Economists have put together models of how an economy works, but these models were developed years ago, when the world economy was far from limits. These models may have been reasonably adequate when they were developed, but there is increasing evidence that they don’t work in an economy that is reaching limits. For example, my most recent post, “Why ‘supply and demand’ doesn’t work for oil,” showed that when the world is facing the rising cost of oil extraction, “supply and demand” doesn’t work in the expected way.
In order to figure out what really does happen, we need to consider findings from a variety of different fields, including biology, physics, systems analysis, finance, and the study of past economic collapses. Since I started studying the situation in 2005, I have had the privilege of meeting many people who work in areas related to this problem.
My own background is in mathematics and actuarial science. Actuarial projections, such as those that underlie pensions and long term care policies, are one place where historical assumptions are not likely to be accurate, if an economy is reaching limits. Because of this connection to actuarial work, I have a particular interest in the problem.
How Other Species Grow
We know that other species don’t amass wealth in the way humans do. However, the number of plants or animals of a given type can grow, at least within a range. Techniques that seem to be helpful for increasing the number of a given species include:
- Natural selection. With natural selection, all species have more offspring than needed to reproduce the parent. A species is able to continuously adapt to the changing environment because the best-adapted offspring tend to live.
- Cooperation. Individual cells within an organism cooperate in terms of the functions they perform. Cooperation also occurs among members of the same species, and among different species (symbiosis, parasites, hosts). In some cases, division of labor may occur (for example, bees, other social insects).
- Use of tools. Animals frequently use tools. Sometimes items such as rocks or logs are used directly. At other times, animals craft tools with their forepaws or beaks.
All species have specific needs of various kinds, including energy needs, water needs, mineral needs, and lack of pollution. They are in constant competition with both other members of the same species and with members of other species to meet these needs. It is individuals who can out-compete others in the resource battle that survive. In some cases, animals find hierarchical behavior helpful in the competition for resources.
There are various feedbacks that regulate the growth of a biological system. For example, a person or animal eats, and later becomes hungry. Likewise, an animal drinks, and later becomes thirsty. Over the longer term, animals have a reserve of fat for times when food is scarce, and a small reserve of water. If they are not able to eat and drink within the required timeframe, they will die. Another feedback within the system regulates overuse of resources: if any kind of animal eats all of a type of plant or animal that it requires for food, it will not have food in the future.
Energy needs are one of the limiting factors, both for individual biological members of an ecosystem, and for the overall ecosystem. Energy systems need greater power (energy use per period of time) to out-compete one another. The Maximum Power Principle by Howard Odum says that biological systems will organize to increase power whenever system constraints allow.
Another way of viewing energy needs comes from the work of Ilya Prigogine, who studied how ordered structures, such as biological systems, can develop from disorder in a thermodynamically open system. Prigogine has called these ordered structures dissipative systems. These systems can temporarily exist as long as the system is held far from equilibrium by a continual flow of energy through the system. If the flow energy disappears, the biological system will die.
Using either Odum’s or Prigogine’s view, energy of the right type is essential for the growth of an overall ecosystem as well as for the continued health of its individual members.
How Humans Separated Themselves from Other Animals
Animals generally get energy from food. It stands to reason that if an animal has a unique way of obtaining additional energy to supplement the energy it gets from food, it will have an advantage over other animals. In fact, this approach seems to have been the secret to the growth of human populations.
Human population, plus the domesticated plants and animals of humans, now dominate the globe. Humans’ path toward population growth seems to have started when early members of the species learned how to burn biomass in a controlled way. The burning of biomass had many benefits, including being able to keep warm, cook food and ward off predators. Cooking food was especially beneficial, because it allowed humans to use a wider range of foodstuffs. It also allowed bodies of humans to more easily get nutrition from food that was eaten. As a result, stomachs, jaws, and teeth could become smaller, and brains could become bigger, enabling more intelligence. The use of cooked food began long enough ago that our bodies are now adapted to the use of some cooked food.
With the use of fire to burn biomass, humans could better “win” in the competition against other species, allowing the number of humans to increase. In this way, humans could, to some extent, circumvent natural selection. From the point of the individual who could live longer, or whose children could live to maturity, this was a benefit. Unfortunately, it had at least two drawbacks:
- While animal populations tended to become increasingly adapted to a changing environment through natural selection, humans tend not to become better adapted, because of the high survival rate that results from more adequate food supplies and better healthcare. Humans might eventually find themselves becoming less well adapted: more overweight, or having more physical disabilities, or having more of a tendency toward diabetes.
- Without a natural limit to population, the quantity of resources per person tends to decline over time. For example, such a tendency tends to lead to less farmland per person. This would be a problem if techniques remained the same. Thus, rising population tends to lead to constant pressure to raise output (more food per arable acre or technological advancements that allow the economy to “do more with less”).
How Humans Have Been Able to Meet the Challenge of Rising Population Relative to Resources
Humans were able to meet the challenge of rising population by taking the techniques many animals use, as described above, and raising them to new levels. The fact that humans figured out how to burn biomass, and later would learn to harness other kinds of energy, gave humans many capabilities that other animals did not have.
- Co-operation with other humans became possible, through a variety of mechanisms (learning of language with our bigger brains, development of financial systems to facilitate trade). Even as hunter-gatherers, researchers have found that economies of scale (enabled by co-operation) allowed greater food gathering per hectare. Division of labor allowed some specialization, even in very early days (gathering, fishing, hunting).
- Humans have been able to domesticate many kinds of plants and animals. Generally, the relationship with other species is a symbiotic relationship–the animals gain the benefit of a steady food supply and protection from predators, so their population can increase. Chosen plants have little competition from “weeds,” thanks to the protection humans provide. As a result, they can flourish whether or not they would be competitive with other plants and predators in the wild.
- Humans have been able to take the idea of making and using tools to an extreme level. Humans first started by using fire to sharpen rocks. With the sharpened rocks, they could make new devices such as boats, and they could make spears to help kill animals for food. Tools could be used for planting the seeds they wanted to grow, so they did not have to live with the mixture of plants nature provided. We don’t think of roads, pipelines, and lines for transmitting electricity as tools, but as a practical matter, they also provide functions similar to those of tools. The many chemicals humans use, such as herbicides, insecticides, and antibiotics, also act in way similar to tools. The many objects that humans create to make life “better” (houses, cars, dishwashers, prepared foods, cosmetics) might in some very broad sense be considered tools as well. Some tools might be considered “capital,” when used to create additional goods and services.
- Humans created businesses and governments to enable better organization, including division of labor and hierarchical behavior. A single person can create a simple tool, just as an animal can. But there are economies of scale, such as when many devices of a particular kind can be made, or when some individuals learn specialized skills that enable them to perform particular tasks better. As mentioned previously, even in the days of hunter-gatherers, there were economies of scale, if a larger group of workers could be organized so that specialization could take place.
- Financial systems and changing systems of laws and regulations provide additional structure to the system, telling businesses and customers how much of a given product is required at a given time, and at what prices. In animals, appetite and thirst determine how important obtaining food and water are at a given point in time. Financial systems provide a somewhat similar role for an economy, but the financial system doesn’t operate within as constrained a system as hunger and thirst. As a result, the financial system can give strange signals, including prices that at times fall below the cost of extraction.
- Humans have tended to put resources of many kinds (arable land, land for homes and businesses, fresh water, mineral resources) under the control of governments. Governments then authorize particular individuals and business to use this land, under various arrangements (“ownership,” leases, or authorized temporary usage). Governments often collect taxes for use of the resources. The practice is in some ways similar to the use of territoriality by animals, but it can have the opposite result. With animals, territoriality is used to prevent crowding, and can act to prevent overuse of shared resources. With human economies, ownership or temporary use permits can lead to a government sanctioned way of depleting resources, and thus, over time, can lead to a higher cost of resource extraction.
Physicist François Roddier has described individual human economies as another type of dissipative structure, not too different from biological systems, such as plants, animals, and ecosystems. If this is true, an adequate supply of energy is absolutely essential for the growth of the world economy.
We know that there is a very close tie between energy use and the growth of the world economy. Energy consumption has recently been dropping (Figure 1), suggesting that the world is heading into recession again. The Wall Street Journal indicates that a junk bond selloff also points in the direction of a likely recession in the not-too-distant future.
Figure 1. Three year average growth rate in world energy consumption and in GDP. World energy consumption based on BP Review of World Energy, 2015 data; real GDP from USDA in 2010$.
What Goes Wrong as Economic Growth Approaches Limits?
We know that in the past, many economies have collapsed. In fact, if Roddier is correct about economies being dissipative structures, then we know that economies cannot be expected to last forever. Economies will tend to run into energy limits, and these energy limits will ultimately bring them down.
The symptoms that occur when economies run into energy limits are not intuitively obvious. The following are some of the things that generally go wrong:
Item 1. A slowdown in economic growth.
Research by Turchin and Nefedov regarding historical collapses shows that growth tended to start in an economy when a group of people discovered a new energy-related resource. For example, a piece of land might be cleared to allow more arable land, or existing arable land might be irrigated. At first, these new resources allowed economies to grow rapidly for many years. Once the population grew to match the new carrying capacity of the land, economies tended to hit a period of “stagflation” for another period, say 50 or 60 years. Eventually “collapse” occurred, typically over a period of 20 or more years.
Today’s world economy seems to be following a similar pattern. The world started using coal in quantity in the early 1800s. This helped ramp up economic growth above a baseline of less than 1% per year. A second larger ramp up in economic growth occurred about the time of World War II, as oil began to be put to greater use (Figure 2).
Figure 2. World GDP growth compared to world energy consumption growth for selected time periods since 1820. World real GDP trends for 1975 to present are based on USDA real GDP data in 2010$ for 1975 and subsequent. (Estimated by author for 2015.) GDP estimates for prior to 1975 are based on Maddison project updates as of 2013. Growth in the use of energy products is based on a combination of data from Appendix A data from Vaclav Smil’s Energy Transitions: History, Requirements and Prospects together with BP Statistical Review of World Energy 2015 for 1965 and subsequent.
Worldwide, the economic growth rate hit a high point in the 1950 to 1965 period, and since then has trended downward. Figure 2 indicates that in all periods analyzed, the increase in energy consumption accounts for the majority of economic growth.
Since 2001, when China joined the World Trade Organization, world economic growth has been supported by economic growth in China. This growth was made possible by China’s rapid growth in coal consumption (Figure 3).
Figure 3. China’s energy consumption by fuel, based on data of BP Statistical Review of World Energy 2015.
China’s growth in energy consumption, particularly coal consumption, is now slowing. Its economy is slowing at the same time, so its leadership in world economic growth is now being lost. There is no new major source of cheap energy coming online. This is a major reason why world economic growth is slowing.
Item 2. Increased use of debt, with less and less productivity of that debt in terms of increased goods and services produced.
Another finding of Turchin and Nefedov is that the use of debt tended to increase in the stagflation period. Since growth was lower in this period, it is clear that the use of debt was becoming less productive.
If we look at the world situation today, we find a similar situation. More and more debt is being used, but that debt is becoming less productive in terms of the amount of GDP being provided. In fact, this pattern of falling productivity of debt seems to have been taking place since the early 1970s, when the price of oil rose above $20 per barrel (in 2014$). It is doubtful that that economic growth can occur if the price of oil is above $20 per barrel, without debt spiraling ever upward as a percentage of GDP. It is supplemental energy that allows the economy to function. If the price of energy is too high, it becomes unaffordable, and economic growth slows.
Figure 4. Worldwide average inflation-adjusted annual growth rates in debt and GDP, for selected time periods. See author’s post on debt for explanation of methodology.
China has been using debt to fund its recent expansion. There is evidence that it, too, is encountering falling productivity of additional debt.
We mentioned that appetite controls how much an animal eats. Debt helps control demand for energy products, and in fact, for products of all kinds in the economy. Appetite is different from debt as a regulator of demand. For one thing, debt can be used for an almost unlimited number of purposes, whether or not these purposes have any real possibility of adding GDP to the economy. (This is especially true if interest rates are close to 0%, or even negative.) There are few controls on debt. Governments have discovered that in some instances, debt stimulates an economy. Because of this, governments have tended to be very liberal in encouraging growth in debt. Often, when a debtor is near default, this problem is hidden by extending the term of the loan and pretending that no problem exists.
With respect to biological organisms, energy is often stored up as fat and used later when there is a shortfall of energy. This is the opposite of the way financing for human “tools” generally works. Here financing is often obtained when a tool is put into operation, with the hope that the new tool will pay back its worth, plus interest, over the life of the tool. Much debt doesn’t even have such a purpose; sometimes it is used simply to make an expensive object easier to purchase, or to give a young person (perhaps with poor grades) an opportunity to attend college. When debt has such poor regulation, we cannot expect it to work as reliably as biological mechanisms in feeding back information regarding true “demand” through the price system.
Item 3. Increased disparity of wages; non-elite workers earning less.
Item 3 is another problem that Turchin and Nefedov encountered in reviewing economies that collapsed. One of the reasons for the increased disparity of wages is the increased need for hierarchical relationships if an economy wants to work around a shortfall in goods and services by adding new “tools”. Businesses and governments need to grow larger if they are to accommodate these more complex processes. In such a case, the natural tendency is for these organizations to become more hierarchical in nature. Also, if there is growth, followed by a temporary need to shrink back, the cutbacks are likely to come disproportionately from the lower ranks of workers, reinforcing the hierarchical structure.
Figure 5. Chart by Pavlina Tscherneva, in Reorienting Fiscal Policy, as reprinted by the Washington Post.
Funding arrangements for the new “tools” to work around shortages add to the hierarchical behavior. Typically, businesses must expand to fund the development of the new tools. This expansion may be funded by debt, or by stock programs. Regardless of which approach is used for funding, the programs tend to funnel an increasing share of the wealth of the economy to the wealthier members of the economy. This happens because interest payments and dividend payments both go disproportionately to benefit those who are already high up on the wealth hierarchy.
Furthermore, the inherent problem of fewer resources per person is not really solved, so an increasingly large share of jobs become “service” jobs, using only a small quantity of energy products, but also providing little true benefit to the economy. The wages for these jobs are thus low. The addition of these low-paid jobs to the economy further reinforces the hierarchical nature of the system.
In a sense, what is happening is that the economy as a whole is growing very little in output of goods and services. An ever-larger share of the output is going to the wealthier members of the economy, because of increased hierarchical behavior and because of growth in debt and dividend payments. Non-elite members of the economy find their wages falling in inflation adjusted terms, because, in a sense, the productivity of their labor as leveraged by a falling amount of energy resources is gradually contracting, rather than increasing. It becomes increasingly difficult for the low-paid members of the economy to “pay the wages” of the high-paid members of the economy, so overall demand for goods and services tends to contract. As a result, the increasingly hierarchical behavior of the economy pushes the economy even more toward contraction.
Item 4. Increased difficulty in obtaining adequate funding for government programs.
Governments operate on the surpluses of an economy. As an economy finds itself in a squeeze (job loss, more workers with lower wages, fewer goods and services being produced), governments find themselves increasingly called upon to deal with these problems. Governments may need larger armies to try to obtain resources elsewhere, or they may be needed to build a public works project (like a dam, to get more water and hydroelectric power), or they may need to make transfer payments to displaced workers. Here again, Turchin and Nefedov found governmental funding to be one of the problems of economies reaching limits.
Energy products are unique in that their value to society can be quite different from their cost of extraction. A third value, which may be different from either of the first two values, is the selling price of the energy product. When the cost of producing energy products is low, the wide difference between the value to society and the cost of extraction can be used to fund government programs and to raise the wages of workers. In fact, this difference seems to be a primary reason why economic growth occurs. (This difference is not recognized by most economists.)
As the cost of extraction of energy products rises, the difference between the value to society and the cost of extraction falls, because the value to society is pretty close to fixed (except for changes taking place because of energy efficiency changes), based on how far a barrel of oil can move a truck or how many British thermal units of energy it can provide. As the cost of energy extraction rises, it becomes increasingly difficult to obtain enough tax revenue, either from taxing energy products directly, or from taxing wages. Wages tend to reflect the energy consumption required to support each job because supplemental energy acts to leverage the abilities of workers, and thus improves their productivity.
Energy selling prices may behave in a strange manner, as an economy increasingly reaches limits. Falling prices redistribute what gain is available, so that energy importers get more, while energy exporters get less. Of course, the problem we are now seeing is that oil exporting countries are having difficulty obtaining sufficient revenue for their programs.
Debt is different this time
This time truly is different. We should have learned from past experience that debt tends not to be very permanent; it often defaults. We should therefore expect huge periods of debt defaults, and we should expect to need frequent debt jubilees. Economist Michael Hudson reports that the structure of debt was very different in the past (Killing the Host or excerpt). In early times, he found that by far the major creditors were the temples and palaces of Bronze Age Mesopotamia, not private individuals acting on their own. Because of the top-down nature of the debt, it was easy for the temples and palaces to forgive debt and restore balance to the social structure.
Now, especially since World War II, there is a new belief in the permanency of debt, and about its suitability for funding insurance companies, banks, and pension plans. The rise in economic growth after World War II was important in this new belief in permanency, because without economic growth, it is extremely difficult to pay back debt with interest, unless debt is used for a truly productive purpose. (See also Figures 2 and 4, above)
Figure 6. Ngram showing frequency of words over a period of years, by Google searches of a large number of books. Words searched from top to bottom are “economic growth, IRA, financial services, MBA, and pension plans.”
The Ngram chart above, showing the frequency of word searches for “economic growth, IRA (Individual Retirement Accounts), financial services, MBA (Master of Business Administration), and pension plans” indicates that economic growth was essentially a new concept after World War II. Once it became clear that the economy could grow, financial services began to grow, as did the training of MBAs. Pension plans grew at first, but once companies with pension programs found that it was difficult to keep them adequately funded, there was a shift to IRAs. With IRAs, employees are expected to fund their own retirements, generally using a combination of stock and debt purchases.
Now that debt is “reused” and integrated into the economy, it becomes much more difficult to forgive. We have a situation where insurance companies, banks, and pension plans are all tied together. They all depend on the current economic growth paradigm, including use of debt with interest, continued dividend plans, and rising stock market prices. We have a major problem if widespread debt defaults start.
Demographic Bubble
The other problem we are up against, making government funding even more difficult than it would otherwise be, is the retirement of the baby boomers, born soon after World War II. This by itself would be a problem for maintaining adequate government funding. When it is added to multiple other problems, including bailing out banks, insurance companies, and pension plans if there are debt defaults, the demographic bubble leaves us in much worse shape than economies that reached limits in the past.
Note that High Energy Prices Are Not on the List of Expected Problems
The idea that as we approach limits, we should expect ever-higher energy prices, is simply not true. It should be viewed as a superstition, or as an erroneous understanding of our current situation, based on a poor model of energy supply and demand. Turchin and Nefedov found evidence of spiking food prices, perhaps similar to the spiking we saw in energy prices as we approached the peak in prices in 2008. But with wages of non-elite workers falling too low, especially on an after-tax basis, it was hard for prices to continue to spike.
