As The Telegraph’s Ambrose Evans-Pritchard reports, Willem Buiter, the bank’s chief economist, said the country needs a major blast of fiscal spending financed by outright “helicopter” money from the bank to avert a deepening crisis.
At some point the only strategy left will probably be QE to the general populace on a gargantuan super multi-trillion dollar scale, then count the months until hyperinflation and financial collapse. What we do then should be very interesting, before it turns violent, or should I say more violent. It’s already crazy. People killing others for all sorts of random and odd reasons. Wait until they have a real good reason, like their babies are screaming for food that isn’t there. Then watch the wheels come off. Wait until their phones no longer work then you’ll really see a magic show.
Are you convinced these “experts” know what they are talking about? Me neither. For starters it doesn’t seem they understand what the Federal Reserve keeps in its member banks reserve accounts.
Each member has two accounts, a savings account and a cheque account, which work just as in your local bank. Treasury also has such accounts. Not a cent of money belongs to the Fed itself. It is just a clearing house. So when the Treasury auctions bonds agents and banks bid on them. The successful bidder deposits his money into the Treasury’s savings account so it can be paid interest. When the bond matures Treasury instructs the Fed to transfer the numbers representing the bond amount back to the lender’s banks’ cheque account.
That says no money changes hands, apart from interest. Why do investors do this? Investors, including nations like China know that in the Fed the government guarantees its treasury securities. It does not guarantee stocks and private bonds. So if you have a billion to invest the safest place is at the Fed and it’s still your money – unlike what banks can do. It easily explains why there is over $18Trillion there. It is actually wealth, not debt. The greater the Government “Debt” the wealthier the nation. That is not widely understood. The articles on this subject are all flawed.
It distorts discussion on what to do. I return to my idea, which is not helicopter money, but will put money into peoples pockets as most will not have a job to be paid for therefore unable to buy food. It begs the question that governments and banks have to survive to be able to credit bank accounts, but also Coupons will be vital units as well, to prevent hoarding. We will need government services, like the police and medical services as well as the grids. Still, that is possible, for a while at least.
The end is still a crash but it might make it all less chaotic. There has to be a Plan A, or B, or C whatever, but a plan!
There was a Plan B, and C, and D and E and F and so on ….
This crisis did not start in 2008… it started many decades ago — see reference to the speech made by the US general in 1957 that was posted earlier…. the PTB have been enacting policies to keep BAU going for a very long time — with the full knowledge that BAU is based on a continued supply of cheap to extract energy and other resources…
Most wars have been fought on this basis — dictators put in place ensure cheap resources were available to BAU….
These are all plans… dozens — hundreds — maybe thousands of plans….
The subprime housing collapse was a plan — it was thought out — it was aimed at keeping BAU going because we were running up against the end of cheap to extract oil…
TARP – ZIRP – QE — all plans — to offset the the pernicious effects of the end of cheap to extract oil…
I suspect we are coming to the end of plans — the think tanks surely are running out of ideas… perhaps there can be one last mega blast of stimulus … but I do not think there is anything beyond that…
Because I cannot envision what more could be done — money printing — monetizing debt — we are also monetizing the stock market using QE to bid it up … we are giving cars to bums (30% of the market….)
We are Weimar Germany on a epic, global scale…
I reckon all the plans are used up – save perhaps a last massive thrust for a final gasp of air — by a man weighted with cement shoes and sinking into the Marianas Trench….
When that fails — the electricity goes out within days maybe weeks — the troops come onto the streets and hold the line until the petrol reserves deplete and the centre breaks…
I struggle to imagine any other outcomes or plans
Sure, it’s a struggle, particularly to overcome the minefield of economic misinformation ruining chances of a rational response. But don’t despair some people do have answers and when the SHTF moment comes they might get listened to. It’ll be like what went down in wartime, when economics left academia for the real world and what REALLY happens has to be acted upon.
You may be correct that it will be too sudden to save anything, although in my view it will be cascade in steps and progress will be different in different parts of the globe. It won’t be all at once everywhere, highly unlikely anyway.
