Our Electricity Problem: Getting the Diagnosis Correct

What is really wrong with our energy system, particularly as it relates to electricity and natural gas? Are there any mitigations available? I have been asked to give a talk at an Electricity/Natural Gas conference that includes both producers and industrial users of electricity and natural gas.

In this presentation, I suggest that the standard diagnosis of the problems facing the energy system is incomplete. While climate change may be a problem, there is another urgent problem that attendees at the conference should be aware of as well–affordability, and the severe near-term impact affordability can be expected to have on the system.

My written summary of this talk is fairly brief. I have not tried to repeat the information shown on the slides. This is a link to a copy of my presentation: Our Electricity Problem: Getting the Diagnosis Right

Slide 2

Slide 2

A finite world is one that is subject to limits. Its economy cannot grow forever for many reasons.

Slide 3

Slide 3

Let’s look at some examples (Slide 4) of how limits work in finite systems. Often there seems to be a change of direction.

Slide 4

Slide 4

The standard story that we hear says that energy prices can rise and rise, indefinitely. But as I look at the data, this doesn’t seem to be true in practice. At some point, there is a problem with affordability, because wages don’t rise as the price of energy products grows.

Slide 5

Slide 5

In many ways, the problems that overtake the economy are similar to ailments that beset a human being. A person can have multiple ailments, some of which grow in severity over the years. The catch, of course, is that if an early ailment becomes severe, it may kill the patient, eliminating the need to fix the later ailments.

The way I see the economy, there are many hurdles that have the potential to inflict severe damage on the economy. Slide 6 shows a few of them. Some examples of other issues include lack of fresh water and erosion of topsoil.

In my view, we are right now reaching an affordability crisis. One way it manifests itself is as high commodity prices that fall and thus become low commodity prices. Falling commodity prices are likely to cause debt-related problems because of all of the debt incurred in their production. We may find financial problems, much worse than those experienced in 2008, back again.

Slide 6

Slide 6

Many others have focused on climate change. In their view, we can extract pretty much all of the fossil fuels that are in the ground, because prices will rise higher and higher, allowing this to be done.

If, in fact, prices fall after a point, then there is a good chance that we must leave most of them in the ground because of affordability issues. If this is the case, the situation may be very different: we may lose fossil fuel production in not many years because of disruptions caused by low prices.

We often think of affordability in terms of what a gallon of oil costs or in terms of how much a kilowatt-hour of electricity sells for. While these costs are one part of the problem, a big part of the affordability problem relates to big-ticket items, as listed in Slide 7.  If customers cannot afford these big-ticket items, such as homes and cars, the economy loses both (a) the energy use that would be required to make these big-ticket items, and (b) the later energy use that these big items would require.

Slide 7

Slide 7

If we look at the data, we find that inflation-adjusted median income for families has been falling.

Slide 8

Slide 8

Part of this lower family income involves a smaller share of the population working.

Slide 9

Slide 9

When a person looks at the labor force growth split between men and women, there is a very different pattern. Men show a small downward trend over time; women increasingly joined the labor force, but this trend topped out in 1999, and became a decline since 2008.

Slide 10

Slide 10

Something we all are aware of:

Slide 11

Slide 11

Many fewer homes are now being built in the United States.

Slide 12

Slide 12

There has been a very different trend in auto purchases in the United States, Europe, and Japan compared to the rest of the world. In the developed areas, interest rates have been very low, and lenders have increasingly offered loans to subprime buyers. An increasing number of the loans are 7-year loans, and the loan to value ratio is often 125%. We seem to be creating a new subprime auto bubble. Based on our experience with subprime housing loans, this is not a sustainable pattern.

Slide 13

Slide 13

I am convinced that most economists have missed a basic principle regarding how economic growth takes place (Slide 14). I define efficiency in terms of what it takes in terms of human labor and resources to produce finished output, such as a barrel of oil or a kilowatt-hour of electricity. Are these finished goods becoming cheaper or more expensive in inflation-adjusted terms?

On Slide 18, note the change in the size of the output boxes, compared to the input boxes. Increased efficiency produces more output compared to the resources used; increased inefficiency produces less output compared to the resources used.

If an economy is becoming increasingly efficient, a given number of workers and a given amount of resources can produce more and more goods. This is good for economic growth. Growing inefficiency is a problem, because it quickly uses up both available worker-time and available resources. Many economists never seem to have gotten past the idea, “We pay each other’s wages.” Yes, we do, but if those wages are being used to encourage the use of increasingly inefficient processes, we go backwards in terms of economic growth.

Slide 14

Slide 14

If we look back historically, we can see a growing efficiency pattern with electricity, in the 1900 to 1998 period. As the price dropped, both consumers and businesses could afford more of it (illustrated with rising black “demand” curve). Part of the lower cost came from increased efficiency of electricity generation during this period.

Slide 15

Slide 15

If we look at the oil sector, since about 1999 we have had exactly the opposite pattern taking place. The cost of oil “exploration and production capital expenditures” has been rising at a rapid rate. This is an issue of diminishing returns. We have already extracted the easy-to-extract oil, and as a result, we need to move on to more difficult (and expensive) to extract oil. Thus we are becoming increasingly inefficient, in terms of the cost of producing the end product, oil.

Slide 16

Slide 16

As we move on to more expensive oil, the higher cost tends to squeeze budgets. The thing that is important is the fact that wages don’t rise sufficiently to cover the cost increase; in fact, the images I showed earlier seem to suggest that in the recent era of high prices, we have seen unusually slow growth in wages. The amount of wages is represented by the size of the circles in Figure 17.  The wage circles don’t grow.

Slide 17 shows that as workers need to spend more for oil, and for the things that oil is used to make, such as food, the discretionary portion of their budgets (“everything else”) is squeezed. This shift in discretionary spending is what tends to lead to recession. The same principle works if consumers suddenly find themselves with higher electricity bills–discretionary spending is again squeezed.

Slide 17

Slide 17

The problem that squeezes all commodities at the same time is falling discretionary income. The amount of debt that can be borrowed also tends to fall as discretionary income falls. The combination leads to falling affordability for expensive goods, like new autos and new homes.

The price patterns for commodities of many types move together, reflecting a combination of rising cost of oil (because of higher extraction costs) and falling ability of consumers to afford the high prices of these goods. I have not included food on Figure 18, but many food prices have recently fallen as well.

Of course, the costs for producers creating these commodities have not fallen proportionately, and many have huge amounts of outstanding debt. Repayment of debt becomes difficult, as prices remain low.

Slide 18

Slide 18

Back at Slide 14, I talked about increased efficiency leading to economic growth, and increased inefficiency causing economic contraction. Because our leaders have not looked at things this way, they have encouraged increased inefficiency in many areas, as I describe on Slide 19. To some extent, this increased inefficiency is required. For example, as population grows in areas with low water supplies, the need for desalination grows. Also, pollution problems increase as we use lower qualities of coal and oil.

Slide 19

Slide 19

What are the expected impacts on the electricity industry and on natural gas? Are there any workarounds?

Let’s look at a few implications of the problems we now see.

In my view, low oil and natural gas prices are likely to be a huge problem for the natural gas industry, leading to the bankruptcy of many natural gas suppliers.

We cannot expect natural gas supply to grow. In fact, we cannot expect a coal to natural gas transition because the natural gas price won’t rise high enough, for long enough.

Slide 21

Slide 21

If we look at the history of US natural gas prices (using Henry Hub data), we see that prices have tended to stay low, after the 2008 spike. This was a great disappointment to those who built new natural gas extraction capability. They expected prices to rise, to justify their new higher costs. In my view, the continued low natural gas prices to some extent already reflect affordability issues.

Slide 22

Slide 22

The Marcellus Shale was perhaps the most successful of the new natural gas production, but it seems to now be topping out because of low prices (Slide 23).

Many producers will have their lending terms reevaluated using September 30, 2015 data. This reevaluation is likely to lead to bankruptcy of some producers, and cutbacks of production of other producers.

Slide 23

Slide 23

Coal use has been declining, as shown in Slide 24. Coal has some of the same problems as natural gas, as I will explain on Slide 25.

Slide 24

Slide 24

The basic issue is that coal prices are too low for most producers. Even if a particular producer has low extraction costs, this benefit is not enough to keep producers from bankruptcy. The problem that occurs is that coal companies are locked into high cost structures because of patterns that continue to persist from when prices were high. Lease costs are high; taxes and royalties are high; often debt was entered into, assuming that revenue would remain high in the future. Now revenue is lower, and there is no way to fix the “hole” that results from low prices. Production stays high, because each producer must produce as much as possible, to try to avoid bankruptcy for as long as possible.

Slide 25

Slide 25

Coal is in a sense ahead of natural gas, in terms of bankruptcies, with big bankruptcies already starting.

With prices as low as they are, there is little chance for a new producer to come in, buy the production facilities at a low price, and restart operations. A big issue is ongoing costs such as royalty payments that cannot be eliminated. Another is debt availability to support the new operations.

Slide 26

Slide 26

Bankruptcies are likely to interrupt supply chains as well. Part of the problem may simply be the excessively high cost of credit, for those members of the supply chain with poor credit ratings. Once a supply chain breaks, replacements parts may not be available. Other services that a company contracts for with outside suppliers may disappear as well.

As I note on Slide 27, customers may have financial difficulties. Those who remain in business will tend to buy less, so demand is likely to be lower, rather than higher. Companies producing electricity should not be misled by the rosy forecasts of the EIA and IEA regarding future demand amounts.

Slide 27

Slide 27

Slide 28 shows that industrial consumption of energy products has been falling since the 1970s, as industrial production has moved overseas. Now the dollar is high relative to other currencies, encouraging more of this trend. On a per capita basis, residential energy consumption is down, and commercial energy consumption is level. It is hard to see that this mix will provide very much of an upward trend in natural gas and electricity consumption in the future. (Note: Slide 28 shows energy of all types combined, including both electricity and fuels burned directly. This approach is used because there has been a shift over time to the use of electricity. This method shows the overall trend in energy use better than, say, an electricity-only analysis.)

Slide 28

Slide 28

The major ways subsidies for wind and solar PV are available are through greater government debt or through higher costs passed on to customers. There are now getting to be pushbacks in both of these areas.

Slide 29

Slide 29

In Europe, the cost of intermittent electricity tends to be passed on to consumers. Dr. Euan Mearns put together the chart shown in Slide 30 comparing price of electricity with the per capita wind and solar PV generation installed for European countries. There is a striking correlation. Countries with more installed wind and solar PV tend to have higher electricity prices for the consumer.

Slide 30

Slide 30

Given the problem with commodity producers not being able to collect high enough prices for their products, and the large number of resulting bankruptcies, a person comes to the rather startling conclusion that the ideal structure for electricity providers in today’s economy is that of a vertically integrated utility. In other words, an electric utility should directly own its suppliers, as well as transmission lines and everything else needed to produce and distribute electricity.

Utilities have traditionally had the ability to price on a cost-plus basis. With vertical integration, the utility can use its pricing ability to keep prices for fuel producers from falling too low, and thus sidestep the problem of bankruptcies. To the extent that the required price for electricity keeps rising, it will tend to pressure discretionary spending. (See Slide 17.) But at least grid electricity will be among the last to “go” under this structure.

Slide 31

Slide 31

Black Hills Corporation lists the many electricity-generating facilities it owns (coal and natural gas), and the places it has arrangements to sell this electricity as a utility. The Black Hills Corporation indicates it has had 45 years of dividend increases. This increase in dividends is in stark contrast to the many coal and natural gas producers that are currently near bankruptcy, as a result of low coal and natural gas prices.

Slide 32

Slide 32

How does one resolve the conflict between industrial companies wanting to generate their own electricity (for a variety of reasons) and the need to have an electric grid for everyone else? It seems to me that we have to keep in mind that having an operating electric grid for everyone else is absolutely essential. Without the electric grid, gasoline stations would stop pumping gasoline and diesel. Transportation would stop. Electric elevators would stop. Treatment of fresh water and sewage would stop. Companies everywhere would lose their consumers. The economy would quickly come to a halt.

With our current affordability problems, we are in danger of losing the electric grid. That is why it is essential that those who opt out not be given too large a credit for providing some or nearly all of their own electricity. The credit given to industrial companies should reflect the savings to the system, no more.

Slide 33

Slide 33

One concern is the bankruptcy of peaker plants, if their use is significantly reduced by, for example, the use of solar PV. If these peaker plants continue to be needed for balancing purposes, this may be a problem. Another concern is the rising cost of grid transmission for those who continue to get their electricity from the grid.

Slide 34

Slide 34

To sum up, the story we read from most sources is so climate-change focused, a person wonders if there aren’t other issues that are important as well. Most observers have overlooked the importance of low commodity prices, and the impact that they can have on coal and natural gas producers’ ability to produce the fuels that are needed by electric utilities.

Too much faith is being placed in natural gas, as the fuel of the future. And too much faith is being placed on intermittent renewables, without fully understanding their costs and limitations.

I haven’t tried to address the many indirect problems arising from many bankruptcies. These may be severe.

Slide 35

Slide 35


About Gail Tverberg

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

1,657 Responses to Our Electricity Problem: Getting the Diagnosis Correct

  1. kesar0 says:

    The extent of the capital market’s support for energy over the past half-decade is laid bare in energy companies’ financial figures. According to Chanos, cash flow from operations at some of the most prominent exploration and production companies has not covered capital expenditure since 2010, meaning that they have consistently outspent income. That trend is present even at the larger “big oil” companies such as Exxon, Chevron, and Royal Dutch Shell, Chanos claims, with cash flow following distributions to shareholders firmly in the red.


    • Exactly: “Return to growth cannot happen without cheap equity and debt, neither of which exist today.”

      • greg machala says:

        Growth is essentially over (“The End Of More”). So the way I see it then: housing for everyone is over, cars for everyone is over, medical care for everyone is over, food for everyone is over, water for everyone is over and on an on. Thus, the future is no longer brighter and something to look forward to. This has huge implications. Surely the psychological impact of a worsening future will also put even more downward pressure on growth. Those dang feedback loops again.

        • Ed says:

          Now come the wars where it is decided who gets none and who gets some.

          • greg machala says:

            I am afraid you are right about wars of aggression over the remaining resources being essentially – a given. Especially if history is a guide. The two big questions in my mind is how long will the resources hold out to wage war? And second, what type of war will it be? (Nuclear?) Very uncertain and scary times we live in.

        • Fast Eddy (56,000,000 Hiroshima bombs) says:

          What you explain is really quite a simple concept to grasp — yet many people here seem unable to conceptualize what the end of growth means… what the end of fossil fuels means…

          One thing I will give to those in the mainstream who do not accept that growth has ended… that the fossil fuel era is nearly over….

          Is that if you ask them ‘what if you are wrong — and I am right on this — entertain me for a moment — what are the implications’

          Most people I have put this question to respond with ‘well — if that is the case — then we are dead’

          Perhaps it is because they understand the implications and the dire nature of what we are saying that they refuse ‘to go there’

          Whereas those living in a Koombaya world have no problem with going there… because in their world there are all sorts of work-arounds — in their world we will still be able to grow food — the spent fuel rods get chucked into the ocean or cooled with garden hoses… we still get to have cars, and iphones…. humans settle down to their little organic gardens….

          And for the first time in history we live together in peace and harmony… just as Joan Baez envisioned….

          • greg machala says:

            We will be living in peace and harmony all right. But not like Joan Baez envisioned. Perhaps living in “pieces” would be a more fitting description. Based on what I have seen of human nature, I am more compelled to believe the only way Humans will “live together in peace and harmony” is by going extinct.

          • madflower69 says:

            “Whereas those living in a Koombaya world have no problem with going there… because in their world there are all sorts of work-arounds — …”

            I think BOTH the doomers and the Koombaya’s have workarounds. They are essentially in the same camp, just different ends. The Doomers are saying there is nothing we can do, and doing prepping to get ready for it. The Koombaya’s are trying to leverage the existing societal infrastructure to avert the damage. Both take time, energy, research, knowledge, and money to develop the solution. You can’t do either overnight. I also don’t think most Doomers really want to see the world collapse, some I am sure do, but the majority of them don’t.

            The best way to avert disaster is to go with renewable’s at worst it extends the life of the existing fossil fuel infrastructure until price points are matched.

  2. Fast Eddy says:

    Caterpillar Shares Tumble After Company Misses Across The Board, Revenues Plunge 19%, Guidance Cut

    It never fails: a month ago, after showing CAT’s abysmal global retail sales, just three days later the company announced a historic business restructuring in which in addition to slashing its guidance, and confirming the China slowdown is now a recession if only in the manufacturing sector so far, it also announced it would fire 10,000, sending its stock crashing.

    Then, yesterday, ahead of today’s earnings we again showed that when it comes to global demand for CAT products, there is simply no demand, and this particular dead cat refuses to bounce, with 34 consecutive months of declining revenues as well as 11 consecutive months of doubler digit sales declines.

    We hoped this data would soften the blow from today’s CAT Q3 earnings which were clearly going to be ugly, and surely worse than consensus estimates.

    Moments ago we got said earnings and as expected, they were indeed far worse than expected, with CAT reporting adjusted EPS of $0.75 ($0.62 GAAP), below consensus estimate of $0.77, while revenue of $11.0 billion also missed expectations of $11.33.This takes place even as CAT repurchased $1.5 billion in stock in Q3, or about 75% of the total $2.0 billion in buybacks it conducted in all of 2015 (compared to $8 billion in the past three years).

    And the punchline: the company cut its 2015 EPS outlook from $5.00 to $4.60, even as it still keeps its full year revenue guidance at $48 billion adding that 2016 sales/rev is about 5% lower than 2015. It now sees 2016 revenues down 5% from 2015.

    Some more highlights:

    Q3 Revenue: $10.962 billion, down 19% Y/Y
    Q3 Operating profit: $713 million, down nearly 50%
    Q3 GAAP EPS: $0.62, down 72%
    Q3 cash from operations: $4.9 billion, down over 20% Y/Y
    Cash: $6 billion, down from $7.3 billion at the start of the year

    From the report:


    CAT death watch begins….