The idea that collapse can come from low prices, rather than high, is something that is not obvious, unless a person thinks through the situation carefully. Prices seem to be primarily influenced by two factors:
(1) Wages of non-elite workers. These wages are important because there is such a large number of them. If their wages are high enough, they buy homes, cars, and other products that are big users of commodities, both when they are made, and as they are operated.
(2) Increases or decreases in the amount of debt outstanding. If debt defaults start to rise, it is very easy for growth in the quantity of debt outstanding to slow, or even to fall. In such a case, low commodity prices, rather than high, become a problem. As economic growth slows, we should expect more debt defaults, not fewer. There is also a limit to how high Debt/GDP ratios can rise before many suspect that the world economy functions much like a Ponzi Scheme.
Mark Twain wrote, “It ain’t what you know that gets you in trouble. It’s what you know for sure, that just ain’t so.” This is especially a problem for academic researchers who depend on the precedents of past academic papers. A researcher may have come to a conclusion years ago, based on a narrow set of research that didn’t cover today’s conditions. The belief can get carried forward endlessly, even though it isn’t really true in today’s situation.
If we are going to figure out the real answer to how the economy operates, we need to look closely at indications from many areas of research. Such an approach can allow us to see the situation in a broader context and thus “weed out” firmly held beliefs that aren’t really true.
Near Term Human Extinction?
— http://presstv.ir/Detail/2015/12/12/441334/Humans-global-warming-
He might be correct.
That would explain why the Men in Black (Elders…) are doing nothing to prepare for the end of BAU.
They would know if there was anything to prepare for….
There is no point preparing because:
1. Spent fuel ponds will exterminate all life
2. There will be almost no food without fossil fuels because we have ruined the soil – and what there is will be quickly consumed by 7.5 B ravenous humans.
3. The world is past the point of no return on warming… which means extinction
4. 1 and 2
5. 2 and 3
6. 1 and 3
7. All of the above
1. Probably, if you are talking about human life; but if the Elders know this, why not start decommissioning now?
2. This will cause mass dieoff, but not extinction (you did admit ‘almost’);
3. Ditto. The poles will warm a lot, the equator not so much. There will still be areas with suitable temperatures for humans and we are quite capable of moving and taking edible plants with us if necessary.
1. You cannot decommission a spent fuel pond. The fuel must remain for years before it can be dry casked.
2. My money is on extinction. But we split hairs — does anyone really want to be around to live in the hell-hole that the world will be? It’s not as if one could be considered a lucky one by surviving this.
“There hasn’t been any significant signs of a pick-up in demand and we haven’t seen any meaningful cuts to production,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “Nothing has really changed in the oil market over the past couple of months apart from the price.”
http://www.bloomberg.com/news/articles/2015-12-20/brent-trades-near-7-year-low-as-u-s-drillers-boost-rig-count
Even more surprising has been the apparently negative effect on the world economy.
If you had told us two years ago, or even one year ago, that oil would fall below $40 a barrel, most economists would have said that this would be extremely bullish for the world economy.
As it is, each new phase of oil and commodity price weakness seems to have led to stock market losses and renewed bearishness about the world economy.
http://www.telegraph.co.uk/finance/12060893/Weak-China-and-cheap-oil-do-not-a-happy-forecaster-make.html
I can smell the burning gears inside the heads of economists as they see their brilliant models go up in smoke….
This time is different.
The following article from zero hedge is something everybody following peak oil should understand. And that is when the Fed supposedly stopped QE, they ACTUALLY altered the program into a revolving door. Meaning as it explains below, instead of ending QE, they actually take maturing debt/securities and regurgitate them into NEW ones. See, to really end QE they would have to retire those funds i.e. the loop was complete from origination to expiration, but they found what is referred to in the movie ‘Lawnmower Man’ as a BACKDOOR! It’s like breaking up with someone but still visiting for a friends with benefits type situation. You get all the benefits but none of the bad press baggage associated with the desperate act of QE. So it keeps revolving, but the masses think it ended. But notice the way the Fed words it: REINVESTING. Ha!
http://www.zerohedge.com/news/2015-12-20/wait-minute-why-fed-continuing-qe
Wait A Minute… Why Is The Fed Continuing QE?
“Despite increasing the interest rate, pretending the situation of the American economy is much better now, the Federal Reserve said it would continue to reinvest the proceeds of the maturing agency debt and mortgage backed securities as well as the income on existing securities into new ones. This basically is a continuous ‘soft’ Quantitative Easing, something we already pointed out in a previous column, published in October 2014.”
Also… other countries are continuing QE big time… Japan… the EU…. that money circulates around the world… it does not just stay at home…
US QE also circulates around the world — loads of corporations have taken on cheap USD debt — and now they are in trouble because of the dollar’s strength….
I know Fast Eddy will rag on this, but Abby Martin has a stellar interview of a top notch player in the inner circle of TPTB. I know Gail asked we stop this topic, and I will not comment further, except for those that have an interest, watch this 20 minute video
http://www.zerohedge.com/news/2015-12-20/americas-ship-sinking-former-bush-official-exposes-unfixable-corruption-inside-estab
Dear Finite Worlders
One more thought following up on the energy slave benefits and the energy slave costs. You probably remember Al Bartlett’s talk on exponential growth, and how humans just don’t get it. I think we can apply a similar law to situations where the benefits are obvious, but the costs are obscure.
Climate change is a current example. The benefits of driving to work so that one can earn a salary with which one can buy food and pay the rent are obvious. The costs have to be calculated based on scientific studies which are complex. The natural human response is likely to favor immediate benefit over possible future costs.
I was reading in The Hidden Half of Nature this morning about Pasteur and Koch and their squabbling as, separately but together, they developed the germ theory of disease. The germ theory bore immediate fruit, and most families today have a member who has survived because of the discoveries that were sparked by the germ theory. But some scientists understood almost immediately that there were downsides to the widespread and profligate use of antibacterial chemicals. Now we are beginning to experience the costs of blindly using antibacterial compounds anytime we wanted to use them. For example, 90 percent of antibacterial compounds are used to make confined animals gain weight more rapidly. The use of antibacterials in animals is a primary contributor to our problems with resistance. And the use of antibacterials is implicated in the destruction of the gut microbiome, which is implicated in the explosion of chronic diseases.
Similarly, the authors of Hidden Half recount a visit to a home show in Seattle, where they were courted by the Scotts company to begin a regular course of inorganic fertilizers, pesticides, and fungicides in their garden. Instead, the couple chose the slower course of building up organic matter. In that case, wisdom prevailed over immediate gratification.
Consider the ‘going to war over oil’ decision. Oil appears to give an immediate payoff in terms of energy slaves. The notion that the energy slaves which must be expended in order to utilize the energy slaves in a barrel of oil has to be based on complex scientific studies, and are not immediately apparent.
My proposed addition to Bartlett is:
Humans will almost always pick the obvious payoff over the speculative, or hard to understand, cost.
Going back to my example of the chickadees. Everything is going well in the winter. Our solitary chickadee is happily eating seeds in a meadow. Then spring arrives and the sap begins to rise and the chickadee experiences an overwhelming hormonal urge to find a member of the opposite sex and mate. The pair then are overcome by overwhelming hormonal pressures to feed those hungry little mouths with caterpillars. Chickadees only weigh three ounces, so their brain has to be tiny. Does it ever occur to their tiny brains that maybe just staying in the seed patch might have been the better choice? I doubt it. Chickadees do what their hormones tell them to do. Humans have large brains, which permit them to override their hormones in certain circumstances, and to generally create situations where they are boxed in and can’t get out. Perhaps a mistake by Evolution?
Don Stewart
Here is something that is really easy to understand:
http://onlinelibrary.wiley.com/doi/10.1002/2015GL063514/full
When you drive 30 miles to your office, you are damaging the earth as it it were 3 million miles as the longerm CO2 forcing will be of the factor 100.000
Easy to understand ?
Also Bartletts videos are very easy to understand (he passed away this year)
Ugo Bardi is tackeling the “story telling” of climate change quite often but he does not have a good idea.
A formar poster mentioned, the limits to growth should become a religion. (this can happen, when it is too late…)
The toughest things people do are due to religious beliefs.
Our religion is growth and progress. If we could kill that god. I bet that for many unemployed young people that is already true but there is no really good other religion showing up 🙁
From the astrological standpoint we enter aquarius now. Aquarius can be seen as some sort of “stewardship of the earth”. If there were not so many evil stewards, this coud be a lot of joy.
That’s exactly what I keep banging on about
Every species has no choice but to reproduce itself to the maximum that resources allow—and just a little beyond that.
The point of the ‘little beyond’ is a little game of chance that nature plays, to see which is the stronger in survival terms. We must fight to survive, or die.
Humankind is the oddity in this game of evolutionary roulette for several reasons:
1….We are self aware
2… We invented gods to convince ourselves that we are exempt from the laws of physics
3…we think we are the ‘dominant’ species here.—Bacteria are about to prove us wrong
“3…we think we are the ‘dominant’ species here.—Bacteria are about to prove us wrong”
Bacteria are easily defeated by copper and silver. They have found that copper door knobs destroy bacteria, and were found to have 90 to 100% fewer bacteria than stainless steel doorknobs. They were also devoid of any MRSA or other drug-resistant bacteria.
https://en.wikipedia.org/wiki/Antimicrobial_copper-alloy_touch_surfaces
Replace all the commonly touched surfaces in hospitals with copper or bronze, and presto. No need to use antibiotic wipes or chlorine. Replace utensils with silverware. Filter water through activated charcoal.
I think what he means Matt is some bacteria has evolved to be anti-biotic resistant; super bugs. It’s a big problem in hospitals and different door knobs, silverware and charcoal filtered water might help but doesn’t cover all contamination pathways.
Dear Finite Worlders
A few posts ago I said that finance through the mechanisms of ZIRP, futures markets, and contango were enabling the shale industry to keep drilling for and producing oil. Later, it occurred to me that another elephant in the room is taxes. IF oil companies had to pay for the numerous wars which have been fought and continue to be fought over oil, then the oil financials would look very much different.
From an energy perspective, governments can tax their citizens in order to fight wars. If oil is no longer a source of energy, then the citizens will have to pay the taxes based on what they can glean from coal and natural gas…and gardening IF they can make gardening pay an energetic return. (There is little evidence that biofuels or nuclear can generate much in the way of energetic returns.)
Do a little arithmetic and you will quickly figure out that the situation is dire. One of the thermodynamic modelers thinks that the models may help by persuading governments that wars over oil are no longer worth fighting.
My own take on that belief is skepticism. The benefits of oil (in the form of energy slaves) are so apparent, and society has so totally ignored the cost (in energy slaves) that we have real trouble visualizing the notion that the energy slave equation is now yielding negative results.
Don Stewart
Don, can you please elaborate on “the energy slave equation is now yielding negative results”?
Costs more in finance and/or energy to feed the slaves than the return obtained. EROI turning negative. EVERYTHING has a basis in EROI. Intellectually beat around it all you want but at the end of the day, the cause of failure, collapse and death has one basic cause.
Ed
Let’s make a couple of assumptions. First, let’s assume that Gail is correct that ‘we need 20 dollar oil’ to sustain a healthy economy. But, for the sake of simplicity, let’s round that up to 30 dollars, which is not far off the current price. Now lets assume that the price of oil which is necessary to sustain a healthy oil production system is 90 dollars. (‘Healthy’ could be disputed for a long time…just assume that it’s true for the sake of discussion.)
Then the average new barrel we produce is a loser to the tune of 60 dollars. We are assuming that the dollars are a true reflection of a ‘claim on oil’.
So a barrel of oil might give us a thousand energy slaves, but it cost 3000 energy slaves to produce and use it. The result is a negative 2000 energy slaves. (‘Using it’ means things like internal combustion engines used in transportation., as well as the transportation infrastructure and the social system which sustains them.)
The mechanism can be obscured, as I have written, by financial maneuvers and taxes and unfunded liabilities and the like. It takes some sort of scholarly model to estimate how far underwater we are.
Don Stewart
PS You could also state the ‘healthy oil production system’ differently, such as ‘a healthy energy system for transportation’, which would allow for things like electrification powered by renewables.
Dollar-Debt Blows up in Mexico, Pushes Biggest Construction Firm (ICA) toward Abyss
by Don Quijones • December 19, 2015
The Oil Connection
“(…)
Pemex’s shrinking fortunes have meant that the government has had to raise taxes as well as drastically cut back on large-scale infrastructure projects, cutting off vital cash flow to companies like ICA. The biggest blow came in September this year when the new governor of the state of Nuevo Leon, Jaime Rodriguez, decided to cancel a controversial project to build an aqueduct in Monterrey worth close to $1 billion.
(…)
Even for many of the infrastructure jobs ICA has already finished, payment is not forthcoming, the company complains. Meanwhile, many of ICA’s providers have launched lawsuits over its and the government’s failure to pay them. Each time a company goes under, a vital link in the business food chain is severed.
As its cash flow has slowed to a trickle, ICA’s dollar-denominated debt has continued to grow, largely on the back of a weakening peso. In the crucial weeks ahead the fate of the company will depend on its ability to keep the few operations it has up and running as well as find common ground with its creditors on ways to restructure its debt.”
http://wolfstreet.com/2015/12/19/strong-dollar-oil-fiasco-push-biggest-construction-firm-in-mexico-closer-to-the-abyss/
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/12/20151219_trade9.jpg
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/12/20151219_trade10.jpg
http://www.zerohedge.com/news/2015-12-19/global-trade-snapshot-pain-getting-worse
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/12/20151219_trade4.jpg
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/12/20151219_trade5_0.jpg
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/12/20151219_trade8.jpg
http://www.zerohedge.com/news/2015-12-19/inflation-watch-new-yorker-edition
We often have inflation vs. deflation discussions here, so I thought the above article would be of interest. It’s called the New Yorker inflation watch. Below is the price rise for publications from 2012-2015.
2012 $5.99
2013 6.99
2014 7.99
2015 8.99
Also, when my wife was at the store this evening 2 heads of organic broccoli was priced at $9 bucks! Last time she was in it was 6. Even though she’s an organic only eater usually she got the non-organic for 4 bucks.
Evidently much of the commodity deflation is not translating to consumer goods.
“Evidently much of the commodity deflation is not translating to consumer goods.”
If you need it- its high.
If you want but dont need it- its low.
The higher the price of the necessities goes the wider the definition of whats discretionary and abandonment of those purchases. Do you really need to heat the whole house in the winter?
People cut and cut and will continue to cut. Deflationary death spiral. The worry robs all the pleasure from non essential purchases. Do I really need a phone? Do I really need internet?
Mortgage, rice, a bit of energy, and taxes. Thats it.
And why is food so high? . The 47 million households receiving food stamps of course. Take that away and it would be a fire sale, just like everything else.
I hadn’t thought about food stamps driving up the price of food. That is an interesting idea – take away all that subsidized govt. bought food and it would be a fire sale – lol! Broccoli, asparagus, get your vegetables real cheap here! I suppose that will be even more the case when twice as many are on food stamps as we work our way down the diminishing returns ladder.
3 meals from anarchy…. take away the food stamps and I suspect the crime would explode….
I live in a rural southern farming area with 25% minority population. I remember the time before food stamps and welfare. No one went hungry and crime was low. There were plenty of jobs in small industries, forestry, and agriculture. People had gardens and did other odd jobs during the off season. Many went North during the summer to work seasonal harvest jobs, returning home when the New York potato crop was in and orange picking began.
With increased mechanization less tractor drivers and chain saw operators were needed. With welfare and subsidized housing there was no need to follow the harvest. What labor that was needed was done by Mexican migrants. With free trade manufacturing moved to China.
When I was a child 50% of the population was involved in agriculture and almost every product sold was made in America. If we want full employment those days will have to return. I was disappointed when I was 9. My dad promised me the year before I would get to work in the field picking up potatoes for five cents a basket. Instead he got a one row harvester that funneled the potatoes into sacks that a worker sat back on the ground to be picked up and stacked on a ten wheel truck. The next year he got a two row harvester with a boom to pour the potatoes into a truck mounted bulk body. Thirty pickers and stackers were out of a job. This was on a hundred acre farm. Multiply that by the twenty thousand acres in my area. Bring those days back, plenty of work for everyone. I still have my wire basket, I’m ready, even if my back isn’t.
Daddio7
Yes, that chimes with what I’ve read about pre-industrial agriculture in Britain, even up to 1945: following the harvests, filling in with lots of small and useful jobs, everything more or less alright just as long as you had your health and avoided the slippery slope of taking to drink, the easiest way to lose modest earnings.
The Scots walked down to England to work, and walked back up again to save their money, even after the railways came. During the Depression which led to untended land everywhere, they came down and settled in this part of England, the only ones who would do the work and attracted by extremely low rents. Have to admire people like that.
Thanks daddio7; its all so simple really. Maybe dark ages are fantastic places to live. We all yearn for the glory that was Rome.
The potatoes were still being distributed by fossil fuel energy.. You lament the combustion motor driven equipment but in reality it is the only thing that made what you describe work. Fossil fuel is the only reason the wages had purchasing power. There is no return to easy to extract energy and there is no substitute.
I forget people reading what I write can not see my thought process. With limited mechanization there is still enough jobs for those who need one. We now have almost total mechanization and people with limited skills and intelligence have little chance of employment. Our tax and health-care system punishes employers who hire too many full time low wage workers. Jobs that require basic skill and intelligence are off shored instead.
In a free market capitalist environment a few companies can make a lot of profit. Governments have to tax much of it away to help support a large unemployed population. It is a very fine balancing act. Reverting back to limited use of fossil fuels and increased human labor could help the county survive cutting back on oil usage but as some have said no one in government is intelligent enough to make it work.
“Reverting back to limited use of fossil fuels and increased human labor could help the county survive cutting back on oil usage but as some have said no one in government is intelligent enough to make it work.”
Small, self governing hubs too. Centralization costs too much, I think. Still, some kind of central source of high-enough energy that can make the local low-energy work. There needs to be a sub-civilization just keeping nuclear plants under wraps. They get nearly all the fossil fuel energy.
And, yes, it requires the level of rational thinking that is now absent. It also requires the kind of public “conditioning” that now only favors obedience, passivity and consumerism. It works for the capitalist purveyors now, but it will kill them too, along with everybody else.
If you don’t want your wife to divorce you, yes, you do have to heat the whole house in winter!
True enough, but then you also have to agree on how much the windows are open so there can be some fresh air. I open an inch, she closes. I just put on a jacket down to 58F but my wife’s hands get cold so like you say, better run the heater or agree to a divorce. I swear though, being in northern CA, not Canada, if it were just me I’d only turn it on for about 15 minutes in the morning to replace damp air. I prefer fresh air to warm.
I would say that the brain is quite a big eater of energy. The presence of warm climate is an important factor for intelectual work. That is why Greece and other warmer parts of the world were the cradles of the civilizations. The use of fossil fuels allowed us to do intellectual work also in the coldest parts of the world where no wood is available.
When there is not enough warmth in the room for the given person, the brain lacks the energy for intellectual work. The thin persons need more heat than fatter persons that can burn the stored fat.
Excuse me! Northern Europe was a hotbed of intellectual activity long before fossil fuels were used.