JD, the more debt the more wealth? If that is true then why not do this fancy shuffling paperwork you seem to think has so much credibility to create quadrillions of debt, because then we’d be the wealthiest country billions of times over. I mean after all it’s guaranteed, right? Why not increase the debt so everybody has enough for a super luxury car. I’ll take a Vanquish Aston Martin. I like the way they sound.
Please don’t advertise your ignorance. You are just relying on lazy thoughtless nostrums and it’s complete nonsense.
Read this and , hopefully, get with it;
http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf
JD, it is you who is advertising your ignorance. Why would the value of the dollar drop during times of QE and rise when the program ended. There is no free lunch.
READ THE BOOKLET!!!
“QE is an asset swap that does not change net wealth [net financial assets] of the non government sector” [Bill Mitchell]. QE is a central bank liquidity management operation.Why do you say “There is no free lunch” It is just more ignorant and lazy thinking!
JD, see what it says at the bottom of the pasted information from this article; “Only central banks have this unique power. It has the same effect as printing money.”
Now if you’re going to get into name calling (you used ignorance) then I’m going to have to get into that as well. Keep it clean and I will too.
http://useconomy.about.com/od/glossary/g/Quantitative-Easing.htm
“Definition: Quantitative easing (QE) is a massive expansion of the open market operations of a central bank. The bank buys securities from its member banks to add liquidity to capital markets. This has the same effect as increasing the money supply. In return, it issues credit to the banks’ reserves to buy the securities.
Where do central banks get the credit to purchase these assets? They simply create it out of thin air.
Only central banks have this unique power. It has the same effect as printing money.”
I didn’t write that, it’s directly from that article, so this is your opportunity to take your passion on this topic and go after the people that wrote that article. I’m sure they have a contact button on their site.
John,
The literature you are passing around was written for what is quickly becoming ancient times. It has nothing at all to do with today’s reality. There was a comment elsewhere that I need to write post about Point 4 of errors in current analysis. That was, “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.” When people do not understand this issue, they come up with the kind of nonsense you are passing around.
It’s hardly nonsense! It’s basically the recipe for macroeconomics as it ACTUALLY WORKS.
There is certainly plenty of nonsense out there! Bill Black said recently; “conventional economics is the most dangerous ideology pretending to be a “science”.
You obviously don’t care to read the literature I am passing around or you would know it’s nothing like the rubbish that passes for mainstream economics.
As to its relevance , unless we understand what REALLY HAPPENS with the economy we are not going to be able to form reasonable plans we need to address the future. We will not understand what Really Happens if we keep heads in the sand and just act as economic sheeple. This is what I am attempting to head off.
If you continue to think there is nothing we can do for the future then It is a waste of time everybody here just moaning and groaning about the current mess and not making any plans to slow the descent. Do you agree then your blog is just a waste of effort because nobody is suggesting any ways forward? Have you already given up? So far you and others have all shown permaculture and renewables are not the answers some believe in, but what do you believe in?
It’s not good enough to just bellyache about the future and waste time trying to work out which part will collapse first. What good does your contribution to this picture do? Is the answer NONE?
It is of course an interesting exercise to figure out what will blow first, but it’s hardly useful if there are no ideas on what to do about it. It’s necessary to both understand the financial world as it’s a very big factor in the collapse scenario and to try to plan for it. For that, MMT has options. Conventional economics has only problems. MMT isn’t the answer to every economic problem as banking and politics etc are also involved, but it gets it onto the right footing. It is purely FACTUAL.
You say you understand MMT but I would say you have demonstrated only ignorance.
Lets see if you can demonstrate you do understand it by answering these questions!
1] Does a sovereign government depend on taxation and borrowing for its expenditure? Just like a household. True or False?
2]The national government borrows money from the private sector to finance the deficit?
True or false?
3] Persistent budget deficits will burden future generations with inflation and higher taxes. And
deficits take away savings from the private sector. True or False?
This is just a sample. Just see what your answers are.