    OH but look…. the markets are ambivalent to the a) crash in profits and b) forward guidance that says you should expect this to worsen…



  3. Ed says:

    Can someone explain? I understand that the financial economy is going to crash for the reasons Gail shows. But then there is still the physical economy. Everything that is currently producing oil, food, water. sewage treatment, electric be it buildings, labor, skills still exists. Yes, there will be many parties that are sad or angry as their promised payments from debt instruments are cancelled. Never the less the physical economy still exists and even if labor has lost trust and business to business has lost trust there is still the government with either “the full faith and credit” or with guns to motivate those two groups to keep producing.

    Given the choice between working for government chits at the nationalized factory and receiving only enough food, transport housing to live versus killing my neighbor and eating him I will pick the former. Won’t you?

    • Ed says:

      The government does not need to keep the whole economy running just the real parts food, transport of some kind, housing, water, sewage treatment. Everything else can go. Yes, many unemployed, either given minimum government welfare to stay alive or not. If not plenty of work for security forces (police, sheriff, state police, FBI, DHS, Army, etc…). Halliburton “work” camps.

      • Fast Eddy says:

        How do you keep transport running? You need oil and gasoline and break fluid and spare parts and roads…. which require machinery to maintain ….

        How do you keep the sewer and water systems in operation — they require pumps and electricity and machinery…

        There is no such thing as BAU lite.

        This truly is a silly conversation — again — parallel universe…

        The facts don’t matter in the other universe of wishful thinking — if they do then please explain how we can overcome the problem of having no oil, gas, and spare parts for the transport system.

        • “The facts don’t matter in the other universe of wishful thinking — if they do then please explain how we can overcome the problem of having no oil, gas, and spare parts for the transport system.”

          Well, there is the problem; you are talking about something totally different. America, for example, can probably produce a million barrels of oil per day for quite a few years, on a drastically reduced system. You’re talking about zero oil and people are looking at dramatically less, but still some, oil. At least that’s my take on it.

          Plus, there is a lot of coal left in the ground – probably 60 to 70% of the starting amount. There will be quite a few people freed up from other jobs, to send down in the holes to dig out the coal by hand, if need be.

          • Fast Eddy says:

            ‘America can produce 1M barrels of oil – there is a lot of coal in the ground’

            There indeed is — and that’s where it will all remain ….

            It takes machinery to extract, refine and transport energy — BAU doesn’t offer a lite version — you either get the full fat version – or you get nothing.

            Again — facts run into wishful thinking.

            • Fast Eddy says:

              The Challenge

              Coal is America’s most important source of power. It generates more than 43 percent of all electric utility and industrial power produced in the United States. In 2010, the country’s 1,400 coal mines produced more than one billion short tons of coal. Given that it can take 3,000 gallons of water to extract, process, transport, store and dispose of every ton of coal, safely and efficiently managing the industry’s process and wastewater streams plays an important role in the economics and environmental performance of coal production and use.

              Water is a constant presence in and around a coal mine: sprayed water suppresses explosive coal dust; water seeps into mine tunnels; rain percolates through stockpiles of newly mined coal; trucks must be washed before they can be driven on highways. Submersible pumps are installed in many locations at a coal mine: within the mine itself to clear tunnels of accumulated spray water and seepage; in runoff ponds or reclaim tunnels that run under outdoor coal stockpiles; in sumps that collect material that falls off and is washed away from conveyor belts; and in truck-wash sumps.

              In most every case, the pumps are required to handle muddy, acidic slurry of water, chunks of coal and coal fines, dust, dirt and rocks.

              The debris is heavy to pump and quickly wears out standard submersible dewatering pumps. Large pieces of material that fall out of solution usually collect at the intake and will clog or destroy an inferior pump. Coal fines are extremely abrasive to the internal components of a pump and dramatically shorten the life of a traditional pump when used in such harsh conditions.

              Coal extractors, processors, transporters and electricity generators have typically used submersible pumps built for sewage to manage water in their operations, usually with poor results. Even the most rugged of these pumps are usually not up to the job, requiring the manual removal of solids from sumps, wastewater pits and holding ponds.

              Additionally, the failure rate of these pumps in the coal industry’s tough conditions has been consistently high, requiring frequent repair, rebuilding and replacement of pumps; unacceptable rates of downtime; high labor costs; unsafe working conditions and risks of regulatory noncompliance or environmentally destructive spills.

              An Illinois coal-mining company was using a sewage-style submersible dewatering pump at the bottom of a 3,000-gallon runoff pond that collects thick slurry draining from several raw and clean coal piles. The water in the pond is so abrasive and acidic that the company was getting no more than six months of use out of each pump.


              Where will the pumps come from post collapse? What about all the machinery that is involved in mining coal…. the low hanging fruit is gone…. coal mining is high tech these days….

              Let’s have a look into an old coal mine – notice all the BAU gear involved even then…. bonus song from Devo:

            • “Where will the pumps come from post collapse?”

              You think that safety and environmental protection will be priority number one in a collapse? I doubt it. No one is going to worry about dirty trucks, water leeching through coal into rivers, or about making sure the coal dust doesn’t kill some workers. Coal mining will be more in line with Chinese practices then modern Western standards.

            • Fast Eddy says:

              Flooding: Almost all working mines require pumps to remove water, with the exception of those being self-draining via deep drainage adits. Once a mine is abandoned, the pumps are usually turned off and the mine slowly fills with water until a level is reached where water can drain out.


            • The truth is probably somewhere between what the two of you are saying. To some extent, the water pumps are essential for getting at the coal. This coal will have to be left behind. Water is also used in later processing. Perhaps approaches closer to what I think of as Indian coal mining (miners carrying baskets of coal on their heads) will be used. But not very much coal can be obtained this way.

            • Good points! The amount of coal that is near the surface, that can easily be picked up and carried away for local use, is very low.

          • liamlynch101 says:

            If America had oil for a reduced system, then the Great Depression wouldn’t have happened in the first place and our economy does not accommodate for drilling at all so once the economy goes, there will be absolutely no drilling, at best, places that have oil will be military checkpoints and people will be fighting to get to them.

          • Transportation of coal is a huge problem. This is what limited its use, back at the time of World War I. There will be no point in digging up more coal than can be used in the immediate local area. Most of the coal in good areas for transport by water has already been extracted. We do have a lot of coal left, but it tends to be in areas which are too cold for farming and have other deficiencies. I expect that complete local systems will not be able to be made in most of these areas.

            • greg machala says:

              Thank you! Diminishing returns is impossible to avoid. One has to go farther and farther out and deeper and deeper down to get the same amount of resource. This is impossible to get around on this planet we are on. There is no solution because there is no problem, it is a predicament.

      • Rodster says:

        Just to give you an idea at how serious the thought is of a global economic collapse. Back in 2008 Heny “Hank” Paulson told George W Bush that if the TBTF Banks were not bailed out the global economy would have collapsed and these are his words which were penned in his book, “Martial Law would have been enacted throughout the USA”. Everything would have come to a complete STOP.

      • dolph9 says:

        You are basically right, Ed.
        Let’s not jump too far into the future and then mistake that for the present day. What matters is the vision of the decline. This should give us the confidence to make our own decisions in the here and now. One must remain flexible shed unnecessary weight and responsibilities and forge one’s own path. It’s all going to go to pot. 100% guaranteed. Knowing that, what would you do?

        Earlier this year I quit a six figure job with benefits, without having another job lined up. Why? Because everybody around me sucked and I could see where it was going…I would be the stoic fall guy for all of the mistakes. So I flew like a bat out of hell. I know what’s coming, thanks to Gail and many others.

        Being too responsible is a mistake, because you never actually know what’s going to happen with the system, and the government will just bail out some sectors anyway, and inflation/war/taxes/confiscation and general chaos could ruin all of your plans. Sad to say but true. Being a resourceful ant is not always the good idea! Because in certain times you really are the sucker, and with the sheer amount of parasites in the world today, this is a time like that. Consider what happened to all those good, responsible, hard-working Germans in WW2. Consider what’s happening to the American middle class today. Don’t let it happen to you.

        But you don’t want to be the grasshopper either. You could really find yourself in dire straits, with few options, in just a couple of years.

        The independent road is the best. Carefully think about your options, diversify a bit, but make sure you absolutely understand what’s going on. If you don’t, forget about even pursuing it. That’s what makes self-knowledge, relocation etc. so essential. It’s going to be really painful to be stuck out of place. If we’re all going to be stuck, better to do so where you are comfortable. If you’re going to do it, do it now, without delay. If you sit around you’re at the mercy at whatever the local warlords and politicians, who are likely to be useless, want out of you. Make sure you absolutely understand what’s expected of you, and do just that, no more, no less. Make sure the people around you are solid, and always protect your reputation. If you find something good stick with it and hope for the best, if not, quit and move on, 10, 50 times if you have to.

    • Fast Eddy says:

      “or with guns to motivate those two groups to keep producing”

      Not possible on a very large scale — we have a system that relies on a global supply chain — you can’t command an entire supply chain — it’s too big and too complex

      However what you can do is command slaves — the men with the guns will without a doubt use them to motivate others to keep producing…

      Now who will they target first?

      There will be very little if any food available post collapse.

      The obvious targets will be the ‘islands’ where people are growing food…


      • greg machala says:

        “or with guns to motivate those two groups to keep producing” –
        You cannot force more net energy out of a system. Print money yes. Print net energy, not so much. I agree attempts will be made to keep some folks comfortable at a horrific costs to others. However, the costs will likely prove fatal to most folks. I think any attempt to maintain BAU-lite (for the elite) will be short lived. It may somewhat work after a massive die off takes place to bring the net energy equation back into balance.

        • liamlynch101 says:

          Hahahaha, nope, not going to happen. Everyone will be dead by that stage. No BAU lite for anyone because they’ll either die by 2020 due to the radiation killing all the trees and animals, thus reducing oxygen, or by 2030 as a result of our seas belching hydrogen sulphide. Get over it, there’s nothing left to hope for.

          • I am sure there are some biological creatures that will live on whatever nature provides, whether it is hydrogen sulphide, too much CO2, or too much radiation. The earth will adapt; the question is whether humans will be among the surviving species. Of course, humans lived through ice ages before. Some humans may very well live through some very changed conditions–perhaps in the parts of the world that are least affected.

    • If there is no way to pay workers, what do businesses do? If there is no way to buy replacement parts, how does production of any kind continue? The physical economy has a very direct relationship to the financial economy. It is what pays our paychecks and allows us to buy goods from the store or on Amazon. Governments tend to collapse as well, as the financial institutions fail. You can’t count on governments to save you. They are part of the problem, not part of the solution. The exist only on debt.

    • greg machala says:

      ” I understand that the financial economy is going to crash for the reasons Gail shows. But then there is still the physical economy. ” The financial economy depends on the physical resource base that underlies it. Today, the physical resource base also requires the financial economy to fund extractive processes. The two (finance and resources) are locked in fantastic dance with each other. Without the other both cease to function. What is left is subject to decay and scavenging. I think that energy and resource extraction must be profitable both in net energy terms and financial terms for anything approaching BAU to continue. Historically there has been no major collapse of an energy producer. Exxon, Mobil, BP, Koch, Shell have always been the envy of the world. They just don’t loose. What would happen if Exxon announced it is bankrupt and insolvent? It is one thing to print money but quite another to produce net energy from oil when there is no net energy left in oil extraction.

      • madflower69 says:

        ” They just don’t loose. What would happen if Exxon announced it is bankrupt and insolvent? It is one thing to print money but quite another to produce net energy from oil when there is no net energy left in oil extraction.”

        Their assets would get sold in bankruptcy. The trick here is to have a way so BAU doesn’t collapse because they hit the wall with extraction.

        You have two options:
        A. Slowly build up an arsenal of tools using available technology and continuously improve it, as we slowly back away from the problem.

        B. Wait until it actually happens, and crash hard, because you don’t have the technology, or resources to fix it when it does happen.

        I think most people prefer A and that is what we are doing. But I know there are some crazy people who want mass genocide, and would go with B even though their odds of living are fairly slim.

        • Göran Rudbäck says:

          Diminishing flow of energy sources of high energy density, cannot be exchanged less

  4. Fast Eddy says:

    The IBM unbeat goes on. Its sales plunged again for the 14th straight quarter while its net income was down by 14% from last year. Even management’s dodgy ex-items earnings guidance for 2015 was lowered by 6% with only one quarter to go…



  5. Fast Eddy says:

    Nyrstar NV, Europe’s largest refined-zinc producer, plunged the most since its shares began trading eight years ago after it said the mining business is being challenged by the rout in metals, raising the prospect of another share sale.

    The stock slumped 27 percent, the most since listing in October 2007, to the lowest in six years. The company is evaluating debt and equity-market alternatives to address a 415 million-euro ($463 million) bond maturity in May 2016, while ruling out restructuring of the debt due next year, it said Thursday. The producer’s investment in smelting operations in Australia will cost more than previously forecast, it also said.

    Nyrstar is among producers battling lower commodity prices with zinc down 20 percent this year on weakening demand from top consumer China. It plans to cut costs and capital spending in its mining business by 40 million euros a year and said it doesn’t rule out more suspensions beyond its Campo Morado and Myra Falls operations, according to a statement Thursday. Suspending additional mines may result in extra impairments by the end of the year, Chief Executive Officer Bill Scotting said on a conference call.


  6. Light bulbs going on recently on places..
    Check these very good comments on deflation as affordability issue and more by id “Seer” and id “HardlyZero” bellow this linked article. It’s very short summary quite in line of the host of this blog.

    ok for the lazy clickers one quote:
    “I’d only add that it is illogical to believe that TPTB want to run the presses. That is, it is my belief that they are only doing so in order to prop up a global market that is wanting to collapse. While anything can be seen a success given a short enough time-frame, the fiat printing, as history tells us, is but a terminal condition (the long-term won’t deem it a success).

    Over-saturation. Changing demographics. Growth as we’d known it, and predicated the future upon, won’t be back any time soon (and likely won’t ever).

    Wait until economies of scale in reverse really start kicking in. THEN you’ll see real PRICE INFLATION (as a measure of “affordability”); this will be the final burn-out phase- a last-gasp effort to keep the large production machines cranking away, until, that is, there’s not enough buyers to support the operation of those machines: keep in mind the scale of raw materials extraction- without the scale of demand here the economies of scale will really go negative (thereby feeding price pressures on manufacturers- margin compression, big time).”

    • Fast Eddy says:

      A bit more from that…..

      And today we’re up to our necks in deflation, and nobody seems to notice, or call it that. Likely because they’re all waiting for CPI consumer prices to fall.

      But when you see that Chinese producer prices are down 5.9%, in the 43rd straight month of declines, and Chinese imports are down 20% (with Japan imports off 11%), don’t you hear a bell ringing? What does it take?

      If the dramatic fall in oil prices hasn’t done it either, how about steel? How about the tragedy British steel has been thrown in, how about the demise of Sinosteel even as China is dumping steel on world markets like there’s no tomorrow?

      Credit Suisse’s latest global wealth outlook shows that dollar strength led to the first decline in total global wealth (which fell by $12.4 trillion to $250.1 trillion) since 2007-2008.

      [..] from HSBC: “We are already in a global USD recession. Global trade is also declining at an alarming pace.

      According to the latest data available in June the year on year change is -8.4%. To find periods of equivalent declines we only really find recessionary periods. This is an interesting point. On one metric we are already in a recession. [..] global GDP expressed in US dollars is already negative to the tune of $1,37 trillion or -3.4%.

      How about companies like Walmart and Glencore, just two of the many large entities that have large troubles? These are not individual cases, they are part of a global trend: deflation. As evidence also by the increase in US corporate downgrades and defaults:

      Moody’s issued 108 credit-rating downgrades for U.S. nonfinancial companies, compared with just 40 upgrades. That’s the most downgrades in a two-month period since May and June 2009, the tail end of the last U.S. recession. Standard & Poor’s downgraded U.S. companies 297 times in the first nine months of the year…



      We are going to get our 2008 moment but this time on steroids…. and the central banks will be powerless to do anything about it — because they have used up all their ammunition trying to prevent that moment.

      I am waiting anxiously on the next magic trick…. if there is one it better come soon….

    • One major reason that the world economy cannot shrink is the problem of economies of scale going in reverse. We are already seeing it happen now in the third quarter financial results. If sales are off, there is an immediate need to sell assets and lay off workers. Ouch, especially if there is no longer a market for a particular type of assets.

  7. Stefeun says:

    “Pundits who insist that global collapse can still be avoided, must explain to us in detail just exactly how this can be achieved given our current circumstances. When challenged on specifics, those cornucopians paint vague unrealistic pictures of magical sudden worldwide cessation of industrial/agricultural emissions (which magically does not result in economic collapse, food shortage and dieoff), magical cessation of conflicts, voluntary population stabilisation then decline to a steady state, equitable global distribution of resources, discovery of unlimited unpolluting energy and free movement of all refugees, welcomed without restriction into all the richer countries. Furthermore the environment magically repairs itself despite having 10 billion people consuming tremendous global resources by mid century. Yeah, right.”

    “The chance of a single particular improbable catastrophic global event occuring in the short term is low. However there are numerous low probability but high impact potential events, any one of which can cause a teetering complex system to crash suddenly and completely. Hence in aggregate, the likelihood that any one (of many as-yet unspecified improbable events) may occur is actually quite high.
    A chain is only as strong as its weakest link. For our complex technological society to function, it is necessary that every one of the thousands of links holding our system together remain intact, however many of those links are now very weak indeed and are on the verge of breaking.”

    These are excerps from a post by Geoffrey Chia, published on the Doomstead Diner:
    Thanks RE!