I remember reading the German prisoner survivors of battle of Stalingrad were the smaller guys or lightweights. They did not require as many calories for survival. Also, I visited Salem, Massachusetts and the colonial days the people were very tiny. Japan also had diminutive population because of the poor diet. After the end of BAU, we humans will revert back to that statue. Just think of all the savings!
Taking into account the genetic entropy (as described by John C. Sanford), the energy is more and more important for the human species. Thanks to the energy, the degenerating human population can continue functioning. The robots are not only replacing costly human resources, but they can assist the disabled people, as there is not enough of the physically fit people for those tasks and not enough money to pay those people.
The reason why the human population stops rising despite the increasing use of energy is not only the fact that we use more and more costly resources, but also the fact that there are more and more mutants or the ill or the physically weak people in the human population, as the healthcare system can fight more and more mutations and keep the affected individuals alive.
The fact that we are loosing the cheap energy and at the same time the degeneration of the human race continues makes the whole picture of our destiny even more terrible: if we loose the energy, the human race is doomed to extinction.
There is really no way back. Preserving the food production is nothing in comparison to our rising need of healthcare and repair of our defects and weaknesses caused by the accumulation of the mutations of the genome.
Once we loose our external energy, we must either migrate to other places (like the people from Syria or the regions, where the energy poverty is rising), or we have to arrange new energy sources to meet our needs.
Well you make some good points. Much of the population of this world are now dependents. But are dependents really needed? You see, in any human society, the young and the fit live, and the old and the sick die. This is naturally true, it was true thousands of years ago, it is true now, and it will be true forever.
This is unspeakable in today’s world, which looks at the fight against the Nazis as part of its origin myth. Combined with our seemingly limitless energy, we now believe in infinite life and resources, for everyone (except for the pesky Muslims who are sitting on top of the oil). In today’s world, if you merely make a statement like, the mortality rate of everyone is 100%, then you are considered worse than Hitler.
That is why I insist we don’t really face an energy problem immediately, we face a political/social problem, the age old problem of how to organize society. More energy merely delays the inevitable reckoning, because more energy would mean more waste really.
The Limits to Growth needs to become our new origin myth. We need a new recognition of limits, and everything that follows from that.
What peak oil means is nature smacking us silly. Billions of people around the world are going to realize they aren’t going to live forever, they aren’t going to become rich, they aren’t special, they aren’t God’s gift to the universe, etc. etc.
How great is that! I look forward to it, I’m sick of people.
I really wonder whether the authors of The Limits to Growth had not overestimated the population aspect of their predictions. The quality of the human race in the depleted and polluted world will be terribly low, as cancer, allergies, body malformations etc. can not be cured without the high-tech medicne.
The end of the cheap energy will bring the end of the human race, as the intermittent costly energy will not be enough to sustain the human populations.
The authors of The Limits to Growth admit that after the peak is hit, they really don’t know how things will work out. They could just as well cut off the graphs early, because it is all a guess after a point. The authors didn’t understand our financial problem. In some sense, the population estimate is an optimistic estimate, because of what was omitted.
Dolph
For you:
‘I wish I liked the human race;
I wish I liked the way it walks;
I wish I liked the way it talks.
And when I’m introduced to one,
I wish I thought ‘What jolly fun!”
Can’t recall who wrote it, some misanthropic Englishman I think.
Sanford is a creationist…
which doesn’t mean that some of his statements cannot be true,
but the basic principles underlying his theory are flawed, for sure.
This is what happens when people look at only one side of a problem, and favor arguments that point towards the desired conclusion.
Evolution is a complex topic, and studying it requires humility and persistence. Shortcuts often lead to total misinterpretations, potentially dangerous (e.g. ‘social darwinsm’).
Dear Stefeun,
well, as regards your mentioning of social darwininsm: without the people with high IQ we would not be able to construct the complex machines, invent new technologies. The difference in IQ is something which is specific for human race: the human race consists of individuals that are very sophisticated, but also contains indiviudals that are more like animals. However, the degeneration is a process that destroys both intellectual and physical health. The cheap energy allowed us to use the brains also of those people who would otherwise die due to their physical weakness. That is the main thing: the higher amounts of the human intellectual power thanks to the cheap energy.
When there is a lack of the individuals with high IQ, the degenerating society collapses sooner. Not everybody can be a physician. You need a higher IQ. The rising costs of caring for the mutated individuals with the end of the cheap energy mean that we sustain individuals that make no contribution for the society, but, on the other hand, there is not enough resources for sustaining and education of the people with higher IQ.
Finally, your brain is completely useless to you, when you die of an illness that can not be cured due to the lack of the resources or due to other degenerations that destroy your important physical abilities, e.g. muscles needed for breathing.
MG,
I don’t think IQ is a reliable metric.
Maybe it’s useful for determining those of us who are most able to make machines and use technology (your words), but this is only a small part of our brains’ abilities.
And look where technology has led us!
I think it was a big mistake that we based our social structure on such technical skills (together with a remaining feudal idea of property and heritage), neglecting personal development and mutual respect, for example.
OTOH, I must admit that we probably didn’t have any choice, as our very survival required an ever increasing use of external energy, enabled by technology.
And I totally disagree with the idea that people or populations could be sorted out and judged, based only on IQ measurements or genetic profile, or length of the nose, or what have you. We already know the story.
Dear Stefeun,
when our life more and more depends on the technology, then those who create and use the technology are the ruling class. Those (other groups or nations), who do not have the technology and can not/do not know to use it, are subordinated. Without the technology, the majority of us would be already dead.
The aggresive nature of the mutations affects everybody and the technology is the way to fight them. The real fight of the todays world is not so much about the resources, but about the technology to get the resources out of the ground and the distant places and to use them for fighting the degeneration of the human race.
The fact that some populations are more degenerated than others is a simple fact of the reality: those populations are dependent on the healthier populations and their mastery of the technology. The more degenerated populations can not continue functioning without the capital injections providing them the energy and resources and the help from the less degenerated populations.
The story about the exploitation of the weaker by the stronger is not completely true: the only thing the stronger population can take from the weaker population is the resources. But the stronger population can not rob you of your genome, which can be e.g. healthier than the genome of the population that is stronger thanks to the abundant use of the technology.
The story about the good poor people and the bad rich is absolutely flawed. Because, in the end, it is not about owning something, but about the survival, which is a more complicated thing than having accounts full of money and tons of gold in vaults.
Sorry MG, I won’t argue anymore on this topic.
I don’t buy your theory of degenerating human race, with some -whole- popuations more degenerated than others (!).
I think it’s irrelevant, flawed and dangerous ; and very convenient for scapegoating.
We know we disagree, that’s enough.
This is a good point.
I have been reading in an article some time ago that it is perfectly possible that we split as homo sapiens in one breed that has the resources and technology and intelligence at hand an one breed that is bound to the dirt as I would frame it.
The genetic selection also applies to bacteria and virusses that threaten our existence. I read that polio was showing up in syria again. If there is no vaccination available you can possibly end up dying from cutting your finger in the garden.
Also the meat you hunt can be infected and you do not see it and you do not have the petri dishes to test it. We are not at the best starting point for a way back to an earthy life…
Dear MM,
your reasoning about the division of the society based on the occurence of mutations can be right.
The poverty is connected with the degeneration of the population. The cummulation of the mutations does not improve social status. The following thesis about the Roma population in Slovakia, which is known having various hereditary degenerative diseases, admits such connections:
“This thesis summarizes the existing research into Roma intelligence in Slovakia, evaluates it, compares it with findings from abroad and suggests future directions of research. From the available data, it seems that the Roma differ substantially from the non-Roma in their measured intelligence and attain values of about 80 IQ points. The tests are probably not biased against them. However, more research is needed to unequivocally confirm these conclusions. These differences have to date been interpreted as of purely environmental origin. The influence of genetic factors seems to be a plausible hypothesis, though, but it can be neither confirmed nor rejected based on the present data. It is, therefore, suggested that further research on representative samples and also on determinants (both genetic and non-genetic) of the difference in intelligence be carried out.”
Source: http://diplomovka.sme.sk/zdroj/3777.pdf
Another article states the following fact:
“The Slovakian Romani is a population with the highest coefficient of inbreeding in Europe, which increases the probability of recessive hereditary diseases.”
Source: http://www.lekarsky.herba.sk/lekarsky-obzor-4-2010/zdravotne-problemy-romskeho-etnika
Some people propose sterilization of certain Roma women to prevent spread of mutated individuals that creates burden for the healthy part of the society.
http://www.blogovisko.sk/sterilizacia-romskych-zien-z-osad-jednym-z-riesenim-ako-ozdravit-romsku-populaciu.html
Not only resources limit civilizations, but also the fact that their genome degenerates and they die out, the same ways as the families affected by the hereditary diseases die out.
What is also interesting is the fact that “The measured average IQ values of the Slovak Roma roughly correspond with the IQ values of the Roma and their related populations in other countries.” (page 17 of the abovementioned thesis), which is in line with the ideas of John C. Sanford that the new generations bring further decline in genome.
The caste system of India (the country of origin of the Roma people) could also promote the higher levels of hereditary diseases:
“The caste system, which restricts marriage to people of different groups, gave rise to populations that were genetically isolated, and therefore may be more likely to harbor rare genetic diseases.”
Source: http://www.boston.com/news/science/blogs/science-in-mind/2013/08/09/genetic-study-finds-caste-system-ancient-india-began-about-years-ago/hu52rKxbmjJn3XUMNHS2LK/blog.html
The populations that are isolated are prone to degeneration. As the energy and resources go down, these degenerative trends become stronger, as the implosion of the economy causes also the rise of the isolationism.
Jews from Northern Europe have a large set of hereditary diseases from inbreeding ( http://www.jewishgeneticdiseases.org/jewish-genetic-diseases/ ). It certainly has not hurt their intelligence.
Dear kesaro,
this is eugenics today:
https://en.wikipedia.org/wiki/Eugenics
“2. New Eugenics
Artificial insemination by donor.[94]
Egg donation.[95]
Prenatal diagnosis of genetic disorders and pregnancy terminations of defective fetuses.[96]
Embryo selection.[97]
Genetic engineering.[98]
Gene therapy.[99]
Cloning.[100]
Arguments[edit]”
So, when the technology collapses, there will be no technology based eugenics that helps to survive the human race, all mutated individuals unable to survive without the technology will die, which is the majority of the mankind. We take too many things for granted…
There is no pure race, every race degenerates not only due to the genetic entropy, but also due to the poluted environment, and is susceptible to mutations like cancer etc. that can not be cured without the technology.
Ivy league grads only marrying other ivy league grads…
Hamptons dwellers only marrying Hamptons dwellers…
I think I mentioned previously I dated a girl from an ultra wealthy family in Asia — met the dad and he probed my background — clearly looking for some aristocratic blood…. at least a club membership (with tongue in cheek I claimed that I had a membership at the local gym — there were no oohs or aaahs… so I guess that wasn’t as impressive as I had expected…)
He was noticeably disappointed when he all he found was a long line of degenerates, alcoholics, truck drivers, and miners….
That’s another form of eugenics at work…. filtering out the riff raff…
Although in this case some riff raff blood might have done the gene pool some good … too much poshness in the DNA can cause genetic abnormalities….
“I think I mentioned previously I dated a girl from an ultra wealthy family in Asia — met the dad and he probed my background — clearly looking for some aristocratic blood”
Check out this book, Crazy Rich Asians by Kevin Kwan , it describes your situation exactly.
When eugenics becomes popular topic, I know we are in deep trouble.
Here we go again, 100 years later.
+1
Dear kesaro,
today, eugenics is a topic of more and more people: the rising problems with natural conception show the need for artificial insemination and selection of embryos. The eugenics became a completely personal problem of many people who have to decide whether they want children (artificial insemination) or not (impossibility of the natural conception). It is no more a kind of fascist ideology, directed against others, but a matter of surival of individual families.
MG, I’m not judging here. I’m just stating the fact. We all know the history of ideas creating Ubermensch.
I know that eugenics might be rational from personal point of view. Every man wants his children to have more chances of survival and good life. This is a basic prerogative of our genom. It’s even rational on the society level. The societies want to have healthy citizens to have lower cost of “maintenance” – less healthcare, more productivity, etc.
What these concepts are lacking is the understanding of general law of genetics Regression to the Mean
https://en.wikipedia.org/wiki/Regression_toward_the_mean
Every population has its genetic flaws due to historical inbreeding. Every one. Interguru pointed to Jews genetical diseases. Just imagine someone saying we should get rid of them (some did 100 years ago). And look at the Nobel Prize laureate list. I can guarantee that before WW2 at least one-third of that list had jewish roots.
https://en.wikipedia.org/wiki/List_of_Nobel_laureates
The best strategy – from humanity perspective – would be to mix all genom populations into one specie. That’s what genetic science says.
In the sci-fi novel I envision — a post BAU world identifies anyone with traits that might contribute to ‘progress’ — and smothers such people under pillows at an early age.
Why?
Because ‘progress’ is what caused the epic suffering and death that was experienced when BAU collapsed.
Yes I see how it makes no sense — that it is a populist thing…. but as with most populist policies.. it would be well received.
Post-BAU people who can’t concieve without help will be gone in one generation, women needing cesarian within a few. That’s not nazism.
I think our bodies are adapted to eating at least some cooked food. (Perhaps a small population could live without cooked food, living on fish, worms, fruit, and water from clean sources), but not very many. So I think we are pretty much stuck. New energy sources are difficult to create–the require a big economy.
Dear Finite Worlders
Several months ago I expressed some criticisms of the internet discussion groups in terms of their ability to bring about consensus among people who initially had disagreements. A few weeks ago I reiterated my misgivings. I referred to a new nook on Spooky Action At A Distance.
Here is a review of the book, along with references to a number of other relevant experiments and books, by Adam Gopnik…Don Stewart
http://www.newyorker.com/magazine/2015/11/30/spooked-books-adam-gopnik
In Alaska
Thanks very much for the reply about the dogs, just found it.
What use in mind? Oh, I’ve just been thinking about guard dogs and had just read a good article on Inuit habits by an Inuit woman – quite a lot about blood feuds and the usefulness of dogs for giving warnings and also sinking their teeth into raiders, so it seemed to me that such dogs might have good instincts. I also like active dogs that need lots of exercise.
Most interesting about the cross-breeding to get the right temperament.
I have to say that my big English Springer is an exceptionally good warning system although of course not bred for it, as he is silent with routine sounds and people, but goes nuts when anything new and unusual occurs.
xabier,
yes dogs are man’s best friend with good cause: companionship, warning system, guard dog, hunting buddy, herding dog, and when the chips are down I guess you could even eat them if things got tough. Alaska sled dogs are great animals, but I think just about any well-trained animal can do the jobs.
In Alaska
And even amusing comics (terriers and spaniels)! There is really no end to the good points of hunting and working dogs.
Dear Finite Worlders
I misattributed the remarks on the inexpensive Texas stripper wells. It was actually Shallow Sand. Here is his quote from Peak Oil…Don Stewart
I will say I hate to see these wells plugged, given the number we reactivated that were just as economic many times as ones continuously produced. As long as they can be safely T’A, I say short term that makes sense. Two of the most efficient leases we operate are ones we reactivated after them being shut in many years. Others had them, went BK, and they went idle. Many times leases are shut in more based on the overall solvency of the operator, than on how economic they are on their own. I just looked and one is running $9 per Bbl OPEX, the other $16 OPEX for 2015. Wish it was all in that ballpark!
The two part 2015 Year in review by David Collum. Some of it is funny, provocative, bone chilling and frightening.
http://www.peakprosperity.com/blog/95808/2015-year-review
That is quite a review and summary of the state of our financial situation, Rodster. Below is a section of quotes mostly on the overinvested stock markets.
“On balance there’s no margin of safety.”
~Mario “The Bull” Gabelli, founder of Gamco Investors Inc.
“We’re in the middle of a disastrous market mania . . . historically, these kinds of gaps get closed in one of three ways: by revolution, higher taxes, or wars. None are on my bucket list.”
~Paul Tudor Jones, Tudor Investment Management
“The good times are over.”
~Bill Gross, Janus Funds
“The median New York Stock Exchange stock is currently at a postwar record high P/E multiple, a record high relative to cash flow, and near a record high relative to book value!”
~Jim Paulsen, Wells Capital’s perennial bull
“[G]lobal financial markets are more distorted than ever before.”
~Felix Zulauf, Zulauf Asset Management and Barrons Round Table
“Sadly, I don’t think anybody’s capable of telling you precisely how and when the whole thing will come unstuck. Nevertheless, you know that at some point, it has to.”
~William White, Bank of International Settlements
“Markets will discover that they have been pushing asset prices to an excessively high level, and there will be a major downward shock to asset prices.”
~Mervyn King, former governor of the Bank of England
Time to run out and buy some stocks! (Not really!)
Charles Hugh Smith: “The inescapable conclusion is that Fed policies (ie rocketing money supply since 2008) have effectively crashed the velocity of money.”
http://charleshughsmith.blogspot.fr/2015/12/money-velocity-is-crashing-heres-why.html
TAE’s Ilargi says “it ain’t so” and explains in detail why there isn’t any correlation between money supply and its velocity. He thinks the crash in money velocity is much more related to the purchasing power and confidence of customers: “Simply because if and when people have a lot less to spend, velocity comes down. That there is even the very heart of deflation.” I tend to subscribe to this opinion.
http://www.theautomaticearth.com/2015/12/the-velocity-of-the-american-consumer/
IMHO the newly created money tends to inflate stranded unproductive assets, or fuel Ponzi schemes such as shale oil, and is not injected into the real -productive- economy. The core reason for that being that the energy and resource supply is no longer able to grow at sufficient pace. That was temporarily masked by debt increase, but now becomes obvious, as even more debt is less and less able to simulate fake growth of GDP.
According to Investopedia,www.investopedia.com/terms/m/m2.asp
Investopedia
If return on investment is doing poorly in most sectors, I know I tend to leave money “parked,” in M2 type accounts. So this may be part of the slowdown. Why risk a not-very-high rate of return, when insured accounts can receive almost an identical rate of return, without fees involved?
Also, the increased disparity of wages affects M2 supplies. A person would expect increased disparity of funds in M2 accounts. The well-to-do will spend only a small fraction of their M2 money; the poor will tend to keep their balances very low. On average, less gets spent.
I didn’t check when the limit on FDIC amounts insured went up, and how this correlates with the M2 turn-over rate, but it may be a factor as well.
Yes Gail,
decreasing ROI and rising inequalities are surely among the main* proximal causes for crashing money velocity (*: can’t see any other right now, but it doesn’t mean there aren’t any!).
The root cause is, as you say in Item 3 of this article: “Non-elite members of the economy find their wages falling in inflation adjusted terms, because, in a sense, the productivity of their labor as leveraged by a falling amount of energy resources is gradually contracting, rather than increasing.”
“Why risk a not-very-high rate of return, when insured accounts can receive almost an identical rate of return, without fees involved?”
That’s a good point, Gail. More incentive to park the stuff which slows velocity, especially since US bonds are a legal way of delaying tax paid on that income, corporate or personal.
