Why is the price of oil so low now? In fact, why are all commodity prices so low? I see the problem as being an affordability issue that has been hidden by a growing debt bubble. As this debt bubble has expanded, it has kept the sales prices of commodities up with the cost of extraction (Figure 1), even though wages have not been rising as fast as commodity prices since about the year 2000. Now many countries are cutting back on the rate of debt growth because debt/GDP ratios are becoming unreasonably high, and because the productivity of additional debt is falling.
If wages are stagnating, and debt is not growing very rapidly, the price of commodities tends to fall back to what is affordable by consumers. This is the problem we are experiencing now (Figure 1).
Figure 1. Author’s illustration of problem we are now encountering.
I will explain the situation more fully in the form of a presentation. It can be downloaded in PDF form: Oops! The world economy depends on an energy-related debt bubble. Let’s start with the first slide, after the title slide.
Slide 2
Growth is incredibly important to the economy (Slide 2). If the economy is growing, we keep needing to build more buildings, vehicles, and roads, leading to more jobs. Existing businesses find demand for their products rising. Because of this rising demand, profits of many businesses can be expected to rise over time, thanks to economies of scale.
Something that is not as obvious is that a growing economy enables much greater use of debt than would otherwise be the case. When an economy is growing, as illustrated by the ever-increasing sizes of circles, it is possible to “borrow from the future.” This act of borrowing gives consumers the ability to buy more things now than they would otherwise would be able to afford–more “demand” in the language of economists. Customers can thus afford cars and homes, and businesses can afford factories. Companies issuing stock can expect that price of shares will most likely rise in the future.
Without economic growth, it would be very hard to have the financial system that we have today, with its stable banks, insurance companies, and pension plans. The pattern of economic growth makes interest and dividend payments easier to make, and reduces the likelihood of debt default. It allows financial planners to set up savings plans for retirement, and gives people confidence that the system will “be there” when it is needed. Without economic growth, debt is more of a last resort–something that might land a person in debtors’ prison if things go wrong.
Slide 3
It should be obvious that the economic growth story cannot be true indefinitely. We would run short of resources, and population would grow too dense. Pollution, including CO2 pollution, would become an increasing problem.
Slide 4
The question without an obvious answer is “When does the endless economic growth story become untrue?” If we listen to the television, the answer would seem to be somewhere in the distant future, if a slowdown in economic growth happens at all.
Most of us who read financial newspapers are aware that more debt and lower interest rates are the types of stimulus provided to the economy, to try to help it grow faster. Our current “run up” in debt seems to have started about the time of World War II. This growing debt allows “demand” for goods like houses, cars, and factories to be higher. Because of this higher demand, commodity prices can be higher than they otherwise would be.
Thus, if debt is growing quickly enough, it allows the sales price of energy products and other commodities to stay as high as their cost of extraction. The problem is that debt/GDP ratios can’t rise endlessly. Once debt/GDP ratios stop rising quickly enough, commodity prices are likely to fall. In fact, the run-up in debt is a bubble, which is itself in danger of collapsing, because of too many debt defaults.
Slide 5
The economy is made up of many parts, including businesses and consumers. The consumers have a second role as well–many of them are workers, and thus get their wages from the system. Governments have many roles, including providing financial systems, building roads, and providing laws and regulations. The economy gradually grows and changes over time, as new businesses are added, and others leave, and as laws change. Consumers make their decisions based on available products in the marketplace and they amount they have to spend. Thus, the economy is a self-organized networked system–see my post Why Standard Economic Models Don’t Work–Our Economy is a Network.
One key feature of a self-organized networked system is that it tends to grow over time, as more energy becomes available. As its grows, it changes in ways that make it difficult to shrink back. For example, once cars became the predominant method of transportation, cities changed in ways that made it difficult to go back to using horses for transportation. There are now not enough horses available for this purpose, and there are no facilities for “parking” horses in cities when they are not needed. And, of course, we don’t have services in place for cleaning up the messes that horses leave.
Slide 6
When businesses start, they need capital. Very often they sell shares of stock, and they may get loans from banks. As companies grow and expand, they typically need to buy more land, buildings and equipment. Very often loans are used for this purpose.
As the economy grows, the amount of loans outstanding and the number of shares of stock outstanding tends to grow.
Slide 7
Businesses compete by trying to make goods and services more efficiently than the competition. Human labor tends to be expensive. For example, a sweater knit by hand by someone earning $10 per hour will be very expensive; a sweater knit on a machine will be much less expensive. If a company can add machines to leverage human labor, the workers using those machines become more productive. Wages rise, to reflect the greater productivity of workers, using the machines.
We often think of the technology behind the machines as being important, but technology is only part of the story. Machines reflecting the latest in technology are made using energy products (such as coal, diesel and electricity) and operated using energy products. Without the availability of affordable energy products, ideas for inventions would remain just that–simply ideas.
The other thing that is needed to make technology widely available is some form of financing–debt or equity financing. So a three-way partnership is needed for economic growth: (1) ideas for inventions, (2) inexpensive energy products and other resources to make them happen, and (3) some sort of financing (debt/equity) for the undertaking.
Workers play two roles in the economy; besides making products and services, they are also consumers. If their wages are rising fast enough, thanks to growing efficiency feeding back as higher wages, they can buy increasing amounts of goods and services. The whole system tends to grow. I think of this as the normal “growth pump” in the economy.
If the “worker” growth pump isn’t working well enough, it can be supplemented for a time by a “more debt” growth pump. This is why debt-based stimulus tends to work, at least for a while.
Slide 8
There are really two keys to economic growth–besides technology, which many people assume is primary. One key is the rising availability of cheap energy. When cheap energy is available, businesses find it affordable to add machines and equipment such as trucks to allow workers to be more productive, and thus start the economic growth cycle.
The other key is availability of debt, to finance the operation. Businesses use debt, in combination with equity financing, to add new plants and equipment. Customers find long-term debt helpful in financing big-ticket items such as homes and cars. Governments use debt for many purposes, including “stimulating the economy”–trying to get economic growth to speed up.
Slide 9
Slide 9 illustrates how workers play a key role in the economy. If businesses can create jobs with rising wages for workers, these workers can in turn use these rising wages to buy an increasing quantity of goods and services.
It is the ability of workers to afford goods like homes, cars, motorcycles, and boats that helps the economy to grow. It also helps to keep the price of commodities up, because making these goods uses commodities like iron, steel, copper, oil, and coal.
Slide 10
In the 1900 to 1998 period, the price of electricity production fell (shown by the falling purple, red, and green lines) as the production of electricity became more efficient. At the same time, the economy used an increasing quantity of electricity (shown by the rising black line). The reason that electricity use could grow was because electricity became more affordable. This allowed businesses to use more of it to leverage human labor. Consumers could use more electricity as well, so that they could finish tasks at home more quickly, such as washing clothes, leaving more time to work outside the home.
Slide 11
If we compare (1) the amount of energy consumed worldwide (all types added together) with (2) the world GDP in inflation-adjusted dollars, we find a very high correlation.
Slide 12
In Slide 12, GDP (represented by the top line on the chart–the sum of the red and the blue areas) was growing very slowly back in the 1820 to 1870 period, at less than 1% per year. This growth rate increased to a little under 2% a year in the 1870 to 1900 and 1900 to 1950 periods. The big spurt in growth of nearly 5% per year came in the 1950 to 1965 period. After that, the GDP growth rate has gradually slowed.
On Slide 12, the blue area represents the growth rate in energy products. We can calculate this, based on the amount of energy products used. Growth in energy usage (blue) tends to be close to the total GDP growth rate (sum of red and blue), suggesting that most economic growth comes from increased energy use. The red area, which corresponds to “efficiency/technology,” is calculated by subtraction. The period of time when the efficiency/technology portion was greatest was between 1975 and 1995. This was the period when we were making major changes in the automobile fleet to make cars more fuel efficient, and we were converting home heating to more fuel-efficient heating, not using oil.
Slide 13
If we look at economic growth rates and the growth in energy use over shorter periods, we see a similar pattern. The growth in GDP is a little higher than the growth in energy consumption, similar to the pattern we saw on Slide 12.
If we look carefully at Slide 13, we see that changes in the growth rate for energy (blue line) tends to happen first and is followed by changes in the GDP growth rate (red line). This pattern of energy changes occurring first suggests that growth in the use of energy is a cause of economic growth. It also suggests that lack of growth in the use of energy is a reason for world recessions. Recently, the rate of growth in the world’s consumption of energy has dropped (Slide 13), suggesting that the world economy is heading into a new recession.
Slide 14
There is nearly always an investment of time and resources, in order to make something happen–anything from the growing of food to the mining of coal. Very often, it takes more than one person to undertake the initial steps; there needs to be a way to pay the other investors. Another issue is the guarantee of payment for resources gathered from a distance.
Slide 15
We rarely think about how all-pervasive promises are. Many customs of early tribes seem to reflect informal rules regarding the sharing of goods and services, and penalties if these rules are not followed.
Now, financial promises have to some extent replaced informal customs. The thing that we sometimes forget is that the bonds companies offer for sale, and the stock that companies issue, have no value unless the company issuing the stock or bonds is actually successful. As a result, the many promises that are made are, in a sense, contingent promises: the bond will be repaid, if the company is still in business (or if the company is dissolved, if the amount received from the sale of assets is great enough). The future value of a company’s stock also depends on the success of the company.
Slide 16
Governments become an important part of the web of promises. Governments collect their assessments through taxes. As an economy grows, the amount of government services tends to increase, and taxes tend to increase.
The roles of governments and businesses vary somewhat depending on the type of economy of a country. In a sense, this type of variation is not important. It is the functioning of the overall networked system that is important.
Slide 17
There was a very large run up in US debt about the time of World War II, not just in the US, but also in the other countries involved in World War II.
Adding the debt for World War II helped pull the US out of the lingering effects of the Depression. Many women started working outside the home for the first time. There was a ramp-up of production, aimed especially at the war effort.
Slide 18 – From The United States’ 65-Year Debt Bubble
What does a country do when a war is over? Send the soldiers back home again, without jobs, and the women who had been working to support the war effort back home again, also without jobs? This was a time period when non-government debt ramped up in the US. In fact, it seems to have ramped up elsewhere around the world as well. The new debt helped support many growing industries at the time–helping rebuild Europe, and helping build homes and cars for citizens in the US. As noted previously, both energy use and GDP soared during this time period.
Slide 19
I haven’t found very good records of debt going back very far, but what I can piece together suggests that the rate of debt growth (total debt, including both government and private debt) was similar to the rate of growth of GDP, up until about 1975. Then, debt began growing much more rapidly than GDP.
Slide 20
The big issue that led to a big increase in the need for debt in the early 1970s was an increase in the price of oil. Oil is the single largest source of energy. It is used in many important ways, including making food, transporting coal, and extracting metals. Thus, when the price of oil rises, so does the price of many other goods.
As we noted on Slides 11, 12, and 13, it is the growing quantity of energy consumption that is important in providing economic growth. The natural tendency with high energy prices is to cut back on energy-related consumption. Increasing debt, if it is at a sufficiently low interest rate, helps counteract this natural tendency toward less energy usage. For example, the availability of debt at a low interest makes it possible for more consumers to purchase big-ticket items like houses, cars, and motorcycles. These products indirectly lead to the growing consumption of energy products, because energy is used in making these big-ticket items and because they use energy in their continuing operation.
Slide 21
Many people have been concerned about what they call “peak oil”–the idea that oil supply would suddenly drop because we reach geological limits. I think that this is a backward analysis regarding how the system works. There is plenty of oil available, if only the price would rise high enough and stay high for long enough.
Much of this oil is non-conventional oil–oil that cannot be extracted using the inexpensive approaches we used in the early days of oil production. In some cases, non-conventional oil is so viscous it needs to be melted with steam, before it will flow freely. Some of the unconventional oil can only be extracted by “fracking.” Some of the unconventional oil is very deep under the ocean. Near Brazil, this oil is under a layer of salt. If prices would remain high enough, for long enough, we could get this oil out.
The problem is that in order to get this unconventional oil out, costs are higher. These higher costs are sometimes described as reflecting diminishing returns–more capital goods are needed, as are more resources and human labor, to produce additional barrels of oil. The situation is equivalent to the system of oil extraction becoming less and less efficient, because we need to add more steps to the operation, raising the cost of producing finished oil products. The higher price of oil products spills over to a higher cost for producing food, because oil is used in operating farm equipment and transporting food to market. The higher cost of oil also spills over to the cost of almost anything that is shipped long distance, because oil is used as a transportation fuel.
You will remember that increased efficiency is what makes an economy grow faster (Slide 7, also Slide 37). Diminishing returns is the opposite of increased efficiency, so it tends to push the economy toward contraction. We are running into many other forms of increased inefficiency. One such type of inefficiency involves adding devices to reduce pollution, for example in electricity production. Another type of inefficiency involves switching to higher-cost methods of generation, such as solar panels and offshore wind, to reduce pollution. No matter how beneficial these techniques may be from some perspectives, from the perspective of economic growth, they are a problem. They tend to make the economy grow more slowly, rather than faster.
The standard workaround for slow economic growth is more debt. If the interest rate is low enough and the length of the loan is long enough, consumers can “sort of” afford increasingly expensive cars and homes. Young people with barely adequate high school grades can “sort of” afford higher education. With cheap debt, businesses can afford to buy back company stock, making reported earnings per share rise–even though after the buy-back, the actual investment used to generate future earnings is lower. With sufficient cheap debt, shale companies can create models showing that even if their cash flow is negative at $100 per barrel oil prices ($2 out for $1 in) and even more negative at $50 per barrel ($4 out for $1 in), somehow, the companies will be profitable in the very long run.
The technique of adding more debt doesn’t fix the underlying problem of growing inefficiency, instead of growing efficiency. Instead, as more debt is added, the additional debt becomes increasingly unproductive. It mostly provides a temporary cover-up for economic growth problems, rather than fixing them.
Slide 22
A common belief has been that as we reach limits of a finite world, oil prices and perhaps other prices will spike. In my view, this is a wrong understanding of how things work.
What we have is a combination of rising costs of production for many kinds of goods at the same time that wages are not rising very quickly. This problem can be temporarily hidden by a rising amount of debt at ever-lower interest rates, but this is not a long-term solution.
We end up with a conflict between the prices businesses need and the prices that workers can afford. For a while, this conflict can be resolved by a spike in prices, as we experienced in the 2005-2008 period. These spikes tend to lead to recession, for reasons shown on the next slide. Recession tends to lead to lower prices again.
Slide 26
The image on Slide 26 shows an exaggeration to make clear the shift that takes place, if the price of oil spikes. When the price of one necessary part of consumers’ budgets increases–namely the food and gasoline segment–there is a problem. Debt payments already committed to, such as those on homes and automobiles, remain constant. Consumers find that they must cut back on discretionary spending–in other words, “Everything else,” shown in green. This tends to lead to recession.
Slide 27
If we look at oil prices since 2000, we see that the period is marked by steep rises and falls in oil prices. In Slides 27 – 29, we will see that changes in the price of oil tend to correspond to changes in debt availability and cost.
In 2008, oil prices rose to a peak in July, and then dropped precipitously to under $40 per barrel in December of the same year. Slide 27 shows that the United States began its program of Quantitative Easing (QE) in late 2008. This helped to lower interest rates, especially longer-term interest rates. China and a number of other countries also raised their debt levels during this period. We would expect greater debt and lower interest rates to increase demand for commodities, and thus raise their prices, and in fact, this is what happened between December 2008 and 2011.
The drop in prices in 2014 corresponds to the time that the US phased out its program of QE, and China cut back on debt availability. Here, the economy is encountering less cheap debt availability, and the impact is in the direction expected–a drop in prices.
Slide 28 – From The United States’ 65-Year Debt Bubble
If we go back to the steep drop in oil prices in July 2008, we find that the timing of the drop in prices matches the timing when US non-governmental debt started falling. In my academic article, Oil Supply Limits and the Continuing Financial Crisis, I show that this drop in debt outstanding takes place for both mortgages and credit card debt.
Slide 29
The US government, as well as other governments around the world, responded by sharply increasing their debt levels. This increase in governmental debt (known as sovereign debt) is part of what helped oil and other commodity prices to rise again after 2008.
Slide 30
We often hear about the drop in oil prices, but the drop in prices is far more widespread. Nearly all commodities have dropped in price since 2011. Today’s commodity price levels are below the cost of production for many producers, for all of these types of commodities. In fact, for oil, there is hardly any country that can produce at today’s price level, even Saudi Arabia and Iraq, when needed tax levels by governments are considered as well.
Producers don’t go out of business immediately. Instead, they tend to “hold on” as best they can, deferring new investment and trying to generate as much cash flow as possible. Because most of them have no alternative way of making a living, they often continue producing, as best they can, even with low prices, deferring the day of bankruptcy as long as possible. Thus, the glut of supply doesn’t go away quickly. Instead, low prices tend to get worse, and low prices tend to persist for a very long period.
Slide 31
In 2008, we had an illustration of what can go wrong when the economy runs into too many headwinds. In that situation, the price of oil and other commodities dropped dramatically.
Now we have a somewhat different set of headwinds, but the impact is the same–the price of commodities has dropped dramatically. Wages are not rising much, so they are not providing the necessary uplift to the economy. Without wage growth, the only other approach to growing the economy is debt, but this reaches limits as well. See my post, Why We Have an Oversupply of Almost Everything (Oil, labor, capital, etc.)
There is some evidence that the Great Depression in the 1930s involved the collapse of a debt bubble. It seems to me that it may very well have also involved wages that were falling in inflation-adjusted terms for a significant number of wage-earners. I say this, because farmers were moving to the city in the early 1900s, as mechanization led to lower prices for food and less need for farmers. I haven’t seen figures on incomes of farmers, but I wouldn’t be surprised if they were dropping as well, especially for the many farmers who couldn’t afford mechanization. Wages for those who wanted to work as laborers on farms were likely also dropping, since they now needed to compete with mechanization.
In many ways, the situation that led up to the Great Depression appears to be not too different from our situation today. In the early 1900s, many farmers were being displaced by changes to agriculture. Now, wages for many are depressed, as workers in developed economies increasingly compete with workers in historically low-wage countries. Additional mechanization of manufacturing also plays a role in reducing job opportunities.
If my conjecture is right, the Great Depression may have been caused by problems similar to what we are seeing today–wages that were too low for a large segment of the economy, thus reducing economic growth, and a temporary debt bubble that tended to cover up the wage problem. Once the debt bubble collapsed, demand for commodities of all types collapsed, and prices collapsed. This problem was very difficult to fix.
Slide 32
When we add more debt to the economy, users of debt-financing find that more of their future income goes toward repaying that debt, cutting off the ability to buy other goods. For example, a young person with a large balance of student loans is unlikely to be able to afford buying a house as well.
A way of somewhat mitigating the problem of too much income going toward debt repayment is lowering interest rates. In fact, in quite a few countries, the interest rates governments pay on debt are now negative.
Slide 33
If the cost of producing commodities continues to rise, but the price that consumers can afford to pay does not rise sufficiently, at some point there is a problem. Instead of continuing to rise, prices start to fall below their cost of production. This drop can be very sharp, as it was in 2008.
The falling price of commodities is the same situation we encountered in 2008 (Slide 27); it is the same situation we reached at the beginning of the Great Depression back in 1929. It seems to happen when wage growth is inadequate, and the debt level is not growing fast enough to hide the inadequate wage growth. This time around, we are also challenged by the cost of producing commodities rising, something that was not a problem at the time of the Great Depression.
Slide 34
If we think about the situation, having prices fall behind the cost of production is a disaster. We can’t get oil out of the ground, if prices are too low. Farmers can’t afford to grow food commercially, if prices remain too low.
Prices of assets such as the value of farmland, the value of oil held by leases, and the value of metal ores in mines will fall. Assets such as these secure many loans. If an oil company has a loan secured by the value of oil held by lease, and this value falls permanently, there is a significant chance that the oil company will default on the loan.
The usual belief is, “The cure for low prices is low prices.” In other words, the situation will fix itself. What really happens, though, is that everyone is so afraid of a big crash that all parties make extreme efforts to avoid a crash. In fact, there is evidence today that banks are “looking the other way,” rather than taking steps to cut off lending to shale drillers, when current operations are clearly unprofitable.