    • Stilgar Wilcox says:

      There’s another possibility that is even worse. Imagine no catastrophic event occurs, but rather the entire world ecosystem and our world economy slowly degrade into extinction and obsolescence. Maybe it’s not like a car in which something catastrophic occurs and it suddenly no longer works, but more like chalk that gets worn down to nothing but dust. That is the process occurring at present – no catastrophic conclusion, just using everything to the extent it helps make people wealthier. Of course some event could take place to speed the descent or even shake it into obsolescence faster, but what would that be? The trouble is humans are great at using whatever is available to the extent possible then moving on to somewhere else to get more stuff to do more resource consumption. Look at Easter Island. They used every single tree until catastrophe, but that was an island with limited resources. Now we are using the resources of the whole planet at breakneck speed. I’m not sure it collapses as much as it changes shape along with the rules as we whittle it down to the nubs.

      • Fast Eddy says:

        The thing is…

        Rusting cars don’t need to eat… don’t die of disease… don’t murder one another… and are immune to the effects of radiation poisoning….

      • Ed says:

        Stilgar, yes, I think there are lots of numbers between 100% and 0%.

      • “Look at Easter Island. They used every single tree until catastrophe, but that was an island with limited resources. ”

        That is probably a misunderstanding of the situation. The real problem is that either the polynesians brought rodents with them as a food source, or they were introduced by European sailors. The rats ate the nuts, preventing new trees from growing, leading to deforestation.

        Then, Peruvian slavers invaded and sent everyone off to work the silver mines. Somewhere along the way there was a disease outbreak or two as well – from European illnesses I think, although possibly a spongiform from eating dead people.

        • Stilgar Wilcox says:

          My point may have gotten lost a bit (which has never happened on a thread – lol), but instead of an island of resources there is an entire planet and that instead of thinking of a possible catastrophe (like a financial crisis or any other) ending the human toll it’s taking on the planet and somehow stopping BAU, it instead means whatever resources are left after any possible debacle will simply be competed for by new rules in a fresh start.

          Instead of being something that can break, it means it’s something that can flex into a new base from which the Monopoly game simply starts over. Albeit there may be fewer people and resources from earlier, but I think we’re going to find that people are always willing to partake in the game no matter how many times the rules change or what resources remain available. In this context the planet gets whittled down to a dust bowl with few remaining species.

          That is unless new rules take into account the value of a sustained planet. So far we haven’t seen that but as catastrophe’s occur in the future, the density of mankind’s grey matter may actually get penetrated sufficiently enough to establish a more sustainable way of living for those remaining. I don’t know if that can happen because humans tend to think in terms of ‘what can I get for me?’, instead of ‘what’s best for all of us?’ in the long term, but it is possible after suffering the consequences of substantial earth bio-systems degradation in which the people can readily see that not only is their std. of living dropping, but it’s moving in the direction of being quite small, so the questions start to abound as to what can be done about it? In other words humankind as a whole needs to think completely differently. One can only wonder if that is possible.

          • liamlynch101 says:

            That’s cute,sustainability is non existent on a nuclear wasteland, the.Spent fuel rods will kill everything so.nope, no such.thing as a new system, just one that’s on fire

            • Stilgar Wilcox says:

              Many people were certain that nuclear weapons would lead to an extinction event. It hasn’t so far due in part to MAD, mutually assured destruction. In fact, I know someone in my hometown I grew up with that did not pursue a career because he was so certain of an all out nuclear exchange. I told him one day when I bumped into him many years later, “I don’t think it’s going to happen”, and I could see the final acceptance of that in his eyes along with the regret of having presumed something that had an ill effect on his life of an incident that never came to pass.

              In the case of nuclear power; why would people ignore something they know would lead to their mutually assured destruction? Even if there is a financial collapse and ensuing mayhem for a time, and a population reduction – even while all that is going on whatever effort needed to assure the plants shut down as needed would occur. Otherwise it would be futile to even till the soil to grow food locally or otherwise. It’s called prioritization. Everybody in a job knows the meaning, and as a species we certainly would not fail to prioritize safe shut down of nuclear power plants.

              Obviously there is a point in time when the oil age ascent will transition into a descent, slow or fast. The population will drop. Globalization will veer into localization but not instantly and as it does priorities will still be set and reset.

              Sustainability is a word we will have to accept sooner or later. Even if it takes the wholesale loss of billions of people, at some point human impact on the planet must be sustainable or there is no long term. And some will argue there is no long term, but after looking at this stuff since 05 it just seems like the idea of an end, is not realistic. It’s fantasy and the reason why is because there is more fluidity to our existence than we think. We just had a fire rage through our community; the Valley Fire. It seemed like the end of the world, but although near 2000 structures burned, things are already getting back to normal. It happened on Sept. 12th. That’s less than 2 months ago. So how long after a financial collapse would things resume? Even if it was 2 years it would still get going again for the survivors. Look at Dresden, Tokyo, Berlin, Stalingrad – they were rubble, but now they are flourishing cities.

              Look at Rome, Italy 2,000 years ago. It collapsed, but people kept going. Now they make money selling pictures of phony gladiators posing with tourists.

            • Fast Eddy says:

              “In the case of nuclear power; why would people ignore something they know would lead to their mutually assured destruction?”

              Two things at play:

              ‘We can ignore reality, but we cannot ignore the consequences of ignoring reality.’



              So we have a situation where we believed we could do anything — because we are the great species….

              So what spent fuel ponds must have fossil fuels — or they extinct us — all we need to do is invent a new technology to replace fossil fuels — or invent a way to render use fuel rods inert.

              Well — we’ve failed.

              And the consequences of ignoring reality are about to be very very dire indeed.

              In fact they are going to wipe us out and almost certainly destroy the planet.

              And to think — humans were almost wiped out by climate change thousands of years ago (see Pandora’s Box)… it is estimated we were down to a couple of thousand … mother earth almost go rid of us…

              It would appear that mother earth does not always bat last…. we get the last swing …. and we are about to hit the ball out of the park….

            • Ed says:

              Stilgar, politician currently use sustainability to mean continued growth but no obvious environmental damage. When they finally mean no growth then we start.

            • Stilgar Wilcox says:

              I don’t see a reply after fast eddy or ed, so I’ll post a response here and it shows up wherever.

              Ed, I realize what we are doing is not sustainable. My point was it must become sustainable somewhere along the line or there is no long term. We either do whatever is necessary to achieve sustainability or nature will hand us that card.

              Fast Eddy, “And to think — humans were almost wiped out by climate change thousands of years ago (see Pandora’s Box)… it is estimated we were down to a couple of thousand … mother earth almost go rid of us…”

              The Toga super volcano event – yes, that’s true. Well since then just like a virus we’ve gone to every corner of the planet. Look, I appreciate that you and many others see a sudden final end at some point. I was very dystopian in my many posts on this site, but lately I’ve just gotten into seeing things a bit different. We’ll see soon enough I suppose.

            • Ed says:

              Stilgar, I was not disagreeing with you. I was just complaining about people, not you mostly politicians, who consciously misuse a perfectly good and honest word.

            • while MAD—Mutually assured destruction—-is literally mad—it has happened hundreds of times already.
              just on a smaller scale.
              The japanese started it with their Kamekaze planes, and were fully prepared to destroy themselves in the face of a land invasion in 1945.
              Hitler ordered mass destruction in the face of advancing armies in 1945—luckily many of his generals simply ignored his orders.
              Suicide bombers regularly engage in MAD—who knows what’s in their minds at the button pressing moment—but the willingness to do it is certainly there. As 9/11 clearly shows
              Now put a nuke in the hands of one of those guys, seal it into the hull of a small cargo ship, sail it up the Hudson or the Thames—and 70 virgins stand ready and waiting while London or New York lie in smoking ruins

        • Networked systems fail in unanticipated ways. This is an example of what happens.

          • Stilgar Wilcox says:

            “Stilgar, I was not disagreeing with you.” No problem Ed. Sometimes things get lost in translation on a thread. I agree politicians misuse the word.

            End of More – I can’t see kamikaze’s as an example of MAD, because only some perished as opposed to two entire countries which could occur in a big enough nuke exchange. And certainly the possibility of a MAD exchange is possible, but it hasn’t happened. Remember when Bush jr. was prez and India and Pakistan were exchanging angry comments and Bush said something to the effect of, “Everybody get out of the way of India and Pakistan. They may blow each other up.” A day or two passed and both countries made statements to the effect of, “We’re not going to do that”, meaning no nuke exchange. That’s the deterrent of Mad. Putin recently recited that idea as he admonished Western attempts to install anti ICBM missile launchers close to Russia. He said that would not eliminate the idea of the West avoiding a bad outcome in a nuke exchange. In other words MAD was still in effect.

            • i was making the point that the mindset is there, given the means.The Japanese ‘mindset’ had planes to carry it out, so did the 9/11 pilots and all the suicide bombers in between.
              It’s just a matter of scale
              I specifically didn’t say ‘nuke exchange’ I said seal a nuke into the hull of a small ship and sail it into the heart of a capital city.
              Given access to nukes, you can be certain that this would happen
              retaliation would be impossible—you wouldn’t know where it had come from

  8. Electrochemical energy storage (i. e., lead-acid battery, lithium-ion battery, etc.) is greatly inferior to chemical energy storage (i. e., gasoline, diesel, gunpowder, etc.). As an example see the use of lead-acid batteries aboard US Navy Fleet submarines in WW2. Lead-acid batteries have been improved a little since WW2 but this still provides a good example of how much better chemical fuels are versus batteries.

    • Each submarine had 2 batteries.
    [Note 1: All ratings are the war-time ratings. In peace-time the ratings were lower to prolong battery life.
    Note 2: Only battery cell weights are quoted below. No figures are given for wiring, controls and monitoring, structural installations, etc.]
    • Each battery consisted of 126 individual cells
    • cell mass: 750 kilograms
    • cell dimensions: 137.16 X 38.1 X 53.34 cm
    • cell volume: 278.7 liters
    • nominal cell voltage: 2.1 VDC
    • Battery voltage range: ~210-355 VDC
    • Battery ratings:
    • 1 hour: 5,000 Amps
    • 3 hours: 2,500 Amps
    • 10 hours: 1,000 Amps
    • Battery energy capacity at the 1,000 Amps for 10 hours rating:
    • 2 V X 1000 Amps X 126 cells X 10 hours = 2,520 kW-hours per battery
    • Specific Energy = (2,520 KW-hours X 3600 seconds/hour) / (126 X 750 kg) = 0.096 MJ/kg
    [Note: current references show lead-acid battery Energy Density as 0.15 MJ/kg, considering the sheer size of these submarine batteries this example is not too far from modern lead-acid batteries).
    • Energy Density = (2,520 kW-hours X 3600 seconds/hour) / (126 X 278.7 liters) = .258 MJ/liter.
    • The specific energy of diesel fuel is 45.3 MJ/kg.

    The ratio of specific energies of diesel fuel to lead-acid battery is: 45.3/0.096 = 472. Or, put another way, the 94,500 kg mass of each battery provided the same energy as 200 kg of diesel fuel. The 189,000 kg of both batteries provided the same energy as 400 kg of diesel fuel.

    In the past ten years the price of 99.97% pure lead has varied between $999 and $3,720 per metric ton. Assume that 90% of each cell is lead 675 kg). Then the raw material costs, for the lead alone, of 2 of these fleet submarine batteries would have been from $170,000 to $632,770 over the past 10 years. In September 2015 pure lead was $1,680 / metric ton, or $285,768 for two batteries.

    Today the retail price of low-sulfur diesel fuel at the pump here in Florida is $2.47 gallon (~$0.805 per kg, assuming 3.07 kg / gallon). Or, $322 for 400 kg of diesel fuel, retail. Comparatively, the ratio in raw material costs, using the Sept 2015 cost of $1680/metric ton, equals $285,768/$322 = 887.

    That should give a good example for why I am extremely skeptical about any solution to providing electricity from the grid that requires electrical storage. The cost in raw materials alone are staggering.

    • madflower69 says:

      “That should give a good example for why I am extremely skeptical about any solution to providing electricity from the grid that requires electrical storage. The cost in raw materials alone are staggering.”

      Everyone is skeptical. 97% of the Lead Acid batteries are recycled in the US. There is no reason why newer technologies, can’t approach that number. Which doesn’t help costs for the first generation, but it helps down the road. Second people are trying to get the most of common materials rather then exotic ones.

      It is far less of an issue then you are making it out to be though, the average number of cycles for lead batteries is like 300, and lithium batteries is around 1000. Flow batteries are in the 10k cycle range, and don’t have issues with 100% draining of the power from them like Lead Acid, lion, NiMH, etc. You can beat the crap out of them, where as Lead Acid, lion, NiMH batteries, you have to be careful about both charge rates and discharge rates, and how much draining of the batteries you do.

      Your point about power density is valid, however, part of that is made up from the more efficient use at the end point. Like a diesel engine is ~35% efficient, and an electric motor is 90+% efficient, so equivalent battery for the system would only need to be ~1/3 the density of diesel to get the same performance out of the drive train.

      The OTHER place batteries really can pay for themselves is on the grid, where density isn’t really an issue. People are talking about compressed air storage, and pumped hydro storage which are the same or usually less efficiency then batteries, and don’t even come close to approaching the same density.

    • Gregory Machala says:

      Nice work Gregg Armstrong! Your numbers indicate that fossil fuel energy stores are more dense than battery storage base on raw material costs. If that is indeed true that would imply that solar PV/Wind with battery storage would be even less affordable because one has to add in the raw material costs of the panels and turbines as well. This affordability issue seems to be occurring right now in Germany and Spain as they attempt to move to more solar PV and wind. If going to a less energy dense fuel is then undesirable, logically moving to an energy source that is more energy dense than fossil fuels is needed. What would be a more energy dense fuel source than fossil fuels and one that is available right now that works in our current system of transportation, manufacturing and industry?

      • “If going to a less energy dense fuel is then undesirable, logically moving to an energy source that is more energy dense than fossil fuels is needed.”

        Only under the current situation where everyone is trying to compete, and production is easily capable of growing much faster than demand. Obviously, if one country makes electricity for $0.05 KwH and another for $0.25, the country with the expensive energy is not going to be able to compete very well at anything that uses energy.

        “What would be a more energy dense fuel source than fossil fuels and one that is available right now that works in our current system of transportation, manufacturing and industry?”

        The first part of your question has a few obvious answers – coal, nuclear. The “available right now” addition makes it more difficult, since there is no instant turn key solution.

      • Gregory Machala wrote:

        “Nice work Gregg Armstrong! Your numbers indicate that fossil fuel energy stores are more dense than battery storage base on raw material costs. If that is indeed true that would imply that solar PV/Wind with battery storage would be even less affordable because one has to add in the raw material costs of the panels and turbines as well. This affordability issue seems to be occurring right now in Germany and Spain as they attempt to move to more solar PV and wind. If going to a less energy dense fuel is then undesirable, logically moving to an energy source that is more energy dense than fossil fuels is needed. What would be a more energy dense fuel source than fossil fuels and one that is available right now that works in our current system of transportation, manufacturing and industry?”

        Thank you. I have been trying to answer that same question for many years. Unfortunately, the answer is that I have to date found nothing that even comes remotely close to fossil fuels for transportation purposes. The reason that we use fossil fuels for transportation, among a myriad of total uses, is that “everyone” collectively decided that they were and are many orders of magnitude better than any alternative. It was not the result of a conspiracy against electricity. It’s also why high real crude oil costs are so detrimental to the world economy and especially for large net importers of crude oil.

        Bear in mind that there are no usable AND naturally occurring electrical energy reserves within or upon the Earth. There is lots of electrical energy in lightning. But, it’s unusable. Even if we eventually discover some way to tap lightning we will still face the massively expensive storage problem. In total there are enormous amounts of electrical energy in space, in the solar wind, in Intra-Galactic Space and inter-Galactic Space. But, it’s volumetric density is probably meaningful only in terms of charged particles per cubic meter. Excepting for that electrical energy derived from renewables all electrical energy sources are from heat engines. Even a nuclear power plant is a heat engine though the fuel or energy source is from nuclear fission.

        Our civilization’s transportation fuel needs have been optimized for fossil fuels. If you think otherwise, calculate the cost of ethanol per gallon derived from, say, distilling 97.3% ethanol from really cheap 5% beer. At Wal-Mart a big case of beer sells for $0.75 per bottle or less. But, do your calculations assuming a wholesale cost of one-tenth of the retail cost or $0.075 per bottle. [Don’t forget that a significant fraction of the resultant ethanol has to be used in the distillation process. Also, realize that without the fossil fuel natural gas the food crop will be grown without using natural gas-derived ammonia fertilizer and harvested without fossil fueled farm equipment. That’s right. Crop yields crash by 80% or more to the pre-ammonia fertilizer yields of 1910 or before.]. That will give you an idea of the “replacement cost” of fossil fuels. I’ve performed that exercise and even at 7.5 cents per bottle it’s a “mind bending” cost. At the very least, it points out that turning foodstuffs into ethanol to burn as a transportation fuel is criminal. By the way, storing energy mechanically, as in a massive flywheel spinning in a vacuum, is similarly futile.

        Just in case you have ever wondered why today’s American infantryman is not packing around a high-powered laser rifle: the specific energy contained in gunpowder is similarly orders of magnitude greater than electrochemical energy storage. Laser weapons rated at 30 kilowatt are already part of the weaponry aboard one US Navy warship. Soon there will be 50 kW, 100 kW or higher power lasers. But, they require their own dedicated diesel generator because they require more energy than today’s warships electrical power plants can quickly deliver on demand.

        In summary, I am not at all optimistic regarding our collective future.

  9. Gregg Armstrong says:

    We should not get sidetracked with concerns regarding climate change with respect to “Our Electricity Problem”. That is because the Global Climate Models used by the UN IPCC and Anthropogenic Global Warming alarmists are faulty. They got the basic physics right but all of their model architecturally suffer from 3 major problems: 1) incorporating partial derivatives of Dependent variables (a basic no-no); 2) the models only consider feedbacks from surface temperature hence missing all other feedback effects; 3) all radiation imbalances are treated the same (or “The Sky is not the Ground”). If you want to know more and also discover details about the first “black box” climate model that shows that CO2 has a minor (~20%) effect on climate, see the work of David Evans at:


    • Rodster says:

      And one should not forget or discount the effects of Geengineering and what it has done to the environment and climate system.