You know, getting the economic narrative onto the correct footing is seriously important if we want to slow the future down away from instant chaos and devastation. I must say I’m not very confident but that’s because governments are too self absorbed etc. You are not, but your unhelpful attitude to economics shows a closed mind to how much it matters to understand the economy as it truly functions. It’s going to be on a wartime footing and that’s when MMT was understood, because it worked.
“… It’s not good enough to just bellyache about the future and waste time trying to work out which part will collapse first. What good does your contribution to this picture do? Is the answer NONE?…”
+1 to the whole comment. But especially to the part where the bellyaching is worthless, and just adding to the problem. In fact, I am not sure why society would want to continue to pay for that effort if things do collapse.
With regards to this alternative economy you are promoting … can it function without cheap to extract energy? If so they please explain how… if not then please give this topic a rest.
What does Gail contribute to the picture? She explains what is happening and why — and how there is not a thing in the world we can do about it.
There is only one outcome here. Collapse. Starvation. Violence. Misery. Death.
If you don’t like that — or don’t agree — I suggest you skip over to the many Koombaya blogs out there that welcome those who disagree with Gail and most of the people on Finite World.
I cannot speak for everyone — but I come here because the articles do not sugar coat the nightmare that is coming — they lay it out in grim detail…
If I wanted Koombaya washed down with Kool Aid — I would go to the MSM — or blogs like Peak Prosperity.
I do not understand why people like yourself come to FW — the mental anguish you endure must really run up your Xanax bills….
what profound ignorance about me. You are a one trick pony. You are not contributing, just bellyaching and pontificating. If you read my contributions I mostly agree with what you say.Are you then like a goldfish ? Every time you spin you see a new view.
I take it that you prefer not to answer the question.
Why bother? You wouldn’t read it anyway. If I thought you read what i write then Yes it might be worth while. But your diatribe offered proof you only look for “hooks” to then repeat yourself. I suggest first you re read what I wrote and see how your response shows you didn’t read it properly.
If you wonder why I am so disparaging it’s because of that.
I might read it if you tell me that this new system can function without cheap to extract energy…. and explain how and on what level
We make progress. You have admitted your diatribe stemmed from not even reading the post. Congratulations! What a champion! How about you read it and see why your rubbish response was out of line? Do try, be brave!
John Doyle: “Are you then like a goldfish ? Every time you spin you see a new view.”
Ah, a believer in the goldfish myth. Is this symptomatic for the rest of you “knowledge”?
You are perfectly free to understand or to keep your head in the sand. It’s your choice.
You know the goldfish thing is a myth?
Yes, but it makes its point.
“With regards to this alternative economy you are promoting … can it function without cheap to extract energy? ”
Nope. Just saying the cheap extraction isn’t coming from fossil fuels. It isn’t going to be overnight unless oil goes back to 100.. then it will be overnight. 🙂
John Doyle to Gail: “Do you agree then your blog is just a waste of effort because nobody is suggesting any ways forward?”
Understanding the world and accepting what’s ahead is not a bad thing, you should try it.
Some people … it would appear …. do not want and cannot handle — the truth…
They prefer to live in Koombaya Land …. all good — till reality hits…
Some have a one track mind and can’t recognise the truth either. They are locked into their own belief system, regardless of what unknowns lie in front. Is that you perhaps?
Third time lucky?
I ask again — does your magical economic system overcome the problem of the end of cheap energy?
if so – how.
If not – then what is your point?
Refer previous post. Take your time! It’s not hard!
You’ll not trick Fast into reading your essay on alternative economic systems by planting the answer in there…
But feel free to post that answer here….
Trick or treat eh? Have it your way, the misinformed way so beloved by you.
I’ll take that as a no ….
Be my guest. Why would I care what you think? You being so misinformed, it’s an advantage!
I do and have. Now its your turn!
So what is it I don’t understand?
What you and FE amongst other do not “get”is that I am describing an existing system, an existing! system, an EXISTING system. It’s not a new theorem it’s not a theorem at all. It is a mechanical explanation, a recipe. Calling it MMT is a bit off the mark; In 1963 the Reserve Bank of Chicago called it [better] Modern Monetary Mechanics in a booklet now out of print.