By the time the crash does come around, it is likely to be a huge one, affecting many segments of the economy at once. Oil exporters and exporters of other commodities will be especially affected. Some of them, such as Venezuela, Yemen, and even Iraq may collapse. Financial institutions are likely to find themselves burdened with many “underwater loans.” The usual technique of lowering interest rates to try to aid the economy doesn’t look like it would work this time, because rates are already so low. Governments are not in sufficiently good financial condition to be able to bail out all of the banks and others needing assistance. In fact, governments may fail. The fall of the former Soviet Union occurred when oil prices were low.
Once there are major debt defaults, lenders will want to wait to see that prices will stay consistently high for a period (say, two or three years) before extending credit again. Thus, even if commodity prices should bounce back in 2017, it is doubtful that producers will be able to find financing at a reasonable interest rate until, say, 2020. By that time, depletion will have taken its toll. It will be impossible to make up for the many years of low investment at that time. Production is likely to continue falling, even if prices do rise.
The indirect impact of low oil and other commodity prices is likely to be a collapse in our current debt bubble. This collapsing bubble may lead to the failures of banks and even governments. It seems quite possible that these indirect impacts will affect us most, even more than the direct loss of commodities. These impacts could come quite quickly–in the next few months, in some cases.
Slide 35
Stocks, bonds, pension programs, insurance programs, bank accounts, and many other things of a financial nature seem to be very “solid” things–things that we can expect to be here and grow, for many years to come. Yet these things, directly and indirectly, depend on the ability of our system to produce goods and services. If something goes terribly wrong, we may find that financial assets have little more value than the pieces of paper that represent them.
Slide 36
I won’t try to explain Slide 36 further.
Slide 37
Slide 37 illustrates the principle of increased efficiency. If a smaller amount of resources and human labor can be used to create a larger amount of end product, this is growing efficiency. If more and more resources and labor are used to produce a smaller amount of end product, this is growing inefficiency.
The other part of the story is that simply automating processes is not enough. Instead, the economy must also produce a sufficiently large number of jobs, and these jobs must pay high enough wages that the workers can afford to buy the output of the economy. It is really the health of the whole interconnected system that is important.
Slide 38
Our low price problems are here now. That is why we need very cheap non-polluting energy products now, in large quantity, if there is any chance of fixing the system. These energy products must work in today’s devices, so we aren’t faced with the cost and delay involved with changing to new devices, such as cars and trucks that use a different fuel than petroleum.
Slide 39
Regarding Slides 39 and 40, we are sitting on the edge, waiting to see what will happen next.
The US economy temporarily seems to be in somewhat of a bubble, now that it does not have QE, while several other countries still do. This bubble is related to a “flight to quality,” and leads to a higher dollar, relative to other currencies. It also leads to high stock market valuations. As a result, the US economy seems to be doing better than much of the rest of the world.
Regardless of how well the US economy seems to be doing, the underlying problems of rising costs of producing commodities and prices that lag below the cost of production are still present, making the situation unstable. Wages continue to lag behind as well. We should not be too surprised if the economy starts taking major downward steps in the next few months.
Slide 40
NEW YORK – When Carly Fiorina started at Hewlett-Packard Co in July 1999, one of her first acts as chief executive officer was to start buying back the company’s shares. By the time she was ousted in 2005, HP had snapped up $14 billion of its stock, more than its $12 billion in profits during that time.
Her successor, Mark Hurd, spent even more on buybacks during his five years in charge – $43 billion, compared to profits of $36 billion. Following him, Leo Apotheker bought back $10 billion in shares before his 11-month tenure ended in 2011.
The three CEOs, over the span of a dozen years, followed a strategy that has become the norm for many big companies during the past two decades: large stock buybacks to make use of cash, coupled with acquisitions to lift revenue.
All those buybacks put lots of money in the hands of shareholders. How well they served HP in the long term isn’t clear. HP hasn’t had a blockbuster product in years. It has been slow to make a mark in more profitable software and services businesses. In its core businesses, revenue and margins have been contracting.
More http://www.reuters.com/investigates/special-report/usa-buybacks-cannibalized/
What if the Elders (or fossil fuels) are simply antagonists in a natural system – similar to a virus or other catalyst – that mutates the system beyond its original form stimulating growth (for a while) until the system implodes under its own weight?
So, in a way, Ponzi scheme Earth – along with its instigators and managers – are part of the natural order. If alien scientists were to study the phenomenon, they would not observe anything exceptionally unusual. Although, a destructive species, we are not the most numerous or long lived. And elephants, if left to their own devices, can devastate land and forests just as we do thereby causing their own collapse events.
It is only humans themselves that elevate their status to that of exceptional. As evidence, we present our technology, our adaptability, and a brief period of excursions to our neighbouring moon – possibly our peak travel moment.
And yet, other species – bacteria as far as we know – travel throughout space hitching a ride on comets, asteroids and such, populating receptive planetary systems with ease. Forests on Earth grow to cover vast areas of land and it has been discovered that some of them form a single organism that communicates to itself via various methods. There are many other species that are tool users, home builders, navigators etc. But if opposable thumbs and a prefontal cortex are required for advanced use of tools, then other species could develop these and rise to dominate as humans have done. Given millions of years of evolution, squirrels or racoons – crows are very smart too but lack the thumbs! – could rise up in our place and possibly achieve greater “success”.
But there lies the problem. As discussed here, any “advanced” species will surely encounter the same limits that we have – unless they find exceptional ways to avoid them i.e. they don’t succumb to the same antagonists or catalysts that we did.
In fact, the Fermi Paradox stipulates that something along these lines may be happening to all planetary species after reaching a certain level of progress. In others words, it may be a universal law. And there’s nothing you can do about it.
Rather than try to fix a universal law of nature, an observer may wish to admire the ebb and flow of species along with each one’s idiosyncracies as one might observe the rise to glory of a dragonfly followed by its rapid demise…
“Dragonflies are predators, both in their aquatic larval stage, when they are known as nymphs or naiads, and as adults. Several years of their lives are spent as nymphs living in fresh water; the adults may be on the wing for just a few days or weeks…”
You guys raise some points about money but you must remember currency is just a symbolic representation of work done, an abstract medium of exchange. We are not talking about gold coins here.
It matters not what the currency price placed on anything in this world is. The price movements up and down, all of these various bubbles, going higher and then bursting, etc. is short term noise that masks the underlying inescapable inflationary trend.
Can governments create currency and decline and “de-grow”? Of course they can! Can they substitute currency, or use another, when theirs has failed? Of course!
It’s just the way the system works. And all the better, too. Paper money works. Digital money as well. It’s flexible, and that flexibility allows for an industrial economy.
But…and this is a huge but…the tendency is always toward inflation. Does this mean you should go out and get rid of all of your cash, and pour it into homes and stocks and fine art and everything that might possibly gain in an inflationary world? No, of course not, because you are not capable of predicting which way these things turn. Nobody is.
It’s a matter of luck, and access to political favors and debt financing. If you were somebody who just worked and saved, and were honest, you were screwed from the beginning. You were the suckers then, and still are even as you theorize on doom.
The world is not fair. The good guys never win. The system is not honest, it’s rigged and corrupt and always inflationary. The sociopaths rule and control everything. We are incapable of reform as a species. We are tribal creatures who lust after sex, power, fame, money, and the thrill of the kill, before we die and meet eternity. America is not a peaceful democratic republic, it’s an empire bent on total domination, or dragging the entire world down with it. The Islamists will never stop breeding, killing, or defending their territory. Israel will never back down. The races and peoples of this world will never live in harmony. The socialists and kumbaya utopians will never stop coming for everything you have to transfer to their pet causes and welfare populations. The corporate managers will never stop expanding and trying to occupy every single niche they can, so they can dump their shares on the public before liquidation. You must repeat this to yourself every single day until you get it. Keep on repeating it until your belief in honesty, objectivity, science, the rule of law, fair play, is absolutely dead and gone, extinguished. Lose all hope and then you’ll see clearly what is going to happen going forward. I know because I went through this painful process myself.
It pains me to see this naivety because it’s going to result in many wrong forecasts and even personal despair going forward. Verily I tell you that you guys actually aren’t prepared. You cannot be prepared with an incorrect forecast. You are going to look at the world, 5, 10, 20 years from now and be shellshocked at the way this plays out.
Can countries “de-grow” without collapsing? That is a question you need to think about. Perhaps, it is true, when a country is part of a networked system that is in total growing. But if the overall system is shrinking, I am pretty sure that collapse occurs, because of the debt involved, and because of the changes in the internal structure of the system, as the amount of required energy use to maintain the system grew.
You have an awfully lot of faith in “how the system works.” This is another situation where there is a “domain” problem. The system works in some situations, but it doesn’t in others.
Gail, I see it frequently mentioned that what we really need is $20 per barrel oil. If that impossible dream did come to pass wouldn’t that just give us a few more years or is it possible that could change our current outlook?
Need $20 to be the cost of extraction, not of sale.
Yes pile that’s an extremely important point.
i.e. impossible
Exactly. So we get money printing, financial engineering and accounting scams as a substitute, for now.
Because if diminishing returns, even if we could get something else to give us $20 per barrel oil, that price tag would not last long. And we would continue to have lots of other problems, like pollution, increasing problems with illness because of high population, mutations, and people living close together.
Dolph9, I agree with your second paragraph.
That reads like you have done extensive MSM reading … and are presenting a current events summary to the class….
Noam Chomsky quotes Carl Sagan saying that intelligence is a lethal mutation:
That was a very good article and shows how intelligent lifeforms tend to mutate until they hit a brick wall.
Intelligence or consciousness just needs an abstrahation module in the brain, ability to make abstract concepts like “Whoopie, animal tracks, a animal went this way not so long ago”. And a working memory of just a few choices. Those two combine in an image of self, and a world, that extrapolates in to intelligence. Not that hard to do, I would imagine. Combine those two with language proficiencies and Voilá.
Now intelligence leads to growth and Joseph Tainter says complexity is always increased over time. The difficult thing would be to stop that growth once planetary limits are reached. That would imply a turnaround of the entire millenium old culture in one generation. Whatever wisdom would have been gathered along the way, would have to be reversed or recast, reimagined, in just one generation. That, I would imagine, would indeed be a difficult thing to achieve. Only some sort of “Radical Rationalism”, what ever science (or Gail) says, goes. Would ever have a chance of keeping Type I or Type II civilizations in check, on the Kardashev scale https://en.wikipedia.org/wiki/Kardashev_scale
Because, imagine what we can do with just a few airplanes and tall buildings. Now imagine flying cars or Millenium Falcons by the billions. That would be a nightmare.
Whatever science says, goes..That would seem like draconian measures, and a life not worth living. But then again I would imagine any intelligence sophisticated enough would know how to make an AI.
I have been wondering why we don´t have an working AI already. There are two ways of making an AI. A soft model of guessing/ predicting what a human would do or think next. An extrapolation module on top of what Google already has. And a hard AI, that is something which a soft AI can reach be extrapolating itself.. Google should already have all the pieces for a soft AI. Except of course, if they are trying to make an hard AI before landing on the soft AI. Going straight for a hard AI would be difficult, I would Imagine.
Anyways, with an AI all members of the species can be reached with just the perfect information, at all times. Perfect knowledge or information would be just the right info, in the right place, at the right time, in the right way. That would be like having a the smartest professor, in everything, as a personal assistant/ best friend in everything you do, all the time. It would know exactly what to do, say, or show you, to manipulate you to be happy and productive in any set of circumstances. Now that would be a way of keeping an Type I or Type II civilization in check.
If then intelligence should be relatively easy to achieve, and AI should be relatively easy to achieve, therefore Type I or Type II civilizations should be relatively easy to achieve. Then why don´t we have a universe teeming with life? The Drake equation would imply that https://en.wikipedia.org/wiki/Drake_equation
Either they are smart enough to encrypt their messages and signals http://www.theguardian.com/us-news/2015/sep/19/edward-snowden-aliens-encryption-neil-degrasse-tyson-podcast
Or, that crucial point in time when a civilization first hits the planetary boundaries and they have to turn a millenium old culture, reinvent themselves, in just one generation, they – just – can´t – do – it. Too much can go wrong in a very short timespan.
Personally I have not met that many intelligent life forms on planet earth, but luckily most of them tend to visit Gails blog regularly. Cheers!
As I wrote previously on Kardashev scale, we have by now reached roughly .75 Type I treshold, i.e. our global energy output equals to 75% yearly solar input. But we could look at it from a different angle as well, in particular since 1960s we already and clearly reached Type I status in terms achieving potential to cripple/destroy/reset the whole planetary biosphere-ecosystem either by nuclear winter, ozone layer destruction, microbiology mutations etc. as opposed to command solar system scale issues (TypeII), galaxy level issues (TypeIII).
Again, the posibility to somehow find another leverage-afterburner thingy and catapult us somewhere between Type I-II is still possible, but I’d give such techno fantasy a low single digit probability, and almost exclusively on the disclaimer domain we simply can’t predict the future, not that’s it is somehow likely given current knowledge and other pressing problems.
Our society runs on a Kim Kardashian scale!!! ( – :
Good one!
Glad you think the intelligent life forms visit here.
I have at times dreamt that our intelligence would continue in some other form – a more resilient substrate able to continue its growth in one way or another. To expand our experience beyond anything comprehensible by any human today. Imagine beings capable of a blissful existence for millions of years, diving within their own expansive awareness, understanding all natural law and applying it with respect and compassion for all life. I don’t see why this wouldn’t be possible given sufficient time and resources.
What we talk about here has nothing to do with what is possible, only the local predicament caused by developed nations consuming way beyond their means. The poor of the world are not to blame, but 7 billion people trying to consume at the rate that americans currently do is, as we know, silly.
Then again, without a sufficient pool of brains, you wouldn’t even get this far, so you would at least require the minimum amount of intelligent humans for this experiment to work. And I absolutely believe that this game is worth pursuing – intelligence, in and of itself, has so much potential and we’ve only scratched the surface. What is destroying that potential is psychopathy, both individual and collective. If psychopathy had not infected the species and spread in its various forms, we would be seeing a very different outcome right now. Even our vestigial animal instincts would have receded far more quickly to be replaced by more rational qualities. Peaceful development and problem resolution would be the norm. Resources would be equitably distributed and not wasted. Population growth would have been nipped in the bud long ago. Patent hogging wouldn’t exist. Global co-operation would be the name of the day. But psychopathy ruined all that. An emergent property that we were unable to contain even though our lives depended on it.
But even if intelligence did manage to break away from its own imploding economic system, it would increasingly be faced with a far more insurmoutable problem. That of ever-increasing life extension anxiety. You see, the more intelligence is able to extend its own existence, the more of its intelligence and resources it will have to dedicate to the task of survival. A million year old organism, aware of its impending death, would become obssessed with the idea and throw everything it could at solving the problem – the ultimate can-kicking exercise! Joy and bliss go down. Anxiety and neurosis go through the roof. The more you have to lose, the more you lose it!
If successful though, and after having consumed all available resources in the universe, the organism’s pursuit would inevitably return it to source i.e. it would have found a way to merge with the informational field from whence it came without loss of conciousness.
Only to set the whole thing in motion again…
You make a naive mistake here for AI. It will not be free to decide what to do but it has to obey the orders of it’s creator. You will not believe that for google but it is for certain true for the military. So what you get is an automaton to persue a certain goal. That is not AI at all. Do you think for example that we do not have knowledge of all things already at your fingertips? There exist trillions of books where smart people have written about absolutely everything you might want to know. There exists Gazilions of cpus in giant computing centers that calculate everything you want from the quantum state upwards.
So what if the AI told you to reduce population or to use drugs to get knowldege of life or to dial K for Kremlin and settle all disputes ? Will not happen ! Why ? because as FE states:”You either win or you loose” There exists a terminal fight on whatever you look at, it is just not very visible as the chains of action and reaction are very long. An AI will understanf all that very quickly and the only result it can come up with in the end is that there can only be AI and no humans. So “real AI” can never happen and when it happens, it will outperform humans in ten milliseconds and pull one Billion levers at once in the next missliseceond. You will be dead before the cursor on the AI terminal will jump to the next position.
MM, a soft AI is a mimic, not an entity. A hard AI should be based on mimicry, unless they are going directly for an hard AI, then we will never see one.
A hard AI based on mimicry will be needing us as the “biosphere” that produces it. At some point the hard AI:s form some sort of hyperevolution, and at that point we as humans will be completely unable to tell what they want or how they should go about and getting the things they want..
MM, relax, since they seem to be going straight for the hard AI, we will never see one.
We are an anomaly. Or are we? It would interesting to know if other intelligent life exists on one of those earth-like exoplanets out there…
It does beg the question… is there any point to all of this?
I used to say that if only one human being felt a sense of purpose, then the universe had in fact been birthed already imbued with the potentiality that would eventually lead to the emergence of that unique sense of purpose. Therefore the universe is rigged for purpose from the get go.
Now, I’m not so sure. It appears that the underlying construct that upholds the universe could infact be a steady-state system i.e. it’s always there. The universes that emerge and recede form part of a superficial fluctuating expression of that which lies beneath. And every outword breath of this ever-present “being” is unique with its own set of laws and patterns – much like every snowflake has a unique structure.
It should be no surprise then that all matter is made up of tiny vibrations – the interplay of light and sound. The deeper we look, the less actual “stuff” we find. There is nothing there but tiny expressions of light and sound (vibration) that pulse in and out of existence. Where do these expressions go before re-appearing again in our “realm”?
I believe that “all that is” bubbles up from this “source” and that emergent intelligent life forms are aware of this source at a deep level. In fact, even bacteria have been shown to ehibit basic levels of conciousness and self awareness.
Why then, do the emergent properties of this “system” tend towards greater complexity and equilibrium only to collapse before reaching escape velocity and some new level of existence?
Techno-freaks talk about this all the time. They readily explain how continuity of humanity can be achieved by extreme miniaturisation and in fact, this is what other universal cultures may have done. Hence, no sign of life out there.
Continuity of humanity really means continuity of intelligence because, more than cheeseburgers or bagpipes, that’s what would allow any organism to reach escape velocity and avoid natural death. Beyond that, a constantly evolving human colony of trillions could live as information on a sliver of glass encrusted in an orbital satellite the size of an orange.
At some point, we have to be honest with ourselves. Either the appearance of life on this planet – including human beings – represents the most improbable lottery win of all time or this happens relatively frequently throughout the universe, we’re just unable to see it.
To counter the obvious conclusion that we may be the result of some underlying system of potential intelligence, cosmologists theorise that our universe may in fact be one of many in a multiverse – we just happen to be in the one that spawned intelligent life. Again, improbable lottery win.
We’re also among the group of species that is aware of its own mortality. But we’re the only one that tries to overcome this – everything from mummification to cryogenics, AI and mind-uploading – anything to escape the chains of entropy.
We are also able to meditate deeply on our existential experience and attempt to make sense of it all. In my own own attempts, my conclusion is that none of it makes any sense at all! You might as well lie down in a field of tall grass and contemplate the clouds until life happens. In other words, simply enjoy it for what it is – an experience, no more, no less.
We talk of our economy as if it’s something that humans created and yet…
“Each of those 100 trillion cells functions like a walled city. Power plants generate the cell’s energy. Factories produce proteins, vital units of chemical commerce. Complex transportation systems guide specific chemicals from point to point within the cell and beyond. Sentries at the barricades control the export and import markets, and monitor the outside world for signs of danger. Disciplined biological armies stand ready to grapple with invaders. A centralized genetic government maintains order.”—Peter Gwynne, *Sharon Begley, and *Mary Hager, “The Secrets of the Human Cell,” in Newsweek, August 20, 1979, p. 48.
We are not in control.
A good argument for the following – which is the same as lying in the field of grass and enjoying the day…. a position that I have increasingly gravitated towards over the years….
Nihilism is the belief that all values are baseless and that nothing can be known or communicated. It is often associated with extreme pessimism and a radical skepticism that condemns existence. A true nihilist would believe in nothing, have no loyalties, and no purpose.
Nihilism equates to clinical depression. A sound mind is able to contemplate its own demise and come up with all manner of fairy tales to compensate i.e. life after death, return to the source etc.
In other words, too much rationality will kill ya! A spoonful of delusion helps the medicine go down. And boy are we a deluded species.
Either that or it’s worth hanging around because every little thing can be a source of joy – gardening, observing nature, swatting flies. Even my pets give me a sense of purpose. Although, I did run over a cat the other day. Maybe that’s the compensation thing at work there…
Put it this way, Isaac Asimov continued tapping away at his type writer until his dying day. A concert cellist continued to practice her technique well into her nineties. When asked why, she responded that there was always room for improvement. Faced with imminent extinction, many people choose life and purpose. Very strange.
I guess we’ll have to rip a leaf out of whatever book those guys were reading.