    • madflower69 says:

      “That is because the Global Climate Models used by the UN IPCC and Anthropogenic Global Warming alarmists are faulty. ”

      Even if the models are faulty, the trend is actually real.

      It is like trying to describe a play by play account of a game, from a box score.
      You know the final outcome, but getting all the details as to what actually happened in the game is a bit trickier. And maybe your only other data point is crowd noise from the stadium.

  10. Suppose inefficiency increases in public services like health and education. This could actually lead to greater quality and value without a bigger waste of resources. This is because more teachers spending time teaching would benefit students. More nursing care for hospital patients could improve health care without a concurrent increase in resources. People rather than machines make a much bigger difference when it comes to services like education and healthcare.

    Wouldn’t organic farming be more inefficient because it requires more labour, while permaculture would be even more inefficient because it limits the use of fossil fuels? But at the same time these forms of agriculture build soil, water retention, crop variation, bring together animal husbandry and composting and lead to more local knowledge. It’s more efficient to use big combines and tractors and flatten the fields, and monocrop as far as the eye can see, but the problem is that you have to keep replacing the lost soil, and the chemicals every year. Whereas organic techniques can build up and improve the quality of the soil over time which means less need of energy and resources to keep things going.

    The problem with “inefficiency” is it is kind of a weasel concept. It’s a way of ignoring foresight quality and resilience.

    Self sufficiency is more inefficient, it is more labour intensive than the hyperspecialization of the global free trade, but it uses less fossil fuels and leads to a better quality of life

    • You are right. Inefficiency has lots of nice characteristics, besides giving a lot of people jobs. Organic farming is inefficient–that is why more farming is not organic. Permaculture is inefficient compared to modern factory-farming.

      What we need is a system that works. One system that works might be very simple homes, built with $20 barrel oil, a husband that works and a wife that stays home with the kinds, a car that doesn’t least very long, but is affordable.

      As we reach diminishing returns, we figure out ways to work around the problems we have. The problem though is that while it looks like we can figure a way around the problem such as the solutions you suggest, in fact, it would take way too many workers, working for far too many hours, growing food, teaching school, and taking care of those who are ill. The system as a whole wouldn’t really work–there would not be enough food produced by such a system (because they are so inefficient). Many necessary functions, such as paving the roads wouldn’t happen, because there are so many workers working at teaching, health care, and growing food. As a result, healthcare and education workers couldn’t really get to work, and they wouldn’t find enough food to buy in the stores. Workers transferred to healthcare, education, and growing food using permaculture would find it impossible to pay of loans for property and automobiles. The system wouldn’t really work.

  11. – Fusion energy could be the future: https://www.dur.ac.uk/research/news/item/?itemno=25499

    “Fusion energy offers the tantalising possibility of clean, sustainable and almost limitless energy. But can it be an economically viable option?

    Research led by Durham University, in collaboration with the Culham Centre for Fusion Energy, has looked in-depth at the economics of fusion energy.

    The team calculated the cost of building, running and decommissioning a fusion power station and how this compares to current fission nuclear power plants.

    They concluded that a fusion power plant could generate electricity at a similar price to a fission plant.

    Professor Damian Hampshire, of the Centre for Materials Physics at Durham University, who led the study, explains: “Obviously we have had to make assumptions, but what we can say is that our predictions suggest that fusion won’t be vastly more expensive than fission.””

    – Optimal design of a toroidal field magnet system and cost of electricity implications for a tokamak using high temperature superconductors: http://www.sciencedirect.com/science/article/pii/S0920379615301526

    • Unfortunately, we are having a hard time affording nuclear fission now, with its high cost structure. We need something cheaper.

      • “Unfortunately, we are having a hard time affording nuclear fission now, with its high cost structure. We need something cheaper.”

        Only to maintain the present financial system. When the current financial system inevitably collapses, perhaps we can rebuild a new financial system and economy around energy that is ten times more costly. That might make a lot of alternatives viable.

        • An economy with energy that is ten times more costly wouldn’t support many people. It would be worse than going back to unleveraged human labor, its cost would be so high. I think we would probably find energy that is 10 times as expensive to be basically worthless.

          • Ed says:

            Gail, I certainly agree with “more costly” but I am thinking it is more like 3x. 10x seems worse than it really is.

  12. Rodster says:

    I’m still amazed TPTB tried to call it the Great Recession post 2008 instead of what it actually was a global depression.

    “If Caterpillar’s Data Is Right, This Is A Global Industrial Depression”



  13. madflower69 says:

    “would we be back in an ice age? ”

    I don’t know. I don’t think it is worth trying to condone heavy fossil fuel use because it might have stalled an ice age, or even because it was easier to tax.

  14. Fast Eddy says:

    September Was the Most Extreme Month in 136 Years of Heat Records

    It doesn’t get any hotter than this… yet.

    Last month was the hottest September on record for planet Earth, according to data released Wednesday by the National Oceanic and Atmospheric Administration. Not only was it a record-breaking September, but it was the largest jump from what’s considered normal for any month ever measured.

    In 136 years of global temperature data, we are in uncharted territory. This new milestone follows the hottest summer on record, the hottest start to a year on record, the hottest 12 months on record, the hottest calendar year on record (2014) and the hottest decade on record. And this year’s extremes are likely to continue as a very strong El Niño weather pattern in the Pacific Ocean continues to rip more heat into the atmosphere.


    Ho hum….

    I know — why don’t we solve this by making 5 million solar panels and covering the Gobi desert with them and connecting them to the factories in China…

    First off —- we would need to order 50,000 shiploads of lignite coal (the dirtiest…) from Australia to provide the electricity to smelt the various metals that go into making solar panels….


    Did someone say something? What’s that? Burning so much lignite will make the problem we are trying to solve worse?

    I suppose you have a point —- so what is your solution then?

    I know… let’s just stop burning fossil fuels — outlaw them!

    What’s that…. our economy runs on fossil fuels so if we don’t burn them our economic system collapses?

    I guess you also have a point….

    What to do what to do….

    • madflower69 says:

      “What to do what to do….”

      The more panels you implement, the less coal you need to burn to run the arc furnace.
      Or what we are currently doing is using less fossil fuels, but not in the same locale as the furnace.
      So we are burning coal to make the electric for the furnace, but we are removing FF use elsewhere on the planet. It is primarily based on economic affordability right now.

      It sounds kind of crappy, but I don’t see another way.

      The other way is to never reduce FF use until we collapse because we are out. We end up burning even more FFs.

      • Actually, the more panels you implement, the higher the cost of the system, and the less electricity businesses use to leverage human labor. Economic growth slows even farther than it already has, pretty much leading to collapse. It is the collapse that brings an end to fossil fuel use (and the making of new solar panels). So indeed, solar panels can help bring an end to fossil fuel usage. The major problem is that the same process is likely to bring an end to most of us.

        • madflower69 says:

          “The major problem is that the same process is likely to bring an end to most of us.”

          Same thing I heard from secretaries with the advent of computers.

          They eliminated secretaries, but created other jobs.

  15. B9K9 says:

    Ed & I think very much alike – the power down will be performed in stages, essentially a triage function.

    What I suggest people do is to separate themselves from the constant flow of (dis)information and carefully consider the facts that are hiding in plain sight. We already have been experiencing a power-down ie Kunster’s ‘long decline’. What else are inner cities, other than segments that have already been sheared away from the main, perhaps just a step or two away from Ed’s staged shut downs?

    If can see that the process is already underway, then it removes these concepts away from theory and into the realm of practical reality. This in turn can be studied & analyzed in order to determine how the next steps may proceed. The #BlackLivesMatter movement is a reaction to the state’s solutions being imposed – a push-back against the all too obvious way this is going to go down – with a heavy militarized police presence. You know, first they came for … then they came for me.

    About this time, Paul will come in and ask how does the state continue to function ie how does it pay? And I will rejoin – as usual – that they will simply begin outright printing. This of course is the same solution to falling corporate profits & looming BK – nationalization via the printing press.

    Outright printing leads to (hyper) inflation which begets wage/price controls, which results in shortages, hence rationing. The type of overt controls needed by the state to maintain control in this kind of environment will require emergency war time measures in order to preserve continuity of government.

    War time measures usually require an, ahem, war (cough, cough). Gee, for some reason it seems like there are a handful of situations conveniently already in place that will provide the necessary casus belli. Does everyone see how straightforward this is? It’s the same tricks played on every generation.

    Rather than fight, to protest against perceived “injustice”, just ride the flippin’ tiger. The market is poised to go at least 2x higher – minimum – from helicopter drops. The debt must be destroyed via devaluation/monetization – if you cannot see how this all links back to preservation of power aka the status quo, then you should spend some more time studying history and not finance/technology.

    • Fast Eddy says:

      No …. I won’t come in and post anything on this …. because it is very difficult to win an argument with Cognitive Dissonance….

      I am even beginning to realize that even when the biggest global companies collapse into bankruptcy and millions are laid off…. we will continue to slowly collapse…. it makes sense.

      • Again, staircase step down process and triage..
        Lets say Caterpillar is not nationalized and folds down, so what? A chinese or other guy picks up core segment of the company and merges it with his global number #2 or #3. Repeat this cycle for all other sectors (cars, airliners, services) and visualize this in 5-15yrs timeframe. Resulting in curtailed consumption, pissed yet still docile sheople, can kicking – papering over virtual money leaks and disruptions as necessary, TPTB still in basic control and preping for next leg down, but global powershift to more balanced regional little empires system, etc. etc.

        • liamlynch101 says:

          I’m not sure if FE was being sarcastic with his comment, but if companies start to fold we could see an overnight collapse.

        • jarvis says:

          I’m not so much worried about the manufacturing companies going down as you say someone will pick up the pieces for the right price. What worries me is when the banks start to go down and credit seizes up. I’m torn between Knustler’s long emergency and Eddy’s fast collapse. I’m beginning to think Eddy might be right.

          • greg machala says:

            The way I see it there are two possibilities. One, there will be shortages of key commodities that lead to panic and collapse. Or, two, debt defaults due to deflation and collapse. Either way, it will be a very big leg down. I really really believe (at least in the USA) everyone will be negatively affected by what is coming in just a matter of days or months now.

          • Fast Eddy says:

            Again — manufacturers are collapsing because of lack of demand … the stimulus bazooka is out of bullets so demand is almost guaranteed to keep dropping….

            Of course there will be some companies who will think they are stepping in and getting a deal — because there are very few CEO’s who buy into the end of growth story….

            They are in for a very big surprise….

        • Fast Eddy says:

          Let’s think this through….

          Why is CAT going out of business (I just saw the horrific numbers on Zero Hedge)?

          Is it because they are incompetently managed? Not that I am aware of.

          They are going out of business because there is not enough demand for what they sell.

          CAT is referred to as an economic bell weather for the global economy — as CAT goes generally so does the global economy.

          If CAT is collapsing — the global economy is collapsing…. growth is collapsing … demand is collapsing ….

          CAT is not alone — as I posted the MSCI Index – which tracks the biggest global companies — is showing – 7% on average profits…

          They are all in the same boat as CAT to a certain degree.

          The global economy either grows — or it collapses. It cannot stagnate (for very long) — it cannot slowly deflate.

          It either grows — or it collapses.

          If the central banks cannot pull another rabbit out of the hat and somehow push them numbers up with some sort of stimulus — then what is happening now is the beginning of the end.

          The layoffs will start — the bankruptcies will start — and everything will just implode… like Lehman Brothers x 1,000,000

          I reckon the central banks are out of bullets — the next stage will involve real bullets….

          • Caterpillar’s problems started a long time ago too–34 months of year on year decline in sales, going back to the end of 2012. That is about the time when commodity prices started sinking.

        • How about the commodity companies? They usually need loans to operate. They have many commitments, like royalty payments if they make extraction. I suppose new buyers might be able to negotiate lower lease prices. They will need to pay employees so they have continuing operating expense. I wonder if coal companies will end up closing quite a few mines. Many oil and gas companies may continue to extract oil from existing wells, but the new buyers will not be able to obtain the loans to allow them to create new wells (and frack them).

          In many cases, production will just plain stop, because the new owners still cannot make the “numbers” work. Or even if they sort of could, banks won’t lend to them on cheap enough terms that they can extract the commodities profitably. With wages as low as they are, and many programs needing more tax money, it is hard to see that there will be enough wage money to get prices up again. Debt money is likely to be less available, without high commodity prices, for quite some time.

          • Fast Eddy says:

            Scaling back — or closing down operations — means layoffs — which means even less consumption — which means even less demand for commodities — which means further scaling back and closing of operations…

            Death spiral…

            Remember this? It also depicts a type of death spiral:

        • InAlaska says:


          You are exactly right. The collapse will be slow, stair step, uneven and at some points maybe even reversed, but with the trend ever downward. By militarizing society and using command economics, TPTB will be fighting the collapse all the way down, slowing the process, delivering what is needed to keep the elites and those who support them afloat while everyone else sinks.

          • Fast Eddy says:

            A lot of children want things very badly — a new iphone — a new bike — a new game boy console….

            Some even pray to a god for these things they want them so badly…

            But wanting something very badly does not mean you will get it….

  16. Gail you are brilliant but I want to hear solutions, I have been aware of these issues for years now. How do we educate people as to what they can do to take ownership of not just problems of the past but solutions for the future? If you could turn your knowledge into propositions for a political platform or legislation what would it be? It is much harder to turn words into action but we have to try so maybe its a holistic list of things we must do. If you need help putting together a list of action let us know, we can provide feedback. There are already many disparate movements around the world like open source ecology, people trying to develop super intelligent A.I. so the A.I. can take over and solve our problems, people that are advocating for thorium molten salt reactors. Where do we prioritize?

    • It is not possible to find solutions to what are really cycles of a finite world. We would like our world to work in a particular way–in a way without limits–but this is not possible. The climate has been changing, and will continue to change. In fact, human actions may have had some impact on how it is changing, but even if we didn’t, climate still would have changed. Perhaps we would be living in an ice age instead.

      We don’t have a way of fixing the way a finite world “works.” Humans don’t live forever. Economies don’t exist forever. Species don’t exist forever. The climate doesn’t say the same forever. Unfortunately, that is simply the way it is.

      • liamlynch101 says:

        Perhaps he was asking for what people can do for the long term following collapse in order to strengthen their own communities. I know you’re pessimistic about the current status quo, but perhaps a solution lies not within continuing BAU, but with changing one’s lifestyle altogether. Perhaps people could try to follow Nicole Foss’ solutions.

    • Fast Eddy says:

      The thing is…

      There are no solutions.

      You’ve dropped by on our funeral – won’t you have some cake and a coffee?

      • Fred says:

        hilarious, FE
        Yes, in fact I’ll stay for a second piece, as you create as you’ve created the perfect ambiance with the depressing music/ narrative. Hearing of my wretched demise never gets old.

    • madflower69 says:

      ” How do we educate people as to what they can do to take ownership of not just problems of the past but solutions for the future? ”

      The second step(after admitting you have a problem) is taking ownership of the problem, and we call the people who think they have done no wrong, and have no solutions “doomers”. The “doomers” call people who can fix the problem “koombayas”, at least from what I have gathered.

      Just a warning, FE will insult you multiple times to get you to leave, if you read any posts here.

      The solution is to work at it. There is going to be no single solution. It will always be a multitude of solutions. Our energy supply has never been a single source.

      At this point, it is do what you can, that makes economic sense to you.

  17. B9K9 says:

    “Let me start with that the world is more complex than you believe.”

    I don’t believe in anything – rather I rely/act on facts. I scored 220 on this test:


    The reason I scored so high is because I’ve governed my life according to the way it actually works. In that manner, I’m considered quite comfortable since I simply take positions that are based on reality. I guess many would be envious of constant travel, both home & abroad, lack of stress and financial security. But it’s available to all who can throw off the shackles of their (purposeful) training.

    Almost everyone is possessed by a genetic predisposition to believe – I call it the “belief gene”. It’s most obviously expressed in religious manifestations, but belief in secular institutions also infects large segments of population.

    However, if you are mentally able to divorce yourself from the conflicting messages constantly being broadcast, clear your mind, and settle down to really investigate what is actually occurring, then you too will come to the same exact conclusions as Gail, Paul, myself & others.

    In a nutshell, easy to access & economically available fossil fuels allowed the almost simultaneous creation of both a practical steam engine (1712) and central banking (1694). Central banking was & is, a purposeful deceit only made possible by continuing economic growth, which is based on industrial production which in turn is based on fossil fuels.

    No fossil fuels, no industry, no industry, no central banking. It was always known by even the most minor PTB that the name of the game was constant growth. This is what drove the necessity of colonial empires, which in turn necessitated the church to develop plausible explanations of why dominance was ‘good’, not evil.

    Now that we’ve crested over the peak of economically available fossil fuels, we are first witnessing the decline of industry, but the smart money is focused on central banking. CBs are private institutions owned and operated by the PTB. They, more than anyone else, know their 325 year old jig is up. Compared across the arc of history, it’s a minor, temporary blip, and yet it is the most dominant feature of our current time.

    With the coming unrest, the most dangerous threat to their continued control is a unified population; it’s merely a matter of us vs them. You either get this or you don’t. If you either cannot comprehend or refuse the facts at hand, then you will only have yourself to blame for any financial hardship, political loss of control or overall unhappiness you may experience.

    Or, you can wake up, get with the program, and play the game as it’s meant to be played. It offers a rewarding experience, especially the satisfaction of being “right” and the associated benefits that accrue to those who have a clue.