So it’s very irksome when you, or someone who should know better, like Gail, calls it nonsense.
Economics is very complex and I can’t do the algebra involved, but MMT is quite straight forward.
I’m quite happy to promote it because the politicians and mainstream economists have the narrative all wrong. The mindset is so concreted into the citizenry and the politicians all over the world that getting ridiculed is par for the course. When it comes from Gail, however, it is particularly depressing as she of all of us should “see” it. It is reality after all. She said she understands it but then proves she is clueless.
Take that first question she hasn’t bothered to answer: A congressman asked Ben Bernanke at a public hearing about Tax money; Scott Pelley: “Is that tax money that the Fed is spending?”
Chairman Bernanke;” It’s not tax money. The banks have accounts with the Fed, much the same way you have an account in a commercial bank. So, to lend to a bank, we simply use the computer to mark up the size of the account that they have with the Fed”
Reserve governors all know the truth, but prefer not to stir up trouble.
I hope you and FE and Gail are beginning to understand???
As to the energy equation Gail refers to, it’s the same problem with all current economics . It’s not addressed but it is in the background and will have to be addressed. I have said already in my earlier posts about how MMT will be useful in setting out a possible workable plan,
so it will be useful to get the narrative right!
As I said, in wartime [WW2] the economic narrative was an MMT based program, but in peacetime it switched back to the academic rubbish in vogue today; the analogies with household finance, which regarding the National accounting could not be more wrong!
Let me know if you are at least beginning to understand
I hear what you say, but I see limits to debt (etc) and diminishing returns as a far bigger problem than details regarding paper money.
That’s nice. Hearing is one thing but understanding is another naturally enough. The point is that no economic regimen is going to save our civilization from collapse, the remedies for coping with the slide are important enough to stop instant chaos. and should be considered. MMT actually does help with the concept of managing the events we know will unfold but we don’t know when or how they will unfold. So we need a plan and MMT can be helpful.
The thing is…
It’s not the economic system that is the problem …. roll out whatever system you like… it will not address the fundamental problem we are facing …
And that problem is that we are out of cheap energy.
That is why I have 0 interest in MMA or MMI or MMT or whatever you are describing.
Unless you start with ‘this system can overcome the problem of the end of cheap energy’ I don’t hear you.
There you go again, not reading what is written just scanning the text. Why don’t you try reading the whole submission occasionally? You just read enough to be misinformed. Lazy. You admit you are not an expert, only opinionated and only look for confirmation. No provisos, no ifs and buts, just stay deaf, as you admit. What a champion!!!
If you had bothered you would see I address those concerns about the economic narrative and why it’s important to get it right. Disagree if you will, but be properly informed first. Because you aren’t.
It’s like this…
I have very little time left on the planet…. I have a normal job … but I also have to drive to Wally’s World at least 3x per week…. then I have at least 3 years per day on the farm (just finished cutting a track down to the creek so the guys can get that solar pump in there without breaking their necks)…. I also need to find time to ski…. etc etc etc…
So guilty as charged — I have not read the PHD thesis on the alternate economic system…
Can you do me the favour of explaining to me how this system allows us to continue to extract oil so that we can continue with this thing called civilization…
That’s really all I am after — if you can convince that it is possible then I will read more….
If we cannot extract oil using this system — then I dare say — this system is worthless.
It’s all about the oil….
Guilty as charged? OH Yes indeed. But you can waste everybody’s time with bleating about not seeing what is already in the blog, in front of your eyes. Keep trying. You may eventually learn comprehension. I assume you are old enough.
So does that mean that your new system offers the solution that allows us to continue to extract oil and continue along our merry path?
I will assume not.
Because if it did… the PTB would be all over it….
Kinda like solar panels….
Just read the posts. stop floundering around! You are making a molehill out of thin air.
The everyone here can breathe easy again.
I agree, Jarle.
Why read books? Why travel? Why learn?
Why do anything other than order in 241 pizza, sleep, work is a dull job, watch dancing with stars reruns, play video games and check for new photos of someone’s meal or baby on Facebook?