In my culture, that book is called “Why Not?” (or: אם אין אני לי מי לי?ולהיות לעצמי שלי, מה שאני ‘אני’? ואם לא עכשיו, אימת? [Hillel’s famous quote])
The 2016 parliamentary elections in Slovakia will be soon, the meetings of the leading party are already going on and, as usual, are visited by the numerous retired people waiting for their share from the output of the ever smaller younger generations…
http://tv.hnonline.sk/naplnime-to-do-poslednej-bodky-brezno-tlieskalo-spickam-smeru-971647
The Chilling Thing Caterpillar’s President Said about China
Caterpillar, one of the icons of American industrial might and a “bellwether” for the global economy, has been having a hard time. It forecast that sales would drop 5% in 2016, an IBM-like fourth year in a row of declining sales, the worst such spell in its history.
Now Caterpillar threw in the towel on its formerly most promising market, China. Not for the current year, or even next year – those are already toast. But for future years. And for the entire industry.
It isn’t just CAT’s problem; the industry as a whole is getting whacked in China because of China’s economy. That’s Tom Pellette, Group President of Caterpillar Inc., with administrative responsibility for Construction Industries, told the Financial Times in an interview.
He cited some terrible industry-wide numbers for China, without disclosing Caterpillar’s own: in 2015, sales of hydraulic excavators between 10-90 tons are expected to be in the “23,000 range,” he said. Back during the China heyday in 2010, the industry sold over five times as many: 120,000 excavators. This would include excavators from Japanese, German, and Chinese competitors. In March 2011, the industry sold 27,000 units – in just that month! – more than in the entire year 2015!
Those were the good times when China’s huge stimulus program from the Financial Crisis was reaching corporate pockets.
“That shows how far off the peak we are,” Pellette said. The market might never get back to where it once had been, despite the official GDP growth rate in the third quarter of 6.9%, which would be considered a blistering hot pace in other major economies that have somewhat less opaque economic reporting.
On September 24, Caterpillar had already warned of another round of big trouble. Its statement – evocatively titled in perfect corporate speak, “Building for a Stronger Future, Caterpillar Announces Restructuring and Cost Reduction Plans” – announced “a total possible workforce reduction of more than 10,000 people…” and “the contemplated consolidation and closures of manufacturing facilities occurring through 2018.”
“At this point, we are experiencing continued weakness in key industries that we serve,” it said, with sales declining “in all three of our large segments,” namely Construction Industries, Energy & Transportation, and Resource Industries.
Shrinkage, shrinkage, shrinkage. Because of the global economy. Because of collapsing investment in mining and energy. Because of “a convergence of challenging marketplace conditions in key regions and industry sectors.” Because of China.
Turns out, Caterpillar has been an excellent leading indicator for the slowdown in China. While China’s boom at the time was still the star of the global economy and was still considered its miraculous engine, CAT sales in the region were already declining.
True to corporate form, Pellette still exhibited the required optimism for the global markets next year, wrapped in caveats and buts: “My expectation is within China and globally that the market will pick up to a level above where we are in 2015,” he said, despite Caterpillar’s own forecast of declining sales. “But for China specifically, our expectation is that the market will rebound but we are not planning [for it to] get back to 2011/2012 levels.”
So forget those hot sales figures in China. They won’t come back. And that “rebound” in China from today’s low levels to slightly higher but still low levels that he just mentioned, when is that going to happen? Not yet:
“We haven’t seen a big turn in terms of improvement on the ground yet,” Pellette said. “It’s still a struggling market place with some signs of hope with the optimistic among us.”
He actually said that: “…some signs of hope with the optimistic among us.”
More http://wolfstreet.com/2015/11/17/chilling-thing-cats-president-pellette-said-about-china/
Back around 2011 Chinese Companies and Subsidiaries, (Including IIRC Caterpillar) were lending money to their customers to buy product. There was bound to be a collapse of sales, it’s just surprising on the timescale.
Increases and decreases in credit programs play a big role in sales of big equipment, I would expect.
Thanks! A person wonders how China came up with its 6.9% growth rate.
FE, any feel for how much is due to China buying all it needs and now it will maintain and repair and only occasionally buy a replacement. What it the life time of an excavator?
Given that key metals such as copper and iron ore are tanking it would appear that China has drastically cut back on ‘ghost town’ projects….
Peak excavators….
You are probably right.
I remember reading a CEO explain how his company no longer purchased “quality” construction equipment. When taking into account the average duration and variable nature of a contract, it just didn’t compensate to invest in the extra quality. They would buy cheaper inferior equipment that “got the job done” in the time required and then sell them off. Rinse repeat.
http://www.zerohedge.com/news/2015-11-17/baltic-dry-index-crashes-near-record-low
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/11-overflow/20151117_bdiy1_0.jpg
Right before Christmas is a strange time for the index to hit a record low.
Ok, think about it in another way. Most here recognize that the world of energy, production, goods and services will enter terminal decline. There is very little argument and we all agree.
But, the mistake is to label this “deflation” and to assume that it also applies to the world of finance. The world of finance floats above the real physical economy. They are linked, to be sure, but finance is not constrained like the physical economy.
Will creating currency solve any of the real problems? No, of course not. But, they are going to do it regardless, and there is one thing that printing currency does do. It monetizes debt. All debts in the world can be monetized. No debt in existence today has to be paid back by real production. And we know this is an impossibility anyway. So, there are two possibilities: default or monetization. The former is extremely painful, so TPTB will carefully apply it only to select areas.
Now, I have never been one to argue that TPTB are all powerful. But I do recognize what they are capable of, what tools they have. And I do know that they can create however much currency they want, and place it where they want to. People here argue that they can’t do that, but they absolutely can. If they wanted, they can just start crediting our accounts directly. A scarcity of currency is impossible in any fiat currency system, and TPTB understand this.
So if asset bubbles burst, or wages stagnate or decline, etc., don’t be fooled. The price of everything that we need on a daily basis, in real terms, will rise all throughout this decline. We will all continue to pay high prices for everything that is still being produced and traded in the economy. You can call this stagflation if you like, but why not call it what it is? It is inflation, simple.
Currency creation is the terminal process of all prior human civilizations and empires, and it will be the same this time, on a global basis. 6000 years of history, and a track record of 100% in favor of inflation. It’s built into our DNA and the way the system works. What we don’t know, however, if the timing of a hyperinflation/currency reset. That’s anybody’s guess really.
How do you think governments will handle a run on the banks?
Like they did in Greece and Cyprus of course…….
If everyone wanted their money it would not be there. The government would immediately restrict withdrawals. They would guarantee the deposits but be unable to make good. The run would have to be stopped at all costs because currency would quickly evaporate. Deflation would steamroll the business world. So we get back to square one…..governments pretend they are in control and the sheeple pretend to believe them. When the trust goes so will the money.
Maybe Greece should have printed counterfeit Euro’s if that was all it would take……printing. Being serious though and many astute posters here know it and have stated it numerous times, the system relies on trust. Trust in the share market, trust in the financial institutions, trust in the government and trust in one another. Governments will not be able to print their way out of a collapse in trust. Money is just pieces of paper or one’s and zero’s without it. So governments are not actually printing, they are assuming debt. They assume the debt of financial institutions and bankrupt corporations. They buy their own bonds and issue more. Outright printing would give off a stink that could not be disguised.
Money is not barely some figures on an account or pieces of paper. Money is a claim of energy. Look around you – all you see is the result of energy consumption. If the amount of money does not roughly correspond to the available net energy the result will be an unbalanced economy. If we experience a period where the net energy is ample (cheap) the economy can expand, if you experience a period where net energy shrinks (expensive) the economy must shrink too. Economists and governments do all possible trick to hide this fact, but eventually thruth will prevail, alas.
I agree if net energy consumption shrinks, we will have a contracting economy. It is necessary to distinguish between “cost of energy production,” and “market price available for energy.” While cost of energy production rises, the feedback loops are not such that “market price for energy” rises at the same time. Thus, we have a problem with low prices and a glut of energy production. The truth may prevail, but it will prevail through low prices, not high, and oversupply.
Maybe you should visit Cris Matensons and The Crash Course. Take particular note on how money is destroyed. The multiple trillions of debt governments own will never be paid, we all know that. It is actually the opposite of printing when governments assume debt. Conflate that with a claim on energy. But I understand how money is related to energy. Our slaves require to be paid, or they work less and eventually cease to work at all.
Trust will go when cash dies.
Undoubtedly. And maybe that’s the reason why we are seeing some efforts toward a cashless society. No cash, no bank runs. Simple!
In Sweden
http://cointelegraph.com/news/115452/sweden-to-become-worlds-first-cashless-country
in Denmark
http://money.cnn.com/2015/06/02/technology/cashless-society-denmark/
The beginning of hyperinflation is not far off, depending on your view of time. I’m expecting the first doubling in the US$ before 2025. Unfortunately, loss of faith in the currency, is also a loss of faith in government of every type.
So now Russia and France are apparently cooperating — against an enemy created by the CIA as a proxy force to oust Assad so that a pipeline carrying gas could be extended through Syria to Europe to reduce dependency on Russian gas….
http://www.reuters.com/article/2015/11/17/us-france-shooting-idUSKCN0T22IU20151117#sgPYrOko9YekX0tl.97
I am bewildered …. what are the Elders up to?
This surely somehow has to be tied to the imminent collapse of BAU …
Well if the pipeline isn’t built and Europe becomes a slave to Russian gas … then Russia could demand payment for the gas in a currency outside the USD. That would WWIII.
That’s how I understood the situation ….
Perhaps there is an element of Europe shifting into the Russian camp because Russia can offer what the US cannot — energy….
And the Elders making threats against the Europeans including collapsing a big German company (VW) — driving refugees into Europe — instructing ISIL to attack Paris….
The Ukraine was prised out of Russia’s control, and that keeps Germany and Russia in a weak position. It is pretty clear that Saudi Arabia and Turkey are none too pleased at France saying that Assad is not the enemy. The MSM in the UK is doing its best to support Cameron’s bid for executive powers, saying “everybody” wants him to bomb – well, I’m not exactly sure. I doubt he knows either, he just gets advice.
If Cameron wants to follow in Blair’s footsteps and collect tens of millions of dollars when he is out of office…. he’ll follow the ‘advice’
“French Prime Minister Manuel Valls said Paris would spare no expense to reinforce and equip its security forces and law enforcement agencies to fight terrorism, even though that was bound to involve breaching European budget deficit limits.”
If all else fails, to jumpstart an ailing economy, start a war.
Apparently it was WW2 that provided the stimulus to end the Great Depression….
Check out the timing on Daisy Bradford No 3, like discovering the world’s biggest oilfield has no economic effect. It wasn’t WWII – it was an intact industry, and near zero competition, together with near total control of the ME after the war finished.
That makes sense…
It was the debt that financed WW2 that provided the stimulus to end the Great Depression. When it came time to pay back that debt, it became necessary to find other debt to substitute for it, and more, so that the economy wouldn’t implode.
That’s true. I’d point out that the USA was neutral until Pearl Harbour. Prior to that I think the term was “lend-lease” to the UK, backed by gold that had been shipped from Europe to N America for safekeeping.
That’s very limited view. In fact powerfull faction of US TPTB directly financed nazis in Europe. Most illustrative case is of the Bush jr.’s grandpa Prescott Bush, who was dealing with nazis not only before war but also in the early 1940s, so after he was investigated under the laws prohibiting trading with declared enemies he also cleared the family by sending Bush father as pilot into the war effort (for a while since he served nazis in the agency at least since the 1960 on). And there were other figures as well like Ford, and even the Bush case was mainly about the front figure-scapegoat/operation not the entire power structure inside banking industrial cabal behind it.
The debt never gets repaid. So why is that a demand for EU nations now? Amazing what can be achieved with Monopoly money.
http://www.zerohedge.com/news/2015-07-06/piketty-germany-has-never-repaid-its-debts-it-has-no-standing-lecture-other-nations
I would pay an annual subscription fee of just about anything to subscribe to a source that provided information as to what is really going on behind the curtain …
Funny thing …. if you asked people what the cause of WW1 was… probably every single person would not identify the cause — which was Germany attempting to take control of middle east oil
100 years later and still we have to go to a comedy act to get the real story https://www.youtube.com/watch?v=GIpm_8v80hw
Germany vs. Holland football cancelled in Hannover. Angela Merkel got herself a signal today.
Hmm.. the game is stepping up a notch.
Preface: haven’t read these myself but come recommended for “deeper” knowledge…
http://www.scribd.com/doc/4047296/Carroll-Quigley-Tragedy-and-Hope-A-History-of-The-World-in-Our-Time
http://www.goodreads.com/book/show/811022.None_Dare_Call_It_Conspiracy
Gary Allen
Be Wise as Serpents
http://www.whale.to/b/Springmeier1991.pdf
This one I did read. It’s huge and a mess and has some religious bias, but contains mind-blowing connections and detail that goes far beyond any mainstream thought.
Panning to read as the world crumbles perhaps?
FE, I too am bewildered. NATO kills Libya because it willing supplies all its oil to EU at market price??? Now NATO wants to kill Syria. To make it another ISIS country, like they did with Libya??? Let us not forget the oil in the Golan.
I am reminded of this scene:
Copper Tumbles to Six-Year Low on Demand Outlook in China
http://www.bloomberg.com/news/articles/2015-11-17/copper-extends-retreat-to-six-year-low-amid-weak-chinese-demand (see Video)
Iron Ore Sinks to Four-Month Low on Demand Outlook in China
http://www.bloomberg.com/news/articles/2015-11-17/iron-ore-sinks-to-four-month-low-on-fragile-global-market
When do the bankruptcies begin?
Bankruptcies? That may take some time. Mining companies begin by restricting operations to only those areas with higher grade ores. The flow slows, so stored refined material crests and begins to decline. Prices keep falling, mines get put into maintenance, and a few close altogether. I’d say that where we are. A few months more before bankruptcy is unavoidable. Some in the MSM are still saying this is a good time to get into mining resources. That’s likely to hurt if you guess wrong.
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Number of the disconnected consumers of electricity and natural gas in Germany steadily rising during the last years:
http://www.faz.net/agenturmeldungen/unternehmensnachrichten/roundup-medien-so-viele-stromsperren-wie-noch-nie-auch-anstieg-bei-gas-13914305.html
Because renewables and decommissioning nuclear made consumer prices soar? Or because households in germany are going completely grid independent?
Apparently there is a small city that is off grid: http://onestepoffthegrid.com.au/german-village-of-feldheim-is-now-off-grid-for-consumption/
When electricity prices become astronomical, it becomes economic to add backup batteries and go off grid. So the decision to go off grid is tied to ultra-high electricity prices. The cost of the grid is a big piece of the total cost.
Fast Eddy, Forget about radioactive spent fuel ponds or Fukashima….
This is worse and occurring to keep BAU going, the elders are indeed desperate
Keith D Johnson to Permaculture Design Magazine / PcActivist
23 hrs ·
I can hardly think of a better example of blind stupidity and heartless greed than this abomination.
“Fracking puts more hazardous radioactive material into the environment than all the US nuclear power plants combined. About a Fukushima worth a month. Another Chernobyl every six months. Three Mile Island ? Fracking child’s play – one truckload of frack sludge has more radioactive material in it than all the leakage at Three Mile Island.
The US nuclear industry produces about 2,000 tons of hazardous waste a year that has to be stored in a secure location. A frack truck can haul about 22 tons of processed sludge that requires storage in a hazardous radioactive waste facility. So a convoy 100 frack trucks carries the equivalent volume of a year’s supply of nuclear industry waste.
That plus the fatalities from fracking, gas compressor explosions, and gas line blasts make fracked gas by far the deadliest form of energy in the US. A bigger body count in a month than nuclear energy in 50 years. More fatalities in a quarter than coal in a year. More accidents in a year than in the entire history of the solar and wind energy industries, world-wide.
We are not talking about the theoretical release of radioactive material into the air and water. We are talking about an industry that is effectively mining radium – billions of pounds of radioactive material as a byproduct of drilling horizontal wells through shale. Then processing those radioactive materials into even more concentrated hazardous radioactive sludge.”
This is from Petmaculture guru Keith Johnson’s Facebook page
Fast…read the whole article here…it is much worse than above
http://www.nofrackingway.us/2014/05/04/fracking-produces-more-radioactive-waste-than-nuclear-power-plants/
Boy, Tracking is deadly, but kept us going a little while longer, oh my!
‘Whatever it takes”
If the Elders are willing to do that to keep BAU going a few more years… what does it say for their expectations for a post BAU world….
Their computer models would have informed them of the odds of this being an extinction event….
I was thinking that the level of radioactivity of the waste was lower, but I know that radioactive waste is a problem–probably far more than the little earthquakes. I know Pennsylvania does not have good wastewater reinjection locations, so at first, the wastewater was just going through municipal water treatment plants (if I remember correctly). Then they were trucking the stuff to Ohio for injection there. I am not sure what they are doing now.
If nuclear could work then I don’t understand why there isn’t a push to build out nuclear power. Unless this has also been modeled and it is either too late or, the energy it replaces isn’t sufficient to reduce fossil fuel usage enough to matter. Other than nuclear I can think of no fuel source as energy dense as any of the big three fossil fuels.
Agreed — the Elders have said they will do ‘whatever it takes’ — so if rolling out a thousand new nuclear plants would extend BAU by a decade —- assume they would be doing that….
Now we are on the same page. What ever it takes, even if we do not like nuclear plants.
You also need a way to keep the fuel coming for nuclear. If it is uranium, you need to recycle it. Otherwise, we run short of uranium supplies.
I think it’s pretty simple. The consumers need to be able to pay for all upstream costs with their bills, and nuclear expensive to build. I was surprised when I learned that even some of the old plants are not profitable. Everyone with a car knows that running your old car is cheaper than leasing a new one. And we haven’t set aside enough money to pay for long term fuel storage.
I read this…
http://www.thesciencecouncil.com/pdfs/P4TP4U.pdf
which is/was a proposal for all-out nuclear Gen III and IV reactor development worldwide – before Fukushima. The author, Tom Blees, still advices national policy through various organisations.
This an interesting video discussing the current outlook for nuclear.
Didn’t mean to embed. I just posted the link. Oh well, the panel discussion starts at 20.00.
Just to put costs into perspective consider this: “The 378 MW installation will feed electricity to the national grid. The order is estimated to be included in Wärtsilä’s order book in 2016, and the plant completion is scheduled for 2018. The value of the order is approximately EUR 240 million”
So how does this stack against the completion cost for Nuclear? Wärtsilä can build the equivalent of an AP1000 plant for less than 1B euro. There is no way you can get an AP1000 plant for 1B EUR.
For sure fuel costs/availability are different down the road, but completion cost is important also.
Hey All,
Been away for a few weeks and I have to say the strangest thing has happened, business in the industrial/oil sector has suddenly and unexpectedly gone bananas! I don’t know if the powers that be have been able to engineer us more time or if this is something else but I had more work in the first week of November than I had all of September and October combined. Projects are being started everywhere and I really don’t know why, all of the fundamentals still look poor and are getting worse but big companies, including oil companies have just started spending and expanding (at least in my area). Is anyone else out there seeing the same thing?
All over New York state natural gas distribution pipes are being installed. Both long distance and local residential. It appears NYS law guarantees the regulated monopolies a profit even if they are replaced by a new better technology.
Unfortunately there is not (nor will there be) a new and better energy technology.
I just listened to a Bloomberg video re: crashing copper and iron ore prices and there was a comment ‘for years China has held us up — now we have to hold China up’
I read that banks are looking the other way, on debt that seems like it is about to default (extend and pretend). I can’t find the reference on this. This may be affecting what businesses are doing.
Energy credit extension :
http://www.reuters.com/article/2015/11/17/us-usa-oil-lending-idUSKCN0T529P20151117
“The biannual process, known in the industry as redetermination, shaved only 4 percent off bank loans to oil and gas companies, according to a Reuters analysis of loan data, surprising experts who had expected deeper cuts because of a protracted oil price rout.”
“ Of the 37 U.S. oil and gas producers tracked by Reuters that hold credit lines backed by their reserves, 15 had credit reduced, seven saw an increase and 12 saw no change. Two said they expected to keep their credit unchanged and one said it expected a reduction. (Graphic: link.reuters.com/wyq95w) “
“The production outlook also depends on the next set of redeterminations six months from now.”
Thanks! A lifeline of 6 more months! But credit needs are likely growing, and I expect interest rates on this debt is higher. So the extension, while helpful, still leaves drillers with problems.