  18. Fast Eddy says:

    S&P Earnings Expectations Tumble 15 Days In A Row – Longest Streak Since Financial Crisis

    While stocks surge ingloriously on the back of a credibility-less Fed (and hope that PBOC, ECB, BoJ will unleash QE-moar), S&P 500 forward earnings expectations are down 15 days in a row – that is the longest losing streak since the financial crisis. In fact, S&P 500 earnings expectations are down over 2% year-over-year.

    The last time earnings growth expectation swung from positive to this negative was August 2008.


    And the central banks are out of ammo …. ZIRP and QE are in play …. and no longer propping the dead horse up….

    • Europe is still somewhat growing on the drugs applied recently, especially in frivolous spending segments, aka stupid waste, namely cars and some service sectors.

      On of the options on the table is that ECB would continue in carrying the batton with several more installments of global QE issuance and deeper NIRPism, simply it’s their turn after FED/BOJ rounds. And after few years FED can continue anew.. Remember the FED pumped trillions in the EU/ECB circuit in 2008/9 to support the system. The central bankers of the world have united way before the peoples and proletariats hah.

      • xabier says:

        ‘Bankers of the World Unite! You have nothing to lose but your integrity!’

      • greg machala says:

        “Ingenuity, greed, and perseverance will prevail.” Not for 7B people it won’t. There are limits to ingenuity, greed and perseverance. You do not seem to be accounting for feedback loops or, unforeseen consequences? 7B people is an awfully large chance for massive disease outbreak. I think there are just too many breaking points all reaching a head at the same time: climate change, drought, floods, huge debts, commodity collapse, deflation, distrust in politicians, tensions in the oil exporting countries, oil fields peaking globally, runaway healthcare costs, Fukoshima, pollution, MRSA, GMO, pesticide run off, ocean acidification, loss of biodiversity, bees dying off, extinction rates off the charts, factory farming, antibiotic resistance, ageing population, retirement benefits drying up, work force participation rate at all time lows, moral values being lost, police abuse, drug abuse, pervasive corruption. All of these issues hide any number of unforeseen consequences and feedback loops. I don’t see the logic in assuming a positive long-term view at all. We are simple at the limits to growth.

        • Fast Eddy says:

          Excellent post Greg.

          There is a tune that summarizes what you are up against when you post facts… it is the theme song of Mr Cognitive Dissonance and Ms Wishful Thinking….

        • Since where I posted anything remotely bordering on “positive long-term view” please?!?
          I’m simply in different time-scale and collapse sequencing order camp than you.

          Triage simply means that someone gets shaved more.
          Globally there are billions of people now after few decades of cheap credit bubble aspiring to some sort of lower middle class status, there are hundred thousands of them in the west/north as well, which even do think in terms of already securing such status. But triage means capacity to trim and trim some more of these illusions away in many direct and indirect ways, in summary you can squeeze some 5-15yrs at the minimum of can kicking out of this situation. I’m not promising this outcome, just seems more probable at the moment given what we have learned/know about TPTB, psychology of the sheoples, resources available etc.

    • Wow! August 2008 was right after the oil price collapse in July. The peak spot price occurred on July 14, 2008. http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RWTC&f=D

      The big debt collapse started not long afterward. AIG’s problems became apparent about August. According to http://www.propublica.org/article/article-aigs-downward-spiral-1114 ,

      August 6, 2008: In its second quarter filing, AIG ups its unrealized loss in 2008 from the credit-default swaps to $14.7 billion, for a grand total loss of $26.2 billion. It also discloses another impressive number: It’s posted a total of $16.5 billion in collateral.

      September 15, 2008: Standard & Poor’s cuts AIG’s credit rating due to “the combination of reduced flexibility in meeting additional collateral needs and concerns over increasing residential mortgage-related losses.”

      AIG is forced to raise another $14.5 billion in collateral due to the rating downgrade. The company faces collapse.

      September 16, 2008: The Federal Reserve Board saves AIG by pledging $85 billion. As part of the deal, the government gets a 79.9 percent equity interest in AIG.

      Lehman Brothers filed for bankruptcy on September 15, 2008.

      • Fast Eddy says:

        The tide is going out again — and a lot of people are about to be exposed as naked…

        Or is it the tidal wave is about to crash into the shore — and a lot of people are laying about sun tanning — oblivious to the danger —- and they will be drowned by the thousands….

        Declining corporate profitability means de-growth …. and de-flation …. if there is not way to reverse this…. then we have officially entered the extreme danger zone…

        MSCI down -7%…. the claxon is sounding

        • InAlaska says:

          So you see, we are already in collapse, and its not coming all at once. Instead, its coming in on successive tides (to use your metaphor) of collapse with each wave reaching higher until the tide is all the way in. How you ride the waves will be all that matters. At full tide, that will be the End.

          • Fast (Collapse) Eddy says:

            My favourite analogy is a man pushing an egg up Mount Everest …..

            Once he reaches the top he pushes the egg over the precipice and it hurtles thousands of feet through the air – smashing into pieces on the rocks below.

            At this moment the man and the egg are somewhere near the Second Step — perhaps a little beyond that point….


            What we are experiencing in the global economy right now is – by definition – not a collapse — you really should not use that word… because doing so means you are in the Fast collapse camp….

            verb col·lapse \kə-ˈlaps\

            : to break apart and fall down suddenly

            Collapse begins when the mass bankruptcies start — the financial system crashes — and the electricity stops….

            Unfortunately when that happens I will not be here to explain to you that collapse has occurred… because FW will go black…

            But then … I am sure you won’t need me around to provide play by play….

  19. Fast Eddy says:

    Steel crisis ‘strikes to heart of UK manufacturing’

    Fears for tens of thousands of jobs in manufacturing as steel crisis sends shockwaves through British industry

    The crisis is sending shockwaves through the UK’s manufacturing sector, with fears that it could have a knock-on effect on the wider economy.

    Industry experts have warned the country’s resurgent automotive sector could suffer a major blow as a result of the crisis, with other companies that rely on steel or service the industry also coming under pressure.

    In Britain’s manufacturing heartland of the Midlands, 12,500 companies employing 260,000 staff are either solely or partly dependent on steel, according to data from the West Midlands Economic Forum.


    https://p21chong.files.wordpress.com/2010/03/financial-dominoes.jpg (redux coming…)

    • There are too many commodities affected. Even if banks can avoid oil-gas, there are other commodities causing problems.

      • greg machala says:

        It is really amazing the number of alarm bells ringing right now.

        • Fast Eddy says:

          If what was happening now in terms of corporate profits — were happening at any other time — the markets would implode….

          Not only are the numbers horrible — they have come in spite of massive stimulus — so if as an investor you put this quarter behind you and look forward —- all you would see is more darkness….

          What more can the central banks do that they have not already done? This would normally be the mother of all short opportunities… but nope – the markets climb higher…

          The plunge protection teams must be working double shifts trying to hold this together….

          Many people I am in touch with in Hong Kong – quite a few in the financial sphere — no longer argue that recovery is coming — they have capitulated — they recognize that the stimulus is not working — and they see the absurdity of markets going up when earnings are falling…

          Mr Cognitive Dissonance – in this case — is actually losing the battle…. the facts are his enemy… and the facts are now overwhelming….

    • liamlynch101 says:

      I think this is how an even lesser form of BAU will be preserved, by way of dictatorship. Life won’t be great, there will be censorship, militarisation and the state will fight against the public, keeping them down as slaves until a breaking point is reached. Oil reserves will be kept perhaps for those in power, while the rest are left with little or nothing. I understand that with businesses going down the toilet, oil will not be supplied, but the kicker here is that oil producing countries or places with oil reserves will probably be able to instil dictatorships where those who are able to round up technicians and allow for oil to continue to be refined until spare parts become an issue. Basically, it’s not a great way to live on the way down, and with Climate Change coming into the game, we will hit the final collapse.

      Please note that this is nothing more than opinion as the Powers that Be, to me because I have a great love for them ya know (/sarcasm), will not just keel over and let themselves die, some will retreat to their bunkers, while others will attempt to assert power over the masses. Whether or not this will be successful will depend on how they can keep supplies going in a more localised world, which in itself will depend on how localised that production will become, for example, if there is still trade between European Countries, then issues related to spare parts might be less of an issue for a time.

      Also, I’ve had this thought for a while, but it seems that the Arctic Sea Ice is poised to melt all the way in the summer of 2016 and as far as I am aware, it is possible for oil to be situated in that area and despite the recent failure for oil to be found in the Arctic recently, an Ice Free Arctic Summer could act as justification for a new drilling operation in the area, possibly extending the life of BAU, especially with TPP which would probably allow the government to tell the public to shut up and get on with it, and the public will either collapse the system themselves because they’ve had enough, or they will just obey the government, possibly 1984 style, because what’s the alternative (personally, collapsing the system would be better because this shit-show has to end).

      To conclude my long winded monologue, there will definitely be places where a dictatorship will be put in place to keep the public in line, for example, we have Syria and Iraq where a war is taking place and the population hasn’t dropped, but that won’t last long because that will become uninhabitable desert after a time in which time, ISIS will be non-existent because ideology means nothing when everyone in your group is starving to death and there’s no food. Dictatorships in other places will probably be more successful if they can force their public to farm organically and be left to starve until a violent uprising comes about either from Climate Change or the public’s anger reaching a breaking point.

    • SymbolikGirl says:

      That actually looks pretty organized for a mob, I kind of expect things to look more like this when we all ‘co-operate’:


      I for one intend to relax and drink my emergency whiskey….after that, well I guess I’ll have to make it up as I go.

    • greg machala says:

      Dictatorship may well be attempted but look at those images. The sheer number of people will overwhelm nearly any police or military force. The most reasonable thing I can think of doing it I were in a position of power would be to seek a bunker stocked with food and a very thick door and wait for the people to die off to a more manageable level before attempting some kind of dictatorial control of those that remain.

      • Fast Eddy says:

        Agree — the mayhem will be on an unthinkable scale….

        I’ve often thought about parking a barge in a remote location here in NZ… stocking it with massive amounts of food and water…. then floating off at the last minute and anchoring … and waiting for the herd to finish culling itself….

        I suppose another option would be to purchase a cabin in the very remote woods…

        At the end of the day — I am probably dead no matter what I do — and I am of the opinion that if anyone does survive this … they will wish they hadn’t.

        If anyone reading this is still around post collapse — remember Fast when that first tooth comes out with the plyers…

        I so love my darling BAU…. she has been very good to me…. I will miss her so….

        • Fast Eddy says:

          I agree — a lot of the fun is taken out of the bucket list when every morning you wake up knowing you won’t live to see anything resembling old age…. and for those who are fortunate enough to already be at that point in life…. there is the despair of knowing your children and grand kids have a death sentence hanging over them…

          Unfortunately there is no way of ‘unknowing’ what you know…. perhaps the blue pill is the better option…

          • liamlynch101 says:

            What kind of problem is the spent fuel rod problem anyway, an overnight one or one that spans several years?

            • Fast Eddy says:


              The immediate release of toxins would be enormous — and long term — because these things would keep billowing toxins for decades… that’s the problem with nuclear energy — it’s the gift that never stops giving… and giving … and giving….

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

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

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

            • liamlynch101 says:

              What about other nuclear power plants that are not situated on vulnerable areas.

            • Fast Eddy says:

              I would have thought that all are vulnerable — all active plants with fresh fuel in them — and all spend fuel ponds.

              Because when the electricity goes off we will not be able to cool the rods…

              The spent fuel ponds are far more of a problem because they contain huge amounts of dangerous materials…

            • liamlynch101 says:

              They only need to be cooled for a certain time though and the backup generators should allow for that.

            • Fast Eddy says:

              I understand that fuel out of the reactor needs to be cooled for roughly a decade….

              Let’s say the power goes off tonight …. where will the fuel for the generators to cool and operate all of these large installations come from? Where will all the spare parts come from?

              Even now with the full force of BAU in play …. we are barely able to maintain nuclear facilities:

              Leaks hit three-quarters of U.S. nuclear plants


            • liamlynch101 says:

              Hmm, that’s problematic, but the fuel should come from the backup generators that contain diesel . After that I’m not sure, but it seems that you expect all the nuclear power plants to go off at the same time, I don’t know how anyone could even say that people living in isolated places will keep to themselves when the world turns into a nuclear holocaust wasteland, or am I exaggerating and amounts globally will mainly affect large mammals or something?

            • Tim Groves says:

              “They only need to be cooled for a certain time though and the backup generators should allow for that.”

              Quite seriously, all reactors and spent fuel pools should be equipped with windmills to supply water to the cooling system, good old-fashioned machines like the Dutch used for centuries to keep pumping water from the lowlands into the sea. Pre-industrial-revolution technology should be able to handle that problem. The local carpenters should be able to keep them in good repair. That will one less problem to worry about after the end of BAU.

            • Artleads says:

              Gail keeps reminding us that you can’t change one thing in isolation. You have to consider the entire support “infrastructure” that makes that one thing work. I use the word infrastructure in the broadest way, to include behavioral and cultural “infrastructure” too.

              To make wooden windmills, you need to identify all the issues involved: Who knows how to make them anymore? How will they be compensated? How do you get public and political support to make wooden windmills? (You can’t find two people today who are on the same page about anything.) What about other aspects of maintaining the plants, as well as the windmills? Where do food and water for workers come from? I can think of other similar questions.

            • Artleads says:

              Thanks, Stefeun, for this really great comment. I agree: we need to change the culture. For one thing, we need to think of the entire planet in the same light as our own backyards. It’s all one thing/one place now. Only the large corporations seem to understand that, however.

            • madflower69 says:

              “Gail keeps reminding us that you can’t change one thing in isolation. ”

              No, and at least the US policy is far more inclusive.

              “To make wooden windmills, you need to identify all the issues involved”

              The old dutch windmills aren’t very efficient. Neither are the old american water pump style.

            • Fast Eddy says:

              These are very complex installations – I have linked to an operating manual previously — you need computers and all sorts of other complex gear that cannot be replaced nor operated using windmills.

              You need electricity — you need BAU.

            • At least the report says, “While most leaks have been found within plant boundaries, some have migrated offsite. But none is known to have reached public water supplies.” Of course, the issue is “yet”.

            • “They only need to be cooled for a certain time though and the backup generators should allow for that.”

              Yeah, only ten years of constant diesel fuel consumption. So you just need the roads, oil wells and refineries to keep going for at least 10 years.

              Then, someone will have to dry cask and bury it all, or else it will eventually spring a leak and trickle into the waterways:

            • Pintada says:

              Irreversible climate change has already happened, and will continue to happen at least 40 years after your predictions come true, Gail. I hope with all my being that you are right about 2016 being the end for the existing economy. One of the things that will push economic collapse along is AGW and I really think that it is not correct to ignore AGW just because your expertise lies elsewhere. (BTW: I am equally miffed when I see people that know climatology ignore the economy as if both things do not happen on the closed system.)

              For two examples of the effects of irreversible climate change that has already occurred see these reports:



            • Stefeun says:

              Thanks Pintada,
              especially for the article by Monbiot about the huge fires in Indonesia, that are mostly due to palm-oil culture (ie corporate money fueled), and ignored by the MSM.
              In that case, as in many other situations, climate change adds to the damaging effects, but is not the primary cause.

              This silence in MSM reminds me of the almost untold conflict that’s been going on in Kivu (DR Congo) for the last 20 years, causing 6 million deaths (some say 9m) of which many many children, and instaured an endemic “rape culture” in the region. All that for coltan (used in smartphones), diamonds and a couple of other valuable resources.

              Monbiot has also written about that, but the article is 10 years old:
              A Deadly Reversal – 14th December 2004 – Why does no one care that the world’s worst conflict has broken out again?

              One can google for more recent ones; for example:
              “‘We Have to Break the Culture’: Meet the Women Fighting Congo’s Rape Epidemic” – 30 Oct.2015

              They claim that now war has “almost ended”, but it’s very unclear ; maybe it’s just lowered in intensity because of lowered prices and demand of commodities.

            • daddio7 says:

              Concerning nuclear power plants I was under the impression that they produce electricity. While their output will diminish as time passes it will be many years before it drops to zero. I would think some of this power could be use pump water to the cooling ponds.

            • Fast Eddy says:

              Spent fuel ponds are high tech installations — they are not swimming pools…. — they require computers — they have many thousands of parts…

              Here’s a technical spec http://www.nrc.gov/waste/spent-fuel-storage/pools.html

              I’ve already posted an article about the sorry state of plants — even with BAU fully functioning we are unable to maintain them in very good condition ….

              Here are some photos: http://www.mirror.co.uk/news/uk-news/pictures-sellafields-crumbling-tanks-radioactive-4539565

              If we can’t maintain them now then we aren’t going to keep them operational post collapse…

              And forget about the 10 years then off to dry casking … even if you could keep the ponds functional — how do you lift radioactive material out of a spent fuel pond and put it into a cask without robotic machinery?

              The operation, beginning this November at the plant’s Reactor No. 4, is fraught with danger, including the possibility of a large release of radiation if a fuel assembly breaks, gets stuck or gets too close to an adjacent bundle, said Gundersen and other nuclear experts.

              That could lead to a worse disaster than the March 2011 nuclear crisis at the Fukushima plant, the world’s most serious since Chernobyl in 1986.

              See http://www.reuters.com/article/2013/08/15/us-japan-fukushima-insight-idUSBRE97D00M20130815

              So if we can’t cask them even if we can cool them that means we have to keep the ponds operational for many decades.

              Not gonna happen

            • “So if we can’t cask them even if we can cool them that means we have to keep the ponds operational for many decades.

              Not gonna happen”

              And yet, the Sellafield article is about spent fuel and fuel reprocessing storage ponds that were abandoned for ~45 years with zero maintenance. Would be nice to see how radioactive the waste is there now, after so much time cooling off and decaying away.

            • interguru says:

              “The problem is if the spent fuel gets too close, they will produce a fission reaction and explode with a force much larger than any fission bomb given the total amount of fuel on the site.”