“The Least Surprising Stat Of The Week: Corporate Insiders Are Dumping Their Stock”
By: John Rubino | Thu, Dec 10, 2015
“Here’s one for the “actions speak louder than words” file:
Massive insider selling spurs stock market concerns
(CNBC) – Corporate insiders have been selling their shares at near-record levels, and according to some, this could be a sign for outside investors to start selling as well.
Investment research firm TrimTabs reported on Wednesday that insider selling reached $7.6 billion for the month of November, the fourth-highest monthly level on record. For some this may be an alarming indicator, as corporate insiders tend to have more knowledge than public shareholders on the inner workings of the company, and what may drive stock prices up or down.
“Historically when insiders are selling heavily it’s not the greatest sign,” TrimTabs’ chief executive, David Santschi, told CNBC in a phone interview Wednesday. “I’m surprised given the valuations in the market that they’re not selling more than they are.”
(…) ”
http://www.safehaven.com/article/39820/the-least-surprising-stat-of-the-week-corporate-insiders-are-dumping-their-stock
http://static.safehaven.com/authors/rubino/39820_a.png
Nice find.
That graph explains why I think the day of reckoning is near…. we grow or collapse…. if that trend cannot be reversed then I cannot see how we go 12 more months like this…
There have to be massive bankruptcies…
http://www.bloomberg.com/news/articles/2015-12-18/when-s-winter-coming-balmy-december-sinks-global-energy-prices
http://assets.bwbx.io/images/ietyI0z7MwT0/v2/-1x-1.png
All lies by those who would take our way of life from us!
http://www.zerohedge.com/news/2015-12-18/its-hot-out-there-heres-why
That’s an article on why it’s so hot – it’s El Nino, and this is the largest and most intense since records have been kept.
Stilgar,
Yes, of course, its El Nino again! I feel much better now. Not climate chaos, just your standard comforting El Nino. It would be funny if it weren’t pathetic how much people will avert their eyes to avoid seeing. You can equate the El Nino rationale with the “commodities supercycle” theory. Both convenient, but reassuring maladies, that may be inconvenient but are certainly not indicative of system change and failure.
It seems like everything is working together to depress prices, even worse than they otherwise would be.
Dear Finite Worlders
I was immobilized yesterday, so had some quiet time to think. I offer the following model as something which may help us see our human situation through the eyes of another species.
Consider the Carolina Chickadee. It survives the winter just fine on its diet with lots of seeds. Can we, therefore, assume that, so long as there are plenty of seeds, the Carolina Chickadee will do fine? And the answer is not straightforward. For any specific Chickadee, the answer is ‘Yes’, but for the species, the answer is ‘No’. The reason is that during the breeding season, seeds are no longer an adequate supply of protein and energy in the form of carbohydrates. The baby birds must be fed caterpillars. It requires 6 to 11 thousand caterpillars to fledge a single clutch of chickadees. This has several consequences. For one, the nesting pair are working at an unbelievable pace to supply all those caterpillars. Second, we know that exotic species generally host far fewer caterpillars than native species of plants. If the homeowners in Fancy Suburb A have fallen in love with the exotic appearance and low maintenance of foreign plants, then there will be fewer caterpillars and consequently more of the baby birds will die. Third, if the homeowners in Fancy Suburb A resort to toxic sprays to keep the caterpillars off their plants, there will be starvation in the nests. Likewise, if the homeowners in Fancy Suburb A cut down and dispose of plants as soon as they have flowered, leaving no seed heads for the winter, then the adult birds will die. Countless birds die in the names of ‘tidiness and low maintenance’.
If we examine the life cycle of chickadees, we find that they follow the energy. They are high in the canopy looking for caterpillars during the nesting season, but move into meadows seeking seeds in the winter. We will also find that the energy balance is never hugely in favor of the chickadees. They can never take the winter off and sit by a warm fire. They will be out in the snow foraging for seeds, and they will be working very hard in June to feed their children.
Now, let’s run a few thought experiments:
*If the supply of caterpillars shrinks, then either the adults will have to find substitute foods for their young, or else the young will die. As a matter of fact, the adult chickadees have not been successful in finding substitutes for caterpillars. As a consequence, the number of young who grow to maturity is declining, and the number of chickadees in the world is declining.
*Chickadee parents can go farther afield in searching for caterpillars. However, the farther they have to fly to find caterpillars, the more energy they use themselves, and the less energy they will bring back for their children. Once again, the population of chickadees will decline.
*Humans who like to see Chickadees going about their business might begin to see the stupidity of behaving the way people in Fancy Suburb A behave, and begin to plant bird friendly plants and stop using toxins. This is the project that Darke and Tallamy promote in their book The Living Landscape: Designing for beauty and biodiversity in the home garden.
I want to call your attention to the observation that the energy balance is NEVER strongly in favor of the chickadees. European humans, in contrast, have had a strongly favorable energy balance since Fourteen Ninety Two. In that year, Columbus and those who followed spread the germs which wiped out most of the population in North and South America. Leaving two fertile continents to be exploited. And then, the Europeans hit on the Mother Lode with the exploitation of fossil fuels.
According to Adrian Bejan and his Constructal Law, we should expect that the Europeans (and those who copy them) will have figured out ways to exploit more of the benefits of the new continents and also the abilities given to us by fossil fuels. And so we see an enormous increase in the number of humans and in the production per capita.
But now, the thermodynamics doom-sayers point out, it takes about half the oil produced to produce another barrel of oil. Much of the oil used to produce oil is accounted for by a sophisticated refining system, in addition to the production of the raw material and the distribution of the consumer products such as gasoline and diesel fuel Furthermore, the Ellen MacArthur Foundation produces pie charts showing that almost all of the energy contained in the gasoline and diesel is used to move humans or freight from Point A to Point B. Depending on how you count infrastructure, oil as a transportation enabler may now be negative. Consequently, we find ourselves in a position not unlike that of the Chickadees. If we are using half the oil we produce to process the oil into products, then we can no longer increase the production of oil using the same technologies (akin to the Chickadees and their technology of feeding caterpillars to their children). And if we are using the energy in the products of oil inefficiently, then we would be like the baby bird which is killed if it contracts diarrhea and cannot really use the caterpillars it is fed.
Likewise, we have long since passed the time when agriculture produced net energy. As Bejan would have predicted, the surplus energy from fossil fuels has been marshaled to increase agricultural production, even at the expense of destroying natural capital.
Humans DO have bigger brains than Chickadees, and perhaps we can figure out some ways to escape or at least buy some time for our species. In the worst case, we just give up on future generations and do the human equivalent of eating seeds year around and forgetting about raising any young. The evidence seems to me to indicate that humans have less concern for their young than Chickadees have concern for theirs.
Or, maybe we can copy ISIS and use very primitive methods for refining oil (RT published some pictures of ISIS ‘refineries’ in Syria recently). Or, a little more sophisticated, we come up with a ‘regional refinery’ which deals with local oil, all pretty much with the same specifications. Both of these would be stop-gap measures…not long term solutions.
Maybe we try to substitute electric vehicles (cars or locomotives) for internal combustion engines, avoiding some of the losses incurred by the ICEs. Barring fusion and some other necessary innovations, electrified transport is also a stop-gap measure.
The most radical approach is to foreswear the whole fossil fuel mirage and revert back to a very much more biologically based existence. I’ll quote from the final thoughts expressed by David Montgomery and Anne Bikle in The Hidden Half of Nature: The Microbial Roots of Life and Health:
‘’Making a garden taught us things we never could have imagined. First and foremost, a garden is never really done. Soil needs long-term care and feeding to get what you need from it. In our case, we started from scratch and had to restore life to our soil. It’s hard work, frustrating at times, and as in all dances with Nature, rarely dull. In our garden we came to see a microcosm of a could be world—feed the soil and it will keep feeding us. Not just our bellies, but our minds and spirits too.’
I hope that the exploration of the life of the Chickadee may put certain questions into perspective. For instance, Chickadees apparently can’t decide to do things differently just in order to preserve the population of Chickadees. Humans have, at least theoretically, more options. Whether we can invent social structures which permit us to effectively use our big brains is an open question.
Don Stewart
Don, a very thoughtful essay and somewhat revealing on the unawareness of modern households in the web of nature. Uplifting message we, humans, have the means to expand our direction toward a better relation with the whole universe
You should tweet this on Twitter.
Yes Don, you are absolutly depriving many by not tweeting. Sroiously you need to tweet.
Dear Don
Sanity.
The Chickadee example is in an interesting one.
I would remind you, “the thermodynamics doom-sayers point out, it takes about half the oil produced to produce another barrel of oil” is very speculative. At most, it is a view of what happens on barrels of oil that are high-priced to extract, not on what it costs to add a new barrel of oil extraction to Iraq or Iran, which is where new production really is coming from.
Gail
Most thermodynamic models are global. While production is increasing in Iran and Iraq, that is offset by countries with declining production. It is also worth noting that Iraq and Iran production is coming from established fields which have been idle for a time due to wars and sanctions.
I believe it was Rockman who recently recounted his experience with some strripper wells in Tesas. They have extremely low costs…but they don’t produce a lot of oil. Which leads some of the thermodynamic people to think that stripper wells are our future, in terms of oil. Plus simplified processing.
Don Stewart
My bet; they are going to continue to produce more oil than we can use. The price will continue to go down.
Creedon
Some thermodynamics based models indicate that you are correct. A cleverly formulated model can feature feedback loops which lead to results which are counter-intuitive to people schooled in supply and demand curves. One of the key factors which permits the destructive loops to operate is finance. It is ZIRP and futures markets and contango which is keeping a lot of shale companies alive.
Don Stewart
If they continue to produce tons of oil at 15 to 20 dollars a barrel, my hat is off to them. They are amazing.
I like the stripper well-as-future principle. Using less energy to get at the oil. Getting less benefit from the oil. The system goes on, but has to learn to adapt to having less.
Then there is the getting rid of waste. I don’t know what is meant by waste in that context, and would welcome an explanation. I can see nothing but waste all around me, but that’s probably not what is meant here.
People can get a whole lot more utility from what we throw away than they do. And if more people learn to make useful things from trash, they can get by with less money (if they can’t actually sell or trade what they make). A lot of people have too much. In a crisis, there is no need to produce anything but food, clothing and shelter. The megafauna in the world is being poached for show or to sell ivory for vanity. Sure, it makes money for somebody, but it’s clearly suicidal madness at the same time.
Why can’t people do without those extras for the sake of staying alive? Why is the lack of imagination to see the beauty in simple things so absent?
Why is the lack of imagination to see the beauty in simple things so PREVALENT?
“Why is the lack of imagination to see the beauty in simple things so PREVALENT?”
The cultural cover does not favor appreciation of beauty.
The cultural cover does not value simple things.
The cultural cover puts high value on complexity.
The cultural cover is GET SUM GET SUM STEP RIGHT UP.
Abandon the collective neurosis. Do not participate. Puke it up. Bury it and mark it with a warning beacon for alien visitors.
We leave cardoon stalks and heads up all winter; they provide a lot of oily seeds for large birds (jays mostly).
Thanks for your erudite posts.
http://www.zerohedge.com/news/2015-12-18/moodys-downgrades-glencore-lowest-investment-grade-rating-cds-trade-multi-year-highs
Bone-Chilling “Plateau” in Apartment Boom Resurfaces, Smartest Money Bails Out
by Wolf Richter • December 17, 2015
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Last time a “plateau” was declared, the market crashed.
Legendary real-estate bottom-and-top picker Sam Zell, chairman of apartment mega-landlord Equity Residential, got on Bloomberg TV and said, “There is a high probability that we are looking at a recession in the next 12 months.”
This is not even a remote possibility in the Fed’s miserably slow-growth forecasts it issued yesterday. But Zell was once again having a will of his own. He offered a laundry list of reasons: Multinationals are announcing mass-layoffs; global trade is deteriorating; China’s economy might be spiraling down; and “the strong dollar” is hitting US production.
But he said this only after he’d unloaded a ton of commercial real estate: in total 23,262 apartments in five states. The deal was announced at the end of October. Another 4,728 apartments are to be dumped next year.
As his firm pocketed the $5.4 billion it got from Starwood Capital Group for these units, Zell said: With “pricing currently available in the commercial real estate market, it is very hard not to be a seller.”
http://wolfstreet.com/2015/12/17/bone-chilling-term-plateau-in-apartment-boom-resurfaces-smartest-money-bails-out/
I am not going to go out and invest in commercial real estate, based on your information.
An attempt to explain why they raised rates:
We see the Fed’s growing desperation in their decision to raise rates now, despite forecasts that have been darkening during the past four years:
They did not raise rates because the economy has improved; they did so because it has not improved.
They act now, fearing that the recession will arrive before they can raise rates enough to give them the monetary ammo to fight it. So the Fed governors have begun the gradual process of raising the fed funds rate in tiny increments to 3.3%, which would restore a more normal relationship between the fed funds rate and GDP.
Good luck with that.
Jacking up rates will slow both domestic consumption and exports; raising rates while other central banks are lowering might send the US dollar into orbit. Worse, large parts of the US economy are already slowing (e.g., exporters and manufacturers), as are the economies of key trading partners, such as the oil exporters (including Canada) and many emerging nations, especially the big ones: China and Brazil.
http://wolfstreet.com/2015/12/17/fed-is-raising-rates-for-the-opposite-reasons-they-claim/
Note that a rise in interest rates triggered 2008 https://en.wikipedia.org/wiki/Subprime_mortgage_crisis
The Fed surely knew that was going to cause a major problem —- yet they did it anyway….
And they are doing it again — knowing full that loads of foreign entities are holding USD denominated debt …. which will be even more expensive to service…
Knowing full well that an increase in rates always slows growth — and that would seem to be the last thing they want now….
So why raise rates?
Perhaps they have an agenda that we are not aware of — or perhaps they feel for some reason they have no choice…
FE,
I think you’ve got it figured correctly. They need to raise rates now, so they can lower them again later when the really need to. And it just might work. All sorts of doomers came out of the woodwork when the Fed ended QE-3 and Operation Twist a few years back hollering that this was going to crack the machine, but it didn’t. So, now here we are again, and if they do it slowly, it might just work. But its not about a hidden agenda. Its about desperation.
It is very strange. A rise in rates causes the value of bonds currently on the books of companies (such as insurance companies) to fall. If they sell these bonds before maturity, they get less money for them. The price of stocks also tends to fall, in part because bonds now become a more favorable alternative. If interest rates for purchasing real estate go up, the value of agricultural land, commercial real estate, and homes tends to fall.
Somehow, the money used to pay interest has to come out of other spending. In recent years, we have only seen the stimulus effect of lower interest rates. These lower interest rates helped compensate for higher oil prices and higher metal prices.
We have had a long period of falling rates–essentially since 1981. We don’t know how much the rise in asset prices is from falling interest rates, and we don’t know how much we will lose as interest rates go up again.
Perhaps we are a society in denial. We are ignorant. Maybe we the ‘marginalized,’ are the ones that know what is going on and are ignored.
The Fed is trapped, just like everyone else. They don’t want asset price to collapse too much, but they don’t want the economy to overheat either. What they desire is smooth functioning of the matrix.
By raising just a little bit, they give themselves some leeway. If the economy collapses, they can say, we didn’t raise rates too much, and now we can lower them again. If the economy doesn’t collapse, they can raise a little bit more. Rinse and repeat, to infinity. The rope was too loose so they tightened up a bit, and if the rope becomes taut they can loosen.
That is the game, as far as the eye can see. Minute changes to everything, infinite repetition. And doesn’t that mirror what’s happening to our own lives.
There are no great projects, no great movements left in the world. Just buying and selling of BS, everybody trying to gain a little advantage over somebody else. Just the repetition of microprocesses until we’re all gone.
“The Fed is trapped, just like everyone else.”
True enough. The trouble though is when things reach the point in which return on investment is no longer to be found (without getting extremely lucky), the super wealthy need a recession to remove assets from people’s panicked grip to generate the next updraft of investment return. Real estate and stocks need to recalibrate down then they can jump in for the next bump up. Even if the bumps up are smaller due to diminishing returns those that have the bucks to do it and time it right will make money off of the beleaguered masses.
OK, Fellow Doomers, Friends and Family. The low oil prices were supposed to drive the frackers out of business, but it hasn’t. The Fed tightening was supposed to cause the stockmarket to implode, but it hasn’t. The Greek emergency were supposed to cause Europe to self-destruct, but it hasn’t. The Refugee Crisis was supposed to become a real crisis, but hasn’t. So, I ask us all collectively: Where is the damn collapse?
Doomer Stock Answer: Its only 2 years away? I think that when our cherished assumptions are challenged, in order to be rigorous, we should re-examine those assumptions. What are we missing?
Per Fast Eddy (who is traveling but should speak for himself) it’s because the PTB or the Elders, owners of the Fed, etc. are doing whatever it takes to maintain BAU, working in the background with their invisible market hands.
Which is a plausible explanation, but hard to prove.
That is a good question. I want to try to say it in Gail’s words.
Cheap energy allows for an ever more complex society. As the society costs for the complexity increases, the more resources go into this area and the less is available for new productivity. Less productiviy in the end means that the general pie of the economy shrinks and that the debt will become too expensive.
I could also argue, the Fed wants inflation at 2% but it isnt. Draghi wants the euro at 2% but it isnt.
The thing with greater productivity is that a society can also allow for more problems to pile up when the resources are there (more refugees, more bombing in syria). Currently it looks like there is no problem and there are plenty of articles in the media that claim “There is no problem”. They all have only one aim: increase customer spending because that really is down due to debt.
The question that is unanswered is how long can THIS economy work when there is no expansion. It is clear that it can not work but we do not know how long it takes for problems to show up as it has never been tried on global scale as it is being done at the moment. My personal view is that the only way out of this is a new cycle with renewables in WWII scale. I bet they will try this next. Even if it means hunderets of genIV reactors.
If the consumption engine does not start in less than 6 months, new problems will kick in.
One thing a pekoiler needs is patience as the global economy is really really huge and changes only “trickle down” but they trickle down already on all corners of the economy.
I’ve posted previously that men like Michael Burry were observing a similar position as early as 2005 — and had Big Shorts on the market…
He could not believe it did not unravel…. but it stayed suspended in animation for nearly 3 years…
This time is very different from 05 though…. we are seeing the layoffs and bankruptcies start…
I don’t see how this continues for 3 more years…. something will give … unless the Fed has another macro magic trick…. which I very much doubt….
Time to trot out that law re: collapse can take longer than you expect….
“What are we missing?”
It seems you expect things to happen instantly. Everything takes time. The Frackers are just running out of hedge. The Fed just tightened how many hours ago? The actual tightening of reverse twist for up to $1 trillion won’t even start until January / February. The Refugee Crisis is really in its early stages; there are potentially tens of millions of people in countries that are very close to collapse yet to come, such as Yemen.
I guess for those of you who thought the world would end in 2015, yes, your timing is off. 2016, maybe, maybe not. Personally, I think it is more like a steep staircase down then a sudden plunge. I think people underestimate the will of the people to give things up to maintain status quo, and the will of the bankers, politicians, and military to hold things together.
If a lot of money disappeared over night, when 7 billion simply continue to work as if there was no problem the next day, BAU could ignite again if it did not last too long. I think, if they can solve a crash in less than 7 days, nothing big will happen.