This is certainly possible, I wonder how long this can go on for? To provide a sense of scope; since November 2nd I have seen more new-build and expansion projects from my customers that are either in the planning stages or the beginning of the execution stage than I have seen in all of 2015, several industrial plants in the area are planning large expansions of 25+ Million dollars and two companies that I work with are planning on on-shoring their manufacturing back from China due to issues there with QC and Logistics. It very much now ‘feels’ like 2010-2011 when the local economy suddenly roared back to life (relatively speaking). I know it can’t continue but I’ll take what I can get for now.
You might ask some of your clients if their ability to get financing has changed recently. Even if that isn’t the right guess, it might be an opening to finding out more about what is happening.
So, did some digging and every single project I am seeing has a good deal of government backing, some are entirely government-funded projects while others have significant government funding from the federal and provincial levels. I don’t recall hearing about any new spending initiatives but it looks like we are seeing helicopter money of a sort.
Interesting…
This is quite a positive development — perhaps now that China is no longer propping up the global economy other countries will step in and do the same
When do we get to see our first ghost city in Canada?
I reckon a replica of Manhattan would look pretty good just outside of Timmins…. a high-speed rail link from T-Bay > Sudbury > Toronto would be a thundering success!
Let’s monitor the commodities index — if we see the prices shoot higher then it means a lot of bridges to nowhere are in the budget — and we may need to revise the date for the Apocalypse/Holocaust….
What I hear from Europe, is that if a company has any chance of making profits, it will get as much government backed funding as needed. What I understood, those playground rules were agreed upon in joint conferances in New York..
Maybe Europe has figured a way to find some money for these thing.
Government money would explain that kind of thing, but I don’t know from where, either. Thanks for checking. It would be a better kind of helicopter money than QE.
I suppose there’s an abundance of cheap labor what with all MENA immigrants.
Economic indicators will likely become more and more irrational as collapse approaches.
I am afraid you are correct.
Thank you Gail for the post, and the very educational commentary. Some how, you have created a site that is (except perhaps for my more strident comments 🙂 ) fun and educational from top to bottom. I don’t know how you do it, but please keep up the good work. Occasionally, on rarer and rarer occasions, I get an idea that i have not yet seen or heard elsewhere, to wit:
Have you noticed that there are lots of experts and pundits in the doomsphere that make a lot of sense, but that do not agree with any of the others? In my mind, they can be broken down into basic categories that do overlap some, but I have asked many of the authors what they think of some other authors ideas and as a rule, they minimize or completely diss their “competition”. I don’t think that they do it out of some mean spirited intent or for financial gain – they really believe that their idea is THE reason for doom.
I firmly believe that the blogger and the commenters that they attract and support are mostly one and the same. The blogger provides content that attracts a given type, and through moderation and participation can control the tone and content of the commentary.
So, who are these doomers? (Hopefully, I can insult them all.)
David Stockman – all our problems are caused by central banks and debt. Get rid of the debt, and the world will enter a golden age with no problems at all. Occasionally, he branches out into the problems caused by the military industrial complex as in this (to my mind) brilliant piece: http://davidstockmanscontracorner.com/blowback-the-washington-war-partys-folly-comes-home-to-roost/
Tverberg/Bardi – we are running out of OIL! Run, (don’t drive) for the hills
Kunstler – some people are just too dark skinned and because of that do bad things.
RobertScribbler – Climate change is here, and is causing problems. All that we need do is build some solar panels and the world will go on forever – growing continuously. If we don’t build those solar/wind power plants, society will continue to burn fossil fuels at an ever increasing pace through this century at least. A variation on the climate theme is McPherson – we are dead but don’t know it yet.
CallumRoberts – Ocean acidification, generalized ocean pollution, and overfishing are the only important things going on.
LesterBrown – Not enough food
PopulationFreaks – (see also Kunstler) – We must reduce the number of (shhhh – dark skinned – shhhh) people now!
Singularitarians – lead by their tech guru in residence Ray Kurzweil they worry that the coming technological utopia will be somewhat marred by the Terminators and the Borg.
Chris – There-is-a-huge-market-for-doom-related-information-and-I-can-use-that-to-make-a-shitton-of-money!! – Martinson If you haven’t reviewed his crash course which he publishes free as a marketing tool, you should: http://www.peakprosperity.com/crashcourse
Greer – catabolic collapse! (What?!?!?!)
RadicalRegion/RadicalAthiests – Everything would be fine if people were just believers/rational.
Just after college I tried and failed to make a living as an environmentalist. During that period I was able to study environmental toxicology for a few years, and I learned then that a trout exposed to a significant amount of zinc would do fine, and likewise, one swimming with some copper was also able to live and breed. But put tiny amounts of zinc AND copper in the same water and poof all of your trout go belly up. (Oddly, put just a trace of cyanide in the water and the replacement trout would live … but i apparently digress.)
All of the doomers insulted above are correct (well, except for Kunstler), and they are all dead wrong. Things are complicated, and 100% interrelated.
Take Syria as a timely example. Syria had oil! and with all that wealth, the population (Kunstler) ballooned. The oil peaked in 1996 (Tverberg/Bardi), but everything was fine until a climate change induced drought (Scribbler) happened forcing people out of the rural areas into cities because they could no longer raise their own food (Brown). Even then, they might have been able to adapt but along came the US with its ability to provide weapons from free money (Stockman). With no food, and no money but plenty of free weapons their religions were a great excuse to start killing each other. The killing continues apace and apparently will continue because we have the resources to keep it happening (Stockman, Kunstler, et. al.)
When the shit finally does hit the fan in earnest, what will everyone above say (except “I told you so.”) They will say that the collapse happened because of their pet and brilliant theory. (In some cases (Gail) the brilliant part will be true.) They will be right … and wrong.
Pintada, most enjoyable post. Before computers people reasoned by simple models with a few parameters. As do all the writers you mention. You point out the world is large and complex many parameters and linkages exist. To attempt to reason/study such a system will take computer models, complex computer models and extreme honesty. In the realm of complex computer models it is easy to fool both others and ones self.
Pintadas sum up reminds me of the blind men and the elephant story https://en.wikipedia.org/wiki/Blind_men_and_an_elephant
The 1972 Limits to Growth chart seems to be holding up pretty well so far. http://www.theguardian.com/commentisfree/2014/sep/02/limits-to-growth-was-right-new-research-shows-were-nearing-collapse?CMP=fb_gu
The thing not written in to the Club of Romes computer models, where a global economy that is fully interwoven, like Gail has told us numerous times. Which would indicate a Seneca Cliff, first global growth will be pursued at all costs, but a global collapse (total collapse) can not be avoided in the long run http://cassandralegacy.blogspot.fi/2011/08/seneca-effect-origins-of-collapse.html
So, what to do, what to do? Pretty simple I would say, there are some skills and information that will not be needed in the future, not in any way. Like learning to code or how to be a private banker, those would not be a prudent way of spendings ones time. But almost all practical engineering, chemistry and farming skills and knowledge will be usefull, in many ways. If you are not in to making bowling ball mortars or chicken manure blackpowder, or converting diesel engines to run on biogas http://www.nzdl.org/gsdlmod?e=d-00000-00—off-0envl–00-0—-0-10-0—0—0direct-10—4——-0-1l–11-en-50—20-about—00-0-1-00-0–4—-0-0-11-10-0utfZz-8-00&cl=CL1.3&d=HASH0157a33df792c66f0c20293d>=2 there´s still plenty to do, just start doing.
There is another version of the Blind Men and the Elephant tale: they are not blind, but in a darkened room. All they have to do is….turn the light on.
I’d like to see a computer model a situation where there are no longer any computers… that would be interesting reading.
> Tverberg/Bardi – we are running out of OIL! Run, (don’t drive) for the hills
Gail is more subtle than that: we are running out of low-priced oil. And it’s “peak finance” – not peak oil.
Thanks! I agree. Bardi has ideas about this and that that might save us, and spends a lot of time worrying about climate change.
Excellent – and amusing – post!
I have read bits and pieces from most of the commentators you mention but without a doubt Gail is in a league of her own in terms of identifying the causes of the collapse of BAU — analyzing how they are playing out — and explaining what the post BAU world is likely to look like (grim…)
The articles on this site lay out the facts without a whiff of Koombaya… they are presented as a doctor would explain how a deadly disease had entered your body — what it was doing to the cells in your body — how long you had to live — and they symptoms you will experience as your body breaks down — and dies.
FW gives us hard, cold logic — without the slightest dash of hopium to reduce the pain of knowing…
No other commentator else comes close.
That’s why we are here – and not there….
“Gail is in a league of her own in terms of identifying the causes of the collapse of BAU”
I agree 100%. My initiation in systems science/doom/peak everything began, almost 4 years ago, with George Mobus, R. Heinberg and Antonio Turiel. But when I found Gail, some months later, everything became much more clear. Finance seems to be indeed the most pressing limit we face (even more than ressource depletion, environmental degradation, overpopulation or AGW). In overall we are dealing with a predicament, not a mere “problem”, as implied by most of the doomers out there. Gail doesn’t gild the pill, god bless her. And today I just follow Doomstead Diner, D. Orlov (for poltiics) and Our Finite World (who has by far the best commentariat I know).
Gail is brilliant. And your analogy fits the bill.
But… being me… I would ask for a second opinion.
In “real” life, a doctor’s diagnosis is often wrong and a patient recovers to die another day.
No offence to Gail and others that have crunched the numbers, but is it possible we will be granted such a reprieve?
No? Ok, didn’t think so.
When the patient has advanced diabetes, cancer, AIDS (BTW – I see that Charlie Sheen is HIV+ — go figure…), clogged arteries, various types of cancer, is 100kg overweight, smokes heavily, drinks a bottle of whiskey per day, eats mostly fast food, and plays video games 12 hours per day…..
The doctor’s diagnosis of imminent death is unlikely to be wrong…
The hard part would be putting an exact date on the patient’s demise….
Thanks for your thoughts. I will have to admit I haven’t read enough of many of those authors to understand their biases. I don’t think of Ugo Bardi and myself as being alike, although on some things we agree. I try to learn from a lot of different people, even though there may be major parts of their stories I don’t agree with.
Gail points out, “I don’t think of Ugo Bardi and myself as being alike, …”
No, but for me to be able to take a little jab at you knowing that you would disagree, and then to receive a pleasant response is just another indication of your intellectual honesty, maturity and poise.
I do know Ugo well. We have spoken at quite a few conferences together, and we end up eating some meals together when this happens. It seems that the folks who invite conference speakers put us in somewhat the same category.
Nothing on Glencore but …
Noble Group has been put on review for a possible downgrade by Moody’s following last week’s third-quarter results, which missed market expectations and saw analysts cut earnings forecasts for the commodities trader.
The Hong-Kong based company, which has faced allegations of aggressive accounting practices, is rated one notch above junk status. If Noble loses its investment-grade credit rating, it could push up the cost of trading, its main business, and put further pressure on its battered share price.
“Over the next two to three months, Moody’s review will focus on the ability of the company to improve its liquidity headroom and cash flow generation, realise its plans to raise capital, and reduce leverage,” Moody’s said in a statement.
Noble has been warned by Standard & Poor’s, the other main credit rating agency, that it could be downgraded.
Since Noble announced a 60 per cent drop in third-quarter net income last Thursday, its shares are down by more than 12 per cent and are close to their lowest level in a decade.
Read more: http://www.afr.com/news/world/noble-group-under-threat-of-downgrade-20151116-gl0n7h#ixzz3rjOPGRC4
Shanghai Copper is down 4.6%, hitting fresh cycle lows not seen since March 2009. No clear catalyst is evident for now aside from stronger USDollar, Codelco’s cuts, and more chatter of CCFD unwinds. If COMEX Copper holds these losses, it will be down for 10 straight days – the longest on record from what we could tell.
Copper is crashing in China…
Concerns metals demand is ebbing deepened as Codelco, the biggest copper producer, cut its surcharge for sales to China by 26 percent next year, according to two buyers. The reduction highlighted waning consumption in the Asian country.
Obviously the tragic developments in Paris have caused a capital flight out of metal and into safety. Secondly, collapsing physical premiums for metal being imported into China really underscores how anemic demand is there.”
China is facing an unprecedented drop in refined copper imports as a slowing economy erodes demand, according to one of the country’s largest buyers. Shipments to the country will shrink 10 percent next year, Stephen Huang, chief executive officer of trading house Arc Resources Co., said in an interview.
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/11-overflow/20151116_copp1_0.jpg
I seem to recall reading that if copper dropped even a slight bit more that Glencore’s debt would be downgraded to junk — and that they would be insolvent….
A 4.6% drop is more than a ‘slight bit’ ….
Which of these things will start the dominoes falling? It is hard to know.
Monsanto — the company everyone loves to hate….
I used to despise Monsanto…
I have been battling twitch weed in my raised beds — they are very, very, very difficult to defeat — quite likely impossible…
But Round Up will kill them – dead.
A lot of people dig deep and get rid of as much twitch as possible — then blast the soil with Round-Up …then cover it with plastic… then soil/compost/mulch goes on top….
We decided not to do that …. and I am starting to think that perhaps we should have… given the amount of time we are spending pulling this medusa out… (if I paid someone to do this work I’d be eating tomatoes that cost a buck each!!!)
The point is — we have 7.5 billion people on this planet — and most of them want babies… just like rats want babies…. and like rats they do not conclude ‘there are too many of us’ — nope — they all want babies….
And another thing they demand is cheap food. In fact they riot and kill each other if food prices go too high — people will accept very harsh treatment — but if they do not have enough food they get right gnarly ….
Exploding Population + Need for Cheap Food = MONSANTO.
Please mark this down — I have changed my mind — because the facts dictate that I do….
Monsanto is not the devil — it is in the same category as shale oil — something that is distasteful…. yet necessary — without it we’d already be well past the collapse….
Eddie, I’m beginning to like you even more!
I was dismayed when one of my heroes of the 1970’s, Steward Brand (Whole Earth Catalog and Co-Evoluntionary Quarterly) stated what you did above!
I felt hurt and betrayed… Now not so…
http://e360.yale.edu/feature/stewart_brands_strange_trip_whole_earth_to_nuclear_power/2227/
Stewart Brand’s Strange Trip:
Whole Earth to Nuclear Power
When the founder of the Whole Earth Catalog embraces nuclear power, genetically engineered crops, and geoengineering schemes to cool the planet, you know things have changed in the environmental movement. In an interview with Yale Environment 360, Stewart Brand explains how the passage of four decades — and the advent of global warming — have shifted his thinking about what it means to be green
I had a quick scan through that article …. I believe I differ from Brand in that he appears to have faith in the Techno God and believes that pursuing innovation is the way to eternal growth…
I on the other hand hold the position that the Techno God will not save us — rather he helps us fend off what will is an inevitable catastrophic collapse of civilization — and likely extinction event…
If George Carlin were still alive perhaps he could do a piece on the Techno God…. like the Sun God one he did some years ago — the Techno God gives us wonderful toys and makes life more comfortable than that of a medieval king…. he allows us to live longer lives… he takes away pain … he entertains us…. he feeds us foods from around the world
And he does not judge us or require that we go to a place of worship to kiss his ass…. in fact you can take his name in vain and he will still bestow the latest iphone upon you….
The Techno God is indeed worthy of our worship…
If only the Techno God could give us another can-kicking solution like he did to the Malthusian dilemma I would say my prayers every night before bed….
That said — the Techno God has walked us ever higher up the mount (no free toys)…. ensuring that when we tip over the side it will be from the very pinnacle —- and we will go hurtling to the bottom along with all of his wonderful gifts…
And if any of us survive… we will almost certainly revisit the Sun God….
Fast, thanks, does it really matter at this point? Brand came out basicly and threw in the towel.We all know how this is going to end…not pretty
Unfortunately you are pretty much right. It is part of the current system of producing reasonably priced food.
I agree. I used to think the Fed was the enemy, the big agri-buisinesses were evil. But, have come to realize they are a necessary result of a system that is in over shoot. Everything is over leveraged. There are too many mouths to feed and factory farming is the only profitable way to do it. Folks could not afford (and I doubt there is enough land for enough) free ranging animals for meat. Roundup and fertilizers and other herbicides are now required to efficiently produce enough food. The whole mess also creates more jobs too (and growth) which is (for now) a positive feedback into the system.
Some have suggested that there are millions of farm animals that would be available to eat to cushion the blow of collapse….
I was listening to Radio New Zealand/Pravda yesterday — the discussion was about over-use of antibiotics — the commentator mentioned their crucial role in industrial farming — there is NO way we could maintain the population densities of animals on farms without heavy applications of antibiotics….
So not only will there be no crops grown — disease will quickly hit the stocks of animals wiping them out…. because the end of BAU means the end of antibiotics….
Extrapolate that to the human population — imagine what would happen if we were unable to treat diseases such as TB… which we won’t….
So many things we take for granted…. who needs spent fuel ponds — there are innumerable things that can wipe us off the planet that we have not even thought of….
Think of the Black Plague, Mayans n Incas , WWI Spanish flu, Dmitry Orlovs recollections of Russia in 92. Its always the diseases that get us. First the body will be weakened by inadequate calories and nutritions, then comes the diseases.
And with the new virulent strains its just a matter of time before you´ll be exposed to the new virulent strains. And at that point, it´s just pure luck if your immune system can handle it at that particular point in time. If your immune system can handle it, congratulations, you´ve gained a new immunity to one strain, and just wait for the next strain to hit. Thats pretty much how it continues untill populations densities fall or calories and nutrition rise. No escaping the new virulent strains, though.
Might be good to know that Vodka sterilizes, Eucalyptys is a germicide, Rosemary is antimicrobial, Orange prohibits microbial growth and Lavender is antiviral. Other natural antibiotics include garlic, ginger, cayenne and honey, digested separately.
Dear Hard Core Collapsenik Farmer Wannabes
A little more on Masonobu Fukuoka. From Wikipedia:
Theodor Friedrich and Josef Kienzle of the Food and Agriculture Organization opined that his rejection of mechanisation is not justifiable for modern agricultural production [33] and that the system cannot interact effectively with conventional agricultural systems
It has been described as a sophisticated approach despite its simple appearance.[
his critics argue that the “inner world and the connection between humans and nature does not, however, exhaust reality” and that he did not give sufficient attention to interpersonal relationships or society
My observations:
*The fact that Fukuoka’s system doesn’t use mechanization and doesn’t play nice with conventional agricultural systems is not a negative factor if one is a collapsenik.
*Indigenous cultures had very sophisticated systems. The number of plants and animals eaten or otherwise used by aborigines in Australia, for example, was enormous. Today, about 5 cereal crops account for an overwhelming percentage of human calories. Fukuoka was closer to the aborigines than to modern agriculture, at least in spirit. He believed, for example, in going out and harvesting what your body told you it needed to eat. Close to a hunter or gatherer. But since Fukuoka had a farm rather than a wilderness, his choices were narrower. Again, not a weakness from the collapsenik perspective.
*Fukuoka did not ‘play nice’ with his neighbors, because he perceived that they were embarked on a path of destruction. He withdrew into an inner place where abundance was simply having enough. He studied plants intently, but found little to interest him in ‘society’. I doubt he would have given 60 seconds to the Kardashians, Not a weakness from the collapsenik’s perspective.
Don Stewart
China is looking to go all in on the bottle water industry for its people. The same country that produces garbage mountains in residential neighborhoods, along with its neon green and crimson toxic lakes. This won’t have a happy ending.
“Tibet is encouraging companies to tap the Himalayan glaciers for premium drinking water, but the environmental stakes are high”
http://www.theguardian.com/sustainable-business/2015/nov/16/chinas-bottled-water-industry-eyes-up-the-tibetan-plateau
Meanwhile. in the land of fantasy robot futures…
As Boeing booms, robots rise and job growth lags
http://www.reuters.com/article/2015/11/16/us-boeing-production-robots-insight-idUSKCN0T50E420151116
This is what will happen when robots take over the world
Few will be spared in the robot revolution as millions of jobs are destroyed. But can humans fight back?
http://www.telegraph.co.uk/finance/economics/11994694/Heres-what-will-happen-when-robots-take-over-the-world.html
Children ‘destined to lose out to robots’ due to outdated exams system, says head
http://www.telegraph.co.uk/education/educationnews/11993842/Children-destined-to-lose-out-to-robots-due-to-outdated-exams-system-says-head.html
Robots could replace 50 percent of jobs, says chief economist
http://www.digitaltrends.com/cool-tech/robots-could-take-50-percent-of-jobs/
Enjoy!