I reckon the answer is here https://en.wikipedia.org/wiki/Zen_and_the_Art_of_Motorcycle_Maintenance
You say,”! It’s basically the recipe for macroeconomics as it ACTUALLY WORKS.”
I agree that it has pretty much worked this way in the past. My point is that it cannot work this way going forward, in a finite world. We are limited by cheap to extract resources. We can’t print these. We can borrow money, ostensibly to extract expensive to extract resources (instead of cheap to extract resources), but we don’t get enough payback for the whole system to work–that is extract the resources, plus pay back debt with interest, and pay adequate wages to workers. Instead, the system tends to collapse. What worked before becomes a Ponzi Scheme.
I should add that energy flows are background to the economy’s performance. What I am saying is what happens after and what gets done by the governments in consequence and how they react with erroneous decisions which just make the economy worse.
“Citigroup Chief Economist Thinks Only “Helicopter Money” Can Save The World Now”
Should read:
“Citigroup Chief Economist Thinks Only “Helicopter Money” Can Delay the Collapse of Civilization and the Deaths of Billions”
The end game is getting closer by the day….
The collapse never stops coming. It’s asymptotic. The more time passes, likelihood increases but never reached level 1 , ie the stage of collapse.
https://quantumprogress.files.wordpress.com/2013/02/screen-shot-2013-02-07-at-11-06-56-pm.png?w=252&h=170
“Citigroup Chief Economist Thinks Only “Helicopter Money” Can Save The World Now”
What he is really saying is Citibank needs another huge bailout package, because they screwed up again.
I agree completely. Most folks will be blind-sided by what is coming.
No, QE is for the banks themselves only. We need the banks to be able to process government pay cheques but all the derivatives etc they use now will have to be jubilee’d out of existence, All the loans made from thin air, which is all of them will have to be eliminated, but their base capital should stay in place. All that needs to remain is their processing and savings facilities.
The Fed will not solve anything with QE, although they might try it before the SHTF becomes too close to avoid noticing. Right now people can pretend they see it all OK going forward.
Of course we need a plan, like I already said, but probably kept secret, so as not to spook everyone too soon. But as things stand now it’s a vain hope, as no one who is in a position to do something seems interested.
I am afraid we cannot get a perpetually operating helicopter to provide money from now into the future, though.
So this is how it will all end…. the oil industry goes bankrupt because prices are too low… and the helicopters are grounded for lack of fuel…. so the money drops stop…
I wonder if Bernanke realized this when he wrote his helicopter money thesis 🙂
Maybe Elon Musk can invent a Tesla helicopter!!!
What do you think Mr madflower?
“So this is how it will all end…. the oil industry goes bankrupt because prices are too low… and the helicopters are grounded for lack of fuel…. so the money drops stop..”
The oil industry is going through a market correction so yes there will be bankruptcies, and merger, which has been happening for a few years with the canadian tar sands.
How old are you? Who uses helicopters anymore?
http://www.amazon.com/b?node=8037720011
The one in the picture looks like it can use solar panels. No fuel shortage here!
I told you the US is developing comprehensive plan.
Your level of ignorance on just about everything is truly breathtaking….
I will now go back to ignore mode….
Your sheep most be calling you.
“The oil industry is going through a market correction…”
Correction? You’re funny!
A Tesla helicopter? Ha ha, that cheered me up!
No, but directly giving money to people in some way could be the last straw that gives the people in positions of power the time they need to head to their safe havens.
“I am afraid we cannot get a perpetually operating helicopter to provide money from now into the future, though.”
JD, what do you have to say about Gail’s comment there on QE?
China Entering Ugly Recession, Not Just a “Hard Landing?”
A “hard landing” would be tough for China. But it would still mean economic growth, if very slow growth by Chinese standards. At worst, it would mean stagnation. But now, evidence is piling up that the economy is actually shrinking.