After that time, I bet people will get a bit nervous…
“I think, if they can solve a crash in less than 7 days, nothing big will happen.”
A 4 day long weekend would be preferable. I agree, after a week without money, especially if it is a week without gasoline, electricity, phones and Internet access, things start to fall apart really fast. Especially in dense urban areas.
Yeah Matt, another year comes and goes without collapse. I personally think it will be palpable to just about everybody and not just peak oil bloggers when the final precipice is close at hand. Like you stated, people will give things up to maintain status quo. So even on an individual level adjustments are being made.
Or perhaps it will just strike out of the blue…
Very few people anticipated the calamity that was 2008…
“Or perhaps it will just strike out of the blue…”
From my perspective, the true moment of crisis in 2008 was not Bear Stearns or AIG. The masses were mostly not too aware of that. The big moment was when all the cameras were watching, and Congress voted no on the first bailout package. That week or so from the no vote until the bailout passed, the malls were empty. The streets had hardly any traffic. This is 4000 miles away from New York and Washington DC, in Canada, and everything went from hustle and bustle to nearly a ghost town overnight.
I suppose for many, that seemed like out of the blue; the politicians did not do what everyone expected, and suddenly there was panic.
I remember 2008. Here in north Florida it was just another year, business as usual. The economy is forestry and agriculture, tourist, medical care, government and social programs. Roads were crowded as was Walmart. Can’t tell about malls because I never set foot in one.
According to B.W. Hill, we will be close to collapse when we see the oil companies going bankrupt. We are still a few years from this. I would guess about 3. The next step of real collapse will manifest as oil shortages and a failure of the dollar. The way that it looks right now oil is going to have to go quite a bit lower to bring about bankruptcy of the larger oil companies, maybe down to 15 or 20 dollars a barrel. Right now the oil companies are barely even nervous. Is there a lot of ignorance in our society about what is taking place? Yes.
Matthew,
“It seems you expect things to happen instantly. Everything takes time.”
You’re a bit newer to OFW than myself or Fast E. I’ve been on this site for 5 years now or perhaps longer…and collapse is always just two more years away. So, I ask again, when do we admit to ourselves that something is not right with the collapse thesis and go back t the drawing board? Why, just a couple of years ago I remember Fast Eddy posting that this whole mess couldn’t go on another 6 months. Well…?
At this point, the start of the collapse is less than 2 years away. It is definitely already here, for folks in Syria. It is also hitting people at the bottom of the wage distribution in the US as well.
Matthew,
“I think people underestimate the will of the people to give things up to maintain status quo, and the will of the bankers, politicians, and military to hold things together.”
I think you are right about that.
Less than 2 years now. We need to keep our fingers crossed.
“The Refugee Crisis was supposed to become a real crisis, but hasn’t. ”
Tell that to the millions in tents from Syria.For mullions collapse has occured
This is how I define collapse.
No goods to buy and or no money to buy them with.
Social unrest overwhelms authorities
Safety nets for basic needs fail.
Before this occurs there will obviously be war. Just like has already occurred in Syria.
War is a lot like collapse only central authority is maintained.
It delays collapse – potentially a long time.
“What are we missing?:
Nothing. Those who have called for collapse within two years for instance may simply be mistaken. I personally think that the chance of avoiding collapse within a time frame of one hundred years to be so incredibly small as to be nonexistent. We are out of time relative to our population. Two minutes to midnight.
A reasonable approach ( I think) is to take a spread of possibilities.
Collapse will occur in the next month
Collapse will occur in the next year
Collapse will occur in the next ten years.
Collapse will occur during my children’s life
Collapse will occur in my grand children’s life.
Each of those timelines entails different appropriate actions. Personally I would think it foolish to extend timelines longer than above. Others would think those timelines too short or perhaps some too long. No one knows. People take their best guess and act accordingly. Its exceeding hard to predict the future in this situation. Is clear to me that change is coming but I could be mistaken I have been mistaken many times in my life.
In Alaska do you believe collapse will not occur ever? Curious where you stand.
xyz44
“In Alaska do you believe collapse will not occur ever? Curious where you stand.”
Oh, I’m a full-on doomster, believe me. I’ve got all the preps on a nice doomstead up here in the North with low human density and with the 5 G’s: gold, gas, guns, grain and groceries.
I started out thinking in 2006 that I only had a little time to prepare, but now its 9 years later and I’ve cycled through all the gas and groceries more than a few times. The grains are getting stale…and so I wonder…what am I missing?
It gets a little ridiculous to continue repeating that collapse is just around the corner. “Two more years!” Of course, all civilizations have collapsed. It doesn’t take a genius to figure out that this one will, too. If you say anything long enough its bound to come true eventually. But perhaps we have either the proximal or distal causes of collapse wrong. Perhaps our civilization is more robust than we think it is, less corrupted, more ingenious. Perhaps we won’t even see our collapse coming because it will come from a corner that we haven’t anticipates. Maybe it wont be peak oil, or peak debt, or peak entropy, or climate change, or, or, or. Perhaps it will come out of a clear blue sky, as it were. One thing is certain, I am turning from a vigorous middle-aged man into a less vigorous older man waiting for it to happen, and I guess that’s a good thing.
“The grains are getting stale”
Mine are holding up although only 5 years old (late to the party). eating barley as we speak with olive oil and kale, YUm!
“and so I wonder…what am I missing?”
You are missing the the paradox of the doomster which is one of the very few win win paradigms on the planet!
Doom- Win! Your a doomster!
No Doom- Win! you get to enjoy the wonderful wonderful fossil fuel life!
Wheres the problem?
Loosen up – Take a few breaths- cook up some of those stale grains with whatever road kill is on the road and be happy. Life is good! I take that back ;life is great!
I believe that understanding impermanence deeply is the key to happiness. Im still working on it and I have my ups and downs but I have become more and more happy. I appreciate the moment more. I still get caught up in my personal neurosis sometimes but at least I have discarded the collective neurosis. Liberation!
Good way of putting the situation:
I can understand the frustration, though, if you really were trying to prepare for a transition, and it didn’t come and didn’t come.
What amazes me are those who can’t wait for the collapse… and are so disappointed when it doesn’t come when they expect….
That is madness.
xyz44
Well said and best wishes to you.
I reckon collapse is close when you see governments dumping massive stimulus onto the global economy — and it is no longer responds…
That is what is happening now …. that is why I see collapse coming in the very near term
@FE
What amazes me are those who can’t wait for the collapse… and are so disappointed when it doesn’t come when they expect….
That is madness.
Not really. Some people are so sick of the ongoing destruction of the living planet by industrial civilization that they want it to end whatever the personal cost. Even for humans, the longer industrial civilization goes on the greater the misery will be when it collapses.
And you think collapse will solve that?
7.5B people live on this planet — they are fed only because we have fossil fuels — collapse = the end of that system of feeding people…
What might 7.5B people do when collapse hits — and they are hungry and cold?
> would then not burn everything that is available including any trees, toxic cushions, treated wood etc… — in an effort to keep warm and cook rats and dogs and whatever else they can find to eat
> would they not kill every animal they can find for food — every cow, pig, dog, deer, bear, horse, elephant ….. heck even rats will quickly make it to the extinct species list! — if you look at past famines people ate people…
> and what about the 4000 spent fuel ponds that MUST remain cooled using high-tech systems and facilities — it won’t be so good for the environment when those explode releasing radioactivity into the atmosphere for many decades (centuries?)
We are a 1000 miles past the point of no return. Collapse now means total destruction of the environment.
It also means I die.
Burn baby burn. Drill baby drill. Those are the only options that make any sense
@FE
I agree that in the short term collapse will hasten the demise of larger animals and plants by orders of magnitude. But the sooner the collapse the greater the chance of anything surviving. (Parts of Amazonia? The jungles of Irian Jaya you have visited?)
I don’t see that as an option — jungle men don’t do well on radioactivity any more than I do….
That said – I am a borderline nihilist ….. so to be quite honest … I don’t care what happens once I am gone …. if it means the jungle man’s demise so that I get another 10 years… then sayonara jungle man…. I have one life only …. and I would like it to be as long and comfortable as possible…
Before passing judgment on the selfishness of the above — ayone putting their hand up to starve and die now to save the jungle man?
For Syrians, collapse has already occurred. The country is one with depleting oil supply. This is part of the problem leading to collapse.
We are missing factors x, y, and z. To paraphrase Donald Rumsfeld, besides the known knowns that we are well aware of, there are also the known unknowns that we are aware must exist but we aren’t aware of what they are, the unknown knowns that we are not aware we are aware of, and finally the unknown unknowns that we are not even aware that we are not aware of—which include things we think are so that aren’t so. Factor that lot in and even the best projections of doom are apt to be premature.
But still, like a chronically sick elderly person or a rusty old car that still creaks along, the current economic system is operating now with considerable difficulty, requires constant maintenance and is impractical to repair or to upgrade. The amount of tinkering required to keep it running is increasing over time. When it starts to fail catastrophically, I expect we will all know pretty quickly because the global internet will be one of the first things to go down.
Yes, I can’t argue with you on that and yet as the great Neil Young once wrote:
“this old world keeps spinning round
It’s a wonder tall trees ain’t layin’ down
There comes a time, there comes a time
There comes a time, there comes a time”
You may be right on that. Banks and pension funds are having a terrible time with today’s low rates.
Here is “chinese buildup” article suggesting that the chinese will be able to handle a transition to carbon free before 2050:
http://www.telegraph.co.uk/finance/economics/12052582/Even-if-the-global-warming-scare-were-a-hoax-we-would-still-need-it.html
It sounds reasonable but there are still some bumps in the road for that. It is clear that the chinese command economy can do this: “become a world leader in low Carb tech”
If we see that coming to reality, there even is a slight possibility that a WWII scenario for carbon free can come. It is difficult but the manufacturing base for that I think exists…
The manufacturing base requires fossil fuels to operate, which means low carbon tech requires it to be built and function.
Yes, but a peak means less resources, not zero. Zero is true only if EROEI is too low, current level ist at about 10:1. That is enough for plenty of these things. We need to BUILD them because that will help the economy (mostly consumer confidence).
That does not mean that we will OPERATE them in the end….
“a peak means less resources, not zero”
THis is where you have been listening to Peak Oilers too much. Reaching limits means a break in the system. It is not clear that we can get resources out at all after peak–not that we can get the other 50% out later, regardless of what the EROEI is.
I personally am ambivalent of your claim.
Afterr reading your texts I could fall into “no growth, no BAU”
On the other hand when we look at some data (commodities, oil price, wages) There is no growth but there is still BAU.
I fall from one to the other as soon as I read new articles about it every time…
I would say, I am a “doomer light” as in “BAU light” person. I think that many people will work very hard should the problems increase. 7 Billion working together can achieve a lot.. A lot of chaos and a lot of transition.
Trump is sturdy enough to steer that 😉
I don’t think the financial system can handle a transfer to carbon free, regardless of the rest of the system. China clearly has a huge pollution problem right now. For that reason alone, it needs to do something different.
As of Kevin Anderson we must reduce CO2 by 7% a year.
As of Ugo Bardi we must create renewables at 6% a year
As of the financial system, we must pay our dept not creating more and not producing too much “waste” products to pay the debt
As of the resource base we are on a plateau and can not increase production.
Sounds like we must get rid of fat fast (as Steve Ludlum writes in his article)
This year it is maybe 30% possible. Next year it might only be 25% possible. The following years: ?
Getting rid of fat is getting rid of jobs. This is not an easy sell. It becomes impossible to fund governments and repay debt. This is simply an argument for crashing the system.
The Job issue has not yet been tried.
How many Billions have been spent on fracking? If that money was taken away from these companies and given to build electric railways or public trabsport by tram in every
City of the US or Buld a global reaching direct current line etc, many Jobs could appear as in the fracking bubble many Jobs appeared. Some people say that the “low unimployment rate” as of Yellen is due to the fracking industry. Fracking also is the wrong strategy as now they are engaged in a price war with the saudis. They should keep it in the ground until the saudis run out.
I admit that to create NEW Jobs in that industry some people have to be trained and that is the most costly.
For the koombaya aspect of the transition I found a good video that we could hand out to everybody who believes that a green future will show up tomorrow.:
Vaclav Smil on the energy revolution
https://www.youtube.com/watch?v=5guXaWwQpe4
it is very good and I like the aspect that if we cut energy use by half we would only end up in the 60’s level.
Yes Gail, I know that would crash the economy anyway, but the If the economy crashes in all possible scenarios, why not choose this one 🙂
in the 60s, the planet carried around 3 bn people, they used 3 bn people’s worth of energy, and from that the y expected continual growth and everything that went with that.
we now have 7 bn—rising to 9 bn.
if you go back to 60s living rate, then you have 7-9bn trying to eke out a living on the material that previously supported 3bn—therefore the standard of living would be cut by half—and eventually two thirds.
that would—i promise you–lead to violent revolution, even thought it would be inevitable
Thanks for the link. I’m afraid I don’t have time to watch an almost-two-hour video right now, but I have read several of Vaclav Smil’s books, and he is very level-headed. He doesn’t understand the problem with the economy collapsing, but otherwise, he understands pretty well how slowly transitions can really take place. Too bad things can’t hold together with less energy–or at least, that is what it looks like to me.
End of More: If they followed their words in COP21 harsh laws about that shoul be in the making right now, to bring us down to that state.
Not yet ? ok, lets sing a koomaya first.
The 60s maybe means per capita energy usage, that should be possible, but I do not know what the per capita usage was in the 60 (the era of these big cars in the US).
Maybe Gail has a diagram about that?
I think Gail previously pointed out that the energy supply that served the 3 bn in the 60s is now depleted. So 7 bn people going back to 60’s level consumption on less that was available then is a tall order. OTOH, we collectively know much more now than then. We are better able to see the world as a single, potentially cooperative, entity now than then.
Holding the system together under these circumstances would be challenging though not impossible. It would require more rationality than ever previously witnessed, and also unprecedented levels of concentration.
Gail has also mentioned the need to trace (energy?) resources back–see where things come from. This takes a lot of concentration and study. It also is so complex and so subject to human will and insight that it would be more art than science.
One example: I find cardboard boxes very useful. I’m guessing it can be made from landfill paper. That would involve digging it up, using small, well aimed energy sources in addition to muscle, rewarding the workers who do it (this could be the supply of food and shelter from public sources). There would need to be machinery to press and shape the material. The machinery exists now, but would need energy to run and repair. But the Cuban kept American cars running for over 50 years, despite an embargo and no access to factories that make spare parts…
I would like to have toothbrushes, but not necessarily toothpaste. Paper would not be bleached and so would be brown. Food would be sold without packaging and distributed in those cardboard boxes. Brown toilet paper would be nice to have, as opposed to none. A gift economy would be part of the mix. Small units of self rule–tribes, teams–would be more efficient to manage. Undoubtedly, 90% of what gets manufactured now could be discarded while still holding the system together. More women police. More variety in age and type, more bottom up governance…
We definitely must burn more oil, coal and gas asap… otherwise we will collapse
http://www.mdpi.com/energies/energies-07-06558/article_deploy/html/images/energies-07-06558-g005-1024.png
Great article.
There are some great papers on this topic from an IEEE symposium back in the mid 90’s. You can download them (after paying) here:
http://ieeexplore.ieee.org/xpl/mostRecentIssue.jsp?punumber=4302&isnumber=12374
The Leduc paper “Knowledge and sustainability: can the planet survive human cognition?” is particularly interesting…Jantsch’s book “The Self-Organizing Universe: Scientific and Human Implications of the Emerging Paradigm of Evolution” also has good material linking a number of aspects that you touch in this article.
Thanks for the suggestions! I am also glad you liked the article.
F. Roddier -roughly- describes E.Jantsch’s theory of self-organisation of the universe, as well as his principles of macro- and micro-evolution, in this article:
(auto translation): https://translate.google.fr/translate?sl=fr&tl=en&u=http%3A//www.francois-roddier.fr/%3Fp%3D151
(original in French): http://www.francois-roddier.fr/?p=151
Thanks! That is interesting.
So promising, the conference. But, then, where did everybody go?
http://ieeexplore.ieee.org/xpl/articleDetails.jsp?arnumber=569183&filter%3DAND%28p_IS_Number%3A12374%29
If we can’t get those papers for free, then we know how much they are worth
Maybe they figured out that changes were not as easy as they looked.
In this article they explain the FED rate hike happened under pressure of the banks and speculators.
I don’t know if it’s the only reason, but at least it makes sense (especially after some MSM articles I read about same topic, and of which I understood nearly nothing).
“The Fed’s New “Operation Twist”: Twisted Logic for Bank Profits at the Expense of the Real Economy”
Posted on December 17, 2015 by Yves Smith
“(…)
Part of the reason they believe inflation will rise despite the increase in interest rates and other negative forces, is that they believe with lower unemployment, workers will achieve the bargaining power to raise their real wages. But in the current context of weak bargaining rights, globalization by US multinational corporations, and the continued weakness in the labor market domestically, worker real wages are likely to continue doing what they have done for decades now: remain relatively stagnant.
These odd examples of twisted logic seem minor, though, compared to some of the more bizarre arguments made by Yellen and the Fed.
In her statement and answers to questions after her remarks, Yellen said several times that the increase in interest rates is a strong sign of the Federal Reserve’s confidence in the strength of the American Economy. Because, after all, if the US economy were not doing well, then of course, the Fed would not be raising rates, right?
Here is an example of the Fed trying to play the classic game of the “confidence fairy” – we will raise your confidence by pretending we are confident. But it is rather more like “whistling past the graveyard”: with the data out there for everyone to see, most are unlikely to be fooled. It is also a little like saying: we are going to get in our truck and run you over because we are confident that you are strong enough to take it.
And here is, perhaps the strangest twisted logic of all: Yellen said that they want to raise rates now, because they are worried that if there is a downward shock to the economy, with interest rates at the zero bound they will have fewer tools (less ammunition) to counteract the shock.
Doesn’t this sound like she is saying: we are going to create a downward shock, so later it is easier to counteract it?
The final example is the argument that they want to raise rates pre-emptively now, before there is any clear sign of excessive inflation, because lags in monetary policy mean that if they wait they might be too late and then they will have to raise rates more abruptly and this will be even more disruptive.
We must ask the question: who does more rapid increases disrupt? The answer is likely to be the speculative financial markets, and the banks who might find that the speculative positions they take have been mistaken. So here, in paying excessive concern for the financial speculative markets, the Fed is willing to raise interest rates before the labor market is really ready. (…)”
http://www.nakedcapitalism.com/2015/12/the-feds-new-operation-twist-twisted-logic-for-bank-profits-at-the-expense-of-the-real-economy.html
I expect pension plans wanted rates higher as well. The need to be getting reasonable returns, if they are to ever make good on their promises.
“Here is an example of the Fed trying to play the classic game of the “confidence fairy” – we will raise your confidence by pretending we are confident.”
That’s my take on it too, Stefeun.
“The need to be getting reasonable returns, if they are to ever make good on their promises.”
Gail, that brings up a good question: What is producing a good return on investment these days? Passbook savings – no. Stock markets stalled out at a lofty height – no. Real estate even on super wealthy properties is stalling out and 99%ers properties came back a bit from 2009 but stalled out some time ago – no. Bonds – some are defaulting – dangerous. Commodities – no. Precious metals – no.