In other words, even if B continued AU, we would be faced with this problem anyway. A mostly psychopathic technocratic elite would end up being the torch bearer for the species. What kind of next level organism would evolve out of THAT soup?
If BAU could continue then robots would continue to take more and more jobs from people. The police state/surveillance state would continue to grow. Life would become unbearable as sources of good jobs and income outside the police state dry up. It is all toxic growth from here on out. Like alcohol production in a yeast farm. Limits to growth is real and there is no way around it.
Yep. All roads do appear to lead to the same destination. And the more sophisticated the vehicles, the quicker we head towards that broken bridge.
I think my analogy was good and some of you like Stilgar Wilcox understand completely.
Virtually everything in this world save for some technology and some low end consumer goods has increased in price, relentlessly, for at least 20 years if not longer. There’s the inflation. Nobody notices because we don’t travel back in time. And the inflation continues, even as the physical system as a whole winds down. By definition this must be true, as inflation is what results when you have infinite currency meeting a finite world of good and services.
Let me make another point. Think hard on this one if you have to, even if it’s obvious to me. Suppose a house today is valued at 5 million dollars, and 20 years ago it was 1 million. Now suppose this is in bubble territory, and the bubble pops and then the price goes down to 2.5 million.
When that happens, all of you will be screaming here, see, deflation! deflation! deflation! Debt collapse! Currency is vanishing! Etc.
But the inflation is still there, because the house still went from 1 million to 2.5 million. More than doubled, really.
The inflation causes all of these bubbles, but when they pop, the price never actually goes down to where it was before the inflation began. That’s the reason why it’s so well disguised, and why everyone is fooled.
Don’t expect any change in this dynamic going forward. Though, I fully admit that the bubbles may not be the same size, and they will change to other areas. But the essentials of how this works will remain largely the same, all the way down the slide.
Deflation is primarily evident in the commodity sector — and this is pernicious.
Take oil for instance – production costs all-in are over $100/barrel.
Of course the market wants oil to sell for over $100 — so there is pressure in that direction — the slight inflation we are seeing….
But there is no way in hell the consumer can pay that amount for oil….
So we have deflationary pressures as demand withered when oil was high — and it continues to wither with oil at $40.
And that is where the real problem is in terms of deflation — producers are insolvent at these levels. They will stop exploring — cut Capex — and eventually they will collapse.
That is what Bernanke was referring to when he said deflation must be stopped at all costs…
[Computer prices have ‘deflated’ tremendously in recent decades …. as did TV’s years back — retail deflation is not necessarily a problem — it can result in more uptake therefore more growth….)
Extrapolate across a wide range of commodities …. we are seeing the same problem — exacerbated by the fact that producers are carrying a lot of debt — so they need to produce even more of a commodity (due to low prices) to make their payments….
The money presses are running hard — yet they are having no impact on what really matters — the production side of the commodity sector….
Let’s turn to Japan — back into deflation and recession — in spite of gargantuan volumes of Yen being printed:
In 2013, the Bank of Japan undertook a radical stimulus program, practically buying up every bond on the market, in a concerted attempt to inject a tremendous amount of Yen into the economy. It was hoped that the injection of stimulus would dislodge the persistent stagflation and lead to new bouts of economic growth.
Unfortunately for the BoJ, stagflation persisted and the only thing that got beat was the central bank’s balance sheet which exploded at a rate even greater than that of the U.S. Federal Reserve.
The reality is that the huge stimulus package has proved futile in stimulating inflation in the wider economy. Japanese consumer prices have remained stubbornly subdued with consumer prices, excluding food, rising just 0.1% over the past year. In fact, many economists are now predicting a significant contraction throughout the current quarter.
Any contraction would subsequently vacuum up the fractional amount of inflation that the central bankers had forecast to become apparent in the latter part of 2015. At this juncture, most experts agree that the BoJ’s inflation target of 2.0% is unobtainable, at least in the medium term.
In fact, the current round of stagflation is turning decidedly nasty as household spending, follows the other economic indicators, and sheds over 2% from the prior year. Retail sales figures also mirror this trend as the latest release shows a decline of 0.8% from May. It is clear that weaker exports and diminishing domestic demand are driving a slowdown despite the huge injection of QE.
More http://www.fxstreet.com/analysis/market-outlook/2015/08/03/
As Japan is finding out — you can print as much as you like — but eventually you push on a string.
So are you saying that Japan just needs to print more in order to defeat deflation?
That’s what they have been doing – increasing the 000s…. but it ain’t working….. there is no inflation …..
Eventually the BOJ will just blow up the entire economy….
Japan is the poster child —- other countries are set to follow.
They will of course print — just as Japan responded by printing more….. but ultimately it won’t solve the problem ….
Expensive to produce oil is the problem — it kills growth — and when growth dies — if you cut open the putrid, festering carcass…. deflation spills out of the gut….
Silver lining? The smell wears off eventually.
We are aware that commodity prices have descended, dropped in half or more in some cases, but I sure wish it converted to everyday products and services for consumers. Healthcare at least in the US is rocketing up as shareholders in insurance and hospitals want ever more profit. The consumer even though given a temporary break at the pumps and for NG are suffering as they try to pay all these rising bills.
I reckon stagflation is the closest term that would describe the current situation …. however it is not nearly dire enough…. we really need a new term to describe what is happening…
I am partial to Economic Apocalypse… Economic Holocaust…
Used in a sentence : “The global economy is on the precipice of an Economic Apocalypse with prices of goods and services increases, salaries decreasing, commodity prices collapsing, extraction of resources prices skyrocketing, corporate profits tanking, and stimulus policies starting to have no impact”
DEFINITION of ‘Stagflation’
A condition of slow economic growth and relatively high unemployment – economic stagnation – accompanied by rising prices, or inflation, or inflation and a decline in Gross Domestic Product (GDP). Stagflation is an economic problem defined in equal parts by it’s rarity and by the lack of consensus among academics on how exactly it comes to pass.
BREAKING DOWN ‘Stagflation’
Usually, when unemployment is high, spending declines, as do prices of goods. Stagflation occurs when the prices of goods rise while unemployment increases and spending declines. Stagflation can prove to be a particularly tough problem for governments to deal with due to the fact that most policies designed to lower inflation tend to make it tougher for the unemployed, and policies designed to ease unemployment raise inflation.
This happened in the United States during the 1970s when world oil prices rose dramatically, increasing the costs of goods and contributing to a increase in unemployment. The following stagnation increased the inflationary effects on the economy. Since the crisis in the 1970s, there has been little consensus on what exactly caused the economic problem. Each school of economics offers their own understanding on what exactly went wrong and why.
Theories on the Causes of Stagflation
There are two main theories on what causes stagflation. One theory states that this economic phenomenon is caused when a sudden increase in the cost of oil reduces an economy’s productive capacity. Because transportation costs rise, producing products and getting them to shelves gets more expensive and prices rise even as people get laid off.
Another theory is that the confluence of stagnation and inflation are results of poorly made economic policy. Simply allowing inflation to go rampant, and then suddenly snapping the reigns on inflation is one example of poor policy that some have argued can contribute to stagflation, while others cite harsh regulation of markets, goods, and labor combined with allowing central banks to print excessive amounts of money are cited as another possible cause of stagflation.
Jane Jacobs saw the inability of the major economic schools of thought to come to a conclusion on why stagflation occurred in the first place as a symptom of misplacing their scholarly focus on the nation as the primary economic engine as opposed to the city. It was her belief that in order to avoid the phenomenon of stagflation, that a country needed to provide an incentive to develop “import-replacing cities,” that is, cities that balance import with production. This idea, essentially diversifying the economies of cities, was critiqued for it’s lack of scholarship by some, but held weight with others.
Contemporary economists like Oliver Blanchard cite both supply shocks on the prices of goods and worker output, as well as incorrect predictions made by Keynesian economics as the cause of stagflation and the inability of economics to understand it.
Read more: http://www.investopedia.com/terms/s/stagflation.asp#ixzz3ri8i3wMA
Agreed! Businesses and governments see the lower prices, and take more than their share.
Tokyo is one of the most expensive cities in the world to live. Everything from food to energy and services is quite expensive in Japan. So much so that people can’t afford babies anymore.
There is no deflation in Japan. There is no deflation anywhere in the world. It’s just a lie, a tool used by central planners to fool the sheeple. And it works, as evidenced here, where even supposedly smart people believe it.
So you believe the following is made up…
Can you explain why they are pretending there is deflation in Japan?
https://research.stlouisfed.org/fred2/graph/fredgraph.png?&id=JPNCPICORMINMEI&scale=Left&range=Custom&cosd=2011-12-11&coed=2013-01-01&line_color=%230000ff&link_values=false&line_style=Solid&mark_type=NONE&mw=4&lw=1&ost=-99999&oet=99999&mma=0&fml=a&fq=Monthly&fam=avg&fgst=lin&transformation=lin&vintage_date=2013-03-09&revision_date=2013-03-09
To answer your question, yes, the figures are manipulated or fabricated entirely.
Why do TPTB pretend there is deflation? So they can print more. If they accurately reported inflation, the people might get a little upset and you can’t have that.
And what about the price of oil — is the $40 or so not real? What’s the real price?
And copper… and iron ore…. and the other commodities in this index…. are they fake as well?
http://assets.bwbx.io/images/iJv75HtyCTbM/v2/-1x-1.png
“Why do TPTB pretend there is deflation? So they can print more. If they accurately reported inflation, the people might get a little upset and you can’t have that.”
And why do they want to print more if there is not deflation? What is the purpose of QE if not to fight deflation? If there is another reason then why not just state it — why make up this term deflation at all?
If deflation was not possible then why did Ben Bernanke in his famous speech state that the Fed must do everything including dropping helicopter money to try to prevent it?
Why even bother to mention it if he knew the cure was so simple?
The “perpetual motion machine” that seems to be present by printing money doesn’t really work.
Hey Dolt do you think everything stays the same over twenty years except the price of something? Twenty years ago the EROI of oil and just about every other commodity was much, much higher. Twenty years ago there was 1.5 billion less people in the world.
Gail refers to it as “diminishing returns”, you of course are completely unable to get your head around it. Today there is more of everything including pollution, corruption, expensive energy, people in jail, motor vehicles, food……….What we really need more of but to our ultimate detriment is CHEAP energy. Although we think we are using more energy, we are in fact using less because of the declining EROI of a barrel of oil and tonne of coal. We burn more but there is less energy therein, because of the declining quality of the energy and requiring more energy for exploration and production. (I’m trying to keep it as simple as possible for you)
I’m pretty sure I just wasted my time with this but you never know, something might seep through the sawdust.
I post again and again that the only two possibilities are inflation and hyperinflation. That’s it. That is what happens when an infinite supply of fiat currency meets a finite, and declining, world of goods and services. You have proved my point.
It matters not whether you and I can afford something. Don’t be fooled. Real prices rise, and rise relentlessly.
If you can’t understand that then you are blind to everything happening around you.
I was in Morocco a few years ago …. I marveled at how the donkeys could be parked against a wall and left there — they would never think to turn around and escape…. they’d just keeping bumping their heads against the brick walls for hours…
http://minyos.its.rmit.edu.au/~dwa/slides/scenes/donkey.jpg
There is a metaphor in there somewhere….
Falling wages is one of the major things that happens. Governments haven’t figured out how to get the money back to the “common people” who need it. Or if they did (back a few years ago) they have forgotten the technique.
Back in the Depression, weren’t they throwing out food for lack of buyers?
If we raised the minimum wage to $30 that would put some money in people’s hands. Apart from the fact that biz doesn’t like that, there would be side effects. Unemployed with a small or no savings would really struggle now as food prices would shoot up. And we have a few of those. We would burn up resources at a larger rate initially as purchasing power would bump up until prices recovered to the same equivalent level of un-affordability.
When you print money those who get it first benefits the most. Yellen doesn’t work for the people so why would she print money for them?
I think the reason dolph draws the conclusions he does is that he is looking backwards. In the time period referenced we never had peak energy extraction, so that time period may not be representative for what’s coming.
If we raised minimum wage to $30, the number of jobs available would drop greatly, because it would no longer be possible to make much of anything for international trade. The amount of imported food would rise, since other countries could produce it cheaper. The drop in jobs would be a big problem for the economy–there would be a need for more people to be supported by some type of welfare benefit. Thus tax rates would go up. The cost of new homes would rise. The cost of many goods would rise–Newspapers, Grocery Store Food, McDonald’s Food, almost everything. Amounts paid to pensioners would need to rise, to cover the higher costs–another source of higher taxes. I am not sure we would gain very much from the change.
What happens if you abolish income tax as some states in the US want to do?
After all, technically speaking, income tax is theft.
http://www.usnews.com/opinion/blogs/peter-roff/2015/03/18/more-states-ready-to-eliminate-income-tax
http://www.ronpaul.com/taxes/
“An income tax is the most degrading and totalitarian of all possible taxes. Its implementation wrongly suggests that the government owns the lives and labor of the citizens it is supposed to represent. Tellingly, “a heavy progressive or graduated income tax” is Plank #2 of the Communist Manifesto, which was written by Karl Marx and Friedrich Engels and first published in 1848.”
Ultimately, our culture and economy is based on consumerism. Unless anyone has a magic wand that can change this, we are doomed to consume oursleves to death.
I still believe that some semblance of a steady state economy would be possible if required criteria were met – dictatorial management of resources, population, and knowledge.
But, even if possible, what purpose would that serve? I don’t think nature values perpetual holiday camp living as anything worth pursuing. But I could be wrong…
Then you put tax on something else, if you don’t have income tax. A Value Added Tax on goods purchased is popular. So is a tax on transfers of real property.
I was surprised to learn in China that they do not have any income tax. The tax seems to be mostly on corporations, if I understood correctly. (There is also no capital gains tax on real estate.)
The same goes for taxes. Once they go up they never go down.
Top leaders have signaled that they won’t tolerate a sharp slowdown in coming years. President Xi Jinpingsaid this month that average annual growth should be no less than 6.5 percent in the next five years to realize the nation’s goal to double 2010 GDP and per capita income by 2020.
Government spending surged four times the pace of revenue growth in October, highlighting policy makers’ determination to meet this years’ growth target as a manufacturing and property investment slowdown weigh on the economy.
Sill, metals demand in China, the top user, slipped again in October, Goldman Sachs Group Inc. said in a report last week, citing an in-house gauge of consumption in Asia’s top economy. The London Metal Exchange index plunged to a six-year low last week as prices for copper, aluminum and zinc fell. Iron ore, the biggest profit driver for Rio, has dropped about a third this year.
http://www.bloomberg.com/news/articles/2015-11-15/world-s-second-biggest-miner-unfazed-by-china-growth-pessimists
Japan Enters Recession as Economy Contracts in the Third Quarter
http://www.bloomberg.com/news/articles/2015-11-15/japan-s-economy-contracted-entered-recession-in-third-quarter
September and October are part of the shipping season for US ports, a time when retailers, reveling in peak optimism, are loading up on merchandise for the holiday shopping season. But not this year.
At the three busiest ports in the US – the container terminals in Los Angeles, Long Beach, and around New York harbor which handle over 50% of the goods entering the US by sea – import volume in September and October fell by over 10%.
It was the “first time in at least a decade” that imports dropped during these key months, according to The Wall Street Journal, which had analyzed data from trade researcher Zepol Corp. A sudden shift in direction: volume in the prior months this year had been higher than last year.
So maybe November is the month when merchandise washes ashore. That’s the hope at the National Retail Federation.
But not yet. The Wall Street Journal cites Fernando Rios, owner of a small trucking company which picks up containers at the port terminals in Elizabeth, N.J.:
“At this time it’s supposed to be very busy, but it’s not,” he said. Only five of his eight trucks are currently running, and he has had to turn away drivers looking for work. Last year in September, he was moving 25 to 30 containers a week; this year it has been between 8 and 12.
More http://wolfstreet.com/2015/11/15/business-inventory-glut-hits-us-ports-container-imports-plunge-in-peak-shipping-season/
A rush in November seems a bit late. Doesn’t look likely to happen.
Given that in past years the ships would have long ago left the China ports it would be rather strange for them to delay until November….
Perhaps they have revolutionary Tesla-power plants added to the container ships that halves the transit time to the US…. so they will send at the last possible moment…
Or maybe there is a Santa Claus — and he’ll just fly over with ‘stuff’ in his sleigh and drop it under the Christmas trees….
For The First Time Ever, Japan Enters A Quintuple-Dip Recession (Courtesy Of Abenomics)
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/11-overflow/20151115_JAPGDP.jpg
http://www.zerohedge.com/news/2015-11-15/first-time-ever-japan-enters-quintuple-dip-recession-courtesy-abenomics
Hmmm… all that QE and still sinking…
I think what Japan should do is just go whole hog….. print 1,000,000,000 billion trillion yen per month for the next 6 months….
Surely that will give them escape velocity from their deflationary death spiral…. all their problems would magically disappear … along with the naysayers…
Money printing is a magical tool — for it to work though it is important for the central bankers to understand you have to go big or go home….
A good trade right now would be to go long the company that manufacturers zeros…..
Either (1) QE doesn’t work or (2) Japan would have even been worse off without QE, or (3) With a shrinking workforce, declining GDP is a foregone conclusion.
According to UN estimates of workforce ages 20-64, Japan’s workforce is shrinking by 1.1% to 1.2% per year. If total GDP is “only” contracting by 0.8% per year, that is good! It implies GDP per worker is rising by 0.3% to 0.4% per year. Maybe they should find a different way of displaying their GDP numbers.
And as predicted
The French Campaign Begins: Hollande Launches “Massive Bombardment” Of ISIS Capital
Moments ago, reports began to surface on social media that the ISIS “capital” of Raqqa was under siege from the sky.
It wasn’t hard to guess whose planes were carrying out the strikes. As we noted ten days ago, in a statement by the French presidency following a meeting of its defense cabinet, the government said it would send its only aircraft carrier, the Charles de Gaulle warship, to the eastern Mediterranean for operations against Isis in both Syria and Iraq. And as you might imagine, that’s not the only place Paris has warplanes stationed in the region.
Just yesterday we said that with the only French aircraft carrier already en route to Syria, meant to support to mission against Assad ISIS, France is oddly prepared for an all out attack to take out the Syrian president. Most importantly, it now has the outraged, incensed public’s blessing to do just that.
Sure enough, we just got confirmation that France, with the help of US intelligence, has commenced a “major” bombing campaign against Raqqa.
http://www.zerohedge.com/news/2015-11-15/french-campaign-begins-hollande-launches-massive-bombardment-isis-capital
Now .. what will Putin (and China) do?
Just some background information. On 1st Nov, ISIL took Maheen (various spellings eg Mahin). That brought them within 20 miles of the main road from Damascus to the coast. If they had managed to control that road, it would probably have been game over for the Syrian Government. (Unless there is more than one Maheen)
http://www.bbc.co.uk/news/world-middle-east-34693670
The story of the Tower of Babel represents the way the civilization is built as the structure with higher and higher sophistication thanks to the cheap energy and resources. The “confounded language” describes the situation when the sophisticated language collapses with the system due to the lack of the energy and resources.
The relationship of the regional dialects and the language of the nation is this lower and higher levels of sophistication. The rise of the modern nations in the 18th and the 19th century was caused by the cheap energy of coal. The globalization was allowed by the cheap oil and natural gas. Both of them helped to create more and more sophisticated languate.
The electricity and ensuing computerization, the rise of the internet brought the levels of the sophistication even higher. This way we managed to make the communication more and more efficient, with naming and describing the reality more and more precisely.
This rising amount and accuracy of information allows for better management of the systems we live in. The systemic collapses are less likely, but the population decline is inevitable.
The financial system now is more and more about the electronic money than the paper money, that is why “printing money” is an outdated term. With uniting money with electricity in the form of electronic money we make the money what it really is and represents: the energy. There is no better money than electronic money anymore. The paper and gold money will never regain its power, as their efficiency is very low in comparision to electronic money. The electronic money allows for immediate injections of capital into the ill and weak parts of the system.
The bigger problem will be less and less faith in growth that is and will be the main cause of the population decline. This faith in growth can be stimulated in various ways, but, finally, the declining population reveals the truth about the lack of affordable energy and resources. The limits of growth being represented by various illnesses, violence, terrorism, accidents etc.
The limits of growth are/will not be visible as resource/energy constraints, but by the risky behaviour of the people trying the overcome the limits and ensuing casualties, as the system during the implosion will be more and more confining the individuals to the life-saving functions rather than functions promoting population growth.