              I wish to disagee with the above statment and the quoted article. When the bomb was developd, one of the biggest problems was how to keep the critical mass together long enough to explode. If you just pushed the fuel together, the incipent fission will heat it and blow it apart before most of the fuel reacts. You will get a fizzle. The solution is to use conventional explosives to implode the fuel and hold it together long enough to produce a large explosion. This cannot not happen in a spent fuel pool

              I do not deny that the fuel may have a “small’ explosion or fire and make an unholy mess. Still the thriving wildlife around Chernoble shows that you can have a healthy ecosystem composed of sickly individuals.


            • ” Still the thriving wildlife around Chernoble shows that you can have a healthy ecosystem composed of sickly individuals.”

              I would not call it a healthy ecosystem. Some of the trees do not rot. The spiders make increasingly bizarre, non-symmetrical webs. Each generation of every species accumulates more radiation and more mutations. Keep in mind, this was a relatively successful containment of a disaster, using vast amounts of manpower and machinery.

            • Fast Eddy says:

              Chernobyl was a reactor accident — reactors don’t have much fuel in them compared to a spent fuel pond.

              It’s like comparing an apple to an apple orchard.

              This is not an atomic bomb – it is simply a fire and an explosion (recall the Fukushima and Chernobyl video … no nuclear bomb like mushroom clouds….) — that’s what happens when fuel rods are not cooled….

              I was unable to find research on what happens if a spent fuel were to permanently boil off its cooling water — because obviously this is unthinkable … however Harvard was commissioned to do a study of what would happen if the water was boiled off due to a terrorist attack….

              Here are some excerpts — well worth reading the entire report:

              About the Author: http://belfercenter.hks.harvard.edu/experts/13/hui_zhang.html?back_url=%2Fpublication%2F364%2Fradiological_terrorism.html&back_text=Back%20to%20publication

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

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

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

              Risk of Spent Fuel Pools at Reprocessing Plants

              Another risk is from the spent fuel pools at reprocessing plants.

              A reprocessing plant has even greater pool storage capacity than that of a reactor pool. Before reprocessing, the received spent fuels are stored in wet pools at the reprocessing plants.

              The buildings that house the pools could be even weaker than those pools at reactor sites. In particular, the roof of the building could be more vulnerable. Most of the sabotage scenarios conceivable for reactor pools could be applied to these pools at reprocessing plants.

              Even though this would not ignite a spent fuel fire, a significant fraction of Cs-137 in the rods could be released into the atmosphere. For example, a pool with 2,000 t ten-year-old SNF would hold about 170 MCi Cs-137. If 3% of this Cs-137 inventory were released, [17] about 5 MCi Cs-137 would be released, which is two times more than the 1986 Chernobyl accident. Furthermore, terrorists could pour fuel in the pool and start a fire that would cause ignition of the zircaloy cladding and lead to a greater release of the Cs-137 inventory.

              Recent results from France indicate that heating at 1,500 °C of high-burnup spent fuel for one hour caused the release of 26% of the Cs inventory. [18]

              Thus it would release about 44 MCi of Cs-137 into the environment, which would be twenty times more than the 1986 Chernobyl accident.

              Some experts are already concerned about the possible consequence of a terrorist attack on the La Hague nuclear reprocessing facilities.

              As a COGEMA-La Hague spokesman declared after September 11, as far as the design basis is concerned, the facilities are no more protected against an airliner crash than any other nuclear power station. [20]

              The World Information Service on Energy, Wise-Paris, estimated the potential impact of a major accident in La Hague’s pools. [21] The calculation was made for the case of an explosion and/or fire in the spent fuel storage pool D (the smallest one), assuming that it is filled up to half of its normal capacity of 3,490 t, supposing a release of up to 100% of Cs-137.

              Based solely on the stock of Cs-137 in pool D, it is shown that a major accident in this pool could have an impact up to 67 times that of the Chernobyl accident.

              Moreover, the total Cs-137 inventory in the pools of La Hague reprocessing facilities is about 7,500 kg, 280 times as much as the Cs-137 amount released from the 1986 Chernobyl accident.

              Fast Eddy’s NOTE: this is ONE pond…. there are THOUSANDS of them


              Unless there is a way to keep these facilities managed for decades after the collapse of BAU — then an extinction event on the way….

              The Elders will know this — and I am making the assumption that this is why they are not doing anything to prepare for a post BAU world — they are desperately trying to keep BAU going for as long as possible — because they would know that when it ends…. we end.

              One might argue that we are playing god — in that we are about to wipe ourselves out by our own hand….

            • liamlynch101 says:

              Wouldn’t there be a more noticeable push to get rid of nuclear facilities and not build new ones if the powers that be were confident that these things would cause our extinction? How long ago did they figure this out, if it was during the 2008 crisis, then they would have pushed further to not build these plants in the first place.

              What would be the effect of these things going off in the first place be anyway; rising cancer levels or something, perhaps it’s something humans can deal with, especially in areas where nuclear power plants haven’t been built.

            • Christian says:

              Right, interguru. It is estimated that only 4% of Fat Man’s material reacted, and of course this was the result of will and effort

          • Ed says:

            Guess this explains why Bill Gates is investing in walk away safe nuclear power plants.

            • liamlynch101 says:

              No such thing, spent fuel rods will burn up and kill every single living thing, that’s just the way it is, accept it and have some cyanide ready for when the collapse occurs.

      • ” seek a bunker stocked with food and a very thick door and wait for the people to die off to a more manageable level before attempting some kind of dictatorial control of those that remain.”

        Except if you leave the situation unmanaged topside, the spent fuel ponds and reactors could be toast. The oil must flow, the grid must stay up and supply lines must continue, for at least 10 years after the last reactor is shutdown, for the fuel to cool enough to remove from the reactor and put into the spent fuel pond, then cool enough to be dry casked. Then just hope it all stays safe for at least 400 years.

        • Fast Eddy says:

          All of the measures we are suggesting are temporary — they are all predicated on the return of some sort of ‘normalcy’

          I reckon we our perceptions are formed by observing what happened after major disasters — wars – hurricanes – tsunamis – earthquakes — famines – economic depressions

          The thing is…

          This disaster will be worse than all of the above combined…. there will be no unaffected countries to reach out to help….. there will be no reset — there can be no reset — because we’ll have no energy to rebuild with…

          This collapse will be permanent (well – perhaps in a billion years if there is anyone around still — humans will rediscover oil bubbling to the surface….)

          When one recognizes that the collapse will be permanent (a ‘new normal’ aka hell on earth) — the situation catastrophically bad (‘putrid’) … to restate something that has been said many times….. the really only good option is to enjoy the final months and days as best one can …

          What the hell… might as well open a bottle of wine…

          • liamlynch101 says:

            Why do you claim that humans will discover oil in a billion years when nuclear radiation will kill everything, every animal, every tree. There will be no oxygen when that happens, the waters will be poisoned and will turn into a carnfield ocean.

      • Is your response related to Germany or wider doom discussions?

        Because the state borders of Germany have been breached by influx of illegal immigrants, it’s invasion, Germans are being kicked out of their tenant agreements just to house this incomming wave. And what have you in reaction? A few dozen thousands protestors in such a big country is bordering pathetic. Moreover this very prostesting crowd is located in former eastern part of the country, most of the protesting folk are middle/older generations on pensions or some sort of state wellfare, while the youngs left for the jobs in west or are too brainwashed to stage any opposing view at all!

        Again, is it going to get worse?
        Quite likely yes, but on the scale of years and decades, not in immediate timeframe.
        People here clearly lack some historical perspectives, read up at least some brief summaries of analogue situation in the loooooonnnnngggg fall of west roman empire by Bardi on his cassandralegacy blog..

        • xabier says:

          The Roman analogy is increasingly attractive: just look at the situation in the US of student debtors who – it seems uniquely among debtors – are effectively unable to declare bankruptcy and escape their debts.

          Very similar to the late-Roman masses, who became so indebted as a result of the demands of the failing and over-complex state system that those born free became slaves.

          • Exactly, the process is conceptually very similar analogue.

            National republicanism giving way to mil-industrial-banking dictatorship and pauperization of the people, cretinization in art and culture on purpose via TPTB policies and for the quick buck as default option. Sourcing energy abroad, protecting those supply routes at all costs, incl. hairbrain geopolitics going with it etc. We can go on and on …

            Now we are entering either the period of shock from realization of wide open borders after which consolidation phase of +2centuries took place in their time or we are at the later stage where they dismantled border checkpoints/forts for good and immigrants just took over the core gradually, mixing up with the society.

            As everything is now time compressed due to the fossil energy leverage it could be speculated that one roman century equals 2-3? decades in our time space.

            • InAlaska says:

              Paul/Fast Freddie will tell you that “this time it really is different!” which is bunkum. Its never different, its always the same. History doesn’t repeat but it does rhyme. Rome is a good analogue, so is the Mayan/Aztec situation. It won’t take us as long as Rome to fall, and due to FF, the severity and length of the fall will be more steep. In the beginning stages (we are in it now) will not be recognized as collapse.

            • Fast Eddy says:

              Did the Romans and Aztecs have 7.4 billion people who grew all of their food using chemical inputs?

              Did the Romans and Aztecs have 4000 ponds filled with tonnes of fuel rods that require high tech facilities supplied by electricity and thousands of spare parts for decades?

              Obviously not.

              This time is different.

              A 7 year old could be made to understand this.

            • liamlynch101 says:

              This time is different though. We are heading into a period where society collapses. After that, we get av1 degree rise in temperature and then methane joins the game and probably brings the temperature up by 6 degrees in a matter of months,.then extinction.

            • Göran Rudbäck says:

              Where will the methane come from?

            • liamlynch101 says:

              Methane will come from the Arctic and from the earth’s sea floor.

            • Göran Rudbäck says:

              You mean the clathrates? I seem to remember that not even IPCC think that’s likely to happen.

            • liamlynch101 says:

              That’s cause they’re conservative as fuck, and there are other feedbacks not being taken into account like what happens when Gail’s hypothesis on first world nations finally unfolds. Basically we lose our shield of aerosol produced by China’s dirty coal plans, what happens then? Well then we get a huge temperature spike in addition to the current El Nino which, according to Guy McPherson, will take temperatures way above 1C. These temperature spikes will trigger methane burps and that will probably lead to a 10C temperature spike overnight, killing humanity within months.

            • How can a 2 Celsius temperature rise cause a methane burp, when in the past temperatures were something like 6 degrees warmer, yet no methane burp occurred? How come the planet did not turn into Venus at warmer temperatures in the past?

              Also, why can’t we just light the burps on fire?

              I think this sudden doomsday from methane hypothesis is unlikely. The good news is, we’ll probably find out soon.

            • Fast Eddy says:

              I have read that we may have passed the tipping point on warming and that the massive areas of muskeg in the north are already thawing — and that no matter what we do now that process will not stop….

              The amount of methane trapped in those frozen swamps is apparently enough to wreak havoc with the climate…

              No idea if that is true or not — but BAU collapsing will not affect that one way or the other

            • Göran Rudbäck says:

              If they’re thawing, they will also start to grow, which means more carbon absorbing areas. Remember the muskeg has been formed since the last ice age, they’re part of a natural temperature balancing system, that I’ve not seen anything about in science articles.

              > 29 okt. 2015 kl. 06:14 skrev Our Finite World :

            • liamlynch101 says:

              And what will grow will die, putting more carbon or methane into the atmosphere.

            • Göran Rudbäck says:

              That depends on which water temperature the clathrates will gasify. Increasing temperature on these high latitudes, will produce more water vapour and clouds, added with the increased clouding from decreasing sun activity, I wouldn’t bet onMcPhersons theory.

              Winter is coming…

              > 29 okt. 2015 kl. 01:18 skrev Our Finite World :

            • liamlynch101 says:

              They stop the sun’s heat coming in, but the clouds also prevent heat from escaping, so no, winter is not coming, it will never come. All you’ll get is an extremely hot world. The trees will die, the soil will become unproductive because of bad weather, and everyone will starve to death, eat each other, eat their children, eat parts of their own body perhaps, and then finally starve to death themselves as there is no food left.

            • “They stop the sun’s heat coming in, but the clouds also prevent heat from escaping, ”

              Most of the heat comes from the Sun, so if it was cloudy all the time I’m pretty confident it would get colder and colder.

              The big issue is what time of day is it cloudy? If it is cloudy at night and sunny in the day, it will get warmer. If it is cloudy during the day and clear at night, it gets colder.

              To accurately model what is going to happen, you should accurately predict cloud cover by time of day.

              The important thing is, there is nothing we can do if Guy McPherson is correct, and it is just a waste of time if he is wrong; it is not actionable information, it has no value. Like worrying about a giant meteor coming and smashing the planet.

            • Göran Rudbäck says:

              Where will the heat raising temperature on earth come from?

            • hkeithhenson says:

              Methane is the one greenhouse gas we could cope with if it were to become a problem. The US corn crop more or less filters the whole atmosphere every year. We can genetically modify the corn with 5 genes from methane eaters and clear methane out in a year or two.

              It’s not my idea, Dr. Stuart Strand came up with it.

              But as you say, even the IPCC doesn’t rate this as much of a risk.

            • Where does this big methane burp come from? Exactly how much methane is there, and where? If we can locate the plumes, we can light them on fire and save us all a lot of headache.

            • liamlynch101 says:


              50GT could be emitted from the Arctic Sea.

  20. Fast Eddy says:

    Ed – the other thing…. you’ll get more points towards your residency if you secure employment outside of Auckland… https://www.immigration.govt.nz/pointsindicator/

  21. Fast Eddy says:

    In truth, Wall Street has become so intellectually addled from its addiction to central bank enabled gambling that it no longer has a clue about what really matters. That’s why the next crash will come as an even greater surprise than the Lehman meltdown, and will be far more brutal and uncontainable, as well.

    Yet the evidence that a China-led crash is on its way is hiding in plain sight. And what is being blithely ignored is not merely the blatant inconsistencies in its economic numbers—–such as the fact that electricity consumption has grown at only a 1.3% rate over the past year——or that its commerce with the outside world has shrunk drastically, with imports down by 23% and exports off by 3-6% in recent months.

    Instead, the evidence that China is a slow-motion trainwreck lies in the very consistency of its Beijing-cooked numbers. Apparently, no one has told its credit-happy rulers that printing precise amounts of new GDP quarter after quarter by issuing credit at double the rate of nominal income growth will eventually result in the mother of all deflationary collapses.


    • Hm, something important is missing in that “china supercrash” picture. China has been sucking all the possible technological know-how for couple of past decades, in fact not much has been left in the “west” to copy anymore. In addition to chips, electronics, high end rail transportation, one of the latest and largest project underway is ungoing complete copy/transfer knowhow for production of big airliners (from the US)..

      I don’t see inside the chinese heads what their priroties currently are as they still stick to petrodollar for the moment, but it’s much better to have crashed economy with industrial base in place, including the workers and egineers, not mentiong ready trading partners and energy suppliers then having a crashed economy with nothing.. Basically, that former has been their overall bet strategy since the 1970s.

      • Fast Eddy says:

        Windscreen waiting for bug…

        China is the greatest construction boom and credit bubble in recorded history. An entire nation of 1.3 billion has gone mad building, borrowing, speculating, scheming, cheating, lying and stealing. The source of this demented outbreak is not a flaw in Chinese culture or character—nor even the kind of raw greed and gluttony that afflicts all peoples in the late stages of a financial bubble.

        Instead, the cause is monetary madness with a red accent. Chairman Mao was not entirely mistaken when he proclaimed that political power flows from the end of a gun barrel-–he did subjugate a nation of one billion people based on that principle. But it was Mr. Deng’s discovery that saved Mao’s tyrannical communist party regime from the calamity of his foolish post-revolution economic experiments.

        Just in the nick of time, as China reeled from the Great Leap Forward, the famine death of 40 million and the mass psychosis of the Cultural Revolution, Mr. Deng learned that power could be maintained and extended from the end of a printing press. And that’s the heart of the so-called China economic miracle. Its not about capitalism with a red accent, as the Wall Street and London gamblers have been braying for nearly two decades; its a monumental case of monetary and credit inflation that has no parallel.

        At the turn of the century credit market debt outstanding in the US was about $27 trillion, and we’ve not been slouches attempting to borrow our way to prosperity. Total credit market debt is now $59 trillion—-so America has been burying itself in debt at nearly a 7% annual rate.

        But move over America! As the 21st century dawned, China had about $1 trillion of credit market debt outstanding, but after a blistering pace of “borrow and build” for 14 years it now carries nearly $25 trillion. But here’s the thing: this stupendous 25X growth of debt occurred in the context of an economic system designed and run by elderly party apparatchiks who had learned their economics from Mao’s Little Red Book!

        That means there was no legitimate banking system in China—just giant state bureaus which were run by party operatives and a modus operandi of parceling out quotas for national credit growth from the top, and then water-falling them down a vast chain of command to the counties, townships and villages. There have never been any legitimate financial prices in China—all interest rates and FX rates have been pegged and regulated to the decimal point; nor has there ever been any honest accounting either—-loans have been perpetual options to extend and pretend.

        More http://davidstockmanscontracorner.com/chinas-monumental-ponzi-heres-how-it-unravels/

        • Rodster says:

          Yup, China is just basically a copy and paste from what the West did decades ago. The big difference was that when the West aka USA was pushing the levers the world was at least growing economically back in the 50-80’s. Now the global economic engine has run out of gas and the only thing keeping the hamster running faster in the cage are Bankster tricks and gimmicks.

          If Apple were to stop selling iPad’s and iPhone’s, Foxconn would go out of business and you’d have other suppliers as well in the supply chain. Most recently in the US there was an Apple supplier who defaulted that was supposed to provide Apple with sapphire components.

    • Kurt says:

      Talk about China all you want FE. Show me the money! Of course you won’t bet. Theory is great, but it’s just theory until you back it up with cold hard cash.