I’m wondering if the Fed realizes there’s no where to turn to get a return on investment, so they are doing the only thing they can to start the engine of return on investment by raising rates. They’ll have to do that .25% increase a bunch of times to make it worthwhile.
Yes Stilgar,
After the productive economy has stalled, it now looks like the rentier economy is stalling too.
These rate hikes very much resemble electric shocks trying to restart the heart of a dieing patient who keeps on bleeding. Even if it works, it’ll be short-lived, as our real problem is we ran out of blood and are unable to stop the hemorrhage.
If you ever watch The Kaiser Report they talk about the rentier class and economy. I guess it had legs until the renters tapped out at rentier peak. Really a very interesting point in time as the options to do much else to the financial system are now very limited.
This is a watch and wait to see what happens next period as we head for winter here in the northern hemisphere. Maintain liquidity and avoid get rich quick schemes, risky investments or big loans. Our neighbors (bless their naïve couragousness) went all in on a restaurant. Not even a franchise (which would at least be based on a proven formula) but their own concoction. Talk about bad timing, but they never asked for our opinions and I never talk to people about peak oil because, well, it’s America and we’re expected to always be positive. The blogs, that’s different. Not that I think we’re on the cusp of collapse just yet, but it could be a bad recession.
If you are not afraid to contact Karl M. on the issue, here is a fine piece about the rentier class:
http://michael-hudson.com/2015/10/the-paradox-of-financialized-industrialization/
The article is very good. Michael Hudson has a book out as well, but the article gets the same ideas across more quickly.
The catch is that raising interest rates doesn’t improve returns on investment–it simply skims off more of what is earned, to give to the rentier class (or perhaps to pension funds, nowadays). It leaves less to pay to workers, and less for reinvestment in plant and equipment. So it really isn’t helpful. The low interest rates were mostly an acknowledgement of the fact that returns were pretty bad.
There isn’t anyplace where a person can get a good return on their money, today. I paid $4 a day to rent a car in Florida. Does anyone believe that the rental company is making money on a rate like that? I declined the insurance coverage, so they didn’t even get to make a profit on that.
$4 … crazy…
I rented a vehicle here in Europe and was surprised to be informed that you are not permitted to take some rental vehicles into a number of EU countries …. cars from mid-range to luxury are restricted from entering much of eastern Europe (insurance is voided…)
Strange that the EU would invite gangster states into their little organization ….
We’ve been in Berlin for a few days now — have not come across any refugees so far — where are you refugees??? I may drop by and have a coffee with Angela later this morning and ask her about this … if I can find the time before heading to Auschwitz…
If your path are crossing Sweden, you are welcome to visit me. I can show you some refugees (and cook you a dinner). The hotell down the street is turned into a refugee camp. If you walk in town in the middle of the day you will see a lot of migrants strolling around and playing with smart phones. They are unemployed and have nothing else to do.
Berlin is too big. It’s cheaper and easier to put refugees in smaller places.
Thanks – but we aren’t going to make it to the northern part of Europe — Poland — Hungary then back towards the west….
FE, I can offer a site-seeing tour in Warsaw. Just PM me.
Thanks – no plans for Warsaw — decided to see Krakow instead.
Thoughts on Auschwitz….
– when I see how humans are capable of acting towards each other — I am thinking 1. we should be exterminated 2. I am so happy I do not have any children because some very nasty behaviour will emerge when you have 7.5 B people and no food or energy
– there were loads of wreaths at the foot of a wall where prisoners were shot — I wish I would have brought along a wreath to honour the many thousands of Palestinians who have been shot, tortured and imprisoned in Israel — no disrespect intended to those who suffered in this camp— just something to provoke a little thought….
– I was also thinking about how many people the US has murdered and tortured in their wars to keep us living large…. and that if the Germans had won the War — Auschwitz would probably have been converted into a public housing estate and holocaust would just be another word in the dictionary….
These gangster states have lower crime rate than western europe, not to mention the US.
Interesting point. I wonder if the problem has to do with lack of parts for repair, and a lack of knowledgeable service stations to do those repairs. Those reasons by themselves could be the reason for not allowing certain types of cars to be rented. Also, if cars are driven one way, there is a question of a traveler, coming the other way, would be available to drop them off.
Maybe they have a lower crime rate because the cops take bribes to let people go who commit crimes.
I lived in Indonesia for 7 years — I know for a fact that I could get off of pretty much any criminal charge by paying off the cops.
https://www.youtube.com/watch?v=OHT1RKkkS3s
The only difference between a foreigner and local is that a foreigner will be asked for more money than a local to walk on a crime
Cops in countries like Indonesia, Bulgaria, Romania, Philippines are not there to help you — they are themselves gangsters — they are there to extort money from people for the most part.
In fact the last thing you want to do in these places if you are a victim of a crime is go to the cops… they will generally not help you — or if they do they will want to be paid.
From what little I know of China, I could believe that that could happen there as well. There seems to be an awfully lot of bribery going on there, and some public officials are very wealthy–apparently for what they earn under the table.
I have a friend in Shanghai who was drunk and disorderly and shoved a cop …. he was jailed for a couple of months over this — eventually he paid money to someone and was released and the record of the incident put in the bin.
China police corruption would be nothing like say Indonesia…. but it is still pervasive … particularly at the higher levels where it is entrenched… kinda like how the real corruption in the US is at the big money levels…
A Macau casino magnate got into a spat with his sister and she revealed how Macau casinos launder large volumes of corruption cash http://www.bloomberg.com/bw/magazine/content/11_07/b4215026347701.htm
Interesting how this has really slowed of late — Macau casino profits have collapsed this year….
Profits at Macau’s 6 biggest casino operators fall 40% – FT.com
http://www.ft.com/cms/s/0/668a56ae-463c-11e5-b3b2-1672f710807b.htmlTDk6Q
Are you crazy ? You let thousands of unregistered foreigners in and then you bring them straight into your capital city ??? Even if germany is bananas on this topic, they do not want to self-destruct.
The refugees are mostly brought to midsize towns, many of them in eastern Germany. Maybe you can find some at the main railway station in Berlin, but I doubt that anyone that can pay a ticket to berlin is then stranded in the station.
I’ll keep an eye out for the gypsies…
MM, here in Sweden the migrants are initially put in smaller towns. After some years many move to the migrant gettoes in the bigger cities. I guess that’s similar to the german strategy. The big city dwellers can feel good about helping migrants. But at the same time the migrants are placed in smaller counties which have to take a lot of the excess cost of the migrants. The former nazi-party and nowdays not-nazi but migrant critical party, “the sweden democrats” get a lot of votes in these counties. In the end the “good” city dwellers don’t even have to see the migrants. At least if they avoid the subway.
The other day you asked : Why all the refugees, now?
it is because we do not really have an army here in Germany.
As soon as collapse plays out, all the refugees get green hats an a gun.
They will help the state “to collect” and fight against the native inhabitants.
We Germans are to weak and to peaceful for this job.
Beautifully reasoned, but wrong on this point:
” But it is rather more like “whistling past the graveyard”: with the data out there for everyone to see, most are unlikely to be fooled.”
NOBODY understands anything. Mainstream society is run intensively and nearly exclusively on misinformation, mystification, obfuscation and dumb-ification of the 99%. That program is so successful that nobody even thinks to question it. The people on this blog are very rare exceptions, and their not knowing it is further testimony to the extreme dissonance and disconnectedness of society.
I am very much like most people in my understanding of the economic system. Even after hanging out here for moths, I understand nearly nothing about the subject. Talk about banks and interest rates is genuinely like an unknown language to me.
Based on what I gather from Gail and others (more by osmosis than anything) is that raising interest rates is a means–just as you say–to create a false optimism which might be better not created. I gather, though, that the complexity of the subject makes certainty unlikely. (And I’m unlikely to understand this even if it’s explained better than this.)
What I’m saying is that it might be better for the 99% to hear only one-liners at a time–irrefutable truths that can be supported by a long series of other one-liners over long periods. Call it spoon feeding. We are so far from understanding elaborate explanations that it makes matters worse, makes us more despairing to hear them. We think the issue is only for highly knowledgeable people with high degrees. We give up and and retreat. What could be better is to keep us marginally informed about one small edge of the very top surface of the subject, the way we were taught to spoon up hot soup.
You are much clearer than most, although with great command of information. Maybe that’s why I’m telling you this…
Thank you Artleads,
but none of that is my reasoning, I only copied & pasted a part of the linked article.
My impression is that the rate hike was forced by lobbying, aiming to boost short-term profits of a few, with total contempt for the longer term consequences or the impact on real economy, US and abroad.
I wonder if such a small increase, and planned smooth ramp-up to follow, is sufficient to trigger an avalanche of defaults. We’ll see soon enough, and as you say there are many parameters we don’t know anything about.
Regarding the rate-rise, I’m inclined to support any interpretation that implies very short-term perspectives on the part of the Fed et al and those whose interests it embodies.
UHNW people are extremely short-term in all their activities, and the general good will certainly play no part at all in their calculations.
All they wish to be assured of is that they will have more next year than this, and the only thing that might alarm them is the thought of serious personal loss and a decline in status, (and maybe having to mix more with common people) not the consequences of their actions on society or the economy as a whole. They lead very insulated lives (but don’t we all wish for the means to escape unpleasant people and things?)
I know people in this category who were first-class mathematicians at university, have made fortunes from scratch, but when discussing general historical/economic/social issues are either uninformed or even indifferent (and on occasion just plain too scared to think about some things). All their energy goes into money-making.
Which is not to say that they are psychopaths or even sociopaths (although I have met them, too): if you think how you love your favourite child or relation, that is how they regard their accumulated wealth: it almost has personality. This conditions everything they think or do. Society can go hang (but then, many poorer people think like that too, they just have no influence….)
More about Abengoa:
“(…)
The Ultimate Indictment
It wasn’t just Mexico’s government that was seemingly caught unawares by Abengoa’s implosion. Only weeks before the company hit the wall, Standard & Poor’s upgraded its long-term rating on the company, saying it expected it to “execute various actions to reduce debt over 2015.” And the company’s auditor, Deloitte, didn’t express any alarm about Abengoa’s financial situation until November 13, just two weeks before the company announced that it was seeking preliminary protection from creditors.
But there’s someone who didn’t miss Abengoa’s collapse: Pepe Baltá, a 17-year old secondary school student in Barcelona who chose Abengoa as his economics project last year! Baltá noticed serious flaws in the company’s accounting. “If it does not act soon, there is a strong risk Abengoa will go into bankruptcy,” he wrote in his 18-page paper, titled “Analytical Report on Abengoa, 2012 and 2013.”
“I have some accounting knowledge,” Baltá, now 18, told the Spanish daily El Mundo, “and Abengoa’s accounts did not seem to add up. There was a lot of debt and few active assets compared to fixed ones. The big surprise was that negative profits were being converted into positives. I didn’t understand how they could do that.” By Don Quijones, Raging Bull-Shit.”
http://wolfstreet.com/2015/12/15/spains-biggest-bankruptcy-ever-hits-banks-mexico-brazil-descends-into-bitter-farce/
The anecdote is quite funny, but what it means in reality is rather frightening, wether such ‘mistake’ is due to malice or to incompetence: we can expect many other companies -and why not banks?- to have severely fiddled accounts, that they won’t be able to hide for much longer…
It will be interesting to watch Abengoa in the months ahead. I understand that they got temporary financing that will take them through the election and year end, but probably not too much farther.
Meet The Foreign Criminals Using L.A. Real Estate To Launder Money & The Developers Who Help Them
http://www.zerohedge.com/news/2015-12-16/meet-foreign-criminals-using-la-real-estate-launder-money-developers-who-help-them
Whatever it takes…
The goods-based economy swoons.
The transportation sector just keeps getting worse. Even after today’s uptick, the Dow Jones Transportation Average is back where it was in April 2014, and down 18% from its peak a year ago. Within this transportation sector is freight, a gauge of the goods-based economy, which is having a rough time.
In November, the number of freight shipments in North America plunged 5.1% from a year ago, according to the Cass Freight Index. It hit the worst level for any November since 2011.
The index is based on $28 billion in freight transactions processed by Cass on behalf of its client base of “hundreds of large shippers,” Cass explains. It covers shipments, regardless of the mode of transportation, including shipments by truck and rail. It does not cover bulk commodities. Shippers include companies in consumer packaged goods, food, automotive, chemical, OEM, heavy equipment, and retail.
This index of shipment volume has been lower year-over-year every month, with the exception of January and February, which makes for an increasingly awful looking year:
http://wolfstreet.com/2015/12/15/freight-shipments-plummet-as-inventory-glut-bites/
BAU is shutting down….
I noticed that. And if the rise in interest rates makes the dollar ride higher, the situation will get even worse.
OK, the Fed is tightening. Where is the damn collapse!
Big financial movements are due to asymetric dispersion of knwledge of a certain type. Information difference makes the price diffrence (in a volatile market even more)
As the increase has been talked about for months the market already priced it in.
The most problems will come for countries that have dollar denominated debt. Until you see a problem there, it might take some months.
Even if a topic is cooked hot in the media, some “stories” need historic dimensions to develop. Many people make the mistake that if no short term problem appears, there also is no long term problem. We will see. At least some defaulting developing countries will reduce global oil demand. That is a good thing for the West.
I wonder why they raised rates…. clearly the economy is worsening … who knows what is going on behind the scenes — we see only the tip of the ice berg… we are fed endless lies…
Look at this nonsense out of Australia http://www.afr.com/news/economy/stellar-jobs-figures-questioned-by-analysts-20150611-ghlcz8
What I do not is that commodities have collapsed — the Baltic Dry has collapsed — the MSCI index is down 7% year on year last quarter…
We need some sort of stimulus to turn this around otherwise…
Wait a bit.
“China Now Has So Much Bad Debt, It’s Selling Soured Loans On Alibaba”
http://www.zerohedge.com/news/2015-12-19/china-now-has-so-much-bad-debt-its-selling-soured-loans-alibaba
Thanks! That is interesting.
I am sure someone was counting on that debt paying out, even if it was “only” the government, hoping to finance some of their payments.
Supertankers on cruise?
Supertankers are now sailing around on the Ocean with nothing to do!
– Something Strange Is Taking Place In The Middle Of The Atlantic Ocean: http://peakoil.com/consumption/something-strange-is-taking-place-in-the-middle-of-the-atlantic-ocean
At going lease rate of $110,000 a day for super tankers, if they hold the maximum 2 million barrels, than at 35 a barrel is worth 70 million, then even after sitting out at sea for 2 months the cost is only 6.6 million which subtracted from 70 million dollars is still 63.4 million US dollars.
“then even after sitting out at sea for 2 months the cost is only 6.6 million which subtracted from 70 million dollars is still 63.4 million US dollars.”
I doubt they got the oil for free … Hopefully it didn’t cost them more than $20 / bbl
If supply and demand somehow could get back in balance again, we would still have all of the stored oil to contend with as well.
Beautiful article.
Thanks!
According to this article there will plenty of tight petrol coming from America in the years ahead
http://www.forbes.com/sites/christopherhelman/2015/11/20/a-year-into-the-oil-bust-a-few-reasons-for-americas-frackers-to-be-thankful/
The boom was fun. The bust has been painful. But there’s nothing like that food coma to get you to stop and appreciate a big meal. So even though its been a tough year for American oil and gas, there’s plenty to be thankful for. Cheap gasoline and natural gas. An increasingly secure oil supply. An opportunity to buy shares in big oil companies at fat dividend yields. Lots of new technology. And especially the appreciation that thanks to the ingenuity of thousands of engineers, geologists and roughnecks we have many more years worth of oily leftovers to turn into some fracking good turkey stew
If high prices proved anything, it’s the oil is there. It would have been a whole different event if high prices had not produced an oversupply, but it did and that suggests potentially it can again. The big question is how high a price can the world economy handle as that descends along with diminishing returns? The answer to that determines how much future turkey stew is available. Will we be knee deep in all the fixings or searching for loose change to get some fast food?
Id be much less scared were the price to rise. I dont see the high price of the boom cycle being a problem any more. The world economy is not going to take it to $140 again IMHO. I see the problem of being the engine stalling and unable to restart not throwing a a piston from high RPM any more.
Agree – 140 out of the question, but so is 120 and 110 and maybe even 100. I think the ceiling is around 85 but we’ll see when the oversupply is gone.
Define “high price” as linked recently, most of the lifting factor for shale was enabled-based on junk bond financing structure and free global capital moving into it. A combination of factors which might not be there for the next round. But it could be replaced by some other even directly gov related scheme..
Anyway, it seems very reasonable to have at least one above $100 upswing before 2025, there is so much money and fools sloshing around, it’s almost guranteed, mind you by that time it would be much smarter to get out way earlier as the sysem might go off the wheels for real at that point.
A big part of the problem is falling demand–something we don’t have good information about. This makes comparisons confusing. If (when) we run out of storage room, prices are likely to drop a lot lower.
The oil is there, if prices are high enough and interest rates are low enough. It is hard to keep up that combination.
For example, the Fed could buy and sell certain assets to stimulate or cool the mortgage market or to affect longer-term borrowing costs, says Benjamin Friedman, former chairman of Harvard University’s economics department. Experts addressing a conference hosted by the Fed last month, said the central bank Fed could use the assets as a new “macro prudential” tool to deal with financial market bubbles – by cooling particular sectors with targeted asset trades – and ward off investor runs by letting ample bank reserves act as a buffer. And while the Fed is now replenishing its portfolio as bonds mature and plans to continue doing so for another year or so, policymakers have directed staff to examine alternatives and to consult outside experts, according to minutes of the Fed’s July meeting.
http://www.reuters.com/article/us-usa-fed-idUSKBN0TY2EX20151216
Hmm, looks like a plan…
but
A “permanently higher balance sheet … is something that we haven’t studied that much but I think needs a lot more thought,” John Williams, president of the San Francisco Fed, said last month.
“haven’t studied that much”??? WTF?
The negative effects may take a bit to show up in feedbacks. I was surprised that European and Asian markets seemed to rise as well.
The markets were expecting Fed to show some credibility, unfortunately they did that. It would be strange if we wouldn´t have QE2 in reverse starting January. If oil keeps dropping, a war is required to get the oil prices higher and mid-January the imaginary economy (fake stats) starts its own war with the real economy (The Price-to-Earnings Ratio) in the stock markets.
Traditional Chinese curse: “May you live in interesting times”
I don’t think that Janet Yellen and the other Federal Reserve folks will catch on as soon as January. No matter how bad things get, they will think that their actions have nothing to do with the problem.
The stock market is down for a second day now, and Brent price is at $36.68. http://www.nasdaq.com/markets/crude-oil-brent.aspx This is hardly a sign that things are going well.
Right, I know. I am just curious about the FED and other central banks reaction.
They are so scared that they prepared laws for this occasion. Bail-ins instead of bail-outs, etc. We’ll see how they manage this time.
Dear Finite Worlders
This will be a book review of The Hidden Half of Nature: The Microbial Roots of Life and Health by David Montgomery and Anne Bikle.