I think what also goes with the Tower of Babel analogy is the use of increased debt. As long as everyone was pretty much equal, and there was not a lot of technology used, it was possible to simply trade among neighbor’s for one’s need. Neighbors could take turns building each others’ homes. Each citizen who had a horse for transport could raise it on his own land, and perhaps build a simple cart to pull behind the horse.
Once we start adding technology , we need more materials from a distance, and more capital goods. We start needing a lot more debt to support our infrastructure. We build our debt / GDP ratio higher and higher, as we add more technology and more promises as to what all of the capital goods might produce. Of course, if there is not a continuing supply of cheap energy supplies, the whole tower falls down.
Two days after the Islamic State attacks on Paris, which killed at least 129 and injured hundreds more, the talk is all of war.
A French aircraft carrier is now en route to the Middle East, where France will likely intensify its contribution to the US-led air campaign in Syria and Iraq. Pressure on the United States to increase its military efforts against the Islamic State is also growing. For the first time, the United States conducted airstrikes against an Islamic State leader in Libya over the weekend.
The war on terror that started in the mountains of Afghanistan after the Sept. 11 attacks and quickly broadened to Iraq and elsewhere is now more than 14 years old. And it’s only expanding.
“The killing of innocent people based on a twisted ideology is not just an attack on France, not just an attack on Turkey, it is an attack on the civilized world,” US President Barack Obama said in a speech from Turkey on Sunday.
http://www.globalpost.com/article/6687934/2015/11/15/pressure-builds-big-military-response-islamic-state
The False Flag Link: Passport “Found” Next To Suicide Bomber Was “Definitely A Forgery”
The already laughable story that the passport of a Syrian refugee had been found next to the bodies of one of the dead terrorists took an even more surreal twist when we learned hours ago that according to both French and US sources, the passport was most likely a fake.
http://www.zerohedge.com/news/2015-11-15/false-flag-link-passport-found-next-suicide-bomber-was-fake-claim-us-french-sources
I am leaning towards this interpretation of the Elders latest moves:
1. Allow a relatively insignificant number of ‘refugees’ to flood across the borders or Europe creating the perception that the hordes are over running the EU….
2. Arrange for a false flag operation to kill 100+ people.
3. Stick a fake passport onto the body of one of the ‘terrorists’ (duh – since when do terrorists carry passports on suicide missions?)
4. Use this to justify a larger military intervention in Syria — where Assad is harbouring ‘the terrorists’ — and elsewhere…
Template: https://en.wikipedia.org/wiki/Operation_Northwoods
Paris is looking more like a genuine and rather ambitious ISIS plot which was detected and allowed to proceed by the French authorities, providing the perfect justification for military escalation in the Syrian chess match.
If the universal intrusive surveillance that we are now under failed to detect it, then we might as well employ my dog to watch ISIS, rather than the alleged several thousand French security operatives and the 400 million (!) euros budget allocation dedicated to’ anti- extremist’ monitoring.
Too cynical? Maybe.
But to allow such dramatic killings to go ahead when they suit one’s purposes is a low-risk strategy: it would have been a fair assumption that only a few hundred people at most would be killed in the Bataclan attack, and the attack on the stadium would be easy enough to limit, with certainly no chance of any direct threat to Hollande as he watched the game.
But it would be suitably spectacular and horrifying to justify ‘declaring war on terror’ (yet again).
Given the immense stakes in respect of resource control, energy security and the West’s geostrategic objectives, the loss of a few hundred lives among the insignificant citizenry would be well worth it, if one had no soul.
A few things….
In the Protocols of the Elders of Zion the architects of the document mention on a number of occasions the need for and acceptability of killing Jews (ends justifies means)…. so no problem with killing non-Jews I would assume…
My other two points relate to how to make make puppets dance…. threatening the puppet can certainly work but there is a far better way to get him to dance… and to love dancing for you…
Here are two examples of men who danced to whatever tune was played while in office — who amassed fortunes when they retired from office…
Former Prime Minister says fortune is “less than a fifth” of estimates of £100 million, despite property empire thought to be worth £25 million.
Clinton is considered the wealthiest living president and among the top-10 all-time wealthiest, with the Clintons’ combined net worth at about $55 million, according to the website 24/7 Wall Street, which started evaluating the net worth of presidents in 2010.
If you own the money- producing factory….. you call the tune.
I am not sure why people have such a difficult time accepting this ….
Perhaps it is because we have had it hammered into our heads that we live in democratic countries…. where the people have power….
And to a large extent the people do have power — we get to decide a great many such things as when the pot holes get fixed or if a new court house should be built — so it is understandable that people believe in the myth of democracy…
But the big issues — things that involve power and wealth and war and resource control — those decisions are made by the present day Elders…. the politicians rubber stamp their decisions….
There is no upside to not rubber stamping them — because everyone wants to maintain their position at the trough…. everyone wants to feed….
And if you piss off to the Elders — you starve.
It really is as simple as that.
In most venues you would be excoriated as a NAZI, but not here.
??
In “most venues” you can lambast all the other tribes of the world until you are blue in the face. But criticise “the Elders” and people piss their pants and get hysterical. Think about that for a while… Why is only the one tribe beyond blame, untouchable?
I am sure if FW had hundreds of thousands of unique visitors per month — the Nazi hunters would roll in ….
The fact that I am not accused of being a Nazi for posting the transcript of The Protocols… the fact that there are people here who will actually respect my position regarding that document — and will actually read it before passing judgment on whether they are authentic or not….
Well that is why I come here….
FE you are completely and utterly wrong about The Protocols. Only racists and bigots take them seriously. As I have pointed out previously they are a work of fiction. There is no end of proof to substantiate they are fake. You have nil proof that they are legitimate.
All you do is predict the past with them. You cherry pick passages that agree with past events and use them to compliment your agenda. You suffer from cognitive bias. Really you need re-educating and some professional help, your credibility which has been built with real facts has nearly depleted while you continue with the “Elders” nonsense.
I really don’t understand why Gail didn’t nip it in the bud. Allowing it to continue could do harm to the credibility of the blog.
Maybe it is time for the end of the discussion of The Protocols. For a topic that gets some people upset, the topic has gone on long enough.
I find it rather amusing that you refer to me as a racist — I am almost certainly the least racist person imaginable.
I deal in facts. I have stated the facts on this issue. And as usual – there are those here who will remain in denial even if I stuff the facts down their gaping maws (the typical response is ‘I don’t like what you are saying — I cannot disprove it though — so I will insult you’)
I will continue to refer to the people who make the decisions as The Elders – surely we can agree that the people making the decisions are likely to be elderly….. You can use the PTB or the Elites or whatever other term you like.
And we will leave it at that shall we.
Of late, all the major players in our little worldly drama seem to be increasingly and alarmingly like cardboard cutout comic book characters as in the movie Sin City.
Have you noticed this?
Why does the US Constitution mention “letters of marque and reprisal”? Because not all enemies are nation states some are gangs of armed men.
Why not offer the legitimate government of Syria all aid and comfort to fight the common enemy ISIS? Offer new fighter plane to the Syrian air force? Satellite and drone intel to the army of Syria? And then let the Syrian army kill the aggressors that have invaded Syria.
Dmitri Orlov’s interesting point of view:
What a difference a single massacre can make!
• Just a week ago the EU couldn’t possibly figure out anything to do to stop the influx of “refugees” from all those countries the US and NATO had bombed into oblivion. But now, because “Paris changed everything,” EU’s borders are being locked down and refugees are being turned back.
• Just a week ago it seemed that the EU was going to be swamped by resurgent nationalism, with incumbent political parties poised to get voted out of power. But now, thanks to the Paris massacre, they have obtained a new lease on life, because they can now safely embrace the same policies that a week ago they branded as “fascist.”
• Just a week ago the EU and the US couldn’t possibly bring themselves admit that they are utterly incompetent when it comes to combating their own creation—ISIS, that is—and need Russian help. But now, at the après-Paris G-20 summit, everybody is ready to line up and let Putin take charge of the war against terrorism. Look—the Americans finally found those convoys of tanker trucks stretching beyond the horizon that ISIS has been using to smuggle out stolen Syrian crude oil—after Putin showed them the satellite photos!
Am I being crass and insensitive? Not at all—I deplore all the deaths from terrorist attacks in Iraq, in Syria, in Lebanon, and in all the other countries whose populations did absolutely nothing to deserve such treatment. I only feel half as bad about the French, who stood by quietly as their military helped destroy Libya (which did nothing to deserve it).
Note that after the Russian jet crashed in the Sinai there weren’t all that many Facebook avatars with the Russian flag pasted over them, and hardly any candlelight vigils or piles of wreaths and flowers in various Western capitals. I even detected a whiff of smug satisfaction that the Russians got their comeuppance for stepping out of line in Syria.
Why the difference in reaction? Simple: you were told to grieve for the French, so you did. You were not told to grieve for the Russians, and so you didn’t. Don’t feel bad; you are just following orders. The reasoning behind these orders is transparent: the French, along with the rest of the EU, are Washington’s willing puppets; therefore, they are innocent, and when they get killed, it’s a tragedy. But the Russians are not Washington’s willing puppet, and are not innocent, and so when they get killed by terrorists, it’s punishment. And when Iraqis, or Syrians, or Nigerians get killed by terrorists, that’s not a tragedy either, for a different reason: they are too poor to matter. In order to qualify as a victim of a tragedy, you have to be each of these three things: 1. a US-puppet, 2. rich and 3. dead.
http://cluborlov.blogspot.pt/2015/11/a-most-convenient-massacre.html#more
Given that history has always been an endless series of battles in a zero sum war for control and consumption of the limited resources of a Finite World…. with no room for kindness beyond tossing a few coins into the Oxfam box when checking out with a couple of monster trolleys filled with the finest food victory in the zero sum game can offer…
We can expect the violence to reach increase going forward and reach a crescendo when the electricity goes off…
Dmitry always sees humor in things that others would not! He often has interesting insights.
And now … Fast Eddy presents….. The Koombaya Moment of the Week:
https://www.rt.com/in-motion/322136-piano-bataclan-theater-paris/
Let me make another analogy, briefly. In the medical field, there are those (and this is the majority) who take their training, science, and the honest delivery of care to cure disease, improve health, and relieve suffering, very seriously, and genuinely try to do good for their patients and the public. In what is a very imperfect and chaotic, and perhaps even failing, system. And then there are those who abuse the system for profit. And quacks, who peddle all sorts of nonsense as “cures” for every condition under the sun. And despite all of our attempts to rigorously weed this out, we never can, because it preys upon people’s insecurity, naivety, and desperation. So it turns out the dishonest and the quacks end up doing great damage, despite their smaller numbers. And the damage is in the form of waste, ruined health, and not getting serious diseases the attention they deserve. If you remember even Steve Jobs was a victim of this when he didn’t get his cancer treated immediately.
Alright so now that we understand this, my point is that the people who insist on deflation are like the quacks of the doomer world. The doomer world does have many people who make honest attempts to try to understand the whole system, how it operates, and try to come up with a view of where this is heading. And perhaps even prepare for it. And this is a great debate to have, which is why I am here and on other sites. But then along come you deflationists, and you basically ruin the understanding for everyone, with pseudo-intellectual theories on why currency will gain in value, prices will fall, there will be a never ending debt – deflationary spiral, etc. It’s all just pie in the sky fantasy, with absolutely no historical or empirical support whatsoever. Insulting actually.
Just as quackery is like an acid that eats through the medical field, this belief in deflation is like an acid that eats through the doomer world, and renders all attempts at understanding futile.
No facts just characterizations and a lame extension of a metaphor that wasnt that brilliant to begin with. Topped off by the demand that your opinion be swallowed whole without any debate as you are head shaman. The crappy metaphor is just a sham to reveal your status as head shaman and your demand that your opinion is not to be questioned. The most humorous part of your whole spiel is it reveals your own doubts about inflation hence the attempt to make it a reality by bulldozing.
Shaman!
https://upload.wikimedia.org/wikipedia/commons/f/ff/Hamatsa_shaman2.jpg
http://static.srcdn.com/slir/w620-h320-q90-c620:320/wp-content/uploads/Star-Wars-7-Rumor-Emperor-Returning.jpg
Creepy!
That’s a rather poor analogy…. what sort of doctor are you?
The word deflation is used in many ways. It’s used to describe decreasing money supply, which is clearly not happening. In fact the money supply is increasing rapidly. No one disoutes that. But the word deflation is also used in the context of cpi and wages. Decreasing cpi and decreasing wages for a large part of the population is also called deflation. Ok, the cpi is not fully reliable and is probably under estimated. Still the inflation of money supply has not reached the people and not created much inflation in wages or prices. Maybe it will in the future but the inflation of prices will in that case most likely be quicker than the inflation of wages. This will create a very difficult situation. Let us call this situation “deflationary collapse” regardless of if prices and wages increase or decrease. If prices increase faster than wages then the economy will in a sense deflate. I think “deflationary collapse” is a good name on the scenario that Gail portrays. I also think there is a substantial probability to it. But its not necessarry.
Deflation and recession are different. Deflation is a decrease in prices whereas a recession is the contraction of the economy. I don’t see deflation in our lives, except the cost of fuel at the pumps and propane is down, but everything else either stayed where it was or went up. For example our water bill just went up in one fell swoop 50% and is up 250% in just 12 years. Bubble wrap we use in our business is up 120% in 8 years. Organic apples are up 100% in 6 years. Groceries overall are twice what there were just a few years ago. Even stupid toilet paper is twice as much as in 08. Try to think of a utility or service, like electrical or water or garbage pick up, or cable or satellite going down – pretty hard to find an example even though oil and NG are down. Once they raise rates, they almost never reduce them. How much has healthcare or it’s insurance gone down? But somehow we are led like cattle to slaughter to be propagandized into thinking there’s little if any inflation. Huh?!
So your wages have kept pace?
To enable inflation you require DEMAND. Commodity prices are collapsing because demand is failing. Demand is failing because there is less money to purchase. GROWTH is failing, we are collapsing.
Businesses cannot survive by reducing prices, they survive by the only way they know how, reduce overheads, reduce wages, reduce employment levels which all lead to containing the rising costs of energy. We have a deflation cover-up not an inflation cover-up. You only see what the PTB want you to see.
“So your wages have kept pace?”
We have a business that’s been doing much better, so income has risen. But it still irritates me that we have to continually take on more and bigger projects to pay all the things that keep going up – inflation.
Now you are behaving like a troll, cherry picking in an attempt to deflect from the big picture. But you like the dolt, have committed to your opinion and even if a frying pan full of facts hit you in the face it would not be enough. There are none so blind as those that will not see.
Getting back to your business, what “things keep going up”. Taxes would be one and electricity another……… Do you have a guess as to why they are “going up”. Maybe you think it’s because of money printing but I’m guessing you will simply say inflation.
Maybe “recessional collapse” is a better word then. There is inflation to a lot of things. For instance the big mac index has increased rapidly. On theother hand prices on technology are deflating. I misstrust the cpi-measure. But in the end, if prices inflate quicker than wages we have problems. This causes problems similar to deflation.
Yes we all understand that.
Prices ARE going up on a lot of things. It’s a race to the bottom. Like I said businesses are responding by increasing prices but REDUCING everything else, including employees and wages. They are doing everything possible including mergers, takeovers and cartel like behaviours, all to reduce energy costs, employees and wages.
Have you noticed any reduction in taxes? Governments too are skinning the consumer, he/she is the last bastion of supply, a vein not fully exploited. Rest assured though, everything the consumer owns is fair game including savings and pension funds.
When the government begins the bail-ins, I think that will be the sign that the poised snowball has begun to roll…… That will finally strip the consumer of everything and you can’t print cheap energy, consumer goods, jobs, food and shelter.
What people are saying here is that… this time it’s different.
I’ve had similar discussions that debate whether automation and AI will cause mass unemployment thereby leading to never-before-seen socioeconomic upheaval. The naysayers usually point to past industrial revolution and other historical references and say everything will be fine – look at the past. Those paying a bit more attention say that… this time it’s different.
Of course, many of the players in that arena may never have read this blog…
On that note, let’s say you had to give a keynote speech to the International Federation of Robotics or the Robotic Industries Association on future policy…
What would you tell them?
a. Quit. Your business may still be on the up and up but it’s vaporwear. Within a year or two you’ll all be chopping trees down to keep warm.
b. Continue. But at least read this blog and try to understand where you may be heading and whether it may be wise to consider a change of strategy. Permaculture farming technician perhaps?
c. Tell them nothing. You’d rather not hurt their feelings. Sometimes it’s kinder to ommit the truth.
Javier, I would tell them we are in for a turbulent transition and we have to be buddy buddy with the government and its security forces. We need to consider placing our factory on or next to military bases. Better yet military bases with stand alone energy systems. But in the long run the future looks bright. Farming yields will grow due to the new robotic farming method called permaculture. Manufacturing will return and be local and all full custom. Our children will no longer die in wars all killing will be done by robots. Policing will be done by robots. Education and medicine will be done by robots. Our job will be controlling the robots. Our only concern is to make sure a robot gap does not develop. That the enemy does not have better robots. To insure this we will need to make sure the generals get everything they want. Including those nice chocolate covered strawberries for their airplane snacking pleasure.
I couldn’t be more excited about the boundless future of our industry robotics time has come at last.
That what I would tell them.
Nice fairy tale.
You sir exhibit excellent corporate survival skills. Something has changed in me I no longer can exhibit such skill. Even when the words come out of my mouth there is some essence that leaks through and destroys my performance. Could that be the elusive quality known as integrity as I have been called a great actor? If so I would advise avoiding the virus known as integrity at all costs. Please put a dollar in my cup Ed that along with my integrity will buy me a can of beans.
May your sense of humor stay intact as we traverse our “boundless” future.
I have to admit I’m genuinely curious as to how this will play out. When will materials intensive progressive industries like robotics realise something is up – that their goose is cooked?
Will it be energy demands not being met or vital rare materials and parts drying up? Will funding grind to a halt so that even the leaders of the pack fail to meet their goals? Or everything all at once – thousands of CEOs across the board staring blankly into space in a not-quite-sure-what-comes-next moment?
I think your analogy to quacks is taken too far. For one thing, when there are debt defaults as we approach limits, there is real loss of value. This loss of value feeds through to prices. For anther, when the cost of oil production rises, it reflects a loss of productivity of workers, because each worker is on average producing less oil. Eventually this loss of productivity has to feed through to the rest of the economy as reduced wages. When it feeds through as lowered wages, demand for high value goods like homes and cars falls. Indirectly, the demand for commodities falls, and the market price falls below the cost of production. It is prices that are too low that bring the end of the system.
Have you ever wondered why the sudden push for nuclear arms race de-escalation in the early-mid 1980s? Well, it seems reasonable that for large part it was a result of new system modeling of nuclear winter effects, done both separately by US/USSR science, and later by their joint effort. And as you might have noticed in the news small nuke exchange is now again in the mood.
Explanation video ft. Prof. Carl Sagan
and also perhaps hinting why some of TPTBs choose NZ and south american locations:
https://www.youtube.com/watch?v=WCTKcd2Ko98
update info: http://www.nucleardarkness.org/warconsequences/hundredfiftytonessmoke/
Threads
One of the best collapse movies of all time. BBC constantly bans it from ytoube, most likely for showing the utter despair and gov helplessness even from limited exchage of 3000 MT, which would be just a few percent of the arsenal of 1980s and a fraction of todays. The multigeneration regression aspect of collapsing society is depicted quite in brutal fashion there. If interested don’t skip/rewind the slow introductory ~25min intro, the film is best watched calmly in its entirity.
So now the movie lives hidden at viemoserver:
+additional expertly debate after they showed the movie:
Interesting. I will add that IMO a lot of the so-called de-escalation is in fact restructuring. In other words, the old stock was becoming obsolete anyway. Time to replace all that junk with shiny new upgrades that are much faster, more accurate, more deadly, much harder to intercept, have greater MIRV capability. All the while, it looks like you’re reducing the global stockpile (psst – but not really).
Although not entirely accurate – according to preemptive EMP attack specialists – “One Second After” is an insightful novel on the after-effects of such an attack. Personally, I believe it to be highly unlikely because the perpetrator would be annihilated within minutes. Even in a “sore loser” scenario, too many “keys” are required to give that sort of order.