So how bad is the economy?
http://wolfstreet.com/2015/08/29/china-entering-a-recession-not-just-a-hard-landing/
“A perfect storm of failing trends”, by Charles Hugh Smith
At the risk of stating the obvious, let’s list the major trends that are already visible.
The China Story is Over
And I don’t mean the high growth forever fantasy tale, I mean the entire China narrative is over:
1- That export-dependent China can seamlessly transition to a self-supporting consumer economy.
2- That China can become a value story now that the growth story is done.
3- That central planning will ably guide the Chinese economy through every rough patch.
4- That corruption is being excised from the system.
5- That the asset bubbles inflated by a quadrupling of debt from $7 trillion in 2007 to $28 trillion can all be deflated without harming the wealth effect or future debt expansion.
6 That development-dependent local governments will effortlessly find new funding sources when land development slows.
7- That workers displaced by declining exports and automation will quickly find high-paying employment elsewhere in the economy.
http://www.peakprosperity.com/blog/94160/heres-why-markets-suddenly-become-so-turbulent
Very sobering.
“China’s workers abandon the city as Beijing faces an economic storm. Labour disputes are rising and some workers are leaving for the country amid fears a crashing economy could cause political and social unrest”.
http://www.theguardian.com/world/2015/aug/27/china-small-time-recyclers-down-on-their-luck-amid-stock-market-turmoil#img-1
Useful article – thanks
Adam Minter, the author of Junkyard Planet: Travels in the Billion-Dollar Trash Trade, said scrap dealers were often among the first to sense a coming economic storm. Chinese recyclers had been feeling the pain since late 2011 “but you really started to feel things hurting on the streets last summer”, he said. “The raw material demand isn’t there.”
The crisis suggested a bleak economic outlook for China even if the country was not heading for “an economic apocalypse”, Minter said. “What the recycling industry is telling us is that this is going to get deeper and worse before it is going to get better. Everything I know about the industry says this is going to get worse for the Chinese economy.”
The out-of-luck recyclers of Nanqijia are far from the only hint of economic malaise in the world’s number two economy. Right across the country a mounting body of evidence points to a slowdown that many experts believe is far more severe than Beijing admits.
Christopher Balding, a Peking University economist based in the southern city of Shenzhen, said China was witnessing a rise in the number of labour disputes and strikes as well as a significant slowdown in migration to cities because of the lack of opportunities and the high cost of living.
Interesting new definition of Collapse: when you can’t even recycle the crap you’ve made previously…….
It’s too much: time to book into Fast Eddy’s Doomsday Disco!
Here at Douglas Airport, Charlotte NC, the city had a vendor provide recycling service of the trash via a contract agreement. In the news the other day the firm went belly up and is no longer able to recycle the waste at the depot. The city is taking over until another vendor is found. The price for these has dropped dramatically since the demand from China is no longer there.
Aren’t feedback loops fun. And unpredictable too.
Oh …
Passed by Congress on January 31, 1865, and ratified on December 6, 1865, the 13th amendment abolished slavery in the United States…
Replaced by coal….
Interesting uptick in coal at that time.
The early settlers to North America relied on organic materials on the surface of land for the vast majority of their energy needs. Wood, brush, and other biomass fuels were burned to warm homes, and eventually to power steam engines. Small amounts of coal were found in riverbeds and other such outcrops, but only local homes in the vicinity of these deposits were able to take advantage of it for household warmth.
During the Industrial Revolution, it was the invention of the first coal-powered, commercially practical locomotives that turned the tide. Although wood would still be used in the majority of locomotives until 1870, the transition to fossil fuels had begun.
Coke, a product of heating certain types of coal, replaced wood charcoal as the fuel for iron blast furnaces in 1875. Thomas Edison built the first practical coal-fired electric generating station in 1882, which supplied electricity to some residents in New York City. It was just after this time in the 1910s that the United States would be the largest coal producer in the world with 750,000 miners and blasting 550 million tons of coal a year.
http://www.zerohedge.com/news/2015-08-29/evolution-americas-energy-supply-1776-%E2%80%93-2014
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150828_energy.jpg
That visual must be disheartening for the Solar Jesus groupies no?