The couple bought an old house in north Seattle. When they attempted to start a garden, they found that the land was very poor, consisting of compacted glacial till from the last ice age. They have been working on restoration now for a decade, using lots of ingenuity but not much money. Along the way, they discovered lots of things about the soil food web, and how microbes are the foundation on which everything rests. Anne also had a bout with cancer, which caused them to learn a lot about microbes and human health, and the similar ways that plants and humans are both interacting with the microbes. This is a very big topic, and I will only address the gardening part in this post.
I recommend the book very highly. It is particularly useful, I think, if some the following describes you:
*I thought about getting into gardening when Bear Stearns collapsed, but didn’t really do anything.
*I believe that industrial agriculture and similar backyard gardening techniques are essential in the production of food.
*While it is possible that I will be a victim of the zombie apocalypse, I will prepare as best I can.
*I think that energy descent, financial collapse, health care system collapse, and resource depletion are all quite possible.
*I have, or want, a suburban scale yard in which I can garden.
*I find the evolution of scientific thought to be a fascinating subject
To begin, I suggest that you watch this David Holmgren interview, in which he describes his ‘greening the suburbs’ scenario.
https://www.youtube.com/watch?v=uqwWdranB5A
It’s all good, but for the Cliff Notes version begin at 45 minutes and watch to the end of the segment.
Now to some notes from Montgomery and Bikle. On page 52 the authors discuss the revolution in biology wrought by Lynn Margulis in the chapter titled Better Together. Just as villages turn out to better for survival than solitary hunter gatherers, so Margulis showed that eukarotes are able to survive because of three key mergers. One of those mergers brought us eukaryotes the mitochondria which provide our energy. On a much larger scale, the modern biological world can be thought of as a symbiotic relationship between the life in the soil and the life above ground.
In 1903, in Japan, each person was supported by one third of an acre of arable land. The farming did not use much in the way of fossil fuels or inorganic fertilizers or herbicides and pesticides. But Japan was an outlier. In Europe and the colonies, the chemical farming message of Justin von Liebig was in the ascendant. Von Liebig had convinced himself and the ‘civilized world’ that organic matter in the soil was irrelevant. Organic matter was believed to contain toxins, which must constantly be fought against. When Frank King from the United States went to Asia early in the 20th Century, he had to rediscover how farming could work in the absence of fossil fuels, and he wrote Farmers of Forty Centuries. Sir Albert Howard spent the first half of the 20th century studying how peasant agriculture, particularly in Indian villages, could be disease and pest resistant while industrially farmed plantations required steadily increased inputs to fight off disease and pests:
‘In 1910 I had learnt how to grow healthy crops, practically free from disease, without the slightest help from mycologists, entomologists, bacteriologists, agricultural chemists, statisticians, clearing-houses of information, artificial manures, spraying machines, insecticides, fungicides, germicides, and all of the other expensive paraphernalia of the modern Experiment Station.’
I want to call to your attention, this passage on page 86, which should particularly interest you:
‘Humus could restore farms surprisingly fast. The challenge was how to get enough organic matter. Howard noted the tremendous potential for diverting back to the land the thirteen million tons of organic waste consigned each year to British dustbins. With such an effort (recycling), society could raise the fertility of soil in the fields surrounding cities.’
This the first of several themes I particularly recommend that you notice. Montgomery and Bikle tap into the enormous streams of organic waste that they find around them in Seattle. For example, picking up in their car bags of coffee grounds from coffee shops and having tree trimming companies dump wood chips on their driveway. If you followed Holmgren’s story, it is one of continuous energy descent. It was possible in 2007 when Bear Stearns collapsed, and it is possible in 2015 when the commodity markets collapsed, to drive to Starbucks and pick up coffee grounds. But we cannot count on it being possible in another decade, and certainly not in 25 years. Therefore, if you want to have a garden, you should have started working on it when Bear Stearns collapsed, but today is much better than tomorrow if you have not started.
For the longer term, it will take a village…not a city…to recycle organic material. Organic material will be moved in wheelbarrows, and compost piles turned by hand or by pigs. If you can establish a community recycling center for organic material, then you are far ahead of the game.
Mongomery and Bikle note that the positive feedback from adding organic matter is ‘surprisingly fast’. But they are talking in terms of 5 years and 10 years, which will sound like forever to a generation raised in a digital culture. Which is my second point. Gardening uses the internet for information exchange and for things like ordering seed, but it is in a completely different ballgame than Sherry Turkle’s world of instant gratification via our phones.
The third point I call to your attention is Montgomery and Bikle describing ‘organic matter sounds far more attractive than it really is’ and beauty resides in ‘what it can do’. If your Homeowners Association’s ideas of beauty were formed by purely surface appearance, then a compost pile or leaf litter will look ugly. Only people who understand the biology (or who have an eye for photography or painting and drawing) can see it as beautiful. Thus, conflict with neighbors in affluent neighborhoods is likely.
The fourth point is the scientific revolution that has swept this field over the last few decades:
‘Today we know that the words of the microbial language consist of a variety of proteins, hormones, and other compounds encoded by each microbe’s genome. Plants use their roots as ‘ears’ to listen to soil life. The net effect of this two-way communication is that it primes metabolic pathways that plants rely on to fend off pests and pathogens. Thus, in life-filled soil, plants stand ready to repel an onslaught, generally faring much better than plants unprepared to face an attack.’
My final point is that Montgomery and Bikle are not ‘going back to grandpa’s methods’. Montgomery is the author of Dirt: The Erosion of Civilizations. He is all too familiar with the destructiveness of most (but not all) historical agricultural societies. The current synthesis is capable of producing lots of food in small spaces. In the US, we have plenty of land…including our yards. Things like distribution and debt and obstinate people are likely to be larger barriers to feeding ourselves than lack of land.
Let me close with a personal anecdote. I worked on a small farm until I was 73. I did garden in my yard, but most of my food came from the farm. At 73, I decided I could not do the stoop labor and keep up with the young people, so I retired. Now, I just have my small yard plus a small plot at a community garden. Realizing the precariousness of my situation, I have begun to look very carefully at my yard. What I find is a compaction layer at about 20 inches in most of the yard (probably dating from when this was a corn field and so was tilled heavily). In one small lawn area, the compaction layer is about an inch down…there is practically no room for roots. So I have started on a project to break up the compaction. Unlike Montgomery and Bikle, I will work on the compaction layer by making holes in the compaction and pouring compost extracts with calcium in the hole to feed fungi under the layer. My hope is that working from both the top and from below, I can quickly restore the clays through the process of flocculation. Where I live, this is the first, necessary step toward remediation. After that, everything should move swiftly in the right direction.
This emphasizes one of the points made by David Holmgren: when dealing with biology, all decisions are local. If you are 25 and living on a farm, the appropriate action will be different. If you have a lot in Florida with lots of sand, the appropriate actions will be different. If you have Alzheimers and are living in a nursing facility, your appropriate actions will be different.
In summary, this book is an excellent and well written overview. If you want to delve into recipes for making compost teas and extracts, or dealing with collapsed clays, you will need to do further research. If you find yourself in a straight-jacket because of debt, this book won’t help you a lot…but Holmgren may have some suggestions.
Don Stewart
Thank you!
Thanks. I’m still at the very (pre)start, I was amazed what simply a higher hay cut and slightly different timing (rain/moisture/+insolation) of cutting grasses (partly mulching) did for the soil biology, after two years it’s visible with more insects and birds, and amphibians getting back despite the contra trend of missing rainfalls. It’s all like pushing magic button and I’ve done only ~2% what should be done in the long term with additional (more demanding) methods.
– What it costs to produce oil: http://money.cnn.com/interactive/economy/the-cost-to-produce-a-barrel-of-oil/index.html?iid=EL#
United Kingdom
$52.50
Brazil
$48.80
Canada
$41.00
United States
$36.20
Norway
$36.10
Angola
$35.40
Colombia
$35.30
Nigeria
$31.60
China
$29.90
Mexico
$29.10
Kazakhstan
$27.80
Libya
$23.80
Venezuela
$23.50
Algeria
$20.40
Russia
$17.20
Iran
$12.60
UAE
$12.30
Iraq
$10.70
Saudi Arabia
$9.90
Kuwait
$8.50
Source: UCube by Rystad Energy; Interactive published Nov. 23, 2015
http://www.bloomberg.com/energy
US cost per barrel at 36.20 is higher than today’s WTI price of 35.69 after a minus 1.66 due to the .25 interest rate rise that increased value of the USD against other currencies.
Nice information Thank you. The real cost is much higher once the dues are paid. In Libya for instance if the regional groups dont get their cut then they start misbehaving which stops oil flow. Everyone gets real upset if they dont get their slice of the pie. The general consensus is If I dont get my pie nobody does. At these prices the slices of pie are quite thin to nonexistent so I see MuaDib stopping the flow of spice much to the dismay of all pie eaters, myself included.
Steven Kopits from Douglas-Westwood said the productivity of new capital spending has fallen by a factor of five since 2000. “The vast majority of public oil and gas companies require oil prices of over $100 to achieve positive free cash flow under current capex and dividend programmes.
Nearly half of the industry needs more than $120,” he said
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11024845/Oil-and-gas-company-debt-soars-to-danger-levels-to-cover-shortfall-in-cash.html
Looks like it may be time to sharpen up the lobo!
https://i.ytimg.com/vi/vBvQpIcrvvo/hqdefault.jpg
Governments depend on oil taxes to fund their governments. Taxes on oil are high everywhere. I am not sure what else has been left out–for example, dividend payments to stockholders and interest payments to bondholders, for example. Probably a lot of other things. The whole system has to operate. At this point, the US government (and state governments) have not suddenly removed all of the taxes on oil. Iraq needs the taxes on oil in order to fund its infrastructure. But the difference between direct costs and total costs means that even if prices stay very low, companies will continue to keep pumping.
http://peakoilbarrel.com/bakken-and-opec-production-data/comment-page-1/#comment-551081
http://peakoilbarrel.com/bakken-and-opec-production-data/comment-page-1/#comment-551204
Interesting posts by Heinrich, if he is right, there will be one more crude-energy spike up before 2025 onwards (~2017-2022 my rough guestimate window), similarly I hope you all noticed as Putin declared next 7yrs of bottom energy pricing, while Saudies (and many other OPEC/NOCs) have fin reserves only to last for next few years (3-5x at max). These guys know or at least bet at something they seem to know. So, this could be the “very last trade” of this dying world order before we go proto neofeudal ..
by Watcher
http://peakoilbarrel.com/bakken-and-opec-production-data/comment-page-1/#comment-551036
by Shallow
http://peakoilbarrel.com/bakken-and-opec-production-data/comment-page-1/#comment-550999
I don’t think Heinrich lived during the Depression. It doesn’t necessarily follow that the lower prices go, the higher they will go later.
this is a classic
Long live Shale!
YPF, Dow To Invest $500M In Argentina Shale In 2016
Total investment could reach $2.5 billion in coming years
BUENOS AIRES—Argentina’s state-run oil company, YPF SA, and Dow Argentina, the local unit of Dow Chemical Co., said Tuesday they will invest $500 million in 2016 to explore for shale gas.
The companies, which have already invested $350 million in a joint shale gas venture, said in a statement that total investment could reach $2.5 billion in coming years.
The transaction will represent the first significant foreign investment announcement in Argentina since President Mauricio Macri took office last week. His administration is seeking to dismantle key policies of his predecessor and boost investor confidence to kick-start a moribund economy.
The joint venture is the leading shale gas project of its kind in Argentina, with daily production of about 750,000 cubic meters. The aim is to triple that next year to about 2 million
http://www.wsj.com/articles/ypf-dow-to-invest-400m-500m-in-argentina-shale-in-2016-1450188676
Really? At today’s prices? According to the article,
“Argentina’s government sets the price of newly produced gas at $7.50 per million British Thermal Unit, making it a profitable option for some companies in Argentina. In comparison, the spot price for a similar amount of natural gas in the U.S. is close to $2.” [The price is actually below $2.]
The problem with setting the price that high is that goods made with the high-priced natural gas will not be competitive in the world marketplace. Also, homeowners will not be able to afford it to heat their homes. The government of Argentina may guarantee the operator this price. The problem comes when trying to sell it at this price. Argentina cannot afford to simply run up debt to subsidize it. If Argentina cannot afford it, and its currency falls further, workers will find foreign goods increasingly expensive to buy.
Previous administration set $7.50 only for new wells, while conventional gas is being paid 2-$2.50. New wells are intended to replace expensive ($15-$17) LNG imports. That’s why it is expected to work, and the fact is gas production is up (which is not so much the case for oil). I suppose LNG price should have fallen but not so much as it has a lot of costs others than extraction itself
However this is not enough, and new energy minister announced a cut on electricity subsidies next month
I am surprised LNG is still that expensive. Its price has been falling elsewhere. In Japan, the recent price was in the $9 range, according to Pink Sheet data. As you say, it has a lot of costs involved.
I can believe that energy subsidies are being cut. That is a pattern seen everywhere, when there is not enough money to go around.
Good article by Charles Hugh Smith in which he says: “The legions living off these inefficient, bloated systems will destroy any real reforms and anyone who dares propose them. The only available process of radical downsizing /rationalization is collapse. That’s The Upside of Down (a book I highly recommend).
I don’t blame anyone for trying to save their job, division or agency; but the systemic cost of protecting privileges, bureaucracies and cartels is collapse.”
http://charleshughsmith.blogspot.com/2015/12/theres-no-upside-left.html
Thanks! I agree that it is a good article. Note particularly the graph:
Things started to fall apart once we lost the rapid growth from oil, shortly after 1970. Wages of non-supervisory workers stopped growing. There was less growth in productivity, and what there was tended to go to supervisory workers. This relates to the increasingly hierarchal organization and increasing financialization that needed to take place, starting at that time.
From the automatic earth is the following clip from their latest post. It explains why commodities are deflating. This is something I’ve written about before, but didn’t have a link until now. I think some on this message board are certain this downtrend in commodities is a signal of an impending collapse, but rather it is a contraction of those corporations that scaled up to supply China on it’s hell bent expansion, mostly in construction. All businesses have difficulty during expansion and contraction but now it’s back to business as it was before China went full tilt.
http://www.theautomaticearth.com/2015/12/debt-rattle-december-15-2015/
“Raw materials sank to the lowest level since 1999 this week as China’s slowest expansion in a quarter of a century cut demand in a reversal of the pattern seen a decade ago, when booming growth in Asia fueled a surge across commodity prices that was dubbed the super-cycle. Continued concern about China, coupled with a rising dollar as the Federal Reserve raises rates, will make it difficult for commodities to rebound, according to Roach, a former non-executive chairman for Morgan Stanley in Asia. “Commodities are, after a super-cycle, obviously going the other way, big time,” Roach said. Some companies “are in denial that China is changing its character, its structure. It’s going to take a while for that to sink in, and until it sinks in, there’s still downward pressure on commodity markets and prices.”
What! Do they think resources and their production costs remained the same? Do they think energy resources and production costs remained the same. Did populations and pollution remain the same. Has environmental destruction reversed. Has climate change reversed. And they they commodities won’t rebound because of China and its all just a cycle and we go back to normal now? They say others are in denial……sheesh.
Bandts101, what goes up in a super cycle must come down in recurring oscillations.
Of course. Isn’t that stating the obvious, especially after the fact. Any clown could come to that conclusion. But to expect another cycle to begin where the last left off is dumb. Actually to expect any new cycle of recovery to start anew is dumb. The spiral is down because of limits and overshoot. Do they expect another cycle of shale oil production, iron ore, copper and Atlantic Salmon.
There is only so many mountain tops to remove, oil wells to drill and markets to exploit. How do they expect to get money into the hands of the people that matter the most….. Consumers.
Our Finite World……….That’s what it’s all about, debt can’t put more oil, coal and gas in the ground. When the inflection point of too dear for consumers and too cheap for producers is reached, terminal decline becomes reality. And what does everyone think caused the inflection point……..money, debt, interest rates……or as a famous idiot said “. It’s the economy stupid”. Sorry none of the above its the demise of cheap easy to extract and produce fossil fuels and the relentless unavoidable, decline of the amount of energy returned on investment. The current predicament.
Wells stated.
Francois Roddier wrote to me recently pointing out that it was about 1600 years between the fall of Mediterranean Civilization in 1177BC and the Roman Empire. Since then, another 1600 years have elapsed. If we believe in very long super cycles, today’s timing is about right.
Yes, the “Sea Peoples” are an interesting allegory of today’s predicament.
The Sea Peoples origin is still a mystery. During the late Bronze Age something caused a massmigration of peoples, and all the superpowers of the late Bronze Age except Egypt collapsed. Even Egypt couldn’t recuperate to its former glory because its trading partners were gone.
So, first resource depletion, then gigantic series of migratory waves, extending all the way from the Danube valley to the plains of China. Then collapse of society.
You’re forgetting something…
“It has often been said that, if the human species fails to make a go of it here on the Earth, some other species will take over the running. In the sense of developing intelligence this is not correct. We have or soon will have, exhausted the necessary physical prerequisites so far as this planet is concerned. With coal gone, oil gone, high-grade metallic ores gone, no species however competent can make the long climb from primitive conditions to high-level technology. This is a one-shot affair. If we fail, this planetary system fails so far as intelligence is concerned.” — Sir Fred Hoyle
I am afraid Sir Fred Hoyle figured out the story correctly.
When your salary depends on not seeing the obvious, you have to invest:
http://www.zerohedge.com/news/2015-12-13/end-bubble-finance-era
“But when it comes to capital goods the relevant inventory measure is capacity in place. That’s where the bubble finance policies of the Fed and other central banks have done so much damage. Prolonged periods of below market capital costs induce business customers to drastically over-estimate investment returns. And therefore to eventually accumulate years and years worth of excess capacity.”
“This depression in the capital goods industries, in turn, means the disappearance of thousands of typically high pay, high skill jobs at companies like Caterpillar. The same will happen among their extensive chains of outsourced components, materials and service suppliers. And the cascade of those contractions down the economy’s food chain will further intensify and extend the deflationary dynamic.”
“During the last 25 years CapEx spending by the publicly listed companies of the world grew by an incredible 500%. Much of this happened in China and the Emerging Market (EM) economies, and in the transportation and distribution infrastructure that connects them.”
http://dailyreckoning.com/dr-content/uploads/2015/12/GlobalCapex1.png
“Instead, this unprecedented construction and CapEx campaign was financed almost entirely by a massive issuance of printing press credit at virtually zero real interest rates. That means capital was drastically underpriced and that waste, excess and inefficiency abounded.”
“Over the last two decades, global credit market debt outstanding has soared from $40 trillion to $225 trillion. This represents an incredible $185 trillion debt expansion. That eruption would be simply unimaginable without the help of money printing central banks. By contrast, global GDP only expanded by $50 billion during the same period, and even that’s an overstatement. Much of that reported gain merely represented the one-time pass-through of fiat credit, not real savings put to work in efficient production. Consequently, it is likely that the global economy accumulated more than $4 of new debt for every $1 of incremental GDP. Not only is that self-evidently an unsustainable financial equation, it also means that when credit growth stops, the bottom will drop out of reported GDP. It wasn’t new wealth in the first place, just production stolen from the future.”