ZH has an article today that talks a little about this…
“The point of no return will pass once and for all sometime in 2016, and America’s elite will no longer be able to choose between the provisions of compromise and collapse. The only thing that they will then be able to do is to slam the door loudly, trying to drag the rest of the world after them into the abyss.”
http://www.zerohedge.com/news/2015-11-14/time-running-out-pax-americana
I found it peculiar that Russians feel the need now to openly react “leaking” their budget response to western attempt for next round of arms race, by introducing those subs launchin high speed “cruise missile” torpedos tipped with smaller KT heads which could make the whole eastern coast unlivable for long time. And it’s to be have for pennies relatively speaking and not much new development needed at all. That may suggest the US is again toying with the idea of limited nuclear war, that’s why I’m posting the ideas-reasoning which culminated in the stop gap measures of mid 1980s. Perhaps today a new generation of crazies would succeed in pushing us into this disaster. Comparably people are way to imature in comparison to that previous period..
You may be right. It’s always possible for things to escalate and then it’s anyone’s guess what comes next. I agree that leaders appear to become more reckless as time goes by.
I’ve bookmarked the Newsnight debate as I think it’s still relevant now. As you say, we’re in a new cycle of sabre rattling between east and west and I think it’s wrong to call this Cold War 2 – this is something else.
It may be that aircraft carriers are obsolete too with latest ship-busting missiles able to thwart their defenses. If major powers did lose all reason and start WW3, I would imagine much of this older hardware would be sunk moving other options higher up the priority list.
But then, one man did already save the world back in the 80s – his name… Stanislav Petrov.
https://en.wikipedia.org/wiki/Stanislav_Petrov
Stanislav Yevgrafovich Petrov (Russian: Станисла́в Евгра́фович Петро́в; born 1939 in Odessa, Ukraine[1]) is a retired lieutenant colonel of the Soviet Air Defence Forces. On September 26, 1983, just three weeks after the Soviet military had shot down Korean Air Lines Flight 007, Petrov was the duty officer at the command center for the Oko nuclear early-warning system when the system reported that a missile, followed by another one and then up to five more, were being launched from the United States. Petrov judged the report to be a false alarm,[2] and his decision is credited with having prevented an erroneous retaliatory nuclear attack on the United States and its NATO allies that could have resulted in large-scale nuclear war. Investigation later confirmed that the satellite warning system had indeed malfunctioned.[3]
This is for hard-core students of sustainable farming.
Larry Korn has recently published a memoir and essay about Masonobu Fukuoka, One-Straw Revolutionary.
If you are seriously contemplating growing your own food, it is worth while buying the book to read Korn’s comparisons of Fukuoka’s system (Natural Farming) with other farming systems. First, he compares Natural Farming with Indigenous Systems, and finds many similarities.
Next he compares to Traditional Japanese Agriculture, from about 1600 to the end of WWII. This period includes the Edo period and the period following the collapse of Edo when many farmers still followed traditional ways. He asks whether Traditional farming is a form of Natural farming. The answer is complex. Technically, Natural Farming means: No cultivation; no chemical fertilizers or prepared composts; no weeding by tillage or herbicides; no dependence on chemicals. More broadly, Natural Farming involves these practices: View the world as a unified, interconnected, and interdependent whole that is ideally arranged just as it is; respect all features and allow an equal opportunity to thrive; protect nature’s ability to replenish itself; value and encourage diversity; know and care for your home; take only what you need and never take it all; use and recycle everything; live with a spirit of tolerance, humility and gratitude.
Technically, Traditional farming is not like Natural farming because the Traditional farmers plowed a great deal and made an awful lot of compost. But in terms of the broad practices, the two are very close.
Next he includes a discussion of Organic agriculture and Permaculture. He distinguishes between large scale ‘organic’, which may be barely distinguishable from industrial agriculture, and those who grow organically with more of the broad practices listed above for Traditional farmers. He discusses the specific practices of Frank King, Sir Albert Howard, and J.I. Rodale. ‘When human beings first learned to plow, they gained access to the vast reserve of solar energy that had been stored in the organic matter of the soil, but access to this energy came at a very high price in the form of labor, erosion, and other environmental consequences’. As a rule, each of the three proponents of ‘organic’ farming thought that it was a good choice to mine the ‘reserve of solar energy’, but also recommended a lot of hard work to try to put the carbon back in the soil. What has actually happened is that much of the land farmed ‘organically’ has lost most of its carbon. Most industrial farms have close to zero carbon.
He also discusses a maverick ‘no-till’ in the early organic movement, Edward H. Faulkner. Faulkner was fired from a government position because of his unorthodox views. ‘From one point of view, we have been creating our own soil problems merely for the doubtful pleasure of solving them. Had we not originally gone contrary to the laws of nature by plowing the land, we would have avoided the problems as well as the expensive and time consuming efforts to solve them…’ He also mentions another maverick, J. Russell Smith, who promoted tree crops. And yet another maverick was Ruth Stout, who quit plowing when the plowman she had hired failed to show up. She became an ardent advocate of mulch with no tillage.
He concludes with an analysis of Permaculture. ‘several characteristics which distinguish it from basic organic agriculture. It stresses the interconnectedness of life, is primarily a no-till system, emphasizes tree crops and perennial plants, and integrates the production of food and shelter with the social, economic, and political aspects of society. In many ways, it does represent an improvement on basic organic techniques. But when carefully analyzed it becomes clear that permaculture, too, is a product of our modern way of thinking and therefore does not represent a clean break from other forms of modern farming.’ ‘So permaculture is based on the commonly shared beliefs and values of modern culture.’
After analyzing the alternatives, Korn includes a chapter Without Natural People, There Can Be No Natural Farming. In other words, we have to go back to the world views of Indigenous people or the Traditional farmers of Japan. The focus would have to move from ‘more’ to ‘enough’. Working hard making compost would not be seen as virtuous activity. Saving and scattering seeds WOULD be seen as virtuous activity. One needs to learn to be happy living in a hut. Korn lived in a hut on Fukuoka’s farm for several years, and learned to be very happy indeed. But he didn’t get there by any very direct route. The first part of the book outlines his journey.
In thinking about the various alternatives, it is perhaps worthwhile to consider the concept of Overshoot. I don’t know how many people can live in a world of Natural Farming. Fukuoka’s yields in the 1970s were comparable to his neighbors who used industrial methods. But yields have since increased, and Fukuoka would not be competitive today. One way of looking at it is that Fukuoka was one of the last of the farmers who were able to live a Natural Life.
Will the world turn, as Overshoot turns into Collapse, so that learning the skills of Natural Farming would be an excellent expenditure of one’s time and money today? As always, it’s hard to tell for sure.
Don Stewart
Just added a ton of fish to the compost pile, and 16 tons of sement to the foundation to the new 200 chicken hen house.
A few years ago that would be the two things I would have never ever imagined I would say after a Satuday well spent..
I hope no one is close by to smell the decaying fish – lol.
Great post. I remember reading about those “no till” mavericks – about how one of them was producing more and better produce per acre than any industrial output. But as usual, the problem is scaling up.
In the end, I’m not reallly concerned with the few that may be able to survive this way – some better than others. And even the luckiest will face devastatingly bad harvests and so on.
No, my thoughts are with the millions of people in every city around the world that are currently texting sweet nothings on their portable snitch devices entirely oblivious to anything that we have just written. Maybe they are the lucky ones.
Scaling up why we are already there? It’s more a question of wider adoption.
There have been many veggetable farms of 2ha size under no till/low till management for years, it works. That’s roughly the max size one farmer family can manage, you can serve aprox. <50families in local veggies buyers club. Obviously you need much more additional acreage per farm for cycling pasture, forest, potatoes, crops etc. And those no tillers are still using diesel/natgas for mixing up the compost, cutting hay on pastures, deliveries to market etc. You can do most of it with horses/cattle (incl. stationary machines horse/cattle powered), yet again you need more acreage then, and there is learning curve of years, you need blacksmith nearby etc. It's a simple math what can be done on what energy input budget. Plus you can enlarge the yield by very tight rotational management adding meat animals but for that you need layers of systemic support .i.e. very stable enviornment of regular demand, solvent clients, dependable climate envelope etc. Simply, if we avoid nuclear war, and spent nuclear fuel could be burried in caves solid and deep enough to avoid leakege the future is managable on "few centuries backtracked BAU compost" like style, including the way smaller population. It should be our prefered strategy, but the odds are relatively small.
That’s very good to know. In small communities, wouldn’t you be able to “grow” your own diesel to power some machinery too? I would think that easier than returning to animal labor – at least until parts and lubricants run out etc.
I think meat consumption, in general, is overblown. I lived on rice, lentils and beans for a year for health reasons and nutritional analytics were 100% – my doctor was routinely blown away by my enviable cholesterol levels! It’s not nice to have a green cloud follow you round 24/7 though…
And the thing is dried food stores well for a year or more. You would only need to supplement with additional veggies, maybe a few chicken eggs and milk and cheese from your goat.
It’s pretty obvious though that your timing would have to be impecable to grab that shedfull of dried food just before every single other soul has the same idea…
I’ve done both ran the numbers and asked the actual doers – it’s simply horrendous to produce necessary amount of diesel fuel in the west/northern regions for the purpose of runing a farming establishment with actual aim selling the produce so not only that selfsustaining hermit scenario in mind. And I’m reffering to veg diesel as originally intended by the inventor not that silly “biodiesel” contraption of mixing various industrial inputs, also mind there is already very hard time making it work with any modern diesel engine reliably, impossible later say in decade or two when the older ones are nonexistant, spare parts limited. All the above also considering low impact on the soil / acreage for the long term, obviously you can destroy someone’s else soil property just for the “immediate” gain of fuel, as we are doing now both domestically and via energy crops 3rd world imports.
But for the midterm I think people will just have to patch it from various sources as regionally available anyway, e.g. house heating/hot water from coal/natgas or biogas(dunk) and or cooking on firewood, draft animals for light-medium farm duties, small displacement tractors for heavy farm duties, small electric tools hooked on the grid as long as it last/later animal powered etc. That obviously means much less food output during the transformation period, but leaner healthier people of those surviving this nasty process. And as you can imagine such ballet requires tons of nurtured knowledge concetrated in few heads of farm owners/operators, which could be displaced rather quickly in times of severe war/domestic uprisings, violent migration not even mentioning the nuclear event. In short such transformation always has been very possible goal but is it likely?
Is it likely? Probably not. But in a fool’s quest, every foolish pursuit must be pursued to the bitter end.
I live in a rural community that only “modernised” fairly recently i.e. dirt tracks and cow-carts have been replaced by BMWs and smartphones in the blink of an eye. Everything you mentioned on your checklist, we have in spades as well as the practical knowledge to apply it. In fact, my 80 year old parents still grow their own food as do most of our neighbours. I was wondering about fuel for tractors because so many people have them now in varying sizes. What about ammo? It’s open hunting season every sunday round here. Got to keep the wild pig population in check and rabbits, pheasants too. Boats go out fishing every day – weather forgiving – and deliver door to door. Firewood galore. Restored water mills that locals regularly use to mill corn. We own our own fresh water supply.
If only we could “borrow” one of the many thousands of huge wind turbines up on the hill to keep the lights on when all else fails, that would be icing on the cake.
For the budget-minded prepper….
I would suggest visiting the dumpster out back of your nearest McDonalds at least twice per day … salvaging the leftovers and storing them in plastic barrels…
Since McDonald’s ‘food’ never goes off this will ensure years of tasty meals.
LOL!
Thank you, Don, for the reviewv of Mr. Korn’s book regarding “natural farming”. The issue for me is after 40 years how has this and other permacuture methods integrated in the system? The answer is obvious and one only has to read Fast Eddie to realize most of food growing has gone in the opposite direction with GMO and plantations ( Palm oil), that destroys or puts in peril natural systems with monoculture for economics of scale.
Regardless, the main drawback is folks would rather be farmers of lawns, than of food.
Food is cheap and requires work and in our value system at this time, is not worth growing ourselves. I am not saying it’s right, but that is how it is. Just who actually picks ourv grocery produces tells us the status, illegal exploited immigrants and serf living conditions.
I own a copy of The Last Straw Revolution” and remember back in the day the impact it had on the Mother Earth Back to the Landers. I’ll check out Larry’s perspective, it sounds like a worthwhile read. The problem with all of this is the disheaval we shall find ourselves in during the fossil fuel contraction will make these books mostly mute testament s of what could have been.
MJ
You will find Larry’s comments about becoming a middle-aged landscape contractor in Oakland to be interesting.
Don Stewart
Reminds me of the books Paradise Lot and Farm City…both nice reads.
However, at least the authors of Paradise Lot admitted that the main staples were rice and pasta and their permie garden supplemented their dietary needs.
I have a fellow doing the same in my neighborhood, doubt he could feed himself alone, never mind a household. But it is a start. The best food providers appear to be fruit and but trees.
MJ
Paradise Lot is on an incredibly small lot which was a real mess when the two guys took it over. Their strategy is the same as mine: grow a variety of the most expensive food you can grow in your small space. That strategy means that you probably won’t be growing staple crops, since they take more land and are cheaper.
If you have just a little more land, you can be largely self-sufficient. A good model for that is provided by Marjorie Wildcraft. She combines veggies, staples, and small animals such as rabbits in a very compact space.
An additional issue is ‘imported fertility’ such as compost. It is almost a given that if you intensively garden a small plot, you are going to have to bring in compost. Which means either that you are in an urban area where people throw away a lot of valuable organic matter which you can salvage, or else you are out in the country and have woods and fields around you which are not intensively gardened or animal operations with excess manure.
One of the things which made Fukuoka stand apart was his rejection of compost, as discussed by Korn when he contrasts Natural Farming with other types of biological farming. That doesn’t mean that Fukuoka didn’t recycle everything. His obsessive recycling gave him the title ‘One Straw Revolution’.
Fukuoka also did not till. No-till is favorable to fungi. Fukuoka repeatedly emphasized the importance of microbes, but he did not have our current scientific understanding of just how extraordinary they are…from our guts to our gardens. See:
http://blogs.scientificamerican.com/artful-amoeba/the-world-s-largest-mining-operation-is-run-by-fungi/
Don Stewart
Reminds me of the old saying,
“Those who hear don’t listen, those who listen don’t think it pertains to them, those who do think it means them, don’t act, those who act are too few. The few are usually too late to make a difference.
Don I look forward to your post and my library has benefited from your research.
I just finished “The Knowledge” by Lewis Dartnell a British scientist who writes a guide to re-starting civilization. He gets carried away here and there but generally he follows history to teach us how our ancestors survived. What I found fascinating is how a tree can provide such an incredible array of useful chemicals that we can extract with basic equipment. I knew that we can make charcoal which is needed for everything from forging, sanitizing our drinking water, adding fertility to our soil (AKA Terra Preta) tar for caulking our canoes or boats, acetone for making paints and the more ambitious can build a wood gasifier to power their cars. Germany and Europe produced nearly a million cars powered by a gasifier during WW 2. For people living on Canada’s west coast a supply of trees is not a problem that is one reason I chose a homestead on Vancouver Island
Dartnell gives the organic chemistry lesson for beginners that itself is worth the price of the book. Do what I did – get if from your library first and if you think it’s a keeper get your own copy!
in response to Jarvis—the original driving force which led to the industrial revolution was the rapid depletion of trees which were being cut down to make charcoal. (to make cannon and ships and other things) essentially it was the resource problem of the 18thc
It takes something like 1000 tons of tree to make 100 tons of charcoal to make 1 ton of iron
Those figures are approximate—but you get my drift
Dear End of More
One of the things that makes Fukuoka’s system interesting is how he is an amalgam of lots of different patterns. He was a little like Edo Japan, a little like indigenous culture, but he had a small pickup truck which allowed him to market his citrus in Tokyo. And Tokyo was relatively rich, due to the fossil fuels which powered Japanese industry, which allowed Fukuoka to get more for his citrus than he could have gotten in his own village.
His hand tools were straight out of Edo (which era saw a renewal of Japanese forests), but his no-till methods were his own invention. His philosophy of life was akin to that of indigenous people. He was clearly in a market system for his citrus crops, but also had a large foot planted in self-sufficiency. He lived in a village, but his agriculture was separate from what the villagers did. He usually hosted interns, such as Larry Korn…but many farmers say they can do it as fast without the interns because all the teaching slows them down.
The government was less repressive for Fukuoka than it was during Edo, and bandits and wars were much less of a problem than they were in the centuries before Edo, but MacArthur had redistributed most of the family farm to others and Fukuoka had very little land. So he began with a good education, had some ideas, very little land, not much money, and no clear models to follow. The years of invention as he figured out how to farm sustainably were hard.
As we try to sort out how we might mix and match the available patterns, it seems to me a crucial issue is the overall size of the economic bubble. If the economy is large, then many things become possible even for those who are using hand tools from a different era. The ‘size of the bubble’ is most explicitly dealt with in the thermodynamic models, I think.
Don Stewart
We have plenty of fruit trees here but they appear to be dieing a slow death caused by rapidly mutating fungus and other treatment resistant diseases. Aren’t we suffering a similar problem to medical overuse of antibiotics leading to drug resistant bacteria?
My father recently died from a simple urinary tract infection due to antibody resistance. They tried three different types and none worked, so the infection spread to vital organs including the lungs. Just so happens the nursing home have their own chicken farm and served the chicken daily in different dishes. A lot of beef and chicken feed is laden with antibodies which leads to human anti-body resistance. So the very food they fed him led to his ultimate demise. That’s the type of irony we can do without, but it’s also one more way we are painting ourselves into a corner.
Sorry to hear that. My uncle managed to survive a year-long ordeal in hospital after the complications surrounding a knee operation nearly killed him. Resistant bacteria wasn’t the worst thing in the end or even a prosthetic knee joint that was implanted already infected. No, the worst part of it was medical malpractice. Doctors prescribed a practically lethal dose of a dangerous medication against other doctor’s advice. His heart stopped beating for seven minutes before he was revived. Now, he’s fine. And no, he didn’t see anything while he was “gone”…
Don
You still need heat to make metal objects,
The problem surely is one of numbers? (people)
End of More
The amount of metal needed to make hand implements for agriculture is more a function of the amount of land to be worked rather than the number of people. If there are more people than can be fed by a system of hand labor using hand tools, then the number of people will simply decline.
Edo Japan had a very elaborate system of recycling precious materials such as metals and even stuff which wasn’t so valuable such as paper. I would expect that, in a collapse, there would be a great deal of recycling of existing scrap and stuff which would become scrap because the infrastructure which used it no longer works. I don’t have some study which shows how much scrap and potential scrap there is, and how that might relate to blades for hand tools…so it’s just a guess on my part that there will be enough. There is a picture on the internet of Oliver Holmgren (David’s son) looking at a knife he made from an old truck spring.
In Edo, they were able to do what they needed to do with the small amount of metals they used and also regenerate the forests which had been cut in earlier centuries. But they were very frugal about things such as heating homes.
I am not aware of any scholarly and thorough discussion of the differences in wood consumption patterns between Edo and Europe. But we do know quite a lot about how the government of Edo controlled the forestry.
Don Stewart
A close friend of my family when we lived in Paris, 35 years ago, was in Bataclan last night
She is safe, but we are all together in this mess
Sorry to pierce the bubble here, but do you realize the least performing public figure of France for past several centuries has been physically present at one of those targeted places. Few minutes later he is escorted away and suddenly all about planning security meassures inside some gov protected bunker-office. People get real, it’s about all we have discussed here so far in terms of the onset of days of less in every aspect for the human farm. So from now expect much easier launch of digital only currencies, day to day visible police-military state and less free movement, more wars abroad etc.
Let me guess…
Now the Elders have a reason to put boots on the ground in Syria….
Possibly yes, but as written above I’d be more concerned about the domestic front/audience and increasing trend towards more directly controlled human farming operation at all fronts. Lets not forget when the last french president of significance learned NATO is providing cover and assitance for unsuccesfull attempts on his life/nature of the french republic he just kick them out. And this event is not even a comparable case, it’s bordering ludicrous attacking rock-metal events, 7yrs old can compute the propensities which side “islamists” vs. “deep state of demographically challenged country full of resentfull imigrants” would benefit from silly act like that. Lets wait for future steps, the current head clown is not capable of such bold action anyway, nor the psychotic witch of germany. In case it’s going to provide argument for switching rails towards rebuilding “fortress europe” and more independent trade and foreign policy one wouldn’t be surprised either, but that would have to be relatively soon confirmed by visible reshuffles in policy.
The Charlie Hebdo incident should have set off alarm bells that the public was and is being duped for more global tyranny and eventual total lockdown of the sheeple. Within days of the Hebdo massacre you had world leaders coming to France and linking arms and marching in the streets of France in a show of support.
That was NO different than the current WAR on CASH. This is why I personally despise centralized government and central planning.