  22. Ed says:

    On spent nuclear fuel we could do what Taiwan used to do with its spent waste. Put it in 55 gallon drums drive it out to sea and throw it overboard. The water never runs out.

    • Rodster says:

      Out of sight out of mind, right? Much like the 7-8 million tonnes of plastics, garbage and toxic chemicals we dump in the ocean floor each year. This is why I stopped eating seafood a long, long time ago.

      • Fast Eddy says:

        Imagine what would happen to marine life if we heaved the spent fuel rods from 4000+ ponds into the ocean…

        Not only would our croplands be sterile because of the chemicals we have poured on them — we’d also sterilize the oceans to the point where they too would provide us with no food.

        The thing is…. these would keep churning out toxic waste for decades…..

        Oh and btw — I was speaking to an organic farming researcher yesterday here in NZ … he has been involved directly in researching the impact of chemical fertilizers on the soil….

        A couple of comments:

        – chemical fertilizers kill all soil organisms — see those orchards and vineyards down the valley — the soil itself serves only to physically support the roots — nothing could grow in that soil if the chemical fertilizers were not applied

        – it would take 3-5 years of intensive organic inputs to revive soils that have been farmed with chemical fertilizers (which is exactly what I was told by a trainer at an Organic Institute in Canada)

        So yes, let’s heave the spent fuel rods into the ocean — that would assure the complete suicide of our species….

        I am all for it.

        If we are stupid enough to do that (as we were stupid enough to kill our soils) then we deserve extinction.

    • “The water never runs out.”

      And the barrels never rust!

  23. Ed says:

    The electric grid is like the economy. The economy has debt that can not be paid in a contracting economy. The gird has guaranteed profit makers that can not be paid by ever diminishing customers. Sooner or later the government will have triage the losers. You on social security are not going to be paid, you own of electrical generator #3, 8 and 12 are not going to be paid. The rest of you carry on. Like those still receiving government pension if that is triaged as a higher priority and those who own electric generators that are still needed.

    TPTB see electric shortages coming and are desperate to install the smart gird that will allow them to turn off load as TPTB see fit. No clothes washing or drying for you this week it has been a cloudy week and the PV are no producing much. More triage but strictly at the control of the PTB.

    • That’s indeed possible. However, I have repeatedly mentioned there are places with semi-vertically integrated grid and “full cycle” domestic industrial chain including resources, which can hum the grid for decades in terms of keeping the current system operating in some +/- fashion, namely Russia, France, some of the CEE countries, perhaps India and China at least partly in fall back fashion as regional grids in there.

  24. Ed says:

    There are only two long term sources of energy 1) sunlight (PV, wind, hydroelectric, wave) and 2) nuclear. Yes, humankind had a brief fling with stored sunlight in coal, oil and natural gas.

    How expensive these two sources are is unknown. How technological progress can change the price is unknown.

    I expect the transition will be largely un-managed (the four horse-persons).

    After the transition I would start with land based wind in ideal locations with near by vertical drops for pumped hydro storage. These would be islands of industry. Next uranium based fission moving on to thorium fission. While working on lowering the cost of PV and storage.

    How many people this can support I do not know. How high a level of technology this can support I do not know.

    • madflower69 says:

      “After the transition I would start with land based wind in ideal locations with near by vertical drops for pumped hydro storage. These would be islands of industry.”

      Pumped hydro storage is about 75% efficient, you can get the same efficiency, and use far less space by using flow batteries. Plus flow batteries aren’t limited by geography and don’t require like 5 years lead time. They are also dropping wildly in price as the industry scales, and the technology improves. They also don’t require massive investment in one lump sum. Nor do they need a huge potential investment in power line infrastructure to get it connected.

      At this point, pumped hydro is a non-starter. 5 years ago, I wouldn’t have come to the same conclusion.

    • The problem with Thorium is that, while there is a lot more of it than Uranium, most of it is in very low ore grades.

      While not so much is needed per year, the total rolling inventory needed is in the millions of tonnes.

      • Ed says:


        As a start 3200 tons refined and sealed in drums placed in cargo containers waiting to be used.

        • “The thorium from Curtis Bay alone (2700 tonnes) would produce all the electricity the US needs for eight years, if used in a liquid-fluoride reactor. My own comments are in paretheses and italics.”

          So, if the Thorium was used in reactors that don’t exist, and the reactors were 100% efficient at converting Thorium into U-233, and all of the U-233 was used up in the five years, the fuel would have been enough to provide America’s energy needs for 5 years.

          BTW, it is not “thrown away”, it is securely stored. It is much more retrievable now then when it was in the ground as raw ores.

          “In the first phase of the project, conversion, disposal and long-term storage of the material were considered.”

          So, they considered turning the Thorium into U-233, and decided against it.

          • madflower69 says:

            “So, if the Thorium was used in reactors that don’t exist, and the reactors were 100% efficient at converting Thorium into U-233, and all of the U-233 was used up in the five years, the fuel would have been enough to provide America’s energy needs for 5 years.”

            What is the efficiency of U-233 reactors these days? The first generation was like .5% efficient. I don’t think they are over 5% yet…

            • “What is the efficiency of U-233 reactors these days? The first generation was like .5% efficient. I don’t think they are over 5% yet…”

              Efficient at what? Making Plutonium? Consuming the U-235? Based on what timeline?

              It seems that 66% of the U-235 is used up, while the total amount of fissile material is increased nearly 10 percent (in the form of U-238 transmuted into Pu-239 and -240), over a 5 year cycle for a natural Uranium (99.29% U-238, 0.71% U-235) fuel rod:

            • madflower69 says:

              “Efficient at what? Making Plutonium? Consuming the U-235? Based on what timeline?”

              conversion efficiency. The biggest reason to do it is to get electric. So how efficient are we at creating electric from the uranium reaction?

            • correction: 66% used up, but Plutonium is created equal to half of the U-235 that was consumed. So you still have 70% as much fuel as you started with, when you end. Not an increase in total fissile material. It seems that, under those circumstances, it is inevitable that on a long enough timeline (and not that long) all the fissile material would be used up.

      • Ed says:

        from wikipedia
        Comparing the amount of thorium needed with coal, Nobel laureate Carlo Rubbia of CERN, (European Organization for Nuclear Research), estimates that one ton of thorium can produce as much energy as 200 tons of uranium, or 3,500,000 tons of coal.[25] Coal, makes up 42% of U.S. electrical power generation and 65% in China.[26]

        • Well, if we all make it to 2050 and BAU is still standing, maybe we’ll see if Thorium really is 200 times better than Uranium by weight.

            • Ed says:

              Bill Gates says
              They have this statement that the cost of solar photovoltaic is the same as hydrocarbon’s. And that’s one of those misleadingly meaningless statements. What they mean is that at noon in Arizona, the cost of that kilowatt-hour is the same as a hydrocarbon kilowatt-hour. But it doesn’t come at night, it doesn’t come after the sun hasn’t shone, so the fact that in that one moment you reach parity, so what?

            • madflower69 says:

              “But it doesn’t come at night, it doesn’t come after the sun hasn’t shone, so the fact that in that one moment you reach parity, so what?”

              Oddly enough most of our use I would say about 2/3’s is during daylight hours.
              Just eliminating that is a huge hunk of the problem.

            • Our problem is that we need a whole system that works. We are having a hard time coming up with a whole system that is cheap enough to keep the economy going.

            • liamlynch101 says:

              Perhaps post-collapse communities can make use of solar?

            • Yes, energy from the sun growing crops and keeping people warm. Other types of solar will exist only as the whole necessary system exists.

            • Fast Eddy (56,000,000 Hiroshima bombs) says:

              They can make use of solar energy to get a tan as well….

              Perhaps as the sun becomes the focal point in the lives (assuming anyone is alive) — we may see a resurgence of sun god worshiping…

              Who knows — perhaps the Sun is the creator — the giver of light and warmth and food


            • madflower69 says:

              “Our problem is that we need a whole system that works. We are having a hard time coming up with a whole system that is cheap enough to keep the economy going.”

              We are actually very close. Once batteries catch on, which they will because of the significant cost savings to utilities, it will further reduce their price. Building batteries requires spending, which will help stimulate the economy. It just isn’t going to be money wasted on FFs. I expect within 5 years most if not all utilities will have storage for cost savings with their current business model. The side effect is it completely takes away the whole intermittent renewable argument.

              EVs are about 6 years from being the same price as their gasoline equivalents and by golly, I just learned from this blog that is about when WTI, is also going to cross it’s line, so good timing.

            • We need cheaper cars than the current gasoline ones. They have become awfully expensive.

            • Göran Rudbäck says:

              Not until there is machinery and tractors working without FF, you would be on the “safe” side. Unfortunately that is not going to happen, to many old tractors used by farmers, there isn’t enough capital to replace them, the profits ain’t big enough. Added to that, when cars move to EV, the advantages of size in oil industry diminishes, the fuel, fertilizers and food gets more expensive, their EROEI decreases.

            • madflower69 says:

              “Not until there is machinery and tractors working without FF, you would be on the “safe” side. Unfortunately that is not going to happen, to many old tractors used by farmers, there isn’t enough capital to replace them, the profits ain’t big enough. Added to that, when cars move to EV, the advantages of size in oil industry diminishes, the fuel, fertilizers and food gets more expensive, their EROEI decreases.”

              The oil industry can be half the size and still get the benefits of mass scalability.

              Farming is only about 5% of the diesel fuel use in the US. Residential use is slightly more, every other use else is less, except the 64% is used for highway transportation.

            • Göran Rudbäck says:

              I seem to remember that when making diesel, you also get petrol. What to do with the petrol making diesel?

            • madflower69 says:

              “I seem to remember that when making diesel, you also get petrol. What to do with the petrol making diesel?”

              In 2014, about 136.78 billion gallons (or 3.26 billion barrels) of gasoline were consumed in the United States.

              I think that is a number you can easily cut in half without losing any scaling advantages too.

            • “Not until there is machinery and tractors working without FF, you would be on the “safe” side. Unfortunately that is not going to happen, to many old tractors used by farmers”

              The problem may be too many newer tractors. You need the good old ones, that can run on wood gas. FEMA 1980s manual on adapting to an oil crisis:

            • madflower69 says:

              The drive on wood site has several tractors running on woodgas. All older, but most of it is because they price is low, and you don’t have to mess around with any electronics. 🙂

            • Ed says:

              Gail, check out https://www.eliomotors.com/
              $6800 new, mpg 84. They have been string us along for some years now but still it give an idea of what may be possible.

            • madflower69 says:

              “They have been string us along for some years now but still it give an idea of what may be possible.”

              Mahindrareva E2O is a pretty inexpensive car.

              Here is a list of a few others, I’m not sure how up to date it is. The Renault Twizy isn’t coming to the states.

            • Skoda used to make a 1.2L Diesel car that would get close to 90 mpg. Now it has got a larger less efficient engine, maybe 1.6L since people want more power. Plus, of course, it doesn’t really meet emissions.

              It would be much easier to get much better fuel economy if vehicles only went 30 miles per hour, since they could then weigh a lot less since crashes would be at much lower speeds, and friction and drag would be much lower at such low speeds. Of course, that doesn’t work with North American commuter car culture.

    • How do you make metals and transport them in this scenario? How do you keep up roads? The electric grid? How do you make pumped hydro storage and uranium based fission without fossil fuels?

      • “How do you make metals and transport them in this scenario? How do you keep up roads? The electric grid? How do you make pumped hydro storage and uranium based fission without fossil fuels?”

        If you have abundant nuclear power, you can synthesize your fuels to make asphalt, power diesel equipment, make lubricants, etc.

        The question is, can a new system organize around energy that is, say, four times as expensive? Can the current system only partially collapse, and then a new system grow from it? I guess we’ll find out, sooner or later.

        • madflower69 says:

          “The question is, can a new system organize around energy that is, say, four times as expensive? Can the current system only partially collapse, and then a new system grow from it? I guess we’ll find out, sooner or later.”

          I don’t think solar and wind are 4x as expensive even with storage. The goal is to drive them down into the same price range. It is a combination of scaling manufacturing as well as coming up with new technologies as we run into roadblocks. You have to work at something to improve it. We really just started to work at it.

          I don’t think the entire existing system collapses for a while. At this point it is more what can we do to extend BAU, and improve technology to mitigate damages.

          I don’t see another way out nor a complete solution that is cost effective at this point. So keep hammering at it. You will never achieve it, if you convince yourself it isn’t possible.

        • We don’t have abundant nuclear power, and given today’s cost structure, probably can’t have abundant nuclear power. And we don’t have time to make all of the changes.

      • Greg Machala says:

        I was fixing to ask the same questions. I am just not understanding how we will build and maintain any infrastructure without fossil fuels.

      • Ed says:

        We are talking two different scales. There is the scale of today’s system and there is the scale of a new system built by hand and using scrape. The new system will start very small, very local. I think maybe around an existing small hydro dam and generator. Yes, parts will wear out. They will be replaced with parts made locally largely by hand often from scrape. Roads? Don’t need them for Juan’s burro, don’t need them for the workers they walk and live near by. I am not talking about an equal of the existing system I am just talking about the possibility of some technology existing over the long haul. Some electric, a telegraph, lines strung and maintained by hand and by burro. Will there be enough scrape metal to wind electric motors or will we use water wheels (wood) and axle (wood) and leather belts? Don’t know but water will still fall, wind will still blow, wood will still burn.

        • Fast Eddy says:

          “They will be replaced with parts made locally largely by hand often from scrap”

          Hmmm… I wonder if a 19th century expert black smith would be able to maintain one of these …


          I could see these working for awhile post collapse — but the moment a key component goes…. they’ll be left to rust to pieces….

          Likewise with solar panels — I just dropped 5 onto our garage yesterday as we get ready to ignite the solar pump in the creek — one thing goes wrong on any of that down the road — and it will be goodbye to the irrigation water… I’ll be relying on the gravity fed spring water completely…. along with everyone else down hill from me)

          • liamlynch101 says:

            At that point, people would have to learn to make new things. Current “renewables” will not last forever, the offshore wind farm here is not going to last long post collapse. In this case, people will have to make their own tools, possibly utilising stone age like skills. However I must note that people may be able to even ascend higher than that because so much knowledge is available today in libraries and so many people are literate. In my opinion, young people today need to start reading up on how to actually manufacture items from a 18th or 19th century setting, that way, they can possibly avoid having to deal with a stone age lifestyle, especially if they live in small towns on relatively isolated islands.

            • Fast Eddy says:

              That makes sense — however try suggesting to a 14 yr old the next time their face is buried in their phone that they should instead be learning how to fashion a knife out of a piece of scrap metal….

            • liamlynch101 says:

              The young want change and some parents want change, this sort of thing of teaching kids how to survive and collaborate with people within their community is a thing parents need to do since they have the most influence over their kids.

          • “Likewise with solar panels — I just dropped 5 onto our garage yesterday as we get ready to ignite the solar pump in the creek — one thing goes wrong on any of that down the road — and it will be goodbye to the irrigation water…”

            If you are going for resilience, I don’t think solar PV would be the way to go. If you stockpile enough spare parts, the system can outlive you, however.

            • Fast Eddy says:

              I need to get water up a 50m hill to storage tanks… solar was the best option …

              At the end of the day who am I kidding — none of this is going make a bit of difference…. all it will do is possibly allow me to hang around a bit longer to observe history in the making…

              The problem is — once the power goes off — I won’t know what’s happening except in my immediate vicinity…

              Everything will get very local very quickly when the grid goes down….

        • Remember, it still takes a lot of wood to make charcoal to melt existing metals for reuse. We can’t do a whole lot, without deforestation.

          • madflower69 says:

            “Remember, it still takes a lot of wood to make charcoal to melt existing metals for reuse. ”

            You can use electric for melting existing metals. You can even use solar directly.

            • The problem, as I keep poking out, is the system breaking. If you don’t have electricity, then what do you do? I am not sure how you used solar directly–put the metal out in the sunlight? Take some mirrors from people’s homes, and use them to concentrate the sunlight a bit?

            • madflower69 says:

              “The problem, as I keep poking out, is the system breaking. If you don’t have electricity, then what do you do? I am not sure how you used solar directly–put the metal out in the sunlight? Take some mirrors from people’s homes, and use them to concentrate the sunlight a bit?”

              It isn’t breaking, it is -changing-. Since you want to build a concentrated solar collector, you can. Go for it:

              It is far easier to contract solarPV out though.

      • madflower69 says:

        “How do you make metals and transport them in this scenario? How do you keep up roads? The electric grid? How do you make pumped hydro storage and uranium based fission without fossil fuels?”

        You do know you can synth everything fossil fuels are don’t you? It has been mentioned several times. It just isn’t cost effective at THIS point. Tomorrow might be a different story.

        So yeah the world will keep moving with or without FFs, and most likely without.

        • We need really cheap and abundant substitutes for fossil fuels. I presume you mean we can synthesize fossil fuels, but not cheaply or in quantity.

          • madflower69 says:

            “We need really cheap and abundant substitutes for fossil fuels.”
            Yup, renewables are cheaper in some instances. It takes time to develop more complete solutions.

            “I presume you mean we can synthesize fossil fuels, but not cheaply or in quantity.”

            Sort of. You can do it in quantity. You can’t do it as cheaply yet.

            It is all about having people work on it. If everyone gives up, no one works on it, and it will never get done. We would have no chance at all. I don’t think we end up using fossil fuel replacements for the most part anyway. You make your energy other ways, and just use those, rather then do a silly conversion to fossil fuels to match the existing infrastructure.

        • Ed says:

          “It just isn’t cost effective at THIS point.” Anybody care to offer a number and a reference?

  25. Kurt says:

    Hey Fast Eddy. Ya wanna bet real money that things are pretty much the same as they are now in 5 years?

    • Rodster says:

      It’s quite possible and it maybe even longer than that. Katherine Austin Fitts likes to refer to where we are now as the “Slow Burn”.