“And the other major central banks of the world are in the same boat. Just last week we saw the ECB stopped short by its powerful Germany contingent that essentially said to Draghi that $1.3 trillion of money printing is enough. Likewise, the People’s Bank of China (PBOC) has run out of dry powder, too. And that’s of monumental importance. The epicenter of the global commodity, industrial and CapEx boom was in China. Thanks to the greatest money printing spree by the PBOC in recorded history, outstanding public and private debt there has exploded from $500 billion in 1994 to $30 trillion at present. That’s a 60-fold gain. Is it any wonder that the commodity and CapEx charts shown above went nearly vertical during the peak of the global boom? But now China is facing the collapse of its credit Ponzi, and capital is fleeing the country at a prodigious pace. In the last 15 months alone, nearly $1 trillion has high tailed it for London, New York, Australia, Vancouver and other resting places for flight capital. So the PBOC is being forced to stop its printing presses in order to prevent the Yuan exchange rate from collapsing and the capital outflow from getting totally out of hand. Even in Japan, the Bank of Japan’s printing press is no longer accelerating. That because notwithstanding trillions of new money conjured from thin air during recent years, Japan is on the verge of its 5th recession in seven years. Even in Japan, bubble finance is losing its credibility.”
That is a David Stockman article. I would agree–we are at the end of the possible growth in debt.
“Roach said. Some companies “are in denial that China is changing its character, its structure.”
What does that really mean? China was all sunshine till august when they let the yuan slide, now in december the country has somehow changed from industrial economy to service economy? How do they do that? By running an erotic line from the mobile phone for every 1,3 Billion chinese?
I do not believe any word of an article where they make such claims, it simply is impossible. China has a problem that we can not gasp with looking at the data from the central bureau of economics.
In every communist country’s newspaper they write about a new record industrial output of this and that for this month and the people on the street asked: Where are those products ?
The financial industry is complete bananas since at least 4 months. The day will come when the true prices for goods wil have to be discovered again as someone asks for cashing out some obscure bond by that crashing the entire house of cards.
It can only be avoided by japanisation: accumulate more debt to pay them out and do not ask for the real value. The million Dollar question is, how long they can withstand that? It could go ad infinite and will stop only when the fuel has run out. Then everythihng goes to a value of zero in a moment.
China based its growth on debt. The amount of “benefit” that additional debt brings rapidly reaches diminishing returns. China is now at a point where it does not get real benefit from adding more debt. In fact, a lot of the debt cannot be repaid. There are a number of articles pointing to further drop in the demand for commodities in the year ahead, because of China’s drop in demand:
http://www.abc.net.au/news/2015-12-17/china-economist-warns-that-iron-ore-miners-will-collapse/7037802
http://www.businessinsider.com.au/macquarie-bank-desperation-not-demand-will-be-the-theme-for-commodities-in-2016-2015-12
The world has used China as its engine of growth, since it joined the World Trade Organization in 2001. Now, it has reached a minimum on pollution levels, if nothing else. Also, the rest of the world cannot keep increasing their debt levels, to buy Chinese goods. Wages have not been keeping pace. So demand for Chinese goods is not rising, and they have overbuilt on many kinds of factories, as well as on housing.
The result is likely to be very bad, as this feeds back into the world economy, in 2016. A lot of falling prices and defaulting debt.
Thanks for that article…
‘Mr Xie said there were few buyers for Anglo’s four Australian coal mines which are on the market.’
Another example of how this time is different… the new normal appears to be very low commodity prices … so no takers for asset fire sales… even those prices are far too high…
This is more fuel to the fire that points to a 2016 end of BAU
Not much worries me these days. This does. You either get it or you don’t.
http://www.zerohedge.com/news/2015-12-15/why-has-labor-participation-rate-plunged
http://www.oftwominds.com/photos2015/productivity4-15.jpg
“For context, let’s look at a few charts of the participation rate and related metrics. Let’s start with the engine of wealth creation–productivity. The productivity of industrialized nations’ work forces topped out in the cheap-oil boom years of the 1960s.”
Looks like a 3% decline over a 37 year period.
In six years it goes negative. Jan. 2022.
How can the output of the average worker go negative?
Not the output, but the change in output.
In other words, output starts to shrink. Seems inevitable to me.
Of course Goldman is not going to publish a chart where it’s negative. They’ll fake it. Much of the “stats” that we read every day is already fake.
Stilgar, it is not output it is change in output YoY. That is in 2023 a worker may make .02% less stuff than they did in 2022. Delays in JIT, expense of input materials, unmotivated workers due to lack of money to buy food, violent attacks by pissed off people all may lower productivity.
Transfer a lot of the output of workers to buying new capital and paying for supervisors.
Or if total output falls (because demand falls), workers may still be present, but output may be capped by demand. Workers in stores may still be present for same number of hours, but few customers to wait on.
My reading is a 0.5% developed world average today, on a five year lookback. Amongst other things, there is no reason to suppose negative values cannot happen in the future.
The trend is the important thing, and it looks unlikely to change anytime soon.
That would be a long contraction aka slow collapse.
Not necessarily slow. Just no way out.
If the 3% is what you are depending on for “real” growth in wages, that is a hugely big deal. It was necessary to take what little was left and give it to the new supervisors and other hierarchy–also financial folks. Non-supervisory workers were left with nothing in real wage growth.
Thanks! The cheap oil boom allowed for a lot of real growth in productivity. Once it was over, it was necessary to go to more hierarchical behavior, more financialization and less for the workers. Debt covered up the problem for a while–not that is not working so well.
When you’re broke and aimless, the apocalypse can’t come soon enough
http://www.avclub.com/article/when-youre-broke-and-aimless-apocalypse-cant-come–228933
Leo Fitzpatrick plays Bruho, the pair’s reticent leader, who sincerely believes that society is about to hit “peak oil,” followed by total collapse. Justin Rice plays Dirty Fred, an incorrigible slacker and libertine who mainly joins Bruho because he likes the idea of living inside of other people’s homes and eating their food. For roughly the first third of Doomsdays, Mullins constructs a series of vignettes of Bruho and Dirty Fred sowing mild anarchy across a small swath of rural New York, and almost getting caught.
.. Doomsdays’ main vision is of rootless youngsters who see no possibility that they could ever afford the life of idle luxury they crave. They assume their best hope is worldwide disaster. And if none’s in the offing, they’ll just pretend it’s already happened
http://www.rottentomatoes.com/m/doomsdays/
Seems like a movie for us on Gail’s site to view.
Movies have changed over the years. Now we are looking ahead to collapse, rather than great and glorious things that might happen in the future.
dolf911,
“Capitalism also creates a larger pie, because it more effectively enables technological advancement to exploit more resources.”
I like what you say. It sounds MOL correct to me. I had been careful not to pretend to know much about either system. Gail hinted at something, and I perhaps misconstrued her meaning. Some analog of communism suits my present thinking, in that I propose some sort of way to eliminate division and the prerogative of making a killing. We see where that exploitation of resources *for profit* takes us. The traditional state communism model, as you say, also takes us down a similar route, though maybe not as fast.
To be clear, what I support is order, the common good, rationality, looking at what is the preferred way to deal with predicament (other than doing nothing), without excessive concern for how things are done now. (I hear shouts of protest. I hear them all the time. Nothing I can do about that.)
“To be clear, what I support is order, the common good, rationality, looking at what is the preferred way to deal with predicament (other than doing nothing), without excessive concern for how things are done now. (I hear shouts of protest. I hear them all the time. Nothing I can do about that.)”
This sounds to me to be totalitarianism. The most likely outcome of what is coming.
For totalitarianism you need “many things” namely the street level enforcers, docile public, heavy coordination of similarly heavy handed gov apparatus on several levels, not a problem in post WWI and WWII situation or in other prior historical analogs, however this time not so much or at least not in the countries/regions this forum seems to be mostly populated from nowadays. So, I’d rather anticipate wider chaos, organizational disfunction, widespread patches of short termism in practice and followup effects etc..
Obviously, if the Russian-Chinese- .. block soldiers on, in whatever form and capacity, there will be presure on the west to stand up in some solid structure as well afterwhile, but firstly the destruction/clean up phase of the old rot must be undertaken and that’s a project for decades at least.
“This sounds to me to be totalitarianism. The most likely outcome of what is coming.”
Are you surprised considering this individuals expressed beliefs? Its not totalitarianism if it wears a PC wrapper doncha know?
We live under a system of “inverted totalitarianism” today. If what I propose is totalitarianism (your term, not mine), it would be the totalitarianism of a school of fish that work together like a single individual.
Inverted Totalitarianism:
https://en.wikipedia.org/wiki/Inverted_totalitarianism
” What is absent is the political, the commitment to finding where the common good lies amidst the welter of well-financed, highly organized, single-minded interests rabidly seeking governmental favors and overwhelming the practices of representative government and public administration by a sea of cash.[12]”
I find this capitalism vs. communism discussion boring and tedious. Our entire system is going to fall apart. Both of these ideologies (and they are ideologies) arose during periods of growth and belief in the future of mankind and industrial civilization. They were competing ideas on how to divide up the pie, which was assumed to be bountiful.
Communism lost out, because it turns out there is no better way to divide up the pie than capitalism, which basically makes people compete for bigger slices. Capitalism also creates a larger pie, because it more effectively enables technological advancement to exploit more resources.
But this is it, we’ve reached the end of the line. There is no more pie, and we are rapidly eating up what remains. All that is left is a reversion to some form of post industrial, regional and local neofeudalism.
Good line,”There is no more pie, and we are rapidly eating up what remains.”
Gail merely said that communist countries were less destructive and rapacious in the extraction of basic natural resources than under capitalism. Period. Being less conservative and informed than Gail, I’d propose–why not try communism for a change?
“why not try communism for a change?”
You can move to Cuba or North Korea, and experience it yourself. Be sure to visit an Internet Cafe and give us updates on how you find it.
There’s a big difference between Cuba and North Korea…or Kerala, India. Were you serious?
“There’s a big difference between Cuba and North Korea…”
There aren’t a lot of communist countries to choose from, most of them gave up on those ideals. Even the countries that have a communist party in a representative democracy, are mixed economies.
I wrote an article about Cuba recently. http://ourfiniteworld.com/2015/05/26/cuba-figuring-out-pieces-of-the-puzzle-full-text/ Communism worked passably well there, as long as there were enough resources. But it is hard to get anyone to do much work, if the pay is the same regardless of how much work anyone does.
“But it is hard to get anyone to do much work, if the pay is the same regardless of how much work anyone does.”
I guess part of what I am suggesting is that, instead of having groups of conflicting ideas that are all attached to the geographic space they happen to be in, we have ideological zones and let people more freely move. If there are people that are in Cuba that don’t want communism, let them leave. If there are people in America that want to be communist, let them move to Cuba.
Perhaps if they had only true believers, they would be more productive and competitive.
Maybe so. I think you need some sort of compromise between the two.
Cuba is quite dependent on oil imports. This has made it hard for the country to be competitive in international markets. If there is not enough to go around, the situation becomes hard to handle. That seems to be the problem now–not enough wages for anyone, except those who can earn through more of a capitalistic system.
Communist countries were even worse than non-communist ones for damaging the environment. This is because there were fewer checks and balances in their societies.
https://en.wikipedia.org/wiki/Aral_Sea
There is more to it, namely the ownership changed hands several times during the early stages of revolution, mind you there were even massive land reforms inside the western europe, but the quality and quantity aspect in most communist countries went to the max in terms of these reforms, so what you get (apart from some scientific and giant infrustructure “successes”) is very damaged small scale space, i.e. public space and small / mid scale private property, hence also profoundly damaged individual relationships etc. You can find parallels throughout the history, if there is too much and too frequent warfare-opression-redistribution the society simply falls apart, it’s irreversible process, you have to start rebuilding, it then takes decades and centuries to stand up somewhat again.. That’s why historically speaking smart rulers always in a certain way “pempered” their subjects on all levels, starting from the peasant, craftsman, artists to merchant class and nobility..
Communism applied top-down diktats for ideological reasons. If Mao or Khrushchev said do this, it had to be done, Khrushchev thought himself an agricultural genius and was fond of ordering, for instance, cotton to be grown in areas that were not suitable for it. This is all down to a lack of checks and balances in a dictatorial society.
The words “capitalism” and “communism” have been used in propaganda so much they are virtually devoid of meaning except to either seek group acceptance or to propagandize. We have individuality. We are part of the whole. Our dividing these as oppositional dichotomies is in itself a failure.
I agree about division re individual and whole. Part of what I mean by communism is the absence or radical constraining of the profit motive. Also, removing reasons for undue competition and divisiveness. People should do what they love, but not at the expense of the whole.
Good point! We are now very dependent on China, and it has a system of its own.
It doesn’t have to be done the same way now. I don’t think that communist Kerala (India) does it quite that way either.
I wouldn’t want to live in somebody else’s communist state; I’d rather create my own. But then I wouldn’t want to live in any other country beside America. As America goes, so go I. I don’t believe that America’s future is written in stone either.
“Being less conservative and informed than Gail”
How do you know Gail is “conservative” ? Her thinking certainly isn’t “conservative”. She most definitely thinks outside the box.
You’re right. I don’t really think she’s conservative. Cautious. Modest. Honest. The best combination possible.
But I am married to the one husband I have had, and don’t go moving in with new male companions, whenever I see fit. I have considerable contact with my relatives, including my grown children.
My vocabulary is mostly the vocabulary of written books, not street slang.
We can’t feed 7.3 billion people today on communism. We would need resources that were very easy to extract. It would require a lot of debt–more than we have today–to get oil prices and other energy prices up high enough to get the oil out. Also, large amounts of debt would be needed to get the other commodity prices higher.
Communism (sort of) worked for a little while, while there were relatively enough resources. But once limits were reached, the economy needed debt to get oil prices up again, to restart the economy. That was one of the reasons for a switch toward capitalism.
https://www.google.com/?gws_rd=ssl#q=yge
That’s a link to a small cap Chinese solar company, Yingli. It shows it went up 1 cent today – whoopee! That was the solar company I was thinking of buying some shares of in advance of the Paris accord, thinking it would jump up enough in value x # of shares = short term profit, IF the agreement had any teeth, i.e. emission reduction was mandatory and global. But it wasn’t so I’m glad to have not taken the risk.
https://www.rt.com/news/325871-war-stops-elon-musk/
“He stresses that now is the time to act and be quick about it, because chances are high that civilization as we know it today may regress in the near future.”
Oh my, if mister positive, Elon, has joined the doomers we are in trouble.
I’m not sure, a guy of South African background, basically of british post colonial pedigree, is by a definition at least “soft doomer” by default anyways (similarly to many french, dutch, based in former colonies..) In his space + solar biz arena talked about the challenges not stalling but progressing forward as species, so I gather at some level and in some capacity he dealt with these issues at some macro level, how deeply I can’t tell, perhaps this will be cleared in his own words in relatively short time. There is also likely present this additional aspect of prominent industrialist psyche, they think the world is not moving at all or too slowly into certain “desirable” direction, recall Ford and many other big names.
Elon is not really part of the structure, he is attempting to take it on, and will fail.
There is no such thing as peaceful progress or healthy disruption that leads to better things. Americans think there is, but that is because they are a naive, optimistic people. There is only consolidation of existing power structures, or collapse.
That’s it. Those are the only two things that recur through history. Mark my words, Elon will be a tragic fall guy.
I agree completely. Just look at the National Association of Realtors and the Automobile Manufacturers Association or even Nation Recording Industry. Its crazy how locked down people are and they just don’t even know it.
Apparently Musk wants to nuke Mars so we can go live there
I think Musk should let NASA do what they do best regarding what to do with Mars. First off they have already said the priority is to search for life, past or present, presumably microbes. Since nuclear explosions would potentially kill of any microbes where it is dropped, that’s not a good idea.
I am leaving for Orlando today, to speak at a conference tomorrow. I probably will not be able to comment very much in the next couple of days.
Have a nice trip, Gail. The weather is nice here in Florida up in the 80’s with some overcast clouds. Hope you presentation is well received. Thank you for your latest effort, one of your best, producing many thought provoking comments.
Hi Gail, I hope your trip is fun and interesting. What is the conference? Cheers, Ed
A Space Solar research group (talking about solar cells orbiting above the earth) wants me to tell them how low a price that they really need to sell the electricity that they would like to make. I am telling them that it needs to be really cheap–4 cents a kWh or less–actually less, if they want to use the electricity to make a cheap substitute for oil.
I told them about peak oil from low prices as well. The talk was well received–lots of questions.
Glad your back and found the session positive from the Solar space members.
Bet they had to adjust there outlooks from your speaking points.
Thanks for taking time to provide responses here at your trip so soon.
The Holiday week will be next and hopefully we will enjoy BAU…in a nice way.
Gail, if we could get unlimited electric at 4 cents per KWHr that would be lessen the pain of the energy transition by a huge amount. I agree as you say making synthetic liquid fuels is expensive in energy and cost. We could live without airplanes. Cargo can go by boat or electric train, information can go by internet and people can video conference.
The disappointing thing about SPS is the scale required. The transmitting and receiving arrays start large due to physics constraints. This means no small prototyping. This makes learning and development hard.
We can’t afford to remake all of the infrastructure we have either–it takes too much energy.
SSP does require huge scale. There is a learning curve in anything. Most of what has been done to data is either on a very small scale, or just in the theoretical model stage.
Thanks for that insight. Much as I tend to caution against government intervention, there is a need for some kind of mechanism to intervene where high capital (initial) cost projects compete in a market against flow-cost based products, eg solar vs fossil fuel generation. Civilisation needs both for security of supply. Factoring the costs into the market prices then becomes a political question.
How to forecast the market price in ten years time, when forecasting next year is problematic?
It is the cost, rather than the price, that I am trying to keep down.
THe price needs to be relatively high, to get a high enough return on investment. If costs are high, it is extraordinarily difficult keeping prices high enough.
High capital cost products have some real problems in the market place. We need a situation where people’s wages are being paid with the proceeds of energy costs (so that workers can buy the output of the system). If instead, we end up with a system where a lot of money goes into interest expense and rents for land, the system doesn’t work very well. The system is feeding the 1%, not keeping the overall system going. We need high return on human labor–something that gets forgotten about.
Baseload electricity price (futures) towards the end of 2020 decade continue to freefall, now attacking EUR25 per MWh. It’s the combination of massive deflation plus that recent crazy buildup of renewables. Dependable backbone of nuclear and natgas powerplants will be sooner or later underfunded even for basic maintanance, but before that “expect the unexpected” another public bailout, i.e. consumers paying for it all again, blackouts also not out of the question..
Electricity has a lot of worries. Lack of funding is certainly one of them.
Saudi Arabia moves in the direction of higher engagement of the women in the working process:
http://www.bbc.com/news/world-middle-east-35075702
Are they going to create a housing bubble by discouraging land hoarding?
http://www.wsj.com/articles/saudi-arabia-to-impose-taxes-on-undeveloped-urban-land-1427131099
I had heard that women were going to get to vote, but had not heard about the tax on undeveloped land. Population has been growing very rapidly there in recent years.