If you want a vision of the future, imagine a boot stamping on a human face – forever.
[youtube http://www.youtube.com/watch?v=OD5ixFFP4w4&w=560&h=315%5D
Whenever you hear the word “deflation” run away like heck. These people are wrong about everything. Always have been, always will be.
It’s some sort of mental disease. I can’t explain it, but as a physician I have experience with the mentally ill and let’s just say I don’t want to be around them during this decline.
Dolph9, I am having a hard time understanding this post.
My point is: deflationists are actually getting dangerous. They are wrong about everything, always have been, and yet peddle their nonsense, like unicorns or aliens, like hucksters and charlatans.
Deflation is a myth. A fairy tale. There is NEVER any deflation, and there never will be. If you say deflation, you are actually just as wrong as all the mainstream and wall street shills.
It’s either inflation or hyperinflation, that’s it. Those are the only two possibilities. If you say “deflation” you are simply saying something that has never occurred and will never occur, and yet you people keep on doing it. It’s dangerous because it prevents clear headed thinking about the direction of this collapse.
If there is no deflation – how do you explain this?
Do you reckon printing more money will fix this?
If so – how much more?
And going forward when commodities crash back into deflation is is just a matter of turning on the printing press again?
Can we just keep doing this forever – if 10 trillion doesn’t work then just to to 500 trillion dollars?
Do you think the world will eventually run out of zeros?
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/12/20141222_comm.jpg
“you are simply saying something that has never occurred and will never occur”
What was the Great Depression you idiot……….. Inflation?
https://en.m.wikipedia.org/wiki/List_of_economic_crises
https://en.m.wikipedia.org/wiki/Depression_(economics)
Bingo!
Depression of 1920–21
You all need jobs?
A 1919 parade in Minneapolis for soldiers returning home after World War I. The upheaval associated with the transition from a wartime to peacetime economy contributed to a depression in 1920 and 1921.
The Depression of 1920–21 was an extremely sharp deflationary recession in the United States and other countries, shortly after the end of World War I. It lasted from January 1920 to July 1921.[1] The extent of the deflation was not only large, but large relative to the accompanying decline in real product.[2] There was a brief post–World War I recession immediately following the end of the war which lasted for 2 years.
The economy started to grow, though it had not yet completed all the adjustments in shifting from a wartime to a peacetime economy. Factors identified as potentially contributing to the downturn include: returning troops which created a surge in the civilian labor force, a decline in labor union strife, changes in fiscal and monetary policy, and changes in price expectations.
Following the end of the Depression of 1920–21, the Roaring Twenties brought a period of economic prosperity.
The Great Depression was a severe worldwide economic depression that took place during the 1930s. The timing of the Great Depression varied across nations; however, in most countries it started in 1929 and lasted until the late 1930s.[1] It was the longest, deepest, and most widespread depression of the 20th century.[2]
Worldwide GDP fell by 15% from 1929 to 1932.[3] In the 21st century, the Great Depression is commonly used as an example of how far the world’s economy can decline.[4] The depression originated in the United States, after a fall in stock prices that began around September 4, 1929, and became worldwide news with the stock market crash of October 29, 1929 (known as Black Tuesday).
The Great Depression had devastating effects in countries both rich and poor. Personal income, tax revenue, profits and prices dropped, while international trade plunged by more than 50%. Unemployment in the U.S. rose to 25% and in some countries rose as high as 33%.[5]
Cities all around the world were hit hard, especially those dependent on heavy industry. Construction was virtually halted in many countries. Farming communities and rural areas suffered as crop prices fell by approximately 60%.[6][7][8] Facing plummeting demand with few alternate sources of jobs, areas dependent on primary sector industries such as mining and logging suffered the most.[9]
Also, a cut back on debt, as countries paid off their loans that finances WWI. End of debt bubble = major recession.
Surely, you meant this…
[youtube http://www.youtube.com/watch?v=Zk5Il6KQrd8&w=560&h=315%5D
Don’t get high on your own supply… rule number one.
When BAU collapses, along with the financial system, what will be around to support prices artificially?
All governments around the world…every single one, has a tool called the printing press. Or it’s digital equivalent. They are not currency constrained. No matter whether governments rise or fall, whether currencies come and go, currency is never restrained. It is infinite now, it will be infinite 10 years from now, it will be infinite 50 years from now, 100 years from now.
They are going to create currency, and when they are finished they will create more. They will bludgeon “deflation” to absolute death, they will kill it. It’s not even going to be funny, it’s actually going to be a massacre the likes of which has never before seen in world history. And yes, I do look forward to those times, because the “myth” of deflation needs to die, it needs to be absolutely buried, never to return again. Deflation is a cult, a religion. It has absolutely no basis in reality and yet you people believe it. I will keep on fighting this belief until the end.
The printing presses won’t allow oil to be extracted or coal to be dug. They won’t keep businesses in operation. If they are around, they will play a very minor role, because there is no way that “money” can redistribute goods that aren’t really available.
The printing press can be used to buy corporate debt from companies to important to fail. For instance coal or oil companies. They could even buy shares. There are of course some problems associated with that. It could at least buy some time. I don’t know what the central bankers are planning today but it’s likely that the scenario you describe is neglected. But at some point some governments will realize that they have to keep the oil pumps pumping. For instance USA has a strong enough government to accomplish this at least for a while. I fear that the governments in EU will not have the same succes.
This has already been done through stock buy-backs. But it’s effectiveness is now waning.
Buy backs are no free lunch…
Companies that engage in this borrow the cash …. if they borrow too much it results in higher interest rates on their debt….
“The printing press can be used to buy corporate debt from companies to important to fail”
If a companies sales are collapsing — see CAT…. you can loan them money to buy-back shares… you can even give them money to maintain their operations….
And their doors can remain open… they can keep workers sitting around playing cards most of the day…
But that would be the ultimate Potemkin Village ….
It makes the assumption that central banks are omnipotent — that they possess a perpetual economic motion machine (a printing press).
They are not omnipotent — a printing press is not a perpetual economic motion machine.
I like your statement, “a printing press is not a perpetual economic motion machine.” Exactly!
Potemkin villages may work for a while. The economy will not keep together for a shorter while than if we didn’t try. Share buy-backs are not really very efficient. It temporarilly raises the price of the shares. The debt should be used to pay for the costs of the company.
Wrong.
Japan is printing astronomical mountains of Yen…. and still… they sink back into deflation ….
What will eventually happen is that at some point they will simply completely collapse their economy.
It won’t matter if the final act is hyper deflation or hyper inflation — the fact of the matter is a printing press is not a perpetual economic motion machine…
If the entire world was not about to collapse — and we could watch Japan collapse with the assumption that there was no real impact on the world….
Then what you would see is a first world formerly prosperous country —- assume failed state status.
We won’t see that though — because when Japan busts up it will take us all to failed state status…. if any significant country defaults on their debt —- we go failed state very overnight.
“because when Japan busts up it will take us all to failed state status…. if any significant country defaults on their debt —- we go failed state very overnight.”
It’s worse than that. Look at the trouble an INSIGNIFICANT country such as Greece was about to unleash on the Global eCONomy. Which is why it wasn’t allowed to default.
Yes, Greece is the weakest link in the chain. Ironic, The country which gave birth to western civilisation is now primed to usher it out.
Exactly. Once the audience spots the trick card up the magician’s sleeve, the illusion will be blown wide open. After that, the audience won’t believe in magic ever again. The stampede for the exit doors will be spectacular.
Explain for me how the printing presses have managed to prevent deflation in Japan and Europe.
If I dare propose an issue regarding the topics of this Blog and Gail’s excellent work and knowledge, the suggestion is the following:
Is the malfunction of the supply & demand curve a good thing?
The key point is that at every issue you look today, be it oil or cars or commodities or what have you: As the “retail” numbers for these items fall, the production is even increased!
I read that all companies are stepping up production even if the market shrinks just to be in the place, a) when the market comes up again or b) to keep market share.
I mean this is a drastic violation of the supply and demand curve every pupil gets fed at the first lesson in economics ?!?! Does there even exist a scientific name for that ?
I think this is a fundamental shift of how the world works and the big question is if this is “sustainable” (*cough*).
Companies are piling up dept for this. Resources are malinvested. It is the baddest thing to do and yet it is done. (check out the articles on the automatic earth in the last weeks)
Ok, some close or shrink and become “more competitive” (the european banks are for it at the moment) but in the overall picture there is nobody really going out of business.
Usually we are told if a company’s production is too expensive, it goes out of business. But today ? Doesn’t happen! This is really some form of predator capitalism: Who can pile up the highest dept in the end? Musical chairs again…
To conclude: Is this a sign of the end game ?…
deflationary death spiral:
Right, debts are never paid off. They are rolled over into more debt. All industries and governments worldwide do this. How long can this go on? Until the last ton of coal and last barrel of oil that we can extract and burn is extracted and burned. That’s the end game.
What, did you think this is kindergarten or church choir? Did you think the world was nice and objective and fair?
The supply and demand curve every student is fed is not really right.
When a person studies mathematics, they learn about the “boundary” over which a particular function is applicable. Economists need to think in terms of placing boundaries on their “supply and demand” models.
The supply and demand curve only “works” in certain situations. If a manufacturer is making red dresses and blue dresses, and only the blue dresses are selling well, the manufacturer will make more blue dress and fewer red dresses. The manufacturer can stay in business. It is simply a matter of tweaking what is being made.
Similarly, if people decide they like chicken better than beef, the market can gradually adjust so that more chicken in produced and less beef. The supply and demand curve “works”.
The problem occurs when we are dealing with energy products, and we are near limits. Prices of the energy products have already risen to a point where they are basically unaffordable. Prices of goods such as homes and cars have risen with energy prices, necessitating ever longer loans at ever lower interest rates, to try to afford these products. Energy products are connected tightly to the economy as a whole–there are all kinds of feedback loops, including the one in which when energy prices rise and wages do not, the result is recession, and job layoffs. Another feedback loop is connected to the fact that oil exporting countries are extremely dependent on the continued exports of these products, regardless of price, because this is how they get tax revenue to provide food subsidies and funds for jobs programs. They will continue to export oil, no matter how low the price, because it will allow them at least a little more tax money. Also, companies pumping shale in the US are very much in debt, and need to keep pumping to generate at least some money to repay their loans. The net impact of all of this is that supply doesn’t go down, but demand does. This situation is outside of the “domain” where the economists’ model works.
Governments are now trying to maintain a system that is at the edge of collapsing. That is why we get such strange policies.
Thanks Gail. That’s a very clear explanation of how things SHOULD work within the bubble of mainstream economic thought. And as we get closer to the edge of the cliff, the policies get stranger and stranger. Maybe that law can be added to economic theory for posterity?
Prices of the energy products have already risen to a point where they are basically unaffordable
Hardly.
In 1964 Joe Sixpack (production and non-supervisory worker) earned $2.53 per hour, leaded gasoline cost ~$0.31 per gallon and the average fuel efficiency (AFE) of a light duty vehicle was ~14 miles per gallon (mpg). Joe could travel ~115 miles per hour of work.
Fifty years later in 2014 Joe earned $20.60 per hour, unleaded gasoline cost ~$3.50 per gallon and the AFE was ~24 mpg. Joe could travel ~140 miles per hour of work.
Gasoline was more affordable per vehicle mile in 2014 than in 1964. In 2015 Joe will be able to travel ~200 miles per hour of work.
“Fifty years later in 2014 Joe earned $20.60 per hour”
I thought Joe Six Pack was unemployed and contemplating suicide?
https://www.psychologytoday.com/blog/reading-between-the-headlines/201305/white-middle-age-suicide-in-america-skyrockets
Labour Participation Rate: Men
https://research.stlouisfed.org/fred2/graph/fredgraph.png?width=880&height=440&id=LNS11300001
Maybe it is the Joe Sixpack who could find a job who earned $20.60 per hour–or was that just the full time workers? Labor participation rates include the many part time workers.
The problem is the cost of goods that are made using energy products (houses and cars), and the large number of people who are in school endlessly, or out of the labor force for some other reason, or earning relatively low wages. The world as a whole is not generating enough demand for these high-priced goods, because work is increasingly being done by low paid workers, in poor countries around the world, who cannot afford what they are making. At the same time, people in the more advanced countries are not able to buy big ticket items because they are increasingly out of the workforce, or only earning low wages, often part time. Young people end up living with parents indefinitely, rather than getting married and starting their own families, in a new home. There is not enough demand (affordability) of $300,000 houses and $40,000 cars.
Thank you Gail for the boundary explanation.
The Question is, how do you make an assessment for an investment when you are in complete nowhere-land with all indicators. Is the only indicator left “If there is a problem, we dial G for Government” and that will make this purchase a profit?
“We have got to learn to love the bomb”
Let’s say you want to make a reasonable investment, let’s take renewables for the moment, you can not do it because no one can believe in any price finding mechanism for the product you offer. So let’s spend it on smart cities instead, that enriches my friend in silicon valley. So we have a total misallocation of everything. This looks more like the “there is no plan at all” theory for TPTB that has been discussed here for some time.
When to a public presentation by the New York State Public Service Commission. I asked where the electric for our new electric cars would come from. I was told the increased efficiency of our refrigerators would provide the needed electricity!!!!! We are doomed.
Strange answer!
Energy and power has always been a tricky topic. Many journalists do not understand what a kWh is and what kW is. But there is also a problem of understanding scale. (Refrigerator example). Energy density is hard. Energy storage is hard. Full picture including manufacturing costs are even harder. Climate is hard.
Most recently global dimming is back. (Guy). He just came to the realization (and became even more depressed – if possible) that we may have to keep firing dirty coal plants to keep dimming going. Without them we have an instant 1 deg. C uptick.
I more or less think that RE is a scam that takes poor peoples money and funnels it to Westas and other RE companies. IMO there is no solution. Then you have tricky questions such as should SUVs be banned? My guess is that we really can’t because the CONomy relies on not admitting any problems. So I don’t see rationing coming either. Poor people will have to go to the food banks, and when they don’t have any, they will… Whatever.. It’s dark. France is dark. ISIS. 3000 warheads. I dunno. No one knows how this will go down. But 2015 will, I think, prove to have been an important year.
Put it this way, if everything is going belly up anyway, what difference does it make if China burns coal like there’s no tomorrow? I’ve known about geoengineering projects for some time now, but they’re mostly unnecessary with unpredictable outcomes. We already have a head start with fossil fuel pollution. It’s readily available and very easy to ramp up. China is leading the way. At this rate we’ll have a global cooling problem. Oh, and you can always incentivise global tourism to increase the number of jet trails and subsequent cloud formation. We have all the tools we need to meet global dimming targets worldwide. If that fails, why not nuke a volcano to produce the mother of all particle clouds? That should help, shouldn’t it?
I wish I was joking, but as you can see, all of the options will eventually be put on the table and some crazy higher-ups will try them all if that’s what it takes. Just as many prominent environmentalists now support nuclear power production, others will start to realise that with clearer skies comes much more global warming than before.
An honest independent climatologist will say that there’s no way to predict exactly what will happen if you try to manipulate global climate to achieve some kind of balance. Covering the skies with cloud or soot or whatever may in fact cause further warming – up to a point – because of the greenhouse effect. And beyond that it may start to cool again. All the while you risk making things a lot worse than they would have been without clumsy intervention.
Coal and other pollutants may kill millions of people, but according to the climate change fear-mongers, abrupt CC and chaotic weather conditions would kill many more. So is it time to add coal burning and increased air travel to the long list of other practices that were once frowned upon by environmentalists but which are now embraced as saviours?
That’s if you can afford to dig anything up out of the ground from now on that is. If not, then why worry?
“If that fails, why not nuke a volcano to produce the mother of all particle clouds?”
I like it!
I think we need a reality Tee Vee show — ‘Vocano Chasers – let’s see what happens when we stuff thermo nuclear devices into the gaping maws of extinct volcanoes’
The lads could make their way across the world blowing up old volcanoes. People love to watch shows that involve destruction and violence – this could be bigger than American Idol!
Let’s start with Krakatoa!
Glad you like the idea. When do we start?
Can’t wait for Celebrity Volcano Chasers – who could possibly refuse?
Think big. Have fun. Save the planet.
Is this what the next stage in the collapse looks like?
Keep an eye on Japan as this is where said paradropping will be attempted first as Ben Bernanke suggested back in 2003 when he said to “consider for example a tax cut for households and businesses that is explicitly coupled with incremental Bank of Japan purchases of government debt – so that the tax cut is in effect financed by money creation.”
But before we get there, here is a snapshot of where, according to Edwards, we are now and why “there” is getting very close.
In his latest note he says, quite simply, that it is now too late to put the “Orc-like monster” of excess debt and declining cash flows back in the bottle, and why “the global economy will be thrown into chaos.”
http://www.zerohedge.com/news/2015-11-13/albert-edwards-explains-why-he-thinks-global-economy-will-be-thrown-chaos
That’s all jolly good and more or less consensual across the board here.
What you and Gail seem to be discounting is on the ground reality of power and remaining momentum in resources and infrustructure.
In particular, lets say the Kunstlerian clusterfuck tipping point is reached in not too distant timeframe, momentary global chaos takes place, runaway stock exchange and more importantely bond collapse follows, global trade halted, food shortage in the west, massive protests. However, countries with some cohesion and at least vertically integrated core services and public space such as Russia, China and France would likely not go dark instantely.
Now what?
Do you seriously expect that on the other end of the spectrum, i.e. countries with fractured public infrustructure topology such as US/UK with their current people at the helm or those with potential taking over (liekly emerging from mil-security apparatus) are just going to say “oops, lets fold this tent, let me die”. No, most likely not! The power vacuum-void will be filled as demanded, it would be sort of brutal command economy but no mad max with possible exception of some “remote” areas, triaged away. Because there is enough infrustructure and energy to run not “BAU-lite” but something more like “BAU compost like” for next couple of decades.
Without BAU — there will be no energy – no oil – no gas — no electricity
So no – there can be no BAU lite.
Anywhere.
When the collapse truly hits — you won’t be able to buy a toothbrush. Never mind a tank of gas for your car.
Fast I read the average amount of toothpaste a person consumes in the West runs about 20 gallons in a lifetime! Oy
A biologist stated that the number one reason in the wild predators die is due to an abscess tooth infection! We will face a host of challenges we humans can hardly imagine.
I can see Fast Eddie storing 5 gallons of Crest. Just think of soap, dental floss ect
Not very pleasant
Actually….
I do have one large box of toothpaste — a couple of hundred tubes…. and another of floss… and another of toothbrushes….
Imagine pulling a decayed tooth out with a pair of plyers and no pain killer….. that will suck
peak toothpaste—-i was beginning to worry that i had nothing left to worry about
Elon Musk will be trying to trade me a Tesla for a toothbrush post SHTF 🙂
You could grow some natural pain killers… if you know what I mean…
Thanks for the information on the abscess tooth infections in animals. Any links available? Humans started having major problems with our teeth when we went from a hunter gatherers to agriculture, because of the change in diet. There seemed to be very early dentistry. See Pandora’s Seed by Spencer Wells.
Gail, I was watching an animal planet show and it was pointed out.
Seems when animals teeth get infected, they stop eating enough, get weaker and become non competitive in their ecosystem. The show indeed showed a root canal procedure on a predator. Just another weeding out method of mother nature.
Teeth are a problem for quite a few elderly folks. My husband’s aunt who lived with us for a few years had major teeth problems–ate baby food to get around the problem. My mother now has teeth problems.
I often think when people talk about people without health insurance, at least part of the problem is not being able to afford dental care. I can think of a particular man in his 50s who developed an abscessed tooth, and then had to try to find dental care, with virtually no money and little prior dental treatment.
Went to the dentist today. While I was laying prostrate on the torture chair, I was wondering how dentists could continue their work without modern machinery and energy. Maybe they could keep going for a while with generators and whatever supplies they have left. But after that, modern dentistry will be sorely missed. It may be more important than people realised to have dental supplies when facing collapse. Migraines are bad, but toothache and infected gums has to be up there among the unbearables.
I was tempted to tack this onto an earlier post, but maybe it best kept in some sort of chronological order.
http://wolfstreet.com/2015/11/12/oil-market-imbalance-getting-worse-not-better/
“Supply was flat but consumption decreased 520,000 bpd. Weaker consumption suggests weakening demand, a disturbing trend that is also evident in year-over-year consumption-change data (Figure 2).”
I’ve thought about this for a while. The world needs innovation. The world instead has QE, leading to malinvestment, and that over time, accumulates like fat in arteries.
We are running out of time.