      • Fast Eddy says:

        The Long Emergency is a a good title…

        We have been in the Long Emergency since 2001 — when oil prices started to climb…

        The Long Emergency will culminate in Apocalypse Now.

    • greg machala says:

      For everyone? In all countries. No way things can remain as they are. I am convinced that there will be some major steps down coming in the Middle East, China, Japan, Europe and the USA before the end of 2016.

    • “Ya wanna bet real money that things are pretty much the same as they are now in 5 years?”

      Now, you’re really going to have to carefully explain what you mean by “pretty much the same”.

      • Fast Eddy says:

        Kurt — that’s not a fair bet — I’d rather target ‘before the end of 2016’ to give you a fighting chance…

        But the thing is….

        You’ll probably be dead and so will I … and if we are not (i.e. we are just suffering and on the verge of starvation) — money will be of no use (other than to light a fire to roast a rat over) —– I guess we could bet a case of tuna … but then how would you get it to me?

        • liamlynch101 says:

          What do you mean by “before the end of 2016”, do you mean, at any time within 2016, or are you referring to around the October November months.

          • Fast Eddy says:

            It’s a guesstimate…

            Corporate profits are shrinking…. commodities have collapsed …. the global economy either grows or it collapses… if this trend continues it will collapse soon ….

            I fail to see how the trend does not continue given interest rates are already zero and tens of trillions of dollars of stimulus have been deployed in an attempt to keep the hamster running.

            The hamster is tiring …. he is close to collapsing…

            Perhaps the central banks will give him another shot of high octane EPRO, coke, heroin, speed and adrenaline to get him back on the wheel… delaying his collapse ….

            But that is impossible to know. Based on the facts — the collapse is close.

            • SymbolikGirl says:

              I’m becoming convinced that the next shot will be direct monetary heroin/stimulus from the CB’s of the world, more infrastructure, maybe big tax breaks and other taxpayer ‘free money’ payments. I have no idea if it will work or what kind of time it will buy us but it seems like this, coupled with NIRP everywhere will be the final huzzah of the elites, will that get us another year or two of BAU (more or less) in the West? I have no idea.

              There are so many other issues that are just piling up on that poor camel; massive instability in the MENA region, a very unstable Saudi Arabia, a shaky China, escalating natural disasters and droughts due to Climate Change, social unrest spreading in many places, millions of economic refugees on the move, European banks looking very shaky (ie Deutsche Bank) and falling economic indicators everywhere. The question is what will be the final straw that breaks the camel’s back and when will it fall?

      • In fact, will “real money” continue to exist in 5 years?

    • The problem is that there will be no way to collect on the bet.

      • Kurt says:

        Wow! You can’t be that stupid. It’s really very simple. You pay me five years from now if the major economic collapse has not occurred. Otherwise, if a collapse occurs before then, I pay you. Come on, take the bet!

        You are right about most things, but you and fast eddy do not understand humans. Ingenuity, greed, and perseverance will prevail. Fast eddy needs to get out of his parents basement and change his attitude. Gail, you need to take long term view. Go to a city, go out to the country. Look at humans in action. Stop thinking that humans do not adjust because they always do.

        • Fast Eddy says:

          Kurt — that’s so ‘out there’ that it’s actually funny!!!

          You should change your username to Jester….

        • xabier says:

          ‘Adjustment’ only goes so far: when the Russian peasants hunkered down during the German invasion of WW2 they were well-set to survive and very tough people.

          Unfortunately, the German soldiery took their houses and mattresses and thick duvets and kicked them out into the snow.

          They didn’t adapt there, they died.

          To say that ‘Humanity will adjust’ is so broad an assertion that it lacks meaning. Rather like asserting that ‘our future’ is to colonise the stars…….

        • How do you pay me if the major economic collapse occurs? Bags of rice and of nuts? Do you have these available to pay me with?

          • Kurt says:

            Everyone has something they value. Just name it. You won’t even do that because deep down, you are not sure that a collapse will occur within five years. Just admit it, nobody can predict the future as accurately as you and fast eddy claim. Too many variables and too many unknown rates of change.

            • liamlynch101 says:

              Too many variables yes, but an overnight collapse seems most likely to occur, one supply chain break and boom, everyone’s eating each other.

            • I am doubtful of everyone eating each other. More likely, the number of people catching diseases and dying soaring, or dying from medical conditions that were formerly treatable (broken arms, childbirth, tooth aches, appendicitis). The very young and the elderly will be most susceptible to problems.

            • liamlynch101 says:

              That was very surprising hearing that coming from you of all people 😉

            • Foodstuffs are likely to be the things survivors of the next five years will value most. That is why I suggested them. I particularly like nuts, but they don’t “keep” indefinitely, unless they are frozen. You need to be growing “new ones.” Also grain. The problem is keeping up the growing of new foodstuffs and shipping them to someone else, after systems have broken down.

  26. Fast Eddy says:

    Anglo American was the biggest casualty, down 49.8p, or 7.4pc to 625.5p, as USB also issued a note on the FTSE 100 miner ahead of its third-quarter production report on Thursday. The bank said the mining giant’s earnings may come under pressure from weak diamond prices, as they expect third-quarter revenue to fall by more than 50pc on soft demand for the gems. In the first half of the year, diamonds generated 40pc of Anglo’s underlying earnings.

    “It is a concern that cut diamond prices are still falling and there has been a material inventory build,” a UBS analyst said.

    Glencore was off by 5.2pc at 110p, Antofagasta slid 3.4pc to 559.5p, BHP Billiton was 3pc lower at £10.96, and Rio Tinto lost 2.1pc to close at £24.40.


    • We have an awfully lot of different kinds of commodities that are caught up in low-price problems. It becomes impossible to avoid the build-upon problems.

  27. Fast Eddy says:

    Britain’s beleaguered steel industry has been dealt a “shattering” and “devastating hammer” blow after Caparo Industries went into administration, with doubts over the future of its 1,700 staff.

    The global business, which has about 20 sites in the Midlands as well as operations sites in India and the US, filed for administration as pressure on the steel industry intensifies.


  28. Rodster says:

    I found this article interesting and it makes a point about technology and how it’s become part of our lives that it’s impossible to move away from it.

    Peter Haff coined the term technosphere just last year. He defines the technosphere as “the global, energy consuming techno-social system that is comprised of humans, technological artifacts, and technological systems, together with the links, protocols and information that bind all these parts together.


    Scientists have been warning for decades that human actions are pushing life on our shared planet toward mass extinction. Such extinction events have occurred five times in the past, but a bold new paper finds that this time would be fundamentally different. Fortunately, there’s still time to stop it.

    • Stefeun says:

      thanks for this rather good article, except -as usual- for the “solutions” part, which is total wishful thinking.

      The Technosphere I use to call it “the Square Bubble”,
      Square because most of our artificial environment (parasitic ersatz of an ecosystem) is made of straight lines, right angles and hard flat surfaces,
      and Bubble because it’s been fueled with ever increasing flows of energy; we know what eventually happens to bubbles.

  29. Fast Eddy says:

    Oh my….

    As for the GAAP bottom line, IBM’s income from cont ops of $3 billion was 14.3% lower than a year ago.

    Yet nowhere was the collapse in IBM’s business more evident than in the top-line, where IBM’s revenues of $19.3 billion, which missed expectations by a whopping $300 million, were down a massive 13.9% from a year ago, worse than the 13.3% plunge recorded in the Lehman quarter…



    Now for those believing that the collapse will continue to be slow…. at some point massive companies like IBM are going to be insolvent…

    i.e. they will no longer be viable entities and will no longer exist…. millions upon millions of employees will be out of jobs…

    Feel free to explain how – when this starts to happen — the collapse will not be fast.

    ‘We can ignore reality, but we cannot ignore the consequences of ignoring reality.’

    Reality will hit you – like a diamond bullet between the eyes — when the mass bankruptcies kick off… and the banks are overwhelmed by bad loans… there is nothing the central banks will be able to do once that hits….

    • Ed says:

      IBM is an excellent example of the PTB knowing what is happening. In 1992 IBM realized it could never pay the pension and retirement medical it had promised. So it cancelled both. IBM has been in liquidation ever since. The executives profit on the ride down. From their point of view that is what it is all about. IBM has sold off everything. Is deep in debt. Has no special product or service. That is only provides commodities like computers and accounting software. The CEO’s hype about cognitive-Watson is pure lie. IBM has not invented something better than AI, better than data mining, better than your staff of PhDs from Harvard and MIT.

      The one special thing IBM has is relationship with the US federal government. That can keep it afloat for as long as the federal government stays afloat.

      • Fast Eddy says:

        “IBM had 379,592 employees at the end of 2014”

        Imagine a company of that size collapsing…

        Then we have CAT — with nearly 3 years of continuous declines in profits…

        “Caterpillar Inc Number of Employees 111.25 K”

        Lots of high paying jobs down the tubes when these two blow sky high….

        These companies use loads of contractors so this would be only the beginning…

        This is how a deflationary death spiral happens — corporate profits shrink due to lower demand for their goods and services — more and more of their profits go to service debt —- that results in a downgrade which increases debt servicing costs — meaning more profits go towards the debts… meanwhile — demand continues to shrink because companies in this situation lay off staff…. eventually said companies crash into insolvency….. not a problem if we are only talking about a few companies…. but we are now talking about many thousands of companies facing the same fate….

        • Ed says:

          FE how many of the 400K are in India? They sure are not in the US.

          • Fast Eddy says:


            IBM’s U.S. workforce, according to the latest data from last fall, which appeared in congressional testimony, is 105,000. In 2007, IBM employed 121,000 people in the U.S.

            Doesn’t matter though — even the jobs in India and elsewhere are relatively high paying ones…. and IBM is not the only company headed for collapse…

            This is going to break the world record for toppling dominoes…

            • Ed says:

              In 2000, before the .com-fueled tech bubble burst, IBM maintained 153,587 workers in the U.S.

            • Ed says:

              The company is close to a deal to sell its chip manufacturing business to GlobalFoundries, a semiconductor maker owned by the emirate of Abu Dhabi. That could see another 7,000 workers, mostly in Vermont and upstate New York, exit the company and would put IBM’s U.S. headcount closer to 70,000 if pro-union estimates are accurate.

            • Fast Eddy says:

              As indicated… this is not just an IBM problem… it is a global problem affecting most large companies… some more than others….

              In the macro — it doesn’t matter if IBM shaves off a few of its businesses…

    • greg machala says:

      I agree. I feel that globally we took a huge step down in 2008. There has been a slow burn collapse (due to massive debt build-up) since 2008. In my opinion, from the indicators that I see enumerated on this and other blogs, I feel the debt bubble has run its course. QE is and will no longer work. The financial system is on the verge of collapsing again. I feel that another big step down is coming within the next 1 to 14 months. Further, I think the next step down will at least match if not rival the 2008 collapse. QE and ZIRP will be cast aside in favor of outright government grab of individual 401K, TSP and pension funds. Civil forfeiture will also be ramped up to confiscate any and all cash that the people have.

      • That’s rather ambitious timeline, what’s the hurry?
        I’d agree we are entering phase of profound global change for one important graph I’ve recently seen the oil consumption of OECD countries vs. the big 6 EME countries reached ~ 50/50 parity for the first time ever. So, from this relationship one easily concludes great reshuffle in politic and economic global order must emerge sooner or later. Question of timing again hah, however, given the current deflationary slowdown things have to ferment a bit more for any clear cut outcome.. As of now, it’s very unlikely the west/north is in any mood or favorable position to kick the table, similarly, the oponents have to firstly stabilize those recent agains. In summary can kicking festivities for ~5yrs most likely..

        • Fast Eddy says:

          Hands up anyone who saw the 2008 collapse coming?

          Although something did not feel right in the lead up — the crazy housing prices and $100 oil smelled fishy — I had no idea what was coming …..

          Until someone sent me this — about a year before the SHTF — http://www.slideshare.net/guesta9d12e/subprime-primer-277484

          I liquidated some assets and bought physical gold and land. That worked out well but the real money would have been in going short ….

          But then — as a number of the players in The Big Short stated – including Kyle Bass stated — ‘the disaster was so big that the fear was that we were right — but would not be able to collect — because everything would be collapsed’

          Anyway…. the point is…

          This time the antennae are up …. and the signals are being picked up …. so it will be no surprise when this blows up…

          But it is impossible to predict with much accuracy the exact timing… one day things will be ‘normal’ — and the next — all hell will start to break lose.

          By all rights it should have blown up already — how can companies profits be collapsing as they are and the stock markets keep charging higher? Never in the history of the world has that happened.

          The central banks will stop at nothing to delay this collapse for as long as possible.

          But when it hits it will be rapid — and it will be exponentially bigger than the 2008 collapse …

          I think it would be fascinating to sit down with Kyle Bass and ask him what he really thinks about this iteration of the collapse…

          If he thought he was going to collect on his bet in 2008…. does he think he’ll collect this time?

          I reckon he is stockpiling guns, ammo, gold and food…. that’s his hedge this time around…..

          • Good post.
            I was more about to stress the point we are now in the crazy “no mans land” period, where all the big global player have no interest to prematurely contribute to the “final crash” so therefore good chance of some more can kicking for the very near term, say up to 5yrs.

            I think people like Rubino, Turk, Schiff and others published clearly prior the housing crash and also recommended shorting the markets on that leg up. For many of those people it’s the x-th rodeo of their life already so they smell the blood in the streets. That’s how fortunes are made, to be more right than wrong for couple of decades in aggregate.

          • This is a link to my article foretelling the 2008 collapse. http://www.theoildrum.com/node/3382

            This is a link to a later write-up/presentation I did, explaining what I saw, that others didn’t. http://www.theoildrum.com/node/6191

          • xabier says:

            I of course had no idea as to the magnitude of what was coming, globally, but I did see that a deep recession was on the way for the US from about 2004: the decline in US orders started in 2003, became severe in 2004-5, and stopped altogether in 2006. Didn’t resume until 2009.

            I now no longer deal directly with the US, but customers who still do tell me things have been on the slide from 2012, and badly so since early last year. This correlates with the macro-data from real-world economics, not the faked-up statistics the politicians and central bankers push on us.

          • madflower69 says:

            “Hands up anyone who saw the 2008 collapse coming? ”
            *hand up*

            “Although something did not feel right in the lead up — the crazy housing prices and $100 oil smelled fishy — I had no idea what was coming ….. ”

            Stocks were way overvalued as well.

            It is why I think this is a market correction from disruptive technology rather then a full head on collapse.

            The FF sector and related businesses are getting tanked dragging down the whole global market. We are also seeing is growth in the non-fossil fuel sector.

            “Renewable energy sources – in power generation as well as transport – continued to increase in 2014, reaching a record 3.0% of global energy consumption, up from 0.9% a decade ago. Renewable energy used in power generation grew by 12.0%. Although this increase was below its 10-year average, it meant that renewables accounted for a record 6.0% of global power generation. “

      • Fast Eddy says:

        “QE and ZIRP will be cast aside in favor of outright government grab of individual 401K, TSP and pension funds. Civil forfeiture will also be ramped up to confiscate any and all cash that the people have.”

        No doubt we’ll see total desperation like this — no pretense of green shoots next time around — this will be the last gasps for air before we drown…

        I very much doubt any of these actions will kick the can very far — because they would all throw fuel onto the inferno of deflation…. they would destroy confidence in they system…

        We might get a few more months — but no way we could get another 7 years as we have out of QE ZIRP.

        The slow burn will give way to an explosion….

    • Don’t worry, when things get bad enough and people are suffering enough, they will support the government buying up all the bankrupt companies and nationalizing them. If things are bad enough, people will not be as critical of such actions as they were with AIG and GM.

      The hardest part is to alter the minds of the masses to accept a much lower level of energy consumption.

      • Fast Eddy says:

        I don’t see how that could work…

        These companies are starting to collapse because of lack of demand …. this is the start of a total deflationary collapse … where layoffs and bankruptcies beget more of the same…

        If the governments nationalize them I don’t see how that changes anything…

        That would be like trying to solve the problem by paying laid off people their wages while they sat at home and did nothing (or showed up at the office and drank coffee and played cards all day).

        There is no such thing as a perpetual motion machine.

        • I often hear from our CEE region friends, “you don’t understand what’s to live under openly nationalizing system” and “now we feel like falling into the same stuff again under EU/NATO” etc. There could be more than a sand grain of truth in that observation. Simply, the western public is intelectually lazy and unprepared enough so to swallow some early wave of nationalizing forced by PTB to prop up the spine of the system for can kicking purposes, it’s fairly likely indeed. Obviously it will end horribly shortly afterwards..

        • “If the governments nationalize them I don’t see how that changes anything…”

          Suppose a company makes widgets. These widgets cost $1, of which $0.10 is labour and $0.10 is debt. The market demand for the widgets falls in half, the company is unable to raise the price due to competition, and goes bankrupt.

          The government can nationalize the company by buying up the debt, equity and everything. They can employ the same amount of people to make half as many widgets. Now, the labour cost is $0.20 per widget, but the debt cost is $0, so the cost per widget remains $1.

          • Fast Eddy says:

            The thing is…

            We are not talking about one company — we are talking about all corporations — at some point they call will collapse because of lack of demand for their widgets…

            You cannot Nationalize BAU …. and even if you could … that would change nothing ….

            The business model demands cheap to extract energy — that is no longer available — nationalizing BAU even if you could would not fix the energy problem ….

            People seem to have this great faith in the central banks and government — they believe that they are all powerful and can ultimately back stop things —- this time is different…. there is nothing they can do about the end of cheap resources….

            That said…. the government has already stepped in and has to some extent nationalized all major corporations — they are not actually taking them over — but they are keeping them alive by making trillions of dollars available to them at ZIRP — which does keep them alive…

            But this is running up against limits…

            IBM is only one of many large corporations that has rapidly declining profits — and is having difficulty keeping its share price up because they have borrowed so much cash to buy back shares that they are at risk of being rated junk….. if that happens their debt servicing costs will rage higher…. and they will enter a death spiral….